KORN FERRY 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements This Quarterly Report on Form 10-Q may contain certain statements that we believe are, or may be considered to be, “forward-looking” statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements generally can be identified by use of statements that include phrases such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “foresee,” “may,” “will,” “likely,” “estimates,” “potential,” “continue” or other similar words or phrases. Similarly, statements that describe our objectives, plans or goals, as well as the magnitude and duration of the impact of the global (“COVID-19”) pandemic on our business, employees, customers and our ability to provide services in affected regions. These forward-looking statements are subject to risks and uncertainties that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statement. The principal risk factors that could cause actual performance and future actions to differ materially from the forward-looking statements include, but are not limited to, those relating to the ultimate magnitude and duration of COVID-19 and of any future pandemics or similar outbreaks, and related restrictions and operational requirements that apply to our business and the businesses of our clients, and any related negative impacts on our business, employees, customers and our ability to provide services in affected regions, global and local political and or economic developments in or affecting countries where we have operations, competition, changes in demand for our services as a result of automation, dependence on and costs of attracting and retaining qualified and experienced consultants, maintaining our relationships with customers and suppliers and retaining key employees, maintaining our brand name and professional reputation, potential legal liability and regulatory developments, portability of client relationships, consolidation of or within the industries we serve, changes and developments in governmental laws and regulations, evolving investor and customer expectations with regard to environmental matters, currency fluctuations in our international operations, risks related to growth, alignment of our cost structure, restrictions imposed by off-limits agreements, reliance on information processing systems, cyber security vulnerabilities or events, changes to data security, data privacy, and data protection laws, dependence on third parties for the execution of critical functions, limited protection of our intellectual property (“IP”), our ability to enhance and develop new technology, our ability to successfully recover from a disaster or other business continuity problems, employment liability risk, an impairment in the carrying value of goodwill and other intangible assets, treaties, or regulations on our business and our Company, deferred tax assets that we may not be able to use, our ability to develop new products and services, the impact of the United Kingdom’s withdrawal from the European Union, changes in our accounting estimates and assumptions, the utilization and billing rates of our consultants, seasonality, the expansion of social media platforms, the ability to effect acquisitions, our indebtedness, the phase-out of LIBOR, and the matters disclosed under the heading “Risk Factors” in the Company’s Exchange Act reports, including Item 1A included in the Annual Report on Form 10-K for the fiscal year ended April 30, 2021 (the “Form 10-K”). Readers are urged to consider these factors carefully in evaluating the forward-looking statements. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Quarterly Report on Form 10-Q, and we undertake no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances. The following presentation of management’s discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q. We also make available on the Investor Relations portion of our website earnings slides and other important information, which we encourage you to review. Executive Summary Korn Ferry (referred to herein as the “Company” or in the first-person notations “we,” “our” and “us”) is a global organizational consulting firm. We help clients synchronize strategy, operations and talent to drive superior business performance. We work with organizations to design their structures, roles and responsibilities. We help them hire the right people to bring their strategy to life. And we advise them on how to reward, develop and motivate their people. We are pursuing a strategy that will help Korn Ferry to focus on clients and collaborate intensively across the organization. This approach builds on the best of our past and gives us a clear path to the future with focused initiatives to increase our client and commercial impact. Korn Ferry is transforming how clients address their talent management needs. We have evolved from a mono-line business to a multi-faceted consultancy business, giving our consultants more frequent and expanded opportunities to engage with clients. 25 Our 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 (“AI”) powered, machine-learning platform to identify the best structures, roles, capabilities and behaviors needed to drive business forward. The end-to-end system combines Korn Ferry proprietary data, client data, and external market data to generate insight and recommend action. 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 & 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. 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. ▪ Approximately 75% of the executive searches we performed in fiscal 2021 were for board level, chief executive and other senior executive and general management positions. Our 3,635 search engagement clients in fiscal 2021 included many of the world’s largest and most prestigious public and private companies. ▪ We have built strong client loyalty, with 90% of the assignments performed during fiscal 2021 having been on behalf of clients for whom we had conducted assignments in the previous three fiscal years. ▪ Approximately 70% of our revenues were generated from clients that have utilized multiple lines of our business. ▪ A vital pillar of our growth strategy is Digital. Our data and IP are embedded into the core business processes of our clients, helping us generate long-term relationships through large scale and technology-based talent programs. ▪ In fiscal 2021, Korn Ferry was recognized as one of the top RPO providers in the Baker’s Dozen list, marking our 14th consecutive year on the list. We were also named leader on the Everest PEAK Matrix for four years running and achieved star performer status in 2021, with an improved leader position from 2020. Through decades of experience, we have enhanced our RPO solution to deliver quality candidates that drive our clients’ business strategies. We leverage proprietary IP and data sets to guide clients on the critical skills and competencies to look for, compensation information to align with market demand, and assessment tools to ensure candidate fit. In fiscal 2021, we introduced Nimble, a new, fully integrated recruitment technology solution incorporating Candidate Relationship Management, AI Assistance & Screening and Korn Ferry Assessments. The Impact of COVID-19 In March 2020, COVID-19 was reported to have spread to over 100 countries, territories or areas, worldwide, and in the fourth quarter of fiscal 2020 the World Health Organization declared it a pandemic. The negative business impact from the pandemic was felt throughout all the geographical areas in which we do business during the first quarter of fiscal 2021. Governments and companies implemented social distancing - limiting either travel or in person individual or group face-to-face interaction as well as working from home to adhere to stay at home orders from national, state and city governments. Such restrictions initially impacted our ability to provide our products and services to our clients with such impact lessening in the second, third and fourth quarters of fiscal 2021 as the world learned to work in different ways. Starting in the fourth quarter of fiscal 2020 and continuing in the first quarter of fiscal 2021, the outbreak restricted the level of economic activity in the areas in which we operate and had an adverse impact on demand for and sales of our products and services. As a result of this, we initiated a plan in April 2020 that was intended to adjust our cost base to the economic environment at that time and to position us to invest in the recovery. This plan resulted in restructuring charges of $27.5 million associated with severance during three months ended July 31, 2020. During the last three quarters, the Company has seen business conditions improve substantially from where they were in the second and first quarters of fiscal 2021. While advances have been made in the science and societal and economic consequences of COVID-19, there remains significant uncertainty about the future impacts of COVID-19. On the positive side, governments around the world have begun distributing and administering the vaccine. In addition, the world has adopted new ways of working and interacting with 26 substantial acceptance of business being conducted in a virtual world. On the negative side, there is a new more contagious variant of the virus that is infecting areas around the world , including portions of the United States and individuals that have been vaccinated. Knowledge is evolving as to the effectiveness of the vaccine against this and other mutations of the virus. There also have been challenges in manufacturing the vaccines at scale as well as distributing and administrating them to the population at large in many countries around the world , including those where we operate . Therefore, it is unknown whether and for how long restrictions may need to be re- implemented in those or other ju ri sdictions . With the i mpro vement in business activity we experienced in the last three quarters, we believe our costs are in line with our current revenu e levels. However, uncertainties such as the impact that the new contagious variant of the virus may have in regions around the world, how long the vaccine is effective and whether new restrictions are imposed (or prior restrictions re-imposed), make us unable to give assurance that the rate of increase in fee revenue during the three months ended July 3 1 , 2021, will continue in the three months ended October 31, 2021 and beyond . Given the amount available from our current revolver and the amount of cash and cash equivalents and marketable securities net of amounts held in trust for deferred compensation and accrued bonuses, we believe that we have sufficient liquidity to meet our anticipated working capital, capital expenditures, general corporate requirements, debt obligation repayments and dividend payments under our dividend policy in the next 12 months. Performance Highlights The Company evaluates performance and allocates resources based on the chief operating decision maker’s review of (1) fee revenue and (2) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration/acquisition costs, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairments of investments). For the three months ended July 31, 2020, Adjusted EBITDA excluded $27.5 million of restructuring charges and $0.7 million of integration/acquisition costs. For the three months ended July 31, 2021, there were no restructuring charges and no integration/acquisition costs. Consolidated and the subtotals of Executive Search Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP financial measures and have limitations as analytical tools. They should not be viewed as a substitute for financial information determined in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”) and should not be considered in isolation or as a substitute for analysis of the Company’s results as reported under GAAP. In addition, they may not necessarily be comparable to non-GAAP performance measures that may be presented by other companies. Management believes the presentation of these non-GAAP financial measures provides meaningful supplemental information regarding Korn Ferry’s performance by excluding certain charges, items of income and other items that may not be indicative of Korn Ferry’s ongoing operating results. The use of these non-GAAP financial measures facilitates comparisons to Korn Ferry’s historical performance and the identification of operating trends that may otherwise be distorted by the factors discussed above. Korn Ferry includes these non-GAAP financial measures because management believes it is useful to investors in allowing for greater transparency with respect to supplemental information used by management in its evaluation of Korn Ferry’s ongoing operations and financial and operational decision-making. The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies in the accompanying consolidated financial statements, except that the above noted items are excluded to arrive at Adjusted EBITDA. Management further believes that Adjusted EBITDA is useful to investors because it is frequently used by investors and other interested parties to measure operating performance among companies with different capital structures, effective tax rates and tax attributes and capitalized asset values, all of which can vary substantially from company to company. Fee revenue was $585.4 million during the three months ended July 31, 2021, an increase of $241.3 million, or 70%, compared to $344.1 million in the three months ended July 31, 2020, with increases in fee revenue across all lines of business due to the Company’s recovery from COVID-19, which adversely impacted the Company on a worldwide basis in the year-ago quarter. Exchange rates favorably impacted fee revenue by $14.0 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter. Net income attributable to Korn Ferry in the three months ended July 31, 2021 was $74.8 million, an increase of $105.6 million as compared to net loss attributable to Korn Ferry of $30.8 million in the year-ago quarter. Adjusted EBITDA in the three months ended July 31, 2021 was $121.3 million, an increase of $110.7 million as compared to $10.6 million in the year-ago quarter. During the three months ended July 31, 2021, the Executive Search, RPO & Professional Search, Consulting, and Digital lines of business contributed $61.6 million, $34.0 million, $26.8 million and $25.6 million, respectively, to Adjusted EBITDA, which was offset by Corporate expenses net of other income of $26.7 million. Our cash, cash equivalents and marketable securities decreased by $192.8 million to $904.3 million at July 31, 2021, compared to $1,097.1 million at April 30, 2021. This decrease was mainly due to annual bonuses earned in fiscal 2021 and paid during the first quarter of fiscal 2022, retention payments, capital expenditures, the semi-annual interest payment on the 4.625% Senior Unsecured Notes due 2027 (the “Notes”) and dividends paid to stockholders during the three months ended July 31, 2021. As of July 31, 2021, we held marketable securities to settle obligations under our Executive Capital Accumulation Plan (“ECAP”) with a cost value of $147.2 million and a fair value of $181.1 million. Our vested obligations for 27 which these assets were held in trust totaled $171.2 million as of July 31, 2021 and our unvested obligations totaled $24.7 million. Our working capital increased by $46.3 million to $783.4 million as of July 31, 2021, as compared to $737.1 million at April 30, 2021. We believe that cash on hand and funds from operations and other forms of liquidity will be sufficient to meet our anticipated working capital, capital expenditures, general corporate requirements, repayment of debt obligations and dividend payments under our dividend policy in the next 12 months. We had $644.5 million and $646.0 million available for borrowing under our Revolver (as defined herein) at July 31, 2021 and April 30, 2021. As of July 31, 2021 and April 30, 2021, there were $5.5 million and $4.0 million of standby letters of credit issued under our long-term debt arrangements. We had a total of $11.7 million and $11.0 million of standby letters of credit with other financial institutions as of July 31, 2021 and April 30, 2021, respectively . Results of Operations The following table summarizes the results of our operations as a percentage of fee revenue: (Numbers may not total exactly due to rounding) Three Months Ended July 31, 2021 2020 Fee revenue 100.0 % 100.0 % Reimbursed out-of-pocket engagement expenses 0.5 0.8 Total revenue 100.5 100.8 Compensation and benefits 67.7 82.5 General and administrative expenses 8.6 13.7 Reimbursed expenses 0.5 0.8 Cost of services 3.8 4.1 Depreciation and amortization 2.7 4.4 Restructuring charges, net — 8.0 Operating income (loss) 17.3 (12.7 ) Net income (loss) 13.1 % (9.0 %) Net income (loss) attributable to Korn Ferry 12.8 % (9.0 %) The following tables summarize the results of our operations: (Numbers may not total exactly due to rounding) Three Months Ended July 31, 2021 2020 Dollars % Dollars % (dollars in thousands) Fee revenue Consulting $ 148,478 25.3 % $ 99,318 28.9 % Digital 80,671 13.8 55,973 16.3 Executive Search: North America 138,678 23.7 69,315 20.1 EMEA 42,747 7.3 30,081 8.8 Asia Pacific 28,703 4.9 17,252 5.0 Latin America 6,776 1.2 3,495 1.0 Total Executive Search 216,904 37.1 120,143 34.9 RPO & Professional Search 139,342 23.8 68,663 19.9 Total fee revenue 585,395 100.0 % 344,097 100.0 % Reimbursed out-of-pocket engagement expense 2,703 2,786 Total revenue $ 588,098 $ 346,883 28 In the tables that follow, the Company presents a subtotal for Executive Search Adjusted EBITDA and a single percentage for Executive Search Adjusted EBITDA margin, which reflects the aggregate of all of the individual Executive Search Regions. These figures are non-GAAP financial measures and are presented as they are consistent with the Company’s lines of business and are financial metrics used by the Company’s investor base. Three Months Ended July 31, 2021 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 148,478 $ 80,671 $ 138,678 $ 42,747 $ 28,703 $ 6,776 $ 216,904 $ 139,342 $ — $ 585,395 Total revenue $ 149,007 $ 80,681 $ 139,300 $ 42,843 $ 28,732 $ 6,779 $ 217,654 $ 140,756 $ — $ 588,098 Net income attributable to Korn Ferry $ 74,823 Net income attributable to noncontrolling interest 1,574 Other income, net (4,447 ) Interest expense, net 5,426 Income tax provision 23,879 Operating income $ 101,255 Depreciation and amortization 15,644 Other income, net 4,447 Adjusted EBITDA $ 26,841 $ 25,632 $ 43,330 $ 7,585 $ 8,320 $ 2,354 $ 61,589 $ 33,967 $ (26,683 ) $ 121,346 Adjusted EBITDA margin 18.1 % 31.8 % 31.2 % 17.7 % 29.0 % 34.7 % 28.4 % 24.4 % 20.7 % Three Months Ended July 31, 2020 Executive Search Consulting Digital North America EMEA Asia Pacific Latin America Subtotal RPO & Professional Search Corporate Consolidated (in thousands) Fee revenue $ 99,318 $ 55,973 $ 69,315 $ 30,081 $ 17,252 $ 3,495 $ 120,143 $ 68,663 $ — $ 344,097 Total revenue $ 99,590 $ 56,022 $ 69,856 $ 30,195 $ 17,340 $ 3,495 $ 120,886 $ 70,385 $ — $ 346,883 Net loss attributable to Korn Ferry $ (30,833 ) Net loss attributable to noncontrolling interest (22 ) Other income, net (11,162 ) Interest expense, net 6,894 Income tax benefit (8,672 ) Operating loss $ (43,795 ) Depreciation and amortization 15,035 Other income, net 11,162 Integration/acquisition costs 737 Restructuring charges, net 27,487 Adjusted EBITDA $ 6,604 $ 7,943 $ 5,312 $ 1,710 $ 1,594 $ (562 ) $ 8,054 $ 6,024 $ (17,999 ) $ 10,626 Adjusted EBITDA margin 6.6 % 14.2 % 7.7 % 5.7 % 9.2 % (16.1 %) 6.7 % 8.8 % 3.1 % Three Months Ended July 31, 2021 Compared to Three Months Ended July 31, 2020 Fee Revenue Fee Revenue. Fee revenue increased by $241.3 million, or 70%, to $585.4 million in the three months ended July 31, 2021 compared to $344.1 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $14.0 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter. The higher fee revenue was attributable to increases in all lines of business primarily due to the increasing relevance of the Company’s solutions in helping businesses solve their organizational and human capital issues in today’s business environment, as well as the Company’s recovery from COVID-19, which adversely impacted the Company on a worldwide basis in the year-ago quarter. Consulting. Consulting reported fee revenue of $148.5 million, an increase of $49.2 million, or 50%, in the three months ended July 31, 2021 compared to $99.3 million in the year-ago quarter. The increase in fee revenue was due to the diversity and increasing relevance of our consulting services across all solutions and our ability to adapt to delivering the services in a virtual world as well as the Company’s recovery from the economic impact of COVID-19, which negatively impacted the Company on a worldwide basis in the year-ago quarter. Exchange rates favorably impacted fee revenue by $3.7 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter. Digital. Digital reported fee revenue of $80.7 million, an increase of $24.7 million, or 44%, in the three months ended July 31, 2021 compared to $56.0 million in the year-ago quarter. The increase in fee revenue was primarily due to the Company 29 recovering from COVID-19, which negatively impacted demand for the Company ’s product and services on a worldwide basis in the year-ago quarter . As economies around the world recover and companies pivot from in person training to virtual delivery of training courses, the demand for our products and services across all solutions continue d to recover in the three months ended July 31, 2021 . Exchange rates favorably impacted fee revenue by $2.2 million, or 4% , in the three months ended July 31, 2021 compared to the year-ago quarter. Executive Search North America . Executive Search North America reported fee revenue of $138.7 million, an increase of $69.4 million, or 100%, in the three months ended July 31, 2021 compared to $69.3 million in the year-ago quarter. North America’s fee revenue was higher due to an 82% increase in the number of engagements billed and a 9% increase in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter. Executive Search EMEA. Executive Search EMEA reported fee revenue of $42.7 million, an increase of $12.6 million, or 42% , in the three months ended July 31, 2021 compared to $30.1 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $2.5 million, or 8%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in fee revenue was due to a 24% increase in the number of engagements billed and a 6% increase in the weighted-average fee billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter. Performance in the United Kingdom, United Arab Emirates, and France were the primary contributors to the increase in fee revenue in the three months ended July 31, 2021 compared to the year-ago quarter . Executive Search Asia Pacific. Executive Search Asia Pacific reported fee revenue of $28.7 million, an increase of $11.4 million, or 66%, in the three months ended July 31, 2021 compared to $17.3 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $1.2 million, or 7%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in fee revenue was due to a 55% increase in the number of engagements billed and a 1% increase in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter. The performance in India, Australia and China were the primary contributors to the increase in fee revenue in the three months ended July 31, 2021 compared to the year-ago quarter. Executive Search Latin America. Executive Search Latin America reported fee revenue of $6.8 million, an increase of $3.3 million, or 94%, in the three months ended July 31, 2021 compared to $3.5 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $0.2 million, or 6%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in fee revenue was due to a 67% increase in the number of engagements billed and a 9% increase in the weighted-average fees billed per engagement (calculated using local currency) during the three months ended July 31, 2021 compared to the year-ago quarter. The increase in fee revenue was due to higher fee revenue in Brazil, Mexico and Colombia in the three months ended July 31, 2021 compared to the year-ago quarter. RPO & Professional Search. RPO & Professional Search reported fee revenue of $139.3 million, an increase of $70.6 million, or 103% , in the three months ended July 31, 2021 compared to $68.7 million in the year-ago quarter. Exchange rates favorably impacted fee revenue by $3.3 million, or 5%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in fee revenue was due to higher fee revenue in RPO of $43.1 million and Professional Search of $27.6 million due to wider adoption of RPO services in the market and the Company’s recovery from the economic impact of COVID-19, which negatively impacted the Company on a worldwide basis in the year-ago quarter. Compensation and Benefits Compensation and benefits expense increased by $112.2 million, or 40%, to $396.2 million in the three months ended July 31, 2021 from $284.0 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $9.1 million, or 3%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in compensation and benefits expense was due to increases in salaries and related payroll taxes, performance related bonus expense, amortization of long-term incentive awards and the use of outside contractors due to the Company’s revenue growth through the recovery from the initial impact of COVID-19, combined with an increase in average headcount of 6% in the three months ended July 31, 2021 compared to the year-ago quarter. Compensation and benefits expense, as a percentage of fee revenue, decreased to 68% in the three months ended July 31, 2021 from 83% in the year-ago quarter. Consulting compensation and benefits expense increased by $25.3 million, or 33%, to $102.2 million in the three months ended July 31, 2021 from $76.9 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $2.5 million, or 3%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in compensation and benefits expense was primarily due to increases in salaries and related payroll taxes and performance-related bonus expense due to the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount in the three months ended July 31, 2021 compared to the year-ago quarter. Consulting compensation and benefits expense, as a percentage of fee revenue, decreased to 69% in the three months ended July 31, 2021 from 77% in the year-ago quarter. 30 Digital compensation and benefits expense increased by $4.9 million, or 14% to $40.8 million in the three months ended July 31, 2021 from $35.9 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $1.3 million, or 4% , in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in compensation and benefits expense was due to increase s in commission expense and salaries and related payroll taxes in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19 . Digital compensation and benefits expense, as a percentage of fee revenue, decreased to 51% in the three months ended July 31, 2021 from 64% in the year-ago quarter. Executive Search North America compensation and benefits expense increased by $26.0 million, or 40%, to $91.5 million in the three months ended July 31, 2021 compared to $65.5 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.4 million, or 1%, in the three months ended July 31, 2021 compared to the year-ago quarter. The change was due to increases in performance-related bonus expense and salaries and related payroll taxes as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount in the three months ended July 31, 2021 compared to the year-ago quarter. Executive Search North America compensation and benefits expense, as a percentage of fee revenue, decreased to 66% in the three months ended July 31, 2021 from 95% in the year-ago quarter. Executive Search EMEA compensation and benefits expense increased by $6.3 million, or 26%, to $30.9 million in the three months ended July 31, 2021 compared to $24.6 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $1.9 million, or 8%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase was due to higher salaries and related payroll taxes in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount. Executive Search EMEA compensation and benefits expense, as a percentage of fee revenue, decreased to 72% in the three months ended July 31, 2021 from 82% in the year-ago quarter. Executive Search Asia Pacific compensation and benefits expense increased by $4.3 million, or 31%, to $18.0 million in the three months ended July 31, 2021 compared to $13.7 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.7 million, or 5%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase was due to increases in performance-related bonus expense and salaries and related payroll taxes in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability and headcount. Executive Search Asia Pacific compensation and benefits expense, as a percentage of fee revenue, decreased to 63% in the three months ended July 31, 2021 from 80% in the year-ago quarter. Executive Search Latin America compensation and benefits expense increased by $1.8 million, or 56%, to $5.0 million in the three months ended July 31, 2021 compared to $3.2 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $0.2 million, or 6%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase was due to higher performance-related bonus expense in the three months ended July 31, 2021 compared to the year-ago quarter as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19. Executive Search Latin America compensation and benefits expense, as a percentage of fee revenue, decreased to 74% in the three months ended July 31, 2021 from 92% in the year-ago quarter. RPO & Professional Search compensation and benefits expense increased by $38.4 million, or 70%, to $93.1 million in the three months ended July 31, 2021 from $54.7 million in the year-ago quarter. Exchange rates unfavorably impacted compensation and benefits by $2.1 million, or 4%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase was due to higher performance-related bonus expense, higher salaries and related payroll taxes due to a 23% increase in the average headcount in the three months ended July 31, 2021 compared to the year-ago quarter and an increase in the use of outside contractors. These increases were all as a result of the segment’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability. RPO & Professional Search compensation and benefits expense, as a percentage of fee revenue, decreased to 67% in the three months ended July 31, 2021 from 80% in the year-ago quarter. Corporate compensation and benefits expense increased by $5.3 million, or 56%, to $14.8 million in the three months ended July 31, 2021 from $9.5 million in the year-ago quarter. The increase was due to higher perform ance-related bonus expense and higher salaries and related payroll taxes due to a 14% increase in the average headcount in the three months ended July 31, 2021 compared to the year-ago quarter. These increases were all as a result of the Company’s revenue growth through the recovery from the initial impacts of COVID-19, combined with an increase in overall profitability on a consolidated basis. 31 General and Administrative Expenses General and administrative expenses increased by $3.2 million, or 7%, to $50.3 million in the three months ended July 31, 2021 from $47.1 million in the year-ago quarter. Exchange rates unfavorably impacted general and administrative expenses by $1.6 million, or 3%, in the three months ended July 31, 2021 compared to the year-ago quarter. The increase in general and administrative expenses was due to higher marketing and business development expenses and premise and office expenses. General and administrative expenses, as a percentage of fee revenue, were 9% in the three months ended July 31, 2021 compared to 14% in the year-ago quarter. Consulting general and administrative expenses were $12.0 million in the three months ended July 31, 2021 compared to $11.8 million in the year-ago quarter, essentially flat. Consulting general and administrative expenses, as a percentage of fee revenue, decreased to 8% in the three months ended July 31, 2021 from 12% in the year-ago quarter. Digital general and administrative expenses were $7.1 million in the three months ended July 31, 2021 compared to $7.3 million in the year-ago quarter, essentially flat. Digital general and administrative expenses, as a percentage of fee revenue, decreased to 9% in the three months ended July 31, 2021 from 13% in the year-ago quarter. Executive Search North America general and administrative expenses were $6.7 million in the three months ended July 31, 2021 compared to $6.8 million in the year-ago quarter, essentially flat. Executive Search North America general and administrative expenses, as a percentage of fee revenue, decreased to 5% in the three months ended July 31, 2021 from 10% in the year-ago quarter. Executive Search EMEA general and administrative expenses increased by $0.6 million, or 16%, to $4.3 million in the three months ended July 31, 2021 from $3.7 million in the year-ago quarter. The increase in general and administrative expenses was due to the impact of foreign currency with foreign exchange losses in the three months ended July 31, 2021 compared to foreign currency gains in the year-ago quarter. Executive Search EMEA general and administrative expenses, as a percentage of fee revenue, decreased to 10% in the three months ended July 31, 2021 from 12% in the year-ago quarter. Executive Search Asia Pacific general and administrative expenses increased by $0.5 million, or 24%, to $2.6 million in the three months ended July 31, 2021 from $2.1 million in the year-ago quarter. The increase was due to higher bad debt expense in the three months ended July 31, 2021 compared to the year-ago quarter. Executive Search Asia Pacific general and administrative expenses, as a percentage of fee revenue decreased to 9% in the three months ended July 31, 2021 from 12% in the year-ago quarter. Executive Search Latin America recognized a reduction in general and administrative expenses of $2.4 million in the three months ended July 31, 2021 compared to the year-ago quarter. The decrease in general and administrative expenses was due to a decrease in premise and office expenses and the impact of foreign currency with foreign exchange gains recognized in the three months ended July 31, 2021 compared to foreign currency losses in the year-ago quarter. RPO & Professional Search general and administrative expenses increased by $1.2 million, or 21%, to $6.9 million in the three months ended July 31, 2021 compared to $5.7 million in the year-ago quarter. The increase in general and administrative expenses was primarily due to higher bad debt expense and an increase in premise and office expenses. RPO & Professional Search general and administrative expenses, as a percentage of fee revenue, decreased to 5% in the three months ended July 31, 2021 from 8% in the year-ago quarter. Corporate general and administrative expenses increased by $3.3 million, or 38%, to $12.1 million in the three months ended July 31, 2021 compared to $8.8 million in the year-ago quarter. The increase was primarily due to higher marketing and business development expenses and an increase in legal and professional fees during the three months ended July 31, 2021 compared to the year-ago quarter. Cost of Services Expense Cost of services expense consists primarily of contractor and product costs related to the delivery of various services and products, primarily in RPO & Professional Search, Consulting and Digital. Cost of services expense increased by $7.7 million, or 54%, to $22.0 million in the three months ended July 31, 2021 compared to $14.3 million in the year-ago quarter. The increase was due to the increase in fee revenue. Cost of services expense, as a percentage of fee revenue, was 4% in both the three months ended July 31, 2021 and 2020. Depreciation and Amortization Expenses Depreciation and amortization expenses were $15.6 million, an increase of $0.6 million, or 4%, in the three months ended July 31, 2021 compared to $15.0 million in the year-ago quarter. The increase was primarily due to the technology investments made in the current and prior year in software in our Digital business. 32 Restructuring Charges, Net In April 2020, we implemented a restructuring plan in response to the uncertainty caused by COVID-19 that resulted in reductions in our workforce in the fourth quarter of fiscal 2020. As part of this plan, we continued to reduce our workforce during the first quarter of fiscal 2021 and recorded restructuring charges, net of $27.5 million of severance costs during the year-ago quarter. There were no restructuring charges, net during the three months ended July 31, 2021. Net Income (Loss) Attributable to Korn Ferry Net income attributable to Korn Ferry increased by $105.6 million, or 343%, to $74.8 million in the three months ended July 31, 2021, as compared to a net loss attributable to Korn Ferry of $30.8 million in the year-ago quarter. The increase in net income attributable to Korn Ferry was driven by the increase in fee revenue, which was driven by the factors discussed above. The increase in fee revenue was partially offset by increases in compensation and benefits expense and cost of services expense associated with the higher levels of business demand and an increase in income tax provision that resulted in net income attributable to Korn Ferry in the three months ended July 31, 2021. Net income (loss) attributable to Korn Ferry, as a percentage of fee revenue, was 13% and (9%) in the three months ended July 31, 2021 and 2020, respectively. Adjusted EBITDA Adjusted EBITDA increased by $110.7 million, or 1044%, to $121.3 million in the three months ended July 31, 2021 as compared to $10.6 million in the year-ago quarter. The increase in Adjusted EBITDA was driven by an increase in fee revenue, partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs), cost of services expense, and general and administrative expenses (excluding integration/acquisition costs). Adjusted EBITDA, as a percentage of fee revenue, was 21% in the three months ended July 31, 2021 compared to 3% in the year-ago quarter. Consulting Adjusted EBITDA was $26.8 million in the three months ended July 31, 2021, an increase of $20.2 million, or 306%, as compared to $6.6 million in the year-ago quarter. This increase in Adjusted EBITDA was driven by higher fee revenue in the segment, as well as cost savings realized from work being conducted virtually. These changes were partially offset by increases in compensation and benefits expense and cost of services expense . Consulting Adjusted EBITDA, as a percentage of fee revenue, was 18% and 7% in the three months ended July 31, 2021 and 2020, respectively. Digital Adjusted EBITDA was $25.6 million in the three months ended July 31, 2021, an increase of $17.7 million, or 224%, as compared to $7.9 million in the year-ago quarter. This increase in Adjusted EBITDA was mainly driven by an increase in fee revenue in the segment, as well as cost savings realized from work being conducted virtually. These changes were partially offset by increases in compensation and benefits expense (excluding integration/acquisition costs) and cost of services expense during the three months ended July 31, 2021 compared to the year-ago quarter. Digital Adjusted EBITDA, as a percentage of fee revenue, was 32% and 14% in the three months ended July 31, 2021 and 2020, respectively. Executive Search North America Adjusted EBITDA increased by $38.0 million, or 717%, to $43.3 million in the three months ended July 31, 2021 compared to $5.3 million in the year-ago quarter. The increase was driven by higher fee revenue in the segment, partially offset by an increase in compensation and benefits expense. Executive Search North America Adjusted EBITDA, as a percentage of fee revenue, was 31% and 8% in the three months ended July 31, 2021 and 2020, respectively. Executive Search EMEA Adjusted EBITDA increased by $5.9 million, or 347%, to $7.6 million in the three months ended July 31, 2021 compared to $1.7 million in the year-ago quarter. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense and general and administrative expenses . Executive Search EMEA Adjusted EBITDA, as a percentage of fee revenue, was 18% and 6% in the three months ended July 31, 2021 and 2020, respectively. Executive Search Asia Pacific Adjusted EBITDA increased by $6.7 million, or 419%, to $8.3 million in the three months ended July 31, 2021 compared to $1.6 million in the year-ago quarter. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense and general and administrative expenses . Executive Search Asia Pacific Adjusted EBITDA, as a percentage of fee revenue, was 29% and 9% in the three months ended July 31, 2021 and 2020, respectively. Executive Search Latin America Adjusted EBITDA increased by $3.0 million to $2.4 million in the three months ended July 31, 2021 compared to $(0.6) million in the year-ago quarter. The increase in Adjusted EBITDA was driven by higher fee revenue in the segment and a decrease in general and administrative expenses, partially offset by an increase compensation and benefits expense. Executive Search Latin America Adjusted EBITDA, as a percentage of fee revenue, was 35% and (16%) in the three months ended July 31, 2021 and 2020, respectively. RPO & Professional Search Adjusted EBITDA was $34.0 million in the three months ended July 31, 2021, an increase of $28.0 million, or 467%, as compared to $6.0 million in the year-ago quarter. The increase in Adjusted EBITDA was mainly driven by higher fee revenue in the segment, partially offset by increases in compensation and benefits expense, cost of 33 services expense, and general and administrative expenses. RPO & Professional Search Adjusted EBITDA, as a percentage of fee revenue, was 24% and 9% in the three months ended July 31, 2021 and 2020, respectively. Other Income, Net Other income, net was $4.4 million in the three months ended July 31, 2021 compared to $11.2 million in the year-ago quarter. The difference was primarily due to smaller gains from the fair value of our marketable securities during the three months ended July 31, 2021 compared to the year-ago quarter. Interest Expense, Net Interest expense, net primarily relates to the Notes issued in December 2019 and borrowings under company-owned life insurance (“COLI”) policies, which are partially offset by interest earned on cash and cash equivalent balances. Interest expense, net was $5.4 million in the three months ended July 31, 2021 compared to $6.9 million in the year-ago quarter. Interest expense, net decreased due to interest income earned as a result of death benefits received from our COLI policies in three months ended July 31, 2021. Income Tax Provision (Benefit) The provision for income tax was $23.9 million in the three months ended July 31, 2021 compared to a benefit of $8.7 million in the year-ago quarter. This reflects a 23.8% and 21.9% effective tax rate for the three months ended July 31, 2021 and 2020, respectively. The variability in effective tax rate is primarily due to the impact of U.S. state income taxes and the jurisdictional mix of earnings. Net Income (loss) Attributable to Noncontrolling Interest Net income (loss) attributable to noncontrolling interest represents the portion of a subsidiary’s net earnings that are attributable to shares of such subsidiary not held by Korn Ferry that are included in the consolidated results of operations. Net income attributable to noncontrolling interest for the three months ended July 31, 2021 was $1.6 million, as compared to break-even in the three months ended July 31, 2020. Liquidity and Capital Resources The Company and its Board of Directors endorse a balanced approach to capital allocation. The Company’s long-term priority is to invest in growth initiatives, such as the hiring of consultants, the continued development of IP and derivative products and services and the investment in synergistic, accretive merger and acquisition transactions that earn a return that is superior to the Company's cost of capital. Next, the Company’s capital allocation approach contemplates the return of a portion of excess capital to stockholders, in the form of a regular quarterly dividend, subject to the factors discussed below and in the “Risk Factors” section of the Form 10-K. Additionally, the Company considers share repurchases on an opportunistic basis and subject to the terms of our Credit Agreement (defined below), as well as using excess cash to repay the Notes. As previously discussed under the heading “Impact of COVID-19”, with the implementation of the restructuring plan that was initiated on April 20, 2020 to reduce, in part, our human capital expenditures, and the improved business activity we experienced in the first quarter of fiscal 2022 demonstrated by an increase in fee revenue compared to the first quarter of fiscal 2021, we believe our costs are in line with our current revenue levels, but given the unpredictable and fluid nature of the pandemic and its economic consequences, our revenue levels may change. Given the amount available from our Revolver (defined below) and the amount of cash and cash equivalents and marketable securities, net of amounts held in trust for deferred compensations and accrued bonuses, we believe that we have sufficient liquidity to meet our anticipated working capital, capital expenditures, general corporate requirements, debt obligation payments and dividend payments under our dividend policy in the next 12 months. On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Notes were issued with a $4.5 million discount and will mature December 15, 2027, with interest payable semi-annually in arrears on June 15 and December 15 of each year, that commenced on June 15, 2020. The Notes represent senior unsecured obligations that rank equally in right of payment to all existing and future senior unsecured indebtedness. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. The Notes are guaranteed by each of our existing and future wholly owned domestic subsidiaries to the extent such subsidiaries guarantee our revolving credit facility under the Credit Agreement (defined below). The indenture governing the Notes requires that, upon the occurrence of both a Change of Control and a Rating Decline (each as defined in the indenture), we shall make an offer to purchase all of the Notes at 101 % of their principal amount, and accrued and unpaid interest. We used the proceeds from the offering of the Notes to repay $276.9 million outstanding under our prior revolving credit facility and to pay expenses and fees in connection therewith. As of July 31, 2021, the fair value of the Notes was $415.5 million, which is based on borrowing rates currently required of notes with similar terms, maturity and credit risk. 34 On December 1 6 , 201 9 , we also entered into a senior secured $650.0 million c redit a greement (the “ Credit Agreement”) with a syndicate of banks and Bank of America, National Association as administrative agent to among other things, provide for enhanced financial flexibility. See Note 1 2 — Long-Term Debt for a description of the Credit Agreement. We ha d a total of $644.5 million and $ 646.0 million available under our $ 650.0 million five-year senior secured revolving credit facility (the “ Revolver ”) after $5.5 million and $ 4.0 million of standby letters of credit ha d been issued as of July 31, 2021 and April 30, 2021 , respectively . We had a total of $ 11. 7 million and $ 11. 0 million of standby letters of credits with other financial institutions as of July 31, 2021 and April 30, 2021 , respectively. The standby letters of credits were generally issued as a result of entering into office premise leases. On December 8, 2014, the Board of Directors adopted a dividend policy to distribute to our stockholders a regular quarterly cash dividend of $0.10 per share. Every quarter since the adoption of the dividend policy, the Company has declared a quarterly dividend. On June 21, 2021, the Board of Directors approved a 20% increase to our quarterly dividend, which is now at $0.12 per share. The declaration and payment of future dividends under the quarterly dividend program will be at the discretion of the Board of Directors and will depend upon many factors, including our earnings, capital requirements, financial condition, the terms of our indebtedness and other factors our Board of Directors may deem to be relevant. Our Board of Directors may, however, amend, revoke or suspend our dividend policy at any time and for any reason. On March 6, 2019, our Board of Directors approved an increase to the share repurchase program of approximately $200 million, which at the time brought our available capacity to repurchase shares in the open market or privately negotiated transactions to approximately $250 million. The Company repurchased approximately $2.5 million of the Company’s stock during the three months ended July 31, 2021, compared to none in the year-ago quarter. As of July 31, 2021 , $ 125.4 million remained available for common stock repurchases under our share repurchase program. Any decision to continue to execute our currently outstanding share repurchase program will depend on our earnings, capital requirements, financial condition and other factors considered relevant by our Board of Directors. The Credit Agreement permits us to pay dividends to our stockholders and make share repurchases so long as there is no default under the Credit Agreement, our total funded debt to adjusted EBITDA ratio (as set forth in the Credit Agreement, the “consolidated net leverage ratio”) is no greater than 4.00 to 1.00, and pro forma liquidity is at least $50 million, including the revolving credit commitment minus amounts outstanding on the Revolver, issued letters of credit and swing loans. Furthermore, our Notes allow us to pay $25 million of dividends per fiscal year with no restrictions plus an unlimited amount of dividends so long as our consolidated total leverage ratio is not greater than 3.50 to 1.00, and there is no default under the indenture governing the Notes. Our performance is subject to the general level of economic activity in the geographic regions and the industries we service. We believe, based on current economic conditions, that our cash on hand and funds from operations and the Credit Agreement will be sufficient to meet anticipated working capital, capital expenditures, general corporate requirements, debt repayments, share repurchases and dividend payments under our dividend policy during the next 12 months. However, if COVID-19 continues to persist or worsen, or the national or global economy, credit market conditions and/or labor markets were to deteriorate in the future, such changes could put negative pressure on demand for our services and affect our operating cash flows. If these conditions were to persist over an extended period of time, we may incur negative cash flows and it might require us to access additional borrowings under the Credit Agreement to meet our capital needs and/or discontinue our share repurchases and dividend policy. Cash and cash equivalents and marketable securities were $904.3 million and $1,097.1 million as of July 31, 2021 and April 30, 2021, respectively. Net of amounts held in trust for deferred compensation plans and accrued bonuses, cash and marketable securities were $614.2 million and $642.1 million at July 31, 2021 and April 30, 2021, respectively. As of July 31, 2021 and April 30, 2021, we held $395.0 million and $382.8 million, respectively of cash and cash equivalents in foreign locations, net of amounts held in trust for deferred compensation plans and to pay fiscal 2021 and 2020 annual bonuses. Cash and cash equivalents consist of cash and highly liquid investments purchased with original maturities of three months or less. Marketable securities consist of mutual funds and investments in commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities. The primary objectives of our investment in mutual funds are to meet the obligations under certain of our deferred compensation plans, while the commercial paper, corporate notes/bonds and U.S. Treasury and Agency securities are available for general corporate purposes. As of July 31, 2021 and April 30, 2021, marketable securities of $ 255.0 million and $246.4 million, respectively, included equity securities of $181.1 million (net of gross unrealized gains of $33.9 million) and $ 175.6 million (net of gross unrealized gains of $ 30.0 million and gross unrealized losses of $ 0.1 million), respectively, were held in trust for settlement of our obligations under certain deferred compensation plans, of which $171.3 million and $166.5 million, respectively, are classified as non-current. These marketable securities were held to satisfy vested obligations totaling $171.2 million and $ 157.3 million as of July 31, 2021 and April 30, 2021, respectively. Unvested obligations under the deferred compensation plans totaled $24.7 million and $ 26.5 million as of July 31, 2021 and April 30, 2021, respectively. The net increase in our working capital of $ 46.3 million as of July 31, 2021 compared to April 30, 2021 is primarily attributable to a decrease in compensation and benefits payable and an increase in accounts receivable, partially offset by a decrease in cash and cash equivalents. The decrease in cash and cash equivalents and compensation and benefits payable was primarily 35 due to payment s of annual bonuses earned in fiscal 20 2 1 and paid during the first quarter of fiscal 202 2 . The in crease in accounts receivable was due to a n increase in fee revenue and an increase in days of sales outstanding, which went from 57 days to 67 days (which is consistent with historical experience) from April 30, 2021 to July 31, 2021 . Cash used by operating activities was $160.5 million in the three months ended July 31, 2021 , a n in crease in cash used of $ 1 6. 2 million, compared to $144.3 million in the three months ended July 31, 2020 . Cash used in investing activities was $10.4 million in the three months ended July 31, 2021 compared to $13.2 million in the year-ago quarter. A decrease in cash used in investing activities was primarily due to an increase in proceeds from life insurance policies of $1.7 million and a decrease in the purchase of marketable securities net of sale/maturities of $1.2 million during the three months ended July 31, 2021 compared to the year-ago quarter. Cash used in financing activities was $23.7 million in the three months ended July 31, 2021 compared to $7.8 million in the three months ended July 31, 2020. The increase in cash used in financing activities was primarily due to higher cash used to repurchase shares of common stock to satisfy tax withholding requirements upon the vesting of restricted stock of $17.6 million in the three months ended July 31, 2021 compared to $ 4.4 million in the year-ago quarter. The rest of the change was due to $2.5 million repurchases of the Company’s common stock in three months ended July 31, 2021 compared to none in the year ago quarter. Cash Surrender Value of Company-Owned Life Insurance Policies, Net of Loans We purchased COLI policies or contracts insuring the lives of certain employees eligible to participate in the deferred compensation and pension plans as a means of funding benefits under such plans. As of July 31, 2021 and April 30, 2021, we held contracts with gross cash surrender value (“CSV”) of $ 243.2 million and $ 241.3 million, respectively. Total outstanding borrowings against the CSV of COLI contracts was $ 80.0 million as of July 31, 2021 and April 30, 2021. Such borrowings do not require annual principal repayments, bear interest primarily at variable rates and are secured by the CSV of COLI contracts. At July 31, 2021 and April 30, 2021, the net cash surrender value of these policies was $ 163.2 million and $161.3 million, respectively. Long-Term Debt On December 16, 2019, we completed a private placement of the Notes with a $400 million principal amount. We may redeem the Notes prior to maturity, subject to certain limitations and premiums defined in the indenture governing the Notes. At any time prior to December 15, 2022, we may redeem at a redemption price equal to 100 % of the principal plus the Applicable Premium (as defined in the indenture), and accrued and unpaid interest. At any time prior to December 15, 2022, we may use the proceeds of certain equity offerings to redeem up to 35 % of the aggregate principal amount of the Notes, including any permitted additional Notes, at a redemption price equal to 104.625 % of the principal amount and accrued and unpaid interest. At any time and from time to time on or after December 15, 2022, we may redeem the Notes at the applicable redemption prices set forth in the table below, plus accrued and unpaid interest, if redeemed during the 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 fair value of the Notes is classified as a Level 2 measurement in the fair value hierarchy. On December 16, 2019, we also entered into the senior secured $650.0 million Credit Agreement with a syndicate of banks and Bank of America. The Credit Agreement provides for the $650.0 million Revolver. The principal balance of the Revolver 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 us at any time without premium or penalty (subject to customary LIBOR breakage fees). At our option, loans issued under the Credit Agreement will bear interest at either LIBOR or an alternate base rate, in each case plus the applicable interest rate margin. The interest rate applicable to loans outstanding under the Credit Agreement may fluctuate between LIBOR plus 1.25% per annum to LIBOR plus 2.00% per annum, in the case of LIBOR borrowings (or between the alternate base rate plus 0.125% per annum and the alternate base rate plus 1.00% per annum, in the alternative), based upon our consolidated net leverage ratio at such time. In addition, we are required to pay to the lenders a quarterly commitment fee ranging from 0.175% to 0.35% per annum on the average daily unused amount of the Revolver, based upon our consolidated net leverage ratio at such time, and fees relating to the issuance of letters of credit. 36 As of July 31, 2021 and April 30, 2021 , there was no amounts outstanding under the Revolver. The unamortized debt issuance costs associated with the Credit Agreement were $ 3 . 1 million as of July 31, 2021 and $ 3 . 3 million as of April 30, 2021 . As of July 31, 2021 , we were in compliance with our debt covenants. We had a total of $644.5 million and $ 646.0 million available under the Revolver after $5.5 million and $ 4.0 million of standby letters of credit had been issued as of July 31, 2021 and April 30, 2021, respectively. We had a total of $ 11.7 million and $11.0 million of standby letters of credits with other financial institutions as of July 31, 2021 and April 30, 2021, respectively. The standby letters of credits were generally issued as a result of entering into office premise leases. Other than the factors discussed in this section and the potential impacts of COVID-19 on our business, we are not aware of any other trends, demands or commitments that would materially affect liquidity or those that relate to our resources as of July 31, 2021 . Off-Balance Sheet Arrangements We have no off-balance sheet arrangements and have not entered into any transactions involving unconsolidated, special purpose entities. We had no material changes in contractual obligations as of July 31, 2021 , as compared to those disclosed in our table of contractual obligations included in our Annual Report. Critical Accounting Policies Preparation of this Quarterly Report on Form 10-Q requires us to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates and assumptions and changes in the estimates are reported in current operations as new information is learned or upon the amounts becoming fixed or determinable. In preparing our interim consolidated financial statements and accounting for the underlying transactions and balances, we apply our accounting policies as disclosed in the notes to our consolidated financial statements. We consider the policies related to revenue recognition, performance related bonuses, deferred compensation, carrying values of receivables, goodwill, intangible assets, leases and recoverability of deferred income taxes as critical to an understanding of our interim consolidated financial statements because their application places the most significant demands on management’s judgment and estimates. Specific risks for these critical accounting policies are described in the Form 10-K. There have been no material changes in our critical accounting policies since the end of fiscal 2021.