8.	Business Segments

The Company currently operates in three global businesses: Executive Recruitment, Hay Group 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. Hay Group assists clients with ongoing assessment, compensation and development of their senior executives and management teams, and addresses three fundamental needs: Talent Strategy, Succession Management, and Leadership Development, all underpinned by a comprehensive array of world-leading IP, products and tools. Futurestep is a global industry leader in high-impact talent acquisition solutions. Its portfolio of services includes global and regional RPO, project recruitment, individual professional search and consulting. The Executive Recruitment business segment is managed by geographic regional leaders and Hay Group and Futurestep worldwide operations are managed by their respective Chief Executive Officers. The Executive Recruitment geographic regional leaders and the Chief Executive Officers of Hay Group 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) adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”). To the extent that such charges occur, Adjusted EBITDA excludes restructuring charges, integration and acquisition items, certain separation costs and certain non-cash charges (goodwill, intangible asset and other than temporary impairment). The accounting policies for the reportable segments are the same as those described in the summary of significant accounting policies, except the items described above are excluded from EBITDA to arrive at Adjusted EBITDA.

Financial highlights by business segment are as follows:


	Three Months Ended January 31, 2016
	Executive Recruitment
	North America			EMEA		Asia Pacific			South America			Subtotal			Hay Group			Futurestep			Corporate			Consolidated
	(in thousands)
Fee revenue	$	93,520		$	35,498	$	19,094		$	6,541		$	154,653		$	140,508		$	48,997		$	—		$	344,158
Total revenue	$	97,097		$	36,417	$	19,603		$	6,545		$	159,662		$	146,079		$	53,138		$	—		$	358,879

Net loss																								$	(15,995	)
Other loss, net																									7,092
Interest expense, net																									372
Equity in earnings of unconsolidated subsidiaries, net																									(181	)
Income tax benefit																									(5,355	)

Operating income (loss)	$	28,957		$	1,707	$	2,775		$	1,166		$	34,605		$	(21,559	)	$	6,630		$	(33,743	)	$	(14,067	)
Depreciation and amortization		812			213		235			73			1,333			6,722			609			1,666			10,330
Other (loss) income, net		(330	)		77		(114	)		9			(358	)		143			79			(6,956	)		(7,092	)
Equity in earnings of unconsolidated subsidiaries, net		26			—		—			—			26			—			—			155			181

EBITDA		29,465			1,997		2,896			1,248			35,606			(14,694	)		7,318			(38,878	)		(10,648	)

Restructuring charges, net		484			5,866		577			328			7,255			23,241			—			81			30,577
Integration/acquisition costs		—			—		—			—			—			8,413			—			12,734			21,147
Deferred revenue adjustment due to acquisition		—			—		—			—			—			5,871			—			—			5,871
Separation costs		—			—		—			—			—			—			—			744			744

Adjusted EBITDA	$	29,949		$	7,863	$	3,473		$	1,576		$	42,861		$	22,831		$	7,318		$	(25,319	)	$	47,691


	Three Months Ended January 31, 2015
	Executive Recruitment
	North America			EMEA		Asia Pacific			South America			Subtotal			Hay Group			Futurestep			Corporate			Consolidated
	(in thousands)
Fee revenue	$	78,026		$	36,816	$	20,924		$	7,713		$	143,479		$	64,313		$	41,753		$	—		$	249,545
Total revenue	$	81,521		$	37,868	$	21,874		$	7,724		$	148,987		$	66,048		$	43,836		$	—		$	258,871

Net income																								$	22,939
Other loss, net																									1,478
Interest income, net																									(288	)
Equity in earnings of unconsolidated subsidiaries, net																									(778	)
Income tax provision																									9,576

Operating income (loss)	$	22,673		$	5,073	$	4,096		$	1,741		$	33,583		$	8,577		$	5,760		$	(14,993	)	$	32,927
Depreciation and amortization		867			431		216			79			1,593			3,317			469			1,435			6,814
Other (loss) income, net		(225	)		24		25			41			(135	)		(156	)		4			(1,191	)		(1,478	)
Equity in earnings of unconsolidated subsidiaries, net		103			—		—			—			103			—			—			675			778

EBITDA		23,418			5,528		4,337			1,861			35,144			11,738			6,233			(14,074	)		39,041

Restructuring recoveries, net		—			—		—			(148	)		(148	)		—			(270	)		—			(418	)
Acquisition costs		—			—		—			—			—			—			—			445			445

Adjusted EBITDA	$	23,418		$	5,528	$	4,337		$	1,713		$	34,996		$	11,738		$	5,963		$	(13,629	)	$	39,068


	Nine Months Ended January 31, 2016
	Executive Recruitment
	North America			EMEA		Asia Pacific			South America		Subtotal			Hay Group			Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	276,667		$	108,158	$	59,307		$	19,083	$	463,215		$	283,350		$	145,587	$	—		$	892,152
Total revenue	$	287,694		$	111,097	$	61,210		$	19,095	$	479,096		$	293,511		$	156,946	$	—		$	929,553

Net income																						$	25,058
Other loss, net																							9,812
Interest expense, net																							1,215
Equity in earnings of unconsolidated subsidiaries, net																							(1,446	)
Income tax provision																							13,211

Operating income (loss)	$	80,524		$	14,912	$	9,668		$	3,644	$	108,748		$	(6,286	)	$	19,715	$	(74,327	)	$	47,850
Depreciation and amortization		2,471			810		704			224		4,209			14,058			1,772		4,894			24,933
Other (loss) income, net		(425	)		227		(102	)		281		(19	)		(737	)		87		(9,143	)		(9,812	)
Equity in earnings of unconsolidated subsidiaries, net		252			—		—			—		252			—			—		1,194			1,446

EBITDA		82,822			15,949		10,270			4,149		113,190			7,035			21,574		(77,382	)		64,417

Restructuring charges, net		484			5,866		577			328		7,255			23,241			—		81			30,577
Integration/acquisition costs		—			—		—			—		—			12,052			—		21,763			33,815
Deferred revenue adjustment due to acquisition		—			—		—			—		—			5,871			—		—			5,871
Separation costs		—			—		—			—		—			—			—		744			744

Adjusted EBITDA	$	83,306		$	21,815	$	10,847		$	4,477	$	120,445		$	48,199		$	21,574	$	(54,794	)	$	135,424


	Nine Months Ended January 31, 2015
	Executive Recruitment
	North America			EMEA		Asia Pacific			South America		Subtotal			Hay Group			Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	243,055		$	113,788	$	61,615		$	22,366	$	440,824		$	194,269		$	121,342	$	—		$	756,435
Total revenue	$	253,855		$	117,351	$	63,959		$	22,416	$	457,581		$	199,945		$	126,387	$	—		$	783,913

Net income																						$	62,875
Other income, net																							(3,061	)
Interest expense, net																							1,426
Equity in earnings of unconsolidated subsidiaries, net																							(1,696	)
Income tax provision																							26,392

Operating income (loss)	$	60,788		$	13,337	$	10,042		$	3,513	$	87,680		$	19,799		$	14,367	$	(35,910	)	$	85,936
Depreciation and amortization		2,662			1,366		771			249		5,048			9,848			1,374		4,093			20,363
Other income (loss), net		98			69		283			87		537			(111	)		27		2,608			3,061
Equity in earnings of unconsolidated subsidiaries, net		281			—		—			—		281			—			—		1,415			1,696

EBITDA		63,829			14,772		11,096			3,849		93,546			29,536			15,768		(27,794	)		111,056

Restructuring charges, net		1,151			3,987		17			229		5,384			2,758			1,154		172			9,468
Acquisition costs		—			—		—			—		—			—			—		445			445

Adjusted EBITDA	$	64,980		$	18,759	$	11,113		$	4,078	$	98,930		$	32,294		$	16,922	$	(27,177	)	$	120,969