Korn/Ferry's revenues slump, more cost-cutting ahead
Paul Reilly, Korn/Ferry chairman and CEO, said: "This brings to a close one of the most difficult quarters in the history of the executive recruitment market."
Reilly said the company had taken strong cost-cutting steps by reducing the global workforce by more than 30%, abandoning the college graduate market and consolidating back office functions.
Additional job losses are expected in Europe in the current quarter, and no improvement is anticipated in revenue.
At the end of the third quarter, Korn/Ferry's outstanding bank borrowings amounted to $48m. Earlier this month it restructured a credit agreement with Bank of America, which gives the firm a revolving credit facility of up to $45m to November 2002.
Korn/Ferry says it is considering various financing alternatives to refinance this facility and other outstanding debt, including the year-end bonus payments.
The firm made a net loss in the third quarter of $7.3m, compared to a profit of $9.9m in the same period last year.
Futurestep, the middle management internet-based recruitment service, was hardest hit, with revenue falling 54% to $9.7m in the third quarter. It continues to show an operating loss.
