Ladies and gentleman thank you for standing by. 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. 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 a number of risks and uncertainties, which are beyond the company’s control. Additional information concerning such risks and uncertainties can be found in the company’s annual report for fiscal 2008. With that, I’ll turn the call over to Mr. Burnison; please go ahead sir.

Well, thank you and good morning everyone. It goes without saying that this is one of the most difficult economic environments that the global business community has ever faced. The speed, in which companies have reduced their outside spend for all services has been absolutely unprecedented. In fact it was just six months ago that we achieved the highest revenue in our companies nearly 40 year history. Although, we remain the leading brand in the industry, we’ve not been immune from a turbulent market that is affected virtually every company conducting business today. The question for us however, is not just to report on the climate, but to tell you what we’re doing about it. So, let me comment on our operating philosophy during this turbulent period. Number one; we’re going to preserve our top line capacity and we are going to remain aggressive in the market. Two, we are going to proactively position ourselves to create a great company that links a client’s strategy to its most pressures resource, it’s workforce. A company that can not only help clients finds great talent, but as importantly help them more effectively and efficiently deploy, development, retain and reward their workforce. Next, we are going to accelerate through the economic turn. The strongest companies make their best moves in tough markets. We’re going to continue to focus on a transformational strategy and we are going to remain consistent in our decision making. We are not going to run below deck in tough times, just as we didn’t over extend ourselves during periods of economic tailwinds. Ultimately, we are going to continue to make the best decisions for our shareholders, clients and colleagues. Lastly, in this unprecedented environment we believe that the primary financial operating metric for our business is cash flow. As…

Thank you, Gary and good morning. This has been a challenging quarter. After more than five years of sustained growth and successfully executing, despite a modest global slowdown in the last 18 months. In our third fiscal quarter, the macroeconomic environment became much worse and we were finally caught up in the crisis. As it’s evident across virtually every industry and geography there’s been no where to hide, our salvation is that we have one of the most liquid, well capitalized balance sheets in the industry giving us the financial strength to withstand the blows delivered by the economy. This quarter’s results include two separate issues unrelated to our ongoing operation that I want to identify now. First as previously announced, we did reduce the size of our global headcount during the quarter resulting in a restructuring charge that I will detail later. Second, during the quarter we recorded an impairment charge related to equity investments we hold on behalf of our employees as part of a long-term deferred compensation arrangement and I will discuss that charge in the balance sheet section of this call, but now let’s discuss operations. As Gary stated fiscal ‘09 third quarter fee revenue was a $136.2 million down over 30% from the prior year’s third quarter and down 28% sequentially. While some portion of that revenue decline is due to holiday seasonality and fee revenue fell-off only 27% year-over-year on a constant currency basis, most of this very rapid decline was due to a sharp reduction in economic activity late in November that is yet to recover. As we mentioned in our last quarterly call, we had begun reducing the size of our infrastructure more than a year ago in anticipation of a slowdown and then we accelerated the downsizing in this third quarter.…

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

Yes, thank you, and Steve I’m very sorry to hear the personal news. If I could start, I was wondering if you could just talk a little bit about typical seasonal trends. November through February and the typical pick up that you would see in the new year, whether the comments you’ve made about stabilization, January to February looking at the trends year over year, i.e. You’ve seen an actual pick up in the number of confirmations in February or whether this was an actual stabilization in terms of number of confirmations in February from January --?

Well, this is not a typical seasonal period. We clearly suffered worse during November, December and January than has been the case in past years and the stabilization that we saw towards the beginning of this new quarter is difficult to extrapolate to the rest of the quarter. Normally, our fourth quarter is extraordinarily strong and so you would expect in a normal environment that there would be certainly stability, if not strong growth through the fourth fiscal quarter of the year, but I think that’s pretty difficult to predict at this juncture of the economies. We saw a level of decline in November into the end of the calendar year that was steeper and quicker than probably any time in the company’s history, and I think if you parse some of the information that’s out there on our primary public competitor and then other private companies in this sector, it’s clear that the entire industry is under siege and that clients are broadly pulling their horns in very rapidly. So, we are optimistic about the long term prospects for the business, but we are cautious about the near term and as we said Andrew, we are trying to do our best to maintain cash flow neutrality or better in this very rapidly evolving environment , but it’s tough out there right now.

Yes, to kind of clarify that point. Was this stabilization in the actual number of confirmations in February in that year-over-year trending confirmation? It sounds like it’s in the number of confirmations?

Yes, that’s a fair assessment.

Could you tell us based on, if you hit the guidance number in Q4 what you would expect to pay out in bonuses at the end of the year?

Well that’s completely depended upon the profitability, Andrew as you know for the full year and so we have to wait and finish up the quarter, drive hard and we’ll come to that conclusion like we always do after the fourth quarter and going through the year end process.

I am just trying again rough sense of the cash impact in terms of bonus payments at the end of the year, if you were to hit the cash neutral estimate for Q4.

Again, we are going to wait until we go through the end of the year. I will tell you that this company is very well capitalized so I don’t think that bonus payment is not going to materially move that conclusion. Last year, I think we paid and you guys can correct me, I think our bonus expense was something like $155 million, in that neighborhood. Obviously given the economic environment this year it’s going to be less than that.

Okay thanks and then just one final, in terms of the additional restructuring that you will be taking. If you could perhaps give us some help in terms of thinking about how that might impact the consultant account in the different regions. Thanks.

Well, obviously what we are trying to do is size the infrastructure for our projected revenues and as we said it’s tough to project revenues in this environment, but we are taking a similar level of reduction in headcount in the fourth quarter that we took in the third quarter.

Your next question comes from Tobey Sommer - Suntrust.

Thank you, just a couple of questions. I was wondering if you could characterize what demand was like at the C level and contrast it with demand is like below the C suite. Thanks.

Thanks Tobey I mean it’s a very, very broad question, and C suite can be open to interpretation as to what that is. I would say generally speaking that given the banking system and the crisis that surrounds the world banking system, that CEO’s around the world have become extremely cautious and because that safety net isn’t out there necessarily, have really hoarded cash and that is consistent around the world. In terms of large cap companies, the hiring activity has been significantly reduced; at the middle market there is still activity. With respect to your question on “C-Suite,” however that’s defined, versus lower down in an organization; it’s probably true to say that at the top of the house there continues to be activity and as you go down in an organization that activity decreases significantly. Tobey Sommer – Suntrust: Thank you very much for the context. Just a question about pricing, with this kind of industry wide, as you said unprecedented steep and deep fall-off, are you seeing any behavior from the limited group of global competitors in terms of pricing in the kind of general construct of how the business is conducted?

No, it goes back to that Tobey, literally it goes back to a little bit of the same answer. At the high end, you really don’t see much price sensitivity. As you go down, through an organization, it definitely becomes more price sensitive. Our average fees, we’re about $90, $91,000 this quarter, the same as last quarter up from $55,000, 18 quarters ago. So, we are happy that it held in the quarter and our goal is to continue to move that up and that’s where one of the big opportunities for us is.

Just wondering if there are anything you are feeling from competitors who perhaps don’t have the same strong balance sheet that you have, to be able to be a little stricter on the price.

You hear stories right, but I would say that in terms of something to respond systematically without generalizing, no. Tobey Sommer – Suntrust: One last question, any reversals or bonus accruals that impacted the financials in the quarter and would you expect any in the forecasted quarter for April? Thanks.

We lowered the amount of bonus we accrued in this quarter, but we did not reverse any accruals of bonus. So, consistent with the level of profitability that the business was generating, we obviously accrue based on that run rate of results, but no material reversals of anything.

Your next question comes from Kevin Mcveigh - Credit Suisse.

I wonder if you could just dissect the cash balance a little bit Steve. The $289 million, how much is available and we don’t know the specific range for the bonus to pay out, but just kind of the component to the cash if you could?

Well, included in that total as I mentioned are certain amounts that we hold in trust for our employees and we disclose that in our public filings, that’s about $60 million. The remainder is available for operations and that includes the amount that we might pay out in bonuses at the end of the year and that includes amounts for working capital and then we have a significant excess over those two demands that we continue to maintain. So, three or four quarters ago we would hear from the Street that we were over capitalized and what were we doing with the cash and we said at the time that we thought it was prudent to remain over capitalized and we feel very good that we’re in that position currently, because it provides us a significant cushion to operate in this difficult economy. We think that the amount that we have in excess of our day-to-day needs is adequate to provide liquidity through this tough period.

That’s helpful; and Steve if you could frame out, obviously there’s going to be another restructuring charge. What type of revenue run rate are you taking the SG&A down to as you think about obviously first; and then the second, what type of run rate would that be going forward?

Well, we gave you an extrapolation of our current level of confirms and it’s difficult to give guidance obviously in this environment, but if you look at where we think revenues are coming out for the quarter and then if you listen to our thoughts around stabilization, you can conclude that that’s more or less the level of revenue that we’re sizing the business for. You can’t get too far out ahead of this and cut revenue potential out of the business, that would be folly and that would be contrary to our goal of preserving the brand and then accelerating out of this economic slowdown. So, we’re sizing the business as efficiently as we can to our expected revenues and our expectation is that while the business has been hurt during the last quarter and a half or so, that we will find bottom relatively soon.

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

I had a question with regards to Asia Pac, what was the constant currency revenue growth rate there?

Hang on one second Mark and Greg is here with us, we’ll get it.

Constant currency growth rate Mark, you’re talking sequentially or…

Year-over-year.

Year-over-year would have been down 41%.

Do you sense that you’re maintaining market share in Asia Pac or doing better or worse? It seems like that area has dropped off pretty dramatically.

It has. I will tell you that the quarter is obviously impacted by the Chinese New Year and events like that. Yes, we believe that we are absolutely maintaining market share. Our team for example, on the Mainland China is as strong, stronger than any other team. We’ve been there for 13 years Mark, and our sense from the leaders in Asia is that there is an increased level of activity. China has been strong and I think that the overall fall-off reflects the global economic crisis from Australia to Japan, to the United States, to Europe.

Yes, I clearly appreciate the economic fall-off. As you know we can compare various companies operating over there and it just seemed a little bit steeper without being too obvious about what I’m speaking of, but has there been any change in your leadership over there?

No, we have taken the approach Mark for now, seven years a very consistent decision-making, and when it comes to acquisitions, when it comes to adding people, I think you know our principals and we’ve applied that consistently. There have been some others that you know have taken a little bit different route and I think that explains some of the difference that you are alluding to. So, we’re going to continue to do what we’ve done over the last seven years. We are going to add talent into the company, continue to extent and elevate the brand, look for transformational opportunities that give our consultants reasons to talk to clients throughout the whole year, and that’s the game plan.

It looks like despite the revenue shift, you were able to maintain a pretty decent level of profitability over there. Is your cost base over there a little bit more adjustable, than say what it is in Europe or how should we think about…

Before Steve answers that question, I was going to say that, Mark to your question its one thing to look at the top-line and talk about share, but the other is the bottom-line and I think our team in Asia has done an incredible job navigating through these waters with respect to profitability.

Yes Mark, I would say that traditionally since I’ve been at the company, Asia has been one of our most profitable operations and that’s how Gary and I measure success is profitability so and certainly it is a more flexible operating environment than is the case in Europe. Europe for any services firm, is the most difficult place to adjust cost, because the laws and regulations of the various countries in Europe make that more challenging. So, when you look at the three major regions in which we operate, our ability to adjust the size of the infrastructure is most inhibited in Europe and that’s where we would probably have the greatest challenge in terms of maintaining our goal of cash flow breakeven or better.

To what extent do you think you will be able to make adjustments in Europe?

Well, we will. We will make adjustments. It’s just whether the speed at which we would like to make change will marry up with the hurdles you have to go over in certain countries in Europe to make those changes. So, we will make changes, it just maybe first of all less speedy than we would like and it maybe more costly than we would like, so both of those have an impact in the short run on our profitability. That said, there are markets in Europe that we expect to be much bigger overtime and so part of our thinking through this process is consistent with what we’ve said for the entire company, is to retain a level of revenue potential in very important markets in Europe, perhaps with the knowledge that we could have modest cash losses in those markets, but that it’s important for the long term strategy of the firm.

Could you talk to what extent Europe is a little bit different now in terms of the way it’s structured than it was during the last downturn, particularly with respect to the variability of compensation for the individuals over there?

Well, in terms of going back now eight years Mark, I mean we have modified as you know the developmental and compensation model of the company overall, whereby the first filter is profitability and then the second filter is regional performance and the third filter is not only what you drive for the company, but how you do it and so that’s been consistent now for seven years or so. In terms of, if you look at the salary levels across the board not just Europe, I think those are really if you talk on the search business they’re more advances treated as draws against total fee billings or total bonus potential. I think that’s probably reflected wage growth if anything over the last seven years. If you look at our leverage structure on the search business overall, again, that’s been something that we’ve deployed rather consistently. So, I don’t think there is any real significant change over the last say, six years, six and a half years. There probably are some changes though going back seven years to where the company was managed previously.

What was the bonus accrual for this quarter?

$8 million.

Okay, and can you talk just a little bit and obviously it’s a very challenging time; in terms of how are you going to assess what a steadier state or more normalized level run rate level would be? How are you going to go about that process?

Well it’s really, number one, I think it’s the banking system globally is under siege and that has to get fixed, it has to get stabilized, banks have to lend for companies to really start to invest and for there to be economic growth and I think that is what we are looking for first and foremost. Our own assessment and I hope we’re wrong, but our own assessment is that we are several months away from the banking system getting rationalized. Then there’s a period of time, a lag after that by which banks are lending and capital is flowing and the companies are making investments. So, that is first and foremost in our minds as we are operating the business Mark and then also following our clients. As you know in the search business, if you take the United States, one proxy for the business is unemployment and the college educated unemployment rate, you can look at that as well, but first and foremost we really do believe that it’s credit and the flow of capital for small and big companies to invest.

It sounds like from those comments that you are not going to make any long term decisions based on what you are currently seeing until you see some signs of stabilization on those elements first. Is that a correct interpretation of what you just said?

Well, when you say long term decisions such as…?

Long term to medium term; well in terms of staffing levels, expense levels, things of that nature.

Yes, I mean look, our long term destination here hasn’t changed at all. We are going to create top of mind brand and human capital, multi-billion dollars diversified HR solutions business. The strategy essentially revolves around giving our consultants reasons to talk to clients throughout the whole year to broaden the conversation. That absolutely has not changed and we are going to continue to again. I think it’s very important to have consistent decisions, whether the winds are blowing against you or you have tailwinds and we’re going to continue to deploy consistent decision making. We will continue to add talent into the company. We are continuing like we’ve done for many years to systematically look at investments; look at reasons to talk to clients and that’s going to continue. Now certainly you do in making those decisions need to be mindful of the short term operating environment, but in good times you have to be mindful of the long term operating environment. So, we are going to continue to be consistent here and I think that’s what we’ve shown.

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

Yes, one technical question. If the $110 million in net revenues were to continue and annualized that, what would you aim for in consultant count?

Well Ty, one of the things that we’ve tried to do as we mentioned is keep as much revenue potential as possible and so most of what we have done in terms of headcount reductions has been in the leverage of the firm. So, in the support functions, etc., but also as we noted during the call, we have had a net reduction in partners of about less than 10% and we would have to continue to look at the level of staffing that we have worldwide. I think it’s a little too broad a question perhaps for us to answer on a call, because you would have to do it market-by-market, and as I said just a moment ago there are certain markets where we would accept modest amounts of cash burn because of our long term goals in those markets and there are others where we would not and we are literally going through that on a person-by-person basis and on a market-by-market basis. So, I don’t know that I can specifically give you a number of consultants but to the extent that we remain at a run rate consistent with the extrapolation in the fourth quarter, our headcount is pretty much in line on it for the partners.

Okay. The other question is a little bit more theoretical and you’ve alluded to it. Once you get below those top five or six big search firms as a dramatic flow off in players and one of the things I remember at the bottom of the market last time is that you started to get more knocks on your front door from some of these senior consultants. Have you started to see that yet or is it still too early in the game?

We are absolutely; I mean yesterday I had six interviews. Again Ty, we have consistently deployed this strategy and so we are looking to continue to build out this company in all three business lines and you’ve seen some of those boutiques that have gone out of business in this kind of environment and we thank goodness we’ve kept the dry powder, because our balance sheet is rock solid and the point in keeping the dry powder was to use it in times like these. So, yes we have.

Your last question comes from Tobey Sommer - Suntrust.

Thank you very much. My question has been answered.

Well, listen I first of all, the company’s thoughts and leaderships teams thoughts go out to Steve and his family. This is clearly a challenging time for him and I look for his continued support. These are challenging times and we are going to absolutely orientate ourselves to taking the volatility that surrounds us and to really have the view that this is too good of an opportunity to waste. We are going to absolutely continue to further institutionalize our go to market strategy. We are going to create a more consultative solutions based business model and we are going to refine our operating model to deliver positive cash flow during this unprecedented time. In this time, I’m so proud to be the Korn/Ferry colleagues that we have around the world and I thank them for their continued support and dedication and I thank our shareholders for being with us in good times and some more challenging times. So with that, thank you very much for your time today and we’ll talk to you next time. Bye-bye.

Thank you. Ladies and gentlemen this conference will be available for replay for one weak starting today at 11:00 am Eastern Daylight Time and running through the day March 18 at midnight. You may access the AT&T executive playback service by dialing 1800-475-6701 and entering the access code 990365. International participants may dial 320-365-3844 and enter the same access code 990365. Additionally the replay will be available for play back at the company’s website, www.kornferry.com in the Investor Relations section. Again everyone, we thank you for joining us today. You may now disconnect.