Business Segments

3 Months Ended

Jul. 31, 2014

Business Segments

8. Business Segments

The Company currently operates in three global businesses: Executive Recruitment, LTC and Futurestep. The Executive Recruitment segment focuses on recruiting Board of Director and C-level positions, in addition to research-based interviewing and onboarding solutions, for clients predominantly in the consumer, financial services, industrial, life sciences/healthcare and technology industries. LTC provides a comprehensive blend of leadership and talent management solutions including both consulting services and product offerings. Service and product offerings in this segment include: Talent Strategy and Organizational Alignment, Succession Management, Board and CEO Services, Leadership Development and Workforce Performance, Inclusion and Diversity, all underpinned by a comprehensive array of world-leading IP, products and tools. Futurestep is a global industry leader in enterprise-wide consulting and recruitment solutions. Its portfolio of services includes RPO, talent acquisition and management consulting services, project-based recruitment, non-executive and other professional recruitment. The Executive Recruitment business segment is managed by geographic regional leaders and LTC and Futurestep worldwide operations are managed by its President and Chief Executive Officer, respectively. The Executive Recruitment geographic regional leaders, the president of LTC and Chief Executive Officer of 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 Company’s chief operating decision maker’s (“CODM”) review of (1) fee revenue and (2) earnings before interest, taxes, depreciation and amortization (“EBITDA”), which is further adjusted to exclude restructuring charges (net of recoveries) and/or integration/acquisition and certain separation costs (“Adjusted EBITDA”). 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 that do not recur on a regular basis are excluded from Adjusted EBITDA.

Financial highlights by business segment are as follows:

	Three Months Ended July 31, 2014
	Executive Recruitment
	North America		EMEA		Asia Pacific		South America		Subtotal		LTC		Futurestep			Corporate			Consolidated
	(in thousands)
Fee revenue	$	82,300	$	40,297	$	19,534	$	6,284	$	148,415	$	63,548	$	39,225		$	—		$	251,188
Total revenue	$	86,082	$	41,429	$	20,369	$	6,309	$	154,189	$	65,420	$	40,716		$	—		$	260,325
Net income																			$	14,533
Other income, net																				(2,177	)
Interest expense, net																				794
Equity in earnings of unconsolidated subsidiaries, net																				(466	)
Income tax provision																				5,909
Operating income (loss)	$	18,998	$	2,643	$	2,522	$	73	$	24,236	$	3,460	$	3,457		$	(12,560	)		18,593
Depreciation and amortization		904		489		294		85		1,772		3,252		446			1,300			6,770
Other income (loss), net		129		46		109		33		317		217		(2	)		1,645			2,177
Equity in earnings of unconsolidated subsidiaries, net		68		—		—		—		68		—		—			398			466
EBITDA		20,099		3,178		2,925		191		26,393		6,929		3,901			(9,217	)		28,006
Restructuring charges, net		1,151		3,987		17		377		5,532		2,758		1,424			172			9,886
Adjusted EBITDA	$	21,250	$	7,165	$	2,942	$	568	$	31,925	$	9,687	$	5,325		$	(9,045	)	$	37,892
	Three Months Ended July 31, 2013
	Executive Recruitment
	North America		EMEA		Asia Pacific		South America		Subtotal		LTC		Futurestep			Corporate			Consolidated
	(in thousands)
Fee revenue	$	74,147	$	34,377	$	21,128	$	7,003	$	136,655	$	60,062	$	31,720		$	—		$	228,437
Total revenue	$	78,111	$	35,457	$	21,927	$	7,036	$	142,531	$	62,082	$	32,974		$	—		$	237,587
Net income																			$	11,417
Other income, net																				(2,267	)
Interest expense, net																				591
Equity in earnings of unconsolidated subsidiaries, net																				(465	)
Income tax provision																				7,385
Operating income (loss)	$	16,324	$	5,960	$	4,500	$	1,496	$	28,280	$	4,335	$	2,545		$	(18,499	)		16,661
Depreciation and amortization		963		435		306		74		1,778		2,897		408			861			5,944
Other income, net		127		234		17		3		381		8		565			1,313			2,267
Equity in earnings of unconsolidated subsidiaries, net		102		—		—		—		102		—		—			363			465
EBITDA		17,516		6,629		4,823		1,573		30,541		7,240		3,518			(15,962	)		25,337
Restructuring charges, net		816		460		60		—		1,336		1,149		1,134			63			3,682
Separation costs		—		—		—		—		—		—		—			2,500			2,500
Integration costs		—		—		—		—		—		—		—			394			394
Adjusted EBITDA	$	18,332	$	7,089	$	4,883	$	1,573	$	31,877	$	8,389	$	4,652		$	(13,005	)	$	31,913