What changed in this filing

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Item 1A. Risk Factors

2022-06-28 compared with 2021-06-28 · 81 added, 110 removed, 399 unchanged (32% of the section changed)

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Risks Related to Our Business

We face various risks related to health epidemics, pandemics, and similar outbreaks, such as COVID-19 .

COVID-19 has been negatively impacting the operations and financial performance of many of the clients we serve.

The ultimate magnitude of COVID-19 and of any future pandemics or similar outbreaks, will depend on a variety of factors, including its duration, related restrictions and operational requirements that apply to our business and the businesses of our clients, and the state of the global economy , the full extent of which can not be predicted at this time.

We face various risks related to health epidemics, pandemics, and similar outbreaks that negatively impact the operations and financial performance of many of the clients we serve.

The ultimate magnitude of any future pandemics or similar outbreaks depends on a variety of factors, including its duration, related restrictions and operational requirements that apply to our business and the businesses of our clients, and the state of the global economy, the full extent of which we may not be capable of prediction.

Our business and financial results have been, and could be in the future, adversely affected by health epidemics, pandemics, and similar outbreaks.

The COVID-19 pandemic has caused, and is expected to continue to cause, a global slowdown in economic activity, a decrease in demand for a broad variety of goods and services, disruptions in global supply chains, and significant volatility and disruption of financial markets.

Because the severity, magnitude and duration of the pandemic and its economic consequences are uncertain, vary by region, are rapidly changing and difficult to predict, its full impact on our operations and financial performance, as well as its impact on our near-term ability to successfully execute our strategic objectives, remains similarly uncertain and difficult to predict.

Further, the pandemic’s ultimate impact depends in part on many factors not within our control and which may vary by region

(heightening the uncertainty as to the ultimate impact COVID-19 may have on our operations and financial performance), including (1) restrictive governmental and business actions (including travel restrictions, work from home requirements, and other workforce limitations), (2) economic stimulus, funding and relief programs and other governmental economic responses, (3) the effectiveness of governmental actions, (4) economic uncertainty in key global markets and financial market volatility, (5) levels of economic contraction or growth, (6) the impact of the pandemic on health and safety, (7) the pace of recovery if and when the pandemic subsides, including the rollout of vaccines, and (8) how significantly the number of cases increases as economies begin to open up and the restrictive governmental and business actions referred to above are relaxed.

Further, the COVID-19 pandemic has subjected our operations and financial performance to a number of risks, including those discussed below, which may also re-occur in any future pandemic:

P andemics can cause a global slowdown in economic activity, a decrease in demand for a broad variety of goods and services, disruptions in global supply chains, and significant volatility and disruption of financial markets.

Because the severity, magnitude and duration of a pandemic and its economic consequences are uncertain and vary by region, its full impact on our operations and financial performance, is uncertain and difficult to predict.

Further, a pandemic’s ultimate impact depends in part on many factors not within our control, including (1) restrictive governmental and business actions (including travel restrictions, vaccine mandates, testing requirements, and other workforce limitations), (2) economic stimulus, funding and relief programs and other governmental economic responses, (3) the effectiveness of governmental actions, (4) economic uncertainty in key global markets and financial market volatility, (5) levels of economic contraction or growth, (6) the impact of the pandemic on health and safety and (7) the availability and effectiveness of vaccines and booster shots.

Further, pandemics can subject our operations and financial performance to a number of risks, including those discussed below:

Operations-related risks:

Across all of our businesses, we are facing increased operational challenges including a heightened need to protect employee health and safety, office shutdowns, workplace disruptions, cybersecurity risks, and restrictions on the movement of people, both at our own offices and at those of our clients and our suppliers.

In addition, as we start to re-open offices in certain jurisdictions, we face additional employee health and safety concerns.

Across all of our businesses, we can face operational challenges including a heightened need to protect employee health and safety, office shutdowns, workplace disruptions, cybersecurity risks, and restrictions on the movement of people, both at our own offices and at those of our clients and our suppliers.

Client-related risks:

Our clients have been and will be disrupted by quarantines , fluctuations in their financial condition, and restrictions on employees’ ability to work and office closures.

Such disruptions have and may continue to restrict our ability to provide products and services to our clients (or for clients to pay for such products and services) and have also and may continue to reduce demand for our products and services.

Our clients will be disrupted by quarantines , fluctuations in their financial condition, and restrictions on employees’ ability to work and office closures.

Such disruptions may restrict our ability to provide products and services to our clients (or for clients to pay for such products and services) and may reduce demand for our products and services.

Employee-related risks:

We have experienced and will experience disruptions to our operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to deliver our products and services in a timely manner or meet milestones or customer commitments.

Liquidity- and funding-related risks:

A prolonged period of generating lower revenue could adversely affect our cash flow and liquidity.

Conditions in the financial and credit markets may also limit our ability to draw on our revolving credit line, as well as the availability of additional funding or increase the cost of funding, if it were to become necessary.

We will experience disruptions to our operations resulting from quarantines, self-isolations, or other movement and restrictions on the ability of our employees to perform their jobs that may impact our ability to deliver our products and services in a timely manner or meet milestones or customer commitments.

Our inability to successfully recover should we experience a disaster or other business continuity problem could cause material financial loss, loss of human capital, regulatory actions, reputational harm or legal liability.

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For example, much of our corporate staff are based in California, which has a high level of risk from wildfires and earthquakes.

The impacts of climate change may heighten or exacerbate the occurrence of such events.

The impacts of climate change present notable risks, including damage to assets and technology caused by extreme weather events linked to climate change and may otherwise heighten or exacerbate the

occurrence of such weather events.

We could potentially lose client data or experience material adverse interruptions to our operations or delivery of services to our clients in a disaster.

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We face significant competition:

c ompetition in our industries could result in lost market share , reduced demand for our services, and/or require us to charge lower prices for our services, which could adversely affect our operating results and future growth .

competition in our industries could result in lost market share, reduced demand for our services, and/or require us to charge lower prices for our services, which could adversely affect our operating results and future growth.

We continue to face significant competition to each of our services and product offerings.

The human resource consulting market has been traditionally fragmented and a number of large consulting firms, such as McKinsey, Willis Towers Watson and Deloitte are building businesses in human resource consulting to serve these needs.

The human resource consulting market has been traditionally fragmented and a number of large consulting firms, such as McKinsey, Willis Towers Watson and Deloitte have built businesses in human resource consulting to serve these needs.

Our consulting business line has and continues to face competition from human resource consulting businesses.

Many of these competitors are significantly larger than Korn Ferry and have considerable resources at their disposal, allowing for potentially significant investment to grow their human resource consulting business.

Digital Products in the human resource market has been traditionally fragmented and a number of firms such as AON, Mercer, Willis Towers Watson, SHL, Fuel 50, SkillSoft, Criteria, Predictive Index, Prevue Hire and Textio offer competitive products.

Digital products in the human resource market have been traditionally fragmented and a number of firms such as AON, Mercer, Willis Towers Watson, SHL, Fuel 50, SkillSoft, Criteria, Predictive Index, Prevue Hire and Textio offer competitive products.

Competitors in the digital marketplace are a combination of large, well-capitalized firms and niche players who have received multiple rounds of private financing.

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Our executive search services face competition from both traditional and non-traditional competitors that provide job placement services, including other large global executive search firms, smaller specialty firms and web-based firms.

In recent years, we have also begun facing increased competition from sole proprietors and in-house human resource professionals whose ability to provide job placement services has been enhanced by professional profiles made available on the internet and enhanced social media-based search tools.

We also face increased competition from sole proprietors and in-house human resource professionals whose ability to provide job placement services has been enhanced by professional profiles made available on the internet and enhanced social media-based search tools.

The continued growth of the shared economy and related freelancing platform sites may also negatively impact demand for our services by allowing employers seeking services to connect with employees in real time and without any significant cost.

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As a result, companies may turn to such sites for their talent needs, which could negatively impact demand for the services we offer.

Our RPO & Professional Search services primarily compete for business with other RPO providers such as Cielo, Alexander Mann Solutions, IBM, Allegis and Kelly Services, and compete for mid-level professional search assignments with regional contingency recruitment firms and large national retained recruitment firms such as Robert Half, Michael Page, Harvey Nash and the Lucas Group.

Our RPO & Professional Search services primarily compete for business with other RPO providers such as Cielo, Alexander Mann Solutions, IBM, Allegis, Kelly Services, Randstad and compete for mid-level professional search

assignments with regional contingency recruitment firms and large national retained recruitment firms such as Robert Half, Michael Page, Harvey Nash , Robert Walters and BTG .

In addition, some organizations have developed or may develop internal solutions to address talent acquisition that may be competitive with our solutions.

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Attracting and retaining consultants in our industry is particularly important because, generally, a small number of consultants have primary responsibility for a client relationship.

Because client responsibility is so concentrated, the loss of key consultants may lead to the loss of client

relationships .

In fiscal 2021 , our top three consultants in Executive Search ( includ ing all four reportable regional segments) and in our Consulting segment had genera ted business equal to approximately 1% and 2 % of our total fee revenues , respectively .

Furthermore, our top ten consultants in Executive Search ( includ ing all four reportable regional segments) and in our Consulting segment had generat ed business equal to approximately 3% and 4 % of our total fee revenues , respectively .

Because client responsibility is so concentrated, the loss of key consultants may lead to the loss of client relationships.

In fiscal 2022, our top three consultants in Executive Search (including all four reportable regional segments) and in our Consulting segment had generated business equal to approximately 1% and 2% of our total fee revenues, respectively.

Furthermore, our top ten consultants in Executive Search (including all four reportable regional segments) and in our Consulting segment had generated business equal to approximately 3% and 4% of our total fee revenues, respectively.

This risk is heightened due to the general portability of a consultant’s business:

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Failing to limit departing consultants from moving business or recruiting our consultants to a competitor could adversely affect our business, financial condition and results of operations.

We are working to advance culture change through the continued implementation of diversity, equity and inclusion initiatives throughout our organization.

If we do not successfully implement these initiatives, our ability to recruit, attract and retain talent may be adversely impacted.

We are highly dependent on the continued services of our small team of executives

We are dependent upon the efforts and services of our small executive team.

While we have a preliminary plan for succession of certain key executives, the loss of any one of our key executives could have an adverse effect on our operations.

Failing to maintain our professional reputation and the goodwill associated with our brand name could seriously harm our business.

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In addition, we plan to extend our services to new clients and into new lines of business and geographic locations.

As we focus on developing new services, clients, practice areas and lines of business;

As we focus on

developing new services, clients, practice areas and lines of business;

open new offices;

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administration or other governments could impact our business.

Our failure to comply with applicable laws and regulations could restrict our ability to provide certain services or result in the imposition of fines and penalties, substantial regulatory and compliance costs, litigation expense, adverse publicity, and loss of revenue.

Our failure to comply with applicable laws

and regulations could restrict our ability to provide certain services or result in the imposition of fines and penalties, substantial regulatory and compliance costs, litigation expense, adverse publicity, and loss of revenue.

We incur, and expect to continue to incur, significant expenses in our attempt to comply with these laws, and our businesses are also subject to an increasing degree of compliance oversight by regulators and by our clients.

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limit the extent, frequency, and modality with which our consultants travel;

impact our business opportunities;

and expose us to liability.

Within our own operations, we face additional costs from rising energy costs which make it more expensive to power our corporate offices;

The impacts of climate change present notable risks, including damage to assets and technology caused by extreme weather events linked to climate change.

efforts to mitigate or reduce our operations’ impacts from or on the environment, such as a shift to cloud technology or a leasing preference for buildings that are LEED-certified.

Risks Related to Our Profitability

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When actual or projected fee revenues are negatively impacted by weakening customer demand, we have and may again find it necessary to take cost cutting measures so that we can minimize the impact on our profitability.

In fiscal 2020, due to the decrease in fee revenue as a result of COVID-19 and, as part of a broader program aimed at further enhancing our strong balance sheet and liquidity position , the Company developed and implemented a plan that was intended to adjust our cost base to the then-current economic environment and to position us to invest in the recovery.

This plan included (i) a reduction in workforce, which was completed by the end of the first quarter of fiscal 2021 and resulted in in restructuring charges of $40.5 million and $30.7 million associated with severance during fiscal 2020 and 2021, respectively, (ii) the temporary furlough of certain employees, (iii) subject to certain exceptions and legal requirements, salary reductions across the organization through December 31, 2020 , and (iv) other cost saving measures relating to general and administrative expenses.

Failing to maintain a balance between our cost structure and our revenue could adversely affect our business, financial condition, and results of operations and lead to negative cash flows, which in turn might require us to obtain additional financing to meet our capital needs.

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In addition, our consultants oftentimes perform services at the physical locations of our clients.

Natural disasters, pandemics, disruptions to travel and transportation or problems with communications systems negatively impact our ability to perform services for, and interact with, our clients at their physical locations, which could have an adverse effect on our business and results of operations.

N atural disasters, pandemics, disruptions to travel and transportation or problems with communications systems negatively impact our ability to perform services for, and interact with, our clients at their physical locations , which could have an adverse effect on our business and results of operations.

The profitability of our fixed-fee engagements with clients may not meet our expectations if we underestimate the cost of these engagements when pricing them.

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Any increased or unexpected costs or unanticipated delays in connection with the performance of fixed-fee engagements, including delays caused by factors outside our control, could make these contracts less profitable or unprofitable, which would have an adverse effect on our profit margin.

For the years ended April 30, 2021, 2020, and 2019, fixed-fee engagements represented 26%, 25%, and 27% of our revenues, respectively.

For the years ended 2022, 2021, and 2020, fixed-fee engagements represented 22%, 26%, and 25% of our revenues, respectively.

Inflationary pressure could adversely impact our profitability.

Demand for our services is affected by global economic conditions and the general level of economic activity in the geographic regions in which we operate.

During periods of slowed economic activity many companies hire fewer permanent employees, and our business, financial condition and results of operations may be adversely affected.

If unfavorable changes in economic conditions occur, our business, financial condition and results of operations could suffer.

Accelerated and pronounced economic pressures, such as the recent inflationary cost pressures, may negatively impact our expense base by increasing our operating costs including labor costs.

Continued inflationary pressures may result in increases in operating costs that we may not be able to fully offset by raising prices for our services because if we do our clients may choose to reduce their business with us, which may reduce our operating margin.

Risks Related to Accounting and Taxation

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Our indebtedness could adversely affect our financial condition, our ability to operate our business, react to changes in the economy or our industry, prevent us from fulfilling our obligations under our indebtedness and could divert our cash flow from operations for debt payments.

As of April 30, 2021, we had approximately $400.0 million in total indebtedness outstanding, and $646.0 million of availability under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) provided for under our Credit Agreement (the “Credit Agreement”) that we entered into on December 16, 2019, with a syndicate of banks and Bank of America, National Association as administrative agent.

Subject to the limits contained in the Credit Agreement that govern our Revolver and the indenture governing our $400.0 million principal amount of the 4.625% Senior Unsecured Notes due 2027 (the “ Notes”), we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisition, or for other purposes.

As of June 24, 2022, we had approximately $400.0 million in total indebtedness outstanding, $645.3 million of availability under our $650.0 million five-year senior secured revolving credit facility (the “Revolver”) and $500 million of availability under our $500.0 million five-year senior secured delayed draw term loan facility (“Delayed Draw Facility”), both provided for under our Credit Agreement, as amended on June 24, 2022 (the “Amended Credit Agreement”) that we entered into with a syndicate of banks and Bank of America, National Association as administrative agent.

Subject to the limits contained in the Amended Credit Agreement that govern our Revolver and Delayed Draw Facility and the indenture governing our $400.0 million principal amount of the 4.625% Senior Unsecured Notes due 2027 (the “ Notes”), we may be able to incur substantial additional debt from time to time to finance working capital, capital expenditures, investments or acquisition, or for other purposes.

If we do so, the risks related to our debt could increase.

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we are more vulnerable to economic downturns and adverse industry conditions and our flexibility to plan for, or react to, changes in our business or industry is more limited;

our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and the restrictive covenants in the Credit Agreement and the indenture governing our Notes;

our ability to capitalize on business opportunities and to react to competitive pressures, as compared to our competitors, may be compromised due to our high level of debt and the restrictive covenants in the Amended Credit Agreement and the indenture governing our Notes;

our ability to borrow additional funds or to refinance debt may be limited ;

COVID-19 could impact our ability to draw on the revolver or result in a credit downgrade;

and it may cause potential or existing customers to not contract with us due to concerns over our ability to meet our financial obligations, such as insuring against our professional liability risks, under such contracts.

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We and our subsidiaries may incur substantial additional indebtedness in the future.

The Credit Agreement and the indenture governing our Notes contain restrictions on the incurrence of additional indebtedness, but these restrictions are subject to several qualifications and exceptions, and the indebtedness that may be incurred in compliance with these restrictions could be substantial.

The Amended Credit Agreement and the indenture governing our Notes contain restrictions on the incurrence of additional indebtedness, but these restrictions are subject to several qualifications and exceptions, and the indebtedness that may be incurred in compliance with these restrictions could be substantial.

If we incur additional debt, the risks associated with our leverage, including those described above, would increase.

Further, the restrictions in the indenture governing the Notes and the Credit Agreement will not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined in such debt instruments.

As of April 30, 2021, we had $646.0 million of availability to incur additional secured indebtedness under our Revolver.

Further, the restrictions in the indenture governing the Notes and the Amended Credit Agreement will not prevent us from incurring obligations, such as trade payables, that do not constitute indebtedness as defined in such debt instruments.

As of June 24, 2022, we had $645.3 million of availability to incur additional secured indebtedness under our Revolver and $500 million of availability to incur additional secured indebtedness under our Delayed Draw Facility.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our indebtedness service obligations to increase significantly.

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As a result, interest rates on the Revolver or other variable rate debt offerings could be higher or lower than current levels.

If interest rates increase, our debt service obligations on our variable rate indebtedness, if any, would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

In addition, a transition away from the London Interbank Offered Rate (“LIBOR”) as a benchmark for establishing the applicable interest rate may affect the cost of servicing our debt under the Revolver.

In July 2017, the Financial Conduct Authority of the U.K.

announced that it plans to phase out LIBOR by the end of calendar year 2021.

On March 5, 2021, however, the ICE Benchmark Administration (the “IBA”), the administrator of LIBOR, announced its intention to cease the publication of all settings of non-U.S.

dollar LIBOR and only the one-week and two-month U.S.

dollar LIBOR settings on December 31, 2021, with the publication of the remaining U.S.

dollar LIBOR settings being discontinued after June 30, 2023.

It is unclear if LIBOR will cease to exist at that time or if new methods of calculating LIBOR will be established.

Our borrowing arrangements provide for alternative base rates, but such alternative base rates may or may not be related to LIBOR, and the consequences of the phase out of LIBOR cannot be entirely predicted at this time.

For example, if any alternative base rate or means of calculating interest with respect to our outstanding variable rate indebtedness leads to an increase in the interest rates charged, it could result in an increase in the cost of such indebtedness, impact our ability to refinance some or all of our existing indebtedness or otherwise have a material adverse impact on our business, financial condition and results of operations.

When interest rates increase, our debt service obligations on our variable rate indebtedness, if any, would increase even though the amount borrowed remained the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease.

We may be unable to service our indebtedness.

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The agreements governing our debt impose significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities.

The Credit Agreement and the indenture governing the Notes impose significant operating and financial restrictions on us.

The Amended Credit Agreement and the indenture governing the Notes impose significant operating and financial restrictions on us.

These restrictions limit our ability and the ability of our subsidiaries to, among other things:

incur or guarantee additional debt or issue capital stock;

pay dividends and make other distributions on, or redeem or repurchase, capital stock;

pay dividends and make other distributions on, or redeem or

repurchase, capital stock;

make certain investments;

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and transfer or sell assets.

We and our subsidiaries are subject to covenants, representations and warranties in respect of the Revolver, including financial covenants as defined in the Credit Agreement.

See “Note 11 – Long-Term Debt” of our notes to our consolidated financial statements included in this Annual Report on Form 10-K.

We and our subsidiaries are subject to covenants, representations and warranties in respect of the Revolver, including financial covenants as defined in the Amended Credit Agreement.

See “Note 18 – Subsequent Events – Credit Facility” of our notes to our consolidated financial statements included in this Annual Report on Form 10-K.

As a result of these restrictions, we are limited as to how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities.

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We cannot assure you that we will be able to maintain compliance with these covenants in the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants.

Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from

time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date.

Our failure to comply with the restrictive covenants described above and/or the terms of any future indebtedness from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date.

If we are forced to refinance these borrowings on less favorable terms or cannot refinance these borrowings, our results of operations and financial condition could be adversely affected.

A decline in our operating results or available cash could cause us to experience difficulties in complying with covenants contained in more than one agreement, which could result in our bankruptcy or liquidation.

If we sustain a decline in our operating results or available cash, we could experience difficulties in complying with the financial covenants contained in the Credit Agreement.

If we sustain a decline in our operating results or available cash, we could experience difficulties in complying with the financial covenants contained in the Amended Credit Agreement.

The failure to comply with such covenants could result in an event of default under the Revolver and by reason of cross-acceleration or cross-default provisions, other indebtedness may then become immediately due and payable.

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Social media platforms present risks and challenges that can cause damage to our brand and reputation.

The inappropriate and/or unauthorized use of social media platforms, including weblogs (or blogs), social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience of consumers and other interested persons by our clients or employees could increase our costs, cause damage to our brand, lead to litigation or result in information leakage, including the improper collection and/or dissemination of personally identifiable information of candidates and clients.

The inappropriate and/or unauthorized use of social media platforms, including blogs, social media websites and other forms of Internet-based communications, which allow individuals access to a broad audience of consumers and other interested persons by our clients or employees could increase our costs, cause damage to our brand, lead to litigation or result in information leakage, including the improper collection and/or dissemination of personally identifiable information of candidates and clients.

In addition, negative or inaccurate posts or comments about us on any social networking platforms could damage our reputation, brand image and goodwill.

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We have invested in specialized technology and other IP for which we may fail to fully recover our investment, or which may become obsolete.

We have invested in developing specialized technology and IP, including proprietary systems, processes and methodologies, such as Korn Ferry Advance and Talent Hub, that we believe provide us a competitive advantage in serving our current clients and winning new engagements.

serving our current clients and winning new engagements.

Many of our service and product offerings rely on specialized technology or IP that is subject to rapid change, and to the extent that this technology and IP is rendered obsolete and of no further use to us or our clients, our ability to continue offering these services, and grow our revenues, has been and may continue to be adversely affected.

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This may require the acquisition of equipment and software and the development of new proprietary software, either internally or through independent consultants.

If we are unable to design, develop, implement and utilize, in a cost-effective manner, information systems that provide the capabilities necessary for us to compete effectively, or for any reason any interruption or loss of our information processing

capabilities occurs, this could harm our business, results of operations and financial condition.

We cannot be sure that our current insurance against the effects of a disaster regarding our information technology or our disaster recovery procedures will continue to be available at reasonable prices, cover all our losses or compensate us for the possible loss of clients occurring during any period that we are unable to provide business services.

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For example, the New York State Department of Financial Services has issued cybersecurity regulations that outline a variety of required security measures for protection of data.

states, including California, have also enacted cybersecurity laws requiring certain security measures of regulated entities that are broadly similar to GDPR requirements, such as the

California Consumer Privacy Act and California Privacy Rights Act, and we expect that other states will continue to do so.

states, including California, have also enacted cybersecurity laws requiring certain security measures of regulated entities that are broadly similar to GDPR requirements, such as the California Consumer Privacy Act and California Privacy Rights Act.

New privacy laws in Colorado and Virginia will take effect in 2023, and we expect that other states will continue to adopt legislation in this area.

As these laws continue to evolve, we may be required to make changes to our services, solutions and/or products so as to enable the Company and/or our clients to meet the new legal requirements, including by taking on more onerous obligations in our contracts, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or solution offerings in certain locations.

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Acquisitions, or our inability to effect acquisitions, may have an adverse effect on our business.

We have completed several strategic acquisitions of businesses in the last several years, including our acquisition of Miller Heiman Group, AchieveForum and Strategy Execution in fiscal 2020 and Hay Group in fiscal 2016.

in fiscal 2022.

Targeted acquisitions have been and continue to be part of our growth strategy, and we may in the future selectively acquire businesses that are complementary to our existing service offerings.

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Our ability to make strategic acquisitions may also be conditioned on our ability to fund such acquisitions through the incurrence of debt or the issuance of equity.

Our Credit Agreement limits us from consummating acquisitions unless we are in pro forma compliance with our financial covenants, and our pro forma domestic liquidity after giving effect to the acquisition is at least $50.0 million, and certain other conditions are met.

Our Amended Credit Agreement limits us from consummating acquisitions unless we are in pro forma compliance with our financial covenants, and certain other conditions are met.

If we are required to incur substantial indebtedness in connection with an acquisition, and the results of the acquisition are not favorable, the increased indebtedness could decrease the value of our equity.

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As a result of our acquisitions, we have substantial amounts of goodwill and intangible assets, and changes in business conditions could cause these assets to become impaired, requiring write-downs that would adversely affect our operating results.

All of our acquisitions have been accounted for as purchases and involved purchase prices well in excess of tangible asset values, resulting in the creation of a significant amount of goodwill and other intangible assets.

All of our acquisitions have been accounted for as purchases and involved purchase prices well in excess of tangible

asset values, resulting in the creation of a significant amount of goodwill and other intangible assets.

As of April 30, 2022 , goodwill and purchased intangibles accounted for approximately 2 1 % and 3 % , respectively, of our total assets.

generally accepted accounting principles (“GAAP”), we do not amortize goodwill and intangible assets acquired in a purchase business combination that are determined to have indefinite useful lives, but instead review them annually (or more frequently, if impairment indicators arise) for impairment.

In fiscal 2019, the Company began to offer substantially all of the Company’s current products and services using the “Korn Ferry” name, branding and trademarks, and has sunset substantially all sub-brands, including Futurestep, Hay Group and Lominger, among others.

The Hay Group and Lominger brands came to the Company through acquisitions and, in connection with the accounting for those acquisitions, $106.6 million of the purchase price was allocated to indefinite lived tradename intangible assets.

On June 12, 2018, the Company concluded that as a result of the decision to discontinue the use of such sub-brands in the near term, the Company was required under U.S.

GAAP to record in the first quarter of fiscal 2019 a one-time, non-cash intangible asset impairment charge of $106.6 million.

The discontinuation of such brands could adversely affect our business.

Further, future events or changes in circumstances that result in an impairment of goodwill or other intangible assets would have a negative impact on our profitability and operating results.

W e review goodwill and intangible assets annually (or more frequently , if impairment indicators arise) for impairment.

F uture events or changes in circumstances that result in an impairment of goodwill or other intangible assets would have a negative impact on our profitability and operating results.

An impairment in the carrying value of goodwill and other intangible assets could negatively impact our consolidated results of operations and net worth.

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These types of events and the resulting analyses could result in goodwill impairment charges in the future.

Impairment charges, such as the impairment charge that we recorded in the first quarter of fiscal 2019 related to the discontinuation of the Hay Group and Lominger brands, could substantially affect our results of operations and net worth in the periods of such charges.

Risks Related to Global Operations

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difficulties in building and maintaining a competitive presence in existing and new markets;

social, economic and political instability;

social, economic and political instability, including the repercussions of Russia’s attack on Ukraine;

differences in cultures and business practices;

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One or more of these factors has and may in the future harm our business, financial condition or results of operations.

The United Kingdom’s withdrawal from the E.U.

may adversely impact our operations in the United Kingdom and elsewhere.

In fiscal 2021, 10.5% of our fee revenue was recognized in the U.K.

In 2020, the U.K.

left the E.U.

and reached an agreement with the E.U.

regarding their future relationship.

The political and economic instability created by the United Kingdom’s exit from the EU has caused and may continue to cause significant volatility in global financial markets and uncertainty regarding the regulation of data protection in the U.K.

In addition, we could be adversely impacted by changes in trade policies, immigration laws and employment laws , tax or other laws and regulations, IP rights and supply chain logistics.

We may incur additional costs as it addresses any such changes.

All or any one of these factors could adversely affect our business, revenue, financial condition and results of operations.

The interest rates under our Credit Agreement may be impacted by the phase-out of LIBOR.

LIBOR is the basic rate of interest used in lending between banks on the London interbank market and is widely used as a reference for setting the interest rates on loans globally.

We generally use LIBOR as a reference rate to calculate interest rates under our credit facility.

In July 2017, the U.K.’s Financial Conduct Authority, which regulates LIBOR, announced that it intends to phase out LIBOR by the end of 2021.

On March 5, 2021, however, the ICE Benchmark Administration (the “IBA”), the administrator of LIBOR, announced its intention to cease the publication of all settings of non-U.S.

dollar LIBOR and only the one-week and two-month U.S.

dollar LIBOR settings on December 31, 2021, with the publication of the remaining U.S.

dollar LIBOR settings being discontinued after June 30, 2023.

It is unclear if LIBOR will cease to exist at that time or if new methods of calculating LIBOR will be established.

Federal Reserve, in conjunction with the Alternative Reference Rates Committee, a steering committee comprised of large U.S.

financial institutions, is considering replacing U.S.

dollar LIBOR with a new index, the Secured Overnight Financing Rate (“SOFR”), calculated using short-term repurchase agreements backed by U.S.

Treasury securities.

Whether or not SOFR, or another alternative reference rate, attains market traction as a LIBOR replacement tool remains in question.

If LIBOR ceases to exist, we may need to amend our Credit Agreement to replace LIBOR with an agreed upon replacement index, and certain of the interest rates under our Credit Agreement may change.

The new rates may not be as favorable to us as those in effect prior to any LIBOR phase-out.

Risks Related to Our Dividend Policy

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The terms of our indebtedness may also restrict us from paying cash dividends on our common stock under certain circumstances.

See below “—Our ability to pay dividends is restricted by agreements governing our debt, including our Credit Agreement and the indenture governing our Notes, and by Delaware law.”

See below “—Our ability to pay dividends is restricted by agreements governing our debt, including our Amended Credit Agreement and indenture governing our Notes, and by Delaware law.”

Over time, our capital and other cash needs may change significantly from our current needs, which could affect whether we pay dividends and the level of any dividends we may pay in the future.

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Any reduction or elimination of dividends may negatively affect the market price of our common stock.

Our ability to pay dividends is restricted by agreements governing our debt, including our Credit Agreement and indenture governing our Notes, and by Delaware law.

Both our Credit Agreement and the indenture governing our Notes restrict our ability to pay dividends.

Our ability to pay dividends is restricted by agreements governing our debt, including our Amended Credit Agreement and indenture governing our Notes, and by Delaware law.

Both our Amended Credit Agreement and the indenture governing our Notes restrict our ability to pay dividends.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources,” where we describe the terms of our indebtedness, including provisions limiting our ability to declare and pay dividends.

As a result of such restrictions, we may be limited in our ability to pay dividends unless we redeem our Notes and amend our Credit Agreement or otherwise obtain a waiver from our lenders.

As a result of such restrictions, we may be limited in our ability to pay dividends unless we redeem our Notes and amend our Amended Credit Agreement or otherwise obtain a waiver from our lenders.

In addition, as a result of general economic conditions, conditions in the lending markets, the results of our business or for any other reason, we may elect or be required to amend or refinance our Revolver, at or prior to maturity, or enter into additional agreements for indebtedness.

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In addition, because a portion of cash available will be distributed to holders of our common stock under our dividend policy, our ability to pursue any material expansion of our business, including through acquisitions, increased capital spending or other increases of our expenditures, will depend more than it otherwise would on our ability to obtain third party financing.

We cannot assure you that such financing will be available to us at all, or at an acceptable cost.

We cannot assure you that such financing will be

available to us at all, or at an acceptable cost.

If we are unable to take timely advantage of growth opportunities, our future financial condition and competitive position may be harmed, which in turn may adversely affect the market price of our common stock.

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Tax rates in the jurisdictions in which we operate may change as a result of macroeconomic and other factors outside of our control, making it increasingly difficult for multinational corporations like ourselves to operate with certainty about taxation in many jurisdictions.

As a result, we have been and may again be materially adversely affected by future changes in tax law or policy (or in their interpretation or enforcement) in the jurisdictions where we operate, including the U.S., which could have a material adverse effect on our business, cash flow, results of operations, financial condition, as well as our effective income tax rate.

Recently, the Biden Administration has proposed changes to federal tax policies that could significantly change how corporations are taxed on U.S.

as well as on foreign earnings.

While the proposed changes are still under debate, they could adversely affect our business and our results of operations.

income tax rate.

Limited protection of our IP could harm our business, and we face the risk that our services or products may infringe upon the IP rights of others.

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Responding to stockholder activism can be costly and time-consuming, disrupt our operations, and divert the attention of management and our employees from our strategic initiatives.

Activist campaigns can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the loss of potential business opportunities, harm our ability to attract new employees, investors, and customers, and cause our stock price to experience periods of volatility or stagnation.

Activist campaigns can create perceived uncertainties as to our future direction, strategy, or leadership and may result in the

loss of potential business opportunities, harm our ability to attract new employees, investors, and customers, and cause our stock price to experience periods of volatility or stagnation.

Unresolved Staff Comments

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors