Ladies and gentleman thank you for standing by and welcome to the Korn/Ferry International conference call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session, and as a reminder this conference is being recorded. Before I turn the call over to your host, Mr. Gary D. Burnison, let me first read the cautionary statement to investors. Certain statements made in the presentation today will constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, investors are cautioned not to place undue reliance on such statements. Actual results in future periods may differ materially from those currently expected or desired, because of the number of risks and uncertainties which are beyond the company’s control. Additional information concerning such risks and uncertainties can be found in the release relating to this presentation in the company’s Annual Report for fiscal 2009, and in the other periodic reports filed by the company with SEC. With that said, I’ll turn the call over to Mr. Burnison; please go ahead sir.

Well thank you Kathy and good morning to all of you. Today we are please to report our first sequential quarterly revenue gain in over a year. I don’t need to say that the past 12 months have been a high speed ride for almost every business around the world, and certainly we’re no exception. It was less than a year ago that we were producing the most revenue and cash flow in the company’s history, and then just 60 days later our industry was off well over 40%. Unemployment in the U.S. and around the world had risen dramatically, the global equity markets cratered, credits have operated and consumer confidence plunged. For the second quarter of this calendar year the association of executive search consultants, the AESC which is our trade organization reported that the search industry was down nearly 50%. Despite the environment, and the fact that we’ve had to eliminate over $300 million from our cost structure and have asked our colleagues to make significant, personal sacrifices, I am prouder today of our organization than I have ever been. As I previously talked about publicly, our goal during this unprecedented time would be to preserve the franchise, position the company for growth, and accelerate through the economic turn. We established an operating boundary of positive cash flow, which we’ve clearly achieved; in fact we ended the quarter with $266 million in cash, substantially higher than forecast. Over the past year we have been able to outperform the competition, uphold our number one market share and manage our balance sheet. Great companies make their best moves in this kind of environment and despite the recession, we have made true progress against our strategy, to further transform Korn/Ferry and the industry. We have made two acquisitions in this down…

Thanks, Gary and good morning everyone. As Gary said, after several quarters of sequential fee revenue contraction, market conditions around the globe are showing meaningful signs of stabilization. In fact that $116.8 million fiscal ’10, first quarter marks the first quarter of sequential fee revenue growth in over a year. In the first quarter fee revenue grew $9.8 million or 9% sequentially and excluding the addition of Whitehead Mann in mid June, was up $4 million or 4% sequentially. Furthermore, the overall market improvement has been broad based with all of our operating regions and divisions posting fee revenue either flat or up compared to the fourth quarter of fiscal year ’09. Just as importantly, we have continued to focus on controlling our cost base and to operate the firm at positive cash flow levels. After the payment in the first quarter of the majority of fiscal ’09 bounces, and the purchase of Whitehead Mann our worldwide cash and marketable securities balance stands at a very strong $266 million. Our firm continues to be the most liquid and well capitalized in the industry, with substantial financial resources to invest in future growth opportunities. As previously announced, in connection with the acquisition and integration of Whitehead Mann, we have taken additional aggressive actions to rationalize the firms cost base by eliminating redundant consultants, support staff, office space and other G&A expenses. These carefully planned cost saving actions will help our U.K., France and overall AMEA region achieved greater profitability while maintaining critical consultant and execution talent necessary to take advantage of the long term upswing and the demand for our services that typically follows a recession. Combined to these cost saving actions are projected result in approximate annual savings of $18 million. Total restructuring charges in the quarter to achieve these…

Thanks Mike. Starting with our executive recruiting segment, on a constant currency basis and excluding the effect of the Whitehead Mann acquisition, executive search fiscal ‘10 first quarter fee revenue was flat versus the fourth quarter of fiscal ‘09 at $92 million. Year-over-year on the same basis, fiscal ‘10 first quarter fee revenue fell $77.5 million, or 44%. As reported, and including the addition of Whitehead Mann consolidated first quarter executive recruiting fee revenue was $101.3 million, up $9.4 million or 10% sequentially and off $73 million or 42% year-over-year. As previously stated, overall market conditions have shown meaningful signs of stabilization in the quarter, with all executive search operating regions and specialty practices either flat or up sequentially. Executive search newly opened assignments were up nearly 20% in the three months ending July ’09, versus the three months ending April ’09. In North America, first quarter fee revenue was $55.3 million, down 41% or $39 million year-over-year, but off only $1.5 million or 3% sequentially. Sequentially, the life sciences’ healthcare and technology specialty practices grew in the first quarter with a consumer goods, financial service and adjuster practice posting only moderate single digit declines. Newly confirmed assignments in North America, grew approximately 10% in the first quarter, versus the fourth quarter of fiscal ’09. Year-over-year, all major specialty practices were down. Underlying market conditions in Europe, also improved in the first quarter. On a constant currency basis, and excluding the addition of Whitehead Mann, Europe first quarter fee revenue declined 56% or $29 million, but grew sequentially $700,000 or 3.4% reaching $23.5 million. With the addition in the quarter of $5.8 million of fee revenue from legacy Whitehead Mann operations, Europe fee revenue grew $8.5 million or 41% sequentially to $29.2 million. 13 of 19 individual country markets grew…

Thanks Gregg. Based on a recent monthly new business trends the global demand for our services has stabilized and along with the macroeconomic environment in labor markets it has begun to show some modest signs of real improvement. Given these trends through the month of August and considering the impact of a modest decline in new business due to summer vacation seasonality, fiscal ’10 second quarter fee revenue will likely range from a $110 million to $120 million. Regardless to seasonality and consistent with the first quarter the firms near term goal remains to operate the business at positive cash flow define by the measure adjusted EBITDA. However, if new business trends were to weaken later this fall the firm will likely take additional actions to rationalize the cost base to maintain positive cash flow. Finally in the near term, the firm will continue to take advantage of its strong financial and market position by selectively hiring unique talent that we believe will in the long run optimize our growth potential and maximize shareholder value. At this point that concludes our prepared remarks and we’ll be glad to answer any questions that you may have.

(Operator Instructions) Your first question comes from Andrew Fones - UBS.

, :

The figure was $5.8 million and that adjust in the EMEA region.

Remember Andrew that was for about 45 days or so, in the quarter.

Yes, that was going to be my other question, but so 5.8 in EMEA. Can you give us the numbers in the other divisions, please?

Essentially nil

Was it fairly to minimize in the other area?

That’s what Mike just said. He said essentially nothing, yes.

Then in terms of the cost savings, the $18 million that you mentioned annualized. How should we expect those to kind of flow in over the next couple of quarters? Likely to be out there annualized right, in two quarters or three quarters. How should we think about that?

Essentially, a lot of the actions were taken at the end of the quarter. So those start to rollout pretty much this quarter. So we won’t necessarily get the full impact during the quarter, but we expect to complete the majority of those actions by the end of the quarter.

So you’re saying that a lot of the actions were happened in Q1, but there are some outstanding that’ll be concluded by the end of Q2?

What Mike said, basically some happened very late in the first quarter. So with we likely will not realize the full impact of those savings in the second quarter, but certainly by the third and fourth quarter, we should be at the appropriate $18 million annualized rate.

We mentioned before, the savings were roughly split between people and real estate costs, and so again the bulk of the people actions we’re taken and so we will start to get those. Some of the real estate actions, again majority of those we’re taken as well, but some will actually rollout here during the quarter.

Then in terms of the bonuses, have you finished paying their bonuses or was there anything else left to payout during the second quarter here?

There’s a small amount that we will be paying, it has paid and will be paying here in the second quarter related to ’09, yes.

Your next question comes from Kevin McVeigh - CSFB.

I wondered if you can just walk through the cash balance a little bit. Obviously real nice job preserving the cash on the balance sheet, but given that the majority of the bonuses are paid out? As you think about you said capital, has that changed recently and I guess specifically, you reconsidering the buyback, near term or just kind of thoughts on use of capital overall and what is the exact amount that’s available?

Let me first, before I have Mike comment on the specifics. Just say that obviously, we’ve come through an unprecedented time, and literally our business and the industry fell off 50% in a span of weeks and as we setup our contingency plans nearly two years ago, one of the operating boundaries was cash. So in terms of your question, if you look back I think we’ve been fairly consistent and discipline in deploying cash, and it’s really been in three areas in terms of; one, returning cash to our shareholders; secondly, in terms of making acquisitions to continue to build out solutions, to differentiate our flag ship search business; and three, generally investing in the business. That would be our operating model going forward. I would like to see another, quarter or so to see what really happens in the global economy, before we comment publicly about that cash. This has been a period of time, it’s been an extraordinary period of time when CEOs have hoarded cash and I still believe that the credit is tight. We’re on the road to recovery in terms of the banking system, but credit is still tight and so I think we need to be mindful of that. So Mike, do you want to…

Yes, basically and as we’d talked about the cash and marketable securities, at $265 million and there’s roughly $65 million, they’re related to the ECAP assets and as we’ve said we’ve got some small amount of bonuses that are being paid in the quarter. So investable cash in the $190 million to $200 million range and as Gary said clearly we continued to look at the opportunity in time for buyback, and also very selectively again acquisitions looking at business and opportunities to improve on the business. Again, we are not yet at the point of operating earnings breakeven, but we said the focus is on cash flow. We think it’s our job to do the right things to maximize long term shareholder value, if we had a focus on maximizing short term profitability, we can do some other things, but we don’t believe necessarily that’s going to help grow value in the long term. So we are still cutting cost selectively at the same time, but trying to do the right things to grow the business.

Mike the cost actions; I know we took an additional $18 million. Is it fair to say that the benefit from all the prior cost actions for this $18 million? Has that already been realized in the P&L or is this just the incremental $18 million, as we think about the rest of the year and you go to the third and fourth quarter?

For the most part, the previously discussed actions however, we did take additional actions during Q1 and have already taken some additional actions during Q2. We will actually continue to selectively constantly take actions. Cost cutting is not a kind of one-time event in our view, it’s something we have to be doing all the time looking at the business, and if you’re going to make investments as we’re doing in select areas to build the value of the business at the same time, we’re looking to make cuts where we can be more efficient in the way we operate our business. The big ones, the restructurings, yes it has been implemented. We’re not going to stop taking actions to cut costs.

If I could just sneak one more, as you think about kind of this cycle versus the last cycle, obviously it’s been very, very severe and very tight. If you could just kind of take us through your thoughts, where we are relative to the last cycle and as we think about kind of how the business deal plays out going forward.

As you know the last cycle, if you look at for example, unemployment levels and the like particularly college educated, essentially last cycle they kind of double, this cycle they’ve done that as well. The overall level of unemployment is obviously much higher than it was. As you said, the severity, the speed of this decline has been absolutely breathtaking. Last time it trickled out over several quarters and the thing that we’re waiting to see it right now is that in the last cycle, there was a job less recovery and that is the question here. I will tell you that the up tick in business that we’ve seen over the last three months, so call it summer compared to spring, it certainly doesn’t follow the typical patter that you would see. So I think that reflects a couple of things. It reflects, I think a sense of economic normalcy on the part of CEO’s that flat, is the old up if you will. Secondly the severity of the cuts that were made was quite significant going back over the last few quarters. I think those two things help to explain why we’ve seen an up tick in our business despite the fact that unemployment continues to growth. So there is a green sprout, but the green sprouts need water and sunshine. So there needs to job creation and the banking system is on the road to recovery, but it’s not there yet. So those are two things that we keep a pretty watchful eye on in our operating model.

Your next question comes from Clinton Fendley - Davenport.

I wonder if you could comment on how the competitive dynamic might have changed in the China and India regions, as a result of the downturn, specifically do you expect any consolidation like we’ve seen in Europe.

Consolidation of industries, or are you talking about search providers?

Search providers.

Well, if you look at both of those markets, even though they represent 45% of the world’s population. I mean there is actually rather for consultative services, it’s still a young and immature markets. So when you look at the providers in both of those markets, we’re the leading provider in both markets and if very, very fragmented. So you’ve got the [bold] bracket firms that each has some level of operations, but then after that it’s very fragmented. In China, there’s a big focus on the internet and the like, so there’s firms that are doing business that way, but I don’t really see that in terms of our strategic focus, I don’t think that’s going impact our business.

I guess that was the heart of my question. Given the fragmentation and the fact that any downturn there appears to have been pretty short lived, I guess it’s safe to say there haven’t been very much of a change in the competitive dynamic in any of those areas then?

I think that’s correct.

Your next question comes from Mark Marcon - R.W. Baird

I was wondering Gary, if you could talk a little bit about what your sense is. It sounds like the pick up in engagements is broad based. Do you have a sense of any of that as just kind of pent up, maybe some engagements that we’re previously contemplated by clients that they just had to put on freeze and now they’re unfreezing or do you think it’s truly a real pick up.

Yes, well there’s really no way. I mean we’ve placed over 30 executives a day, so it’s very, very hard to generalize. If I had to generalize what I said earlier Mark, I just think that the cut backs. When the equity markets cratered in October, CEO’s immediately had an inward focus and there was tremendous effort around cash preservation and rationalizing ones cost structure. At some point you kind of get immune to things and then there’s a sense of normalcy, and you get on with life and you start to figure out what does the new world order look like and how do you grow your organization. So I would attribute it more to the severity and the slope of the decline, rather than anything else Mark.

Then in terms of normalizing, when you look at the new engagements that you’ve been getting over the last couple of months, are the terms for fees getting back to normal or are you still seeing some that are kind of scaled back?

We don’t have any great hopes in the next quarter that our average fees are going to raise, that’s not going to happen, but again I think you have to look at this as a journey in a continuum. This is now my 30th earnings call. If you go back over that time, there was a point where Korn/Ferry’s average fees were $50,000, $55,000; today they’re $75,000. Now, sure they were $92,000 four quarters ago, but we are moving the brand upstream, there’s no question about that. I don’t see any kind of macro trends around wage inflation and the like, that would suggest some near term spike in average fees.

I meant more just in terms of the way that you were being engaged, and kind of the full service search, as opposed to something that would be a little bit more abbreviated.

No, I think everybody in the businesses has had to be extraordinarily creative over the last several quarters, but I don’t think there’s anything material there Mark.

In terms of the bonus accrual, was it for this quarter?

Bonus accrual for this quarter was 11.56, mid-11s. Mark Marcon – R.W. Baird: Would you say that’s pretty good if we were to stay around this sort of a run rate, is that kind of a good way to think about it?

It obviously depends, but...

Generally speaking, it’s probably in the ballpark, but our objective is to try to grow this thing a little better, so we can share the wealth a little bit.

Gary, you made some comments about LVW. Obviously nobody really knows and we obviously have some stimulus that’s occurring currently, that may or may not be sustainable. So it’s hard to say exactly how things are going to go, but the question is if this ends up being, say plus or minus $50 million, kind of a run rate that we’re going to be at for the next few years, how should we think about profitability? Part of the background for the question is, when you were the CFO of the organization, and you and Paul were engineering the last turnaround, you were able to generate double-digit operating margins, even at a $400 million revenue run rate, obviously the scope of businesses wasn’t as great, and the long term opportunities were probably less geographically diverse and unless diverse from a service perspective. I’m just trying to think about, how are you thinking about profitability, if you think things aren’t going to go back to prior peak levels?

That’s a great question, we think about it all the time. The bottom line answer is, we want to wait over the next quarter and see what happens in the global economy, and so over the next three to four months, between now and the end of the calendar year, we want to get a sense of what’s happening with the banking system, what’s happening with job creation, and if consumers comeback and start spending. Our goal is, as you know going back a couple of years into this thing were that, cash was absolutely the operating boundary. As we sit here today, we still believe in the short term, that that is the metric; however, we’re mindful of the fact that our goal is to not only grow the company, but grow profitability. So we are committed to operating earnings, and we are going to assess that over the next three to four months. So if the world as you described is the world that we see, then we’re going to do some about it, but again you have to look at this as a continuum. I mean, remember that 7.5 years ago this company had less than $20 million of cash on its balance sheet, had bank debt and had a run rate kind of $260 million. So once the jobless recovery, when there was job creation we grew the business the first year 38%. I mean that was the growth rate coming out of it. So we’re trying to look at this as a continuum and try to build a long term shareholder value. We’re passion it, that we have to continue to build solutions and services that differentiate our flagship business; we’re absolutely committed to that. I think there’s an enormous opportunity here long term, but at the same time Mark, if the hypothesis of the thesis that you’re laying out is correct, we have to do something about it.

Yes! I obviously don’t know, and I’m just wondering, it’s doesn’t seem like anybody truly knows, but I was just wondering, if there was anything that occurred that’s happened structurally, that would prevent you from achieving margins that you previously were able to achieve at that revenue per constants?

No, I mean we’ve been very conscious. I mean if you look at our businesses, at our operations, you could pick countries around the world or regions. We’re essentially operating in some cases at a third capacity to 50% capacity, right. So our revenue per constant is $800 million, a little bit less than that. That number is $1 million, $4 million, $5 million or so, we’ve done it before. We had consciously made the decision right now to focus on cash flow neutrality, and managing the balance sheet and preserving capacity. So I mean Italy, we’re running at a third capacity; Debut, we’re running at a third capacity. So over the next few months, we’ll have to see how the economy plays out. We’ll have to make decisions against what we think the next 24 months we’re going to look like. At this point we’ve made the conscious decision to preserve as much capacity as we possibly can and that’s what we have.

Can you talk a little bit about LDS and what you’re seeing on that side?

The business is running about $70 million or so, and absolutely a more convinced than ever, that the suite of solutions we’re building will differentiate our flagship search business overtime; we’re excited about it. I also believe that alarming, the intellectual property, we have proved that we can create ASP businesses, software as a solution that are more scalable than just people. We’ve got an enormous effort underway there, but essentially since this great recession broke out, the business has been flat and although I’d like to say it was better than that, I’m very proud. When the search industry is off 50% or so, and our leadership business is essentially flat and our product business there is up. I think that tells a good story to shareholders in the long term, but that’s not going to be build next quarter. I mean, again that’s a journey.

Your next question comes from Andrew Fones - UBS.

I was hoping you could talk a little bit about the recent confirmation trends, particularly July; August I guess typically can be a little bit seasonally weak. What you saw in terms of trends there recently? Thanks.

I think the way they character; summer is up 20% over spring.

How would that look typically seasonally?

Andrew as you know, usually the end of our first quarter as it relates to July confirmations start to tail off a bit. I think this year although, July was not as good as June it was higher than our expectation. So, based on that we really believe we have a solid backlog, and the truth of the matter is August outdid our expectations as well. So, we have a good backlog and have started the first month of our fiscal second quarter on very solid ground, really across the world.

I guess kind of looking at your sequential growth in the first quarter excluding Whitehead. You were up more, excluding last year looking back over the prior five years sequentially. So, you were up more this Q1 than you were on average little bit that was prior five years on sequentially. So kind of thinking big picture about what could have driven, obviously we are at high levels of unemployment, to see your business kind of rebound this quickly even during potentially weaker seasonal months. Just wondering what you’re thoughts are there and perhaps just generally, but if you could also touch on whether you think that the companies have cut too far in some instances and then they trying to perhaps scramble a little bit to back sale? Thanks.

First of all, three months does not make a trend. So, that is the overriding message there. I wouldn’t call anything. I think it is still across the globe for organizations to get a net new hire into a company is extraordinarily difficult. The fact is there is still, millions of people that are unemployed around the world and so we’re quite mindful of that. I will tell you that this up tick has certainly, it would be statistically and anomaly if you look back over the 50 year search industry. If you were to look at search industry revenue and unemployment levels and alike, and so as we look at it, we believe that the slope Double Black Diamond was very, very steep and it really what we said earlier is what’s driving us is that there is just a sense of economic normal. After you rationalize the cost structure and preserved your balance sheet, and restructure your debt you start to make plans for the future and that’s really more than anything what we believe is driving us.

Gary let me add a couple of things. First of all, I think the premise of your questions by its nature is a difficult one because, we know that the current environment is not comparable to the last five years during this period, just given the nature of the whole macro economic environment. So, you really can’t compare just because of that. However, having said I think, again what we said before, the company in the process of restructuring was very aggressive as to total cost, but was very careful in selective in cutting the consultant base and the people that really drive value and didn’t go quite as deep there. I think that was a conscious effort to protect part of the asset base that would help us. So, I think the company actually did a good job of leveraging that talent base and that is how we’re going to get back more business, and our objective is to beat competition and do better and get market share.

Just in terms of kind of the nature of the confirmation trend you saw in July and August, do you describe them as being a little bit back to than you’d expected. Was that fairly broad based across geographies, and then also LDS, have you seen kind of a similar trend there as well?

Well, two things; first of all yes, the recovery was fairly broad based across geographies and businesses even, and as Gary said before the LTC business fundamentally flat, but when a period like this, that we are very proud that it’s maintained it’s level of revenue over a many quarters.

Your next question comes from Ty Govatos - C.L. King.

Couple of technique questions, the 41 new consultants which was 64 new hires and 23 terminations? Did the 64 new hires, obviously contained the 12 new partnerships you bought on other than Whitehead Mann?

Yes.

Where were they located, mostly what regions?

It was spread between North America and Asia, Ty.

When you say the bonus accrual looks right with the current levels, given what you’re currently doing? I would assume that you accrued in there for the new consultants, both Whitehead and the outside?

Yes.

Now, I’m probably going to push. 12 from outside seems to be far more than anybody else in the industry as acquiring. Am I missing something or are you hiring that many more than everybody else?

I can’t speak for the competition. I can only tell you that, I fundamentally believe that this is the time that you create change. I mean you plant the seeds now, if you got a solid balance sheet. So we’re trying to make the balance between shareholders, our colleagues internally, our clients and long term growth. So I believe that this is the time, where you can move the culture, you can move the compensation system, you can top grade and upgrade talent, you can make an acquisitions. I mean this is the time to do it, not at a time where there are 40 mile an hour winds behind you, and business is coming in from outsides, and valuation levels are extraordinarily high. This is the time to seas opportunity. We just have to balance those kind of four pillars Ty, and that’s we’re trying to do.

Your next question comes from Mark Marcon - R.W. Baird.

Couple of quick questions; one, they relate to Whitehead Mann. First of all, should we just assume that the $5.8 million, since it was roughly 45 days and FX rates probably are in that different now than they were during most of the quarter, that would just essentially this double?

It’s actually 60 that, it was actually 60 that happened on the 11 so we got 19 days, so 50 days in total there basically. So the business is basically running at this descent rate, but that was 50 days of business.

Essentially, if we adjust for the days the revenue run rate should likely be…?

We can’t predict; we see no reason why it should change substantially.

Can you give us a sense now that you’ve got Whitehead Mann on Board, how that’s going? What’s the interaction between your legacy London office, the new partners over a Whitehead Mann, how well are they been integrated? What the steps are that have been taken to integrate them and how you’re managing accounts with them?

I think it’s gone extraordinarily well. Now going forward we are not going to be able to report those numbers separately, because our goal has been to create an integrative business and that’s what we’re doing. So we have started the integration weeks before and it ranged from the back office to real estate, to the go-to-market strategy and we established go-to-market teams for both organizations, brought them together and today we’re going to market together. We’re seeing the flywheel impact of business that has been set from the legacy Whitehead Mann colleagues to the United States. I think of Calgary is something that happened in the last couple of weeks. So I think it’s gone extraordinarily well markets, but its early days and it’s all in the execution. So we’re pretty diligent about that, but I think it gives us a platform for growth throughout all of EMEA.

Thank you. It appears there are no further questions Mr. Burnison.

Okay, well thank you everyone for your patience, and your interest in Korn/Ferry. As I said it certainly have been a remarkable time looking back now over the last 12 months, but I am proud today. Ironically I’ve never been prouder, we set the operating boundaries around cash and the balance sheet and capacity, and I think we’ve done everything we said we are going to do. So, with that again, thank you very much for your time this morning and we’ll talk to you soon.

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