The Caldwell Partners Announces Fiscal 2009 First-Quarter Financial Results



    
    -   Nine percent decline in operating revenue, compared with strong 2008
        first quarter, and higher expenses result in net loss for the period
    -   Cautious about near-term effects of weak economy, as companies across
        Canada taking longer to fill positions
    -   Company is continuing to invest for long-term, sustainable growth
    

    TORONTO, Jan. 14 /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 2009 first quarter ended November
30, 2008. All references to quarters or years are for the fiscal periods
unless otherwise noted and all currency amounts are in Canadian dollars.

    
    Financial Highlights

    -------------------------------------------------------------------------
                                                 Three Months    Three Months
                                                    Ended           Ended
                                                Nov. 30, 2008   Nov. 30, 2007
    -------------------------------------------------------------------------
    Operating revenue                             $4,136,202      $4,552,685
    -------------------------------------------------------------------------
    Expenses                                       5,089,511       4,371,684
    -------------------------------------------------------------------------
    Operating (loss) income                         (953,309)        181,001
    -------------------------------------------------------------------------
    Investment (loss) income                          95,871          64,385
    -------------------------------------------------------------------------
    Net (loss) earnings                           ($ 531,852)      $ 160,423
    -------------------------------------------------------------------------
    Earnings per share                               ($0.032)         $0.009
    -------------------------------------------------------------------------
    

    Operating revenue declined 9.1 percent in the 2009 first quarter to
$4,136,202 compared with the 2008 period, which had been a particularly strong
quarter following a surge of assignments booked in the latter part of 2007.
Indicative of this is that the operating revenue for the 2009 first quarter
was 33 percent higher than in the 2007 first quarter. New bookings in the 2009
quarter were up slightly from those in the 2008 first quarter.
    Gross operating profit before general and administrative expenses
decreased in the 2009 first quarter by 62.4 percent to $511,000, or a gross
margin of 12.4 percent, compared with $1,359,000, or a gross margin of 29.9
percent in the 2008 period. Total expenses before amortization increased to
$5,089,511, up 16.9 percent from $4,282,059 in the 2008 first quarter. Factors
accounting for the increase include increased management compensation, due in
part to the addition of John N. Wallace as President and Chief Executive
Officer; accruals for management bonuses, whereas there were none in the 2008
quarter; and higher legal fees of $163,000, compared with $90,000 in the
prior-year period. The increased fees mainly are the result of defending and
settling a Statement of Claim filed in November 2006.
    The company has submitted a claim on its Directors and Officers insurance
to cover its litigation expense and has been informed that a portion of the
costs will be covered. A reimbursement of $47,000 has been received and
recognized in the 2009 first quarter. As previously announced, on November 27,
2008, the company signed a settlement agreement with the litigants and
therefore it expects that its legal expenses will significantly decline in
future quarters.
    Reflecting the lower operating revenue and increased operating expenses,
the company recorded a net operating loss for the first-quarter 2009 of
$953,309, compared with a net operating profit of $181,001 in the 2008 period.
    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 $95,871 in the 2009 first quarter, compared with
$64,385 a year earlier. The 2008 first quarter included a realized capital
loss of $73,616. Reflecting the marked decline in stock markets, the market
value of the company's investments declined to $7,523,578, being $3,947,000
below book cost. This unrealized loss is reflected in the Consolidated
Statements of Comprehensive Income and in the Balance Sheet's value of
marketable securities at November 30, 2008. Total cash, short-term deposits,
and marketable securities were $15,105,156, down from $19,575,461 a year
earlier.
    After recording a recovery for income taxes ($325,586), the company had a
net loss of $531,852 ($0.032 per share), compared with net income in the 2008
period of $160,423 ($0.009 per share).
    As the result of the unrealized loss in marketable securities and the net
loss incurred by the company, the value of its marketable securities plus cash
and equivalents declined to $15.1 million at the end of the 2009 first
quarter, compared with $18.9 million at the 2008 year-end.
    In the 2008 fourth quarter, the Board of Directors determined that the
payment of cash dividends of $0.02 per share should be suspended. In view of
the company's 2009 first-quarter net loss, the Board continued this
suspension.

    Outlook - Company Continuing to Invest for Long-Term, Sustainable Growth

    "For the balance of this year, we recognize that the weak economic
situation inevitably will have some near-term impact on our business," said
John N. Wallace. "We are continuing to see good activity across the country,
but also a slowing in demand as organizations are taking longer to move on
filling positions.
    "In this environment, we are fortunate that our company is lean with a
highly experienced group of partners and professional staff, many of whom have
worked through tough economic periods in the past. We are financially strong
and therefore able to continue investing for the future growth of the company
to create long-term, sustainable value for our shareholders. We currently
intend to add additional experienced partners in our Canadian practice, as
well as to proceed during the year with our previously announced plans to
establish at least one office and possibly two in the United States," Mr.
Wallace said.

    Annual Meeting and Special Class meetings on February 19

    The Annual Meeting will be held on February 19, 2009 at 4:30 p.m.
(Eastern) at the Toronto Yorkville InterContinental Hotel. In conjunction with
the Annual Meeting, the company will present a resolution to special class
meetings of holders of its Class A Non-Voting shares and Class B shares to
amend the company's Articles of Incorporation. The resolution is in accordance
with the legal settlement agreement reached on November 27, 2008. The Class A
and Class B shareholders will be asked to approve a resolution that will
provide for the automatic conversion of all Class B shares in to Class A
non-voting shares effective November 1, 2011 at a ratio of 1.149 Class A
non-voting shares for each Class B share. The result of this conversion is
that effective November 1, 2011, the company will have a single class of
shares with equal voting rights.
    At the Annual Meeting, shareholders will be asked to approve the
re-election of the company's five current directors as well as three new
directors, as provided for in the November 27, 2008 settlement agreement. The
three additional directors will be John N. Wallace, the company's President
and Chief Executive Officer and two independent directors, Kathy A. Welsh and
Richard D. Innes.
    Ms. Welsh has been a senior executive with companies in a number of
different industries and has been an independent consultant since 2004. From
2002 to 2004, she served as Chief Financial officer and Corporate Secretary of
Radian Communication Services Corporation. Since the mid-1980s, Ms. Welsh has
held a number of other senior financial positions, including as CFO for
Simvest Solutions, The Second Cup, and Canada Bread. She began her business
career as a senior accountant with KPMG, subsequently holding a number of
management positions at Holt Rinehart & Winston of Canada Limited and then
Controller at Innopac Inc. Ms. Welsh earned her CA designation in 1982 and in
2008 became an Institute Certified Director of the Institute of Corporate
Directors. She has served as a Director or Trustee for a number of
organizations. Ms. Welsh holds a B. Comm. (Honours - Gold Medalist) from
Queen's University.
    Mr. Innes currently is a Director of General Nutrition Centers Inc. and
an advisor to J.C. Clark Ltd., an investment management company. From 1997 to
2007, Mr. Inness was President and Chief Executive Officer of Arbor Memorial
Services Inc., a TSX-listed company operating cemeteries, crematoria, and
funeral homes across Canada. Mr. Innes' lengthy and broad business career
includes serving as President of the Frozen Products and Industrial divisions
of Ault Foods, and other senior roles as Catelli, Nabisco Brands Limited,
Playtex Limited, Canadian Marketing Associates, and Proctor & Gamble, where he
began his career. He holds an Honours Business Administration degree from the
University of Western Ontario.

    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
    (unaudited)
    -------------------------------------------------------------------------
                                                                       As at
                                        As at November 30          August 31
                                            2008          2007          2008
    -------------------------------------------------------------------------
    Assets
      Cash and short-term deposits    $7,581,578    $7,036,857    $8,007,963
      Accounts receivable              2,003,430     3,595,019     3,029,381
      Income taxes receivable          1,237,197       733,453     1,080,959
      Prepaid expenses                   133,627       198,135       181,222
    -------------------------------------------------------------------------
                                      10,955,832    11,563,464    12,299,525

      Marketable securities            7,523,578    12,538,604    10,909,603
      Loans receivable, net              437,992       248,064       418,978
      Property and equipment           1,827,971     2,149,483     1,859,562
      Future income taxes                340,000        24,041       340,000
    -------------------------------------------------------------------------
                                     $21,085,373   $26,523,656   $25,827,668
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
      Accounts payable and accrued
       liabilities                    $3,538,809    $2,652,304    $4,637,343
      Deferred revenue                   282,243       297,253       256,409
      Current portion of incentive
       accrual                           530,250             0       530,250
    -------------------------------------------------------------------------
                                       4,351,302     2,949,557     5,424,002

    Long-term incentive accruals       1,837,892     1,469,712     1,599,266

    Future income taxes                  339,928       371,543       339,928

    Shareholders' equity
      Capital stock                   19,590,338    20,582,979    19,603,150
      Contributed surplus                511,160       204,804       488,693
      (Defecit) retained earnings     (1,597,927)      851,649    (1,066,076)
      Accumulated other
       comprehensive (loss) income    (3,947,320)       93,412      (561,295)
    -------------------------------------------------------------------------
                                      14,556,251    21,732,844    18,464,472
    -------------------------------------------------------------------------
                                     $21,085,373   $26,523,656   $25,827,668
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENT OF EARNINGS
    (unaudited)
    -------------------------------------------------------------------------
                                                      Three months ended
                                                          November 30
                                                          2008          2007
    -------------------------------------------------------------------------
    Operating revenue                               $4,136,202    $4,552,685

    Expenses
      Employee compensation, general and
       administration                                5,007,799     4,282,059
      Amortization                                      81,712        89,625
    -------------------------------------------------------------------------
                                                     5,089,511     4,371,684
    -------------------------------------------------------------------------
    (Loss) income before the following:               (953,309)      181,001

    Investment income                                   95,871        64,385
    -------------------------------------------------------------------------
    Net (loss) income before tax                      (857,438)      245,386

    (Recovery of) provision for income taxes          (325,586)       84,963
    -------------------------------------------------------------------------
    Net (loss) earnings for the period               ($531,852)     $160,423
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Earnings per share                                 ($0.032)       $0.009
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF
    COMPREHENSIVE INCOME
    (unaudited)
    -------------------------------------------------------------------------
                                                      Three months ended
                                                          November 30
                                                          2008          2007
    -------------------------------------------------------------------------
    Net (loss) earnings for the period               ($531,852)     $160,423

    Other comprehensive income:
      Unrealized loss on marketable securities
       (net of tax)                                 (3,386,025)     (248,451)
    -------------------------------------------------------------------------
    Comprehensive loss                             ($3,917,877)     ($88,028)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
    ACCUMULATED OTHER COMPREHENSIVE INCOME
    (unaudited)
    -------------------------------------------------------------------------
                                                      Three months ended
                                                          November 30
                                                          2008          2007
    -------------------------------------------------------------------------

    Shareholders' equity - beginning of period     $18,464,472   $21,832,880

    Net (loss) earnings for the period                (531,852)      160,423
    Issuance of stock options                           17,093             0
    Cancellation of Class A shares                      (7,437)      (12,691)
    Dividends on Class A and Class B shares                  0      (341,180)
    Other comprehensive (loss) income               (3,386,025)       93,412
    -------------------------------------------------------------------------

    Shareholders' equity - end of period           $14,556,251   $21,732,844
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    Accumulated other comprehensive (loss)
     income - beginning of period                    ($561,295)           $0

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

    Unrealized loss on marketable securities
     (net of tax)                                   (3,386,025)     (248,451)
    -------------------------------------------------------------------------

    Accumulated other comprehensive (loss)
     income - end of period                        ($3,947,320)      $93,412
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENT OF CASH FLOWS
    (unaudited)
    -------------------------------------------------------------------------
                                                      Three months ended
                                                          November 30
                                                          2008          2007
    -------------------------------------------------------------------------
    Operating Activities
      Net (loss) earnings for the period             ($531,852)     $160,423
      Items not affecting cash
        Amortization                                    81,712        89,625
        Loss on sale of investments                          0        73,616
        Issuance of stock options                       17,093             0
        Non-cash incentive compensation                238,626       132,564
    -------------------------------------------------------------------------
                                                      (194,421)      456,228

    Net increase in working capital balances
     related to operations                            (174,407)      (93,084)
    -------------------------------------------------------------------------
                                                      (368,828)      363,144
    -------------------------------------------------------------------------

    Investment Activities
      Proceeds on sale of marketable securities              0     1,236,427
      Additions to property and equipment              (50,120)      (48,135)
    -------------------------------------------------------------------------
                                                       (50,120)    1,188,292
    -------------------------------------------------------------------------

    Financing Activities
      Dividends on Class A and Class B Shares                0      (341,180)
      Cancellation of Class A Shares                    (7,437)      (12,691)
    -------------------------------------------------------------------------
                                                        (7,437)     (353,871)
    -------------------------------------------------------------------------

    Net (decrease) increase in cash and cash
     equivalents during the period                    (426,385)    1,197,565
    Cash and cash equivalents, beginning of period   8,007,963     5,839,292
    -------------------------------------------------------------------------
    Cash and cash equivalents, end of period        $7,581,578    $7,036,857
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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