What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2021-06-28 compared with 2020-07-15 · 420 added, 408 removed, 335 unchanged (71% of the section changed)

3 unchanged sentences

These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases.

Similarly, statements that describe our objectives, plans or goals as well as the expected benefits of the acquisition of Miller Heiman Group, AchieveForum and Strategy Execution (collectively, the “Acquired Companies”), 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.

Similarly, statements that describe our objectives, plans or goals, the timing and expected benefits of our completed 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.

These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement.

The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to the magnitude and duration of the negative impact of the COVID -19 outbreak on our business, employees, customers and our ability to provide services in affected regions, global and local political and or economic developments in or affecting countries where we have operations, 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 this Annual Report on Form 10-K.

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 ultimate magnitude and duration of COVID-19 and of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to 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, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental matters, 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 or events, changes to data security, data privacy, and data protection laws , dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets , treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, the impact of the United Kingdom’s withdrawal 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, 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 this Annual Report on Form 10-K.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements.

1 unchanged sentence

The following presentation of management’s discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included in this Annual Report on Form 10-K .

We also make available on the Investor Relations portion of our website earnings slides and other important information, which we encourage you to review.

Executive Summary

Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our,” and “us”) is a global organizational consulting firm .

We help clients synchronize strategy and talent to drive superior performance.

We help clients synchronize strategy, operations and talent to drive superior business performance.

We work with organizations to design their structures, roles and responsibilities.

1 unchanged sentence

And we advise them on how to reward, develop and motivate their people.

We operate through four global segments:

Consulting helps clients synchronize their strategy and their talent by addressing four fundamental needs:

Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Rewards and Benefits.

This work is supported and underpinned by a comprehensive range of some of the world’s leading IP and data.

Digital leverages an artificial intelligence (“AI”) powered platform to identify structure, roles, capabilities and behaviors needed to drive business forward.

The end to end system gives clients one enterprise-wide talent framework and delivers an achievable blueprint for success along with the guidance and tools to deliver it.

We are pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across the organization.

This approach builds on the best of our past and gives us a clear path to the future with focused initiatives to increase our client and commercial impact.

Korn Ferry is transforming how clients address their talent management needs.

We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients.

Our seven reportable segments operate through the following four lines of business:

Consulting aligns organization structure, culture, performance and people to drive sustainable growth by addressing four fundamental needs:

Organizational Strategy, Assessment and Succession, Leadership and Professional Development, and Total Rewards .

This work is supported by a comprehensive range of some of the world ’s leading lP and data.

Digital leverages an artificial intelligence (“AI”) powered, machine-learning platform to identify the best structures, roles, capabilities and behaviors needed to drive business forward.

The end-to-end system combines Korn Ferry proprietary data, client data, and external market data to generate insight and recommend action.

Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent.

Behavioral interviewing and proprietary assessments are used to determine ideal

organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention.

Behavioral interviewing and proprietary assessments are used to determine ideal organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention.

RPO and Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients.

Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions.

Consulting and Digital are new reporting segments.

Previously, these were tracked and reported together as Korn Ferry Advisory (“Advisory”).

Over the past years 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.

Consulting and Digital became reportable segments in the third quarter of fiscal 2020.

Previously, these were tracked and reported together as one reportable segment, Korn Ferry Advisory (“Advisory”).

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.

These investments, combined with the acquisitions of Miller Heiman Group, AchieveForum and Strategy Execution (“the “Acquired Companies”) in November 2019 from TwentyEighty, Inc.

for $108.6 million, resulted in reassessing how we managed our Advisory business.

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.

for $108.6 million, resulted in us reassessing how we managed our Advisory reportable segment.

Therefore, beginning in the third quarter of fiscal 2020, we separated our Advisory reportable segment into two reportable segments 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.

As a result, the Company now has seven reportable segments:

Consulting, Digital, Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific, Executive Search Latin America and RPO & Professional Search.

The addition of the Acquired Companies has further expanded our vast IP and content and leveraged the firm’s digital delivery platforms.

4 unchanged sentences

We have built strong client loyalty, with 90% of the assignments performed during fiscal 2021 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years.

Approximately 71% of our revenues were generated from clients that utilized multiple lines of our business.

A vital pillar of our growth strategy is our Digital business.

Approximately 70% of our revenues were generated from clients that have utilized multiple lines of our business.

A vital pillar of our growth strategy is Digital.

Our data and IP are embedded into the core business processes of our clients, helping us generate long-term relationships through large scale and technology-based talent programs.

In fiscal 2021, Korn Ferry was recognized as one of the top RPO providers in the Baker’s Dozen list, marking our 14 th consecutive year on the list.

We were also named leader on the Everest PEAK Matrix for three years running and achieved star performer status in fiscal 2020.

We were also named leader on the Everest PEAK Matrix for four years running and achieved star performer status in 2021, with an improved leader position from 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.

In fiscal 2021 we introduced Nimble, a new, fully integrated recruitment technology solution incorporating Candidate Relationship Management, AI Assistance & Screening and Korn Ferry Assessments.

Restructuring and Operational Changes

1 unchanged sentence

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 the time, including Futurestep, Hay Group and Lominger, among others.

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.

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.

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.

3 unchanged sentences

On November 1, 2019, we adopted a restructuring plan to rationalize our cost structure to realize the efficiencies and operational improvement that the investments in the digital business had enabled, or positioned us to realize.

The plan impacts both Consulting and Digital and includes the elimination of redundant positions and consolidation of office space.

During fiscal 2020, we recognized $18.1 million of restructuring charges associated with severance and recorded $2.8 million of integration/acquisition costs associated with impairment of 16 office leases.

The restructuring actions will be completed by July 31, 2020.

The plan impacted both Consulting and Digital and included the elimination of redundant positions and consolidation of office space.

In the third quarter of fiscal 2020, we recognized $18.1 million of restructuring charges associated with severance and recorded $2.8 million of integration/acquisition costs associated with impairment of 16 office leases.

The restructuring actions were completed by July 31, 2020.

The Impact of COVID-19

In March 2020, COVID-19 was reported to have spread to over 100 countries, territories or areas worldwide.

the negative business impact of the coronavirus outbreak was most pronounced in the Asia Pacific Region , and in p articular China and Hong Kong.

D uring the fourth quarter of fiscal 2020 the World Health Organization declared it a pandemic and the impact has been felt worldwide.

The outbreak has severely restricted the level of economic activity in affected areas and has had an adverse impact on sales of certain of our products and services .

G overnments 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 .

A ll of our business segments across all of our geographies have been impacted as fee revenue decreased significantly in the fourth quarter.

In light of the continuing uncertainty in worldwide economic conditions caused by the COVID-19 pandemic and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position, on April 20, 2020, we initiated a plan intended to adjust our cost base to the current economic environment and to position us to invest in the recovery.

Th is plan includes (i) a reduction in workforce , which was substantially completed by the end of fiscal 2020 and resulted in restructuring charges of $40.5 million associated with severance , (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses.

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.

The negative business impact of the coronavirus outbreak was initially most pronounced in the Asia Pacific Region.

During fiscal 2021, the impact has been felt throughout all the geographical areas in which we do business.

Governments and companies 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 .

Such restrictions initially impacted our ability to provide our products and services to our clients with such impact lessening in the second, third and fourth quarters of fiscal 2021 as the world learned to work in different ways.

Further, the outbreak has restricted the level of economic activity in the areas in which we operate and has had an adverse impact on demand for and sales of our products and services.

All of our reportable segments across all of our geographies have been impacted as fee revenue decreased in the fourth quarter of fiscal 2020 and further decreased in the first quarter of fiscal 2021 due to a decrease in demand as clients responded to the pandemic.

As a result of this 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 that was intended to adjust our cost base to the economic environment at that time and to position us to invest in the recovery.

This plan included (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 $30.7 million associated with severance during the fourth quarter of fiscal 2020 and fiscal 2021 , respectively, (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization through December 31, 2020, and (iv) other cost saving measures relating to general and administrative expenses.

In the third and fourth quarters of fiscal 2021, the Company saw business conditions improve substantially from where they were in the second and first quarters with fee revenues increasing 27% in the second quarter of fiscal 2021 compared to the first quarter, 9% in the third quarter from the second quarter of fiscal 2021, and 17% in the fourth quarter from the third quarter of fiscal 2021 to $555.2 million, with all reportable segments contributing to the improvement of fee revenue.

As such, no new restructuring actions were taken in the last nine months of fiscal 2021.

With the sequential improvement in fee revenue and leveraging the restructured cost base, the Company experienced notably better profitability starting in the second quarter of fiscal 2021 compared to sequential quarter.

As such, in the second and third quarter of the Company’s 2021 fiscal year, the Company made a decision to pay all colleagues, including our named executive officers, their full salary and non-executive directors their full retainers for both the second and third quarter of the Company’s 2021 fiscal year.

With the improvement in the operating results the Company decided to fully reimburse colleagues (except certain executive officers) for the remainder of their pay cuts that were taken in fiscal 2021.

Employees will receive their final payment in the first quarter of fiscal 2022.

Beginning on January 1, 2021 salaries of our employees were fully reinstated.

While advances have been made in the science and societal and economic consequences of COVID-19, there remains significant uncertainty about the future impacts of COVID-19.

On the positive side, governments around the world have begun distributing and administering the vaccine.

In addition, the world has adopted new ways of working and interacting with substantial acceptance of business being conducted in a virtual world.

On the negative side, there have been challenges in manufacturing the vaccines at scale as well as distributing and administrating to the population at large in many countries around the world.

Since the end of the second quarter of fiscal 2021, we saw governments impose additional restrictions on travel and activities, particularly in Europe and in the United States, as the number of COVID-19 cases and hospitalizations continued to increase, reaching all-time highs in the United States.

At the end of the third quarter and during the fourth quarter, hospitalizations in the United States started to decrease and restrictions are starting to ease whereas in Brazil, India and in some parts of Europe the opposite is true.

The new, more contagious variants of the virus appear to be more resistant to the vaccines and it is unknown how long the antibodies developed by the vaccine will be effective against the virus mutations.

Therefore, it is

unknown whether the easing of the restrictions will continue or be reversed.

With the implementation of the plan discussed above and the improved business activity we experienced in the second , third and fourth quarter s , we believe our costs are in line with our current revenue levels.

However, uncertainties such as whether the new variants of the virus become the dominant strain, for how long the vaccine is effective to virus mutations or whether new restrictions are imposed (or prior restrictions re-imposed), make us unable to give assurance that the rate of increase in fee revenue during the three months ended April 30 , 2021, will continue in the three months ended July 31, 2021.

Given the amount available from our current revolver and the amount of cash and cash equivalents and marketable securities net of amounts held in trust for deferred compensation and accrued bonuses, we believe that we have sufficient liquidity 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.

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”).

To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairments of investments).

For fiscal 2021, Adjusted EBITDA excluded $30.7 million of restructuring charges and $0.7 million of integration/acquisition costs.

For fiscal 2020, Adjusted EBITDA excluded $58.6 million of restructuring charges, $12.2 million of integration/acquisition costs and $1.8 million of separation costs.

For fiscal 2019, Adjusted EBITDA excluded $106.6 million of tradename write-offs and $6.7 million of integration/acquisition costs.

For fiscal 2018, Adjusted EBITDA excluded $9.4 million of integration/acquisition costs and $0.1 million of restructuring charges, net.

EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin are non-GAAP financial measures.

Consolidated and the subtotals of Executive Search 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.

3 unchanged sentences

Korn Ferry includes these non-GAAP financial measures because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making.

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

Management further believes that EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company.

Fee revenue was $1,932.7 million during fiscal 2020, an increase of $6.7 million, compared to $1,926.0 million in fiscal 2019, with increases in fee revenue in Digital and RPO & Professional Search.

During fiscal 2020, we recorded operating income of $176.0 million with the Executive Search, Digital, Consulting and RPO & Professional Search segments contributing $156.9 million, $46.9 million, $17.7 million and $50.4 million, respectively, offset by Corporate expenses of $96.0 million.

Management further believes that Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company.

Fee revenue was $1,810.0 million during fiscal 2021, a decrease of $122.7 million, or 6.3%, compared to $1,932.7 million in fiscal 2020, with decreases in fee revenue in the Consulting, Digital and Executive Search lines of business due to a decline in demand for our products and services as a result of COVID-19, partially offset by an increase in fee revenue in RPO & Professional Search.

Net income attributable to Korn Ferry increased by $9.6 million during fiscal 2021 to $114.5 million from $104.9 million in fiscal 2020 .

Adjusted EBITDA was $301.0 million, a decrease of $10.0 million during fiscal 2020, from Adjusted EBITDA of $311.0 million in the year-ago period.

During fiscal 2020, the Executive Search, Digital, Consulting and RPO & Professional Search segments contributed $181.1 million, $83.1 million, $61.1 million and $60.2 million, respectively, offset by Corporate expenses net of other income of $84.5 million.

Adjusted EBITDA was $286.3 million, a decrease of $14.7 million during fiscal 2021, from Adjusted EBITDA of $301.0 million in fiscal 2020.

During fiscal 2021, the Executive Search, Digital, Consulting and RPO & Professional Search lines of business contributed $127.8 million, $86.1 million, $81.5 million and $69.4 million, respectively, offset by Corporate expenses net of other income of $78.5 million.

Our cash, cash equivalents and marketable securities increased by $233.8 million to $1,097.1 million at April 30, 2021, compared to $863.3 million at April 30, 2020.

This increase was mainly due to cash flows from operations and net borrowings of $168.6 million as a result of our December 2019 notes offering offset by the repayment of the amount outstanding under our prior revolving credit facility (discussed further below).

The increase was partially offset by annual bonuses earned in fiscal 2019 and paid during fiscal 2020, sign-on and retention payments, $108.6 million paid for the acquisition of the Acquired Companies, $92.4 million in stock repurchases in the open market, $41.5 million in payments for the purchase of property and equipment, $9.0 million paid in tax withholding on restricted stock vestings and $22.8 million in dividends paid during fiscal 2020.

As of April 30, 2020, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $144.3

million and a fair value of $141.4 million .

Our vested oblig ations for which these assets were held in trust totaled $124.6 million as of April 30, 2020 and our unvest ed obligations totaled $21.7 million .

This increase was mainly due to cash flows from operations as a result of cost savings initiatives that were put in place and a positive effect of exchange rate changes on cash and cash equivalents, partially offset by repurchases of our common stock in the open market, purchases of property and equipment, interest payments on the 4.625% Senior Unsecured Notes due 2027 (the “Notes”) and dividends paid to stockholders during fiscal 2021.

As of April 30, 2021, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $145.7 million and a fair value of $175.6 million.

Our vested obligations for which these assets were held in trust totaled $157.3 million as of April 30, 2021 and our unvested obligations totaled $26.5 million.

Our working capital increased by $124.2 million to $737.1 million in fiscal 2021 .

We believe that cash on hand and funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital expenditures, general corporate requirements, repayment of our debt obligations and dividend payments under our dividend policy in the next twelve months.

We had $646.0 million available for borrowing under our Revolver (as defined herein) at April 30, 2020.

As of April 30, 2019, we had a total of $420.2 million available under the previous revolver after letters of credit were issued.

As of April 30, 2020 and 2019, there was $4.0 million and $2.9 million of standby letters of credit issued, respectively, under our long-term debt arrangements.

We had a total of $11.3 million and $8.5 million of standby letters of credits with other financial institutions as of April 30, 2020 and 2019, respectively.

We had $ 646.0 million available for borrowing under our Revolver (as defined herein) at April 30, 2021 and 2020 .

As of April 30, 2021 and 2020 , there was $4.0 million of standby letters of credit issued , under our long-term debt arrangements.

We had a total of $ 11.

0 million and $ 11 .

3 million of standby letters of credits with other financial institutions as of April 30, 2021 and 2020 , respectively .

Critical Accounting Policies

15 unchanged sentences

and 5) recognize revenue when (or as) each performance obligation is satisfied.

Consulting fee revenue is primarily recognized as services are rendered, measured by total hours incurred to the total estimated hours at completion.

Consulting fee revenue is primarily recognized as services are rendered, measured by total hours incurred as a percentage of total estimated hours at completion.

It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination.

7 unchanged sentences

Revenue for tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped.

Fee revenue from executive and non-executive professional search activities is generally one-third of the estimated first year compensation of the placed candidate plus a percentage of the fee to cover indirect engagement related expenses.

Fee revenue from executive and professional search activities is generally one-third of the estimated first year compensation of the placed candidate plus a percentage of the fee to cover indirect engagement related expenses.

In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the client for a placement is higher than the estimated compensation.

11 unchanged sentences

Each quarter, management makes its best estimate of its annual performance related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by executive search consultants and revenue and other performance/profitability metrics for Consulting, Digital and RPO & Professional Search consultants), the level of engagements referred by a consultant in one line of business to a different line of business, our performance including profitability, competitive forces and future economic conditions and their impact on our results.

At the end of each fiscal year, annual performance related bonuses take into account final individual consultant productivity (including referred work), Company/line of business results including profitability, the achievement of strategic objectives and the results of individual performance appraisals, and the current economic landscape.

At the end of each fiscal year, annual performance related bonuses take into account final individual consultant productivity (including referred work), Company/line of business results including profitability, the achievement of strategic objectives , the results of individual performance appraisals, and the current economic landscape.

Accordingly, each quarter we reevaluate the assumptions used to estimate annual performance - related bonus liability and adjust the carrying amount of the liability recorded on the consolidated balance sheets and report any changes in the estimate in current operations.

17 unchanged sentences

We perform an annual impairment test each year as of January 31, or more frequently if impairment indicators arise.

The qualitative test performed as of January 31, 2020 did not indicate any impairment.

During the fourth quarter of fiscal 2020, the rapid and severe impacts of COVID-19, and more specifically, the need to support global social distancing efforts, by mitigating the spread of the virus and complying with restrictions put in place by various governmental and authoritative entities, led to a decline in demand for our products and services.

These actions had a material impact on our business.

Therefore, we performed a quantitative review as of March 31, 2020, to assess whether we believed these actions caused the fair value of any of our reporting units to fall below its carrying value.

This quantitative review included sensitivity analyses of each reporting unit’s discounted cash flow models considering updated rates, financial results and forecasts, market multiples and terminal value revenue growth rates.

The conclusion for all reporting units was that no impairment existed as of March 31, 2020.

The qualitative and quantitative test performed as of January 31, 2021 did not indicate any impairment.

While historical performance and current expectations have resulted in fair values of goodwill in excess of carrying values, if our assumptions are not realized, it is possible that in the future an impairment charge may need to be recorded.

1 unchanged sentence

Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors.

As a result, there can be no assurance that the estimates and assumptions

made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future.

As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual goodwill impairment test will prove to be accurate predictions of the future.

As of our testing date, the fair value of each reporting unit exceeded its carrying amount and as a result, no impairment charge was recognized.

However, due to the impact of the COVID-19 pandemic the fair value calculated by or substantive valuation of all the reporting units has declined.

While these fair values exceed carrying value for all reporting units the excess of fair value over carrying value of the Consulting segment has the smallest buffer.

As of April 30, 2020, goodwill in our Consulting segment was $173.0 million.

We are unable to predict how long the impacts from COVID-19 will affect our operations or what additional restrictions may be imposed by governments.

Variations from current expectations could impact future levels of fair value relative to carrying value resulting in an impairment.

There was no indication of potential impairment during the month of April 30, 2020 that would have required further testing.

There was no indication of potential impairment through April 30, 2021 that would have required further testing.

Examples of events or circumstances that could reasonably be expected to negatively affect the underlying key assumptions and ultimately impact the estimated fair value of the reporting units may include such items as follows:

6 unchanged sentences

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

(Numbers may not total exactly due to rounding)

Year Ended April 30,

10 unchanged sentences

General and administrative expenses for fiscal 2019 includes write-off of tradenames of $106.6 million.

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

The following tables summarize the results of our operations:

(Numbers may not total exactly due to rounding)

1 unchanged sentence

(dollars in thousands)

Consulting (1)

Executive Search:

6 unchanged sentences

Total revenue

The Consulting and Digital segment data for fiscal 2019 and 2018 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

Year Ended April 30,

(dollars in thousands)

Operating income (loss)

Consulting {2}

Executive Search:

North America

Latin America

Total Executive Search

RPO & Professional Search

Total operating income

Margin calculated as a percentage of fee revenue by segment.

The Consulting and Digital segment data for fiscal 2019 and 2018 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

In the tables that follow, the Company presents a subtotal for Executive Search Adjusted EBITDA and a single percentage for Executive Search Adjusted EBITDA margin, which reflects the aggregate of all of the individual Executive Search Regions.

These figures are non-GAAP financial measures and are presented as they are consistent with the Company’s l ines of b usiness and are financial metrics used by the Company’s investor base.

Year Ended April 30, 2021

4 unchanged sentences

Net income attributable to noncontrolling interest

Other loss, net

Other income, net

Interest expense, net

Income tax provision

Operating income (loss)

Operating income

Depreciation and amortization

Other income (loss), net

Other income, net

Integration/acquisition costs

Restructuring charges, net

Separation costs

Adjusted EBITDA

Operating margin

Adjusted EBITDA margin

1 unchanged sentence

Executive Search

Consulting (1)

(in thousands)

2 unchanged sentences

Net income attributable to noncontrolling interest

Other income, net

Other loss, net

Interest expense, net

Income tax provision

Operating (loss) income

Operating income

Depreciation and amortization

Other income (loss), net

Other loss, net

Integration/acquisition costs

Tradename write-offs

Restructuring charges, net

Separation costs

Adjusted EBITDA

Operating margin

Adjusted EBITDA margin

The Consulting and Digital segment data for fiscal 2019 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

Year Ended April 30, 2019

Executive Search

Consulting (1)

(in thousands)

5 unchanged sentences

Income tax provision

Operating income (loss)

Operating income

Depreciation and amortization

1 unchanged sentence

Integration/acquisition costs

Restructuring charges (recoveries), net

Tradename write-offs

Adjusted EBITDA

Operating margin

Adjusted EBITDA margin

The Consulting and Digital segment data for fiscal 2018 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

Fiscal 2021 Compared to Fiscal 2020

During fiscal 2020, the Company changed the composition of its global segments.

The Consulting and Digital segment were previously included in the Advisory segment.

Segment data for fiscal 2019 has been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

Fee revenue decreased by $122.7 million, or 6.3%, to $1,810.0 million in fiscal 2021 compared to $1,932.7 million in fiscal 2020.

Exchange rates favorably impacted fee revenue by $21.6 million, or 1%, in fiscal 2021 compared to fiscal 2020.

The lower fee revenue was attributable to decreases in our Executive Search, Digital and Consulting lines of business primarily due to the impact of COVID-19 on economies in which we operate in fiscal 2021, partially offset by fee revenue generated from the growth in RPO & Professional Search.

Consulting reported fee revenue of $515.8 million in fiscal 2021, a decrease of $27.3 million, or 5%, compared to $543.1 million in fiscal 2020.

The decrease was primarily due to the contraction in economic activity due to COVID-19.

Exchange rates favorably impacted fee revenue by $5.6 million, or 1%, compared to fiscal 2020

Digital reported fee revenue of $287.3 million in fiscal 2021, a decrease of $5.1 million, or 2%, compared to $292.4 million in fiscal 2020.

The lower fee revenue was primarily due to the contraction in economic activity due to COVID-19.

Exchange rates favorably impacted fee revenue by $3.0 million, or 1%, compared to fiscal 2020.

Executive Search North America .

Executive Search North America reported fee revenue of $397.3 million in fiscal 2021, a decrease of $37.3 million, or 9%, compared to $434.6 million in fiscal 2020.

North America’s fee revenue was lower due to a 5% decrease in the number of engagements billed and a 4% decrease in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2021 compared to fiscal 2020.

Executive Search EMEA.

Executive Search EMEA reported fee revenue of $139.0 million in fiscal 2021, a decrease of $31.3 million, or 18%, compared to $170.3 million in fiscal 2020.

Exchange rates favorably impacted fee revenue by $8.0 million, or 5%, in fiscal 2021, compared to fiscal 2020.

The decrease in fee revenue was due to a 16% decrease in the number of engagements billed and an 8% decrease in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2021 compared to fiscal 2020.

The performance in the United Kingdom, Germany, France, Switzerland, Netherlands and the UAE were the primary contributors to the decrease in fee revenue in fiscal 2021 compared to fiscal 2020.

Executive Search Asia Pacific.

Executive Search Asia Pacific reported fee revenue of $83.3 million in fiscal 2021, a decrease of $14.8 million, or 15%, compared to $98.1 million in fiscal 2020.

Exchange rates favorably impacted fee revenue by $2.5 million, or 3%, in fiscal 2021, compared to fiscal 2020.

The decrease in fee revenue was due to an 11% decrease in the weighted-average fees billed per engagement (calculated using local currency) and a 7% decrease in the number of engagements billed in fiscal 2021 compared to fiscal 2020.

The performance in Australia, Hong Kong, and Singapore were the primary contributors to the decrease in fee revenue in fiscal 2021 compared to fiscal 2020.

Executive Search Latin America.

Executive Search Latin America reported fee revenue of $17.5 million in fiscal 2021, a decrease of $11.9 million, or 40%, compared to $29.4 million in fiscal 2020.

Exchange rates unfavorably impacted fee revenue by $3.6 million, or 12%, in fiscal 2021, compared to fiscal 2020.

The decrease in fee revenue was due to a 27% decrease in the number of engagements billed and a 7% decrease in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2021 compared to fiscal 2020.

The decrease in fee revenue was due to lower fee revenue in Mexico, Brazil, Chile and Peru in fiscal 2021 compared to fiscal 2020.

RPO & Professional Search.

RPO & Professional Search reported fee revenue of $369.9 million in fi scal 2021 , an increase of $5.1 million, or 1% , compared to $364.8 million in fiscal 2020 .

Exchange rates favorably impacted fee revenue by $5.4 million, or 1% , compared to fiscal 2020 .

The increase in fee revenue was due to higher fee revenue in RPO of $ 18 .

0 million due to a strong demand for our services in the fourth quarter of fiscal 2021 , partially offset by lower fee revenue in Professional Search of $ 12 .

9 million which was impacted by COVID-19.

Compensation and Benefits

Compensation and benefits expense remained flat at $1,297.9 million in fiscal 2021 and $1,298.0 million in fiscal 2020.

Exchange rates unfavorably impacted compensation and benefits by $14.2 million, or 1%, in fiscal 2021 compared to fiscal 2020.

The change in compensation and benefits expense was due to lower salaries and related payroll taxes and employer insurance due to a 5% decrease in average headcount as a result of actions taken to align our cost structure with lower-level business demand.

This was fully offset by increases in performance-related bonus expense and deferred compensation expense driven by an increase in the fair value of participants’ accounts.

Compensation and benefits expense, as a percentage of fee revenue, increased to 72% in fiscal 2021 from 67% in fiscal 2020.

Consulting compensation and benefits expense decreased by $12.8 million, or 3%, to $360.4 million in fiscal 2021 from $373.2 million in fiscal 2020.

Exchange rates unfavorably impacted compensation and benefits by $4.0 million, or 1%, in fiscal 2021 compared to fiscal 2020.

The change was primarily due to a decrease in salaries and related payroll taxes and employer insurance due to an 11% decline in average headcount as a result of actions taken to align our cost structure with the lower level of business demand, partially offset by higher performance-related bonus expense.

Consulting compensation and benefits expense, as a percentage of fee revenue, increased to 70% in fiscal 2021 from 69% in fiscal 2020.

Digital compensation and benefits expense decreased by $3.0 million, or 2%, to $146.7 million in fiscal 2021 from $149.7 million in fiscal 2020.

Exchange rates unfavorably impacted compensation and benefits by $1.6 million, or 1%, in fiscal 2021 compared to fiscal 2020.

The decrease in compensation and benefits expense was due to a decline in salaries and related payroll taxes as a result of actions taken to align our cost structure with the lower level of business demand.

This decrease was also impacted by lower integration/acquisition costs partially offset by increases in performance-related bonus expense and commission expense.

Digital compensation and benefits expense, as a percentage of fee revenue, was 51% for both fiscal 2021 and 2020.

Executive Search North America compensation and benefits expense increased by $29.8 million, or 11%, to $299.5 million in fiscal 2021 compared to $269.7 million in fiscal 2020.

Exchange rates unfavorably impacted compensation and benefits by $0.3 million in fiscal 2021 compared to fiscal 2020.

The increase was due to higher expenses associated with our deferred compensation and retirement plans driven by an increase in the fair value of participants’ accounts and an increase in performance-related bonus expense.

These increases were partially offset by a decrease in salaries and related payroll taxes due to a 14% decline in average headcount as a result of actions taken to align our cost structure with the lower level of business demand in fiscal 2021 compared to fiscal 2020.

Executive Search North America compensation and benefits expense, as a percentage of fee revenue, increased to 75% in fiscal 2021 from 62% in fiscal 2020.

Executive Search EMEA compensation and benefits expense decreased by $8.6 million, or 7%, to $111.1 million in fiscal 2021 compared to $119.7 million in fiscal 2020.

Exchange rates unfavorably impacted compensation and benefits by $5.3 million, or 4%, in fiscal 2021 compared to fiscal 2020.

The decrease was due to lower salaries and related payroll taxes due to an 8% decline in average headcount as a result of actions taken to align our cost structure with the lower level of business demand in fiscal 2021 compared to fiscal 2020.

Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, increased to 80% in fiscal 2021 from 70% in fiscal 2020.

Executive Search Asia Pacific compensation and benefits expense decreased by $6.0 million, or 9%, to $58.3 million in fiscal 2021 compared to $64.3 million in fiscal 2020.

Exchange rates unfavorably impacted compensation and benefits by $1.7 million, or 3%, in fiscal 2021 compared to fiscal 2020.

The decrease was due to a decrease in salaries and related payroll taxes due to 12% decline in average headcount as a result of actions taken to align our cost structure with the lower level of business demand in fiscal 2021 compared to fiscal 2020.

The decrease was partially offset by a higher performance-related bonus expense.

Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, increased to 70% in fiscal 2021 from 66% in fiscal 2020.

Executive Search Latin America compensation and benefits expense decreased by $4.6 million, or 25%, to $14.1 million in fiscal 2021 compared to $18.7 million in fiscal 2020.

Exchange rates favorably impacted compensation and benefits by $2.7 million, or 14%, in fiscal 2021 compared to fiscal 2020.

The decrease was due to lower salaries and related payroll taxes due to a 16% decline in average headcount as a result of actions taken to align our cost structure with the lower level of business demand in fiscal 2021 compared to fiscal 2020.

Executive Search Latin

America compensation and benefits expense, as a percentage of fee revenue, increased to 80% in fiscal 2021 from 64% in fiscal 2020 .

RPO & Professional Search compensation and benefits expense increased by $3.6 million, or 1%, to $264.6 million in fiscal 2021 from $261.0 million in fiscal 2020.

Exchange rates unfavorably impacted compensation and benefits by $4.0 million, or 2%, in fiscal 2021 compared to fiscal 2020.

The increase was due to higher performance-related bonus expense, partially offset by a decrease in salaries and related payroll taxes in fiscal 2021 compared to fiscal 2020.

RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, was 72% in both fiscal 2021 and 2020.

Corporate compensation and benefits expense increased by $1.5 million, or 4%, to $43.2 million in fiscal 2021 from $41.7 million in fiscal 2020.

The increase was primarily due to higher performance-related bonus expense and an increase in expenses associated with our deferred compensation and retirement plans driven by increases in the fair value of participants’ accounts.

These increases were partially offset by lower salaries and related payroll taxes as a result of a 2% decline in headcount as a result of actions taken to align our cost structure with the lower level of business demand in fiscal 2021 compared to fiscal 2020 and an increase in income from company-owned life insurance (“COLI”) policies due to more death benefits recorded in fiscal 2021 compared to fiscal 2020.

General and Administrative Expenses

General and administrative expenses decreased $67.2 million, or 26%, to $191.8 million in fiscal 2021 compared to $259.0 million in fiscal 2020.

Exchange rates unfavorably impacted general and administrative expenses by $3.3 million, or 1%, in fiscal 2021 compared to fiscal 2020.

The decrease in general and administrative expenses was due to lower marketing and business development expenses, travel related expenses, premise and office expenses and legal and other professional fees as a result of actions taken to align our cost structure with the lower level of business demand and restrictions implemented by various governmental agencies due to COVID-19.

Also contributing to the decrease in general and administrative expenses was a decrease in integration/acquisition costs related to the purchase of the Acquired Companies.

General and administrative expenses, as a percentage of fee revenue, decreased to 11% in fiscal 2021 from 13% in fiscal 2020.

Consulting general and administrative expenses decreased by $18.5 million, or 28%, to $48.6 million in fiscal 2021 compared to $67.1 million in fiscal 2020.

The decrease in general and administrative expenses was due to lower 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 and restrictions implemented by various governmental agencies due to COVID-19.

Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 9% in fiscal 2021 from 12% in fiscal 2020.

Digital general and administrative expenses decreased by $9.6 million, or 25%, to $29.1 million in fiscal 2021 compared to $38.7 million in fiscal 2020.

The decrease in general and administrative expenses was due to lower travel related expenses, marketing and business development expenses and premise and office expenses as a result of actions taken to align our cost structure with the lower level of business demand and restrictions implemented by various governmental agencies due to COVID-19.

Also contributing to the decrease in general and administrative expenses was a decrease in integration/acquisition costs related to the purchase of the Acquired Companies.

Digital general and administrative expenses, as a percentage of fee revenue, decreased to 10% in fiscal 2021 from 13% in fiscal 2020.

Executive Search North America general and administrative expenses decreased by $12.1 million, or 31%, to $26.9 million in fiscal 2021 from $39.0 million in fiscal 2020.

Executive Search North America general and administrative expenses, as a percentage of fee revenue was 7% in fiscal 2021 compared to 9% in fiscal 2020.

Executive Search EMEA general and administrative expenses decreased by $5.0 million, or 24%, to $16.0 million in fiscal 2021 from $21.0 million in fiscal 2020.

The decrease in general and administrative expenses was due to lower marketing and business development expenses and travel related expenses as a result of actions taken to align our cost structure with the lower level of business demand and restrictions implemented by various governmental agencies due to COVID-19.

Also contributing to the decrease in general and administrative expenses was the impact of foreign currency with foreign exchange gains in fiscal 2021 compared to foreign currency losses in fiscal 2020.

Executive Search EMEA general and administrative expenses, as a percentage of fee revenue was 12% in both fiscal 2021 and 2020.

Executive Search Asia Pacific general and administrative expenses decreased by $2.0 million, or 19%, to $8.6 million in fiscal 2021 from $10.6 million in fiscal 2020.

The decrease in general and administrative expenses was due to lower premise and office expenses, marketing and business development expenses and travel related expenses as a result of actions taken to align our cost structure with the lower level of business demand and restrictions

implemented by various governmental agencies due to COVID-19.

Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue was 10% in fiscal 2021 compared to 11% in fiscal 2020.

Executive Search Latin America general and administrative expenses decreased by $2.1 million, or 49%, to $2.2 million in fiscal 2021 from $4.3 million in fiscal 2020.

The decrease in general and administrative expenses was due to lower premise and office expenses and marketing and business development expenses as a result of actions taken to align our cost structure with the lower level of business demand and restrictions implemented by various governmental agencies due to COVID-19.

Executive Search Latin America general and administrative expenses, as a percentage of fee revenue was 12% in fiscal 2021 compared to 15% in fiscal 2020.

RPO & Professional Search general and administrative expenses decreased by $6.4 million, or 21%, to $24.8 million in fiscal 2021 from $31.2 million in fiscal 2020.

The decrease in general and administrative expenses was due to lower travel related expenses and marketing and business development expenses as a result of actions taken to align our cost structure with the lower level of business demand and restrictions implemented by various governmental agencies due to COVID-19.

RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, was 7% in fiscal 2021 compared to 9% in fiscal 2020.

Corporate general and administrative expenses decreased by $11.5 million, or 24%, to $35.5 million in fiscal 2021 compared to $47.0 million in fiscal 2020.

The decrease in general and administrative expenses was due to lower marketing and business development expenses, legal and other professional fees and travel related expenses as a result of actions taken to align our cost structure with the lower level of business demand and restrictions implemented by various governmental agencies due to COVID-19.

Also contributing to the decrease in general and administrative expenses was a decrease in integration/acquisition costs related to the purchase of the Acquired Companies.

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.

Cost of services expense was $72.0 million in fiscal 2021 compared to $85.9 million in fiscal 2020.

Cost of services expense, as a percentage of fee revenue, was 4% in both fiscal 2021 and 2020.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $61.8 million in fiscal 2021, an increase of $6.5 million, or 12%, compared to $55.3 million in fiscal 2020.

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

In November 2019, we implemented a restructuring plan to eliminate redundant positions that were created due to investments made in our Digital business and the acquisition of the Acquired Companies.

In April 2020, we implemented a second plan in response to the uncertainty caused by COVID-19 that resulted in reductions in our workforce.

We continued the implementation of the second plan in fiscal 2021 and as a result of these plans recorded restructuring charges, net of $30.7 million and $58.6 million of severance costs in fiscal 2021 and 2020, respectively.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry increased by $9.6 million to $114.5 million in fiscal 2021 compared to $104.9 million in fiscal 2020.

The increase was mainly driven by decreases in general and administrative expenses and cost of services expense associated with actions taken to align our cost structure with the lower level of business demand.

A decline in restructuring charges, net and an increase in other income, net contributed to the increase in net income attributable to Korn Ferry as well.

These changes were partially offset by a decrease in fee revenue and increases in interest expense, net and depreciation and amortization expense.

Net income attributable to Korn Ferry, as a percentage of fee revenue, was 6% in fiscal 2021 as compared to 5% in fiscal 2020.

Adjusted EBITDA

Adjusted EBITDA decreased by $14.7 million to $286.3 million in fiscal 2021 compared to $301.0 million in fiscal 2020.

The decrease in Adjusted EBITDA was driven by a decline in fee revenue that resulted from actions taken by various government and other authoritative bodies in response to COVID-19 that caused a contraction in economic activity during the year.

This decrease was partially offset by a decline in general and administrative expenses (excluding integration/acquisition costs), which resulted from the cost savings initiatives that were put in place in response to COVID-19.

Adjusted EBITDA, as a percentage of fee revenue, was 16% in both fiscal 2021 and 2020.

Consulting Adjusted EBITDA was $81.5 million in fisca l 2021 , an increase of $20.4 million, or 33% , compared to $61.1 million in fiscal 2020 .

The in crease was driven by decreases in general and administrative expenses , cost of services expense and compensation and benefits expense , which resulted from the cost savings initiatives that were put in place in response to COVID-19 .

These changes were partially offset by a decrease to fee revenue that resulted from actions taken by various government and other authoritative bodies in response to COVID-19 that caused a contraction in economic activity during the year.

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 16% in fiscal 2021 compared to 11% in fiscal 2020.

Digital Adjusted EBITDA was $86.1 million in fiscal 2021, an increase of $3.0 million, or 4%, compared to $83.1 million in fiscal 2020.

The increase was driven by decreases in general and administrative expenses (excluding integration/acquisition costs) and compensation and benefits expense (excluding integration/acquisition costs) in fiscal 2021 compared to fiscal 2020, which resulted from the cost savings initiatives that were put in place in response to COVID-19.

These increases were partially offset by lower fee revenue that resulted from actions taken by various government and other authoritative bodies in response to COVID-19 that caused a contraction in economic activity during the year.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 30% in fiscal 2021 as compared to 28% in fiscal 2020.

Executive Search North America Adjusted EBITDA decreased by $22.6 million, or 19%, to $98.1 million in fiscal 2021 compared to $120.7 million in fiscal 2020.

The decrease was driven by lower fee revenue that resulted from actions taken by various government and other authoritative bodies in response to COVID-19 that caused a contraction in economic activity during the year, as well as an increase in compensation and benefits expense.

These changes were partially offset by a decrease in general and administrative expenses, which resulted from the cost savings initiatives that were put in place in response to COVID-19.

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 25% in fiscal 2021 compared to 28% in fiscal 2020.

Executive Search EMEA Adjusted EBITDA decreased by $19.4 million, or 62%, to $11.7 million in fiscal 2021 compared to $31.1 million in fiscal 2020.

This was partially offset by decreases in compensation and benefits expense (excluding separation costs) and general and administrative expenses, which resulted from the cost savings initiatives that were put in place in response to COVID-19.

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 8% in fiscal 2021 compared to 18% in fiscal 2020.

Executive Search Asia Pacific Adjusted EBITDA decreased by $6.2 million, or 27%, to $16.7 million in fiscal 2021 compared to $22.9 million in fiscal 2020.

This decrease was partially offset by decreases in compensation and benefits expense and general and administrative expenses, which resulted from the cost savings initiatives that were put in place in response to COVID-19.

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 20% in fiscal 2021 compared to 23% in fiscal 2020.

Executive Search Latin America Adjusted EBITDA decreased by $5.1 million, or 80%, to $1.3 million in fiscal 2021 compared to $6.4 million in fiscal 2020.

Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 7% in fiscal 2021 compared to 22% in fiscal 2020.

RPO & Professional Search Adjusted EBITDA was $69.4 million in fiscal 2021, an increase of $9.2 million, or 15%, compared to $60.2 million in fiscal 2020.

The increase was driven by higher fee revenue and a decrease in general and administrative expenses, which resulted from cost savings initiatives that were put in place in response to COVID-19.

These changes were partially offset by an increase in compensation and benefits expense.

RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 19% in fiscal 2021 compared to 17% in fiscal 2020.

Other Income (Loss) , Net

Other income, net was $37.2 million in fiscal 2021 compared to other loss, net of $2.9 million in fiscal 2020.

The change from other loss, net to other income, net was primarily due to gains in the fair value of our marketable securities recognized in fiscal 2021 compared to losses in fiscal 2020.

These gains recorded in fiscal 2021 were offset by the increases in our deferred compensation liability that were recorded as increases in compensation and benefits expense in fiscal 2021.

Interest Expense, Net

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.

Interest expense, net was $29.3 million in fiscal 2021 compared to $22.2 million in fiscal 2020.

The increase in interest expense, net was related to the Notes, which have a higher interest rate than the revolver under our prior credit agreement that was outstanding for most of fiscal 2020.

Income Tax Provision

The provision for income tax was $48.1 million in fiscal 2021 compared to $43.9 million in fiscal 2020.

This reflects a 29% effective tax rate in both fiscal 2021 and 2020.

Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of operations.

Net income attributable to noncontrolling interest was $1.1 million and $2.1 million in fiscal 2021 and 2020, respectively.

Fiscal 2020 Compared to Fiscal 2019

We changed the presentation from the last year’s Form 10-K to reflect the performance of each of our seven reportable segments.

Fee revenue increased by $6.7 million, or 0.3%, to $1,932.7 million in fiscal 2020 compared to $1,926.0 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $36.2 million, or 2%, in fiscal 2020 compared to the year-ago period.

The higher fee revenue was attributable to fee revenue generated from the Acquired Companies and growth in RPO & Professional Search, offset by decreases in Executive Search and Consulting principally impacted by COVID-19 I the fourth quarter of fiscal 2020.

Exchange rates unfavorably impacted fee revenue by $36.2 million, or 2%, in fiscal 2020 compared to fiscal 2019.

Consulting reported fee revenue of $543.1 million in fiscal 2020, a decrease of $25.2 million, or 4%, compared to $568.3 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $10.9 million, or 2%, compared to the year-ago period.

Exchange rates unfavorably impacted fee revenue by $10.9 million, or 2%, compared to fiscal 2019.

The decrease was primarily due to the impact of COVID-19 in the fourth quarter of fiscal 2020.

1 unchanged sentence

The higher fee revenue was attributable to fee revenue generated from the Acquired Companies.

Exchange rates unfavorably impacted fee revenue by $6.4 million, or 3%, compared to the year-ago period.

Executive Search.

Executive Search reported fee revenue of $732.5 million in fiscal 2020, a decrease of $42.3 million, or 5%, compared to $774.8 million in the year-ago period.

Exchange rates unfavorably impacted fee revenue by $11.9 million, or 2%, in fiscal 2020 as compared to the year-ago period.

As detailed below, Executive Search fee revenue was lower in all regions in fiscal 2020 as compared to fiscal 2019.

The overall decrease in fee revenue was driven by decreases in fee revenue in all sectors due to COVID-19 with consumer products, financial services, technology and education/non-profit having the greatest impact.

North America reported fee revenue of $434.6 million in fiscal 2020, a decrease of $21.2 million, or 5%, compared to $455.8 million in the year-ago period.

North America’s fee revenue was lower due to a 7% decrease in the number of engagements billed, partially offset by a 3% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2020 compared to the year-ago period.

EMEA reported fee revenue of $170.3 million in fiscal 2020,a decrease of $12.5 million, or 7%, compared to $182.8 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $5.9 million, or 3%, in fiscal 2020, compared to the year-ago period.

The decrease in fee revenue was due to a 3% decrease in the number of engagements billed and a 1% decrease in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2020 compared to the year-ago period.

The performance in Germany, United Kingdom, Norway,

Sweden and Denmark were the primary contributors to the de crease in fee revenue in fiscal 2020 compared to the year-ago period .

Asia Pacific reported fee revenue of $98.1 million in fiscal 2020, a decrease of $6.2 million, or 6%, compared to $104.3 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $2.9 million, or 3%, in fiscal 2020, compared to the year-ago period.

The decrease in fee revenue was due to a 5% decrease in the number of engagements billed, partially offset by a 2% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2020 compared to the year-ago period.

The performance in Australia and China were the primary contributors to the decrease in fee revenue, partially offset by increases in fee revenue in Singapore and Japan in fiscal 2020 compared to the year-ago period.

Latin America reported fee revenue of $29.4 million in fiscal 2020, a decrease of $2.5 million, or 8%, compared to $31.9 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $2.6 million, or 8%, in fiscal 2020, compared to the year-ago period.

The decrease in fee revenue was due to lower fee revenue in Brazil, Colombia and Argentina, partially offset by increases in fee revenue in Mexico and Chile in fiscal 2020 compared to the year-ago period.

Exchange rates unfavorably impacted fee revenue by $6.4 million, or 3%, compared to fiscal 2019.

Executive Search North America reported fee revenue of $434.6 million in fiscal 2020, a decrease of $21.2 million, or 5%, compared to $455.8 million in fiscal 2019.

Executive Search EMEA reported fee revenue of $170.3 million in fiscal 2020, a decrease of $12.5 million, or 7%, compared to $182.8 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $5.9 million, or 3%, in fiscal 2020, compared to fiscal 2019.

The performance in Germany, United Kingdom, Norway, Sweden and Denmark were the primary contributors to the decrease in fee revenue in fiscal 2020 compared to fiscal 2019.

Executive Search Asia Pacific reported fee revenue of $98.1 million in fiscal 2020, a decrease of $6.2 million, or 6%, compared to $104.3 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $2.9 million, or 3%, in fiscal 2020, compared to fiscal 2019.

Executive Search Latin America reported fee revenue of $29.4 million in fiscal 2020, a decrease of $2.5 million, o r 8% , compared to $31.9 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $2.6 million, or 8%, in fiscal 2020, compared to fiscal 2019 .

The de crease in fee revenue was due to lower fee revenue in Brazil, Colombia and Argentina , partially offset by increases in fee revenue in Mexico and Chile in fiscal 2020 compared to fiscal 2019 .

RPO & Professional Search.

RPO & Professional Search reported fee revenue of $364.8 million in fiscal 2020, an increase of $34.7 million, or 11%, compared to $330.1 million in fiscal 2019.

Exchange rates unfavorably impacted fee revenue by $6.9 million, or 2%, compared to the year-ago period.

Exchange rates unfavorably impacted fee revenue by $6.9 million, or 2%, compared to fiscal 2019.

Higher fee revenues in RPO and professional search of $26.4 million and $8.3 million, respectively, drove the increase in fee revenue.

1 unchanged sentence

Compensation and benefits expense decreased $13.2 million, or 1%, to $1,298.0 million in fiscal 2020 from $1,311.2 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $22.6 million, or 2%, in fiscal 2020 compared to the year-ago period.

The decrease in compensation and benefits expense was due to lower performance-related bonus expense due to lower fee revenue as a result of COVID-19 pandemic, a decrease in expenses associated with our deferred compensation and retirement plans driven by a decrease in the fair value of participants’ accounts and a decrease in integration/ acquisition costs.

Exchange rates favorably impacted compensation and benefits by $22.6 million, or 2%, in fiscal 2020 compared to fiscal 2019.

The decrease in compensation and benefits expense was due to lower performance-related bonus expense due to lower fee revenue as a result of the COVID-19 pandemic, a decrease in expenses associated with our deferred compensation and retirement plans driven by a decrease in the fair value of participants’ accounts and a decrease in integration/ acquisition costs.

These decreases in compensation and benefits expense were partially offset by a 3% increase in average headcount, which contributed to an increase in salaries and related payroll taxes in fiscal 2020 compared to fiscal 2019.

1 unchanged sentence

Consulting compensation and benefits expense decreased by $17.8 million, or 5%, to $373.2 million in fiscal 2020 from $391.0 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $7.8 million, or 2%, in fiscal 2020 compared to the year-ago period.

The change was primarily due to lower performance-related bonus expense due to lower fee revenue as a result of COVID-19 pandemic, partially offset by an increase in salaries and related payroll taxes.

Exchange rates favorably impacted compensation and benefits by $7.8 million, or 2%, in fiscal 2020 compared to fiscal 2019.

The change was primarily due to lower performance-related bonus expense due to lower fee revenue as a result of the COVID-19 pandemic, partially offset by an increase in salaries and related payroll taxes.

Consulting compensation and benefits expense, as a percentage of fee revenue, was 69% for both the fiscal 2020 and 2019.

Digital compensation and benefits expense increased by $16.6 million, or 12%, to $149.7 million in fiscal 2020 from $133.1 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $2.8 million, or 2%, in fiscal 2020 compared to the year-ago period.

The increase in compensation and benefits expense was due to an increase in salaries and related payroll taxes mainly from the Acquired Companies resulting in a 12% increase in the average headcount in fiscal 2020 compared to the year-ago period.

Exchange rates favorably impacted compensation and benefits by $2.8 million, or 2%, in fiscal 2020 compared to fiscal 2019.

Digital compensation and benefits expense, as a percentage of fee revenue, decreased to 51% in fiscal 2020 from 53% in fiscal 2019.

Executive Search compensation and benefits expense decreased by $30.0 million, or 6%, to $472.4 million in fiscal 2020 compared to $502.4 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $7.5 million, or 1%, in fiscal 2020 compared to the year-ago period.

Executive Search North America compensation and benefits expense decreased by $16.3 million, or 6%, to $269.7 million in fiscal 2020 compared to $286.0 million in fiscal 2019.

The decrease was due to lower performance-related bonus expense due to lower fee revenue as a result of the COVID-19 pandemic.

The rest of the change was due to a decrease in the expenses associated with our deferred compensation and retirement plans driven by a decrease in the fair value of participants’ accounts.

Executive Search compensation and benefits expense, as a percentage of fee revenue, decreased to 64% in fiscal 2020 from 65% in fiscal 2019.

Executive Search North America compensation and benefits expense, as a percentage of fee revenue, decreased to 62% in fiscal 2020 from 63% in fiscal 2019.

Executive Search EMEA compensation and benefits expense decreased by $9.1 million, or 7%, to $119.7 million in fiscal 2020 compared to $128.8 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $3.8 million, in fiscal 2020 compared to fiscal 2019.

The decrease was primarily due to lower performance-related bonus expense due to lower fee revenue as a result of the COVID-19 pandemic.

Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, was 70% in both fiscal 2020 and 2019.

Executive Search Asia Pacific compensation and benefits expense decreased by $2.9 million, or 4%, to $64.3 million in fiscal 2020 compared to $67.2 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $1.8 million, in fiscal 2020 compared to fiscal 2019.

The decrease was due to lower performance-related bonus expense due to lower fee revenue as a result of the COVID-19 pandemic.

Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, increased to 65% in fiscal 2020 from 64% in fiscal 2019.

Executive Search Latin America compensation and benefits expense decreased by $1.8 million, or 9%, to $18.7 million in fiscal 2020 compared to $20.5 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $1.6 million, in fiscal 2020 compared to fiscal 2019.

The decrease in compensation and benefits expense was due to a decrease in salaries and related payroll taxes as a result of a 5% decrease in the average headcount in fiscal 2020 compared to fiscal 2019.

Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, was 64% for both fiscal 2020 and fiscal 2019.

RPO & Professional Search compensation and benefits expense increased by $26.4 million, or 11%, to $261.0 million in fiscal 2020 from $234.6 million in fiscal 2019.

Exchange rates favorably impacted compensation and benefits by $4.5 million, or 2%, in fiscal 2020 compared to the year-ago period.

The increase was due to a 14% increase in the average headcount in fiscal 2020 compared to fiscal 2019, partially offset by a decrease in lower performance-related bonus expense due to lower fee revenue as a result of COVID-19 pandemic.

Exchange rates favorably impacted compensation and

benefits by $4.5 million, or 2%, in fiscal 2020 compared to fiscal 2019 .

The increase was due to a 14 % increase in the average headcount in fiscal 2020 compared to fiscal 2019 , partially offset by a decrease in lower performance-related bonus expense due to lower fee revenue as a result of the COVID-19 pandemic .

RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue , increased to 72% in fiscal 2020 from 71% in fiscal 2019.

Corporate compensation and benefits expense decreased by $8.4 million, or 17%, to $41.7 million in fiscal 2020 from $50.1 million in fiscal 2019.

The decrease was primarily due to lower performance-related bonus expense due to

lower fee revenue as a result of COVID-19 pandemic and a decrease in expenses associated with our deferred compensation and retirement plans in fiscal 2020 compared to the year-ago period.

The decrease was primarily due to lower performance-related bonus expense due to lower fee revenue as a result of the COVID-19 pandemic and a decrease in expenses associated with our deferred compensation and retirement plans in fiscal 2020 compared to fiscal 2019.

General and Administrative Expenses

General and administrative expenses decreased $93.0 million, or 26%, to $259.0 million in fiscal 2020 compared to $352.0 million in fiscal 2019.

Exchange rates favorably impacted general and administrative expenses by $6.2 million, or 2%, in fiscal 2020 compared to the year-ago period.

Exchange rates favorably impacted general and administrative expenses by $6.2 million, or 2%, in fiscal 2020 compared to fiscal 2019.

The decrease in general and administrative expenses was magnified by a one-time write-off of tradenames of $106.6 million in fiscal 2019 related to the Plan.

1 unchanged sentence

General and administrative expenses, as a percentage of fee revenue, decreased to 13% in fiscal 2020 from 18% in fiscal 2019, however, excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 13% in both fiscal 2020 and 2019.

Consulting general and administrative expenses decreased by $79.1 million, or 54%, to $67.1 million in fiscal 2020 compared to $146.2 million in the year-ago period.

Consulting general and administrative expenses decreased by $79.1 million, or 54%, to $67.1 million in fiscal 2020 compared to $146.2 million in fiscal 2019.

The decrease in general and administrative expenses was magnified by a one-time write-off of tradenames related to the Plan of $77.0 million in fiscal 2019.

1 unchanged sentence

Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 12% in both fiscal 2020 and 2019.

Digital general and administrative expenses decreased by $19.4 million, or 33%, to $38.7 million in fiscal 2020 compared to $58.1 million in the year-ago period.

Digital general and administrative expenses decreased by $19.4 million, or 33%, to $38.7 million in fiscal 2020 compared to $58.1 million in fiscal 2019.

The decrease in general and administrative expenses was magnified by a one-time write-off of tradenames related to the Plan of $29.6 million in fiscal 2019, partially offset by an increase in integration/acquisition costs and premise and office expenses.

Digital general and administrative expenses, as a percentage of fee revenue, decreased to 13% in fiscal 2020 from 23% in fiscal 2019.

Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 13% in fiscal 2020 compared to 11% in the year-ago period.

Executive Search general and administrative expenses decreased by $7.2 million, or 9%, to $74.9 million in fiscal 2020 from $82.1 million in fiscal 2019.

The decrease in general and administrative expenses was primarily due to decreases in legal and other professional fees, travel related expenses and premise and office expenses in fiscal 2020 compared to the year-ago period.

Executive Search general and administrative expenses, as a percentage of fee revenue was 10% in fiscal 2020 compared to 11% in the year-ago period.

Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 13% in fiscal 2020 compared to 11% in fiscal 2019.

Executive Search North America general and administrative expenses decreased by $2.9 million, or 7%, to $39.0 million in fiscal 2020 from $41.9 million in fiscal 2019.

The decrease in general and administrative expenses was primarily due to decreases in legal and other professional fees and travel related expenses in fiscal 2020 compared to fiscal 2019.

Executive Search North America general and administrative expenses, as a percentage of fee revenue, was 9% for both fiscal 2020 and 2019.

Executive Search EMEA general and administrative expenses decreased by $1.3 million, or 6%, to $21.0 million in fiscal 2020 from $22.3 million in fiscal 2019.

The decrease in general and administrative expenses was primarily due to decreases in travel related expenses and premise and office expenses, partially offset by an increase in foreign currency losses in fiscal 2020 compared to fiscal 2019.

Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, was 12% for both fiscal 2020 and 2019.

Executive Search Asia Pacific general and administrative expenses decreased by $0.3 million, or 3%, to $10.6 million in fiscal 2020 from $10.9 million in fiscal 2019.

The decrease in general and administrative expenses was primarily due to decreases in legal and other professional fees, travel related expenses and foreign currency gains in fiscal 2020 compared to foreign currency losses in fiscal 2019.

This was partially offset by an increase in bad debt expense in fiscal 2020 compared to fiscal 2019.

Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue, increased to 11% in fiscal 2020 from 10% in fiscal 2019.

Executive Search Latin America general and administrative expenses decreased by $2.7 million, or 39%, to $4.3 million in fiscal 2020 from $7.0 million in fiscal 2019.

The decrease in general and administrative expenses was primarily due to a decrease in premise and office expenses and to a lesser extent foreign currency gains in fiscal 2020 compared foreign currency losses in fiscal 2019.

Executive Search Latin America general and administrative expenses, as a percentage of fee revenue, decreased to 15% in fiscal 2020 from 22% in fiscal 2019.

RPO & Professional Search general and administrative expenses increased by $3.1 million, or 11%, to $31.2 million in fiscal 2020 from $28.1 million in fiscal 2019.

2 unchanged sentences

Corporate general and administrative expenses increased by $9.5 million, or 25%, to $47.0 million in fiscal 2020 compared to $37.5 million in fiscal 2019.

The increase was due to integration/acquisition costs incurred in fiscal 2020 related to the purchase of the Acquired Companies and increases in marketing and business development expenses in fiscal 2020 compared to the year-ago period.

Cost of Services Expense

10 unchanged sentences

There were no restructuring charges in fiscal 2019.

Operating Income

Operating income was $176.0 million in fiscal 2020, an increase of $35.2 million, compared to $140.8 million in fiscal 2019.

The increase in operating income was primarily driven by a decrease in general and administrative expenses of $93.0 million magnified by a one-time write-off of tradenames in the year-ago period, partially offset by restructuring charges of $58.6 million incurred in fiscal 2020.

Consulting operating income was $17.7 million in fiscal 2020, an increase of $51.8 million, compared to operating loss of $34.1 million in fiscal 2019.

The change was primarily due to a decrease in general and administrative expenses of $79.1 million magnified by a one-time write-off of tradenames related to the Plan of $77.0 million in the year-ago period and a decrease of $17.8 million in compensation and benefits expense.

The increase in operating income was partially offset by lower fee revenue of $25.2 million and restructuring charges of $24.5 million in fiscal 2020.

Consulting operating income, as a percentage of fee revenue was 3% in fiscal 2020 compared to an operating loss, as a percentage of fee revenue of 6% in fiscal 2019.

Excluding the tradename write-offs, operating income as a percentage of fee revenue was 3% in fiscal 2020 compared to 8% in fiscal 2019.

Digital operating income was $46.9 million in fiscal 2020, an increase of $7.2 million, or 18%, compared to $39.7 million in fiscal 2019.

The increase in operating income was due to higher fee revenue of $39.7 million and a decrease in general and administrative expenses of $19.4 million magnified by a one-time write-off of tradenames related to the Plan in the year ago period.

The increase in operating income was partially offset by restructuring charges of $10.5 million in fiscal 2020 and increases in compensation and benefits expense, cost of service and depreciation and amortization expense of $16.6 million, $18.3 million and $6.4 million, respectively.

Digital operating income, as a percentage of fee revenue was 16% in both the fiscal 2020 and 2019.

Excluding the tradename write-offs, operating income as a percentage of fee revenue was 16% in fiscal 2020 compared to 27% in fiscal 2019.

Executive Search operating income decreased by $22.2 million, or 12%, to $156.9 million in fiscal 2020 compared to $179.1 million in fiscal 2019.

The decrease in Executive Search operating income was driven by a decrease in fee revenue of $42.3 million and restructuring charges of $17.5 million incurred in fiscal 2020 largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020.

The decrease in operating income was partially offset by decreases in compensation and benefits expense and general and administrative expenses of $30.0 million and $7.2 million, respectively.

Executive Search operating income, as a percentage of fee revenue, was 21% and 23% in the fiscal 2020 and 2019, respectively.

RPO & Professional Search operating income was $50.4 million in fiscal 2020 compared to $50.9 million in fiscal 2019.

The decrease in operating income was driven by higher compensation and benefits expense of $26.4 million, restructuring charges of $5.7 million incurred in fiscal 2020 and an increase in general and administrative expenses of $3.1 million.

The decrease in operating income was partially offset by an increase in fee revenue of $34.7 million.

RPO & Professional Search operating income, as a percentage of fee revenue, was 14% in fiscal 2020 compared to 15% in fiscal 2019.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry increased by $2.2 million to $104.9 million in fiscal 2020 compared $102.7 million in fiscal 2019.

The increase was primarily driven by lower operating expenses of $31.7 million, partially offset by an increase in income tax expense of $14.4 million and losses in the fair value of our marketable securities incurred in fiscal 2020 compared to gains in the year-ago period.

Net income attributable to Korn Ferry, as a percentage of fee revenue, was 5% in both the fiscal 2020 and 2019.

4 unchanged sentences

The decrease was driven by lower fee revenue of $25.2 million largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020.

The decrease in adjusted EBITDA was partially offset by decreases of $12.5 million in compensation and benefits expense (excluding integration/acquisition costs), $6.0 million in cost of services expense and $2.1 million in general and administrative expenses (excluding tradename write-offs in fiscal 2019) in fiscal 2020 compared to the year-ago period.

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 11% in fiscal 2020 compared to 12% in the year-ago period.

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 11% in fiscal 2020 compared to 12% in fiscal 2019.

Digital Adjusted EBITDA was $83.1 million in fiscal 2020, a decrease of $1.4 million, or 2%, compared to $84.5 million in fiscal 2019.

The decrease was driven by higher compensation and benefits expense (excluding integration/acquisition costs) of $15.5 million, higher cost of service expenses of $18.3 million and an increase of $6.7 million in general and administrative expenses (excluding integration/acquisition costs in fiscal 2020 and write-off of tradenames in fiscal 2019).

This was partially offset by an increase of $39.7 million in fee revenue in fiscal 2020

compared to the year-ago period.

This was partially offset by an increase of $39.7 million in fee revenue in fiscal 2020 compared to fiscal 2019.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 28% in fiscal 2020 as compared to 33% in fiscal 2019.

Executive Search Adjusted EBITDA decreased by $12.7 million, or 7%, to $181.1 million in fiscal 2020 compared to $193.8 million in fiscal 2019.

The decrease was driven by lower fee revenue of $42.3 million in fiscal 2020 compared to the year-ago period largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020 and losses in the fair value of our marketable securities incurred in fiscal 2020 compared to gains in the year-ago period.

The decrease in adjusted EBITDA was partially offset by a decrease of $31.9 million in compensation and benefits expense (excluding separation costs in fiscal 2020) and $7.2 million in general and administrative expenses.

Executive Search Adjusted EBITDA, as a percentage of fee revenue, was 25% in both the fiscal 2020 and 2019.

Executive Search North America Adjusted EBITDA decreased by $10.6 million, or 8%, to $120.7 million in fiscal 2020 compared to $131.3 million in fiscal 2019.

The decrease was driven by lower fee revenue of $21.2 million in fiscal 2020 compared to fiscal 2019 largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020 and losses in the fair value of our marketable securities incurred in fiscal 2020 compared to gains in fiscal 2019.

The decrease in Adjusted EBITDA was partially offset by a decrease of $16.3 million in compensation and benefits expense and $2.9 million in general and administrative expenses.

Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, decreased to 28% in fiscal 2020 from 29% in fiscal 2019.

Executive Search EMEA Adjusted EBITDA decreased by $0.6 million, or 2%, to $31.1 million in fiscal 2020 compared to $31.7 million in fiscal 2019.

The decrease was driven by lower fee revenue of $12.5 million in fiscal 2020 compared

to fiscal 2019 largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020.

The decrease in A djusted EBITDA was partially offset by a decrease of $10.9 million in compensation and benefits expense (excluding separation costs in fiscal 2020) and $1.3 million in general and administrative expenses.

Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, increased to 18% in fiscal 2020 from 17% in fiscal 2019.

Executive Search Asia Pacific Adjusted EBITDA decreased by $3.2 million, or 12%, to $22.9 million in fiscal 2020 compared to $26.1 million in fiscal 2019.

The decrease was driven by lower fee revenue of $6.2 million in fiscal 2020 compared to fiscal 2019 largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020.

The decrease in Adjusted EBITDA was partially offset by a decrease of $2.9 million in compensation and benefits expense and $0.3 million in general and administrative expenses.

Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, decreased to 23% in fiscal 2020 from 25% in fiscal 2019.

Executive Search Latin America Adjusted EBITDA increased by $1.7 million, or 36%, to $6.4 million in fiscal 2020 compared to $4.7 million in fiscal 2019.

The increase was driven by decreases of $2.7 million in general and administrative expenses and $1.8 million in compensation and benefits expense.

The increase was partially offset by lower fee revenue of $2.5 million in fiscal 2020 compared to fiscal 2019 largely due to the impact of COVID-19 in the fourth quarter of fiscal 2020.

Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, increased to 22% in fiscal 2020 from 15% in fiscal 2019.

RPO & Professional Search Adjusted EBITDA was $60.2 million in fiscal 2020, an increase of $5.8 million, or 11%, compared to $54.4 million in fiscal 2019.

The increase was driven by higher fee revenue of $34.7 million driven by higher fee revenues in RPO and professional search of $26.4 million and $8.3 million, respectively.

The increase in adjusted EBITDA was partially offset by increases of $26.4 million in compensation and benefits expense and $3.1 million in general and administrative expenses, in fiscal 2020 compared to the year-ago period.

RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 17% in fiscal 2020 compared to 16% in fiscal 2019.

Other (Loss) Income, Net

Other loss, net was $2.9 million in fiscal 2020 compared to other income, net of $10.4 million in the year-ago period.

The change from other income, net to other loss, net was primarily due to losses in the fair value of our marketable securities incurred in fiscal 2020 compared to gains in the year-ago period.

Other loss, net was $2.9 million in fiscal 2020 compared to other income, net of $10.4 million in fiscal 2019.

The change from other income, net to other loss, net was primarily due to losses in the fair value of our marketable securities incurred in fiscal 2020 compared to gains in fiscal 2019.

These losses were offset by the decreases in our deferred compensation liability that are recorded as decreases in compensation and benefits expense in fiscal 2020.

1 unchanged sentence

Interest expense, net primarily relates to the 4.625% Senior Unsecured Notes due 2027 (the “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.

Interest expense, net was $22.2 million in fiscal 2020 compared to $16.9 million in the year-ago period.

Interest expense, net was $22.2 million in fiscal 2020 compared to $16.9 million in fiscal 2019.

The increase in interest expense, net was related to the newly issued Notes, which have a higher interest rate and a higher principal balance than the revolver under our prior credit agreement.

Income Tax Provision

The provision for income tax was $43.9 million in fiscal 2020 compared to $29.5 million in the year-ago period.

The provision for income tax was $43.9 million in fiscal 2020 compared to $29.5 million in fiscal 2019.

This reflects a 29% and 22% effective tax rate for fiscal 2020 and 2019, respectively.

3 unchanged sentences

Net income attributable to noncontrolling interest was $2.1 million in both fiscal 2020 and 2019.

Fiscal 2019 Compared to Fiscal 2018

During fiscal 2020, the Company changed the composition of its global segments.

The Digital and Consulting segment were previously included in the Advisory segment.

Segment data for fiscal 2019 and 2018 have been recast to reflect the division of the Advisory segment into the Consulting and Digital segments.

Fee revenue increased by $158.8 million, or 9%, to $1,926.0 million in fiscal 2019 compared to $1,767.2 million in fiscal 2018.

Exchange rates unfavorably impacted fee revenue by $48.3 million, or 3%, in fiscal 2019 compared to the year-ago period.

The increase in fee revenue was attributable to organic growth in all solution areas.

Consulting reported fee revenue of $568.3 million, an increase of $27.8 million, or 5%, in fiscal 2019 compared to $540.5 million in fiscal 2018.

Exchange rates unfavorably impacted fee revenue by $17.1 million, or 3%, compared to the year-ago period.

Digital reported fee revenue of $252.7 million, an increase of $8.2 million, or 3%, in fiscal 2019 compared to $244.5 million in fiscal 2018.

Exchange rates unfavorably impacted fee revenue by $7.7 million, or 3%, compared to the year-ago period.

Executive Search.

Executive Search reported fee revenue of $774.8 million , an increase of $65.8 million, or 9% , in fiscal 2019 compared to $709.0 million in the year-ago period.

As detailed below, Executive Search fee revenue was higher in all regions in fiscal 2019 compared to fiscal 2018 .

The higher fee revenue in Executive Search was mainly due to a 6% increase in the number of engagements billed and a 5% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2019 compared to the year-ago period.

Exchange rates unfavorably impacted fee revenue by $14.8 million, or 2% , in fiscal 2019 compared to the year-ago period.

North America reported fee revenue of $455.8 million, an increase of $47.7 million, or 12%, in fiscal 2019 compared to $408.1 million in the year-ago period.

North America’s fee revenue was higher due to a 9% increase in the number of engagements billed and a 3% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2019 compared to the year-ago period.

Technology, industrial and financial services were the main sectors contributing to the increase in fee revenue in fiscal 2019 compared to the year-ago period.

The effect of exchange rates on fee revenue was minimal in fiscal 2019 compared to the year-ago period.

EMEA reported fee revenue of $182.8 million, an increase of $9.1 million, or 5%, in fiscal 2019 compared to $173.7 million in fiscal 2018.

Exchange rates unfavorably impacted fee revenue by $5.7 million, or 3%, in fiscal 2019, compared to the year-ago period.

The increase in fee revenue was due to a 5% increase in the number of engagements billed and a 4% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2019 compared to the year-ago period.

The performance in the United Kingdom, Germany, United Arab Emirates, and France were the primary contributors to the increase in fee revenue in fiscal 2019 compared to the year-ago period.

In terms of business sectors, financial services, industrial and technology had the largest increase in fee revenue in fiscal 2019 compared to the year-ago period, partially offset by a decrease in fee revenue in the life sciences/healthcare and consumer goods sectors.

Asia Pacific reported fee revenue of $104.3 million, an increase of $7.7 million, or 8%, in fiscal 2019 compared to $96.6 million in fiscal 2018.

Exchange rates unfavorably impacted fee revenue by $3.6 million, or 4%, in fiscal 2019, compared to the year-ago period.

The increase in fee revenue was due to a 10% increase in the number of engagements billed and a 2% increase in the weighted-average fees billed per engagement (calculated using local currency) in fiscal 2019 compared to the year-ago period.

The performance in Hong Kong, Australia, Singapore, and New Zealand were the primary contributors to the increase in fee revenue in fiscal 2019 compared to the year-ago period.

Technology, education/non-profit, consumer goods, and financial services were the main sectors contributing to the increase in fee revenue in fiscal 2019 compared to the year-ago period.

Latin America reported fee revenue of $31.9 million, an increase of $1.3 million, or 4%, in fiscal 2019 compared to $30.6 million in fiscal 2018.

Exchange rates unfavorably impacted fee revenue by $4.6 million, or 15%, in fiscal 2019, compared to the year-ago period.

The increase in fee revenue was due to higher fee revenue in Peru, Colombia and Brazil in fiscal 2019, compared to the year-ago period.

Consumer goods and financial services were the main sectors contributing to the increase in fee revenue in fiscal 2019, compared to the year-ago period, partially offset by a decrease in life sciences/healthcare and industrial sectors.

RPO & Professional Search.

RPO & Professional Search reported fee revenue of $330.1 million, an increase of $56.9 million, or 21%, in fiscal 2019 compared to $273.2 million in fiscal 2018.

Exchange rates unfavorably impacted fee revenue by $8.7 million, or 3%, compared to the year-ago period.

Higher fee revenues in RPO and professional search of $33.0 million and $23.9 million, respectively, drove the increase in fee revenue.

Compensation and Benefits

Compensation and benefits expense increased $112.1 million, or 9%, to $1,311.2 million in fiscal 2019 from $1,199.1 million in fiscal 2018.

Exchange rates favorably impacted compensation and benefits by $29.6 million, or 2%, in fiscal 2019 compared to the year-ago period.

The increase in compensation and benefits was due to a 10% increase in average headcount, which contributed $41.4 million in higher salaries and related payroll taxes and a $13.5 million increase in amortization of long-term incentive awards.

Also contributing to the increase was higher performance-related bonus expense of $36.9 million, higher commission expense of $5.5 million and an increase in the use of outside contractors of $5.5 million all due to the need to service higher fee revenues from increased business.

Compensation and benefits expense, as a percentage of fee revenue, was 68% in both fiscal 2019 and 2018.

Consulting compensation and benefits expense increased by $9.4 million, or 3%, to $391.0 million in fiscal 2019 from $381.6 million in fiscal 2018.

Exchange rates favorably impacted compensation and benefits expense by $10.9 million, or 3%, in fiscal 2019 compared to the year-ago period.

The change was primarily due to $3.1 million in higher performance-related bonus expense, an increase in amortization of long-term incentive awards of $3.7 million and an increase in severance expense of $2.1 million.

Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 69% in fiscal 2019 from 71% in fiscal 2018.

Digital compensation and benefits expense increased by $17.4 million, or 15%, to $133.1 million in fiscal 2019 from $115.7 million in fiscal 2018.

Exchange rates favorably impacted compensation and benefits expense by $3.3 million, or 3%, in fiscal 2019 compared to the year-ago period.

The change was primarily due to an increase of $5.5 million in

commission expense , $ 3 .

3 million in higher performance-related bonus expense, an increase of $3.0 million in outside contractors due to the need to accommodate the growth in fee revenue and $1 .

9 million more in salaries and related payroll taxes in fiscal 2019 compared to the year-ago period.

Digital compensation and benefits expense, as a percentage of fee revenue, increased to 53% in fiscal 2019 from 47% in fiscal 2018.

Executive Search compensation and benefits expense increased by $33.8 million, or 7%, to $502.4 million in fiscal 2019 compared to $468.6 million in fiscal 2018.

Exchange rates favorably impacted compensation and benefits by $9.4 million, or 2%, in fiscal 2019 compared to the year-ago period.

The increase was due to higher performance-related bonus expense of $17.7 million due to the increase in fee revenue.

Also contributing to the increase was a 5% increase in average headcount, which contributed $13.0 million in higher salaries and related payroll taxes, and a $8.2 million increase in amortization of long-term incentive awards in fiscal 2019 compared to the year-ago period.

Executive Search compensation and benefits expense, as a percentage of fee revenue, decreased to 65% in fiscal 2019 from 66% in fiscal 2018.

RPO & Professional Search compensation and benefits expense increased by $41.4 million, or 21%, to $234.6 million in fiscal 2019 from $193.2 million in fiscal 2018.

Exchange rates favorably impacted compensation and benefits by $5.9 million, or 3%, in fiscal 2019 compared to the year-ago period.

The increase was due to higher salaries and related payroll taxes of $23.9 million resulting from a 32% increase in the average headcount in fiscal 2019 compared to fiscal 2018.

The higher average headcount and the $2.3 million increase in the use of outside contractors was primarily driven by the need to service an increase in fee revenue in the RPO business.

Also contributing to the increase in compensation and benefits was a higher performance-related bonus expense of $10.7 million.

RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, was 71% in both fiscal 2019 and 2018.

Corporate compensation and benefits expense increased by $10.1 million, or 25%, to $50.1 million in fiscal 2019 from $40.0 million in fiscal 2018.

The increase was primarily due to higher performance-related bonus expense, higher salaries and related payroll taxes, an increase in the use of outside contractors, higher stock-based compensation expense and an increase in amortization of long-term incentive awards of $2.0 million, $2.2 million, $1.1 million, $0.9 million and $0.6 million, respectively, in fiscal 2019 compared to the year-ago period.

The rest of the increase was due to a change in the cash surrender value (“CSV”) of COLI that increased compensation and benefits expense by $1.6 million in fiscal 2019 compared to the year-ago period.

General and Administrative Expenses

General and administrative expenses increased $114.6 million, or 48%, to $352.0 million in fiscal 2019 compared to $237.4 million in fiscal 2018.

Exchange rates favorably impacted general and administrative expenses by $8.3 million, or 3%, in fiscal 2019 compared to the year-ago period.

The increase in general and administrative expenses was due to the write-off of tradenames of $106.6 million related to the Plan, an increase of $3.0 million in legal and other professional expenses, higher marketing and business development expenses of $2.4 million and an increase in premise and office expense of $1.2 million in fiscal 2019 compared to the year-ago period.

General and administrative expenses, as a percentage of fee revenue, was 18% in fiscal 2019 compared to 13% in the year-ago period.

Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 13% in fiscal 2019.

Consulting general and administrative expenses increased by $77.8 million, or 114%, to $146.2 million in fiscal 2019 compared to $68.4 million in the year-ago period.

The increase in general and administrative expenses was mainly due to the write-off of tradenames of $77.0 million in fiscal 2019 compared to the year-ago period.

Consulting general and administrative expenses, as a percentage of fee revenue, was 26% in fiscal 2019 compared to 13% in fiscal 2018.

Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 12% in fiscal 2019 compared to 13% in fiscal 2018.

Digital general and administrative expenses increased by $28.1 million, or 94%, to $58.1 million in fiscal 2019 compared to $30.0 million in the year-ago period.

The increase in general and administrative expenses was mainly due to the write-off of tradenames of $29.6 million in fiscal 2019 compared to the year-ago period.

Digital general and administrative expenses, as a percentage of fee revenue, was 23% in fiscal 2019 compared to 12% in fiscal 2018.

Excluding the tradename write-offs, general and administrative expenses as a percentage of fee revenue was 11% in fiscal 2019 compared to 12% in fiscal 2018.

Executive Search general and administrative expenses increased by $4.4 million, or 6%, to $82.1 million in fiscal 2019 from $77.7 million in fiscal 2018.

The increase in general and administrative expenses was mainly due to $1.8 million more in premise and office expense and an increase of $0.9 million in legal and other professional expenses.

Also contributing to the increase were increases to travel-related expenses and marketing and business development expenses of $1.3 million and $0.7 million, respectively, in order to support the higher fee revenues generated in fiscal 2019 compared to the year-ago period.

Executive Search general and administrative expenses, as a percentage of fee revenue, was 11% in both fiscal 2019 and 2018.

RPO & Professional Search general and administrative expenses increased by $1.4 million, or 5% , to $28.1 million in fiscal 2019 from $26.7 million in fiscal 2018 .

The increase was due primarily to increases in premise and office expense of $1.1 million, in fiscal 2019 compared to the year-ago period.

RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, was 9% in fiscal 2019 compared to 10% in the year-ago period.

Corporate general and administrative expenses increased by $2.9 million, or 8%, to $37.5 million in fiscal 2019 compared to $34.6 million in fiscal 2018.

The increase was due primarily to increases in legal and other professional expenses and software licenses of $2.2 million and $1.7 million, respectively, in fiscal 2019 compared to the year-ago period.

This was offset by a foreign exchange gain of $1.0 million in fiscal 2019 compared to a foreign exchange loss of $1.2 million in fiscal 2018.

Cost of Services Expense

Cost of services expense consists primarily of non-billable contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search, Consulting and Digital.

Cost of services expense was $75.5 million in fiscal 2019 compared to $73.7 million in fiscal 2018.

Cost of services expense, as a percentage of fee revenue, was 4% in both fiscal 2019 and 2018.

Depreciation and Amortization Expenses

Depreciation and amortization expenses were $46.5 million, a decrease of $2.1 million, or 4%, in fiscal 2019 compared to $48.6 million in fiscal 2018.

The decrease was due to lower amortization expense associated with intangible assets as some of our intangible assets became fully amortized.

Operating Income

Operating income was $140.8 million, a decrease of $67.6 million, in fiscal 2019 compared to $208.4 million in fiscal 2018.

The decrease in operating income was primarily driven by the write-off of tradenames of $106.6 million, an increase of $112.1 million in compensation and benefits expense, and $8.0 million more in general and administrative expenses (excluding write-off of tradenames), offset by higher fee revenue of $158.8 million.

Consulting operating loss was $34.1 million, a decrease of $56.5 million in fiscal 2019 compared to operating income of $22.4 million in fiscal 2018.

The change was primarily due to the write-off of tradenames of $77.0 million and an increase of $9.4 million in compensation and benefits expense in fiscal 2019 compared to the year-ago period, offset by higher fee revenue of $27.8 million and a decrease in depreciation and amortization expense of $2.8 million.

Consulting operating loss, as a percentage of fee revenue, was 6% in fiscal 2019 compared to operating income, as a percentage of fee revenue, of 4% in fiscal 2018.

Excluding the tradename write-offs, operating income as a percentage of fee revenue was 8% in fiscal 2019 compared to 4% in fiscal 2018.

Digital operating income was $39.7 million, which decreased by $38.4 million, or 49% in fiscal 2019 compared to $78.1 million in fiscal 2018.

The change was primarily due to the write-off of tradenames of $29.6 million and an increase of $17.4 million in compensation and benefits expense in fiscal 2019 compared to the year-ago period, offset by higher fee revenue of $8.2 million.

Digital operating income, as a percentage of fee revenue was 16% and 32% in the fiscal 2019 and 2018, respectively.

Excluding the tradename write-offs, operating income as a percentage of fee revenue was 27% in fiscal 2019 compared to 32% in the year-ago period.

Executive Search operating income increased by $29.5 million, or 20%, to $179.1 million in fiscal 2019 compared to $149.6 million in fiscal 2018.

The increase in Executive Search operating income was driven by an increase in fee revenue of $65.8 million, offset by increases in compensation and benefits expense and general and administrative expenses of $33.8 million and $4.4 million, respectively.

Executive Search operating income, as a percentage of fee revenue, was 23% and 21% in fiscal 2019 and 2018, respectively.

RPO & Professional Search operating income was $50.9 million, an increase of $11.5 million, or 29%, in fiscal 2019 compared to $39.4 million in fiscal 2018.

The increase in operating income was driven by higher fee revenue of $56.9 million, offset by increases in compensation and benefits expense, cost of services expense and general and administrative expenses of $41.4 million, $2.4 million and $1.4 million, respectively.

RPO & Professional Search operating income, as a percentage of fee revenue, was 15% in fiscal 2019 compared to 14% in the year-ago period.

Net Income Attributable to Korn Ferry

Net income attributable to Korn Ferry decreased by $31.1 million to $102.7 million in fiscal 2019 compared $133.8 million in fiscal 2018.

The decrease was primarily driven by higher operating expenses of $221.9 million mainly due to the tradename write-off of $106.6 million and higher compensation and benefits expense of $112.1 million, partially offset by higher total revenue of $154.4 million and a lower income tax provision of $40.6 million compared to the year-ago period.

Net income attributable to Korn Ferry, as a percentage of fee revenue, was 5% in fiscal 2019 compared to 8% in the year-ago period.

Adjusted EBITDA

Adjusted EBITDA increased by $33.0 million to $311.0 million in fiscal 2019 compared to $278.0 million in fiscal 2018.

This increase was driven by higher fee revenue of $158.8 million, offset by an increases of $114.8 million in compensation and benefits expense (excluding integration costs), $8.0 million in general and administrative expenses (excluding write-off on tradenames), $1.8 million in cost of services and a decrease in other income, net of $1.0 million, primarily due to changes in the fair value of our marketable securities in fiscal 2019 compared to the year-ago period.

Adjusted EBITDA, as a percentage of fee revenue, was 16% in both fiscal 2019 and 2018.

Consulting Adjusted EBITDA was $66.5 million, an increase of $15.4 million, or 30%, in fiscal 2019 compared to $51.1 million in fiscal 2018.

The increase was driven by higher fee revenue of $27.8 million, offset by increases of $11.9 million in compensation and benefits expense (excluding integration costs) in fiscal 2019 compared to the year-ago period.

Consulting Adjusted EBITDA, as a percentage of fee revenue, was 12% fiscal 2019 compared to 9% in the year-ago period.

Digital Adjusted EBITDA was $84.5 million, decreased by $7.9 million, or 9%, in fiscal 2019 compared to $92.4 million in fiscal 2018.

The decrease was driven by increases of $17.5 million in compensation and benefits expense (excluding integration costs) offset by higher fee revenue of $8.2 million and a decrease in general and administrative expenses (excluding tradename write-offs) of $1.5 million in fiscal 2019 compared to the year-ago period.

Digital Adjusted EBITDA, as a percentage of fee revenue, was 33% in fiscal 2019 compared to 38% in the fiscal 2018.

Executive Search Adjusted EBITDA increased by $34.5 million, or 22%, to $193.8 million in fiscal 2019 compared to $159.3 million in fiscal 2018.

The increase was driven by higher fee revenue of $65.8 million and an increase in other income, net of $5.9 million, primarily due to changes in the fair value of our marketable securities in fiscal 2019 compared to the year-ago period, offset by increases of $33.8 million in compensation and benefits expense, $4.4 million in general and administrative expenses.

Executive Search Adjusted EBITDA, as a percentage of fee revenue, was 25% in fiscal 2019 compared to 22% in the year-ago period.

RPO & Professional Search Adjusted EBITDA was $54.4 million, an increase of $11.8 million, or 28%, in fiscal 2019 compared to $42.6 million in fiscal 2018.

The increase was driven by higher fee revenue of $56.9 million, offset by increases of $41.4 million in compensation and benefits expense, $2.4 million in cost of services and $1.4 million in general and administrative expenses, in fiscal 2019 compared to the year-ago period.

RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 16% in both fiscal 2019 and 2018.

Other Income, Net

Other income, net was $10.1 million in the fiscal 2019 compared to $11.1 million in the year-ago period.

The decrease was primarily due to smaller gains in the fair value of our marketable securities in fiscal 2019 compared to the year-ago period.

Interest Expense, Net

Interest expense, net primarily relates to our credit agreement and borrowings under our COLI policies, which was partially offset by interest earned on cash and cash equivalent balances.

Interest expense, net was $16.9 million in the fiscal 2019 compared to $13.8 million in the year-ago period.

Income Tax Provision

The provision for income tax was $29.5 million in the fiscal 2019 compared to $70.1 million in the year-ago period.

This reflects a 22% and 34% effective tax rate for fiscal 2019 and 2018, respectively.

The difference in the effective tax rate is primarily due to the enactment of the Tax Act which reduced the U.S.

corporate federal statutory income tax rate from 35% to 21%, as well as the excess tax benefit on stock-based awards that vested in fiscal 2019.

Net Income Attributable to Noncontrolling Interest

Net income attributable to noncontrolling interest was $2.1 million in both fiscal 2019 and 2018.

Liquidity and Capital Resources

The Company and its Board of Directors endorse a balanced approach to capital allocation.

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.

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.

Next, the Company’s capital allocation approach contemplates the return of a portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors discussed below and in the “Risk Factors” section of this Annual Report on Form 10-K.

Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Credit Agreement (defined below) as well as using excess cash to repay the Notes.

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 a ctual results of operations of the A cquired C ompanies are included in our consolidated financial statements from November 1, 2019, the effective date of the acquisition .

On November 1, 2019, we also adopted a restructuring plan to rationalize our cost structure to realize the efficiencies and operational improvement that these investments have enabled us to , or positioned us to , realize , and d uring fiscal 2020 , we recognized $ 18.1 million of restructuring charges associated with severance and recorded $ 2.8 million of integration/acquisition costs associated with abandonment of premises .

In light of the continuing uncertainty in worldwide economic conditions caused by the COVID-19 pandemic and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position, on April 20, 2020, we initiated a plan intended to adjust the Company’s cost base to the current economic environment and to position us to invest into the recovery.

The plan includes (i) a reduction in workforce and resulted in restructuring charges of $40.5 million associated with severance), (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization, and (iv) other cost saving measures relating to general and administrative expenses.

On November 1, 2019, we completed the acquisition of the Acquired Companies in the leadership development area for $108.6 million, net of cash acquired .

A ctual results of operations of the A cquired C ompanies are included in our consolidated financial statements from November 1, 2019, the effective date of the acquisition .

On November 1, 2019, we also adopted a restructuring plan to rationalize our cost structure to position us to realize efficiencies and operational improvements .

As previously discussed under the heading “Impact of COVID-19”, with the implementation of the restructuring plan that was initiated on April 20, 2020 to reduce, in part, our human capital expenditures, and the improved business activity we experienced in the second, third, and fourth quarter demonstrated by an increase in fee revenue compared to the first quarter of fiscal 2021, we believe our costs are in line with our current revenue levels, but given the unpredictable and fluid nature of the pandemic and its economic consequences our revenue levels could fall below our current levels.

Given the amount available from our current revolver and the amount of cash and cash equivalents and marketable securities net of amounts held in trust for deferred compensations and accrued bonuses, we believe that we have sufficient liquidity 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.

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.

The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, that commenced on June 15, 2020.

The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness.

6 unchanged sentences

See Note 11— Long-Term Debt for a description of the Credit Agreement.

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 April 30, 2020, after $4.0 million of standby letters of credit had been issued as of April 30, 2020.

We had $4.0 million and $2.9 million in standby letters of credit issued under our long-term debt arrangements as of April 30, 2020 and 2019, respectively.

We had a total of $646.0 million available under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) after $4.0 million of standby letters of credit had been issued as of April 30, 2021 and 2020.

We had a total of $11.0 million and $11.3 million of standby letters of credits with other financial institutions as of April 30, 2021 and 2020, respectively.

The standby letters of credits were generally issued as a result of entering into office premise leases.

The Board of Directors has adopted a dividend policy to distribute, to our stockholders, a regular quarterly cash dividend of $0.10 per share.

On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share.

Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend.

On June 21, 2021, the Board of Directors approved a 20% increase to our quarterly dividend, which is now at $0.12 per share.

The declaration and payment of future dividends under the quarterly dividend program will be at the discretion of the Board of Directors and will depend upon many factors, including our earnings, capital requirements, financial conditions, the terms of our indebtedness and other factors our Board of Directors may deem to be relevant.

4 unchanged sentences

Any decision to continue to execute our currently outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors.

The Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Credit Agreement, the consolidated net leverage ratio, which used adjusted EBITDA is no greater than 4.25 to 1.00, and the pro 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.

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, our total funded debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidated net leverage ratio”) is no greater than 4.00 to 1.00, and 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 indenture governing the Notes.

Our performance is subject to the general level of economic activity in the geographic regions and the industries we service.

We believe, based on current economic conditions, that our cash on hand and funds from operations and the 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.

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.

4 unchanged sentences

Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less.

Marketable securities consist of mutual funds and investments in commercial paper and corporate notes/bonds.

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.

Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and US Treasury and Agency securities.

The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, corporate notes/bonds and U.S.

Treasury and Agency securities are available for general corporate purposes .

As of April 30, 2021 and 2020, marketable securities of $246.4 million and $174.1 million, respectively, included equity securities of $175.6 million (net of gross unrealized gains of $30.0 million and gross unrealized losses of $0.1 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 $166.5 million and $132.1 million, respectively, are classified as non-current.

1 unchanged sentence

Unvested obligations under the deferred compensation plans totaled $26.5 million and $21.7 million as of April 30, 2021 and 2020, respectively.

The net increase in our working capital of $27.0 million as of April 30, 2020 compared to April 30, 2019 is primarily attributable to increases in cash and cash equivalents, marketable securities and a decrease in compensation and benefits payable, partially offset an increase in other accrued liabilities and operating lease liability, current as a result of implementing the new lease accounting standard.

Cash and cash equivalents increased due to cash flows from operations and net borrowings of $168.6 million as a result of our December 2019 Notes offering, offset by the repayment of the amount outstanding under our prior revolving credit facility.

The increase in marketable securities was due to purchases of debt securities during fiscal 2020, while the decrease in compensation and benefits was primarily due to a decrease in bonus accrual due to lower fee revenue and profitability caused by the impact of COVID-19 pandemic on sales and demand The increase in other accrued liabilities was due to restructuring charges incurred during fiscal 2020 and not yet paid and deferred revenue from the Acquired Companies.

Cash provided by operating activities was $236.3 million in fiscal 2020, a decrease of $22.5 million, compared to $258.8 million in fiscal 2019.

The net increase in our working capital of $124.2 million as of April 30, 2021 compared to April 30, 2020 is primarily attributable to increases in cash and cash equivalents and accounts receivables, partially offset by increases in compensation and benefits payable.

Cash and cash equivalents increased due to cash flows from operations and positive effect of exchange rate changes on cash and cash equivalents, partially offset by capital expenditures, net purchases of marketable securities, repurchases of common stock and dividends to shareholders.

The increase in compensation and benefits payable was primarily due to an increase in bonus liability on April 30, 2021 compared to April 30, 2020 and to a lesser extent an increase in the deferred compensation amounts due within a year .

The increase in accounts receivable was due to higher fee revenue in the fourth quarter of fiscal 2021 compared to year-ago period and the timing of when the revenue was recognized during the quarter.

In fiscal 2021 more revenue was generated towards the end of the quarter whereas in fiscal 2020 more revenue was generated at the beginning of the quarter.

Cash provided by operating activities was $251.4 million in fiscal 2021, an increase of $15.1 million, compared to $236.3 million in fiscal 2020.

Cash used in investing activities was $61.4 million in fiscal 2021 compared to $198.8 million in fiscal 2020.

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 the purchase of marketable securities net of sale/maturities of $39.9 million, partially offset by a decrease in premiums paid on the COLI policies of $19.2 million in fiscal 2020 compared to the year-ago period.

Cash provided by financing activities was $43.7 million in fiscal 2020 compared to cash used in financing activities of $64.6 million in fiscal 2019.

The change from cash used to cash provided by financing activities was primarily due to an increase in net proceeds from long term debt of $180.7 million in fiscal 2020 compared to 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 $11.7 million.

This was partially offset by $55.1 million more in common stock repurchases and a decrease in borrowings under COLI policies of $31.9 million in fiscal 2020 compared to fiscal 2019.

We had approximately $871.0 million of estimated remaining revenue under existing contracts as of April 30, 2020.

However, this should not be considered the amount of our future revenue as it does not take into consideration contracts that will be originated and recognized within the same future reporting periods.

Further, our contract terms and conditions allow for clients to increase or decrease the scope of services and such changes do not increase or decrease the estimated remaining revenue under contract until we have an enforceable right to payment.

A decrease in cash used in investing activities was primarily due to cash paid for the acquisition of the Acquired Companies of $108.6 million in fiscal 2020 and an increase in the proceeds received from life insurance policies.

Also contributing to a lower amount of cash used in investing activity was a decrease in the purchase of property and equipment in fiscal 2021 compared to fiscal 2020.

Cash used in financing activities was $66.9 million in fiscal 2021 compared to cash provided by financing activities of $43.7 million in fiscal 2020.

The change from cash provided to cash used in financing activities was primarily due to net proceeds from long term debt of $168.6 million in fiscal 2020 as a result of issuing the Notes in the year-ago period and paying off the amount outstanding under the prior revolving credit facility and an increase in payments on life insurance policy loans of $11.3 million.

This was partially offset by lower cash used to repurchase shares of common stock of $62.1 million.

Off-Balance Sheet Arrangements

13 unchanged sentences

Assumes COLI loans remain outstanding until receipt of death benefits on COLI policies and applies current interest rates on COLI loans ranging from 4.76% to 8.00% with total death benefits payable, net of loans under COLI contracts of $443.9 million at April 30, 2021.

Interest on the Notes payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020.

Interest on the Notes payable semi-annually in arrears on June 15 and December 15 of each year, commenced on June 15, 2020.

In addition to the contractual obligations above, we have liabilities related to certain employee benefit plans.

4 unchanged sentences

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.

As of April 30, 2020 and 2019, we held contracts with gross CSV of $238.7 million and $219.2 million, respectively.

As of April 30, 2021 and 2020, we held contracts with gross cash surrender value (“CSV”) of $241.3 million and $238.7 million, respectively.

Total outstanding borrowings against the CSV of COLI contracts were $80.0 million and $92.3 million as of April 30, 2021 and 2020, respectively.

2 unchanged sentences

Total death benefits payable, net of loans under COLI contracts, were $443.9 million and $451.7 million at April 30, 2021 and 2020, respectively.

Total death benefits increased in fiscal 2020 as compared to fiscal 2019 as we entered into additional insurance policies in order to fund future obligations under certain deferred compensation plans.

Long-Term Debt

3 unchanged sentences

At any time prior to December 15, 2022, we may use the proceeds of certain equity offerings to redeem up to 35% of the aggregate principal amount of the Notes, including any permitted additional Notes, at a redemption price equal to 104.625% of the principal amount and accrued and unpaid interest.

At any time and from time to time on or after December 15, 2022, we may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the twelve-month period beginning on December 15 of each of the years indicated:

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.

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.

5 unchanged sentences

During fiscal 2020, the average interest rate on amounts outstanding under the current Revolver and the prior revolver was 3.34%.

The average interest rate on amounts outstanding under the prior revolver was 3.50% for fiscal 2019.

As of April 30, 2020, there was no outstanding liability under the Revolver compared to $226.9 million as of April 30, 2019 under the prior revolver.

The unamortized debt issuance costs associated with the Credit Agreement were $4.2 million as of April 30, 2020 and $4.0 million under the Prior Credit Agreement as of April 30, 2019.

As of April 30, 2021 and 2020, there was no outstanding liability under the Revolver.

The unamortized debt issuance costs associated with the Credit Agreement were $3.3 million and $4.2 million as of April 30, 2021 and 2020, respectively.

As of April 30, 2021, we were in compliance with our debt covenants.

We had a total of $646.0 million available under the Revolver after $4.0 million of standby letters of credit had been issued as of April 30, 2020.

We had a total of $420.2 million available under the Prior Credit Agreement after we drew down $226.9 million and after $2.9 million of standby letters of credit had been issued as of April 30, 2019.

We had a total of $646.0 million available under the Revolver after $4.0 million of standby letters of credit had been issued as of April 30, 2021 and 2020.

We had a total of $11.0 million and $11.3 million of standby letters of credits with other financial institutions as of April 30, 2021 and 2020, respectively.

3 unchanged sentences

Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued guidance (Accounting Standard Codification 842 – Leases ) on accounting for leases that generally requires all leases to be recognized on the consolidated balance sheet.

The guidance became effective for fiscal years beginning after December 15, 2018.

On July 30, 2018, the FASB issued an amendment that allows entities to apply the provisions at the effective date without adjusting comparative periods.

We adopted this guidance as of May 1, 2019 using a modified retrospective approach without restatement of comparative periods.

As such, periods prior to the date of adoption are presented in accordance with Accounting Standard Codification 840 - Leases .

The FASB also issued subsequent related Accounting Standards Updates (“ASUs”), which detail amendments to the ASU, implementation considerations, narrow-scope improvements and practical expedients.

We elected to apply the group of practical expedients which allows us to carry forward our identification of contracts that are or contain leases, our historical lease classification and our initial direct costs for existing leases.

We also elected to combine lease and non-lease components for all asset classes and recognize leases with an initial term of 12 months or less on a straight-line basis without recognizing a ROU asset or operating lease liability.

The adoption of this standard had a material impact on the consolidated balance sheet as of May 1, 2019 due to the recognition of ROU assets and operating lease liabilities, but an immaterial impact on our consolidated statements of income, consolidated statements of comprehensive income, consolidated statements of stockholders’ equity, and consolidated statements of cash flows.

Upon adoption we recognized total ROU assets of $236.1 million with a corresponding liability of $272.3 million.

The ROU asset balance was adjusted by the reclassification of pre-existing

prepaid expenses and other assets and deferred rent balances of $ 5.1 million and $ 41.3 million, respectively.

In August 2017, the FASB issued guidance amending and simplifying the accounting for hedging activities.

The guidance refined and expanded strategies that qualify for hedge accounting and simplify the application of hedge accounting in certain situations.

The guidance is effective for fiscal years beginning after December 15, 2018.

In June 2016, the Financial Accounting Standards Board (the “FASB”) issued guidance on accounting for measurement of credit losses on financial instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables.

The standard became effective for fiscal years beginning after December 15, 2019.

We adopted this guidance as of May 1, 2020.

The adoption of this guidance did not have an impact on the consolidated financial statements.

Recently Proposed Accounting Standards - Not Yet Adopted

In June 2016, the FASB issued guidance on accounting for measurement of credit losses on financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables.

The standard is effective for fiscal years beginning after December 15, 2019.

We will adopt this guidance in our fiscal year beginning May 1, 2020.

The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued guidance simplifying the test for goodwill impairment.

The new guidance simplifies the test for goodwill impairment by removing Step 2 from the goodwill impairment test.

Companies will now perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value not to exceed the total amount of goodwill allocated to that reporting unit.

The adoption of this guidance did not have a material impact on the consolidated financial statements.

In January 2017, FASB issued guidance simplifying the test for goodwill impairment.

The new guidance simplified the test for goodwill impairment by removing Step 2 from the goodwill impairment test.

Companies now perform the goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, recognizing an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value not to exceed the total amount of goodwill allocated to that reporting unit.

An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.

The amendments of this standard are effective for goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted for goodwill impairment tests performed after January 1, 2017.

We will adopt this guidance in our fiscal year beginning May 1, 2020.

The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued guidance amending the disclosure requirements for fair value measurements.

The amendment removes and modifies disclosures that are currently required and adds additional disclosures that are deemed relevant.

The amendments of this standard are effective for fiscal years beginning after December 15, 2019.

We will adopt this guidance in our fiscal year beginning May 1, 2020.

We are currently evaluating the impact of adopting this guidance and do not anticipate the guidance to have a material impact on the consolidated financial statements.

In August 2018, the FASB issued guidance amending accounting for internal-use software.

The new guidance will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with developing or obtaining internal-use software.

The amendments of this standard are effective for fiscal years beginning after December 15, 2019 with early adoption permitted.

We will adopt this guidance in our fiscal year beginning May 1, 2020.

The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.

In December 2019, the FASB issued guidance on Simplifying the Accounting for Income Taxes.

This update eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The update also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill.

The amendments of this standard are effective for fiscal year beginning after December 15, 2020, with early adoption permitted.

We will adopt this guidance in our fiscal year beginning May 1, 2021.

The adoption of this guidance is not anticipated to have a material impact on the consolidated financial statements.

The amendments of this standard became effective for goodwill impairment tests in fiscal years beginning after December 15, 2019.

We adopted this guidance as of May 1, 2020.

The adoption of this guidance did not have a material impact on the consolidated financial statements.

In August 2018, FASB issued guidance amending the disclosure requirements for fair value measurements.

The amendment removed and modified disclosures that are currently required and added additional disclosures that are deemed relevant.

The amendments of this standard became effective for fiscal years beginning after December 15, 2019.

We adopted this guidance as of May 1, 2020.

The adoption of this guidance did not have a material impact on the consolidated financial statements.

In August 2018, FASB also issued guidance amending accounting for internal-use software.

The new guidance aligned the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with developing or obtaining internal-use software.

The amendments of this standard became effective for fiscal years beginning after December 15, 2019, with early adoption permitted.

We adopted this guidance as of May 1, 2020.

The adoption of this guidance did not have a material impact on the consolidated financial statements.

In December 2019, FASB issued guidance on Simplifying the Accounting for Income Taxes.

This update eliminated certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income

taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

The update also simplified aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarified the accounting for transactions that result in a step-up in the tax basis of goodwill.

The amendments of this standard are effective for fiscal year s beginning after December 15, 2020, with early adoption permitted.

We early adopted this guidance in fiscal year beginning May 1, 2020 .

The adoption of this guidance did not have a material impact on the consolidated financial statements .

Recently Proposed Accounting Standards - Not Yet Adopted

In March 2020, FASB issued guidance on Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

This guidance provides optional expedients and exceptions to the guidance on contract modifications and hedge accounting related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative rates.

Entities can elect to adopt this guidance as of any date within an interim period that includes or is subsequent to March 12, 2020 and can adopt it for new contracts and contract modifications entered into through December 31, 2022.

We will adopt this guidance in our fiscal year beginning May 1, 2022 and we may elect to apply the amendments prospectively through December 12, 2022.

We are currently evaluating the impact of this accounting guidance, but do not anticipate that it will have a material impact on the consolidated financial statements.

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.

What changed 10-K

Item 7. Management’s Discussion and Analysis