11. Business Segments

The Company currently operates through three business segments: Executive Search, Hay Group and Futurestep. The Executive Search 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 four fundamental needs: Talent Strategy, Succession Management, Leadership Development, and Rewards, Motivation and Engagement, 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 Search business segment is managed by geographic regional leaders and Hay Group and Futurestep worldwide operations are managed by their Chief Executive Officers. The Executive Search 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/acquisition costs, 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. For fiscal 2017 and 2016, Adjusted EBITDA includes deferred revenue adjustment related to the Legacy Hay acquisition, reflecting revenue that the Hay Group would have realized if not for business combination accounting that requires a company to record the acquisition balance sheet at fair value and write-off deferred revenue where no future services are required to be performed to earn that revenue. 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:


	Year Ended April 30, 2018
	Executive Search
	North America		EMEA		Asia Pacific		Latin America		Subtotal		Hay Group			Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	408,098	$	173,725	$	96,595	$	30,624	$	709,042	$	785,013		$	273,162	$	—		$	1,767,217
Total revenue	$	421,260	$	177,234	$	98,062	$	30,717	$	727,273	$	801,005		$	291,241	$	—		$	1,819,519

Net income attributable to Korn/Ferry International																			$	133,779
Net income attributable to noncontrolling interest																				2,118
Other income, net																				(11,525	)
Interest expense, net																				9,676
Equity in earnings of unconsolidated subsidiaries, net																				(297	)
Income tax provision																				70,133

Operating income (loss)	$	100,037	$	26,768	$	18,425	$	4,022	$	149,252	$	100,939		$	39,363	$	(85,670	)	$	203,884
Depreciation and amortization		3,930		1,689		1,408		455		7,482		31,527			3,054		6,525			48,588
Other income, net		845		168		373		181		1,567		599			152		9,207			11,525
Equity in earnings of unconsolidated subsidiaries, net		297		—		—		—		297		—			—		—			297

EBITDA		105,109		28,625		20,206		4,658		158,598		133,065			42,569		(69,938	)		264,294
Restructuring charges (recoveries), net		—		—		313		—		313		(241	)		6		—			78
Integration/acquisition cost		—		—		—		—		—		9,151			—		279			9,430

Adjusted EBITDA	$	105,109	$	28,625	$	20,519	$	4,658	$	158,911	$	141,975		$	42,575	$	(69,659	)	$	273,802


Identifiable assets (1)	$	411,347	$	198,815	$	98,599	$	23,832	$	732,593	$	1,092,474		$	144,160	$	318,687		$	2,287,914
Long-lived assets (1)	$	22,813	$	11,018	$	10,834	$	3,203	$	47,868	$	42,605		$	6,390	$	23,038		$	119,901
Goodwill (1)	$	47,757	$	47,501	$	972	$	—	$	96,230	$	458,169		$	29,823	$	—		$	584,222


	Year Ended April 30, 2017
	Executive Search
	North America		EMEA			Asia Pacific		Latin America		Subtotal		Hay Group		Futurestep			Corporate			Consolidated
	(in thousands)
Fee revenue	$	356,625	$	146,506		$	80,169	$	34,376	$	617,676	$	724,186	$	223,659		$	—		$	1,565,521
Deferred revenue adjustment due to acquisition		—		—			—		—		—		3,535		—			—			3,535

Adjusted fee revenue	$	356,625	$	146,506		$	80,169	$	34,376	$	617,676	$	727,721	$	223,659		$	—		$	1,569,056

Total revenue	$	369,803	$	150,113		$	81,744	$	34,533	$	636,193	$	741,533	$	243,943		$	—		$	1,621,669

Net income attributable to Korn/Ferry International																				$	84,181
Net income attributable to noncontrolling interest																					3,057
Other income, net																					(11,820	)
Interest expense, net																					10,251
Equity in earnings of unconsolidated subsidiaries, net																					(333	)
Income tax provision																					29,104

Operating income (loss)	$	81,550	$	27,854		$	8,580	$	6,268	$	124,252	$	47,302	$	29,986		$	(87,100	)	$	114,440
Depreciation and amortization		3,812		1,030			1,060		483		6,385		32,262		2,818			5,795			47,260
Other income (loss), net		844		(15	)		300		684		1,813		341		(91	)		9,757			11,820
Equity in earnings of unconsolidated subsidiaries, net		333		—			—		—		333		—		—			—			333

EBITDA		86,539		28,869			9,940		7,435		132,783		79,905		32,713			(71,548	)		173,853
Restructuring charges, net		1,719		629			1,495		773		4,616		29,663		101			220			34,600
Integration/acquisition cost		—		—			—		—		—		14,440		—			7,939			22,379
Deferred revenue adjustment due to acquisition		—		—			—		—		—		3,535		—			—			3,535
Separation costs		—		—			—		—		—		609		—			—			609

Adjusted EBITDA	$	88,258	$	29,498		$	11,435	$	8,208	$	137,399	$	128,152	$	32,814		$	(63,389	)	$	234,976


Identifiable assets (1)	$	340,069	$	158,927		$	87,845	$	26,897	$	613,738	$	1,057,611	$	116,717		$	274,832		$	2,062,898
Long-lived assets (1)	$	23,746	$	11,089		$	8,371	$	3,262	$	46,468	$	37,846	$	6,693		$	18,560		$	109,567
Goodwill (1)	$	46,201	$	44,976		$	972	$	—	$	92,149	$	457,241	$	27,475		$	—		$	576,865


	Year Ended April 30, 2016
	Executive Search
	North America			EMEA		Asia Pacific		Latin America			Subtotal		Hay Group			Futurestep		Corporate			Consolidated
	(in thousands)
Fee revenue	$	371,345		$	144,319	$	80,506	$	26,744		$	622,914	$	471,145		$	198,053	$	—		$	1,292,112
Deferred revenue adjustment due to acquisition		—			—		—		—			—		10,967			—		—			10,967

Adjusted fee revenue	$	371,345		$	144,319	$	80,506	$	26,744		$	622,914	$	482,112		$	198,053	$	—		$	1,303,079

Total revenue	$	386,256		$	148,285	$	83,206	$	26,781		$	644,528	$	488,217		$	213,969	$	—		$	1,346,714

Net income attributable to Korn/Ferry International																					$	30,913
Net income attributable to noncontrolling interest																						520
Other loss, net																						4,167
Interest income, net																						(237	)
Equity in earnings of unconsolidated subsidiaries, net																						(1,631	)
Income tax provision																						18,960

Operating income (loss)	$	100,381		$	20,607	$	12,572	$	(1,854	)	$	131,706	$	(3,415	)	$	26,702	$	(102,301	)	$	52,692
Depreciation and amortization		3,267			1,029		941		312			5,549		21,854			2,386		6,431			36,220
Other (loss) income, net		(147	)		433		21		312			619		(868	)		364		(4,282	)		(4,167	)
Equity in earnings of unconsolidated subsidiaries, net		437			—		—		—			437		—			—		1,194			1,631

EBITDA		103,938			22,069		13,534		(1,230	)		138,311		17,571			29,452		(98,958	)		86,376
Restructuring charges, net		499			5,807		577		322			7,205		25,682			49		77			33,013
Integration/acquisition costs		—			—		—		—			—		17,607			—		27,802			45,409
Venezuelan foreign currency loss		—			—		—		6,635			6,635		7,085			—		—			13,720
Deferred revenue adjustment due to acquisition		—			—		—		—			—		10,967			—		—			10,967
Separation costs		—			—		—		—			—		—			—		744			744

Adjusted EBITDA	$	104,437		$	27,876	$	14,111	$	5,727		$	152,151	$	78,912		$	29,501	$	(70,335	)	$	190,229


Identifiable assets (1)	$	227,228		$	150,516	$	86,394	$	24,273		$	488,411	$	1,005,457		$	104,396	$	300,336		$	1,898,600
Long-lived assets (1)	$	19,044		$	4,817	$	3,708	$	1,479		$	29,048	$	42,974		$	4,635	$	18,779		$	95,436
Goodwill (1)	$	48,320		$	46,193	$	972	$	—		$	95,485	$	465,937		$	28,650	$	—		$	590,072

(1)	As of the end of the fiscal year.

Fee revenue attributed to an individual customer or country, other than the U.S., did not account for more than 10% of the total fee revenue in fiscal 2018, 2017 or 2016. Fee revenue classified by country in which the Company derives revenues are as follows:


	Year Ended April 30,
	2018		2017		2016
	(in thousands)
U.S.	$	778,470	$	728,871	$	669,585
Other countries		988,747		836,650		622,527

Total fee revenue	$	1,767,217	$	1,565,521	$	1,292,112

Other than the U.S., no single country controlled over 10% of the total long-lived assets, excluding financial instruments and tax assets. Long-lived assets, excluding financial instruments and tax assets, classified by controlling country are as follows:


	Year Ended April 30,
	2018		2017		2016
	(in thousands)
U.S. (1)	$	80,424	$	70,949	$	64,525
Other countries		39,477		38,618		30,911

Total long-lived assets	$	119,901	$	109,567	$	95,436

(1)	Includes Corporate long-lived assets