KORN FERRY 10-K

Item 9A. Controls and Procedures a) Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this Annual Report on Form 10-K, management, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures and internal controls over financial reporting. Based on their evaluation of our disclosure controls and procedures conducted as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act of 1934 (the “Exchange Act”)) are effective as of April 30, 2021. b) Changes in Internal Control over Financial Reporting. There were no changes in our internal control over financial reporting during the fourth fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting. See Management’s Report on Internal Control Over Financial Reporting and Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting on pages F-2 and F-3, respectively. Item 9B. Other Information Named Executive Officer Employment Agreements On June 28, 2021, the Company entered into (1) an amended and restated employment agreement with Gary Burnison (the “Burnison Agreement”), (2) an amended and restated employment agreement with Robert Rozek (the “Rozek Agreement”), (3) an employment agreement with Byrne Mulrooney (the “Mulrooney Agreement”) and (4) an employment agreement with Mark Arian (the “Arian Agreement” and collectively, the “NEO Agreements” and each, an “NEO Agreement”). Each NEO Agreement supersedes the executive’s prior employment agreement or letter, as the case may be. The NEO Agreements are terminable on notice by either party (on ninety days’ notice if by the executive or 30 days’ notice in the case of termination for “Good Reason”, as defined in the applicable NEO Agreement). The NEO Agreements provide for the following annual compensation: (1) an annual base salary, effective July 1, 2021, of $1,000,000 for Mr. Burnison, $625,000 for Mr. Rozek and $550,000 for each of Messrs. Mulrooney and Arian; (2) participation in the Company’s annual cash incentive plan with an annual target award of 150% of annual base salary for Mr. Burnison, 120% of annual base salary for Mr. Rozek and 100% of annual base salary for Messrs. Mulrooney and Arian, and the ability to earn additional amounts up to a maximum cash award of 200% of the applicable target bonus opportunity for each executive; and (3) subject to approval of the Compensation and Personnel Committee of the Board of Directors, participation in the Company’s equity incentive program. In addition, the executives are eligible to participate in employee benefit plans, arrangements and programs maintained from time to time by the Company for the benefit of senior executives. The Burnison Agreement provides for continuation of the Retention Award originally granted under his previous employment agreement with the Company dated March 30, 2018 in the amount of $5 million, which cliff vests on March 30, 2022 (the “Retention Vesting Date”). Under the Burnison Agreement, interest will accrue on the Retention Award from March 30, 2022 until Mr. Burnison’s termination of employment at 120% of the long-term Applicable Federal Rate as in effect from time to time. The Retention Award, together with accrued interest, will be paid in equal monthly installments in cash (without further interest) over twelve months following Mr. Burnison’s termination of employment for any reason (other than termination by the Company for “Cause”, as defined in the Burnison Agreement) on or after the Retention Vesting Date. Payment of the Retention Award will be conditioned on Mr. Burnison’s execution and delivery of a general release of claims and his compliance with restrictive covenants relating to confidentiality, nonsolicitation and noncompetition. Upon any termination of Mr. Burnison’s employment on or after the Retention Vesting Date (other than by the Company for Cause or due to death or Disability (as defined in the NEO Agreements)), all unvested equity awards granted on or after March 30, 2018 (and at least 90 days prior to such termination, other than with respect to a termination by the Company without Cause or a termination by Mr. Burnison for Good Reason (as defined in the Burnison Agreement) (an “Involuntary Termination”) during such 90-day period, in which case, there shall be no such 90-day requirement) will continue to vest in accordance with their terms, disregarding such termination. Such continued vesting will be conditioned on Mr. Burnison’s execution and delivery of a general release of claims and his compliance with restrictive covenants relating to confidentiality, 56 nonsolicitation and noncompetition. As an exception, the post-Change in Control double trigger equity severance vesting rules described below would continue to apply in the event of an Involuntary Termination within 24 months after a Change in Control (as defined in the NEO Agreements). Under each NEO Agreement, if the executive’s employment terminates due to death or Disability, then he, or his legal representatives, would receive: (1) all accrued compensation as of the date of termination; (2) full vesting of all outstanding stock options, other equity-type incentives (excluding performance shares) and benefits under the Executive Capital Accumulation Plan (“ECAP”); (3) a pro rata portion of his target annual cash incentive award for the fiscal year in which his employment terminated; (4) the number of performance shares that would have been earned if he had served the Company for the entire performance period and the target performance had been achieved; and (5) reimbursement of COBRA coverage premiums for the executive and his dependents for as long as such coverage was available under COBRA. In addition, for Mr. Burnison, any unvested amount of the Retention Award would vest. If the Company terminates the executive’s employment for Cause at any time or he voluntarily terminates his employment without Good Reason, then the Company would pay him accrued compensation through the date of termination. If the executive’s employment is Involuntarily Terminated prior to a Change in Control or more than 24 months after a Change in Control, then he will be entitled to the following: (1) his accrued compensation; (2) a pro rata portion of his annual cash incentive award, based on actual Company performance, for the year in which his employment terminated; (3) in the case of Mr. Burnison, solely if such termination occurs prior to the Retention Vesting Date, cash payments equal to the greater of (i) the sum of one and one-half times his then current annual base salary and one and one-half times his target annual cash incentive award, or (ii) the prorated amount of the Retention Award based on days worked from March 30, 2018 until the date of termination; and in the case of the other executives, cash payments equal to one and one-half times his then current annual base salary and one and one-quarter times his target annual cash incentive award; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for the executive and his dependents for as long as such coverage was available under COBRA; (5) in the case of Mr. Burnison, solely if such termination occurs prior to the Retention Vesting Date, and Mr. Rozek, all outstanding stock options, other equity-type incentives, other long term awards and all benefits held under the ECAP (excluding performance awards) (collectively, the “Time Vested Awards”) will continue to vest in accordance with their terms (disregarding such termination) and, in the case of Messrs. Mulrooney and Arian, the Time Vested Awards that would have vested within 12 months of termination will become fully vested as of the date of such termination; and (6) in the case of Mr. Burnison, solely if such termination occurs prior to the Retention Vesting Date, and Mr. Rozek, the performance awards will vest based on actual performance through the entire performance period and, in the case of Messrs. Mulrooney and Arian, a pro rata portion of the performance awards will vest based on actual performance during the entire performance period and the number of days the executive was employed during the performance period plus an additional year (provided this number of days does not exceed the number of days in the performance period). If the executive’s employment is Involuntarily Terminated within 24 months following a Change in Control, then he will be entitled to the following: (1) his accrued compensation; (2) a pro rata portion of his target annual cash incentive award; (3) in the case of Mr. Burnison, cash payments equal to three times his current annual base salary, three times his target annual cash incentive award and the amount of the Retention Award (to the extent not yet paid) and, in the case of Messrs. Rozek, Mulrooney and Arian, cash payments equal to two and one-half times the executive’s current annual base salary and two and one-half times the executive’s target annual cash incentive award; (4) for up to 18 months after termination, reimbursement of COBRA coverage premiums for him and his dependents for so long as such coverage is available under COBRA and for six months thereafter, reimbursement of a portion of the cost of healthcare coverage for him and his dependents; (5) vesting on the date of termination of all outstanding Time Vesting Awards; and (6) a number of performance awards equal to the greater of (i) the performance awards that would have been earned if the executive had served for the Company for the entirety of any open performance period and the Company’s performance during such period had been the Company’s actual performance through the date of the Change in Control and at the target level for the period subsequent to the Change in Control and (ii) the performance awards that would have been earned if the executive had served the Company for the entirety of any open performance period and the Company’s performance during such period had been at the target level of performance for the entire performance period. If Mr. Rozek terminates his employment due to Retirement (as defined in the Rozek Agreement), he will be entitled to the following: (1) his accrued compensation; (2) Time Vested Awards that have been outstanding for more than 90 days will continue to vest in accordance with their terms (disregarding such termination); and (3) performance awards that have been outstanding for more than 90 days will vest based on actual performance through the entire performance period. Mr. Rozek is required to provide six months’ notice prior to terminating his employment due to Retirement. 57 Under the NEO Agreements, the severance benefits described above are conditioned on the executive’s execution and delivery of a general release and compliance with covenants relating to confidentiality, nonsolicitation and noncompetition. In addition, in the event of a Change in Control, the NEO Agreements provide that any payments contingent on a Change in Control that would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code will be reduced by an amount equal to the smallest amount possible such that no payment would be subject to such excise tax; provided that if, without any reduction in payments, the net amount retained by the executive, after subtracting all taxes imposed thereon, would exceed the after-tax amount that would be retained by him after the reduction described above, then no reduction in payments will be made. The NEO Agreements also provide for indemnification of the executives to the fullest extent permitted by applicable law and the Company’s governing instruments in connection with suits or proceedings arising by reason of the fact that he is or was a director, officer or employee of the Company. A copy of the NEO Agreements are attached as Exhibits 10.53, 10.54, 10.55 and 10.56 to this Annual Report. Long-Term Performance Unit Plan and Executive Capital Accumulation Plan On June 24, 2021, the Compensation and Personnel Committee (the “Committee”) of the Board of Directors of the Company amended and restated the Company’s Long-Term Performance Unit Plan (the “LTPUP”) and Executive Capital Accumulation Plan (the “ECAP”), effective as of July 1, 2021. The Committee amended and restated the LTPUP to provide that unit awards made thereunder on or after July 1, 2021 will have a total value upon becoming fully vested of $62,500, generally payable over five years in equal annual installments subject to the terms and conditions of the LTPUP, including the alternate payment provisions provided therein. The Committee amended and restated both the LTPUP and the ECAP to provide that, following the occurrence of a Change in Control Event (as defined in the applicable plan), a participant’s rights with respect to vested benefits under the plans may not be terminated due to the participant engaging in Detrimental Activity (as defined in the applicable plan). In addition, under the ECAP, if a participant’s employment is terminated on or following a Change in Control Event by the Company for any reason (other than for Cause, as defined in the ECAP) or due to the Participant’s retirement on or after attaining age 65, then the participant will become 100% vested in all amounts under the ECAP. A copy of the ECAP and the LTPUP are attached as Exhibits 10.50 and 10.51 to this Annual Report. 58 PART III. Item 10. Directors, Executive Officers and Corporate Governance The information required by this Item will be included under the captions “The Board of Directors” and, when applicable, “Delinquent Section 16(a) Reports” and elsewhere in our 2021 Proxy Statement and is incorporated herein by reference. The information under the heading “Information about our Executive Officers” in Part I of this Annual Report on Form 10-K is also incorporated by reference in this section. We have adopted a “Code of Business Conduct and Ethics” that applies to all of our directors, officers and employees, including our principal executive officer (who is our Chief Executive Officer), principal financial officer, and principal accounting officer (who is our Chief Financial Officer) and senior financial officers, or persons performing similar functions. The Code of Business Conduct and Ethics is available on the Investor Relations portion of our website at http://ir.kornferry.com . If, or when, applicable we will disclose amendments to certain provisions of the Code of Business Conduct and Ethics and waivers of the Code of Business Conduct and Ethics granted to executive officers and directors on our website within four business days following the date of the amendment or waiver. Item 11. Executive Compensation The information required by this Item will be included under the captions “Compensation Discussion and Analysis” and “Compensation of Executive Officers and Directors” and elsewhere in our 2021 Proxy Statement and is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information required by this Item will be included under the caption “Security Ownership of Certain Beneficial Owners and Management” and elsewhere in our 2021 Proxy Statement and is incorporated herein by reference. Item 13 . Certain Relationships and Related Transactions, and Director Independence The information required by this Item will be included under the caption “Certain Relationships and Related Transactions” and elsewhere in our 2021 Proxy Statement and is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information required by this Item will be included under the captions “Fees Paid to Ernst & Young LLP” and “Audit Committee Pre-Approval Policies and Procedures,” and elsewhere in our 2021 Proxy Statement, and is incorporated herein by reference. 59 PART IV. Item 15. Exhibits and Financial Statement Schedules Financial Statements. a) The following documents are filed as part of this report: 1. Index to Financial Statements : Page See Consolidated Financial Statements included as part of this Annual Report on Form 10-K and Schedule II — Valuation and Qualifying Accounts. Pursuant to Rule 7-05 of Regulation S-X, the other schedules have been omitted as the information to be set forth therein is included in the notes of the audited consolidated financial statements. F-1 Exhibits: Exhibit Number Description 2.1+ Stock Purchase Agreement by and between HG (Bermuda) Limited and Korn/Ferry International, dated as of September 23, 2015, filed as Exhibit 2.1 to the Company’s Form 8-K, filed September 24, 2015. 2.2+ Letter Agreement dated November 30, 2015, by and between Korn/Ferry International and HG (Bermuda) Limited, filed as Exhibit 2.1 to the Company’s Form 8-K, filed December 2, 2015. 2.3+ Letter Agreement dated April 19, 2018, by and between Korn/Ferry International and HG (Bermuda) Limited. 3.1+ Restated Certificate of Incorporation of the Company, dated January 7, 2019, filed as Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q, filed March 11, 2019. 3.2+ Seventh Amended and Restated Bylaws, effective January 1, 2019, filed as Exhibit 3.2 to the Company’s Report on Form 8-K, filed December 13, 2018. 4.1+ Form of Common Stock Certificate of the Company, filed as Exhibit 4.1 to the Company's Annual Report on Form 10-K, filed June 28, 2019. 4.2+ Description of Securities, filed as Exhibit 4.2 to the Company's Annual Report on Form 10-K, filed June 28, 2019. 4.3+ Indenture, dated as of December 16, 2019, by and among Korn Ferry, an issuer, certain subsidiaries of Korn Ferry, as guarantors thereto, and Wells Fargo Bank, National Association, as trustee, filed as Exhibit 4.1 to the Company’s Form 8-K, filed December 16, 2019. 10.1*+ Form of Indemnification Agreement between the Company and some of its executive officers and directors, filed as Exhibit 10.1 to the Company’s Registration Statement on Form S-1/A (No. 333-61697), filed December 24, 1998. 10.2*+ Form of U.S. and International Worldwide Executive Benefit Retirement Plan, filed as Exhibit 10.3 to the Company’s Registration Statement on Form S-1/A (No. 333-61697), filed September 4, 1998. 10.3*+ Form of U.S. and International Worldwide Executive Benefit Life Insurance Plan, filed as Exhibit 10.4 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 10.4*+ Worldwide Executive Benefit Disability Plan (in the form of Long-Term Disability Insurance Policy), filed as Exhibit 10.5 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 10.5*+ Form of U.S. and International Enhanced Executive Benefit and Wealth Accumulation Plan, filed as Exhibit 10.6 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 10.6*+ Form of U.S. and International Senior Executive Incentive Plan, filed as Exhibit 10.7 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 10.7*+ Executive Salary Continuation Plan, filed as Exhibit 10.8 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 10.8*+ Form of Amended and Restated Stock Repurchase Agreement, filed as Exhibit 10.10 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 10.9*+ Form of Standard Employment Agreement, filed as Exhibit 10.11 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 10.10*+ Form of U.S. and Foreign Executive Participation Program, filed as Exhibit 10.27 to the Company’s Registration Statement on Form S-1 (No. 333-61697), filed September 4, 1998. 60 10.11*+ Korn/Ferry International Second Amended and Restated Performance Award Plan, filed as Appendix A to the Company’s Definitive Proxy Statement, filed August 12, 2004. 10.12*+ Form of Indemnification Agreement between the Company and some of its executive officers and directors, filed as Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q, filed March 12, 2004. 10.13*+ Form of Restricted Stock Unit Award Agreement to Directors Under the Performance Award Plan, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed December 10, 2007. 10.14*+ Form of Stock Option Agreement to Employees and Non-Employee Directors Under the Korn/Ferry International 2008 Stock Incentive Plan, filed as Exhibit 10.3 to the Company’s Form 8-K, filed June 12, 2009. 10.15*+ Korn/Ferry International Executive Capital Accumulation Plan, filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-8 (No. 333-111038), filed December 10, 2003. 10.16*+ Korn Ferry Amended and Restated Employee Stock Purchase Plan, filed as Exhibit 10.17 to the Company’s Annual Report on Form 10-K, filed June 28, 2019. 10.17*+ Employment Agreement between the Company and Robert Rozek, filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed February 21, 2012. 10.18*+ Second Amended and Restated Korn/Ferry International 2008 Stock Incentive Plan, filed as Exhibit 10.1 to the Company’s Form 8-K, filed October 2, 2012. 10.19*+ Form of Restricted Stock Unit Award Agreement to Non-Employee Directors Under the 2008 Stock Incentive Plan, filed as Exhibit 10.38 to the Company’s Annual Report on Form 10-K, filed June 25, 2013. 10.20*+ Form of Restricted Stock Unit Award Agreement to Employees Under the 2008 Stock Incentive Plan, filed as Exhibit 10.39 to the Company’s Annual Report on Form 10-K, filed June 25, 2013. 10.21*+ Letter Agreement between the Company and Byrne Mulrooney dated June 26, 2014, filed as Exhibit 10.33 to the Company’s Annual Report on Form 10-K, filed June 27, 2014. 10.22*+ Amended and Restated Korn Ferry Executive Capital Accumulation Plan, as of January 1, 2019, filed as Exhibit 10.23 to the Company’s Annual Report on Form 10-K, filed June 28, 2019. 10.23*+ Amended and Restated Korn Ferry Executive Capital Accumulation Plan, as of December 4, 2019, filed as Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed March 11, 2020. 10.24*+ Form of Indemnification Agreement between the Company and some of its directors and executive officers, filed as Exhibit 10.1 to the Company’s Form 8-K, filed June 15, 2015. 10.25*+ Amendment to Employment Agreement dated December 28, 2015 between the Company and Robert Rozek, filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q, filed March 10, 2016. 10.26*+ Korn Ferry Long Term Performance Unit Plan, filed as Exhibit 10.26 to the Company's Annual Report on Form 10-K, filed June 28, 2019. 10.27*+ Korn Ferry Long Term Performance Unit Plan Form of Unit Award Agreement, filed as Exhibit 10.27 to the Company's Annual Report on Form 10-K, filed June 28,2019. 10.28*+ Amended and Restated Korn Ferry Long Term Performance Unit Plan, as of December 4, 2019, filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q, filed March 11, 2020. 10.29*+ Third Amendment and Restated Korn Ferry 2008 Stock Incentive Plan, filed as Exhibit 10.28 to the Company’s Annual Report on Form 10-K, filed June 28, 2019. 10.30*+ Fourth Amended and Restated Korn Ferry 2008 Stock Incentive Plan, filed as Exhibit 10.1 to the Company's Form 8-K, filed October 7, 2019. 10.31*+ Summary of Non-Employee Director Compensation Program Effective December 7, 2016, filed as Exhibit 10.1 to the Company’s 10-Q, filed March 10, 2017. 10.32*+ Letter Agreement between the Company and Mark Arian, dated March 17, 2017, filed as Exhibit 10.48 to the Company’s Annual Report on Form 10-K, filed June 28, 2017. 10.33*+ Form of Restricted Stock Unit Award Agreement to Non-Employee Directors under the 2008 Stock Incentive Plan, filed as Exhibit 10.31 to the Company's Annual Report on Form 10-K, filed June 28, 2019. 10.34*+ Form of Performance Restricted Stock Unit Award Agreement Under the 2008 Stock Incentive Plan, filed as Exhibit 10.32 to the Company's Annual Report on Form 10-K, filed June 28, 2019. 10.35*+ Form of Restricted Stock Unit Award Agreement to Employees Under the 2008 Stock Incentive Plan, filed as Exhibit 10.33 to the Company's Annual Report on Form 10-K, filed June 28, 2019. 10.36*+ Form of Restricted Stock Award Agreement to Employees Under the 2008 Stock Incentive Plan, filed as Exhibit 10.34 to the Company's Annual Report on Form 10-K, filed June 28, 2019. 61 10.37*+ Amended and Restated Employment Agreement dated March 30, 2018 between the Company and Gary Burnison, filed as Exhibit 10.1 to the Company’s Form 8-K, filed April 4, 2018. 10.38+ Amended and Restated Credit Agreement, dated December 19, 2018, by and among the Company and Wells Fargo, National Association, as administrative agent and other lender parties thereto, filed as Exhibit 10.1 to the Company’s Form 8-K, filed December 20, 2018 . 10.39+ Credit Agreement, dated December 16, 2019, by and among Korn Ferry, Bank of America, N.A., as administrative agent, and other lender parties thereto, filed as Exhibit 10.1 to the Company’s Form 8-K, filed December 16, 2019. 10.40*+ Amendment to Amended and Restated Employment Agreement dated March 30, 2018 between the Company and Gary Burnison, filed as Exhibit 10.1 to the Company’s Form 8-K, filed April 17, 2020. 10.41*+ Amendment to Employment Agreement dated February 6, 2012 between the Company and Robert Rozek, as amended by that Amendment thereto dated December 28, 2015, filed as Exhibit 10.2 to the Company’s Form 8-K, filed April 17, 2020. 10.42*+ Amendment to Employment Letter dated June 26, 2014 between the Company and Byrne Mulrooney, filed as Exhibit 10.3 to the Company’s Form 8-K, filed April 17, 2020. 10.43*+ Amendment to Employment Letter dated March 17,2017 between the Company and Mark Arian, filed as Exhibit 10.4 to the Company’s Form 8-K, filed April 17, 2020. 10.44*+ Amended and Restated Korn Ferry Long Term Performance Unit Plan, effective June 1, 2020, filed as Exhibit 10.44 to the Company’s Annual Report on Form 10-K, filed July 15, 2020. 10.45*+ Korn Ferry Amended and Restated Employee Stock Purchase Plan, effective July 1, 2020, filed as Exhibit 10.45 to the Company’s Annual Report on Form 10-K, filed July 15, 2020. 10.46*+ Amendment to Amended and Restated Employment Agreement dated March 30, 2018 between the Company and Gary Burnison and the Letter Agreement dated April 14, 2020, filed as Exhibit 10.1 to the Company’s Form 8-K, filed July 10, 2020 . 10.47*+ Amendment to Employment Agreement dated February 6, 2012 between the Company and Robert Rozek, as amended by that Amendment thereto dated December 28, 2015 and the Letter Agreement dated as of April 14, 2020, filed as Exhibit 10.2 to the Company’s Form 8-K, filed July 10, 2020. 10.48*+ Amendment to Employment Letter dated June 26, 2014 between the Company and Byrne Mulrooney and the Letter Agreement dated as of April 14, 2020, filed as Exhibit 10.3 to the Company’s Form 8-K, filed July 10, 2020. 10.49*+ Amendment to Employment Letter dated March 17, 2017 between the Company and Mark Arian and the Letter Agreement dated as of April 14, 2020, filed as Exhibit 10.4 to the Company’s Form 8-K, filed July 10, 2020. 10.50* Amended and Restated Korn Ferry Executive Capital Accumulation Plan, effective July 1, 2021. 10.51* Amended and Restated Korn Ferry Long Term Performance Unit Plan, effective July 1, 2021. 10.52* Form of Unit Award Agreement under Amended and Restated Korn Ferry Long Term Performance Unit Plan. 10.53* Amended and Restated Employment Agreement dated June 28, 2021 between the Company and Gary Burnison. 10.54* Amended and Restated Employment Agreement dated June 28, 2021 between the Company and Robert Rozek. 10.55* Employment Agreement dated June 28, 2021 between the Company and Byrne Mulrooney. 10.56* Employment Agreement dated June 28, 2021 between the Company and Mark Arian. 21.1 Subsidiaries of Korn Ferry. 23.1 Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (contained on signature page). 31.1 Chief Executive Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act. 31.2 Chief Financial Officer Certification pursuant to Rule 13a-14(a) under the Exchange Act. 32.1 Chief Executive Officer and Chief Financial Officer Certification pursuant to 18 U.S.C. Section 1350. 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. 62 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 This cover page from the Company’s Annual Report on Form 10-K for the year ended April 30, 2021, had been formatted in Inline XBRL and included as Exhibit 101. * Management contract, compensatory plan or arrangement. + Incorporated herein by reference. Item 16. Form 10-K Summary None 63 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Korn Ferry By: /s/ Robert P. Rozek Robert P. Rozek Executive Vice President, Chief Financial Officer and Chief Corporate Officer Date: June 28, 2021 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and directors of the registrant hereby constitutes and appoints Jonathan M. Kuai and Gary D. Burnison, and each of them, as lawful attorney-in-fact and agent for each of the undersigned (with full power of substitution and resubstitution, for and in the name, place and stead of each of the undersigned officers and directors), to sign and file with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, any and all amendments, supplements and exhibits to this report and any and all other documents in connection therewith, hereby granting unto said attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or desirable to be done in order to effectuate the same as fully and to all intents and purposes as each of the undersigned might or could do if personally present, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or any of their substitutes, may do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ CHRISTINA A. GOLD Christina A. Gold Chairman of the Board and Director June 28, 2021 /s/ GARY D. BURNISON Gary D. Burnison President & Chief Executive Officer (Principal Executive Officer) and Director June 28, 2021 /s/ ROBERT P. ROZEK Robert P. Rozek Executive Vice President, Chief Financial Officer and Chief Corporate Officer (Principal Financial Officer and Principal Accounting Officer) June 28, 2021 /s/ DOYLE N. BENEBY Doyle N. Beneby Director June 28, 2021 /s/ J ERRY LEAMON Jerry Leamon Director June 28, 2021 /s/ A NGEL MARTINEZ Angel Martinez Director June 28, 2021 /s/ D EBRA J. PERRY Debra J. Perry Director June 28, 2021 /s/ L ORI ROBINSON Lori Robinson Director June 28, 2021 /s/ G EORGE T. SHAHEEN George T. Shaheen Director June 28, 2021 64 KORN FERRY AND SUBSIDIARIES INDEX TO CONSOLIDATED FINANCIAL STATEMENTS APRIL 30, 2021 Page Management’s Report on Internal Control over Financial Reporting F-2 Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting F-3 Report of Independent Registered Public Accounting Firm F-4 Consolidated Balance Sheets as of April 30, 2021 and 2020 F-6 Consolidated Statements of Income for the years ended April 30, 2021, 2020, and 2019 F-7 Consolidated Statements of Comprehensive Income for the years ended April 30, 2021, 2020, and 2019 F-8 Consolidated Statements of Stockholders’ Equity for the years ended April 30, 2021, 2020, and 2019 F-9 Consolidated Statements of Cash Flows for the years ended April 30, 2021, 2020, and 2019 F-10 Notes to Consolidated Financial Statements F-11 Financial Statements Schedule II – Valuation and Qualifying Accounts F-45 F-1 MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management of Korn Ferry (the “Company”) is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the Securities and Exchange Commission, internal control over financial reporting is a process designed by, or supervised by, the issuer’s principal executive and principal financial officers, and effected by the issuer’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. The Company’s internal control over financial reporting is supported by written policies and procedures, that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In connection with the preparation of the Company’s annual financial statements, management of the Company has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of April 30, 2021 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of the Company’s internal control over financial reporting. Based on this assessment, management did not identify any material weakness in the Company’s internal control over financial reporting, and management has concluded that the Company’s internal control over financial reporting was effective as of April 30, 2021. Ernst & Young LLP, the independent registered public accounting firm that audited the Company’s financial statements for the year ended April 30, 2021 included in this Annual Report on Form 10-K, has issued an audit report on the effectiveness of the Company’s internal control over financial reporting as of April 30, 2021, a copy of which is included in this Annual Report on Form 10-K. June 28, 2021 F-2 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING To the Stockholders and Board of Directors of Korn Ferry: Opinion on Internal Control over Financial Reporting We have audited Korn Ferry and subsidiaries’ internal control over financial reporting as of April 30, 2021, based on criteria established in Internal Control— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Korn Ferry and subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of April 30, 2021, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of April 30, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended April 30, 2021 and the related notes and the financial statement schedule listed in the index at Item 15(a) and our report dated June 28, 2021 expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Los Angeles, California June 28, 2021 F-3 REPORT OF INDEPEN DENT REGISTERED PUBLIC ACCOUNTING FIRM To the Stockholders and Board of Directors of Korn Ferry Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Korn Ferry and subsidiaries (the “Company”) as of April 30, 2021 and 2020, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for each of the three years in the period ended April 30, 2021 and the related notes and the financial statement schedule listed in the index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at April 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended April 30, 2021, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of April 30, 2021, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated June 28, 2021 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue recognition Description of the Matter As described in Note 1 to the consolidated financial statements, the Company recognizes revenue when control of the goods and services are transferred to the customer. Revenue recognition includes management estimates of uptick fee variable consideration for Search engagements and estimates of the total hours at completion used to recognize revenue as services are rendered under Consulting contracts. Auditing revenue recognition was complex due to the volume of transactions within the various revenue streams with each revenue stream representing a different pattern of revenue recognition. Auditing revenue recognition also incorporates testing the underlying data supporting management estimates mentioned above that are used in recognizing revenues under Search and Consulting contracts. F-4 How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company’s processes and controls related to the recognition of each revenue stream, including, among others, controls over management review of contractual terms, management’s determination of when control of goods and services are transferred to customers as well as management’s review of the accuracy and completeness of underlying data used in the estimates mentioned above. Our audit procedures included, among others, testing a sample of contracts to determine whether terms that may affect revenue recognition were identified and properly considered, performance obligations were appropriately identified in the Company’s evaluation of the accounting for the contracts and revenue was recognized when control of the goods or services is transferred to the customer. In addition, we tested management estimates mentioned above. For Search contracts, we compared the estimates of uptick fee revenues to historical actual data for a portfolio of similar contracts. For Consulting contracts, we compared the data used in the estimate of the total hours at completion to time reports for work completed to date, recalculated the percentage of completion and assessed the reasonableness of management’s estimates to complete based on an understanding of the current status of the contracts. We also performed analysis over contracts completed during the year to determine whether there are significant changes in the estimate from initiation to completion of contracts. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2002. Los Angeles, California June 28, 2021 F-5 KORN FERRY AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS April 30, 2021 2020 (in thousands, except per share data) ASSETS Cash and cash equivalents $ 850,778 $ 689,244 Marketable securities 63,667 41,951 Receivables due from clients, net of allowance for doubtful accounts of $ 29,324 and $ 23,795 at April 30, 2021 and 2020, respectively 448,733 397,165 Income taxes and other receivables 40,024 38,755 Unearned compensation 53,206 43,117 Prepaid expenses and other assets 30,724 26,851 Total current assets 1,487,132 1,237,083 Marketable securities, non-current 182,692 132,134 Property and equipment, net 131,778 142,728 Operating lease right-of-use assets, net 174,121 195,077 Cash surrender value of company-owned life insurance policies, net of loans 161,295 146,408 Deferred income taxes 73,106 55,479 Goodwill 626,669 613,943 Intangible assets, net 92,949 111,926 Unearned compensation, non-current 102,356 79,510 Investments and other assets 24,428 29,540 Total assets $ 3,056,526 $ 2,743,828 LIABILITIES AND STOCKHOLDERS’ EQUITY Accounts payable $ 44,993 $ 45,684 Income taxes payable 23,041 21,158 Compensation and benefits payable 394,606 280,911 Operating lease liability, current 47,986 54,851 Other accrued liabilities 239,444 221,603 Total current liabilities 750,070 624,207 Deferred compensation and other retirement plans 346,455 289,136 Operating lease liability, non-current 155,998 180,766 Long-term debt 394,794 394,144 Deferred tax liabilities 3,832 1,056 Other liabilities 36,602 30,828 Total liabilities 1,687,751 1,520,137 Commitments and contingencies Stockholders' equity Common stock: $ 0.01 par value, 150,000 shares authorized, 74,915 and 73,205 shares issued and 54,008 and 54,450 shares outstanding at April 30, 2021 and 2020, respectively 583,260 585,560 Retained earnings 834,949 742,993 Accumulated other comprehensive loss, net ( 51,820 ) ( 107,172 ) Total Korn Ferry stockholders' equity 1,366,389 1,221,381 Noncontrolling interest 2,386 2,310 Total stockholders' equity 1,368,775 1,223,691 Total liabilities and stockholders' equity $ 3,056,526 $ 2,743,828 The accompanying notes are an integral part of these consolidated financial statements. F-6 KORN FERRY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME Year Ended April 30, 2021 2020 2019 (in thousands, except per share data) Fee revenue $ 1,810,047 $ 1,932,732 $ 1,926,033 Reimbursed out-of-pocket engagement expenses 9,899 44,598 47,829 Total revenue 1,819,946 1,977,330 1,973,862 Compensation and benefits 1,297,880 1,297,994 1,311,240 General and administrative expenses 191,776 258,957 351,991 Reimbursed expenses 9,899 44,598 47,829 Cost of services 72,030 85,886 75,487 Depreciation and amortization 61,845 55,311 46,489 Restructuring charges, net 30,732 58,559 — Total operating expenses 1,664,162 1,801,305 1,833,036 Operating income 155,784 176,025 140,826 Other income (loss), net 37,194 ( 2,879 ) 10,405 Interest expense, net ( 29,278 ) ( 22,184 ) ( 16,891 ) Income before provision for income taxes 163,700 150,962 134,340 Income tax provision 48,138 43,945 29,544 Net income 115,562 107,017 104,796 Net income attributable to noncontrolling interest ( 1,108 ) ( 2,071 ) ( 2,145 ) Net income attributable to Korn Ferry $ 114,454 $ 104,946 $ 102,651 Earnings per common share attributable to Korn Ferry: Basic $ 2.11 $ 1.91 $ 1.84 Diluted $ 2.09 $ 1.90 $ 1.81 Weighted-average common shares outstanding: Basic 52,928 54,342 55,311 Diluted 53,405 54,767 56,096 Cash dividends declared per share: $ 0.40 $ 0.40 $ 0.40 The accompanying notes are an integral part of these consolidated financial statements. F-7 KORN FERRY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Year Ended April 30, 2021 2020 2019 (in thousands) Net income $ 115,562 $ 107,017 $ 104,796 Other comprehensive income: Foreign currency translation adjustments 50,069 ( 23,764 ) ( 28,038 ) Deferred compensation and pension plan adjustments, net of tax 5,419 ( 6,716 ) ( 5,369 ) Net unrealized (loss) gain on marketable securities, net of tax ( 53 ) 34 — Net unrealized loss on interest rate swap, net of tax — ( 456 ) ( 1,080 ) Comprehensive income 170,997 76,115 70,309 Less: comprehensive income attributable to noncontrolling interest ( 1,191 ) ( 1,689 ) ( 1,978 ) Comprehensive income attributable to Korn Ferry $ 169,806 $ 74,426 $ 68,331 The accompanying notes are an integral part of these consolidated financial statements. F-8 KORN FERRY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Accumulated Other Total Korn Ferry Total Common Stock Retained Comprehensive Stockholders' Noncontrolling Stockholder's Shares Amount Earnings Loss, Net Equity Interest Equity (in thousands) Balance at May 1, 2018 56,517 $ 683,942 $ 572,800 $ ( 40,135 ) $ 1,216,607 $ 3,008 $ 1,219,615 Net income — — 102,651 — 102,651 2,145 104,796 Other comprehensive loss — — — ( 34,320 ) ( 34,320 ) ( 167 ) ( 34,487 ) Effect of adoption of accounting standards — — 8,853 ( 2,197 ) 6,656 — 6,656 Dividends paid to shareholders — — ( 23,459 ) — ( 23,459 ) — ( 23,459 ) Dividends paid to noncontrolling interest — — — — — ( 2,255 ) ( 2,255 ) Purchase of stock ( 1,166 ) ( 58,070 ) — — ( 58,070 ) — ( 58,070 ) Issuance of stock 1,080 8,528 — — 8,528 — 8,528 Stock-based compensation — 22,063 — — 22,063 — 22,063 Balance at April 30, 2019 56,431 656,463 660,845 ( 76,652 ) 1,240,656 2,731 1,243,387 Net income — — 104,946 — 104,946 2,071 107,017 Other comprehensive loss — — — ( 30,520 ) ( 30,520 ) ( 382 ) ( 30,902 ) Dividends paid to shareholders — — ( 22,798 ) — ( 22,798 ) — ( 22,798 ) Dividends paid to noncontrolling interest — — — — — ( 2,110 ) ( 2,110 ) Purchase of stock ( 2,839 ) ( 101,439 ) — — ( 101,439 ) — ( 101,439 ) Issuance of stock 858 9,041 — — 9,041 — 9,041 Stock-based compensation — 21,495 — — 21,495 — 21,495 Balance at April 30, 2020 54,450 585,560 742,993 ( 107,172 ) 1,221,381 2,310 1,223,691 Net income — — 114,454 — 114,454 1,108 115,562 Other comprehensive income — — — 55,352 55,352 83 55,435 Dividends paid to shareholders — — ( 22,498 ) — ( 22,498 ) — ( 22,498 ) Dividends paid to noncontrolling interest — — — — — ( 1,115 ) ( 1,115 ) Purchase of stock ( 1,146 ) ( 35,376 ) — — ( 35,376 ) — ( 35,376 ) Issuance of stock 704 6,560 — — 6,560 — 6,560 Stock-based compensation — 26,516 — — 26,516 — 26,516 Balance at April 30, 2021 54,008 $ 583,260 $ 834,949 $ ( 51,820 ) $ 1,366,389 $ 2,386 $ 1,368,775 The accompanying notes are an integral part of these consolidated financial statements. F-9 KORN FERRY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended April 30, 2021 2020 2019 (in thousands) Cash flows from operating activities: Net income $ 115,562 $ 107,017 $ 104,796 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 61,845 55,311 46,489 Stock-based compensation expense 27,157 22,818 23,385 Tradename write-offs — — 106,555 Write-off of long-lived assets — 2,654 — Provision for doubtful accounts 15,763 14,644 14,260 Gain on cash surrender value of life insurance policies ( 13,017 ) ( 6,551 ) ( 6,160 ) (Gain) loss on marketable securities ( 38,529 ) 2,066 ( 8,134 ) Deferred income taxes ( 14,140 ) ( 9,330 ) ( 27,796 ) Change in other assets and liabilities: Deferred compensation 64,005 23,496 18,478 Receivables due from clients ( 67,331 ) 34,152 ( 30,625 ) Income taxes and other receivables 5,798 ( 6,421 ) 1,409 Prepaid expenses and other assets ( 3,902 ) ( 956 ) ( 148 ) Unearned compensation ( 32,935 ) 300 ( 7,299 ) Income taxes payable ( 1,824 ) 1,246 213 Accounts payable and accrued liabilities 122,687 ( 6,011 ) 28,398 Other 10,294 1,914 ( 5,016 ) Net cash provided by operating activities 251,433 236,349 258,805 Cash flows from investing activities: Purchase of property and equipment ( 31,122 ) ( 41,460 ) ( 46,682 ) Purchase of marketable securities ( 103,499 ) ( 83,563 ) ( 9,476 ) Proceeds from sales/maturities of marketable securities 69,683 47,936 13,781 Cash paid for acquisitions, net of cash acquired — ( 108,602 ) — Premium on company-owned life insurance policies ( 15,353 ) ( 15,699 ) ( 34,862 ) Proceeds from life insurance policies 18,707 2,280 7,632 Dividends received from unconsolidated subsidiaries 205 346 140 Net cash used in investing activities ( 61,379 ) ( 198,762 ) ( 69,467 ) Cash flows from financing activities: Repurchases of common stock ( 30,387 ) ( 92,446 ) ( 37,372 ) Payments of tax withholdings on restricted stock ( 4,989 ) ( 8,993 ) ( 20,698 ) Proceeds from issuance of common stock upon exercise of employee stock options and in connection with an employee stock purchase plan 5,706 7,684 7,272 Borrowings under life insurance policies — — 31,870 Payments on life insurance policy loans ( 12,279 ) ( 943 ) ( 5,316 ) Principal payments on finance leases ( 1,324 ) ( 1,833 ) — Dividends paid to shareholders ( 22,498 ) ( 22,798 ) ( 23,459 ) Dividends paid to noncontrolling interest ( 1,115 ) ( 2,110 ) ( 2,255 ) Proceeds from long term debt — 1,045,500 226,875 Principal payments on long term debt — ( 876,875 ) ( 238,906 ) Payment of debt issuance costs — ( 3,050 ) ( 2,181 ) Payment of contingent consideration from acquisitions — ( 455 ) ( 455 ) Net cash (used in) provided by financing activities ( 66,886 ) 43,681 ( 64,625 ) Effect of exchange rate changes on cash and cash equivalents 38,366 ( 18,384 ) ( 19,201 ) Net increase in cash and cash equivalents 161,534 62,884 105,512 Cash and cash equivalents at beginning of year 689,244 626,360 520,848 Cash and cash equivalents at end of the period $ 850,778 $ 689,244 $ 626,360 Supplemental cash flow information: Cash used to pay interest $ 25,207 $ 12,526 $ 14,188 Cash used to pay income taxes, net of refunds $ 55,317 $ 54,914 $ 58,408 The accompanying notes are an integral part of these consolidated financial statements. F-10 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 1. Organization and Summary of Significant Accounting Policies Nature of Business Korn Ferry, a Delaware corporation, and its subsidiaries (the “Company”) is a global organizational consulting firm. The Company helps clients synchronize strategy and talent to drive superior performance. The Company works with organizations to design their structures, roles, and responsibilities. The Company helps organizations hire the right people to bring their strategy to life and advise them on how to reward, develop, and motivate their people. The Company is pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across the organization. This approach builds on the best of the Company’s past and gives the Company a clear path to the future with focused initiatives to increase its client and commercial impact. Korn Ferry is transforming how clients address their talent management needs. The Company has evolved from a mono-line to a diversified business, giving its consultants more frequent and expanded opportunities to engage with clients. The Company has seven reportable segments that operate through the following four lines of business: 1. 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 intellectual property (“lP”) and data. 2. Digital leverages an artificial intelligence powered machine-learning platform to identify structure, roles, capabilities and behaviours needed to drive business forward. This end-to-end system combines Korn Ferry proprietary data, client data, and external market data to generate insight and recommend action. 3. Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention. This business is managed and reported on a geographic basis and represents four of the Company’s reportable segments (Executive Search North America, Executive Search EMEA, Executive Search Asia Pacific and Executive Search Latin America). 4. Recruitment Process Outsourcing (“RPO”) and Professional Search combines people, process expertise and IP-enabled technology to deliver enterprise talent acquisition solutions to clients. Transaction sizes range from single professional searches to team, department and line of business projects, and global outsource recruiting solutions. Basis of Consolidation and Presentation The consolidated financial statements include the accounts of the Company and its wholly and majority owned/controlled domestic and international subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The preparation of the consolidated financial statements conform with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and prevailing practice within our different industries. The consolidated financial statements include all adjustments, consisting of normal recurring accruals and any other adjustments that management considers necessary for a fair presentation of the results for these periods. The Company has control of a Mexican subsidiary and consolidates the operations of this subsidiary. Noncontrolling interest, which represents the Mexican partners’ 51 % interest in the Mexican subsidiary, is reflected on the Company’s consolidated financial statements. The Company considers events or transactions that occur after the balance sheet date but before the consolidated financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures. F-11 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Use of Estimates and Uncertainties The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates, and changes in estimates are reported in current operations as new information is learned or upon the amounts becoming fixed or determinable. The most significant areas that require management’s judgment are revenue recognition, deferred compensation, annual performance-related bonuses, evaluation of the carrying value of receivables, goodwill and other intangible assets, share-based payments, leases and the recoverability of deferred income taxes. Revenue Recognition Substantially all fee revenue is derived from talent and organizational consulting services and digital sales, stand-alone or as part of a solution, fees for professional services related to executive and professional recruitment performed on a retained basis and RPO, either stand-alone or as part of a solution. Revenue is recognized when control of the goods and services are transferred to the customer in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Revenue contracts with customers are evaluated based on the five-step model outlined in Accounting Standard Codification (“ASC”) 606 (“ASC 606”): 1) identify the contract with a customer; 2) identify the performance obligation(s) in the contract; 3) determine the transaction price; 4) allocate the transaction price to the separate performance obligation(s); and 5) recognize revenue when (or as) each performance obligation is satisfied. Consulting fee revenue is primarily recognized as services are rendered, measured by total hours incurred as a percentage of the total estimated hours at completion. It is possible that updated estimates for consulting engagements may vary from initial estimates with such updates being recognized in the period of determination. Depending on the timing of billings and services rendered, the Company accrues or defers revenue as appropriate. Digital fee revenue is generated from IP platforms enabling large-scale, technology-based talent programs for pay, talent development, engagement, and assessment and is consumed directly by an end user or indirectly through a consulting engagement. Revenue is recognized as services are delivered and the Company has a legally enforceable right to payment. Revenue also comes from the sale of the Company’s proprietary IP subscriptions, which are considered symbolic IP due to the dynamic nature of the content. As a result, revenue is recognized over the term of the contract. Functional IP licenses grant customers the right to use IP content via the delivery of a flat file. Because the IP content license has significant stand-alone functionality, revenue is recognized upon delivery and when an enforceable right to payment exists. Revenue for tangible and digital products sold by the Company, such as books and digital files, is recognized when these products are shipped. Fee revenue from executive and professional search activities is generally one-third of the estimated first-year cash compensation of the placed candidate, plus a percentage of the fee to cover indirect engagement-related expenses. In addition to the search retainer, an uptick fee is billed when the actual compensation awarded by the client for a placement is higher than the estimated compensation. In the aggregate, upticks have been a relatively consistent percentage of the original estimated fee; therefore, the Company estimates upticks using the expected value method based on historical data on a portfolio basis. In a standard search engagement, there is one performance obligation, which is the promise to undertake a search. The Company generally recognizes such revenue over the course of a search and when it is legally entitled to payment as outlined in the billing terms of the contract. Any revenues associated with services that are provided on a contingent basis are recognized once the contingency is resolved, as this is when control is transferred to the customer. These assumptions determine the timing of revenue recognition for the reported period. RPO fee revenue is generated through two distinct phases: 1) the implementation phase and 2) the post-implementation recruitment phase. The fees associated with the implementation phase are recognized over the period that the related implementation services are provided. The post-implementation recruitment phase represents end-to-end recruiting services to clients for which there are both fixed and variable fees, which are recognized over the period that the related recruiting services are performed. F-12 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Reimbursements The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as revenue in the consolidated statements of income. Allowance for Doubtful Accounts An allowance is established for doubtful accounts by taking a charge to general and administrative expenses. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers’ trade accounts receivable. Due to the short-term nature of such receivables, the estimate of amount of accounts receivable that may not be collected is primarily based on historical loss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic condition for a period of sixty to ninety days, which corresponds with the contractual life of its accounts receivables. After the Company exhausts all collection efforts, the amount of the allowance is reduced for balances written off as uncollectible. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. As of April 30, 2021 and 2020, the Company’s investments in cash equivalents consisted of money market funds, and commercial paper and as of April 30, 2020 also includes corporate notes/bonds with initial maturity of less than 90 days for which market prices are readily available. Marketable Securities The Company currently has investments in marketable securities and mutual funds that are classified as either equity securities or available-for-sale debt securities. The classification of the investments in these marketable securities and mutual funds is assessed upon purchase and reassessed at each reporting period. These investments are recorded at fair value and are classified as marketable securities in the accompanying consolidated balance sheets. The investments that the Company may sell within the next 12 months are carried as current assets. The Company invests in mutual funds (for which market prices are readily available) that are held in trust to satisfy obligations under the Company’s deferred compensation plans. Such investments are classified as equity securities and mirror the employees’ investment elections in their deemed accounts in the Executive Capital Accumulation Plan and similar plans in Asia Pacific and Canada (“ECAP”) from a pre-determined set of securities. Realized gains (losses) on marketable securities are determined by specific identification. Interest is recognized on an accrual basis; dividends are recorded as earned on the ex-dividend date. Interest, dividend income and the changes in fair value in marketable securities are recorded in the accompanying consolidated statements of income in other income (loss), net. The Company also invests cash in excess of its daily operating requirements and capital needs primarily in marketable fixed income (debt) securities in accordance with the Company’s investment policy, which restricts the type of investments that can be made. The Company’s investment portfolio includes commercial paper, corporate notes/bonds and US Treasury and Agency securities. These marketable fixed income (debt) securities are classified as available-for-sale securities based on management’s decision, at the date such securities are acquired, not to hold these securities to maturity or actively trade them. The Company carries these marketable debt securities at fair value based on the market prices for these marketable debt securities or similar debt securities whose prices are readily available. The changes in fair values, net of applicable taxes, are recorded as unrealized gains or losses as a component of comprehensive income unless the change is due to credit loss. A credit loss is recorded in the statement of income in other income (loss), net; any amount in excess of the credit loss is recorded as unrealized gains or losses as a component of comprehensive income. Generally, the amount of the loss is the difference between the cost or amortized cost and its then current fair value; a credit loss is the difference between the discounted expected future cash flows to be collected from the debt security and the cost or amortized cost of the debt security. During fiscal 2021, 2020 and 2019, no amount was recognized as a credit loss for the Company’s available for sales debt securities. F-13 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Fair Value of Financial Instruments Fair value is the price the Company would receive to sell an asset or transfer a liability (exit price) in an orderly transaction between market participants. For those assets and liabilities recorded or disclosed at fair value, the Company determines the fair value based upon the quoted market price, if available. If a quoted market price is not available for identical assets, the fair value is based upon the quoted market price of similar assets. The fair values are assigned a level within the fair value hierarchy as defined below: ▪ Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ▪ Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. ▪ Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions. As of April 30, 2021 and 2020, the Company held certain assets that are required to be measured at fair value on a recurring basis. These included cash, cash equivalents, accounts receivable, marketable securities and foreign currency forward contracts. The carrying amount of cash, cash equivalents and accounts receivable approximates fair value due to the short-term maturity of these instruments. The fair values of marketable securities classified as equity securities are obtained from quoted market prices, and the fair values of marketable securities classified as available-for-sale and foreign currency forward contracts are obtained from a third party, which are based on quoted prices or market prices for similar assets and financial instruments. Derivative Financial Instruments On December 16, 2019, in conjunction with the payoff of the credit facility, the Company terminated its interest rate swap. The Company had entered into the interest rate swap agreement to effectively convert its variable debt to a fixed-rate basis. The principal objective was to eliminate or reduce the variability of the cash flows in interest payments associated with the Company’s long-term debt, thus reducing the impact of interest rate changes on future interest payment cash flows. The Company determined that the interest rate swap qualified as a cash flow hedge in accordance with ASC 815. Changes in the fair value of an interest rate swap agreement designated as a cash flow hedge were recorded as a component of accumulated other comprehensive loss within stockholders’ equity and were amortized to interest expense over the term of the related debt. Foreign Currency Forward Contracts Not Designated as Hedges The Company has established a program that primarily utilizes foreign currency forward contracts to offset the risks associated with the effects of certain foreign currency exposures primarily originating from intercompany balances due to cross border work performed in the ordinary course of business. These foreign currency forward contracts are neither used for trading purposes nor are they designated as hedging instruments pursuant to ASC 815. Accordingly, the fair value of these contracts is recorded as of the end of the reporting period in the accompanying consolidated balance sheets, while the change in fair value is recorded to the accompanying consolidated statements of income. Business Acquisitions Business acquisitions are accounted for under the acquisition method. The acquisition method requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill, or if the fair value of the assets acquired exceeds the purchase price consideration, a bargain purchase gain is recorded. Adjustments to fair value assessments are generally recorded to goodwill over the measurement period (not longer than 12 months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense as committed and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination. During fiscal 2021, the Company recorded an adjustment of $ 2.6 million to increase goodwill as a result of additional tax liabilities from the Miller Heiman Group, Achieve Forum and Strategy Execution (the “Acquired Companies”) acquisition completed on November 1, 2019. The measurement period for the Acquired Companies is closed. F-14 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Leases The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right of use (“ROU”) assets and current and non-current operating lease liability, in the consolidated balance sheets. Finance leases are included in property and equipment, net, other accrued liabilities and other liabilities in the consolidated balance sheets. ROU assets represent the Company's right to use an underlying asset for the lease term, and the lease liabilities represent the Company's obligation to make lease payments arising from the lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term on the commencement date. As most of the Company’s leases do not provide an implicit rate, the Company uses its estimated incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term, with variable lease payments recognized in the periods in which they are incurred. The Company has lease agreements with lease and non-lease components. For all leases with non-lease components the Company accounts for the lease and non-lease components as a single lease component. Property and Equipment, Net Property and equipment is carried at cost less accumulated depreciation. Leasehold improvements are amortized on a straight-line basis over the estimated useful life of the asset, or the lease term, whichever is shorter. Software development costs incurred for internal use projects are capitalized and once placed in service, amortized using the straight-line method over the estimated useful life, generally three to ten years . All other property and equipment is depreciated or amortized on a straight-line basis over the estimated useful lives of three to ten years . Impairment of Long-Lived Assets Long-lived assets include property, equipment, ROU assets and software developed or obtained for internal use. In accordance with ASC 360, Property, Plant and Equipment, management reviews the Company’s recorded long-lived assets for impairment annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses, or a forecasted inability to achieve break-even operating results over an extended period. The Company determines the extent to which an asset may be impaired based upon its expectation of the asset’s future usability, as well as on a reasonable assurance that the future cash flows associated with the asset will be in excess of its carrying amount. If the total of the expected undiscounted future cash flows is less than the carrying amount of the asset, a loss is recognized for the difference between fair value and the carrying value of the asset. During fiscal 2020, the Company decided that it would exit 16 office leases as part of the integration of the Acquired Companies. This resulted in an impairment charge of the ROU asset of $ 2.3 million and impairment of leasehold improvements and furniture and fixtures of $ 0.4 million, both recorded in the consolidated statements of income in general and administrative expenses in the Digital reportable segment. During fiscal 2021 and 2019, there were no impairment charges recorded. Goodwill and Intangible Assets Goodwill represents the excess of the purchase price over the fair value of assets acquired. The goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the implied fair value of a reporting unit’s goodwill is compared to the carrying amount of that goodwill. If the carrying amount of a reporting unit’s goodwill exceeds the fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. For each of these tests, the fair value of each of the Company’s reporting units is determined using a combination of valuation techniques, including a discounted cash flow methodology. To corroborate the discounted cash flow analysis performed at each reporting unit, a market approach is utilized using observable market data such as comparable companies in similar lines of business that are publicly traded or which are part of a public or private transaction (to the extent available). Goodwill is tested for impairment annually and more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Results of the annual impairment test performed as of January 31, 2021, indicated that the fair value of each of the reporting units exceeded its carrying amount and no reporting units were at risk of failing the impairment test. As a result, no impairment charge was recognized. There was also no indication of potential impairment during the fourth quarter of fiscal 2021 that would require further testing. F-15 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Intangible assets primarily consist of customer lists, non-compete agreements, proprietary databases and IP. Intangible assets are recorded at their estimated fair value at the date of acquisition and are amortized in a pattern in which the asset is consumed if that pattern can be reliably determined, or using the straight-line method over their estimated useful lives, which range from one to 24 years . For intangible assets subject to amortization, an impairment loss is recognized if the carrying amount of the intangible assets is not recoverable and exceeds fair value. The carrying amount of the intangible assets is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use of the asset. The coronavirus pandemic (“COVID-19”) impacted the Company’s fourth quarter of fiscal 2020 business, as well as the business during fiscal 2021. The Company reviewed its intangible assets and noted no impairment as of April 30, 2021 and 2020. On June 12, 2018, the Company’s Board of Directors voted to approve a plan to go to market under a single, master brand architecture and to simplify the Company’s organizational structure by eliminating and/or consolidating certain legal entities and implementing a rebranding of the Company to offer the Company’s current products and services using the “Korn Ferry” name, branding and trademarks. As a result, the Company discontinued the use of all sub-brands. Two of the Company’s former sub-brands, Hay Group and Lominger, came to Korn Ferry through acquisitions. In connection with the accounting for these acquisitions, $ 106.6 million of the purchase price was allocated to indefinite-lived tradename intangible assets. As a result of the decision to discontinue their use, the Company took a non-cash intangible asset write-off of $ 106.6 million in fiscal 2019, recorded in general and administrative expenses in the consolidated statement of income. Compensation and Benefits Expense Compensation and benefits expense in the accompanying consolidated statements of income consist of compensation and benefits paid to consultants (employees who originate business), executive officers and administrative and support personnel. The most significant portions of this expense are salaries and the amounts paid under the annual performance-related bonus plan to employees. The portion of the expense applicable to salaries is comprised of amounts earned by employees during a reporting period. The portion of the expenses applicable to annual performance-related bonuses refers to the Company’s annual employee performance-related bonus with respect to a fiscal year, the amount of which is communicated and paid to each eligible employee following the completion of the fiscal year. Each quarter, management makes its best estimate of its annual performance-related bonuses, which requires management to, among other things, project annual consultant productivity (as measured by engagement fees billed and collected by executive 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, and Company performance, including profitability, competitive forces and future economic conditions and their impact on the Company’s results. At the end of each fiscal year, annual performance related bonuses take into account final individual consultant productivity (including referred work), Company/line of business results including profitability, the achievement of strategic objectives, the results of individual performance appraisals, and the current economic landscape. Accordingly, each quarter the Company reevaluates the assumptions used to estimate annual performance related bonus liability and adjusts the carrying amount of the liability recorded on the consolidated balance sheet and reports any changes in the estimate in current operations. Because annual performance-based bonuses are communicated and paid only after the Company reports its full fiscal year results, actual performance-based bonus payments may differ from the prior year’s estimate. Such changes in the bonus estimate historically have been immaterial and are recorded in current operations in the period in which they are determined. The performance-related bonus expense was $ 287.3 million, $ 197.1 million and $ 257.3 million for the years ended April 30, 2021, 2020 and 2019, respectively, included in compensation and benefits expense in the consolidated statements of income. Other expenses included in compensation and benefits expense are due to changes in deferred compensation and pension plan liabilities, changes in cash surrender value (“CSV”) of company-owned life insurance (“COLI”) contracts, amortization of stock-based compensation awards, payroll taxes and employee insurance benefits. Unearned compensation on the consolidated balance sheets includes long-term retention awards that are generally amortized over four-to- five years . F-16 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Deferred Compensation and Pension Plans For financial accounting purposes, the Company estimates the present value of the future benefits payable under the deferred compensation and pension plans as of the estimated payment commencement date. The Company also estimates the remaining number of years a participant will be employed by the Company. Then, each year during the period of estimated employment, the Company accrues a liability and recognizes expense for a portion of the future benefit using the unit credit cost method for the Senior Executive Incentive Plan (“SEIP”), Wealth Accumulation Plan (“WAP”), Enhanced Wealth Accumulation Plan (“EWAP”) and Worldwide Executive Benefit Plan (“WEB”) and the pension plan acquired under Hay Group, while the medical and life insurance plan and Long Term Performance Unit Plan (“LTPU Plan”) uses the projected unit credit cost method. The amounts charged to operations are made up of service and interest costs and the expected return on plan assets. Actuarial gains and losses are initially recorded in accumulated other comprehensive loss. The actuarial gains/losses included in accumulated other comprehensive income are amortized to the consolidated statements of income, if at the beginning of the year, the amount exceeds 10 % of the greater of the projected benefit obligation and market-related plan assets. The amortization included in periodic benefit cost is divided by the average remaining service of inactive plan participants, or the period for which benefits will be paid, if shorter. The expected return on plan assets takes into account the current fair value of plan assets and reflects the Company’s estimate for trust asset returns given the current asset allocation and any expected changes to the asset allocation and current and future market conditions. In calculating the accrual for future benefit payments, management has made assumptions regarding employee turnover, participant vesting, violation of non-competition provisions and the discount rate. Management periodically reevaluates all assumptions. If assumptions change in future reporting periods, the changes may impact the measurement and recognition of benefit liabilities and related compensation expense. Executive Capital Accumulation Plan The Company, under the ECAP, makes discretionary contributions and such contributions may be granted to key employees annually based on the employee’s performance. Certain key management may also receive Company contributions upon commencement of employment. The Company amortizes these contributions on a straight-line basis as they vest, generally over a five-year period. The amounts that are expected to be paid to employees over the next 12 months are classified as a current liability included in compensation and benefits payable in the accompanying consolidated balance sheets. The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants are adjusted with a corresponding charge (or credit) to compensation and benefits costs. Cash Surrender Value of Life Insurance The Company purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in certain of the deferred compensation and pension plans as a means of funding benefits under such plans. The Company purchased both fixed and variable life insurance contracts and does not purchase “split-dollar” life insurance policy contracts. The Company only holds contracts or policies that provide for a fixed or guaranteed rate of return. The CSV of these COLI contracts are carried at the amounts that would be realized if the contract were surrendered at the balance sheet date, net of the outstanding loans from the insurer. The Company has the intention and ability to continue to hold these COLI policies and contracts. Additionally, the loans secured by the policies do not have any scheduled payment terms and the Company also does not intend to repay the loans outstanding on these policies until death benefits under the policy have been realized. Accordingly, the investment in COLI is classified as long-term in the accompanying consolidated balance sheets. The change in the CSV of COLI contracts, net of insurance premiums paid and gains realized, is reported net in compensation and benefits expense. As of April 30, 2021 and 2020, the Company held contracts with net CSV of $ 161.3 million and $ 146.4 million, respectively. If the issuing insurance companies were to become insolvent, the Company would be considered a general creditor; therefore, these assets are subject to credit risk. Management, together with its outside advisors, routinely monitors the claims paying abilities of these insurance companies. Restructuring Charges, Net The Company accounts for its restructuring charges as a liability when the obligations are incurred and records such charges at fair value. Changes in the estimates of the restructuring charges are recorded in the period the change is determined. F-17 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Stock-Based Compensation The Company has employee compensation plans under which various types of stock-based instruments are granted. These instruments principally include restricted stock units, restricted stock and an Employee Stock Purchase Plan (“ESPP”). The Company recognizes compensation expense related to restricted stock units, restricted stock and the estimated fair value of stock purchases under the ESPP on a straight-line basis over the service period for the entire award. Translation of Foreign Currencies Generally, financial results of the Company’s foreign subsidiaries are measured in their local currencies. Assets and liabilities are translated into U.S. dollars at exchange rates in effect at the balance sheet date, while revenue and expenses are translated at weighted-average exchange rates during the fiscal year. Resulting translation adjustments are recorded as a component of accumulated comprehensive income. Gains and losses from foreign currency transactions of the Company’s foreign subsidiaries and the translation of the financial results of subsidiaries operating in highly inflationary economies are included in general and administrative expense in the period incurred. During fiscal 2021, 2020 and 2019, the Company recorded foreign currency losses of $ 2.7 million, $ 4.1 million and $ 1.7 million respectively, in general and administrative expenses in the consolidated statements of income. Income Taxes There are two components of income tax expense: current and deferred. Current income tax expense (benefit) approximates taxes to be paid or refunded for the current period. Deferred income tax expense (benefit) results from changes in deferred tax assets and liabilities between periods. These gross deferred tax assets and liabilities represent decreases or increases in taxes expected to be paid in the future because of future reversals of temporary differences in the basis of assets and liabilities as measured by tax laws and their basis as reported in the consolidated financial statements. Deferred tax assets are also recognized for tax attributes such as net operating loss carryforwards and tax credit carryforwards. Deferred tax assets and deferred tax liabilities are presented net on the consolidated balance sheets by tax jurisdiction. Valuation allowances are then recorded to reduce deferred tax assets to the amounts management concludes are more likely than not to be realized. Income tax benefits are recognized and measured based upon a two-step model: (1) a tax position must be more-likely-than-not to be sustained based solely on its technical merits in order to be recognized and (2) the benefit is measured as the largest dollar amount of that position that is more-likely-than-not to be sustained upon settlement. The difference between the benefit recognized for a position and the tax benefit claimed on a tax return is referred to as an unrecognized tax benefit. The Company records income tax-related interest and penalties within income tax expense. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, investments, foreign currency forward contracts, receivables due from clients and net CSV due from insurance companies, which are discussed above. Cash equivalents include investments in money market securities, commercial papers and corporate notes/bonds while investments include mutual funds, commercial papers, corporate notes/bonds and US Treasury and Agency securities. Investments are diversified throughout many industries and geographic regions. The Company conducts periodic reviews of its customers’ financial condition and customer payment practices to minimize collection risk on accounts receivable. At April 30, 2021 and 2020, the Company had no other significant credit concentrations. Recently Adopted Accounting Standards 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. The Company adopted this guidance as of May 1, 2020 . The adoption of this guidance did not have a material impact on the consolidated financial statements. F-18 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) 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 became effective for goodwill impairment tests in fiscal years beginning after December 15, 2019. The Company 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. The Company 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. The Company 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 years beginning after December 15, 2020, with early adoption permitted. The Company early adopted this guidance in its 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. The Company will adopt this guidance in its fiscal year beginning May 1, 2021 and the Company may elect to apply the amendments prospectively through December 12, 2022. The Company is currently evaluating the impact of this accounting guidance but does not anticipate that it will have a material impact on the consolidated financial statements. 2. Basic and Diluted Earnings Per Share ASC 260, Earnings Per Share , requires companies to treat unvested share-based payment awards that have non-forfeitable rights to dividends prior to vesting as a separate class of securities in calculating earnings per share. The Company has granted and expects to continue to grant to certain employees under its restricted stock agreements, grants that contain non-forfeitable rights to dividends. Such grants are considered participating securities. Therefore, the Company is required to apply the two-class method in calculating earnings per share. The two-class method of computing earnings per share is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The dilutive effect of participating securities is calculated using the more dilutive of the treasury method or the two-class method. F-19 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Basic earnings per common share was computed using the two-class method by dividing basic net earnings attributable to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per common share was computed using the two-class method by dividing diluted net earnings attributable to common stockholders by the weighted-average number of common shares outstanding plus dilutive common equivalent shares. Dilutive common equivalent shares include all in-the-money outstanding options or other contracts to issue common stock as if they were exercised or converted. Financial instruments that are not in the form of common stock, but when converted into common stock increase earnings per share, are anti-dilutive and are not included in the computation of diluted earnings per share. During fiscal 2021, 2020 and 2019, restricted stock awards of 1.3 million shares, 0.7 million shares and 0.6 million shares, respectively, were outstanding but not included in the computation of diluted earnings per share because they were anti-dilutive. The following table summarizes basic and diluted earnings per common share attributable to common stockholders: Year Ended April 30, 2021 2020 2019 (in thousands, except per share data) Net income attributable to Korn Ferry $ 114,454 $ 104,946 $ 102,651 Less: distributed and undistributed earnings to nonvested restricted stockholders 2,763 1,140 1,066 Basic net earnings attributable to common stockholders 111,691 103,806 101,585 Add: undistributed earnings to nonvested restricted stockholders 2,185 901 831 Less: reallocation of undistributed earnings to nonvested restricted stockholders 2,165 894 820 Diluted net earnings attributable to common stockholders $ 111,711 $ 103,813 $ 101,596 Weighted-average common shares outstanding: Basic weighted-average number of common shares outstanding 52,928 54,342 55,311 Effect of dilutive securities: Restricted stock 476 367 750 ESPP 1 58 34 Stock Options — — 1 Diluted weighted-average number of common shares outstanding 53,405 54,767 56,096 Net earnings per common share: Basic earnings per share $ 2.11 $ 1.91 $ 1.84 Diluted earnings per share $ 2.09 $ 1.90 $ 1.81 3. Comprehensive Income Comprehensive income is comprised of net income and all changes to stockholders’ equity, except those changes resulting from investments by stockholders (changes in paid-in capital) and distributions to stockholders (dividends) and is reported in the accompanying consolidated statements of comprehensive income. Accumulated other comprehensive loss, net of taxes, is recorded as a component of stockholders’ equity. The components of accumulated other comprehensive loss, net were as follows: April 30, 2021 2020 (in thousands) Foreign currency translation adjustments $ ( 33,666 ) $ ( 83,652 ) Deferred compensation and pension plan adjustments, net of taxes ( 18,135 ) ( 23,554 ) Marketable securities unrealized (loss) gain, net of tax ( 19 ) 34 Accumulated other comprehensive loss, net $ ( 51,820 ) $ ( 107,172 ) F-20 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) The following table summarizes the changes in each component of accumulated other comprehensive loss, net: Foreign Currency Translation Deferred Compensation and Pension Plan (1) Unrealized Gains (Losses) on Marketable Securities Unrealized Gains on Interest Rate Swap (2) Accumulated Other Comprehensive Loss (in thousands) Balance as of May 1, 2018 $ ( 32,399 ) $ ( 9,073 ) $ — $ 1,337 $ ( 40,135 ) Unrealized losses arising during the period ( 27,871 ) ( 6,461 ) — ( 800 ) ( 35,132 ) Reclassification of realized net losses (gains) to net income — 1,092 — ( 280 ) 812 Effect of adoption of accounting standard — ( 2,396 ) — 199 ( 2,197 ) Balance as of April 30, 2019 ( 60,270 ) ( 16,838 ) — 456 ( 76,652 ) Unrealized (losses) gains arising during the period ( 23,382 ) ( 8,883 ) 37 ( 678 ) ( 32,906 ) Reclassification of realized net losses (gains) to net income — 2,167 ( 3 ) 222 2,386 Balance as of April 30, 2020 ( 83,652 ) ( 23,554 ) 34 — ( 107,172 ) Unrealized gains (losses) arising during the period 49,986 2,660 ( 53 ) — 52,593 Reclassification of realized net losses to net income — 2,759 — — 2,759 Balance as of April 30, 2021 $ ( 33,666 ) $ ( 18,135 ) $ ( 19 ) $ — $ ( 51,820 ) (1) The tax effects on unrealized gains (losses) were $ 1.1 million, $( 3.1 ) million and $( 2.3 ) million as of April 30, 2021, 2020 and 2019, respectively. The tax effects on reclassifications of realized net losses were $ 1.0 million, $ 0.8 million and $ 0.4 million as of April 30, 2021, 2020 and 2019, respectively. (2) The tax effects on unrealized (losses) gains were $( 0.2 ) million and $( 0.3 ) million as of 2020 and 2019, respectively. The tax effects on the reclassification of realized net (losses) gains to net income was $( 0.1 ) million and $ 0.1 million as of 2020 and 2019, respectively. 4. Employee Stock Plans Stock-Based Compensation The following table summarizes the components of stock-based compensation expense recognized in the Company’s consolidated statements of income for the periods indicated: Year Ended April 30, 2021 2020 2019 (in thousands) Restricted stock $ 26,516 $ 21,495 $ 22,063 ESPP 641 1,323 1,322 Total stock-based compensation expense $ 27,157 $ 22,818 $ 23,385 Stock Incentive Plan At the Company’s 2019 Annual Meeting of Stockholders, held on October 3, 2019, the Company’s stockholders approved an amendment and restatement to the Korn Ferry Amended and Restated 2008 Stock Incentive Plan (the 2019 amendment and restatement being the “Fourth A&R 2008 Plan”), which, among other things, eliminated the fungible share counting provision and decreased the total number of shares of the Company’s common stock available for stock-based awards by 2,141,807 shares, leaving 3,600,000 shares available for issuance, subject to certain changes in the Company’s capital structure and other extraordinary events. The Fourth A&R 2008 Plan was also amended to generally require a minimum one-year vesting for all future awards, and provides for the grant of awards to eligible participants, designated as either nonqualified or incentive stock options, restricted stock and restricted stock units, any of which are market-based, and incentive bonuses, which may be paid in cash or stock or a combination thereof. F-21 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Restricted Stock The Company grants time-based restricted stock awards to executive officers and other senior employees generally vesting over a four-year period. In addition, certain key management members typically receive time-based restricted stock awards upon commencement of employment and may receive them annually in conjunction with the Company’s performance review. Time-based restricted stock awards are granted at a price equal to fair value, which is determined based on the closing price of the Company’s common stock on the grant date. The Company recognizes compensation expense for time-based restricted stock awards on a straight-line basis over the vesting period. The Company also grants market-based restricted stock units to executive officers and other senior employees. The market-based units vest after three years depending upon the Company’s total stockholder return over the three-year performance period relative to other companies in its selected peer group. The fair value of these market-based restricted stock units are determined by using extensive market data that is based on historical Company and peer group information. The Company recognizes compensation expense for market-based restricted stock units on a straight-line basis over the vesting period. Restricted stock activity is summarized below: April 30, 2021 2020 2019 Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value Shares Weighted- Average Grant Date Fair Value (in thousands, except per share data) Non-vested, beginning of year 1,365 $ 44.59 1,460 $ 38.42 1,730 $ 33.45 Granted 1,606 $ 27.63 608 $ 38.38 671 $ 40.93 Vested ( 516 ) $ 39.78 ( 638 ) $ 25.42 ( 904 ) $ 36.41 Forfeited ( 85 ) $ 22.35 ( 65 ) $ 33.48 ( 37 ) $ 32.26 Non-vested, end of year 2,370 $ 34.34 1,365 $ 44.59 1,460 $ 38.42 As of April 30, 2021, there were 0.3 million shares outstanding relating to market-based restricted stock units with total unrecognized compensation totaling $ 3.9 million. As of April 30, 2021, there was $ 50.7 million of total unrecognized compensation cost related to all non-vested awards of restricted stock, which is expected to be recognized over a weighted-average period of 2.8 years. During fiscal 2021 and 2020, 172,749 shares and 232,618 shares of restricted stock totaling $ 5.0 million and $ 9.0 million, respectively, were repurchased by the Company, at the option of the employee, to pay for taxes related to the vesting of restricted stock. Employee Stock Purchase Plan The Company has an ESPP that, in accordance with Section 423 of the Internal Revenue Code, allows eligible employees to authorize payroll deductions of up to 15 % of their salary to purchase shares of the Company’s common stock. On June 3, 2020, the Company amended the plan so that the purchase price of the shares purchased could not be less than 85 %, or more than 100 % of the fair market price of the common stock on the last day of the enrollment period. This amendment became effective July 1, 2020. Employees may not purchase more than $ 25,000 in stock during any calendar year. The maximum number of shares that may be issued under the ESPP is 3.0 million shares. During fiscal 2021, 2020, and 2019, employees purchased 188,608 shares at an average price of $ 30.25 per share, 220,161 shares at an average price of $ 34.90 per share and 169,299 shares at an average price of $ 42.05 per share, respectively. As of April 30, 2021, the ESPP had approximately 0.5 million shares remaining available for future issuance. Common Stock During fiscal 2021, 2020 and 2019, the Company repurchased (on the open market or privately negotiated transactions) 973,451 shares, 2,606,861 shares and 809,074 shares, respectively, of the Company’s common stock for $ 30.4 million, $ 92.4 million and $ 37.4 million, respectively. F-22 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) 5. Financial Instruments The following tables show the Company’s financial instruments and balance sheet classification as of April 30, 2021 and 2020: April 30, 2021 Fair Value Measurement Balance Sheet Classification Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities, Current Marketable Securities, Non-current Other Accrued Liabilities (in thousands) Changes in Fair Value Recorded in Other Comprehensive Income Level 2: Commercial paper $ 51,979 $ 1 $ ( 7 ) $ 51,973 $ 9,499 $ 42,474 $ — $ — Corporate notes/bonds 26,371 — ( 20 ) 26,351 — 10,134 16,217 — U.S. Treasury and Agency Securities 1,975 — — 1,975 — 1,975 — — Total debt investments $ 80,325 $ 1 $ ( 27 ) $ 80,299 $ 9,499 $ 54,583 $ 16,217 $ — Changes in Fair Value Recorded in Net Income Level 1: Mutual funds (1) $ 175,559 $ — $ 9,084 $ 166,475 $ — Total equity investments $ 175,559 $ — $ 9,084 $ 166,475 $ — Cash $ 752,737 $ 752,737 $ — $ — $ — Money market funds 88,542 88,542 — — — Level 2: Foreign currency forward contracts ( 12 ) — — — ( 12 ) Total $ 1,097,125 $ 850,778 $ 63,667 $ 182,692 $ ( 12 ) April 30, 2020 Fair Value Measurement Balance Sheet Classification Cost Unrealized Gains Unrealized Losses Fair Value Cash and Cash Equivalents Marketable Securities, Current Marketable Securities, Non-current Income Taxes & Other Receivables (in thousands) Changes in Fair Value Recorded in Other Comprehensive Income Level 2: Commercial paper $ 19,132 $ 39 $ — $ 19,171 $ 4,785 $ 14,386 $ — $ — Corporate notes/bonds 19,181 26 ( 19 ) 19,188 901 18,287 — — Total debt investments $ 38,313 $ 65 $ ( 19 ) $ 38,359 $ 5,686 $ 32,673 $ — $ — Changes in Fair Value Recorded in Net Income Level 1: Mutual funds (1) $ 141,412 $ — $ 9,278 $ 132,134 $ — Total equity investments $ 141,412 $ — $ 9,278 $ 132,134 $ — Cash $ 611,795 $ 611,795 $ — $ — $ — Money market funds 71,763 71,763 — — — Level 2: Foreign currency forward contracts 2,634 — — — 2,634 Total $ 865,963 $ 689,244 $ 41,951 $ 132,134 $ 2,634 F-23 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) (1) These investments are held in trust for settlement of the Company’s vested obligations of $ 157.3 million and $ 124.6 million as of April 30, 2021 and 2020, respectively, under the ECAP (see Note 6 — Deferred Compensation and Retirement Plans ). Unvested obligations under the deferred compensation plans totaled $ 26.5 million and $ 21.7 million as of April 30, 2021 and 2020, respectively. During fiscal 2021 and 2019, the fair value of the investments increased; therefore, the Company recognized income of $ 38.5 million and $ 8.1 million, respectively, which was recorded in other income (loss), net. During fiscal 2020, the fair value of the investments decreased; therefore, the Company recognized a loss of $ 1.8 million which was recorded in other income (loss), net. Investments in marketable securities classified as available-for-sale securities are made based on the Company’s investment policy, which restricts the types of investments that can be made. As of April 30, 2021 and 2020, marketable securities classified as available-for-sale consisted of both commercial paper and corporate notes/bonds and on April 30, 2021 also consisted of US Treasury and Agency securities for which market prices for similar assets are readily available. Investments that have an original maturity of 90 days or less and are considered highly liquid investments are classified as cash equivalents. As of April 30, 2021, available-for-sale marketable securities had remaining maturities ranging from one to twenty-one months . During fiscal 2021 and 2020, there were $ 60.6 million and $ 4.8 million in sales/maturities of available-for-sale marketable securities, respectively. Investments in marketable securities that are held in trust for settlement of the Company’s vested obligations under the ECAP are equity securities and are based upon the investment selections the employee elects from a pre-determined set of securities in the ECAP and the Company invests in equity securities to mirror these elections. As of April 30, 2021 and 2020, the Company’s investments in equity securities consisted of mutual funds for which market prices are readily available. Unrealized gains that relate to equity securities still held as of April 30, 2021, was $ 32.7 million while unrealized losses that relate to equity securities held as of April 30, 2020 and 2019 was $ 8.2 million and $ 4.7 million, respectively. Foreign Currency Forward Contracts Not Designated as Hedges The fair value of derivatives not designated as hedge instruments are as follows: April 30, 2021 2020 (in thousands) Derivative assets: Foreign currency forward contracts $ 822 $ 3,034 Derivative liabilities: Foreign currency forward contracts $ 834 $ 400 As of April 30, 2021, the total notional amounts of the forward contracts purchased and sold were $ 69.4 million and $ 44.9 million, respectively. As of April 30, 2020, the total notional amounts of the forward contracts purchased and sold were $ 91.2 million and $ 41.8 million, respectively. The Company recognizes forward contracts as a net asset or net liability on the consolidated balance sheets as such contracts are covered by master netting agreements. During fiscal 2021 and 2019 the Company incurred gains of $ 2.7 million and $ 1.2 million, respectively, related to forward contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of income. These foreign currency gains offset foreign currency losses that result from transactions denominated in a currency other than the Company’s functional currency. During fiscal 2020, the Company incurred losses of $ 0.3 million, related to forward contracts which is recorded in general and administrative expenses in the accompanying consolidated statements of income. These foreign currency losses offset foreign currency gains that result from transactions denominated in a currency other than the Company’s functional currency. The cash flows related to foreign currency forward contracts are included in cash flows from operating activities. 6. Deferred Compensation and Retirement Plans The Company has several deferred compensation and retirement plans for eligible consultants and vice presidents that provide defined benefits to participants based on the deferral of current compensation or contributions made by the Company subject to vesting and retirement or termination provisions. F-24 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) The total benefit obligations for these plans were as follows: Year Ended April 30, 2021 2020 (in thousands) Deferred compensation and pension plans $ 178,994 $ 156,586 Medical and Life Insurance plan 6,584 7,527 International retirement plans 15,633 14,851 Executive Capital Accumulation Plan 163,582 129,315 Total benefit obligation 364,793 308,279 Less: current portion of benefit obligation (1) ( 18,338 ) ( 19,143 ) Non-current benefit obligation $ 346,455 $ 289,136 (1) Current portion of benefit obligation is included in Compensation and benefits payable in the consolidated balance sheet . Deferred Compensation and Pension Plans The EWAP was established in fiscal 1994, which replaced the WAP. Certain vice presidents elected to participate in a “deferral unit” that required the participant to contribute a portion of their compensation for an eight year period, or in some cases, make an after-tax contribution, in return for defined benefit payments from the Company over a fifteen year period at retirement age of 65 or later. Participants were able to acquire additional “deferral units” every five years . Vice presidents who did not choose to roll over their WAP units into the EWAP continue to be covered under the earlier version in which participants generally vest and commence receipt of benefit payments at retirement age of 65. In June 2003, the Company amended the EWAP and WAP, so as not to allow new participants or the purchase of additional deferral units by existing participants. In conjunction with the acquisition of Hay Group, the Company acquired multiple pension and savings plans covering certain of its employees worldwide. Among these plans is a defined benefit pension plan for certain employees in the U.S. The assets of this plan are held separately from the assets of the sponsors in self-administered funds. On July 8, 2016, the Company established the LTPU Plan in order to promote the success of the Company by providing a select group of management and highly compensated employees with nonqualified supplemental retirement benefits as an additional means to attract, motivate and retain such employees. A unit award has a base value of $ 50,000 for the purpose of determining the payment that would be made upon early termination for a partially vested unit award. The units vest 25 % on each anniversary date with the unit becoming fully vested on the fourth anniversary of the grant date, subject to the participant’s continued service as of each anniversary date. Each vested unit award will pay out an annual benefit of $ 25,000 for each of five years commencing on the seventh anniversary of the grant date. F-25 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Deferred Compensation and Pension Plans The following tables reconcile the benefit obligation for the deferred compensation plans: Year Ended April 30, 2021 2020 (in thousands) Change in benefit obligation: Benefit obligation, beginning of year $ 180,821 $ 148,369 Service cost 31,947 24,939 Interest cost 4,035 5,433 Actuarial (gain) loss ( 590 ) 13,427 Administrative expenses paid ( 265 ) ( 155 ) Benefits paid from plan assets ( 2,327 ) ( 3,932 ) Benefits paid from cash ( 7,881 ) ( 6,652 ) Plan amendment — ( 608 ) Benefit obligation, end of year 205,740 180,821 Change in fair value of plan assets: Fair value of plan assets, beginning of year 24,235 25,131 Actual return on plan assets 4,523 2,726 Benefits paid from plan assets ( 2,327 ) ( 3,932 ) Administrative expenses paid ( 265 ) ( 155 ) Employer contributions 580 465 Fair value of plan assets, end of year 26,746 24,235 Funded status and balance, end of year (1) $ ( 178,994 ) $ ( 156,586 ) Current liability $ 9,074 $ 8,887 Non-current liability 169,920 147,699 Total liability $ 178,994 $ 156,586 Plan Assets - weighted-average asset allocation: Debt securities 36 % 43 % Equity securities 62 % 56 % Other 2 % 1 % Total 100 % 100 % (1) The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. As the COLI contracts are held in trust and are not separated from our general corporate assets, they are not included in the funded status. As of April 30, 2021 and 2020, the Company held contracts with gross CSV of $ 241.3 million and $ 238.7 million, offset by outstanding policy loans of $ 80.0 million and $ 92.3 million, respectively . The pension obligation in fiscal 2021 increased compared to fiscal 2020 due to the ongoing accruals for the LTPU Plan for additional awards issued in fiscal 2021. The increase in pension benefit obligations was partially offset by a change in the mortality assumption. The mortality assumption was updated from the MP-2019 projection scale to the MP-2020 mortality projection scale which improved our funded position. Also improving the funded position was the actual return on plan assets that was greater than expected. The fair value measurements of the defined benefit plan assets fall within the following levels of the fair value hierarchy as of April 30, 2021 and 2020: F-26 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Level 1 Level 2 Level 3 Total (in thousands) April 30, 2021: Mutual funds $ — $ 26,140 $ — $ 26,140 Money market funds 606 — — 606 Total $ 606 $ 26,140 $ — $ 26,746 April 30, 2020: Mutual funds $ — $ 24,041 $ — $ 24,041 Money market funds 194 — — 194 Total $ 194 $ 24,041 $ — $ 24,235 Plan assets are invested in various asset classes that are expected to produce a sufficient level of diversification and investment return over the long term. The investment goal is a return on assets that is at least equal to the assumed actuarial rate of return over the long term within reasonable and prudent levels of risk. Investment policies reflect the unique circumstances of the respective plans and include requirements designed to mitigate risk including quality and diversification standards. Asset allocation targets are reviewed periodically with investment advisors to determine the appropriate investment strategies for acceptable risk levels. Our target allocation ranges are as follows: equity securities 50 % to 70 % and debt securities 30 % to 50 %. We establish our estimated long‑term return on plan assets considering various factors, including the targeted asset allocation percentages, historic returns and expected future returns. The components of net periodic benefits costs are as follows: Year Ended April 30, 2021 2020 2019 (in thousands) Service cost $ 31,947 $ 24,939 $ 17,281 Interest cost 4,035 5,433 5,044 Amortization of actuarial loss 4,117 3,261 1,798 Net prior service credit amortization ( 97 ) ( 24 ) — Expected return on plan assets ( 1,404 ) ( 1,452 ) ( 1,568 ) Net periodic benefit cost (1) $ 38,598 $ 32,157 $ 22,555 (1) The service cost, interest cost and other components of net periodic benefit costs are included in compensation and benefits expense, interest expense, net and other income (loss), net, respectively, on the consolidated statements of income. The weighted-average assumptions used in calculating the benefit obligations were as follows: Year Ended April 30, 2021 2020 2019 Discount rate, beginning of year 2.29 % 3.57 % 3.93 % Discount rate, end of year 2.17 % 2.29 % 3.57 % Rate of compensation increase 0.00 % 0.00 % 0.00 % Expected long-term rates of return on plan assets 6.00 % 6.00 % 6.00 % Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten years as follows: Year Ending April 30, Deferred Retirement Plans (in thousands) 2022 $ 11,544 2023 10,596 2024 15,589 2025 24,900 2026 33,811 2027-2031 213,120 F-27 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Medical and Life Insurance Plan In conjunction with the acquisition of Hay Group, the Company inherited a benefit plan which offers medical and life insurance coverage to 118 participants. The medical and life insurance benefit plan is unfunded. The following table reconciles the benefit obligation for the medical and life insurance plan: Year End April 30, 2021 2020 (in thousands) Change in benefit obligation: Benefit obligation, beginning of year $ 7,527 $ 7,310 Interest cost 140 227 Actuarial (gain) loss ( 549 ) 458 Benefits paid ( 534 ) ( 468 ) Benefit obligation, end of year $ 6,584 $ 7,527 Current liability $ 601 $ 666 Non-current liability 5,983 6,861 Total liability $ 6,584 $ 7,527 The components of net periodic benefits costs are as follows: Year Ended April 30, 2021 2020 2019 (in thousands) Service cost $ — $ — $ — Interest cost 140 227 243 Net periodic service credit amortization ( 308 ) ( 308 ) ( 308 ) Amortization of actuarial gain — — ( 14 ) Net periodic benefit cost (1) $ ( 168 ) $ ( 81 ) $ ( 79 ) (1) The service cost, interest cost and the other components of net periodic benefit costs are included in compensation and benefits expense, interest expense, net and other income (loss), net, respectively, on the consolidated statements of income. The weighted-average assumptions used in calculating the medical and life insurance plan were as follows: Year Ended April 30, 2021 2020 2019 Discount rate, beginning of year 2.45 % 3.67 % 3.94 % Discount rate, end of year 2.54 % 2.45 % 3.67 % Healthcare care cost trend rate 6.25 % 6.50 % 6.50 % Benefit payments, which reflect expected future service, as appropriate, are expected to be paid over the next ten years as follows: Year Ending April 30, Medical and Life Insurance (in thousands) 2022 $ 601 2023 595 2024 576 2025 552 2026 527 2027-2031 2,153 F-28 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) International Retirement Plans The Company also maintains various retirement plans and other miscellaneous deferred compensation arrangements in 24 foreign jurisdictions. The aggregate of the long-term benefit obligation accrued at April 30, 2021 and 2020 is $ 15.6 million for 2,557 participants and $ 14.9 million for 2,991 participants, respectively. The Company’s contribution to these plans was $ 12.7 million and $ 14.4 million in fiscal 2021 and 2020, respectively. Executive Capital Accumulation Plan The Company’s ECAP is intended to provide certain employees an opportunity to defer salary and/or bonus on a pre-tax basis. In addition, the Company, as part of its compensation philosophy, makes discretionary contributions into the ECAP and such contributions may be granted to key employees annually based on the employee’s performance. Certain key management may also receive Company ECAP contributions upon commencement of employment. The Company amortizes these contributions on a straight-line basis over the service period, generally a five year period. Participants have the ability to allocate their deferrals among a number of investment options and may receive their benefits at termination, retirement or ‘in service’ either in a lump sum or in quarterly installments over one-to-15 years. The ECAP amounts that are expected to be paid to employees over the next 12 months are classified as a current liability included in compensation and benefits payable on the accompanying consolidated balance sheets. The Company issued ECAP awards during fiscal 2021, 2020 and 2019 of $ 8.2 million, $ 9.0 million and $ 8.5 million, respectively. The ECAP is accounted for whereby the changes in the fair value of the vested amounts owed to the participants are adjusted with a corresponding charge (or credit) to compensation and benefits costs. During both fiscal 2021 and fiscal 2019, the deferred compensation liability increased; therefore, the Company recognized compensation expense of $ 37.3 million and $ 8.7 million, respectively. During fiscal 2020, deferred compensation liability decreased; therefore, the Company recognized a reduction in compensation expense of $ 0.8 million. Offsetting the increases in compensation and benefits expense in fiscal 2021 and 2019 was increases in the fair value of marketable securities (held in trust to satisfy obligations of the ECAP liabilities) of $ 38.5 million and $ 8.1 million in fiscal 2021 and 2019, respectively, recorded in other income (loss), net on the consolidated statements of income. Offsetting the decrease in compensation and benefits expense in fiscal 2020 was a decrease in the fair value of marketable securities (held in trust to satisfy obligations of the ECAP liabilities) $ 1.8 million in fiscal 2020, recorded in other income (loss), net on the consolidated statement of income. Changes in ECAP liability were as follows: Year Ended April 30, 2021 2020 (in thousands) Balance, beginning of year $ 129,315 $ 130,161 Employee contributions 4,935 8,215 Amortization of employer contributions 6,287 6,074 Gain (loss) on investment 37,323 ( 826 ) Employee distributions ( 15,652 ) ( 13,911 ) Exchange rate fluctuations 1,374 ( 398 ) Balance, end of year 163,582 129,315 Less: current portion ( 8,663 ) ( 9,590 ) Non-current portion $ 154,919 $ 119,725 As of April 30, 2021 and 2020, the unamortized portion of the Company contributions to the ECAP was $ 20.2 million and $ 17.0 million, respectively. Defined Contribution Plan The Company has a defined contribution plan (“401(k) plan”) for eligible employees. Participants may contribute up to 50 % of their base compensation as defined in the plan agreement. In addition, the Company has the option to make matching contributions. The Company intends to make matching contributions related to fiscal 2021 in fiscal 2022, which are accrued in compensation and benefits payable on the consolidated balance sheet. Due to the impact of COVID-19, the Company suspended matching contributions related to fiscal 2020. The Company made a $ 3.0 million matching contribution in fiscal 2020 related to contributions made by employees in fiscal 2019. F-29 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Company Owned Life Insurance The Company purchased COLI contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. The gross CSV of these contracts of $ 241.3 million and $ 238.7 million as of April 30, 2021 and 2020, respectively, is offset by outstanding policy loans of $ 80.0 million and $ 92.3 million in the accompanying consolidated balance sheets as of April 30, 2021 and 2020, respectively. 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. Management intends to use the future death benefits from these insurance contracts to fund the deferred compensation and pension arrangements; however, there may not be a direct correlation between the timing of the future cash receipts and disbursements under these arrangements. The CSV of the underlying COLI investments increased by $ 13.0 million, $ 6.6 million and $ 6.2 million during fiscal 2021, 2020 and 2019, respectively, recorded as a decrease in compensation and benefits expense. In addition, certain policies are held in trusts to provide additional benefit security for the deferred compensation and pension plans. As of April 30, 2021, COLI contracts with a net CSV of $ 145.1 million and death benefits, net of loans, of $ 398.9 million were held in trust for these purposes. 7. Fee Revenue Contract Balances A contract asset (unbilled receivables) is recorded when the Company transfers control of products or services before there is an unconditional right to payment. A contract liability (deferred revenue) is recorded when cash is received in advance of performance of the obligation. Deferred revenue represents the future performance obligations to transfer control of products or services for which we have already received consideration. Deferred revenue is presented in other accrued liabilities on the consolidated balance sheet. The following table outlines our contract asset and liability balances as of April 30, 2021 and 2020: April 30, 2021 2020 (in thousands) Contract assets-unbilled receivables $ 82,842 $ 65,370 Contract liabilities-deferred revenue $ 184,610 $ 133,128 During fiscal 2021, 2020 and 2019 we recognized revenue of $ 92.4 million, $ 94.1 million and $ 97.0 million, respectively, that were included in the contract liabilities balance at the beginning of the period. Performance Obligations The Company has elected to apply the practical expedient to exclude the value of unsatisfied performance obligations for contracts with a duration of one year or less, which applies to all executive search and professional search fee revenue. As of April 30, 2021, the aggregate transaction price allocated to the performance obligations that are unsatisfied for contracts with an expected duration of greater than one year at inception was $ 739.5 million. Of the $ 739.5 million of remaining performance obligations, we expect to recognize approximately $ 415.8 million in fiscal 2022, $ 197.3 million in fiscal 2023, $ 92.4 million in fiscal 2024 and the remaining $ 34.0 million in fiscal 2025 and thereafter . However, this amount should not be considered an indication of the Company’s future revenue as contracts with an initial term of one year or less are not included. Further, our contract terms and conditions allow for clients to increase or decrease the scope of services and such changes do not increase or decrease a performance obligation until the Company has an enforceable right to payment. Disaggregation of Revenue The Company disaggregates its revenue by line of business and further by region for Executive Search. This information is presented in Note 12— Segments . The following table provides further disaggregation of fee revenue by industry: F-30 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Year Ended April 30, 2021 2020 2019 Dollars % Dollars % Dollars % (dollars in thousands) Industrial $ 490,863 27.1 % $ 556,189 28.8 % $ 557,284 28.9 % Life Sciences/Healthcare 355,668 19.7 343,955 17.8 322,574 16.7 Financial Services 331,976 18.3 334,433 17.3 348,460 18.1 Consumer Goods 239,457 13.2 285,927 14.8 295,900 15.4 Technology 275,510 15.2 285,562 14.8 261,176 13.6 Education/Non – Profit/General 116,573 6.5 126,666 6.5 140,639 7.3 Fee Revenue $ 1,810,047 100.0 % $ 1,932,732 100.0 % $ 1,926,033 100.0 % 8. Credit Losses The Company is exposed to credit losses primarily through the provision of its Executive Search, Consulting and Digital services. The Company’s expected credit loss allowance methodology for accounts receivable is developed using historical collection experience, current and future economic and market conditions and a review of the current status of customers' trade accounts receivables. Due to the short-term nature of such receivables, the estimate of the amount of accounts receivable that may not be collected is primarily based on historical loss-rate experience. When required, the Company adjusts the loss-rate methodology to account for current conditions and reasonable and supportable expectations of future economic and market conditions. The Company generally assesses future economic conditions for a period of sixty to ninety days, which corresponds with the contractual life of its accounts receivables. Additionally, specific allowance amounts are established to record the appropriate provision for customers that have a higher probability of default. The Company’s monitoring activities include timely account reconciliation, dispute resolution, payment confirmation, consideration of customers' financial condition and macroeconomic conditions. Balances are written off when determined to be uncollectible. The Company considered the current and expected future economic and market conditions surrounding COVID-19 as of the end of the fiscal year and determined that the estimate of credit losses was not significantly impacted as of that date. The activity in the allowance for credit losses on the Company's trade receivables is as follows: (in thousands) Balance at April 30, 2018 $ 17,845 Provision for credit losses 14,260 Write-offs ( 10,608 ) Recoveries of amounts previously written off 911 Foreign currency translation ( 826 ) Balance at April 30, 2019 21,582 Provision for credit losses 14,644 Write-offs ( 12,518 ) Recoveries of amounts previously written off 398 Foreign currency translation ( 311 ) Balance at April 30, 2020 23,795 Provision for credit losses 15,763 Write-offs ( 12,073 ) Recoveries of amounts previously written off 311 Foreign currency translation 1,528 Balance at April 30, 2021 $ 29,324 The fair value and unrealized losses on available for sale debt securities, aggregated by investment category and the length of time the security has been in an unrealized loss position, are as follows: F-31 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Less Than 12 Months Balance Sheet Classification Fair Value Unrealized Loss Cash and Cash Equivalents Marketable Securities, Current Marketable Securities, Non-Current Balance at April 30, 2021 (in thousands) Commercial paper $ 36,378 $ 7 $ 5,749 $ 30,629 $ — Corporate notes/bonds $ 26,350 $ 20 $ — $ 10,133 $ 16,217 The unrealized losses on 18 investments in Commercial paper securities and 15 investments in Corporate notes/bonds were caused by fluctuations in market interest rates. The Company only purchases high grade bonds that have a maturity from the date of purchase of no more than two years. The Company monitors the credit worthiness of its investments on a quarterly basis. The Company does not intend to sell the investments and does not believe it will be required to sell the investments before the investments mature and therefore recover the amortized cost basis. 9. Income Taxes Income from continuing operations before provision for income taxes was as follows: Year Ended April 30, 2021 2020 2019 (in thousands) Domestic $ 34,661 $ 40,736 $ ( 22,039 ) Foreign 129,039 110,226 156,379 Income before provision for income taxes $ 163,700 $ 150,962 $ 134,340 The provision for domestic and foreign income taxes was as follows: Year Ended April 30, 2021 2020 2019 (in thousands) Current income taxes: Federal $ 16,913 $ 14,336 $ 6,152 State 4,719 4,974 9,097 Foreign 40,646 33,965 42,091 Current provision for income taxes 62,278 53,275 57,340 Deferred income taxes: Federal ( 5,809 ) ( 6,862 ) ( 16,211 ) State ( 5,025 ) ( 784 ) ( 7,682 ) Foreign ( 3,306 ) ( 1,684 ) ( 3,903 ) Deferred benefit for income taxes ( 14,140 ) ( 9,330 ) ( 27,796 ) Total provision for income taxes $ 48,138 $ 43,945 $ 29,544 The reconciliation of the statutory federal income tax rate to the effective consolidated tax rate is as follows: Year Ended April 30, 2021 2020 2019 U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State tax, net of federal effect 1.0 2.2 1.1 Foreign tax rates differential 4.5 4.5 5.0 Non-deductible officers compensation 2.3 0.5 1.1 Excess tax expense (benefit) on stock-based compensation 0.8 ( 1.0 ) ( 3.1 ) Change in valuation allowance 0.3 — ( 2.0 ) COLI increase, net ( 1.7 ) ( 0.9 ) ( 1.0 ) Change in uncertain tax positions 1.1 0.2 0.1 Other 0.1 2.6 ( 0.2 ) Effective income tax rate 29.4 % 29.1 % 22.0 % F-32 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Components of deferred tax assets and liabilities were as follows: April 30, 2021 2020 (in thousands) Deferred tax assets: Deferred compensation $ 107,834 $ 86,479 Operating lease liability 34,183 37,934 Loss carryforwards 39,704 27,845 Reserves and accruals 16,393 14,211 Allowance for doubtful accounts 4,885 4,029 Other — 2,703 Gross deferred tax assets 202,999 173,201 Deferred tax liabilities: Operating lease, right-of-use, assets ( 27,777 ) ( 29,998 ) Intangibles and Goodwill ( 26,570 ) ( 29,006 ) Property and equipment ( 20,590 ) ( 22,332 ) Prepaid expenses ( 23,928 ) ( 19,567 ) Marketable Securities ( 7,003 ) — Other ( 2,684 ) — Gross deferred tax liabilities ( 108,552 ) ( 100,903 ) Valuation allowances ( 25,173 ) ( 17,875 ) Net deferred tax asset $ 69,274 $ 54,423 Deferred tax assets are reduced by a valuation allowance if it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Management believes uncertainty exists regarding the realizability of certain deferred tax assets and has, therefore, established a valuation allowance for deferred tax assets that are not more-likely-than-not to be realized. Realization of the deferred tax asset is dependent on the Company generating enough taxable income of the appropriate nature in future years. Although realization is not assured, management believes that it is more likely than-not that the net deferred tax assets will be realized. Deferred tax assets and deferred tax liabilities are presented net on the consolidated balance sheets by tax jurisdiction. As of April 30, 2021, the Company had U.S. federal net operating loss carryforwards of $ 2.2 million, which the Company anticipates will be fully utilized by fiscal 2028 . The Company has state net operating loss carryforwards of $ 40.3 million, which, if unutilized, will begin to expire in fiscal 2022 . The Company also has foreign net operating loss carryforwards of $ 159.3 million, which, if unutilized, will begin to expire in fiscal 2022 . We continue to consider approximately $ 571.3 million of undistributed earnings of our foreign subsidiaries to be indefinitely reinvested, and, accordingly, have provided no taxes on such earnings other than the Transition Tax. While we do not anticipate a need to repatriate funds to the U.S. to satisfy domestic liquidity needs, we review our cash positions regularly and, to the extent we determine that all or a portion of our foreign earnings are not indefinitely reinvested, we provide additional taxes, if applicable, including foreign withholding taxes and U.S. state income taxes. The Company elected to treat taxes due on future U.S. inclusions in taxable income related to Global Intangible Low-Taxed Income as an expense when incurred (the “period cost method”) as opposed to factoring such amounts in the Company’s measurement of its deferred taxes (the “deferred method”). The Company and its subsidiaries file federal and state income tax returns in the U.S. as well as in foreign jurisdictions. These income tax returns are subject to audit by the Internal Revenue Service (the “IRS”) and various state and foreign tax authorities. Currently, income tax returns of the Company’s subsidiaries are under audit in Brazil, Germany, Switzerland, Japan and India. The Company’s income tax returns are not otherwise under examination in any material jurisdictions. The statute of limitations varies by jurisdiction in which the Company operates. With few exceptions, however, the Company’s tax returns for years prior to fiscal 2015 are no longer open to examination by tax authorities (including U.S. federal, state and foreign). F-33 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Unrecognized tax benefits are the differences between the amount of benefits of tax positions taken, or expected to be taken, on a tax return and the amount of benefits recognized for financial reporting purposes. As of April 30, 2021, the Company had a liability of $ 10.0 million for unrecognized tax benefits. A reconciliation of the beginning and ending balances of the unrecognized tax benefits is as follows: Year Ended April 30, 2021 2020 2019 (in thousands) Unrecognized tax benefits, beginning of year $ 6,037 $ 7,794 $ 3,674 Settlement with tax authority — ( 1,767 ) ( 1,771 ) Additions based on tax positions related to the current year 1,716 10 1,775 Additions based on tax positions related to prior years 2,201 — 4,116 Unrecognized tax benefits, end of year $ 9,954 $ 6,037 $ 7,794 The full amount of unrecognized tax benefits would impact the effective tax rate if recognized. In the next 12 months, it is reasonably possible that the Company’s unrecognized tax benefits could change due to the resolution of certain tax matters either because the tax positions are sustained on audit or the Company agrees to their disallowance. These resolutions could reduce the Company’s liability for unrecognized tax benefits by approximately $ 1.3 million. The Company does not expect a change in the amount of unrecognized tax benefits to have a material financial statement impact. The Company classifies interest and penalties related to unrecognized tax benefits as a component of the provision for income taxes. The Company had accruals of $ 0.9 million, $ 0.6 million, and $ 0.4 million for interest related to unrecognized tax benefits as of April 30, 2021, 2020, and 2019 respectively. The Company had an accrual of $ 0.5 million as of April 30, 2021, for penalties related to unrecognized tax benefits and no accrual for penalties related to unrecognized tax benefits in fiscal 2020 and 2019. The Company recognized tax expense of $ 0.8 million, $ 0.2 million, and $ 0.1 million for interest and penalties related to unrecognized tax benefits during fiscal 2021, 2020, and 2019, respectively. 10. Property and Equipment, Net Property and equipment include the following: April 30, 2021 2020 (in thousands) Computer equipment and software (1) $ 290,417 $ 261,970 Leasehold improvements 89,276 85,208 Furniture and fixtures 44,033 42,741 Automobiles 3,356 3,065 427,082 392,984 Less: accumulated depreciation and amortization ( 295,304 ) ( 250,256 ) Property and equipment, net $ 131,778 $ 142,728 (1) Depreciation expense for capitalized software was $ 25.4 million, $ 18.8 million and $ 14.6 million during fiscal 2021, 2020 and 2019, respectively. The net book value of the Company’s computer software costs included in property and equipment, net was $ 85.6 million and $ 86.3 million as of April 30, 2021 and 2020, respectively . Depreciation expense for property and equipment was $ 42.6 million, $ 39.0 million and $ 33.0 million during fiscal 2021, 2020 and 2019, respectively. F-34 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) 11. Long-Term Debt 4.625% Senior Unsecured Notes due 2027 On December 16, 2019, the Company completed a private placement of 4.625 % Senior Unsecured Notes due 2027 (the “Notes”) with a $ 400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $ 4.5 million discount and will mature December 15, 2027 , with interest payable semi-annually in arrears on June 15 and December 15 of each year, commencing on June 15, 2020 . The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. The Company may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. At any time prior to December 15, 2022, the Company may redeem the Notes at a redemption price equal to 100 % of the principal plus the Applicable Premium (as defined in the indenture governing the Notes), and accrued and unpaid interest. At any time prior to December 15, 2022, the Company 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, the Company may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the 12-month period beginning on December 15 of each of the years indicated: Year Percentage 2022 102.313 % 2023 101.156 % 2024 and thereafter 100.000 % The Notes allow the Company to pay $ 25 million of dividends per fiscal year with no restrictions, plus an unlimited amount of dividends so long as the Company’s consolidated total leverage ratio is not greater than 3.50 to 1.00, and the Company is not in default under the indenture governing the Notes. The Notes are guaranteed by each of the Company's existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee the Company's revolving credit facility. The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), the Company shall make an offer to purchase all of the Notes at 101 % of their principal amount and accrued and unpaid interest. The Company used the proceeds from the offering of the Notes to repay $ 276.9 million outstanding under the Company’s prior revolving credit facility and to pay expenses and fees in connection therewith. The remainder of the proceeds were used for general corporate requirements. The effective interest rate on the Notes is 4.86 %. As of April 30, 2021 and 2020, the fair value of the Notes was $ 416.5 million and $ 372.5 million, respectively, based on borrowing rates then required of notes with similar terms, maturity and credit risk. The fair value of the Notes was classified as a Level 2 measurement in the fair value hierarchy. Long-term debt, at amortized cost, consisted of the following: In thousands April 30, 2021 April 30, 2020 Senior Unsecured Notes $ 400,000 $ 400,000 Less: Unamortized discount and issuance costs ( 5,206 ) ( 5,856 ) Long-term borrowings, net of unamortized discount and debt issuance costs $ 394,794 $ 394,144 Credit Facility On December 16, 2019 , the Company entered into a Credit Agreement (the “Credit Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent to among other things, provide for enhanced financial flexibility. The Credit Agreement provides for a $ 650.0 million five-year senior secured revolving credit facility (the “Revolver”), and contains certain customary affirmative and negative covenants, including a maximum consolidated net leverage ratio, a maximum consolidated secured net leverage ratio and a minimum interest coverage ratio. The Credit Agreement permits the payment of dividends to stockholders and Company share repurchases so long as there is no default under the Credit Agreement, the 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 the pro forma liquidity is at least $ 50.0 million. F-35 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) The principal balance of the Revolver, if any, is due on the date of its termination. The Revolver matures on December 16, 2024 and any unpaid principal balance is payable on this date. The Revolver may also be prepaid and terminated early by the Company at any time without premium or penalty (subject to customary LIBOR breakage fees). At the Company’s option, loans issued under the Credit Agreement will bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Credit Agreement may fluctuate between LIBOR plus 1.125 % per annum to LIBOR plus 2.00 % per annum, in the case of LIBOR borrowings (or between the alternate base rate plus 0.125 % per annum and the alternate base rate plus 1.00 % per annum, in the alternative), based upon the Company’s total funded debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidated net leverage ratio”) at such time. In addition, the Company will be required to pay to the lenders a quarterly commitment fee ranging from 0.175 % to 0.35 % per annum on the average daily unused amount of the Revolver, based upon the Company’s consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit. The average interest rate on our current and previous term loan for fiscal 2020 and 2019 was 3.34 % and 3.50 %, respectively. 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 was $ 3.3 million and $ 4.2 million as of April 30, 2021 and 2020, respectively. The debt issuance costs were included in other current assets and other non-current assets on the consolidated balance sheets. As of April 30, 2021, the Company was in compliance with its debt covenants. The Company had a total of $ 646.0 million available under the Revolver after $ 4.0 million of standby letters of credit have been issued as of April 30, 2021 and 2020. The Company had a total of $ 11.0 million and $ 11.3 million of standby letters with other financial institutions as of April 30, 2021 and 2020, respectively. The standby letters of credit were generally issued as a result of entering into office premise leases. The Company has outstanding borrowings against the CSV of COLI contracts of $ 80.0 million and $ 92.3 million at April 30, 2021 and 2020, respectively. CSV reflected in the accompanying consolidated balance sheets is net of the outstanding borrowings, which are secured by the CSV of the life insurance policies. Principal payments are not scheduled and interest is payable at least annually at various fixed and variable rates ranging from 4.76 % to 8.00 %. 12. Segments The Company 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. Revenues are directly attributed to a reportable segment and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors. The Company’s seven reportable segments operate through the following four lines of business: 1. 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. 2. Digital leverages an artificial intelligence powered, machine-learning platform to identify structure, roles, capabilities and behaviours needed to drive business forward. This end-to-end system combines Korn Ferry proprietary data, client data, and external market data to generate insight and recommend action. 3. Executive Search helps organizations recruit board level, chief executive and other senior executive and general management talent. Behavioral interviewing and proprietary assessments are used to determine ideal organizational fit, and salary benchmarking builds appropriate frameworks for compensation and retention. 4. 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. F-36 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Executive Search is managed by geographic regional leaders . Worldwide operations for Consulting, Digital, and RPO and Professional Search are managed by their Chief Executive Officers. The Executive Search geographic regional leaders and the Chief Executive Officers of Consulting, Digital, and RPO & Professional Search report directly to the Chief Executive Officer of the Company. The Company also operates Corporate to record global expenses. The Company evaluates performance and allocates resources based on the Company’s chief operating decision maker (“CODM”) review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such costs or charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other impairment charges). The CODM is not provided asset information by reportable segment. Financial highlights by reportable segments are as follows: Year Ended April 30, 2021 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 515,844 $ 287,306 $ 397,275 $ 138,954 $ 83,306 $ 17,500 $ 369,862 $ — $ 1,810,047 Total revenue $ 517,046 $ 287,780 $ 399,104 $ 139,213 $ 83,463 $ 17,500 $ 375,840 $ — $ 1,819,946 Net income attributable to Korn Ferry $ 114,454 Net income attributable to noncontrolling interest 1,108 Other income, net ( 37,194 ) Interest expense, net 29,278 Income tax provision 48,138 Operating income $ 155,784 Depreciation and amortization 61,845 Other income, net 37,194 Integration/acquisition costs 737 Restructuring charges, net 30,732 Adjusted EBITDA (1) $ 81,522 $ 86,095 $ 98,099 $ 11,742 $ 16,676 $ 1,289 $ 69,411 $ ( 78,542 ) $ 286,292 (1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes integration/acquisition and net restructuring charges. Year Ended April 30, 2020 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 543,095 $ 292,366 $ 434,624 $ 170,314 $ 98,132 $ 29,400 $ 364,801 $ — $ 1,932,732 Total revenue $ 557,255 $ 294,261 $ 447,528 $ 172,978 $ 99,209 $ 29,493 $ 376,606 $ — $ 1,977,330 Net income attributable to Korn Ferry $ 104,946 Net income attributable to noncontrolling interest 2,071 Other loss, net 2,879 Interest expense, net 22,184 Income tax provision 43,945 Operating income $ 176,025 Depreciation and amortization 55,311 Other loss, net ( 2,879 ) Integration/acquisition costs 12,152 Restructuring charges, net 58,559 Separation costs 1,783 Adjusted EBITDA (1) $ 61,092 $ 83,073 $ 120,725 $ 31,067 $ 22,885 $ 6,402 $ 60,168 $ ( 84,461 ) $ 300,951 (1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes integration/acquisition costs, net restructuring charges and separation costs. F-37 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Year Ended April 30, 2019 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 568,321 $ 252,727 $ 455,826 $ 182,829 $ 104,291 $ 31,896 $ 330,143 $ — $ 1,926,033 Total revenue $ 585,893 $ 252,727 $ 469,743 $ 186,131 $ 105,543 $ 31,960 $ 341,865 $ — $ 1,973,862 Net income attributable to Korn Ferry $ 102,651 Net income attributable to noncontrolling interest 2,145 Other income, net ( 10,405 ) Interest expense, net 16,891 Income tax provision 29,544 Operating income $ 140,826 Depreciation and amortization 46,489 Other income, net 10,405 Integration/acquisition costs 6,746 Tradename write-offs 106,555 Adjusted EBITDA (1) $ 66,531 $ 84,455 $ 131,343 $ 31,660 $ 26,073 $ 4,730 $ 54,407 $ ( 88,178 ) $ 311,021 (1) Adjusted EBITDA refers to earnings before interest, taxes, depreciation and amortization and further excludes, integration/acquisition costs and tradename write-offs . Fee revenue attributed to an individual customer or country, other than the U.S. and United Kingdom, did not account for more than 10 % of the total fee revenue in fiscal 2021, 2020 or 2019. Fee revenue classified by country in which the Company derives revenues are as follows: Year Ended April 30, 2021 2020 2019 (in thousands) U.S. $ 837,682 $ 875,605 $ 859,969 United Kingdom 189,893 204,271 202,055 Other countries 782,472 852,856 864,009 Total fee revenue $ 1,810,047 $ 1,932,732 $ 1,926,033 Other than the U.S. and United Kingdom, no single country had over 10% of the total long-lived assets, excluding financial instruments and tax assets. Long-lived assets, excluding financial instruments and tax assets, classified by location of the controlling statutory country are as follows: Year Ended April 30, 2021 2020 2019 (in thousands) U.S. (1) $ 182,218 $ 199,436 $ 98,455 United Kingdom 34,081 35,739 6,466 Other countries 89,600 102,630 26,584 Total long-lived assets $ 305,899 $ 337,805 $ 131,505 (1) Includes Corporate long-lived assets 13. Restructuring Charges, Net On April 20, 2020, in light of the uncertainty in worldwide economic conditions caused by the COVID-19 pandemic and, as part of a broader program aimed at further enhancing Korn Ferry’s strong balance sheet and liquidity position, the Company adopted a restructuring plan intended to adjust its cost base to the current economic environment and to position the Company to invest into the recovery. The Company continued the implementation of this plan in the first quarter of fiscal 2021. There were no new such actions in the rest of fiscal 2021. Rather, the Company completed the actions initiated in prior quarters and made adjustments to previously recorded restructuring accruals resulting in restructuring charges, net of $ 30.7 million and $ 40.5 million during fiscal 2021 and 2020, respectively, across all lines of business relating to severance for eliminated positions. F-38 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) In the third quarter of fiscal 2020, the Company adopted a restructuring plan to rationalize its cost structure to realize the efficiencies and operational improvement that the investments in the Digital business, as discussed in Note 12— Segments , have enabled, or position us to realize. The restructuring plan impacted both the Consulting and Digital segments and included the elimination of redundant positions, which resulted in restructuring charges, net of $ 18.1 million in fiscal 2020, relating to severance for eliminated positions. Changes in the restructuring liability were as follows: Restructuring Liability (in thousands) As of April 30, 2019 $ 531 Restructuring charges, net 58,559 Reductions for cash payments ( 16,737 ) Non-cash payments ( 8,053 ) Exchange rate fluctuations ( 147 ) As of April 30, 2020 34,153 Restructuring charges, net 30,732 Reductions for cash payments ( 56,387 ) Non-cash payments ( 3,968 ) Exchange rate fluctuations 2,455 As of April 30, 2021 $ 6,985 As of April 30, 2021 and 2020, the restructuring liability is included in the current portion of other accrued liabilities on the consolidated balance sheets, except for $ 0.6 million and $ 0.6 million, respectively, which are included in other long-term liabilities. 14. Goodwill and Intangible Assets Changes in the carrying value of goodwill by reportable segment were as follows: Executive Search Consulting Digital North America EMEA Asia Pacific RPO & Professional Search Consolidated (in thousands) Balance as of May 1, 2019 $ 173,147 $ 284,214 $ 46,571 $ 45,480 $ 972 $ 27,914 $ 578,298 Additions — 38,926 — — — — 38,926 Exchange rate fluctuations ( 133 ) ( 413 ) ( 850 ) ( 986 ) — ( 899 ) ( 3,281 ) Balance as of April 30, 2020 173,014 322,727 45,721 44,494 972 27,015 613,943 Adjustments — 2,643 — — — — 2,643 Exchange rate fluctuations 396 1,258 2,777 2,955 — 2,697 10,083 Balance as of April 30, 2021 $ 173,410 $ 326,628 $ 48,498 $ 47,449 $ 972 $ 29,712 $ 626,669 Tax deductible goodwill from the Miller Heiman acquisition was $ 24.5 million and $ 34.9 million as of April 30, 2021 and 2020, respectively. Tax deductible goodwill from the PIVOT Leadership acquisition was $ 6.6 million and $ 7.2 million as of April 30, 2021 and 2020, respectively. F-39 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Intangible assets include the following: April 30, 2021 April 30, 2020 (in thousands) Amortized intangible assets: Gross Accumulated Amortization Net Gross Accumulated Amortization Net Customer lists $ 131,299 $ ( 76,489 ) $ 54,810 $ 131,299 $ ( 64,762 ) $ 66,537 Intellectual property 69,100 ( 33,623 ) 35,477 69,100 ( 26,548 ) 42,552 Proprietary databases 4,256 ( 4,234 ) 22 4,256 ( 4,202 ) 54 Non-compete agreements 910 ( 910 ) — 910 ( 910 ) — Trademarks 7,186 ( 4,636 ) 2,550 7,186 ( 4,236 ) 2,950 Total $ 212,751 $ ( 119,892 ) 92,859 $ 212,751 $ ( 100,658 ) 112,093 Exchange rate fluctuations 90 ( 167 ) Total Intangible assets $ 92,949 $ 111,926 Acquisition-related intangible assets acquired in fiscal 2020 consists of IP, customer relationships and tradenames of $ 36.0 million, $ 6.2 million, and $ 3.2 million, respectively, with weighted-average useful lives from the date of purchase of seven years , ten years , and nine years , respectively. During fiscal 2019, the Company decided to further integrate our go-to-market activities under one master brand —Korn Ferry, and discontinued the use of all sub-brands. Two of the Company’s sub-brands, Hay Group and Lominger, were acquired by Korn Ferry through acquisitions. As a result of the decision to discontinue their use, the Company took a non-cash intangible asset impairment charge of $ 106.6 million during fiscal 2019, recorded in general and administrative expenses on the accompanying statement of income, of which $ 77.0 million was recorded in the Consulting reportable segment and $ 29.6 million in the Digital reportable segment. Amortization expense for amortized intangible assets was $ 19.2 million, $ 16.3 million and $ 13.5 million during fiscal 2021, 2020 and 2019, respectively. Estimated annual amortization expense related to amortizing intangible assets is as follows: Year Ending April 30, Estimated Annual Amortization Expense (in thousands) 2022 $ 19,123 2023 17,271 2024 14,794 2025 14,679 2026 14,174 Thereafter 12,908 $ 92,949 All amortizable intangible assets will be fully amortized by the end of fiscal 2032 . 15. Leases The Company’s lease portfolio is comprised of operating leases for office space and equipment and finance leases for equipment. Equipment leases are comprised of vehicles and office equipment. The majority of the Company’s leases include both lease and non-lease components. Non-lease components primarily include maintenance, insurance, taxes and other utilities. The Company has decided to combine fixed payments for non-lease components with its lease payments and account for them as a single lease component, which increases its ROU assets and lease liabilities. Some of the leases include one or more options to renew or terminate the lease at the Company’s discretion. Generally, the renewal and termination options are not included in the ROU assets and lease liabilities as they are not reasonably certain of exercise. The Company has elected not to recognize a ROU asset or lease liability for leases with an initial term of 12 months or less. F-40 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of the future minimum lease payments. The Company applies the portfolio approach when determining the incremental borrowing rate since it has a centrally managed treasury function. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments in a similar economic environment. Operating leases contain both office and equipment leases and have remaining terms that range from less than one year to 11 years, some of which also include options to extend or terminate the lease. Finance leases are comprised of equipment leases and have remaining terms that range from less than one year to almost 5 years. Finance lease assets are included in property and equipment, net while finance lease liabilities are included in other accrued liabilities and other liabilities. As a result of the acquisition of the Acquired Companies in fiscal 2020, the Company recognized ROU assets of $ 3.2 million with a corresponding liability of $ 6.7 million. The ROU asset balance was adjusted by reclassification of pre-existing prepaid expenses, restructuring liabilities and deferred rent totaling $ 3.5 million. As part of the plan for integrating the Acquired Companies, the Company decided to exit 16 office leases and as a result, recorded an impairment charge of the ROU assets of $ 2.3 million in fiscal 2020 recorded in the consolidated statement of income. The components of lease expense were as follows: Year Ended April 30, 2021 2020 (in thousands) Finance lease cost Amortization of ROU assets $ 1,221 $ 1,820 Interest on lease liabilities 114 149 1,335 1,969 Operating lease cost 56,166 57,683 Short-term lease cost 474 1,111 Variable lease cost 11,592 13,562 Lease impairment cost — 2,282 Sublease income ( 657 ) ( 447 ) Total lease cost $ 68,910 $ 76,160 Rent expense, as previously defined under ASC 840, which includes the Company leased office premises and certain office equipment leases for fiscal 2019 was $ 58.2 million. Supplemental cash flow information related to leases was as follows: Year Ended April 30, 2021 2020 (in thousands) Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 66,991 $ 59,631 Financing cash flows from finance leases $ 1,324 $ 1,833 ROU assets obtained in exchange for lease obligations: Operating leases $ 13,638 $ 15,246 Finance leases $ 516 $ 1,333 F-41 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) Supplemental balance sheet information related to leases was as follows: Year Ended April 30, 2021 2020 (in thousands) Finance Leases: Property and equipment, at cost $ 4,801 $ 4,281 Accumulated depreciation ( 2,590 ) ( 1,485 ) Property and equipment, net $ 2,211 $ 2,796 Other accrued liabilities $ 1,010 $ 1,241 Other liabilities 1,301 1,634 Total finance lease liabilities $ 2,311 $ 2,875 Weighted average remaining lease terms: Operating leases 5.0 years 5.5 years Finance leases 2.7 years 2.9 years Weighted average discount rate: Operating leases 4.8 % 4.8 % Finance leases 4.2 % 4.1 % Maturities of lease liabilities are as follows: Year Ending April 30, Operating Financing (in thousands) 2022 $ 56,636 $ 1,084 2023 48,092 784 2024 41,216 439 2025 34,653 130 2026 29,350 — Thereafter 20,734 — Total lease payments 230,681 2,437 Less: imputed interest 26,697 126 Total $ 203,984 $ 2,311 16. Acquisition On November 1, 2019, the Company completed its acquisition of the Acquired Companies for $ 108.6 million, net of cash acquired. The Acquired Companies contributed a world-class portfolio of learning, development and performance improvement offerings and expertise to Korn Ferry and bolster the Company’s substantial leadership development capabilities. These companies are included in the Digital segment which, working closely with the Consulting segment, provides clients with direct access to data, insights and analytics from one of the world’s most comprehensive people and organizational databases. The addition of the Acquired Companies further expanded Korn Ferry’s vast IP and content and leveraged the firm’s digital delivery platforms. Actual results of operations of the Acquired Companies are included in the Company’s consolidated financial statements from November 1, 2019, the effective date of the acquisition. F-42 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) The following table provides a summary of the net assets acquired in fiscal 2020 (as no acquisitions were completed in fiscal 2021 or 2019): Year Ended April 30, 2020 (in thousands) Current assets (1) $ 44,475 Long-term assets 15,024 Intangibles assets 45,400 Current liabilities 29,503 Long-term liabilities 5,720 Net assets acquired 69,676 Purchase price 108,602 Goodwill $ 38,926 (1) Included in current assets is acquired receivables in the amount of $ 41.1 million. The aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed on their estimated fair values at the date of acquisition. During fiscal 2021, the Company finalized the purchase price allocation by recording an increase in goodwill of $ 2.6 million as a result of additional tax liabilities. 17. Commitments and Contingencies Employment Agreements The Company has a policy of entering into offer letters of employment or letters of promotion with vice presidents, which provide for an annual base salary and discretionary and incentive bonus payments. Certain key vice presidents who typically have been employed by the Company for several years may also have a standard form employment agreement. Upon termination without cause, the Company is required to pay the amount of severance due under the employment agreement, if any. The Company also requires its vice presidents to agree in their employment letters and their employment agreement, if applicable, not to compete with the Company during the term of their employment and for a certain period after their employment ends. Litigation From time to time, the Company has been and is involved in litigation incidental to its business. The Company is currently not a party to any litigation which, if resolved adversely against the Company, would, in the opinion of management, after consultation with legal counsel, have a material adverse effect on the Company’s business, financial position or results of operations. 18. Quarterly Results (Unaudited) The following table sets forth certain unaudited consolidated statements of income data for the quarters in fiscal 2021 and 2020. The unaudited quarterly information has been prepared on the same basis as the annual financial statements and, in management’s opinion, includes all adjustments necessary to present fairly the information for the quarters presented. Quarters Ended Fiscal 2021 Fiscal 2020 April 30 January 31 October 31 July 31 April 30 January 31 October 31 July 31 (in thousands, except per share data) Fee revenue $ 555,151 $ 475,360 $ 435,439 $ 344,097 $ 440,469 $ 515,325 $ 492,389 $ 484,549 Operating income (loss) $ 86,252 $ 65,155 $ 48,172 $ ( 43,795 ) $ 22,227 $ 31,595 $ 61,869 $ 60,334 Net income (loss) $ 66,751 $ 51,588 $ 28,078 $ ( 30,855 ) $ ( 621 ) $ 20,956 $ 43,032 $ 43,650 Net income (loss) attributable to Korn Ferry $ 66,190 $ 51,319 $ 27,778 $ ( 30,833 ) $ ( 802 ) $ 19,993 $ 42,804 $ 42,951 Net earnings (loss) per common share: Basic $ 1.22 $ 0.95 $ 0.51 $ ( 0.58 ) $ ( 0.02 ) $ 0.37 $ 0.78 $ 0.77 Diluted $ 1.21 $ 0.94 $ 0.51 $ ( 0.58 ) $ ( 0.02 ) $ 0.36 $ 0.77 $ 0.76 F-43 KORN FERRY AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS April 30, 2021 (continued) 19. Subsequent Event Quarterly Dividend Declaration On June 21, 2021 , the Board of Directors of the Company approved an increase of 20 % in the Company’s quarterly dividend policy to $ 0.12 per share and declared a cash dividend of $ 0.12 per share with a payment date of July 30, 2021 to holders of the Company’s common stock of record at the close of business on July 6, 2021 . The declaration and payment of future dividends under the quarterly dividend policy will be at the discretion of the Board of Directors and will depend upon many factors, including the Company’s earnings, capital requirements, financial condition, the terms of the Company’s indebtedness and other factors that the Board of Directors may deem to be relevant. The Board may amend, revoke or suspend the dividend policy at any time and for any reason. F-44 KORN FERRY AND SUBSIDIARIES SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS April 30, 2021 Column A Column B Column C Column D Column E Additions Description Balance at Beginning of Period Charges to Cost and Expenses Charges to Other Accounts Deductions Balance at End of Period (in thousands) Deferred tax asset valuation allowance: Year Ended April 30, 2021 $ 17,875 $ 1,642 $ 8,119 $ ( 2,463 ) $ 25,173 Year Ended April 30, 2020 $ 14,032 $ 886 $ 3,939 $ ( 982 ) $ 17,875 Year Ended April 30, 2019 $ 15,682 $ 5,170 $ — $ ( 6,820 ) $ 14,032 F-45