Business Segments

9 Months Ended

Jan. 31, 2013

Business Segments

8. Business Segments

In the first quarter of fiscal 2013, the Company changed the composition of its global business segments. Given the importance to the Company’s strategy and development of financial and operational metrics for the Leadership & Talent Consulting business services, the Company’s chief operating decision maker (“CODM”) began to regularly make resource allocation decisions and assess performance separately for Executive Recruitment and Leadership & Talent Consulting. Therefore, under the new reporting format Executive Recruitment and Leadership & Talent Consulting are reported separately. Revenues are directly attributed to a segment and expenses not directly associated with a specific segment are allocated based on the most relevant measures applicable, including revenues, headcount and other factors. Operating results for three and nine months ended January 31, 2012 have been revised to conform to the new segment reporting. During the three and nine months ended January 31, 2012, the Company also revised the presentation of expenses that are not directly associated with Futurestep resulting in an increase in Futurestep’s operating income of $0.6 million and $1.7 million, respectively, offset by a decrease in Executive Recruitment operating income.

The Company currently operates in three global business segments: Executive Recruitment, Leadership & Talent Consulting and Futurestep. The Executive Recruitment segment focuses on recruiting board-level, chief executive and other senior executive positions for clients predominantly in the consumer, financial services, industrial, life sciences/healthcare provider and technology industries. Leadership & Talent Consulting provides a comprehensive blend of leadership and talent management solutions that assist clients with their ongoing assessment of executives, organizational alignment and leadership development efforts and provides other services related to recruiting. These solutions address five fundamental needs, board effectiveness, CEO & top team effectiveness, leadership development & enterprise learning, organization transformation and integrated talent management. Futurestep creates customized and flexible recruitment solutions to meet specific workforce needs of organizations around the world. Their portfolio of services includes recruitment process outsourcing, talent acquisition and management consulting services, project-based recruitment, mid-level recruitment and interim professionals. The Executive Recruitment business segment is managed by geographic regional leaders. Leadership & Talent Consulting’s and Futurestep’s worldwide operations are managed by their respective Chief Executive Officers. The Executive Recruitment geographic regional leaders, the Chief Executive Officers of Leadership & Talent Consulting and Futurestep report directly to the Chief Executive Officer of the Company. The Company also operates a Corporate segment to record global expenses of the Company.

The Company evaluates performance and allocates resources based on the CODM’s review of (1) fee revenue and (2) segment income (loss). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies, except that unusual or infrequent items are excluded from segment income (loss).

Financial highlights by business segment are as follows:

	Three Months Ended January 31, 2013
	Executive Recruitment										Leadership
	North America		EMEA		Asia Pacific		South America		Subtotal		& Talent Consulting			Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	71,259	$	33,600	$	18,301	$	7,334	$	130,494	$	41,155		$	30,355	$	—		$	202,004
Segment income (loss)	$	14,637	$	4,177	$	1,913	$	920	$	21,647	$	1,643		$	3,722	$	(13,865	)	$	13,147
Restructuring charges, net		—		—		—		—		—		4,441			—		—			4,441
Operating income (loss)	$	14,637	$	4,177	$	1,913	$	920	$	21,647	$	(2,798	)	$	3,722	$	(13,865	)	$	8,706

	Three Months Ended January 31, 2012
	Executive Recruitment												Leadership
	North America			EMEA		Asia Pacific		South America			Subtotal		& Talent Consulting		Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	72,000		$	34,442	$	18,383	$	7,256		$	132,081	$	28,031	$	25,839	$	—		$	185,951
Segment income (loss)	$	15,601		$	4,419	$	1,397	$	1,687		$	23,104	$	5,195	$	1,587	$	(12,792	)	$	17,094
Restructuring charges, net		(15	)		897		—		(99	)		783		—		146		—			929
Operating income (loss)	$	15,616		$	3,522	$	1,397	$	1,786		$	22,321	$	5,195	$	1,441	$	(12,792	)	$	16,165

	Nine Months Ended January 31, 2013
	Executive Recruitment										Leadership
	North America		EMEA		Asia Pacific		South America		Subtotal		& Talent Consulting		Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	212,806	$	96,565	$	54,022	$	22,295	$	385,688	$	107,999	$	91,242	$	—		$	584,929
Segment income (loss)	$	47,164	$	9,788	$	4,104	$	4,226	$	65,282	$	12,834	$	10,227	$	(39,923	)	$	48,420
Restructuring charges, net		5,436		4,752		613		—		10,801		5,118		3,086		931			19,936
Operating income (loss)	$	41,728	$	5,036	$	3,491	$	4,226	$	54,481	$	7,716	$	7,141	$	(40,854	)	$	28,484

	Nine Months Ended January 31, 2012
	Executive Recruitment												Leadership
	North America			EMEA		Asia Pacific		South America			Subtotal		& Talent Consulting		Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	229,449		$	108,681	$	62,706	$	23,204		$	424,040	$	83,757	$	84,621	$	—		$	592,418
Segment income (loss)	$	58,417		$	14,451	$	8,858	$	6,572		$	88,298	$	11,389	$	7,258	$	(38,502	)	$	68,443
Restructuring charges, net		(15	)		897		—		(99	)		783		—		146		—			929
Operating income (loss)	$	58,432		$	13,554	$	8,858	$	6,671		$	87,515	$	11,389	$	7,112	$	(38,502	)	$	67,514