Gregg Kvochak – SVP, IR Gary Burnison - CEO Bob Rozek - EVP and CFO.

Kevin McVeigh - Macquarie Tim McHugh - William Blair & Company Mark Marcon - Robert W. Baird Tobey Sommer - Suntrust Josh Vogel - Sidoti & Company.

Ladies and gentlemen, thank you for standing by. And welcome to the Korn/Ferry First Quarter Fiscal Year 2015 Conference Call. At this time, all participants are in a listen-only mode. Following the prepared remarks, we will conduct the question-and-answer session. As a reminder, this conference call is being recorded for replay purposes.

We have also made available on Investor Relations section of our Web site at kornferry.com, a copy of the financial presentation that we will be reviewing with you today. Before I turn the call over to your host, Mr. Gary Burnison let me first read the cautionary statement to investors.

Certain statements made in the call today, such as those related to future performance, plan and goals 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 a number of risks or uncertainties, which are beyond the Company's control.

Additional information concerning such risks and uncertainties can be found in the release related to this presentation and the Company's Annual Report for fiscal 2014 and in the other periodic reports filed by the Company with the SEC.

Also, some of the comments today may reflect non-GAAP financial measures such as constant currency amounts, EBITDA and adjusted EBITDA.

Additional information concerning these measures, including reconciliations to the most directly comparable GAAP financial measure is contained in the financial presentation and release related to this call, both of which are posted on the Company's Web site at www.kornferry.com. With that, I'll turn the call over to Mr. Burnison. Please go ahead, Mr.

Burnison..

Okay, thanks, Paul, and good afternoon everybody. Thank you for joining us. I am joined here by Bob Rozek and Gregg Kvochak.

I would first say that I am incredibly pleased with the results of our first quarter but I think even more than that, if I just step back for a second and hit Google Earth, this is my 50th quarterly earnings call, somewhat hard to believe but I will tell you that I have never been more excited in terms of our execution of our go-to-market philosophy, of our long-term strategy and I just have to thank our 3,600 world-class professionals.

I think they are the best in the business today. The quarter showed about 10% growth in fee revenue and the story is really Search, particularly North America Search as well as Europe then Futurestep really, really solid quarters. We had an adjusted EBITDA margin of 15%. EPS on an adjusted basis was 43%.

And all three lines of business grew and again Futurestep came in with a resounding 24% growth rate. And I think that our results reflect consistency, consistency of purpose, consistency of strategy and most importantly, redefining the business to talent for clients.

And I think that we are increasingly recognized as the source of expertise on talent leadership..

But as any leader knows there is much more than just assembling a great team and great talent. They also have to work together and they have to be aligned to a common purpose. And that’s what our leadership business is all about.

That business was up 6% year-over-year and in that business we’re crafting development solutions that organizations that leaders that teams that individuals can grow and that they can drive sustainable change. Our leadership business now represents about a quarter of the Firm’s revenue mix.

As I also tapped Google Earth here, over the last couple of quarters I think we’ve made real strides with developing and mobilizing our own work force, our own consultants giving them the IP, the analytics and the innovation that helps our clients redefine their business through talent.

And as a result, when you look at our colleagues across the globe, they are more actively engaging in conversations with clients about their broader talent needs than ever before. And in fact when you look at our business almost 90% of our top 50 clients utilize at least two of our three service lines.

When I look at this last fiscal year, and I am sure Bob will correct me. But two thirds of our colleagues that have responsibility for business origination referred somebody from a different line of business. It’s remarkable the penetration, the drive, the energy of the consistency that I think we’re demonstrating here.

Every month 49,000 professionals benefit from our development programs, every seven minutes we place a professional in a new job 94% of the Fortune 100 is Korn/Ferry their partner over the past three years as well as 84% of the FTSE 100. So in the quarters ahead, we’re going to continue with this consistency of purpose.

And namely three big areas continue to drive relentlessly a proactive go-to-market strategy. We deal with 5,000 clients every year, year in and year out. We have an enormous opportunity to broaden the conversation, to deepen the relationships with those clients.

Secondly, we have to make our brand more elastic and we’re going to do that through IP, through the investments that we’re making in the Korn/Ferry Institute and research around things like learning agility or enterprise agility, solutions that can really help to drive growth in this kind of economic environment that all of our clients are looking for.

And lastly, we’re going to continue with the pragmatic approach to M&A, looking to adapt scale capability to our business overall. And so, again I am very-very pleased with the quarter but I think more importantly as I sit here today from 12 years ago well I just have to thank our employees and the colleagues that we have.

And so, with that, I will turn it over to Bob..

Thanks Gary. Good afternoon everyone and thanks for joining.

Gary took you through we had pretty strong financial performance in the first quarter of fiscal ’15, which really is a reflection of the steadily improving demand for our industry leading recruitment and talent management services as well as our disciplined reinvestment back into the business, the internal momentum that we generated from the execution of our strategic transformation and the cost efficiencies resulting from our continuous focus and expense management.

Gary said our fee revenue in the first quarter was $251.2 million with solid growth in all three of our major lines of business. Consolidated fee revenue was up $22.8 million or 10% year-over-year that’s about 9% at constant currency and was flat sequentially.

Our cross selling and account development efforts continue to advance our revenue mix came in at about 41% of our fee revenue being generated from services other than executive recruitment. In the executive search, new business remains strong in the first quarter.

Starting from the beginning of calendar ’14, the choppiness in the global monthly new orders has significantly lessened and we’re now settling into a fairly tight range.

In the first quarter, Executive Search new business was up 3.1% compared to the first quarter of fiscal ‘14 and down only marginally sequentially from seasonal highs in the fourth quarter. In L&TC, new business awards in the first quarter grew 8% compared to the fourth quarter of fiscal ‘14 and we’re up double-digit year-over-year.

And finally Futurestep’s new business award trend continued in a positive light in the first quarter with new orders remaining consistent with what we saw last year in the first quarter as well as the fourth quarter on a sequential basis.

Our firm is also focused on accelerating profitable growth, several specific measures targeted at improving our ongoing profitability continued in the first quarter.

As we discussed in our prior earnings calls and detailed in our guidance, we leveraged the prior year’s technology investments and the company took certain actions in the first quarter to improve its cost structure and really take the final steps to integrate its legacy business with recent acquisitions as a result the company recorded a net restructuring charge of $9.9 million primarily comprised of separation benefits related to a reduction in our global workforce.

Excluding all restructuring and integration charges in the first quarter of fiscal ‘14 in the first quarter of fiscal ‘15 adjusted EBITDA improved $6 million or 18.8% year-over-year to $37.9 million. An incremental consolidated fee revenue of $22.8 million, this represents EBITDA flow through of a very healthy 26%.

When compared to the fourth quarter of fiscal ‘14 adjusted EBITDA in the first quarter improved $3.4 million or 9.9%. EBITDA margin was 15.1% in the first quarter compared to 13.7% in the fourth quarter of fiscal ‘14 and 14% in the first quarter of fiscal ‘14.

On a GAAP basis, operating earnings in the first quarter were $18.6 million with a 7.4% margin as compared to $16.6 million and a 7.3% margin in the first quarter of fiscal ‘14.

Excluding restructuring integration and management separation charges in the first quarter of last year and restructuring charges in the first quarter of this year adjusted operating earnings were 28.5% or up 5.2 or 23% year-over-year with a 110 basis points improvement in margin and up $4 million or 16% with a 160 basis point improvement margin.

Our financial position remains solid in the first quarter with total cash and marketable securities of $372 million, up $92 million compared to the first quarter of fiscal ‘14 and down $96 million compared to Q4 of last year and that results primarily from the payment of incentive compensation that was made in July.

Excluding cash, marketable securities reserve for deferred comp arrangements and improved bonuses, our current investible cash balances approximately $211 million which is kind of flat with where we were at the end of the year and last year. Of that 211 million about 26% of it resides in the U.S.

After you pull out working capital needs, our net investable cash in total approximately $136 million. Finally after adjusting for restructuring charges of approximately $0.14 per share fully diluted earnings per share in the quarter were $0.43, this represents a 10% or $0.10 or 30% improvement year-over-year on an adjusted basis.

Sequentially, adjusted diluted earnings per share were flat Q4 and Q1 but in Q4 if we recall we benefitted from a lower tax rate of about 22% compared to the 30% rate that we saw in the first quarter. With that I will now turn it call to Gregg who will review our operating segments in more detail..

Thanks Bob. I’ll start with our Executive Recruitment segment. Globally, revenue in our Executive Recruitment segment remained strong in the first quarter. On a consolidated basis, fee revenue in Executive Recruitment for the first quarter was $148.4 million up $11.8 million or 8.6% year-over-year and essentially flat sequentially.

On a regional basis at constant currency North America was up 11.5%, Europe was up 10.3% while Asia Pacific and South America were down 6.8% and 3.9% respectively when compared to the first quarter of fiscal ‘14.

On a sequential basis also at constant currency North America grew 2.3%, Europe was flat, Asia Pacific was down 11% and South America was up 2.1% in the first quarter. Compared to the first quarter of fiscal ‘14 all of our major specialty practices grew with the exception of the global technology practice which was slightly down.

Year-over-year worldwide growth was strongest in our industrial and financial services practices which were up 12% each while our consumer goods and life science and healthcare practices were up 7% and 6% respectively.

Our global technology practice and executive search was down 3% year-over-year driven primarily by softer market conditions in both Europe and South America.

Financial services accounted for approximately 18% of all executive recruitment fee revenue in the first quarter which was up 60 basis points year-over-year and down marginally on a sequential basis. On a core sequential basis, growth in our global specialty practices was mixed.

Industrial and consumer goods practices were up 6% each, on the life sciences and health care, financial services and technology practices were down 3%, 4% and 12% respectively. The total number of dedicated executive recruiting consultants worldwide at the end of the first quarter was 442, up 26 year-over-year and up 10 sequentially.

Annualized fee revenue production per consultant in the first quarter was $1.36 million compared to $1.34 million in the first quarter of fiscal ‘14 and $1.38 million in the fourth quarter of fiscal ’14. The number of new search assignments opened worldwide in the first quarter was 1,310 which was up 7.7% year-over-year and was flat sequentially.

Excluding restructuring charges consolidated executive search adjusted EBITDA in the first quarter was $31.9 million with a 31.5% margin compared to $31.9 million with a 23.3% margin in the first quarter of fiscal ’14.

The flat year-over-year adjusted EBITDA and lower EBITDA margin for the first quarter of fiscal ’15 was primarily influenced by the decline in fee revenue in Asia Pacific and South America.

Higher variable incentive compensation expenses linked to the continued execution of our strategy including costs, service referrals as well as the timing of recent investment hiring of additional consultants.

When compared to the fourth quarter of fiscal ’14 adjusted EBITDA was up approximately $180,000 with a 10 basis point improvement in margin and essentially flat fee revenue. Let’s now turn to our leadership and talent consulting segment which generated $63.6 million of global fee revenue in the first quarter.

L&TC’s fee revenue in the first quarter grew $3.5 million or 5.8% year-over-year driven primarily by strength in the North America region which was up over 10.6%. Compared to the fourth quarter of fiscal ’14 on a constant currency basis L&TC’s fee revenue was down $2.9 million or 4.3%.

Regionally, North America accounted for 70% of total L&TC’s worldwide fee revenue in the first quarter compared to 72% in the fourth quarter of fiscal ’14. At the end of the first quarter, there were 127 dedicated L&TC consultants, which was flat compared to the fourth quarter of fiscal ’14 and down 7 compared to the first quarter of fiscal ’14.

Professional staff utilization in the first quarter was also flat sequentially at 70% and up from 65% in the first quarter of fiscal ’14.

Driven primarily by cost based efficiencies gained from several phase of post-acquisition integration activity, L&TC’s profitability continued to improve in the first quarter excluding restructuring and integration charges, adjusted EBITDA in the first quarter grew to $9.7 million with a 15.2% margin which was up $1.3 million or 15.5% with a 120 basis point increase in margin when compared to the first quarter of fiscal ’14.

Compared to the fourth quarter of fiscal ’14, L&TC’s adjusted EBITDA margin in the first quarter of fiscal ’15 improved 10 basis points despite lower fee revenue. Finally, let’s turn to Futurestep which grew for the 7th consecutive quarter and generated $39.2 million of fee revenue in the first quarter.

Futurestep’s first quarter fee revenue was up $7.5 million or 23.7% year-on-year and up $1.9 million or slightly over 5% sequentially. On a regional basis, measured year-over-year at constant currency, North America was up 28% Europe was up 32% and Asia Pacific was up 1%.

Sequentially on the same basis, North America was up 3.5%, Europe was flat and Asia Pacific was up 13.8%. Driven primarily by improving operating leverage, Futurestep’s profitability continue to improve in the first quarter with EBITDA adjusted for restructuring charges reaching $5.3 million with a 13.6% margin.

Now I will turn the call back over to Bob to discuss our outlook for the second quarter of fiscal ’15. .

Thanks, Greg. As mentioned earlier, the variability in our monthly new waters across all lines of service has narrowed. Globally, August and even September new awards are typically negatively affected by summer vacation seasonality.

July was a solid month of new business for us and as expected new business did slow in August and it is difficult to decide for us the deceleration of simply late summer seasonality or a certain heightened economic geopolitical factors are negatively affecting our new business at this point.

Additionally, as we move into the next quarter and the second half of fiscal year, we will realize cost savings associated with the last phase of integration restructuring that we executed in the first quarter.

At a summary level we anticipate recovering to our go forward cost structure and future quarterly earnings all of the $9.9 million spent in the first quarter and restructuring by the end of fiscal ’15, so that’s about three quarters of a year payback.

However, some of the resulting savings potential will be reinvesting back into the business for growth opportunities in the event that those opportunities arise. Assuming worldwide economic conditions, financial markets, and foreign exchange rates remain steady.

Fee revenue in the second quarter of fiscal 15 is likely to range from $244 million to $254 million and after taking the consideration of partial realization of cost saving actions adjusted diluted earnings per share are likely to range from $0.42 per share to $0.48 per share.

And with that, I will conclude our prepared remarks and we would be glad to answer any questions that anybody has. Thank you..

(Operator Instructions) Our first question comes from Kevin McVeigh of Macquarie. Please go ahead..

Great, thanks. Congrats. I wonder, relative to the revenue guide, real nice EPS out-performance.

Is that purely just better margins or lower tax rate, or just what's driving that real nice outperformance on the EPS line?.

It’s really the lower – we had a little a bit help from tax but not much, it might have been a penny or so in the tax rate, but it’s really the over performance and the margins on the cost side..

And then as we think, Bob, about margins over the course of the cycle, where are we thinking in terms of targets, peak margins, and if you could give us a little more color by segment?.

I think it is as we’ve talked in the past on the search side, we’re looking at a range long-term of range 20 to 25, so as we 25%, this is EBITDA margin.

So as where we’re today more kind of lower to the midpoint of that range, so we think we’ve got some opportunities and some of the restructuring actions we took in the first quarter will help to improve that as we go forward over the course of last the year and then the other factor I would say Kevin is as the new hires and we have aggressively hired into search as new hires ramp up and become more productive, we’ll get additional [year] [ph], yeah, so, I would expect us to see towards the high end of that range, absent any economic, real economic changes.

On the L&TC side, we’re looking at a range of about 15% to 18% so last year we ended up at kind of little bit slightly below that range. Right now we’ve crossed over to low end of that range.

Some of the cost actions we took again in the first quarter will impact L&TC technology investments that we’ve made last year will really help that business, so we should see a margin improvement there towards the middle of the range. And then on the Futurestep side, our longer term range there is 13% to 15%.

I think, Byrne and his leadership team have really done a commendable job of growing the top line; that business has the significant component related to leverage, so I would expect to see us at midpoint of that range over the course of the rest of the year..

Got it, and as you think about the services pile overall, are you comfortable with where you are from a mix perspective, or do we maybe continue to have target acquisitions, or how are we thinking about use of capital? Just rank order priorities?.

Use of capital is first into intellectual property, then into people, then into capability I mean that’s really what we’re looking at..

And the other thing I would Kevin, one of the things I’ve learned in this two and half years I have been here working for Gary, you’re never comfortable, so we’re always pushing to move things forward..

Understood, nice job..

Our next question is from Tim McHugh of William Blair & Company. Please go ahead..

Yes, just to start with some numbers questions.

What type of tax rate are you embedding in your guidance for next quarter, and if you have a sense then, for the full year?.

Yes, Tim. We’ve talked last time, Tim, on the phone. We thought it would be about 34% but we’ve had a couple of items that flow through in the first quarter related to state tax planning activities as well as when you look at the projected change in the mix of our revenues.

I think you’ve probably should put somewhere in 32% to 33% range for tax rate for the year..

For the year? And is that the same for Q2?.

Yes, I would use that as sort of an effective rate..

And then as I think about Futurestep, can you help us understand the number of engagements is flat year-over-year, but the revenue per engagement is up a lot.

Is there really, is that just -- there's that much of a difference in the fees on RPO than the core business? Can you help me understand the numbers, I guess?.

Yes, well, if you look -- if you think about an RPO engagement, it’s viewed as one engagement, but you’re doing a number of search so with the fees, they would be higher versus as a single search if you will..

So you don't recognize each hire you do under an RPO as an engagement?.

No, no..

Okay..

We would be engaging with the customer. .

So there is engagements that literally have embedded in them hundreds of could-be placements..

All right, so that's going to skew it. All right. And then, I guess, more broadly, you can talk about Asia with the executive search business, and I guess opposite side is, it seemed North America picked up a fair amount versus even what you were talking about, or seeing a quarter ago but Asia really slowed a lot.

Any context for those two?.

It was certainly not what we’re looking for, it’s really anchored around Australia, Asia and Japan, and there is nothing there that would suggest that there is a problem, any kind of economic malaise. Our teams will rebound for sure there. .

And Australia, I would assume is the bigger piece of that?.

Yes, Australia is the bigger piece of that..

Okay. And then, I guess lastly, just capital deployment. I guess you've -- it seemed a couple months ago that for a while you were thinking dividends and other ideas, and you sounded more excited about M&A opportunities on last call.

I guess I didn't pick up a clear sense of direction here, in terms of what the environment is like, as you look out there right now.

Has it gotten better, worse, any sense for -- I think there's some larger opportunities that you guys had at least in your site, as potential three months ago?.

No, we continue to I think execute pretty consistently, I mean it’s -- we're looking for the right opportunities and we continue to think that we can create $2 billion organization not $1 billion and to do that we’re going to have to invest in intellectual property and talent analytics and we’re going to have to also add depth and scale.

So, I -- we're going to execute this consistently and we’re in the market looking for the right types of investments and at the same time we’re quite cognizant that we can’t have cash lying around earning 10 bps that’s pretty clear too..

Next question is from Mark Marcon with Robert W. Baird, please go ahead..

Let me add my congratulations. Really nice rebound, in terms of North American executive search.

Can you talk about the contributions from the new people, or in terms of driving that, versus say just certain practices picking back up, can you just give us a little more color there?.

Mark, I can’t get granular in terms of the new people. We always are adding people and counseling people out. The pickup was very broad-based. We saw it across the board really and it would be probably unfair to pick out any one particular segment versus another.

We are continuing to broaden the conversation with clients and when you look at our penetration and the opportunity we have there I think that, that speaks pretty loudly about what we can do but in terms of search it was broad based Mark..

And it sounds like by virtue of the fact that you're broadening out the conversation and that you are not a mono-line provider of talent solutions that - tell me if I'm putting words into your mouth, but it seems like you're probably gaining some share as a result of that message resonating?.

That’s the essence of the strategy, I hope that that continues to play out over time Mark and the thing that I’m very encouraged by is when you look on a new business basis into the LTC Futurestep business, 40% of it comes from search partners. If you add the tail about further extension of that work, that percentage becomes much larger.

So that is very interesting in a relatively short amount of time but second data point is that when you look at folks that have business origination responsibility and they are compensated for any kind of business that we bring in here and executed in a quality fashion.

Two thirds of last year, it was at least two thirds of those individuals did something across service lines, again pretty remarkable in a short amount of time..

Great. And then can you talk a little bit about the nice step up that you had again in Futurestep sequentially? I sense that you're probably still putting in place certain contracts that aren't fully generating revenue.

How should we think about Futurestep in terms of the trajectory for the full year, because it certainly seems like it's been accelerating?.

Well, we hope it does. I think that this growth rate in this particular quarter is and out of the park -- I wouldn’t expect that however, when you look year-over-year you would see some real gains made in the technology area, the technology market the life sciences market as well as industrial. And that’s where you see growth, particularly technology.

That’s been a big contributor to Futurestep..

Would expect Futurestep to be up sequentially in this coming quarter?.

That our later on the spot and yes, it would..

Okay, that's great. And then how should we think about L&TC? Obviously that's a lumpier business. We saw 6% growth this last quarter. How should we think about the growth there? You obviously have a lot of different solutions that you're offering.

Which ones are the ones that are showing the strongest growth and what are the areas for improvement?.

The areas for improvement are number one, around development I think that we can both increase the distribution of current solutions around developing people. We’ve got deep capability and assessment but I think that there is a huge opportunity for development.

So that’s probably the one that I would point out right away obviously succession in talent management continue to be a driver. But we also have some real cool diagnostics if you look at any CEO they’re grappling with growth, and what you really need is a nimble, agile workforce. You just don't hire scale anymore. Scale is out and you need agility.

So we’ve got actually diagnostic tools in organization and we look at enterprise agility learning agility, cultural agility and I think we’ve got a big opportunity there. It is a very lumpy business. I have said that I expect 10% growth of that business and there is nothing that would suggest that we should settle for anything less than that..

Although you wouldn’t expect 10% growth in this coming quarter which on your year-over-year basis?.

No, would not..

Because I mean that’s really tough comp that you’re going out first..

Yes that I was going to mention if you remember last year in Q2 we did 66..

Right..

And then there is tough and quite honestly if you look back across the whole business get into Q3 and Q4 of last year the comps do get tougher for us. So folks are going to have to work much harder to keep rates of growth up are acceptable..

Some growth would be expected, but certainly not -- 10% would probably be more of a target?.

Yes, it’s 10% for the inspirational growth..

Next question is from Tobey Sommer with Suntrust. Please go ahead..

Thanks.

Gary, what inning is it, do you think in terms of the market grasping the intellectual property, upon which Korn/Ferry is now increasingly basing its services?.

No, we’ve done warm-ups..

Okay, in terms of -- I guess we'll extend the baseball symbolism if you will.

Where do you feel like the Company is in terms of cross-selling, so judge it from an internal progress standpoint?.

I think we’re clearly for sure the fourth inning maybe we’re in the bottom of the fourth I think that when you look at just the data I don’t want to sale and if you just look at the data in terms of, as Greg said cross service referrals, the search business is just the precious gem. It has incredible access.

It’s a way to differentiate the brand and I think that’s playing out in the numbers. Having said that we still deal with an awful lot of clients where we just do one thing it could future stuff, it could an assessment in L&TC or can be searching and obviously the goal of challenge the opportunity is the broaden those relationships..

Bob, what kind of incremental margin should we be targeting in the next several quarters?.

I would say somewhere right today we’re at 15.1 coming out of this quarter, somewhere between that point and maybe say 15.5, 15.6 as we move forward overall..

And then Gary, from a longer-term perspective, do you have goals to extend the intellectual property, such that you could leave products behind and create and expand upon the recurring portion of revenue that might be higher margin that property can generate?.

Yes, right now it’s about 6% of the company. So that is an opportunity for us, licensing our intellectual property and certainly creating stickier kind of role relationships really but certainly sticker revenue stream, so look it was zero a few years ago, it’s 6% that has incredible incremental profitability to it but that takes time.

That’s a separate sales force, the price points are different and all that..

Just two more questions. One, I wanted to follow-up on the M&A question. Gary, is the pipeline less or more plentiful now than last quarter? And then I was just hoping you could comment on the -- what verticals and geographies show strength in your new engagements in executive search? Thanks..

You guys can handle the strength of the new business work coming from. And I would say look it’s about the same, I mean it’s obviously an environment where valuations are on the higher side but for us it really kind of comes down to culture fit and we bring people in and grow that’s really what it comes down to.

So, I would say it’s about the same than it was say last time we spoke in terms of the new business guys..

Tobey this is Gregg, as far as new business goes in executive search, we are probably seeing the best activity of course in the North American region. And a lot of that’s being driven by the consumer segment as well as the industrial segment, a little bit more consumer than industrial but those are both strong.

And then as it relates the second, we’re seeing lots of good activities. And again this is trailing, they are going to a seasonal quarter but Europe was very strong in industrial and as well as a life sciences and healthcare and even in technology in the quarter.

And as Gary indicated, we expect to see some rebound in the Asia Pacific region on a sequential basis. And almost all of the markets were down on the sequential basis in Asia Pac but we expect likewise to be sort of a broad based rebound in quarter two..

Question from Josh Vogel with Sidoti & Company. Please go ahead..

Just wanted to build off one of the earlier questions on L&TC. Can you just remind us is there any seasonality in the business? Just want to get a better handle on the sequential downtick in revenue..

Yes, there is seasonality, Josh, if you back and we don’t have obviously a long history with the combined business, if you go back to last year, Q2 and Q4 were the higher Watermark if you will for the year and Q1 and Q3 were at the lower point, but they are not like wild swings, if you will.

It’s a fairly tight band, but Q2 and Q4 are the stronger quarters..

Okay, and just one more. Looking at consultant productivity, it assumes you still have some nice capacity left to fill.

I was just curious if you had an idea of your hiring plans throughout the year, and where you think headcount will be at year-end fiscal ‘15?.

We really don’t guide out that but I would say in this quarter on the Search business we hired or promoted 25 people. We counseled out 10 or 15, we were up net 10 that would be I think too aggressive to model that in on a sustained basis..

Okay, and are you seeing changes to the compensation structure, or has it been pretty stable over the last couple quarters?.

In terms of how we compensate our colleagues before it comes down to the profitability of the company. We haven’t seen anything externally that would be a change and we haven’t really altered dramatically our compensation philosophy..

Question is from Mark Marcon with Robert W. Baird..

A couple of follow-ups. Gary, you always have a pretty good sense for what leaders across your client base are thinking.

How would you characterize the level of economic optimism, vis-a-vis what we've seen over the last five years, in terms of, is it building, is it staying steady? How would you characterize it?.

I would say that people have the OA time period. It’s almost erased from peoples’ minds. We are five years into a positive economic cycle and the averages have been five years since World War II. But I would say that the value has been largely erased that scrambles for liquidity that disaster, I think that as I talk to CEOs, people are optimistic.

Our surveys would suggest that the hiring intentions are positive. At the same time though there is a view that just numbers and scale won’t get it done. Really what counts today is agility, so I see increasing dialogue around agility.

And so I would characterize as positive absent anything happening in the Middle East or the Ukraine that was derailed out..

That was my follow-up.

Are you seeing any impact from Ukraine in terms of the intentions in Europe?.

We certainly have heard a great deal of chatter over the last few weeks that the difficulty is that with all of this August is a very seasonal month so it’s very difficult we’re seven or eight nine days whatever it is into the start of September is really tough I can’t just has it had an impact we can’t say but certainly the radar went up about three weeks ago, four weeks ago..

And you have been posting just amazingly good numbers out of there, given the economic backdrop, so maybe it will start showing up a little bit now, in terms of just -- as you're going against tough comps?.

I don’t know, I am not sure I am just not sure Mark I can’t quite call it out..

Okay, and can you give us a sense, in terms of what sort of savings we should start seeing from the restructuring, and when those would kick in?.

I think Mark as we say we expect to get the whole 9.9 million back this year which will translate to somewhere between $0.04 and $0.05 a quarter for the next three quarters the only other item that we touched upon was to spend that we have reinvestment opportunity that come over well use some of those savings to be invest back into the business as well..

Great and then last thing, with regards to the new consultants, what's the ratio between those that were hired versus those that were promoted?.

It’s a little over half were promoted versus hired..

Next question is from Tim McHugh, William Blair & Company..

Just a quick follow-up.

Can you talk about how you tackled currency and the guidance, given all the moves lately? I guess just so we know how to track that, relative to if it continues to move? And then any other factor, just explaining the year-over-year growth rate implied at the mid-point here, seems more like 5% versus the 10% you just put up, can you just help us understand that?.

I think two things and one is as we just talked about the comparables are getting more challenging for us on a year-over-year basis so Q1 last year was at 228 revenue as compared to 250 that we just did now Q2 last year was at 238 so some of that just the tougher comps as you see year-over-year. And then the first question….

Just currency I guess.

Did you just take currency there?.

It hasn’t been if you look at the revenue and expense off such as a bit of a natural hedge occurs there so currency plus over time research to and here appears I think here has not been a big factor for us when the currencies move because you get each one offset amounts of top down below little bit arbitrage because obviously revenues are greater than expenses.

The bigger issue for us on the currency side is we have a structure put in place where there has been and there are company loans made over time and that’s one of the things that we’re working very aggressively on, to get that, for lack of a better term, obviously cleaned up or repaying loans to the extent that entities don’t have the ability to repay the loans we’re capitalizing it which would then eliminate whether you repay or you capitalize or you eliminate the risks associated with currency movement.

So that’s obviously the bigger issue. And I’ve got a team working on that right now to get that all off being up to mitigate those risks..

Okay maybe just one more numbers.

I guess, I think, Gary someone tried to put Gary on the spot and say if leadership would be up sequentially, or I'm sorry Futurestep, and leadership is normally Q2 is one of their strongest quarters, so I guess the guidance at the midpoint being down sequentially implies executive search would be down a little bit sequentially.

Is that Europe, and the topic Mark was asking about, in terms of uncertainty there, or I know you said Asia, you thought would be up sequentially?.

I placed those because I think there is search business we expect it to be more flattish on a sequential basis if there is any bit of a downturn we expect to see the L&TC side..

Sequentially down?.

No, that’s sequentially down to be flattish to up a little bit..

But then that implies year-over-year down.

Was there something unusual you saw last year in Q2 that it's normally not a seasonally strong quarter?.

No Q2 for LTC January is one of their stronger quarters ahead they just had an outrageous Q2 last year..

Yes, we came right out of the gate and we saw, there was a handful of really big tickets success and planning engagements search and LTC and they were quite large than last year..

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

Well listen I first thank you for taking the time. Thank you to our shareholders, most importantly to our Board our global operating committee and our colleagues. We’re again pleased but not satisfied I think we’re really moving the organization to redefine the business and talent for clients. So with that I look forward to speaking to you next time.

Thank you very much..

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