Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Kevin McVeigh - Credit Suisse.
Kevin McVeigh - Credit Suisse
When you talk about the restructuring charge of $11 million to $15 million, what type of run rate does that assume in the business going forward? To say that another way, as you’re rationaling down the cost structure, what are you positioning the company for in terms of revenue?
Gary D. Burnison
The first thing is you don’t want this to be a self-fulfilling prophecy. Our focus has to be on the future and taking share and building the company, not cutting your way out of this. But I’ll tell you, it is a rapidly changing environment. In terms of these actions that we had on the drawing board for quite some time in the event that the situation would turn the way it has, our thinking was to make those cuts with an anticipation that you’ve got a business that’s running in the high $600s or so.
Kevin McVeigh - Credit Suisse
In terms of the $50 million, as those cost savings come on line is it $50 million in the second half of the year or is that $50 million annualized? How should we model that?
Gary D. Burnison
It’s $50 million annualized and part of that will happen over the next several months. Greg can give you the details on how that calenderizes.
Gregg Kvochak
There will be a partial affect of that in the third quarter but full affect of those cost savings again annualized would take effect basically in the fourth quarter of the year.
Kevin McVeigh - Credit Suisse
Drawing on past downturn the runoff in the revenue, how does this compare to the dot com and the current market conditions if we were to try to think about drawing parallels to times in the past?
Gary D. Burnison
In Korn/Ferry’s history prior to this there’s been five recessionary periods. In four of them the business was down about 8% or 9% and then rebounded 20+%. The last recession the business absolutely fell off and plummeted 60% or so over the course of several months. Over the last really four or five weeks, and I’m sure you see this, businesses have just stopped. They have curtailed spending and very much had an inward focus. The question really to me is the credit markets. When are those going to thaw? I think when those begin to thaw, this fear and retreat that we’re in right now will subside.
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