The Caldwell Partners Announces Fiscal 2008 Fourth-Quarter and Year-End Financial Results



    
    -   Operating revenue increases 11% for the year
    -   Growth reflects number of more senior executive searches and related
        fees, as well as increased business in western Canada
    -   Company plans to expand into U.S. in fiscal 2009
    -   Company reports loss of 2.5 cents per share
    -   Suspends quarterly cash dividend
    

    TORONTO, Oct. 27 /CNW/ - The Caldwell Partners International Inc.
(TSX: CWL.A), Canada's first truly national human capital services firm, today
issued its financial results for the fiscal 2008 fourth quarter and year ended
August 31, 2008. All references to quarters or years are for the fiscal
periods unless otherwise noted and all currency amounts are in Canadian
dollars. The company also announced plans to expand into the United States
with the opening in fiscal 2009 of at least one and possibly two offices.

    
    Financial Highlights

    -------------------------------------------------------------------------
                                Three        Three         Year         Year
                               Months       Months        Ended        Ended
                            Ended Aug.   Ended Aug.     Aug. 31,     Aug. 31,
                             31, 2008     31, 2007         2008         2007
    -------------------------------------------------------------------------
    Operating revenue      $4,531,484   $5,021,034  $17,212,296  $15,544,458
    -------------------------------------------------------------------------
    Expenses                5,169,906    4,417,146   18,242,910   15,226,738
    -------------------------------------------------------------------------
    Operating (loss)
     income                  (638,422)     603,888   (1,030,614)     317,720
    -------------------------------------------------------------------------
    Investment (loss)
     income                  (542,100)      19,550      300,738      644,841
    -------------------------------------------------------------------------
    Net (loss) earnings     ($856,356)    $355,394    ($414,876)    $690,561
    -------------------------------------------------------------------------
    Earnings per share        ($0.051)      $0.020      ($0.025)      $0.040
    -------------------------------------------------------------------------
    


    Year-End Results

    Operating revenue for 2008 rose 10.7 percent to $17,212,296 mainly as the
result of the number of more senior-level executive searches carried out by
The Caldwell Partners and the related increase in average fees, as well as a
significant increase in business in the company's western Canada business. The
level of operating revenue was consistent throughout 2008 at $4.5 million or
more for three of the four quarters, with the exception being a softer second
quarter.
    Gross operating profit before general and administrative expenses for
2008 increased 7.7 percent to $5,212,000, or a gross margin of 30.3 percent,
compared with $4,840,000, or a gross margin of 31.1 percent in 2007. Total
expenses before amortization increased to $17,890,532, up 20.2 percent from
$14,880,394 in 2007. The increase is related to the growth in operating
revenue and related higher variable and fixed compensation expense,
investments being made in partners and other professional staff under the
strategic growth plan previously disclosed by the company, and other costs,
including the addition of John N. Wallace as President and Chief Operating
Officer at mid-year (subsequently appointed Chief Executive Officer on
September 11). Legal fees for 2008 were $967,385, compared with $584,538 a
year earlier, mainly related to the company's litigation expenses. The company
has submitted claims under its Directors and Officers insurance to recover a
portion of these legal costs, but has not reflected this in the financial
statements pending a determination of the amount that will be recovered and
receipt of funds.
    As the result of the increased expenses, the company incurred a net
operating loss for 2008 of $1,030,614, compared with a net operating profit of
$317,720 in 2007.
    Operating revenue and operating income are non-GAAP (generally accepted
accounting principles) measures. The company believes, however, that they
provide a useful understanding of the performance of its core human capital
services operations as they exclude income or loss from investments and taxes.
    Investment income was $300,738 in 2008, compared with $644,841 a year
earlier. As reflected in the Consolidated Statements of Comprehensive Income,
the company incurred an unrealized loss on its marketable securities of
$903,158 in 2008. These amounts have been reflected in the balance sheet value
of marketable securities as at August 31, 2008.
    After recording a recovery for income taxes ($315,000), the company had a
net loss for 2008 of $414,876 ($0.025 per share), compared with net income in
2007 of $690,561 ($0.040 per share).

    Fourth-Quarter Results

    Operating revenue for the 2008 fourth quarter at $4,531,484 was
9.8 percent below the level of the 2007 period. The 2007 fourth quarter was an
unusually strong period following a surge of new business booking late that
summer. The 2008 fourth-quarter operating revenue was nearly 38 percent higher
than the company recorded in the 2006 fourth quarter. Although the 2008
fourth-quarter operating revenue was consistent with the business generated in
the first and third quarters of the year, the company did note some softening
in activity that it believes is related to the current economic uncertainty
and that it expects will be reflected in its 2009 first-quarter performance.
    Reflecting the lower operating revenue, gross operating profit declined
in the 2008 fourth quarter to $1,409,000, compared with $1,598,000, or a gross
margin of 31.1 percent, compared with 31.8 percent in the 2007 quarter. Total
expenses before amortization increased to $5,080,582, up 17.6 percent from
$4,319,806 in the 2007 period. The most significant reason for the increase
was higher legal fees in the 2008 quarter, amounting to $329,000, compared
with only $42,000 in the prior-year period. Other factors contributing to the
increase were those that affected costs for all of 2008.
    The company incurred a net operating loss for the fourth-quarter 2008 of
$638,422, compared with a net operating profit of $603,888 in the 2007
quarter.
    In the 2008 fourth quarter, the company recorded a loss from its
investments of $542,100. The loss reflects a change in accounting treatment
deemed to be appropriate under the new accounting standards for financial
instruments. This change required a $568,000 reduction in investment income to
adjust for gains that had been recorded earlier in the year. The adjustment
had no impact on the reported values of the company's marketable securities,
total assets, or shareholders' equity or on the reported comprehensive income
for any period in 2008. In the 2007 fourth quarter, the company reported
investment income of $19,550.
    After recording a recovery for income taxes ($324,166), the company had a
net loss for the 2008 fourth quarter of $856,356 ($0.051 per share), compared
with net income in the 2007 quarter of $355,394 ($0.020 per share).

    Outlook - Company Will Continue to Pursue Growth Opportunities in 2009

    "We are naturally concerned about the turmoil and uncertainty that has
beset the capital markets and all sectors of the economy in Canada and
internationally," said John N. Wallace, the company's recently appointed Chief
Executive Officer. "The Caldwell Partners is well-positioned to deal with
these conditions and to continue to invest in growing our business.
    "We are financially strong with no debt and nearly $19 million in
marketable securities, cash, and equivalents. We have a lean, highly
experienced organization of partners and professional staff that are among the
best in our industry. Our business is diversified across sectors and across
Canada so we are not dependent on the performance of any particular
industries, clients, or regions. We believe that this economic climate likely
will continue to generate opportunities for us to grow in meeting the need for
C-level executives, including CEOs, CFOs, CIOs, and other senior executives
for all manner of private and public organizations.
    "Our growth strategies for 2009 also include plans to establish at least
one and possibly two offices in the United States," Mr. Wallace said. "This is
an exciting initiative. For competitive reasons though, we will not disclose
the details of our plans until we move ahead with them. My experience in
operating in the U.S. market gives me confidence that there are considerable
opportunities for a top-level, highest-quality practice, such as The Caldwell
Partners, to grow profitably in key markets. I look forward to working with
Doug Caldwell, our founder and Chairman of the company, our Board, and all of
our organization in carrying out our growth strategies, and to reporting to
our shareholders on our progress in creating value for them."

    Board Suspends Quarterly Dividend

    The Board determined that the payment of the quarterly cash dividend of
two cents per share should be suspended at this time.
    On December 14, 2007, The Caldwell Partners issued a news release
advising that because of its Board's desire to maintain the quarterly dividend
level of $0.02 per share even if operating earnings are not sufficient to
cover these payments, the Directors had determined that a reduction of the
company's Stated Capital and the addition of this amount to Contributed
Surplus was in the best interest of all of the shareholders. While the company
has substantial cash reserves at its disposal, the news release noted that it
is prevented from distributing these amounts to shareholders due to statutory
restrictions on payments from capital. At the end of 2008, the company had
$18.9 million in marketable securities, cash, and equivalents, while the level
of retained earnings was insufficient to maintain the $0.02 per share cash
dividend.
    On February 7, 2008, however, the holders of its Class A Non-Voting
shares voted to reject the resolution to reduce the Stated Capital of the
Class A and Class B shares by 90 percent, adding those amounts to Contributed
Surplus. Class B shareholders had approved the resolution earlier that day.
    Had this resolution been approved, the reduction in Stated Capital would
have provided the Directors the option to declare a dividend this quarter.
However, that option was not available.

    Normal Course Issuer Bid

    On November 14, 2007, The Caldwell Partners announced that the Toronto
Stock Exchange had accepted the company's application for a normal course
issuer bid for the repurchase of up to 658,439 Class A Non-voting Shares,
representing approximately five percent of the 13,168,783 Class A shares
outstanding as at October 31, 2007. In the 2008 fourth quarter, the company
repurchased and cancelled 528,160 Class A shares, for a total of 637,160
purchased and cancelled since the commencement of the program.
    Today, the Board approved filing of a Notice of Intention with the
Toronto Stock Exchange to renew its Normal Course Issuer Bid. The number of
shares and the time period of purchases will be subject to approval by the
Toronto Stock Exchange. A further news release will be made when the TSX has
ruled on the application.

    About The Caldwell Partners

    The Caldwell Partners International Inc., founded in 1970, was Canada's
first executive search firm. Today the human capital services company serves
clients across Canada and internationally. The Caldwell Partners focuses, in
particular, on recruiting "C-class" executives (chief executive, chief
financial, chief information officers, as well as other senior executives).
The Caldwell Partners takes pride in delivering unmatched depth of service and
expertise to its clients, the calibre and experience of its staff, and the
successful completion of its engagements. The Caldwell Partners founded and
continues to promote the prestigious national awards programs recognizing
Canada's Outstanding CEO of the Year(TM) and Canada's Top 40 Under 40(TM), and
advises and supports the Canada's CFO of the Year Award(TM) program. In 2007,
the Canada's Outstanding CEO of the Year(TM) and Canada's Top 40 Under 40(TM)
programs marked their respective 19th and 14th anniversaries.
    The Caldwell Partners' Class-A non-voting shares are listed on The
Toronto Stock Exchange (TSX: CWL.A). Please visit our website at
www.caldwell.ca for further information.

    Forward-Looking Statements

    Forward-looking statements in this document are based on current
expectations that are subject to significant risks and uncertainties. Actual
results might differ materially due to various factors such as the competitive
nature of the executive search industry, the ability of the company to execute
its growth strategies, the performance of the Canadian domestic and
international economies, and the company's ability to retain key personnel.
The Caldwell Partners assumes no obligation to update the forward-looking
statements, or to update the reasons why actual results could differ from
those reflected in the forward-looking statements.

    
    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED BALANCE SHEET

    -------------------------------------------------------------------------
                                                        As at        As at
                                                      August 31    August 31
                                                        2008         2007
    -------------------------------------------------------------------------
    Assets
    Current Assets
      Cash and cash equivalents                      $8,007,963   $5,839,292
      Accounts receivable                             3,029,381    3,886,522
      Income taxes receivable                         1,252,960      679,337
      Prepaid expenses                                  181,222      169,545
    -------------------------------------------------------------------------
                                                     12,471,526   10,574,696

      Marketable securities                          10,909,603   13,734,660
      Loans receivable, net                             418,978      355,966
      Property and equipment                          1,859,562    2,190,973
      Future income taxes                                     0       24,041
    -------------------------------------------------------------------------
                                                    $25,659,669  $26,880,336
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current Liabilities
      Accounts payable and accrued liabilities       $4,137,343   $2,961,487
      Deferred revenue                                  256,409      397,854
      Current portion of incentive accrual              530,250            0
    -------------------------------------------------------------------------
                                                      4,924,002    3,359,341

    Long-term incentive accrual                       1,599,266    1,337,148

    Future income taxes                                 339,928      350,968

    Shareholders' equity
      Capital stock                                  19,603,150   20,595,326
      Contributed surplus                               488,693      204,803
      (Deficit) retained earnings                      (734,075)   1,032,750
      Accumulated other comprehensive loss             (561,295)           0
    -------------------------------------------------------------------------
                                                     18,796,473   21,832,879
    -------------------------------------------------------------------------

                                                    $25,659,669  $26,880,336
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENT OF EARNINGS (LOSS)

    -------------------------------------------------------------------------
                             Three months ended        Twelve months ended
                                  August 31                 August 31
                              2008         2007         2008         2007
    -------------------------------------------------------------------------

    Operating revenue      $4,531,484   $5,021,034  $17,212,296  $15,544,458

    Expenses
      Employee compensation,
       general and
       administration      $5,080,582    4,319,806   17,890,532   14,880,394
    Amortization               89,324       97,340      352,378      346,344
    -------------------------------------------------------------------------
                            5,169,906    4,417,146   18,242,910   15,226,738
    -------------------------------------------------------------------------
    (Loss) earnings
     before the following    (638,422)     603,888   (1,030,614)     317,720

    Investment (loss)
     income, net             (542,100)      19,550      300,738      644,841
    -------------------------------------------------------------------------
    Net (loss)
     earnings before tax   (1,180,522)     623,438     (729,876)     962,561

    (Recovery of) provision
     for income taxes
      Current                (337,166)     258,001     (328,000)     236,000
      Future                   13,000       10,043       13,000       36,000
    -------------------------------------------------------------------------
                             (324,166)     268,044     (315,000)     272,000
    -------------------------------------------------------------------------

    Net (loss) earnings
     for the period         ($856,356)    $355,394    ($414,876)    $690,561
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share        ($0.051)      $0.020      ($0.025)      $0.040
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                                                        Three       Twelve
                                                       months       months
                                                        ended        ended
                                                      August 31,   August 31,
                                                        2008         2007
    -------------------------------------------------------------------------

    Net loss for the period                           ($856,356)   ($414,876)

    Unrealized loss on available-for-sale
     marketable securities                              (95,381)  (1,064,015)
    Reclassification of gains and losses included
     in net loss                                              0      160,857
    -------------------------------------------------------------------------
    Change in unrealized loss on marketable
     securities                                         (95,381)    (903,158)
    -------------------------------------------------------------------------
    Comprehensive loss                                ($951,737) ($1,318,034)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
    ACCUMULATED OTHER COMPREHENSIVE INCOME

    -------------------------------------------------------------------------
                             Three months ended        Twelve months ended
                                  August 31                 August 31
                              2008         2007         2008         2007
    -------------------------------------------------------------------------

    Shareholders' equity -
     beginning of period  $21,100,415  $21,818,379  $21,832,879  $22,506,535

    Net (loss) earnings
     for the period          (856,356)     355,394     (414,876)     690,561

    Repurchase of Class
     A shares                (558,020)           0     (708,620)           0

    Dividends on Class
     A and Class B shares    (328,271)    (340,895)  (1,351,615)  (1,364,217)
    -------------------------------------------------------------------------

    Shareholders' equity -
     end of period        $19,357,768  $21,832,879  $19,357,768  $21,832,879
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive
     income - beginning
     of period              ($465,914)                       $0

    Adoption of new
     handbook standard
     (net of tax)                   0                   341,863

    Change in unrealized
     gains and losses on
     available-for-sale
     marketable
     securities               (95,381)                 (903,158)
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive
     income - end
     of period              ($561,295)                ($561,295)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENT OF CASH FLOWS

    -------------------------------------------------------------------------
                             Three months ended        Twelve months ended
                                  August 31                 August 31
                               2008         2007         2008         2007
    -------------------------------------------------------------------------
    Operating
     Activities
      Net (loss) earnings
       for the period       ($856,356)    $355,394    ($414,876)    $690,561
      Items not affecting
       cash
        Amortization           89,324       97,340      352,378      346,344
        Loss on sale
         of marketable
         securities                 0      117,899      160,857        4,671
        Other realized
         losses (gains)
         on investments       638,992        2,425            0      (82,471)
        Future income taxes   (93,874)      10,043       13,000       36,000
        Non-cash incentive
         compensation         238,626      132,563      792,368      551,468
    -------------------------------------------------------------------------
                               16,712      715,664      903,727    1,546,573

    Net decrease in
     working capital
     balances related
     to operations            210,961      850,785    1,243,240       40,754
    -------------------------------------------------------------------------
                              227,673    1,566,449    2,146,967    1,587,327
    -------------------------------------------------------------------------

    Investment Activities
      Proceeds on sale of
       marketable securities        0    3,745,325    2,102,906    6,359,962
      Purchase of marketable
       securities                   0   (4,101,030)           0  (10,447,480)
      Additions to property
       and equipment          (33,336)     (54,713)     (69,460)    (301,743)
      Disposals of property
       and equipment           48,493            0       48,493            0
    -------------------------------------------------------------------------
                               15,157     (410,418)   2,081,939   (4,389,261)
    -------------------------------------------------------------------------

    Financing Activities
      Dividends paid         (328,271)    (340,895)  (1,351,615)  (1,364,217)
      Repurchase of Class
       A Shares              (558,020)           0     (708,620)           0
    -------------------------------------------------------------------------
                             (886,291)    (340,895)  (2,060,235)  (1,364,217)
    -------------------------------------------------------------------------

    Net (decrease)
     increase in cash
     and cash equivalents
     during the period       (643,461)     815,136    2,168,671   (4,166,151)
    Cash and cash
     equivalents,
     beginning of period    8,651,424    5,024,156    5,839,292   10,005,443
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period             $8,007,963   $5,839,292   $8,007,963   $5,839,292
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %SEDAR: 00003230E




For further information:

For further information: Richard W. Wertheim, Wertheim + Company Inc.,
wertheim@wertheim.ca, (416) 594-1600, (416) 518-8479 (cell)


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