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: Leadership Strategy, Board, CEO and Top Team Effectiveness, Succession Planning, Assessment, Leadership and Employee Development, Diversity and Inclusion as well as a rich library of online learning modules. Futurestep is a global industry leader in high impact 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’s and Futurestep’s worldwide operations are managed by their respective Chief Executive Officers. The Executive Recruitment geographic regional leaders and the Chief Executive Officers of LTC 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 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 are excluded from Adjusted EBITDA.

Financial highlights by business segment are as follows:


	Three Months Ended January 31, 2014
	Executive Recruitment
	North America		EMEA		Asia Pacific		South America			Subtotal		LTC			Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	77,208	$	39,144	$	20,213	$	7,477		$	144,042	$	62,217		$	35,925	$	—		$	242,184
Total revenue	$	80,926	$	40,381	$	20,820	$	7,560		$	149,687	$	64,282		$	36,968	$	—		$	250,937
Net income																				$	21,304
Other income, net																					(1,132	)
Interest expense, net																					873
Equity in earnings of unconsolidated subsidiaries																					(470	)
Income tax provision																					6,727

Operating income (loss)	$	19,919	$	6,649	$	3,922	$	1,132		$	31,622	$	5,651		$	3,925	$	(13,896	)	$	27,302
Depreciation and amortization		849		452		267		52			1,620		3,272			437		1,004			6,333
Other income, net		81		121		52		—			254		92			28		758			1,132
Equity in earnings of unconsolidated subsidiaries		36		—		—		—			36		—			—		434			470

EBITDA		20,885		7,222		4,241		1,184			33,532		9,015			4,390		(11,700	)		35,237

Adjusted EBITDA	$	20,885	$	7,222	$	4,241	$	1,184		$	33,532	$	9,015		$	4,390	$	(11,700	)	$	35,237


	Three Months Ended January 31, 2013
	Executive Recruitment
	North America		EMEA		Asia Pacific		South America			Subtotal		LTC			Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	71,259	$	33,600	$	18,301	$	7,334		$	130,494	$	41,155		$	30,355	$	—		$	202,004
Total revenue	$	74,992	$	34,491	$	18,816	$	7,382		$	135,681	$	43,008		$	31,583	$	—		$	210,272
Net income																				$	9,482
Other income, net																					(3,296	)
Interest expense, net																					360
Equity in earnings of unconsolidated subsidiaries																					(593	)
Income tax provision																					2,753

Operating income (loss)	$	14,637	$	4,177	$	1,913	$	920		$	21,647	$	(2,798	)	$	3,722	$	(13,865	)	$	8,706
Depreciation and amortization		1,183		605		368		91			2,247		1,764			324		753			5,088
Other income (loss), net		158		123		63		(19	)		325		37			5		2,929			3,296
Equity in earnings of unconsolidated subsidiaries		148		—		—		—			148		—			—		445			593

EBITDA		16,126		4,905		2,344		992			24,367		(997	)		4,051		(9,738	)		17,683
Restructuring charges, net		—		—		—		—			—		4,441			—		—			4,441
Separation costs		—		516		—		—			516		—			—		—			516
Integration/acquisition costs		—		—		—		—			—		—			—		2,515			2,515

Adjusted EBITDA	$	16,126	$	5,421	$	2,344	$	992		$	24,883	$	3,444		$	4,051	$	(7,223	)	$	25,155


	Nine Months Ended January 31, 2014
	Executive Recruitment
	North America		EMEA			Asia Pacific		South America			Subtotal		LTC		Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	226,538	$	107,742		$	63,063	$	23,346		$	420,689	$	188,357	$	99,543	$	—		$	708,589
Total revenue	$	237,771	$	111,078		$	65,087	$	23,522		$	437,458	$	194,566	$	102,737	$	—		$	734,761
Net income																				$	51,480
Other income, net																					(7,751	)
Interest expense, net																					2,102
Equity in earnings of unconsolidated subsidiaries																					(1,492	)
Income tax provision																					22,789

Operating income (loss)	$	51,773	$	18,469		$	12,894	$	4,893		$	88,029	$	16,992	$	9,009	$	(46,902	)	$	67,128
Depreciation and amortization		2,732		1,339			1,102		225			5,398		9,330		1,285		2,844			18,857
Other income, net		529		403			144		10			1,086		145		576		5,944			7,751
Equity in earnings of unconsolidated subsidiaries		258		—			—		—			258		—		—		1,234			1,492

EBITDA		55,292		20,211			14,140		5,128			94,771		26,467		10,870		(36,880	)		95,228
Restructuring charges, net		816		460			60		—			1,336		1,149		1,134		63			3,682
Separation costs		—		—			—		—			—		—		—		4,500			4,500
Integration costs		—		—			—		—			—		—		—		394			394

Adjusted EBITDA	$	56,108	$	20,671		$	14,200	$	5,128		$	96,107	$	27,616	$	12,004	$	(31,923	)	$	103,804


	Nine Months Ended January 31, 2013
	Executive Recruitment
	North America		EMEA			Asia Pacific		South America			Subtotal		LTC		Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	212,806	$	96,565		$	54,022	$	22,295		$	385,688	$	107,999	$	91,242	$	—		$	584,929
Total revenue	$	224,456	$	99,408		$	55,483	$	22,622		$	401,969	$	113,475	$	95,650	$	—		$	611,094
Net income																				$	21,096
Other income, net																					(3,808	)
Interest expense, net																					1,721
Equity in earnings of unconsolidated subsidiaries																					(1,567	)
Income tax provision																					11,042

Operating income (loss)	$	41,728	$	5,036		$	3,491	$	4,226		$	54,481	$	7,716	$	7,141	$	(40,854	)	$	28,484
Depreciation and amortization		3,610		1,751			1,137		250			6,748		3,387		940		2,052			13,127
Other income (loss), net		232		(85	)		147		(19	)		275		71		15		3,447			3,808
Equity in earnings of unconsolidated subsidiaries		305		—			—		—			305		—		—		1,262			1,567

EBITDA		45,875		6,702			4,775		4,457			61,809		11,174		8,096		(34,093	)		46,986
Restructuring charges, net		5,436		4,752			613		—			10,801		5,118		3,086		931			19,936
Separation costs		—		516			—		—			516		—		—		—			516
Integration/acquisition costs		—		—			—		—			—		—		—		2,515			2,515

Adjusted EBITDA	$	51,311	$	11,970		$	5,388	$	4,457		$	73,126	$	16,292	$	11,182	$	(30,647	)	$	69,953