The Caldwell Partners Issues Fiscal 2009 Second-Quarter Financial Results



    
    -   Results reflect initial revenue from expansion into the United States
        in February 2009
    -   Operating revenue affected somewhat by recessionary environment
    -   Company plans to build on organization strength and use financial
        resources to continue investing for future growth in the United
        States and Canada
    

    TORONTO, April 7 /CNW/ - Retained executive search firm The Caldwell
Partners International Inc. (TSX: CWL.A) today issued its financial results
for the fiscal 2009 second quarter ended February 28, 2009. 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  Six Months   Six Months
                              Ended        Ended        Ended        Ended
                            February     February     February     February
                            28, 2009     29, 2008     28, 2009     29, 2008
    -------------------------------------------------------------------------
    Operating revenue      $3,311,794   $3,493,290   $7,447,996   $8,045,973
    -------------------------------------------------------------------------
    Expenses                3,785,502    4,150,885    8,875,013    8,522,568
    -------------------------------------------------------------------------
    Operating (loss)
     income                  (473,708)    (657,595)  (1,427,017)    (476,595)
    -------------------------------------------------------------------------
    Investment income          48,091      624,144      143,962      688,530
    -------------------------------------------------------------------------
    Net (loss) earnings     ($286,241)    $211,912    ($818,093)    $372,335
    -------------------------------------------------------------------------
    (Loss) earnings
     per share             (1.7 cents)   1.2 cents   (5.0 cents)   2.2 cents
    -------------------------------------------------------------------------
    

    In February 2009, The Caldwell Partners expanded its operations into the
United States, adding partners in Los Angeles, San Francisco, New York City,
and Chicago, and opened offices in San Francisco and Los Angeles. In the final
weeks of the second quarter, the new U.S. operations booked their first
operating revenues, however, these were not sufficient to offset a decline in
business in Canada where the company's offices were impacted by the
accelerating downturn in the economy.
    The result was a 5.2 percent decrease in second-quarter 2009 operating
revenue compared with the 2008 period. First-half 2009 revenue also reflected
the effects of the economic downturn, declining 7.4 percent. While the number
of search assignments in Canada has declined in the first half of the year,
the average fee revenues per engagement have increased. Revenues for Interim
Executive fulfillments also significantly increased in the 2009 second quarter
and first six months compared with the respective 2008 periods.
    The lower revenue in the 2009 second quarter and first half compared with
the prior-year periods as well as higher direct costs attributable in part to
the increased compensation costs of an improved plan designed to better
attract and retain partners contributed to reduced gross operating profit
before general and administrative expenses. In the 2009 second quarter, gross
operating profit decreased 33.7 percent to $568,000, or a gross margin of 17.2
percent, compared with $858,000, or a gross margin of 24.6 percent in the 2008
period; first-half 2009 gross operating profit decreased 51.3 percent to
$1,079,000, a gross margin of 14.5 percent, compared with $2,217,000 or a
gross margin of 27.6 percent in the 2008 period.
    Total employee compensation, and general and administrative expenses
before amortization decreased 8.9 percent to $3,697,136 in the 2009 second
quarter from $4,059,645 in the 2008 period; in the first half of 2009, these
expenses were 8,704,935, up 4.4 percent from 8,341,703 in the 2008 period. The
lower 2009 second-quarter expenses are entirely attributable to reduced legal
costs as well as recoveries amounting to $352,000 from the company's insurer
of costs incurred for the now-settled litigation. Compensation costs rose in
the second quarter and first six months of 2009 compared with the 2008 periods
because of the addition of John N. Wallace as President and Chief Executive
Officer; accruals for management bonuses, whereas there were none in the 2008
periods; and the recruitment and initial compensation of new partners in the
United States.
    For the 2009 second quarter and first half, the company had an operating
loss of $473,708 and $1,427,017, respectively; in the 2008 periods, the
company reported operating losses of $657,595 and $476,595 in the comparable
2008 periods.
    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 $48,091 in the 2009 second quarter and $143,962 in
the first half the year. In 2008, investment income amounted to $624,144 for
the second quarter and $688,530 in the first six months. In the 2008 second
quarter, the company had recorded investment income of $568,000 that had been
earned in 2007 (according to the issuance of tax receipts) by the
professionally managed funds used for a portion of its investment portfolio.
Subsequently, it was concluded that, given the nature of these managed funds,
recognition of this income was not appropriate under the new accounting
standards for financial instruments and the amount was reversed in the 2008
fourth quarter. Reflecting the dramatic decline in stock markets, the market
value of the company's investments declined to $7,184,314 ($11,539,489 at the
end of the 2008 second quarter), being $4,287,000 below book cost. This
unrealized loss is reflected in the Consolidated Statements of Comprehensive
Income and in the Balance Sheet's stated value of marketable securities at
February 28, 2009.
    Total cash, short-term deposits, and marketable securities were
$11,821,237, down from $18,917,566 at August 31, 2008. The decline is due to
the recognition of the unrealized loss on marketable securities, reduced
accounts payable mostly as the result of the payment of partner commissions
subsequent to the 2008 year-end, and the net loss experienced by the company
in the first half of 2009.
    After recording a recovery for income taxes ($139,376), the company had a
net loss of $286,241 ($0.017 per share), compared with net income in the 2008
period of $211,912 ($0.012 per share), which included a recovery for income
taxes of $245,363. For the first half of 2009, the net loss after a recovery
for income taxes of $464,962 was $818,093 ($0.050 per share), compared with
net income in the first six months of 2008 of $372,335 ($0.022 per share),
including a recovery of income taxes of $160,400.

    Outlook

    "During the second quarter, we executed on our plan to expand into the
U.S. market and this initiative immediately began to generate new business for
The Caldwell Partners," said John N. Wallace, President and Chief Executive
Officer. "We expect that these new partners will continue generating new
opportunities and growth for our company. We will be adding additional
partners and offices in the U.S. over time as we identify individuals and
locations that we believe can contribute positively to our business. As we
carry out our strategic growth plans, the required investments will put
short-term pressure on our profitability, but we expect that they will
generate future increased value for our shareholders.
    "Our Partners have been working in a challenging economic climate since
the start of our fiscal year in September, but we have managed to achieve
consistent new business bookings on a year-over-year basis. However, activity
has slowed in recent months as we anticipated would be the result of the
recessionary economic environment. We remain cautious about the outlook for
revenues and profitability during the balance of 2009, particularly in light
of the fact that bookings in the last half of our 2008 year surpassed the
first six months. We are fortunate that we can both manage our current
business and make investments for our future based on our very solid,
debt-free financial position, as well as the strength of our organization of
experienced partners in our Canadian operations and those that we have been
adding in the United States," Mr. Wallace said.

    About The Caldwell Partners

    Retained executive search firm The Caldwell Partners International Inc.,
founded in 1970, serves clients across Canada and internationally with offices
in Vancouver, San Francisco, Los Angeles, Calgary, Toronto, and Montreal. 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        As at
                                       February 28  February 29   August 31
                                           2009         2008         2008
    -------------------------------------------------------------------------
    Assets
    Current Assets
      Cash and cash equivalents         $4,636,924   $7,131,338   $8,007,963
      Accounts receivable                2,417,293    3,150,922    3,029,381
      Income taxes receivable            1,396,546    1,076,284    1,080,959
      Prepaid expenses                     292,733      202,604      181,222
    -------------------------------------------------------------------------
                                         8,743,496   11,561,148   12,299,525

      Marketable securities              7,184,314   11,539,489   10,909,603
      Loans receivable, net                559,184      391,990      418,978
      Property and equipment             1,883,840    2,079,222    1,859,562
      Future income taxes                  340,000      199,808      340,000
    -------------------------------------------------------------------------
                                       $18,710,834  $25,771,657  $25,827,668
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
    Current Liabilities
      Accounts payable and accrued
       liabilities                      $2,228,650   $2,700,433   $4,637,343
      Deferred revenue                     190,047      439,098      256,409
      Current portion of incentive
       accrual                             530,250            0      530,250
    -------------------------------------------------------------------------
                                         2,948,947    3,139,531    5,424,002

    Long-term incentive accrual          1,470,702    1,652,264    1,599,266

    Future income taxes                    339,928      351,416      339,928

    Shareholders' equity
      Capital stock                     16,064,076   20,497,167   19,603,150
      Contributed surplus                4,057,933      204,803      488,693
      (Deficit) retained earnings       (1,884,168)     722,451   (1,066,076)
      Accumulated other
       comprehensive loss               (4,286,584)    (795,975)    (561,295)
    -------------------------------------------------------------------------
                                        13,951,257   20,628,446   18,464,472
    -------------------------------------------------------------------------

                                       $18,710,834  $25,771,657  $25,827,668
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENT OF EARNINGS (LOSS)
    (unaudited)
    -------------------------------------------------------------------------
                             Three months ended          Six months ended
                          February 28  February 29  February 28  February 29
                              2009         2008         2009         2008
    -------------------------------------------------------------------------

    Operating revenue      $3,311,794   $3,493,290   $7,447,996   $8,045,973

    Expenses
      Employee compensation,
       general and
       administration      $3,697,136    4,059,645    8,704,935    8,341,703
      Amortization             88,366       91,240      170,078      180,865
    -------------------------------------------------------------------------
                            3,785,502    4,150,885    8,875,013    8,522,568
    -------------------------------------------------------------------------
    (Loss) earnings before
     the following           (473,708)    (657,595)  (1,427,017)    (476,595)

    Investment income,
     net                       48,091      624,144      143,962      688,530
    -------------------------------------------------------------------------
    Net (loss) earnings
     before tax              (425,617)     (33,451)  (1,283,055)     211,935

    Recovery of
     income taxes            (139,376)    (245,363)    (464,962)    (160,400)
    -------------------------------------------------------------------------

    Net (loss) earnings
     for the period         ($286,241)    $211,912    ($818,093)    $372,335
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (Loss) earnings
     per share                ($0.017)      $0.012      ($0.050)      $0.022
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    CONSOLIDATED STATEMENTS OF
    COMPREHENSIVE INCOME
    (unaudited)
    -------------------------------------------------------------------------
                             Three months ended          Six months ended
                          February 28  February 29  February 28  February 29
                              2009         2008         2009         2008
    -------------------------------------------------------------------------

    Net (loss) earnings
     for the period         ($286,241)    $211,912    ($818,093)    $372,335

    Other comprehensive
     income:
    Unrealized loss on
     marketable securities   (339,264)    (889,387)  (3,725,289)  (1,137,839)
    -------------------------------------------------------------------------
    Comprehensive loss      ($625,505)   ($677,475) ($4,543,382)   ($765,504)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY AND
    ACCUMULATED OTHER COMPREHENSIVE INCOME
    (unaudited)
    -------------------------------------------------------------------------
                             Three months ended          Six months ended
                          February 28  February 29  February 28  February 29
                              2009         2008         2009         2008
    -------------------------------------------------------------------------

    Shareholders' equity
     - beginning of
     period               $14,556,251  $21,732,842  $18,464,472  $22,174,743

    Net (loss) earnings
     for the period          (286,241)     211,912     (818,093)     372,335
    Issuance of
     stock options             20,511            0       37,604            0
    Repurchase of
     Class A shares                 0      (85,802)      (7,437)     (98,493)
    Dividends on Class A
     and Class B shares             0     (341,119)           0     (682,300)
    Other comprehensive
     loss                    (339,264)    (889,387)  (3,725,289)  (1,137,839)
    -------------------------------------------------------------------------

    Shareholders' equity
     - end of period      $13,951,257  $20,628,446  $13,951,257  $20,628,446
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive income
     - beginning
     of period            ($3,947,320)     $93,412    ($561,295)          $0

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

    Change in unrealized
     gains and losses on
     available-for-sale
     marketable securities   (339,264)    (889,387)  (3,725,289)  (1,137,839)
    -------------------------------------------------------------------------

    Accumulated other
     comprehensive income -
     end of period        ($4,286,584)   ($795,975) ($4,286,584)   ($795,975)
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    THE CALDWELL PARTNERS INTERNATIONAL INC.

    CONSOLIDATED STATEMENT OF CASH FLOWS
    (unaudited)
    -------------------------------------------------------------------------
                             Three months ended          Six months ended
                          February 28  February 29  February 28  February 29
                              2009         2008         2009         2008
    -------------------------------------------------------------------------
    Operating Activities
      Net (loss) earnings
       for the period       ($286,241)    $211,912    ($818,093)    $372,335
      Items not affecting
       cash
        Amortization           88,366       91,240      170,078      180,865
        Loss on sale of
         marketable
         securities                 0       67,330            0      136,275
        Other realized
         losses on
         investments                0     (567,976)           0     (567,976)
        Issuance of
         stock options         20,511            0       37,604            0
        (Decrease) increase
         in non-cash
         incentive
         compensation        (367,190)     182,551     (128,564)     315,116
    -------------------------------------------------------------------------
                             (544,554)     (14,943)    (738,975)     436,615

    Net (decrease) increase
     in working capital
     balances related
     to operations         (2,255,865)     142,844   (2,430,271)      49,760
    -------------------------------------------------------------------------
                           (2,800,419)     127,901   (3,169,246)     486,375
    -------------------------------------------------------------------------

    Investment Activities
      Proceeds on sale of
       marketable securities        0      414,480            0    1,655,578
      Additions to property
       and equipment         (144,235)     (20,979)    (194,356)     (69,114)
    -------------------------------------------------------------------------
                             (144,235)     393,501     (194,356)   1,586,464
    -------------------------------------------------------------------------

    Financing Activities
      Dividends paid                0     (341,119)           0     (682,300)
      Repurchase of
       Class A Shares               0      (85,802)      (7,437)     (98,493)
    -------------------------------------------------------------------------
                                    0     (426,921)      (7,437)    (780,793)
    -------------------------------------------------------------------------

    Net (decrease) increase
     in cash and cash
     equivalents during
     the period            (2,944,654)      94,481    (3,371,039)  1,292,046
    Cash and cash
     equivalents,
     beginning of
     period                 7,581,578    7,036,857     8,007,963   5,839,292
    -------------------------------------------------------------------------
    Cash and cash
     equivalents, end
     of period             $4,636,924   $7,131,338    $4,636,924  $7,131,338
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    %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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