HAMILTON, Bermuda, Nov. 20, 2009 (GLOBE NEWSWIRE) --
Six Month 2009 Highlights
W.P. Stewart & Co., Ltd. (BSX:WPS) (Pink Sheets:WPSLF) ("W.P. Stewart" or the "Company") today reported a net loss of $9.6 million, or $1.82 per share (diluted) and $1.82 per share (basic), for the six months ended 30 June 2009. This loss includes non-recurring, cash and non-cash charges of approximately $1.1 million or $0.21 per share (diluted), on a tax-effected basis. Of such amount, the non-recurring, non-cash charges of approximately $625,000 related to an adjustment in the carrying value of an investment in an affiliate. In addition, non-recurring, cash charges of approximately $475,000 were incurred in the period primarily reflecting the disposal of a portion of leased space in New York during the six month period. Excluding these non-recurring, cash and non-cash charges, the six month 2009 net loss was $8.5 million, or $1.61 per share (diluted). These results compare with net loss in the first six months of 2008 of $11.5 million, or $2.48 per share (diluted) and $2.48 per share (basic). These prior year results include non-recurring cash and non-cash charges of approximately $2.2 million, or $0.47 per share (diluted), on a tax-effected basis.
Net results on a cash basis for the six months ended 30 June 2009 were -$5.8 million (net loss of $9.6 million adjusted to include $3.8 million, representing non-cash income and expenses consisting of unrealized gains and losses, non-cash compensation, depreciation, amortization and other non-cash charges, on a tax-effected basis), or -$1.11 per share (diluted). In the same period of the prior year, cash earnings were $-3.4 million (net loss of $11.5 million adjusted to include $8.1 million, representing non-cash income and expenses consisting of unrealized gains and losses, non-cash compensation, depreciation, amortization and other non-cash charges, on a tax-effected basis), or -$0.74 per share (diluted).
For the six months ended 30 June 2009 there were 5,252,472 common shares outstanding on a weighted average diluted basis (5,252,472 - weighted average basic) compared to 4,638,935 common shares outstanding for the six months ended 30 June 2008 on the same weighted average diluted basis (4,638,935 - weighted average basic). On 19 November 2008, the Company effected a one-for-ten share consolidation of the Company's authorized and issued common shares pursuant to which every ten common shares, par value $0.001 per share, were consolidated, reclassified and converted into one new common share, par value $0.01 per share. All share numbers and per share dollar figures for the six months ended 30 June 2009 are provided after giving effect to such share consolidation and all prior period share numbers and per share data have been restated to reflect the share consolidation.
Included in this release are tables containing revenue and expense detail for the six months ended 30 June 2009 with comparisons to prior periods.
Investment Performance Update
The year-to-date performance for the W.P. Stewart U.S. Equity Composite (the "Composite"), as of 31 October 2009, was 23.4%, pre-fee, and 22.6%, post-fee, compared with 17.0% for the S&P 500. These performance results are subject to change on final reconciliation of all relevant data.
Commenting on 2009 performance, Mark Phelps, the President and Chief Executive Officer of the Company, stated "Our strong absolute and relative results for 2009 year-to-date builds upon the positive relative performance of 2008 to enhance the value of our clients' portfolios. We attribute our performance to the strength and cohesiveness of our investment team. During the current quarter, we unfortunately lost our colleague and friend Bob Kahn who passed away due to complications relating to a stroke. His contribution to our investment philosophy over the years was priceless. The investing principles Bob espoused have been embraced by our team and Bob's legacy will be carried on within the firm. We have an experienced and dedicated team of eight investment professionals, most of whom have been with the firm for years and one of whom joined us earlier this year." More information on the investment team can be found on the Company's website at www.wpstewart.com.
Assets Under Management
Assets under management ("AUM") at 16 November 2009 were approximately $1.6 billion, compared with approximately $1.4 billion at 31 December 2008. In the attached tables a complete breakdown of AUM flows for the period ended 30 June 2009 with comparisons to earlier periods is provided.
The Company releases composite portfolio investment returns on a monthly basis and intends to release AUM data at least on a quarterly basis. The performance returns are posted on the Company's website at www.wpstewart.com, usually within one week of month-end and AUM quarterly updates will be posted usually within one month of the quarter-end. A complete history of the performance of the Composite is available on the Company's website.
Revenues and Other Financial Data
Revenues were $9.6 million for the six months ended 30 June 2009, compared to $20.9 million for the same period of 2008.
The average gross management fee, annualized, was 1.09% for the six months ended 30 June 2009, compared to 1.06% for the six months ended 30 June 2008 on an annualized basis. Excluding performance fee based accounts, which pay a lower quarterly base fee plus an annual performance fee at year-end if earned, the average gross management fee was 1.29%, annualized, for the six months ended 30 June 2009, compared to 1.28% in the comparable period of the prior year.
Total operating expenses were $20.2 million, including $1.1 million in non-recurring charges (cash and non-cash), on a tax-effected basis, for the six months ended 30 June 2009, compared to $33.8 million in the same period of the prior year, including $2.2 million in non-recurring charges (cash and non-cash).
For the six months ended 30 June 2009 non-cash compensation expense related to the Company's restricted share issuances to employees was approximately $3.2 million. For the same period of the prior year, these non-cash compensation charges were approximately $6.7 million. These non-cash compensation expenses are included in "employee compensation and benefits".
The Company's benefit for taxes for the six months ended 30 June 2009 was $1.1 million versus $1.3 million in the comparable period of the prior year.
Included with this release are tables containing additional revenue and expense detail for the six months ended 30 June 2009 with comparisons with prior periods.
The Company had cash and marketable securities at 30 June 2009 of $37.2 million. The Company has no debt. As of 16 November 2009, the Company had cash and marketable securities balances of approximately $37.2 million.
Shareholders' equity at 30 June 2009 was approximately $37.3 million.
Other Items
The Company intends to continue to streamline the Company's operations to further reduce its operating costs by further concentration of the Company's operations primarily in New York beginning in the first quarter of 2010. A contract was entered into for the sale of the building in Bermuda owned by a joint venture company between The Bank of Bermuda and the Company. The sale, subject to certain contingencies, is expected to close during the first quarter of 2010, at which time the Company would recognize its share of the proceeds.
Pursuant to 6.9(2) of Section IIA of the Bermuda Stock Exchange Listing Regulations, the total interests of all Directors and Executive Officers of the Company as of 30 June 2009 were 2,608,394 common shares. This amount excludes any common shares owned by trusts for which any Director or Executive Officer serves as trustee and of which he or she is not a beneficiary, but includes 2,375,733 shares held by four funds managed by Arrow Capital Management LLC and its affiliates. Messrs. Alex von Furstenberg and Mal Serure, each Directors of the Company, are Co-Managing Members of Arrow Capital Management LLC. In addition, as of 30 June 2009, the Company's Directors and Executive Officers owned options to purchase an aggregate of 3,293 common shares of the Company. Each option vests in equal portions on the first seven anniversaries of the grant date. 1,953, 742, 171 and 427 of these options were granted on 24 October 2001, 1 May 2002, 20 August 2002 and 3 October 2002 at exercise prices of $208.00, $284.20, $221.00 and $165.80, respectively (in each case, after giving effect to the one-for-ten share consolidation effected in November 2008). These options expire on 24 October 2009, 1 May 2010, 20 August 2010 and 3 October 2010.
W.P. Stewart & Co., Ltd. is an asset management company that has provided research-intensive equity management services to clients throughout the world since 1975. The Company is headquartered in Hamilton, Bermuda and has additional operations or affiliates in the United States, Europe and Asia.
The Company's shares are currently listed for trading on the Bermuda Stock Exchange (BSX:WPS) and are currently traded in the U.S. on the Pink Sheets (Pink Sheets:WPSLF).
For more information, please visit the Company's website at http://www.wpstewart.com, or call W.P. Stewart Investor Relations at 1-888-695-4092 (toll-free within the United States) or + 441-295-8585 (outside the United States) or e-mail to IRINFO@wpstewart.com. Statements made in this release concerning our assumptions, expectations, beliefs, intentions, plans or strategies are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ from those expressed or implied in these statements. Such risks and uncertainties include, without limitation, the adverse effect from a decline or volatility in the securities markets, the general downturn in the economy, the effects of economic, financial or political events, a loss of client accounts, inability of the Company to attract or retain qualified personnel, a challenge to our U.S. tax status, competition from other companies, changes in government policy or regulation, a decline in the Company's products' performance, inability of the Company to implement its operating strategy, the effects of the Company's delisting and deregistration under the U.S. Securities Act of 1934, inability of the Company to manage unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations, industry capacity and trends, changes in demand for the Company's services, changes in the Company's business strategy or development plans and contingent liabilities. The information in this release is as of the date of this release, and will not be updated as a result of new information or future events or developments.
W.P. Stewart & Co., Ltd.
Condensed Consolidated Statements of Financial Condition
June 30, December 31,
2009 2008
----------- -----------
(unaudited)
Assets:
Cash and cash equivalents $26,280,651 $35,158,939
Fees receivable 1,204,796 502,288
Receivable from clearing broker 9,690 19,042
Investments in unconsolidated affiliates
(net of accumulated amortization of
$617,790 at June 30, 2009 and
December 31, 2008, respectively) 1,722,880 2,343,506
Receivables from affiliates, net 487,153 551,192
Investments, trading (cost $2,706,044 at
June 30, 2009 and $2,813,255 at
December 31, 2008, respectively) 2,772,140 2,691,108
Investments, available for sale (cost
$7,968,192 at June 30, 2009 and $96,518 at
December 31, 2008, respectively) 8,108,957 88,567
Furniture, equipment, software and
leasehold improvements (net of accumulated
depreciation and amortization of
$7,516,020 and $7,262,931 for
June 30, 2009 and December 31, 2008,
respectively) 1,001,904 1,372,674
Interest receivable on shareholders' notes 17,709 17,709
Income taxes receivable 6,089,289 7,864,696
Deferred income taxes receivable 13,000 26,400
Other assets 2,896,591 3,668,140
----------- -----------
$50,604,760 $54,304,261
=========== ===========
Liabilities and Shareholders' Equity:
Liabilities:
Employee compensation and benefits payable $ 2,677,759 $ 453,800
Fees payable 1,569,444 1,702,699
Vendor payables 4,194,686 4,048,874
Accrued expenses and other liabilities 4,900,000 4,900,000
----------- -----------
13,341,889 11,105,373
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Shareholders' Equity:
Common shares, $0.01 par value (12,500,000
shares authorized 5,629,324 and 5,544,699
shares issued and outstanding at
June 30, 2009 and December 31, 2008,
respectively) 56,293 55,447
Additional paid-in-capital 130,456,258 127,125,627
Accumulated other comprehensive income 782,208 477,478
Retained earnings/(deficit) (93,790,513) (84,223,614)
Common shares held in treasury, at cost,
$0.01 par value (2,500 shares at
June 30, 2009) (5,325) --
----------- -----------
37,498,921 43,434,938
Less: notes receivable for common shares (236,050) (236,050)
----------- -----------
37,262,871 43,198,888
----------- -----------
$50,604,760 $54,304,261
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W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
For the Six Months Ended June 30,
---------------------------------------
2009 2008 %
----------- ------------ ------------
Revenue:
Fees (includes fees from
affiliates of $461,776 and
$1,159,085 for 2009 and
2008, respectively) $ 8,056,487 $ 17,590,130 -54.20%
Commissions 693,588 4,341,753 -84.03%
Realized and unrealized
gains/(losses) on
investments 169,499 (1,654,604) -110.24%
Interest and other 677,026 661,239 2.39%
----------- ------------ ------------
9,596,600 20,938,518 -54.17%
----------- ------------ ------------
Expenses:
Employee compensation and
benefits 10,332,413 18,445,116 -43.98%
Fees paid out 528,278 2,107,526 -74.93%
Commissions, clearance and
trading 398,103 746,147 -46.65%
Research and administration 4,608,515 4,912,045 -6.18%
Marketing 677,694 1,680,785 -59.68%
Depreciation and
amortization 376,271 616,367 -38.95%
Other operating 3,326,805 5,283,028 -37.03%
----------- ------------ ------------
20,248,079 33,791,014 -40.08%
----------- ------------ ------------
Income/(loss) before taxes (10,651,479) (12,852,496) -17.13%
Provision/(benefit) for taxes (1,084,576) (1,336,532) -18.85%
----------- ------------ ------------
Net income/(loss) $(9,566,903) $(11,515,964) -16.92%
=========== ============ ============
Earnings/(loss) per share:
Basic earnings/(loss) per
share $ (1.82) $ (2.48) -26.61%
=========== ============ ============
Diluted earnings/(loss) per
share $ (1.82) $ (2.48) -26.61%
=========== ============ ============
W.P. Stewart & Co., Ltd.
Net Flows of Assets Under Management*
(in millions)
-----------
For the
For the Three Months Ended Six Months Ended
-------------------------- ----------------
Jun. 30, Mar. 31, Jun. 30, Jun. 30, Jun. 30,
2009 2009 2008 2009 2008
------- ------- ------- ------- -------
Existing Accounts:
Contributions $ 26 $ 25 $ 43 $ 51 $ 90
Withdrawals (27) (32) (259) (59) (484)
------- ------- ------- ------- -------
Net Flows of Existing
Accounts (1) (7) (216) (8) (394)
------- ------- ------- ------- -------
Publicly Available Funds:
Contributions 7 4 21 11 37
Withdrawals (4) (22) (70) (26) (218)
Direct Accounts Opened 12 -- -- 12 5
Direct Accounts Closed (44) (109) (222) (153) (924)
------- ------- ------- ------- -------
Net New Flows (29) (127) (271) (156) (1,100)
------- ------- ------- ------- -------
Net Flows of Assets
Under Management $ (30) $ (134) $ (487) $ (164) $(1,494)
======= ======= ======= ======= =======
* The table above sets forth the total net flows of assets under
management for the three months ended June 30, 2009, March 31, 2009
and June 30, 2008, respectively, and for the six months ended June 30,
2009 and 2008, respectively, which include changes in net flows of
existing accounts and net new flows (net contributions to our publicly
available funds and flows from new accounts minus closed accounts).
The table excludes total capital appreciation or depreciation in
assets under management with the exception of the amount attributable
to withdrawals and closed accounts.