CTPARTNERS EXECUTIVE SEARCH INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands, except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
December 31, 2013
|
Assets
|
|
|
|
Current Assets
|
|
|
|
Cash
|
$
|
6,620
|
|
|
$
|
5,654
|
|
Accounts receivable, net
|
38,271
|
|
|
26,381
|
|
Other receivables
|
413
|
|
|
433
|
|
Prepaid expenses
|
3,796
|
|
|
3,974
|
|
Deferred income taxes
|
3,547
|
|
|
3,184
|
|
Other
|
3,641
|
|
|
4,411
|
|
Total current assets
|
56,288
|
|
|
44,037
|
|
Non-current assets
|
|
|
|
Leasehold improvements and equipment, net
|
4,969
|
|
|
4,149
|
|
Goodwill
|
10,317
|
|
|
5,811
|
|
Intangibles, net
|
4,179
|
|
|
3,746
|
|
Other assets
|
5,508
|
|
|
5,517
|
|
Deferred income taxes
|
6,107
|
|
|
5,482
|
|
|
$
|
87,368
|
|
|
$
|
68,742
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
Current Liabilities
|
|
|
|
Current portion of long-term debt
|
$
|
3,143
|
|
|
$
|
4,762
|
|
Line of credit
|
12,168
|
|
|
—
|
|
Accounts payable
|
3,557
|
|
|
3,813
|
|
Accrued compensation
|
28,879
|
|
|
25,201
|
|
Accrued business taxes
|
2,136
|
|
|
2,079
|
|
Income taxes payable
|
2,750
|
|
|
710
|
|
Accrued expenses
|
3,047
|
|
|
5,571
|
|
Total current liabilities
|
55,680
|
|
|
42,136
|
|
Long-Term Liabilities
|
|
|
|
Long-term debt, less current maturities
|
2,799
|
|
|
1,295
|
|
Deferred rent, less current maturities
|
841
|
|
|
1,050
|
|
Total long-term liabilities
|
3,640
|
|
|
2,345
|
|
Redeemable noncontrolling interest
|
4,220
|
|
|
4,088
|
|
Stockholders’ Equity
|
|
|
|
Preferred stock: 1,000,000 shares authorized, no shares issued and outstanding
|
—
|
|
|
—
|
|
Common stock: $0.001 par value, 15,000,000 shares authorized, 7,680,635 and 7,540,821
shares issued; 7,247,777 and 7,110,292 shares outstanding at June 30, 2014 and December 31, 2013, respectively
|
8
|
|
|
8
|
|
Additional paid-in capital
|
38,075
|
|
|
37,778
|
|
Accumulated deficit
|
(10,980
|
)
|
|
(14,242
|
)
|
Accumulated other comprehensive loss, net of tax
|
(1,136
|
)
|
|
(1,275
|
)
|
Treasury stock at cost 432,858 shares at June 30, 2014 and 430,529 at December 31, 2013.
|
(2,139
|
)
|
|
(2,096
|
)
|
Total stockholders' equity
|
23,828
|
|
|
20,173
|
|
|
$
|
87,368
|
|
|
$
|
68,742
|
|
See Notes to Consolidated Financial Statements.
CTPARTNERS EXECUTIVE SEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands except share and per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Revenue
|
|
|
|
|
|
|
|
Net revenue
|
$
|
45,113
|
|
|
$
|
34,223
|
|
|
$
|
84,983
|
|
|
$
|
63,406
|
|
Reimbursable expenses
|
1,256
|
|
|
1,142
|
|
|
2,344
|
|
|
1,942
|
|
Total revenue
|
46,369
|
|
|
35,365
|
|
|
87,327
|
|
|
65,348
|
|
Operating expenses
|
|
|
|
|
|
|
|
Compensation and benefits
|
32,832
|
|
|
26,240
|
|
|
62,252
|
|
|
50,307
|
|
General and administrative
|
8,421
|
|
|
8,349
|
|
|
17,032
|
|
|
16,630
|
|
Reimbursable expenses
|
1,428
|
|
|
1,255
|
|
|
2,637
|
|
|
2,092
|
|
Total operating expenses
|
42,681
|
|
|
35,844
|
|
|
81,921
|
|
|
69,029
|
|
Operating income/(loss)
|
3,688
|
|
|
(479
|
)
|
|
5,406
|
|
|
(3,681
|
)
|
Interest expense, net
|
(79
|
)
|
|
(65
|
)
|
|
(128
|
)
|
|
(119
|
)
|
Income/(loss) before income taxes
|
3,609
|
|
|
(544
|
)
|
|
5,278
|
|
|
(3,800
|
)
|
Income tax (expense)/benefit
|
(1,391
|
)
|
|
220
|
|
|
(2,032
|
)
|
|
1,443
|
|
Net income/(loss)
|
2,218
|
|
|
(324
|
)
|
|
3,246
|
|
|
(2,357
|
)
|
Net (income)/loss attributable to redeemable noncontrolling interest
|
(116
|
)
|
|
(58
|
)
|
|
16
|
|
|
(58
|
)
|
Net income/(loss) attributable to the Company
|
$
|
2,102
|
|
|
$
|
(382
|
)
|
|
$
|
3,262
|
|
|
$
|
(2,415
|
)
|
|
|
|
|
|
|
|
|
Basic income/(loss) per common share
|
$
|
0.29
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.46
|
|
|
$
|
(0.34
|
)
|
Diluted income/(loss) per common share
|
$
|
0.27
|
|
|
$
|
(0.05
|
)
|
|
$
|
0.43
|
|
|
$
|
(0.34
|
)
|
Basic weighted average common shares
|
7,197,341
|
|
|
7,035,919
|
|
|
7,168,072
|
|
|
7,027,120
|
|
Diluted weighted average common shares
|
7,659,910
|
|
|
7,035,919
|
|
|
7,659,957
|
|
|
7,027,120
|
|
See Notes to Condensed Consolidated Financial Statements.
CTPARTNERS EXECUTIVE SEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(In Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six months ended
June 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
Net income/(loss)
|
$
|
2,218
|
|
|
$
|
(324
|
)
|
|
$
|
3,246
|
|
|
$
|
(2,357
|
)
|
Other comprehensive income/(loss), net of tax
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
53
|
|
|
(79
|
)
|
|
139
|
|
|
(11
|
)
|
Comprehensive income/(loss)
|
2,271
|
|
|
(403
|
)
|
|
3,385
|
|
|
(2,368
|
)
|
Comprehensive loss attributable to redeemable noncontrolling interest
|
(116
|
)
|
|
(58
|
)
|
|
16
|
|
|
(58
|
)
|
Comprehensive income/(loss) attributable to the Company
|
$
|
2,155
|
|
|
$
|
(461
|
)
|
|
$
|
3,401
|
|
|
$
|
(2,426
|
)
|
See Notes to Condensed Consolidated Financial Statements.
CTPARTNERS EXECUTIVE SEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30
|
|
2014
|
|
2013
|
Cash Flows From Operating Activities
|
|
|
|
Net income/(loss)
|
$
|
3,246
|
|
|
$
|
(2,357
|
)
|
Adjustments to reconcile net income/(loss) to net cash used in operating activities
|
|
|
|
Depreciation and amortization
|
1,174
|
|
|
846
|
|
Reorganization charges
|
—
|
|
|
33
|
|
Share-based compensation
|
313
|
|
|
377
|
|
Amortization of discount on seller notes
|
9
|
|
|
61
|
|
Amortization of post-combination compensation
|
—
|
|
|
1,878
|
|
Deferred income taxes
|
(971
|
)
|
|
(522
|
)
|
Changes in operating assets and liabilities, net of effect of acquired businesses:
|
|
|
|
Accounts receivable, net
|
(11,211
|
)
|
|
(5,938
|
)
|
Prepaid expenses
|
687
|
|
|
208
|
|
Income taxes receivable
|
—
|
|
|
(1,555
|
)
|
Other assets and receivables
|
314
|
|
|
(1,375
|
)
|
Accounts payable
|
(736
|
)
|
|
470
|
|
Accrued compensation
|
3,561
|
|
|
(2,771
|
)
|
Accrued business taxes
|
33
|
|
|
148
|
|
Income taxes payable
|
2,049
|
|
|
(395
|
)
|
Accrued expenses
|
(2,580
|
)
|
|
(191
|
)
|
Deferred rent
|
(173
|
)
|
|
(216
|
)
|
Net cash used in operating activities
|
(4,285
|
)
|
|
(11,299
|
)
|
Cash Flows From Investing Activities
|
|
|
|
Acquisition of businesses
|
(2,712
|
)
|
|
(833
|
)
|
Purchase of leasehold improvements and equipment
|
(1,182
|
)
|
|
(242
|
)
|
Notes receivable issued
|
(1,051
|
)
|
|
—
|
|
Repayment of notes receivable
|
1,000
|
|
|
—
|
|
Net cash used in investing activities
|
(3,945
|
)
|
|
(1,075
|
)
|
Cash Flows From Financing Activities
|
|
|
|
Principal payments on long-term debt
|
(2,779
|
)
|
|
(2,704
|
)
|
Net proceeds from line of credit
|
12,168
|
|
|
4,568
|
|
Net cash provided by financing activities
|
9,389
|
|
|
1,864
|
|
Net (increase)/decrease in cash
|
1,159
|
|
|
(10,510
|
)
|
Effect of foreign currency on cash
|
(193
|
)
|
|
253
|
|
Cash:
|
|
|
|
Beginning
|
5,654
|
|
|
15,947
|
|
Ending
|
$
|
6,620
|
|
|
$
|
5,690
|
|
CTPARTNERS EXECUTIVE SEARCH INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
(In thousands)
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30
|
|
2014
|
|
2013
|
Supplemental Disclosure of Non-Cash Investing Activities
|
|
|
|
Acquisition of businesses
|
|
|
|
Total identifiable assets acquired and liabilities assumed
|
$
|
1,106
|
|
|
$
|
2,717
|
|
Goodwill
|
4,129
|
|
|
5,122
|
|
Deferred post-combination compensation
|
—
|
|
|
—
|
|
Aggregate purchase price per purchase agreement
|
$
|
5,235
|
|
|
$
|
7,839
|
|
Seller note
|
(2,523
|
)
|
|
(2,490
|
)
|
Redeemable noncontrolling interest
|
—
|
|
|
(3,849
|
)
|
Cash paid for acquisition of businesses
|
$
|
2,712
|
|
|
$
|
1,500
|
|
Less cash acquired
|
—
|
|
|
(667
|
)
|
Cash paid for acquisition of a business net of cash acquired
|
$
|
2,712
|
|
|
$
|
833
|
|
|
|
|
|
Forgiveness of notes receivable
|
$
|
117
|
|
|
—
|
|
|
|
|
|
Supplemental Disclosure of Non-Cash Financing Activities
|
|
|
|
Seller financing of fixed asset additions
|
$
|
—
|
|
|
(518
|
)
|
Employee discount stock purchase award in lieu of cash compensation
|
—
|
|
|
275
|
|
See Notes to Condensed Consolidated Financial Statements.
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
Note 1. Basis of Presentation
Description of Business -
CTPartners Executive Search Inc., along with its subsidiaries (collectively, “CTPartners” or the “Company”), is a retained executive search firm with global capabilities. The Company operates in North America, Europe and the Middle East (EMEA), Asia Pacific and Latin America. The Company is subject to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”), and the relevant provisions of the Securities Acts of 1933, as amended, and the Securities Exchange Act of 1934, as amended. The Company’s common stock trades on the NYSE MKT exchange under the symbol “CTP.”
Principles of Consolidation
-
The accompanying unaudited condensed consolidated financial statements include the accounts of CTPartners Executive Search Inc., together with its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information, and with the instructions to Form10-Q and the requirements of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014, are not necessarily indicative of the results that may be expected for the year ended December 31, 2014.
The condensed consolidated balance sheet, at December 31, 2013, has been derived from the audited financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements.
The interim financial statements contained in this report should be read in conjunction with the audited consolidated financial statements and footnotes presented in the Company’s Form 10-K for the year ended December 31, 2013, filed with the SEC on March 12, 2014.
Goodwill
-
Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed, if any. The goodwill impairment test compares the fair value of a reporting unit with its carrying amount, including goodwill. If the carrying amount of a reporting unit exceeds its fair value, goodwill of the reporting unit would be considered impaired. To measure the amount of the impairment loss, the implied fair value of a reporting unit’s goodwill is compared to the carrying amount of that goodwill. If the carrying amount of a reporting unit’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is indicated. For this test, the fair value of the Company’s relevant reporting unit is determined using a combination of valuation techniques, including a discounted cash flow methodology. The Company performs an impairment test annually, in the fourth quarter of the fiscal year. As of June 30, 2014, there were no indicators of impairment with respect to the Company’s goodwill.
Intangible Assets
-
Intangible assets primarily consist of customer relationships and developed technology and are recorded at their estimated fair value at the date of acquisition and are amortized using the straight-line method over their estimated useful lives. For intangible assets not subject to amortization, an impairment loss is recognized if the carrying amount of the intangible assets is not recoverable and exceeds fair value. The carrying amount of the intangible assets is considered not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from use of the asset. As of June 30, 2014, there were no indicators of impairment with respect to the Company’s intangible assets.
Redeemable Noncontrolling Interest -
On May 2, 2013, the Company acquired a
51%
controlling ownership interest in Augmentum. The Company has the right to call the remaining
49%
interest, and Augmentum shareholders have the right to put the remaining
49%
interest for a limited amount of time after the first anniversary of acquisition, at a pre-determined price, adjustable based on certain revenue targets. The "put" option expires on September 12, 2014, if not exercised, and the call option continues to exist indefinitely. The put option requires the noncontrolling interest to be classified as redeemable, recorded in the mezzanine equity on the Company's consolidated balance sheet, and measured at the greater of estimated redemption value, which approximates fair value, at the end of each reporting period or the historic cost basis. The resulting increases or decreases in the estimated redemption amount are affected by corresponding charges or credits against retained earnings, or in the absence of retained earnings, additional paid in capital. If the put option becomes no longer exercisable, the redeemable noncontrolling interest will be reclassified to noncontrolling interest and included in the permanent equity on the Company's consolidated balance sheet.
Other Comprehensive Loss
-
Other comprehensive loss primarily consists of foreign currency translation gains and losses, net of income tax effects.
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
The components of accumulated other comprehensive loss, net of tax, are as follows:
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
December 31,
2013
|
Foreign currency translation adjustments
|
$
|
(949
|
)
|
|
$
|
(1,088
|
)
|
Other
|
(187
|
)
|
|
(187
|
)
|
|
$
|
(1,136
|
)
|
|
$
|
(1,275
|
)
|
Fair Value
-
The Company measures the fair values of its financial instruments in accordance with accounting guidance that defines fair value, provides guidance for measuring fair value and requires certain disclosures. The guidance also discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
|
|
•
|
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
|
|
|
•
|
Level 2: Inputs other than quoted prices which are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
|
|
•
|
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
|
The inputs used in the fair value measurement should be from the highest level available. In instances where the measurement is based on inputs from different levels of the fair value hierarchy, the fair value measurement will fall within the lowest level input that is significant to the fair value measurement in its entirety.
Foreign Currency Translation - Venezuela -
The Company has a subsidiary in Venezuela. The economy in Venezuela has had significant inflation in the last several years. At the time of the acquisition, the Venezuelan economy was designated as highly inflationary, and is accounted for pursuant to accounting guidance for highly inflationary economies. Therefore, the U.S. dollar is designated to be the functional currency of our Venezuelan operations, and any gain or loss resulting from foreign currency translation is reflected in the general and administrative expenses in Company's results of operations.
The Venezuelan government has maintained currency controls and a fixed official exchange rate since February 2003. In June 2010, The Venezuelan Central Bank began operating the Transaction System for Foreign Currency Denominated Securities (SITME), which established a "banded" exchange rate of
5.3
bolivars to the U.S. dollar. In 2011, CADIVI, Commission for the Administration of Currency Exchange, established an official exchange rate of
4.30
bolivars to U.S. dollar, which was available in parallel with SITME rate. In February 2013, the Venezuelan government set a new official exchange rate of
6.3
bolivars to the U.S. dollar ("Official Rate") and abolished SITME rate. In March 2013, the Venezuelan government created the Complimentary System of Foreign Currency Acquirement ("SICAD 1"). SICAD 1 is an auction system and allows entities in specific sectors to bid for U.S. dollars.
As of June 30, 2014 SICAD rate was
10.6
bolivars to the U.S. dollar. On February 19, 2014, the Venezuelan government announced plans for another currency exchange mechanism, referred to as “SICAD 2,” which allows authorized foreign exchange operators, such as regulated banks and capital market brokers, to act as intermediaries in the sale of acquisitions of foreign currency. Once regulated, this may facilitate easier access to foreign currency. The SICAD 2 rate is intended to more closely resemble a market-driven exchange rate compared to the rates provided by Venezuela’s other regulated exchange mechanisms. SICAD 2 became effective on March 24, 2014 and the approximate SICAD 2 rate as of June 30, 2014 was
50
bolivars to the U.S. dollar.
As of June 30, 2014, there were three legal exchange mechanisms administered by the Venezuelan government, each with a different exchange rate. The recent introduction of the variable SICAD 1 an SICAD 2 mechanisms requires reporting entities to exercise considerable judgment to determine which rate to utilize to remeasure their bolivar denominated monetary assets and liabilities, and to record revenue and expenses. The Company believes that there is significant uncertainty pertaining to the nature of transactions that flow through SICAD 1 auction and how SICAD 1 will operate in the future. The number of SICAD 2 auctions held to date is very limited, and the Company does not intend to utilize SICAD 2 at the prevailing exchange rates. The Company believes that the official rate of
6.3
bolivars to the U.S. dollar remains legally available to us, and therefore continued to measure its bolivar denominated assets, liabilities and associated transactions at the official rate of
6.3
. As of June 30, 2014 the Company had
$1.8 million
of bolivar denominated assets and
$0.7 million
of bolivar denominated liabilities.
Reclassifications
-
Certain items in the 2013 condensed consolidated financial statements have been reclassified to conform to the 2014 presentation.
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
Note 2. Acquisitions
Johnson Executive Search
On March 1, 2014, the Company acquired Johnson Executive Search ("Johnson"), an independent executive search and leadership advisory firm based in Sydney, Australia. The firm works with clients in the Financial Services, Legal and Professional Services, Technology and Communications, Consumer and Industrial sectors. This acquisition expands the Company's presence in Asia-Pacific region.
The Company paid
$2.3 million
in cash on the acquisition date, and recorded a seller note payable valued at
$2.5 million
, payable over
three years
from the date of acquisition, and subject to adjustment based on certain revenue targets over
three
years.
The following table summarizes the preliminary fair values of the consideration transferred, assets acquired and liabilities assumed, at acquisition date:
|
|
|
|
|
Fair value of consideration transferred:
|
|
Cash
|
$
|
2,336
|
|
Seller note payable for contingent consideration
|
2,523
|
|
Total
|
$
|
4,859
|
|
|
|
|
|
|
Recognized amounts of identifiable assets acquired and liabilities assumed
|
|
Accounts receivable
|
$
|
380
|
|
Other assets
|
53
|
|
Trade names and trademarks
|
189
|
|
Database content
|
321
|
|
Customer relationships
|
227
|
|
Property and equipment
|
187
|
|
Accounts payable and accrued expenses
|
(251
|
)
|
Total identifiable net assets
|
1,106
|
|
Goodwill
|
3,753
|
|
Total fair value of assets acquired and liabilities assumed
|
$
|
4,859
|
|
The weighted average life of total amortizable intangible assets acquired is
8
years.
The acquisition of Johnson includes a contingent consideration arrangement that allows for adjustment of payments based upon achievement of certain revenue targets over the next three years. The fair value of contingent consideration is based upon the future revenues attributable to the acquired business, and was estimated through the use of the Monte Carlo model. The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement. These fair value measurements are based on (i) an assumed revenue forecast, (ii) an assumed discount rate of
8.5%
, and (iii) assumed market volatility rate range of
10%
. The fair value of the note payable for contingent consideration recognized on the acquisition date is
$2.5 million
.
The fair value of identifiable intangible assets was measured based upon significant inputs that were not observable in the market, and therefore are classified as Level 3. The key assumptions include (i) management's projection of future cash flows based upon past experience and future expectations, and (ii) an assumed discount rate of
13.5%
.
The goodwill of
$3.8 million
is attributable to the workforce of the acquired business and the synergies expected to arise in connection with the acquisition. The goodwill relating to the Company's acquisition of Johnson is fully deductible for United States federal income tax purposes.
The Company incurred acquisition related costs of
$0.6 million
, which were recorded as general and administrative expenses in the consolidated statements of operations for the six months ended June 30, 2014.
The total revenues and net income attributable to the acquisition, since the acquisition date, included in the consolidated statements of operations for the six months ended June 30, 2014 are as follows:
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30, 2014
|
|
Six Months
Ended
June 30, 2014
|
Total Revenues
|
$
|
1,127
|
|
|
$
|
1,484
|
|
Net Income
|
$
|
(255
|
)
|
|
$
|
(202
|
)
|
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
The amounts of revenue and net income related to the acquisition that are included in our consolidated statements of operations and the pro forma financial information as if the acquisition had occurred on January 1, 2013, are presented in the following table. This pro forma information is presented for informational purposes only and is not necessarily indicative of what our actual results of operations would have been had the acquisition happened at such time.
Pro forma unaudited total revenues and net income of the combined entity had the acquisition date been January 1, 2013 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30
|
|
Six Months Ended
June 30
|
|
2014
|
|
2013
|
|
2014(1)
|
|
2013(2)
|
Total Revenues
|
$
|
46,369
|
|
|
$
|
38,990
|
|
|
$
|
88,728
|
|
|
$
|
69,811
|
|
Net Income
|
$
|
2,218
|
|
|
$
|
(997
|
)
|
|
$
|
3,944
|
|
|
$
|
(3,721
|
)
|
(1) Pro forma net income for the six months ended June 30, 2014 is adjusted to exclude
$0.6 million
of acquisition costs.
(2) Pro forma net loss for the six months ended June, 2013 is adjusted to include
$0.6 million
million of acquisition costs and
$0.1 million
of amortization costs.
Augmentum Consulting, Ltd.
On May 2, 2013, the Company acquired a
51%
controlling ownership interest in Augmentum Consulting, Ltd. ("Augmentum"), a London based search firm. This acquisition complements CTPartners' existing UK business in a variety of practice areas, provides increased competitive advantage and enhances growth opportunity.
The Company paid
$1.5 million
in cash on the acquisition date, recorded a seller note payable valued at
$2.5 million
, payable in
two
equal installments on August 31, 2014 and 2015, and a redeemable noncontrolling interest of
$3.8 million
. The aggregate maximum purchase price may be adjusted based on certain revenue targets over
three
years, not to exceed
$8.5 million
in total.
The acquisition of Augmentum includes a contingent consideration arrangement that allows for adjustment of payments based upon achievement of certain revenue targets over the next three years. The range of undiscounted amounts that the Company could pay for the contingent part of its
51%
controlling ownership interest is between
zero
and
$3.0 million
, denominated in British pounds and translated at the rate in effect at the end of reporting period.
The Company has the right to call the remaining
49%
interest in Augmentum after August 2, 2014, and Augmentum shareholders have the right to put the remaining
49%
interest after September 1, 2014 if the call option has not been exercised, at a pre-determined price, adjustable based on Augmentum's performance. The put option expires on September 12, 2014, if not exercised, and the call option continues to exist indefinitely. The purchase price for the non-controlling interest is determined based on the same formula as contingent consideration, with maximum amount payable of
$4.4 million
, denominated in British pounds and translated at the rate in effect at the end of the reporting period. As of June 30, 2014, the redemption value of non-controlling interest was
$4.2 million
.
The fair value of contingent consideration and the fair value of noncontrolling interest, including the value of the put and the call options, is contingent upon the future revenues attributable to the acquired business, and was estimated through the use of the Monte Carlo model. These fair value measurements are based on significant inputs not observable in the market and thus represent a Level 3 measurement. These fair value measurements are based on (i) an assumed revenue forecast, (ii) an assumed discount rate of
6.5%
, and (iii) assumed market volatility rate range of
10%
-
12.5%
based on the volatility data for companies similar to Augmentum. The fair value of the note payable for contingent consideration recognized on the acquisition date was
$2.5 million
and the fair value of the redeemable noncontrolling interest was
$3.8 million
.
The fair value of identifiable intangible assets was measured based upon significant inputs that were not observable in the market, and therefore are classified as Level 3. The key assumptions include (i) management's projection of future cash flows based upon past experience and future expectations, and (ii) an assumed discount rate of
18.5%
.
The goodwill of
$5.1 million
is attributable to the workforce of the acquired business and the synergies expected to arise in connection with the acquisition. The goodwill relating to the Company's acquisition of Augmentum is fully deductible for United States federal income tax purposes.
Cheverny CEO Search, S.A.
On October 10, 2012, the Company completed an acquisition of Cheverny CEO Search, S.A., a Paris, France based search firm focused on executive recruiting. The first payment of
$0.5 million
was made in cash on the acquisition date, and a non-interest bearing seller note was issued for the remainder of the purchase price. The note was payable in
two
equal installments of $
0.5 million
each on July 12, 2013 and July 12, 2014. A portion of the total purchase price was contingent upon the continued employment certain shareholders of the acquiree. Therefore, the contingent portion of the purchase price was accounted for as compensation for post-combination services, recognized over the requisite service period using the graded-vesting method.
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
During the quarter ending March 31, 2013, the Company modified the terms of the Cheverny CEO Search, S.A. acquisition agreement, terminating all employment contingencies. As a result of the amendment, the Company recognized remaining post-combination compensation and incurred a non-recurring charge of
$0.8 million
relating to Cheverny CEO Search, S.A. post-combination compensation in the first quarter of 2013. The charge is included in compensation and benefits expenses in the consolidated statement of operations for the six months ended June 30, 2013.
Latin America
Effective January 2, 2012, the Company acquired CTPartners Latin America Inc., its independently-owned licensee that had been operating under the name of CTPartners in Latin America for the prior
five years
. The aggregate purchase price in the agreement was
$10.5
million, which was paid in cash and the issuance of a non-interest bearing seller note for
$5.3
million, due in equal installments of
$2.6
million each on January 2, 2013 and January 2, 2014, respectively. A portion of the total purchase price was contingent upon the continued employment of certain key shareholders. The purchase agreement provides that the selling shareholders are required to repay to the Company up to the aggregate amount of
$7.2 million
if their employment terminates prior to the
36
-month anniversary of the closing of the transaction. Therefore, the contingent portion of the purchase price was accounted for as compensation for post-combination services, and initially recognized over
three years
using the graded-vesting method. After accounting for a portion of the purchase price as post-combination compensation, the fair value of the consideration allocation to the assets and liabilities acquired was
$3.0
million.
During the quarter ending March 31, 2013, the Company modified the terms of the Latin America acquisition agreement, terminating all employment contingencies. As a result of the amendment, the Company recognized the remaining post-combination compensation and incurred a non-recurring charge of
$1.1
million relating to Latin America post-combination compensation in the first quarter of 2013. The charge is included in compensation and benefits expenses in the consolidated statement of operations for the six months ended June 30, 2013.
Note 3. Goodwill and Intangible Assets
Goodwill
Changes in the carrying value of goodwill for the six months ended June 30, 3014 are as follows:
|
|
|
|
|
Balance as of December 31, 2013
|
$
|
5,811
|
|
Additions
|
4,129
|
|
Exchange rate fluctuation
|
377
|
|
Balance as of June 30, 2014
|
$
|
10,317
|
|
Intangible Assets
The following is a summary of intangible assets at June 30, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortizable Lives
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
Amortized Intangible assets
|
|
|
|
|
|
|
|
|
Customer relationships
|
|
10 years
|
|
$
|
3,210
|
|
|
$
|
669
|
|
|
$
|
2,541
|
|
Developed technology
|
|
10 years
|
|
1,459
|
|
|
169
|
|
|
1,290
|
|
Trade names
|
|
1 year
|
|
483
|
|
|
256
|
|
|
227
|
|
Other
|
|
3 years
|
|
87
|
|
|
34
|
|
|
53
|
|
|
|
|
|
$
|
5,239
|
|
|
$
|
1,128
|
|
|
$
|
4,111
|
|
Unamortized Intangible Assets
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
|
|
|
|
|
68
|
|
Total Intangible Assets
|
|
|
|
|
|
|
|
$
|
4,179
|
|
Total amortization expense of intangible assets for the three months and six months ended June 30, 2014 was
$0.2 million
and
$0.4 million
respectively, and for the three and six months ended June 30, 2013 was
$0.1 million
and
$0.2 million
respectively. Estimated aggregate future amortization expense for the following five years and thereafter is as follows:
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
|
|
|
|
|
|
Years ending December 31,
|
|
Estimated Aggregate
Future Amortization
Expense
|
2014
|
|
$
|
357
|
|
2015
|
|
620
|
|
2016
|
|
487
|
|
2017
|
|
461
|
|
2018
|
|
461
|
|
Thereafter
|
|
1,725
|
|
|
|
$
|
4,111
|
|
Note 4. Accounts Receivable
The Company extends unsecured credit to customers under normal trade agreements, which generally require payment upon invoice receipt. The allowance for doubtful accounts is based upon management's review of delinquent accounts and an assessment of the Company's historical evidence of collections. The Company also provides a reserve for billing adjustments based upon historical experience. The allowance for doubtful accounts and billing adjustments amounted to
$2.1 million
and
$1.5
million at June 30, 2014, and December 31, 2013, respectively.
Note 5. Basic and Diluted Earnings Per Share
A reconciliation of the amounts used in the basic and diluted earnings per share computation is shown in the following table.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30
|
Six Months Ended June 30
|
|
2014
|
|
2013
1
|
2014
|
|
2013
1
|
Numerator
|
|
|
|
|
|
|
Net income/(loss) attributable to the Company
|
$
|
2,102
|
|
|
$
|
(382
|
)
|
$
|
3,262
|
|
|
$
|
(2,415
|
)
|
Denominator
|
|
|
|
|
|
|
Basic weighted-average common shares
|
7,197,341
|
|
|
7,035,919
|
|
7,168,072
|
|
|
7,027,120
|
|
Effect of stock options and restricted stock
|
462,569
|
|
|
—
|
|
491,885
|
|
|
—
|
|
Diluted weighted-average common shares
|
7,659,910
|
|
|
7,035,919
|
|
7,659,957
|
|
|
7,027,120
|
|
Basic income/(loss) per common share
|
$
|
0.29
|
|
|
$
|
(0.05
|
)
|
$
|
0.46
|
|
|
$
|
(0.34
|
)
|
Diluted income/(loss) per common share
|
$
|
0.27
|
|
|
$
|
(0.05
|
)
|
$
|
0.43
|
|
|
$
|
(0.34
|
)
|
|
|
(1)
|
For the three months and six months ended June 30, 2014,
93,907
and
47,213
options are excluded as the stock price on the last day of the quarter was below strike price. For the three months ended June 30, 2013,
246,454
restricted shares and
75,488
stock options are excluded as they are anti-dilutive to the net loss per common share. For the six months ended June 30, 2013,
187,742
restricted shares and
37,952
stock options are excluded, as they are anti-dilutive to the net loss per common share.
|
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
Note 6. Leasehold Improvements and Equipment
The components of the leasehold improvements and equipment at June 30, 2014 and December 31, 2013 are as follows:
|
|
|
|
|
|
|
|
|
|
June 30,
2014
|
|
December 31, 2013
|
Leasehold improvements
|
$
|
3,534
|
|
|
$
|
3,222
|
|
Office furniture, fixtures and equipment
|
3,350
|
|
|
3,050
|
|
Computer equipment and software
|
7,088
|
|
|
6,066
|
|
|
13,972
|
|
|
12,338
|
|
Accumulated depreciation and amortization
|
(9,003
|
)
|
|
(8,189
|
)
|
|
$
|
4,969
|
|
|
$
|
4,149
|
|
Depreciation and amortization expense relating to leasehold improvements and equipment for the three and six months ended June 30, 2014 was
$0.4 million
and
$0.8 million
respectively, and for the three and six months ended June 30, 2013 was
$0.3 million
and
$0.6 million
respectively.
Note 7. Long-Term Debt
Line of Credit.
The Company is a party to a credit and security agreement (the “Fourth Amended and Restated Credit and Security Agreement” or “Credit Agreement”) with a bank which includes a revolving credit facility. The Credit Agreement, as amended, has been extended through April 30, 2016. Under the amended terms of the revolving credit facility, the Company may borrow an amount equal to the lesser of
$17.0 million
or the “Borrowing Base” (the Company’s eligible accounts receivable as defined in the Credit Agreement), with interest calculated at
325
basis points above the LIBOR rate as defined in the revolving Credit Agreement (the adjusted LIBOR rate), which was
3.404%
at June 30, 2014. The Company had
$12.2 million
in borrowings on the revolving credit facility at June 30, 2014 and no borrowings at December 31, 2013. Additionally, the Company has issued letters of credit related to office lease agreements secured by the Credit Agreement in the amount of
$3.8 million
as of June 30, 2014, and
$3.3 million
at December 31, 2013. Available borrowings under the revolving credit facility were
$4.8 million
and
$14.0 million
at June 30, 2014 and December 31, 2013, respectively.
Notes Payable.
Long-term debt consists of the following at June 30, 2014 and December 31, 2013:
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31, 2013
|
Notes payable - redemption of members’ units
|
$
|
234
|
|
|
$
|
310
|
|
Notes payable - seller financed acquisitions
|
5,695
|
|
|
5,637
|
|
Notes payable - other
|
13
|
|
|
110
|
|
|
5,942
|
|
|
6,057
|
|
Less current portion of long-term debt
|
3,143
|
|
|
4,762
|
|
|
$
|
2,799
|
|
|
$
|
1,295
|
|
Notes Payable
—
Redemption of Members’ Units.
Prior to the conversion from a limited liability company to a corporation, the Company periodically purchased member units from former members, with payment in the form of notes, payable over
5 years
. The total due on these notes amounted to
$0.2 million
at June 30, 2014, and
0.3 million
at December 31, 2013. The interest on the notes ranges from
2.66%
to
5.00%
. The carrying value of notes payable approximates its fair value.
Notes Payable
—
Seller Financed Acquisitions.
During the year ended December 2013, the Company completed
two
acquisitions, and during the first quarter of 2014 the Company acquired Johnson Executive Search as further described in Note 2. The aggregate purchase price for these acquisitions was, in part, financed through seller notes.
The seller financed note payable associated with the Cheverny CEO Search, S.A. is a non-interest bearing note. As of June 30, 2014,
$0.5
million was outstanding. The final installment is payable on July 12, 2014.
In conjunction with the acquisition of Augmentum, the Company recorded a note payable to the seller in connection with the contingent purchase price. The note was recorded at fair value at acquisition, and is re-measured every reporting period, as further described in Note 2 to the consolidated financial statements. As of June 30, 2014,
$2.4 million
is outstanding, payable in
two
equal installments on August 31, 2014 and August 31, 2015.
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
In conjunction with the acquisition of Johnson, the Company recorded a note payable to the seller in connection with the contingent consideration. The note was recorded at fair value at acquisition, and is re-measured every reporting period, as further described in Note 2 to the consolidated financial statements. As of June 30, 2014,
$2.6 million
is outstanding, payable in
three
installments on March 1, of 2015, 2016 and 2017.
Note 8. Share-Based Compensation
Restricted Shares -
Upon effectiveness of conversion to a corporation, the Company adopted the 2010 Equity Incentive Plan. The purpose of the 2010 Equity Incentive Plan is to promote the interests of the Company and our stockholders by (i) attracting, retaining and motivating employees, non-employee directors and independent contractors (including prospective employees), (ii) motivating such individuals to achieve long-term Company goals and to further align their interests with those of the Company’s stockholders by providing incentive compensation opportunities tied to the performance of the common stock of the Company and (iii) promoting increased ownership of our common stock by such individuals. Subject to adjustment for changes in capitalization, the maximum aggregate number of shares of our common stock that may be delivered pursuant to awards granted under the 2010 Equity Incentive Plan is
1.0 million
.
A summary of the Company’s common stock subject to vesting provisions as of June 30, 2014, is presented below:
|
|
|
|
|
|
|
|
|
Common
|
|
Weighted-
Average
Grant-Date
|
Non-Vested Common Stock
|
Stock
|
|
Fair Value
|
Non-vested common stock at December 31, 2013
|
227,159
|
|
|
$
|
5.11
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Vested
|
(88,849
|
)
|
|
$
|
6.67
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Non-vested common stock at June 30, 2014
|
138,310
|
|
|
$
|
4.19
|
|
Total share-based compensation expense related to vested shares was
$0.1
million and $
0.2 million
for the three and six months ended June 30, 2014, respectively, and $
0.2 million
and $
0.3 million
for the three and six months ended June 30, 2013, respectively.
As of June 30, 2014, there was
$0.7
million of unrecognized compensation expense related to shares subject to vesting provisions granted under the plan. This expense is expected to be recognized over a weighted-average period of
2.8 years
years.
In the first quarter of 2013, the Company granted an award subject to recapture provisions. Recapture provisions allow the Company to recapture a portion of stock if certain performance or service conditions are not met. A summary of the Company’s common stock subject to recapture provisions as of June 30, 2014, is presented below:
|
|
|
|
|
|
|
|
|
Common
|
|
Weighted-Average Grant-Date
|
Common Stock Subject to Recapture
|
Stock
|
|
Fair Value
|
Common stock subject to recapture at December 31, 2013
|
7,019
|
|
|
$
|
4.70
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Expiration of recapture provision
|
(2,340
|
)
|
|
$
|
4.70
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Common stock subject to recapture at June 30, 2014
|
4,679
|
|
|
$
|
4.70
|
|
Total share-based compensation expense related to shares subject to recapture was $
2,829
and
$5,684
for the three and six months ended June 30, 2014, respectively, and
$2,722
and
$5,473
for the three and six months ended June 30, 2013.
As of June 30, 2014, there was
$16,321
of unrecognized compensation expense related to shares subject to recapture granted under the plan. This expense is expected to be recognized over a weighted-average period of
1.5
years.
Non-qualified Stock Options
—In April 2014, April 2013 and December 2011, the Company authorized and granted
105,500
,
94,100
, and
102,500
stock options to various employees under its 2010 Equity Incentive Plan. All options have an exercise price that is equal to the fair value of the Company’s common stock on the grant date. Options are subject to ratable vesting over a three year period, and compensation expense is recognized on a straight-line basis over the vesting period.
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
A summary of the Company’s non-qualified stock option activity for the six months ended June 30, 2014, is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Non-
qualified
Stock
Options
|
|
Weighted
Average
Exercise
Price
Per Share
|
|
Weighted
Average
Remaining
Contractual
Term (in
years)
|
|
Aggregate
Intrinsic
Value
|
Outstanding on December 31, 2013
|
195,600
|
|
|
$
|
4.34
|
|
|
8.6
|
|
|
$
|
247
|
|
Granted
|
105,500
|
|
|
$
|
10.40
|
|
|
9.8
|
|
|
$
|
—
|
|
Exercised
|
(2,000
|
)
|
|
$
|
5.00
|
|
|
—
|
|
|
$
|
—
|
|
Expired
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Forfeited
|
(1,500
|
)
|
|
$
|
4.65
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding on June 30, 2014
|
297,600
|
|
|
$
|
6.48
|
|
|
8.7
|
|
|
$
|
964
|
|
Exercisable on June 30, 2014
|
127,400
|
|
|
$
|
4.33
|
|
|
—
|
|
|
$
|
—
|
|
The aggregate intrinsic value is based upon the Company's closing stock price of
$9.35
at June 30, 2014. The compensation expense related to the options was
$74,465
and
$105,913
for the three and six months ended June 30, 2014, respectively, and
$31,447
and
$50,545
for the three and six months ended June 30, 2013. As of June 30, 2014, there was
$0.6
million of unrecognized compensation expense related to unvested non-qualified stock options, which is expected to be recognized over a weighted-average period of
2.5
years.
Employee Stock Purchase Program -
The stock discount purchase program allows selected employees to purchase up to
$0.1 million
of the Company’s stock in lieu of cash bonuses, at a
15%
discount to the NYSE MKT trading price of those shares. Shares are subject to ratable vesting over a
three
-year period, and compensation expense relating to the discount is recognized on a straight-line basis over the vesting period. A summary of the Company's employee stock purchase program as of June 30, 2014, is presented below:
|
|
|
|
|
|
|
|
|
Common
|
|
Weighted-Average Grant-Date
|
Employee Stock Purchase Program
|
Stock
|
|
Fair Value
|
Non-vested purchased employee stock at December 31, 2013
|
128,429
|
|
|
$
|
4.09
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Vested
|
(50,962
|
)
|
|
$
|
4.25
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Non-vested common stock at June 30, 2014
|
77,467
|
|
|
$
|
3.98
|
|
Compensation expense relating to the stock purchase discount program was
$9,559
and
$19,118
for the three and six months ended June 30, 2014, respectively. For the three and six months ended June 30, 2013, compensation expense relating to the stock purchase discount program was $
6,862
and
$12,377
respectively. As of June 30, 2014, there was
$51,225
of unrecognized compensation expense related to shares subject to vesting provisions granted under the stock purchase discount program. This expense is expected to be recognized over a weighted-average period of
1.5
years.
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
Note 9. Enterprise Geographic Concentrations
The Company operates in
four
principal geographic regions: North America, EMEA, Asia Pacific and Latin America. The revenue by region, for the three and six months ended June 30, 2014, and 2013, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended June 30, 2014
|
|
Three Months ended June 30, 2013
|
|
Six Months ended June 30, 2014
|
|
Six Months ended June 30, 2013
|
Revenue
|
|
|
|
|
|
|
|
North America
|
$
|
27,565
|
|
|
$
|
21,726
|
|
|
$
|
51,231
|
|
|
$
|
39,159
|
|
EMEA
|
10,021
|
|
|
8,348
|
|
|
20,606
|
|
|
15,030
|
|
Asia Pacific
|
2,769
|
|
|
1,187
|
|
|
5,227
|
|
|
2,907
|
|
Latin America
|
4,758
|
|
|
2,962
|
|
|
7,919
|
|
|
6,310
|
|
Net revenue before reimbursable expenses
|
45,113
|
|
|
34,223
|
|
|
84,983
|
|
|
63,406
|
|
Reimbursable expenses
|
1,256
|
|
|
1,142
|
|
|
2,344
|
|
|
1,942
|
|
Total
|
$
|
46,369
|
|
|
$
|
35,365
|
|
|
$
|
87,327
|
|
|
$
|
65,348
|
|
Identifiable assets by geographic concentrations are as follows:
|
|
|
|
|
|
|
|
|
|
June 30, 2014
|
|
December 31,
2013
|
Identifiable Assets
|
|
|
|
North America
|
$
|
36,567
|
|
|
$
|
34,006
|
|
EMEA
|
18,712
|
|
|
13,979
|
|
Asia Pacific
|
4,835
|
|
|
3,562
|
|
Latin America
|
11,457
|
|
|
6,322
|
|
Global Operations Support
|
1,301
|
|
|
1,316
|
|
Total
|
$
|
72,872
|
|
|
$
|
59,185
|
|
Goodwill and other intangible assets, net:
|
|
|
|
Latin America
|
$
|
2,393
|
|
|
$
|
2,553
|
|
EMEA
|
7,380
|
|
|
7,004
|
|
Asia Pacific
|
4,723
|
|
|
—
|
|
Total
|
$
|
14,496
|
|
|
$
|
9,557
|
|
Note 10. Reorganization
In the third quarter of 2012, the Company’s management initiated a plan to reorganize its operations resulting in certain organizational changes in its Canadian and EMEA locations. The plan consisted of a workforce reorganization, and elimination of redundant or unneeded positions, which allowed the Company to combine business operations in certain geographic locations and serve clients more efficiently. During 2013, the Company expanded its reorganization efforts globally, eliminating certain functions.
Changes in reorganization reserves related to the plan described above for the six months ended June 30, 2014, are as follows:
|
|
|
|
|
|
Severance and other
employee related costs
|
Balance at December 31, 2012
|
$
|
153
|
|
Reorganization charges
|
782
|
|
Cash payments
|
(728
|
)
|
Non-cash charges
|
(48
|
)
|
Balance at December 31, 2013
|
$
|
158
|
|
Reorganization charges
|
—
|
|
Cash payments
|
(142
|
)
|
Non-cash charges
|
—
|
|
Balance at June 30, 2014
|
$
|
16
|
|
CTPARTNERS EXECUTIVE SEARCH INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(All tables in thousands, except share and per share amounts)
Note 11. Subsequent Events
On July 1, 2014, CTPartners Executive Search Inc (the”Company”) acquired the Perth, Australia office of Park Brown International, an executive search firm focusing on the energy, natural resources and infrastructure sectors. Under the terms of the contract, the Company paid
$1.0 million
of initial consideration at closing. The Company expects to pay additional consideration based on the achievement of certain revenue metrics in the next
three
years. The Company is currently in the process of determining the fair value of assets acquired.