HAMILTON, Bermuda, March 25, 2009 (GLOBE NEWSWIRE) --
Fourth Quarter 2008 Highlights
W.P. Stewart & Co., Ltd. (BSX:WPS) (Pink Sheets:WPSLF) ("W.P. Stewart" or the
"Company") today reported a net loss of $6.6 million, or $1.26 per share
(diluted) and $1.26 per share (basic), for the fourth quarter ended 31 December
2008. This loss includes fourth quarter non-recurring, cash and non-cash
charges of approximately $297,000 or $0.06 per share (diluted). Of such amount,
the non-recurring, non-cash charges of approximately $65,000 related to an
adjustment in the carrying value of an investment in an affiliate. In addition,
non-recurring, cash charges of approximately $232,000 were incurred in the
period primarily reflecting agreements with certain employees whose employment
terminated during the quarter. Excluding these non-recurring, cash and non-cash
charges, the fourth quarter 2008 net loss was $6.3 million, or $1.20 per share
(diluted). These results compare with net loss in the fourth quarter of 2007 of
$21.0 million, or $4.53 per share (diluted) and $4.53 per share (basic). These
prior year results include non-recurring charges of $15.7 million, including a
non-cash charge of approximately $15.6 million related to an impairment of
assets, or $3.37 per share (basic and diluted). This impairment reflected a
decrease in assets under management, the fees from which were supporting
intangible assets per the Financial Accounting Standards Board (SFAS No. 142).
Net results on a cash basis for the quarter ended 31 December 2008 were -$4.0
million (net loss of $6.6 million adjusted to include $2.6 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 -$0.76 per share (diluted). In the same
quarter of the prior year, cash earnings were $1.3 million (net loss of $21.0
million adjusted to include $22.3 million representing non-cash items
consisting of unrealized losses and expenses consisting of non-cash
compensation, depreciation, amortization and other non-cash charges, including
the non-recurring impairment charges noted above, on a tax-effected basis), or
$0.28 per share (diluted).
For the fourth quarter of 2008 there were 5,223,957 common shares outstanding
on a weighted average diluted basis (5,223,957 - weighted average basic)
compared to 4,625,186 common shares outstanding for the fourth quarter of 2007
on the same weighted average diluted basis (4,625,186 - 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 2008 fourth quarter
and year end 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.
Full Year 2008 Highlights
For the full year ended 31 December 2008 the net loss was $49.3 million, or
$10.09 per share (diluted) and $10.09 per share (basic), on revenues of $32.6
million. This loss includes non-recurring cash and non-cash charges of
approximately $24.7 million or $5.06 per share (diluted). For the year there
were non-recurring, non-cash charges of approximately $18.9 million or $3.87
per share (diluted), which included $18.7 million related to an impairment of
intangible assets and goodwill, representing a complete write-down of the
remaining balance. The impairment of intangible assets reflects a decrease in
assets under management, the fees from which were supporting intangible assets
per the Financial Accounting Standards Board (SFAS No. 142) and the impairment
of goodwill is the result of the decline in market capitalization as compared
with the value of shareholder's equity. In addition, during the year there were
$5.8 million non-recurring cash charges incurred related to agreements with
certain employees whose employment terminated during the year and our
initiative to complete a strategic transaction, which initiative resulted in an
investment by funds managed by Arrow Capital Management. Excluding these
non-recurring, cash and non-cash charges, for the full year ended 31 December
2008, the net loss was $24.6 million, or $5.03 per share (diluted).
For the full year ended 31 December 2007 the Company recorded a net loss of
$31.4 million or $6.81 per share (diluted) and $6.81 per share (basic), on
revenues of $100.4 million. These results include a non-recurring gain on the
sale of the Company's aircraft of $10.2 million, post tax, offset by
non-recurring charges of approximately $33.6 million related to an impairment
of intangible assets and non-recurring charges of approximately $8.0 million
related to agreements with certain employees, whose employment with the Company
terminated during the year.
Net results on a cash basis for the year ended 31 December 2008 were -$14.2
million (net loss of $49.3 million adjusted to include $35.1 million,
representing non-cash income and expenses consisting of unrealized gains and
losses, non-cash compensation, depreciation, amortization and other non-cash
charges, including the non-recurring impairment charges referred to above, on a
tax-effected basis), or -$2.91 per share (diluted). For the full year ended 31
December 2007, cash earnings were $31.8 million (net loss of $31.4 million
adjusted to include $63.2 million, representing non-cash items consisting of
unrealized losses, and expenses, consisting of non-cash compensation,
depreciation, amortization and other non-cash charges, including non-recurring
impairment charges, on a tax-effected basis), or $6.89 per share (diluted).
For the full year ended 31 December 2008, there were 4,886,968 common shares
outstanding on a weighted average diluted basis (4,886,968 - weighted average
basic) compared to 4,611,700 common shares outstanding for the year ended 31
December 2007 on the same weighted average diluted basis (4,611,700 - weighted
average basic) (as restated to give effect to the ten-for-one share
consolidation).
Investment Performance Update
The performance for the W.P. Stewart U.S. Equity Composite (the "Composite")
for the year ended 31 December 2008 was -30.2%, pre-fee, and -31.3%, post-fee,
compared to -37.0% for the S&P 500.
The Company releases composite portfolio investment returns on a monthly basis.
These returns are posted on the Company's website at www.wpstewart.com, usually
within one week of month-end. A complete history of the performance of the
Composite is available on the Company's website.
The year-to-date performance for the Composite, as of 15 March 2009, was
-10.6%, pre-fee, and -10.9%, post-fee, compared with -15.7% for the S&P 500.
These performance results are subject to change on final reconciliation of all
relevant data.
Commenting on these performance results, Mark Phelps, President and Chief
Executive Officer said: "While the firm's absolute performance is
disappointing, we are pleased that, on a relative basis, our U.S. Equity
Composite significantly outperformed the S&P 500 Index for 2008 and
year-to-date through mid-March. We believe this is a testament to our strong
team of senior investment professionals as well as our continued cooperative
research efforts with Arrow Capital Management, our largest shareholder.
Earlier this month, one of our team members, Dr. Jack Mahler, who joined the
firm in 2005, resigned to pursue another opportunity which we do not consider
to be competitive with the firm; we thank him for his service and wish him well
in this endeavor."
Assets Under Management
As previously reported, assets under management ("AUM") at 31 December 2008
were approximately $1.4 billion, compared with approximately $1.9 billion at 30
September 2008. In the attached tables a complete breakdown of AUM flows with
comparisons to earlier periods is provided.
As of 15 March 2009, AUM was approximately $1.2 billion; a significant portion
of the decline from 31 December 2008 reflects market value changes.
Revenues and Other Financial Data
Revenues were $4.9 million for the quarter ended 31 December 2008, compared to
$15.6 million, for the same quarter of 2007. Revenues for the full years ended
31 December 2008 and 2007 were $32.6 million and $100.4 million, respectively.
The average gross management fee, excluding performance fees, annualized, was
1.11% for the quarter ended 31 December 2008 and 1.08% for the year ended 31
December 2008, compared to 1.06% in each of the fourth quarter of 2007 and for
the year ended 31 December 2007. Excluding performance fee based accounts, the
average gross management fee was 1.31%, annualized, for the quarter ended 31
December 2008, and 1.27% for the full year 2008, compared to 1.26% and 1.24% in
each of the comparable periods of the prior year, respectively.
Total operating expenses were $12.6 million, including $297,000 in
non-recurring charges (cash and non-cash) for the fourth quarter 2008, compared
to $37.0 million in the same quarter of the prior year, including $15.7 million
in non-recurring charges (cash and non-cash). Total operating expenses were
$83.1 million, including $24.7 million in non-recurring charges (cash and
non-cash) for the full year ended 31 December 2008, compared to $125.0 million
for the year ended 31 December 2007, including $41.6 million in non-recurring
charges (cash and non-cash).
For the fourth quarter of 2008 non-cash compensation expense related to the
Company's restricted share issuances to employees was approximately $2.6
million. For the year ended 31 December 2008, these non-cash compensation
charges were approximately $12.7 million. In the fourth quarter and full year
2007, these non-cash compensation charges were approximately $3.9 million and
$17.8 million, respectively. These non-cash compensation expenses are included
in "employee compensation and benefits".
The Company's provision/(benefit) for taxes for the quarter ended 31 December
2008 was $(1.1) million versus $(400,000) in the comparable quarter of the
prior year, and was $(1.2) million and $6.8 million for the years ended 31
December 2008 and 2007, respectively.
Included with this release are tables containing additional revenue and expense
detail for the fourth quarter and full year ended 31 December 2008 with
comparisons with prior periods.
The Company had cash and marketable securities at 31 December 2008 of $37.9
million. The Company has no debt.
As of March 15, 2009, the Company had cash and marketable securities balances
of approximately $38 million.
Shareholders' equity at 31 December 2008 was approximately $43.2 million. Per
the Company's previously announced repurchase program, the Company purchased
2,500 common shares on the open market during January 2009.
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 (Fred M.
Ryan) 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.
Unaudited Condensed Consolidated Statements of Operations
For the Year Ended December 31,
------------------------------------------
2008 2007 %
------------ ------------ ------------
Revenue:
Fees $ 28,001,942 $ 64,322,381 -56.47%
Commissions 5,442,196 13,875,152 -60.78%
Realized gain on
sale of aircraft -- 18,464,963 -100.00%
Realized and
unrealized
gains/(losses)
on investments (1,878,472) 1,460,178 -228.65%
Interest and other 1,048,152 2,265,888 -53.74%
------------ ------------ ------------
32,613,818 100,388,562 -67.51%
------------ ------------ ------------
Expenses:
Employee compensation
and benefits 33,423,801 48,125,077 -30.55%
Fees paid out 3,101,457 6,626,482 -53.20%
Commissions,
clearance and
trading 1,305,301 2,301,335 -43.28%
Research and
administration 9,471,949 12,260,688 -22.75%
Marketing 3,418,827 6,002,748 -43.05%
Depreciation and
amortization 1,536,981 5,769,095 -73.36%
Impairment of
intangible asset 18,692,283 33,557,074 -44.30%
Other operating 12,135,265 10,351,246 17.23%
------------ ------------ ------------
83,085,864 124,993,745 -33.53%
------------ ------------ ------------
Income/(loss)
before taxes (50,472,046) (24,605,183) 105.13%
Provision/(benefit)
for taxes (1,160,165) 6,796,053 -117.07%
------------ ------------ ------------
Net income/(loss) $(49,311,881) $(31,401,236) 57.04%
============ ============ ============
Earnings/(loss)
per share:
Basic
earnings/(loss)
per share $ (10.09) $ (6.81) 48.16%
============ ============ ============
Diluted
earnings/(loss)
per share $ (10.09) $ (6.81) 48.16%
============ ============ ============
W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
For the Three Months Ended
--------------------------------------------
Dec. 31, Sept. 30, Dec. 31,
2008 2008 2007
------------ ------------ ------------
Revenue:
Fees $ 4,505,933 $ 5,905,879 $ 13,505,682
Commissions 438,456 661,987 2,264,549
Realized and
unrealized
gains/(losses)
on investments (129,084) (94,785) (800,602)
Interest and other 116,305 270,609 635,442
------------ ------------ ------------
4,931,610 6,743,690 15,605,071
------------ ------------ ------------
Expenses:
Employee
compensation and
benefits 6,184,922 8,793,763 11,324,901
Fees paid out 531,201 462,730 1,298,611
Commissions,
clearance and
trading 239,672 319,482 383,146
Research and
administration 2,113,775 2,446,129 2,470,070
Marketing 935,815 802,227 1,833,438
Depreciation
and amortization 245,152 675,462 1,441,214
Impairment of
intangible asset -- 18,692,284 15,572,074
Other operating 2,385,629 4,466,607 2,652,474
------------ ------------ ------------
12,636,166 36,658,684 36,975,928
------------ ------------ ------------
Income/(loss)
before taxes (7,704,556) (29,914,994) (21,370,857)
Provision/(benefit)
for taxes (1,147,323) 1,323,690 (400,226)
------------ ------------ ------------
Net income/(loss)
$ (6,557,233) $(31,238,684) $(20,970,631)
============ ============ ============
Earnings/(loss)
per share:
Basic
earnings/(loss)
per share $ (1.26) $ (6.20) $ (4.53)
============ ============ ============
Diluted
earnings/(loss)
per share $ (1.26) $ (6.20) $ (4.53)
============ ============ ============
% Change From
----------------------
Sept. 30, Dec. 31,
2008 2007
-------- --------
Revenue:
Fees -23.70% -66.64%
Commissions -33.77% -80.64%
Realized and unrealized
gains/(losses) on investments 36.19% -83.88%
Interest and other -57.02% -81.70%
-------- --------
-26.87% -68.40%
-------- --------
Expenses:
Employee compensation and benefits -29.67% -45.39%
Fees paid out 14.80% -59.09%
Commissions, clearance and trading -24.98% -37.45%
Research and administration -13.59% -14.42%
Marketing 16.65% -48.96%
Depreciation and amortization -63.71% -82.99%
Impairment of intangible asset -100.00% -100.00%
Other operating -46.59% -10.06%
-------- --------
-65.53% -65.83%
-------- --------
Income/(loss) before taxes -74.25% -63.95%
Provision/(benefit) for taxes -186.68% 186.67%
-------- --------
Net income/(loss)
-79.01% -68.73%
======== ========
Earnings/(loss) per share:
Basic earnings/(loss) per share -79.68% -72.19%
======== ========
Diluted earnings/(loss) per share -79.68% -72.19%
======== ========
W.P. Stewart & Co., Ltd.
Net Flows of Assets Under Management*
(in millions)
-----------------------------------------------
For the For the
Three Months Ended Year Ended
--------------------------- -----------------
Dec. Sept. Dec. Dec. Dec.
31, 30, 31, 31, 31,
2008 2008 2007 2008 2007
------- ------- ------- ------- -------
Existing Accounts:
Contributions $ 21 $ 23 $ 106 $ 134 $ 303
Withdrawals (41) (57) (154) (582) (934)
------- ------- ------- ------- -------
Net Flows of
Existing Accounts (20) (34) (48) (448) (631)
------- ------- ------- ------- -------
Publicly
Available Funds:
Contributions 7 8 8 51 115
Withdrawals (28) (74) (128) (320) (605)
Direct Accounts
Opened 4 1 11 11 161
Direct Accounts
Closed (48) (187) (469) (1,159) (3,038)
------- ------- ------- ------- -------
Net New Flows (65) (252) (578) (1,417) (3,367)
------- ------- ------- ------- -------
Net Flows of
Assets Under
Management
$ (85) $ (286) $ (626) $(1,865) $(3,998)
======= ======= ======= ======= =======
* The table above sets forth the total net flows of assets under
management for the three months ended December 31, 2008,
September 30, 2008 and December 31, 2007, respectively, and for
the years ended December 31, 2008 and 2007, 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.
CONTACT: W.P. Stewart & Co., Ltd.
Fred M. Ryan
441-295-8585
W.P. Stewart & Co., Ltd. Announces Fourth Quarter and Full Year 2008 Financial Results
| Source: W.P. Stewart & Co., Ltd.