NEW YORK, Dec. 21, 2010 (GLOBE NEWSWIRE) -- W.P. Stewart & Co., Ltd. Announces June 30 Financial Results and Gives Corporate Update, Including
- AUM of $1.7 Billion as of December 10, 2010
- Outperformance of Benchmark Year-to-Date and Three Years ending November 30, 2010
Six Month 2010 Financial Highlights
W.P. Stewart & Co., Ltd. ("W.P. Stewart" or the "Company") today reported a net loss of $4.9 million, or $0.92 per share (diluted) and $0.92 per share (basic), for the six months ended 30 June 2010. This loss includes cash charges of approximately $775,000 or $0.14 per share (diluted), on a tax-effected basis, related to (a) professional fees incurred in connection with (1) the exploration of a strategic transaction that was not completed and (2) the corporate restructuring of the Company and certain of its formerly Bermuda-based subsidiaries that was concluded in May 2010 as previously reported and (b) severance payments made to employees terminated in connection with the corporate restructuring. Excluding these cash charges, the six month 2010 net loss was $4.1 million, or $0.78 per share (diluted). These results compare with a net loss in the first half of 2009 of $9.6 million, or $1.82 per share (diluted) and $1.82 per share (basic). These prior year results include cash and non-cash charges aggregating approximately $1.1 million, or $0.21 per share (diluted), on a tax-effected basis, primarily relating to an adjustment in the carrying value of an investment in an affiliate and the disposal of a portion of leased space in New York during the period.
Net results on a cash basis for the six months ended June 30, 2010 were -$600,000 (net loss of $4.9 million adjusted for $4.3 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 -$0.12 per share (diluted). In the same period of the prior year, net results on a cash basis 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).
For the six months ended June 30, 2010 there were 5,315,064 common shares outstanding on a weighted average diluted basis (5,315,064 – weighted average basic) compared to 5,252,472 common shares outstanding for the six months ended June 30, 2009 on the same weighted average diluted basis (5,252,472 – weighted average basic).
Included in this release are tables containing revenue and expense detail for the six months ended June 30, 2010 with comparisons to the same period of the prior year.
Investment Performance and Assets Under Management Update
The year-to-date performance for the W.P. Stewart U.S. Equity Composite (the "Composite") for the six months ended June 30, 2010, was -11.0%, pre-fee, and -11.5%, post-fee, compared with -6.7% for the S&P 500. As of November 30, 2010, year-to-date performance for the Composite was 9.1%, pre-fee, and 8.2%, post-fee, compared with 7.9% for the S&P 500. For the three years ending November 30, 2010, cumulative performance for the Composite was -0.5%, pre-fee, and -3.7% post-fee, which was 11.0% ahead of the S&P 500 at -14.7% for the same period. Interim monthly and quarterly performance for the Composite for 2010 are posted on the Company's website at www.wpstewart.com.
In relation to the firm's recent investment performance, Mark Phelps, CEO of the Company, commented "Relative performance in the first half of the year was always likely to be challenging as investors focused in the short-term on those companies whose earnings rebounded from the lows recorded in 2009. In contrast, the portfolio of investments held for our clients had not suffered such falls to the same extent and so saw more modest recovery. As we moved into the second half of the year, investors once again began to take note of those companies with sustainable earnings growth and we recorded strong relative and absolute performance more than making up for the shortfall seen in the first half."
Assets under management ("AUM") at December 10, 2010 were approximately $1.7 billion (preliminary), compared with approximately $1.4 billion at June 30, 2010 and $1.5 billion at December 31, 2009. In the attached tables a complete breakdown of AUM flows for the periods ended June 30, 2010 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. Performance results and AUM data are subject to change on final reconciliation of all relevant data.
Revenues and Other Financial Data
Revenues were $10.6 million for the six months ended June 30, 2010, up 10.4% from $9.6 million for the same period of 2009.
The average gross management fee, annualized, was 1.06% for the six months ended June 30, 2010, compared to 1.09% for the six months ended June 30, 2009 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 1.27%, annualized, for the six months ended June 30, 2010, compared to 1.29% in the comparable period of the prior year on an annualized basis.
Total operating expenses for the six months ended June 30, 2010 were $14.5 million, including approximately $775,000 in cash charges, on a tax-effected basis, related to (a) professional fees incurred in connection with the exploration of a strategic transaction not completed and the corporate restructuring concluded in May 2010 as mentioned above and (b) severance payments made to employees terminated in connection with the corporate restructuring. For the same period of the prior year, total operating expenses were $20.2 million, including $1.1 million in cash and non-cash charges, on a tax-effected basis, primarily relating to an adjustment in the carrying value of an investment in an affiliate and the disposal of a portion of leased space in New York during the period.
For the six months ended June 30, 2010, non-cash compensation expense related to the Company's restricted share issuances to employees was approximately $2.5 million. For the same period of the prior year, these non-cash compensation charges were approximately $3.2 million. These non-cash compensation expenses are included in "employee compensation and benefits."
The Company's provision/(benefit) for taxes for the six months ended June 30, 2010 was $1.0 million versus -$1.1 million in the comparable period of the prior year.
Please see the tables included in this release for further detail on revenue and expenses for the six months ended June 30, 2010 with comparisons to the same period of the prior year.
The Company had cash and marketable securities at June 30, 2010 of $29.8 million. The Company has no debt. As of December 10, 2010, the Company had cash and marketable securities balances of approximately $27.3 million. In addition, the joint venture company that owned the Company's headquarter building in Bermuda completed its sale of the building in May 2010 and will subsequently distribute its assets, including the proceeds of the sale, to its joint venture partners, The Bank of Bermuda and the Company.
Shareholders' equity at June 30, 2010 was approximately $29.9 million.
Other Items
From January through December 15, 2010, the Company repurchased 287,133 shares of its common stock from employees or former employees for an aggregate amount of $1,469,098. The Company funded these repurchases with cash on hand.
Mark Phelps further commented, "The Company has been through a challenging period over the past couple of years, but the bulk of the corporate restructuring is now behind us and looking forward into 2011 we are focused once again on growing the business."
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 New York, New York and has additional operations or affiliates in Europe.
The Company's shares are currently traded on the Pink Sheets under the symbol "WPSL."
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 1-212-750-8585 (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 effects of the Company's corporate reorganization, 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 former 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, 2010 |
December 31, 2009 |
|
| (unaudited) | ||
| Assets: | ||
| Cash and cash equivalents | $ 27,439,189 | $ 21,407,458 |
| Fees receivable | 347,898 | 755,093 |
| Receivable from clearing broker | 479 | 13,039 |
|
Investments in unconsolidated affiliates (net of accumulated amortization of $617,790 at December 31, 2009) |
2,018,063 | 1,757,919 |
| Receivables from affiliates, net | 505,357 | 476,830 |
|
Investments, trading (cost $2,239,984 at June 30, 2010 and $2,785,735 at December 31, 2009, respectively) |
2,293,715 | 3,311,434 |
|
Investments, available for sale (cost $96,518 at June 30, 2010 and $7,968,192 at December 31, 2009, respectively) |
48,652 | 8,484,910 |
|
Furniture, equipment, software and leasehold improvements (net of accumulated depreciation and amortization of $3,522,455 and $7,862,722 at June 30, 2010 and December 31, 2009, respectively) |
461,055 | 663,607 |
| Interest receivable on shareholders' notes | 17,709 | 17,709 |
| Income taxes receivable | 3,786,417 | 6,995,505 |
| Deferred income taxes receivable | 397,964 | 363,555 |
| Other assets | 2,261,165 | 3,061,412 |
| $ 39,577,663 | $ 47,308,471 | |
| Liabilities and Shareholders' Equity: | ||
| Liabilities: | ||
| Employee compensation and benefits payable | $ 2,322,756 | $ 4,642,976 |
| Fees payable | 136,356 | 97,755 |
| Vendor payables | 3,214,518 | 5,011,748 |
| Accrued expenses and other liabilities | 4,049,759 | 3,892,192 |
| 9,723,389 | 13,644,671 | |
| Shareholders' Equity: | ||
|
Common shares, $0.01 par value (12,500,000 shares authorized; 5,444,820 and 5,587,464 shares issued, 5,442,320 and 5,584,964 shares outstanding at June 30, 2010 and December 31, 2009, respectively) |
54,448 | 55,875 |
| Additional paid-in-capital | 135,735,428 | 134,021,928 |
| Accumulated other comprehensive income | 492,738 | 1,164,630 |
| Retained earnings/(deficit) | (106,246,013) | (101,337,258) |
|
Common shares held in treasury, at cost, $0.01 par value (2,500 shares at June 30, 2010 and December 31, 2009) |
(5,325) | (5,325) |
| 30,031,276 | 33,899,850 | |
| Less: notes receivable for common shares | (177,002) | (236,050) |
| 29,854,274 | 33,663,800 | |
| $ 39,577,663 | $ 47,308,471 | |
| W.P. Stewart & Co., Ltd. | |||
| Unaudited Condensed Consolidated Statements of Operations | |||
| For the Six Months Ended June 30, | |||
| 2010 | 2009 | % | |
| Revenue: | |||
|
Fees (includes fees from affiliates of $499,666 and $461,776 for 2010 and 2009, respectively) |
$ 8,363,030 | $ 8,056,487 | 3.80% |
| Commissions | 369,599 | 693,588 | -46.71% |
| Realized and unrealized gains/(losses) on investments | 544,975 | 169,499 | 221.52% |
| Interest and other | 1,318,393 | 677,026 | 94.73% |
| 10,595,997 | 9,596,600 | 10.41% | |
| Expenses: | |||
| Employee compensation and benefits | 8,070,014 | 10,332,413 | -21.90% |
| Fees paid out | 915,017 | 528,278 | 73.21% |
| Commissions, clearance and trading | 264,104 | 398,103 | -33.66% |
| Research and administration | 2,624,692 | 4,608,515 | -43.05% |
| Marketing | 598,000 | 677,694 | -11.76% |
| Depreciation and amortization | 43,068 | 376,271 | -88.55% |
| Other operating | 1,980,328 | 3,326,805 | -40.47% |
| 14,495,223 | 20,248,079 | -28.41% | |
| Income/(loss) before taxes | (3,899,226) | (10,651,479) | -63.39% |
| Provision/(benefit) for taxes | 1,009,529 | (1,084,576) | -193.08% |
| Net income/(loss) | $ (4,908,755) | $ (9,566,903) | -48.69% |
| Earnings/(loss) per share: | |||
| Basic earnings/(loss) per share | $ (0.92) | $ (1.82) | -49.45% |
| Diluted earnings/(loss) per share | $ (0.92) | $ (1.82) | -49.45% |
| W.P. Stewart & Co., Ltd. | |||||||
| Net Flows of Assets Under Management* | |||||||
| (in millions) | |||||||
| For the Three Months Ended | For the Six Months Ended | ||||||
| Jun. 30, 2010 | Mar. 31, 2010 | Jun. 30, 2009 | Jun. 30, 2010 | Jun. 30, 2009 | |||
| Existing Accounts: | |||||||
| Contributions | $ 42 | $ 14 | $ 26 | $ 56 | $ 51 | ||
| Withdrawals | (29) | (20) | (27) | (49) | (59) | ||
| Net Flows of Existing Accounts | 13 | (6) | (1) | 7 | (8) | ||
| Publicly Available Funds: | |||||||
| Contributions | 24 | 46 | 7 | 70 | 11 | ||
| Withdrawals | (40) | (9) | (4) | (49) | (26) | ||
| Direct Accounts Opened | 12 | 24 | 12 | 36 | 12 | ||
| Direct Accounts Closed | (15) | (29) | (44) | (44) | (153) | ||
| Net New Flows | (19) | 32 | (29) | 13 | (156) | ||
| Net Flows of Assets Under Management | $ (6) | $ 26 | $ (30) | $ 20 | $ (164) | ||
| * The table above sets forth the total net flows of assets under management for the three months ended June 30, 2010, March 31, 2010 and June 30, 2009, respectively, and for the six months ended June 30, 2010 and 2009, 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. | |||||||