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CTPartners Executive Search Inc. (NYSE MKT:CTP), a leading global retained executive search firm, today announced its financial results for the fourth quarter and year ended December 31, 2012. The Company also announced its intention to restate its 2012 quarterly financial statements for the interim periods through September 30
th to account for the acquisition of its Latin American licensee, completed on January 2, 2012. The restatement reclassifies $7.2 million from purchase consideration to post-combination compensation.
“Our fourth quarter net revenue was consistent with the financial guidance we provided on February 26
th. We successfully executed our strategic growth plan in 2012 and added more clients and experienced executive search consultants to our team, while expanding our geographic footprint. Excluding the non-recurring post-combination compensation charge and the reorganization charge taken in the third quarter, we generated an adjusted $0.16 in earnings per share, a significant improvement over the prior year,” said Brian Sullivan, Chief Executive Officer.
In a Form 8-K filing, CTPartners announced its intention to restate its 2012 quarterly financial statements for the interim periods through September 30
th to account for the acquisition of its Latin American licensee. Financial Accounting Standards Codification Topic 805 “Business Combinations” (“ASC 805”) states that a contingent consideration arrangement in which the payments are automatically forfeited if employment terminates is compensation for post-combination services, which must be recognized over the measurement period of the contingent payment. 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. To comply with ASC 805, the Company will restate its previously issued financial statements to reflect the contingent purchase consideration as compensation expense for post-combination services rather than a component of purchase price consideration. The restatement reclassifies $7.2 million of the contingent purchase consideration as compensation for post-combination services, which must be recognized over 36 months from the time of acquisition.
The Company also completed an acquisition of Cheverny CEO Search in the fourth quarter of 2012, with similar provisions. Similarly, the acquisition resulted in an additional $1.0 million of deferred post-combination compensation, recognizable over 20 months.