W.P. Stewart & Co., Ltd. Announces:
* Trading to Cease on the New York Stock Exchange
* Company to Deregister Its Common Shares under
the Securities Exchange Act of 1934
* Investment Performance and Business Update
* Third Quarter and Nine Months 2008 Financial Results
HAMILTON, Bermuda, Jan. 5, 2009 (GLOBE NEWSWIRE) -- W.P. Stewart & Co., Ltd.
(NYSE:WPL) ("W.P. Stewart" or the "Company") today announced it has been
notified by the New York Stock Exchange ("NYSE") that the Company is considered
below continued listing criteria since its average market capitalization was
less than $25 million over a 30 trading-day period. In light of such
non-compliance, the Company's common shares will not continue to be eligible
for trading on the NYSE. Under applicable NYSE procedures, the Company has 10
days from the receipt of official notice of non-compliance to appeal the
delisting proceedings with the NYSE. The Company does not expect to submit an
appeal of the NYSE delisting. In conversations with the NYSE, it was determined
that trading of the Company's common shares on the NYSE will be suspended
effective at the opening of the market on Friday, 9 January 2009.
In light of such delisting and for the other reasons explained below, the
Company intends to terminate the registration of its common shares under the
Securities Exchange Act of 1934 ("Exchange Act"). On or before 30 January 2009,
the Company will file with the SEC a Form 15, Notice of Termination of
Registration and Suspension of Duty to File, to terminate its reporting
obligations under the Exchange Act. When the Form 15 has been filed, the
Company's obligation to file certain reports with the SEC, such as Forms 20-F
and 6-K, will be suspended. The deregistration of the Company's common shares
under the Exchange Act will become effective 90 days after the date on which
the Form 15 was filed. The Company is eligible to deregister under the Exchange
Act because its common shares were held of record by fewer than 300 persons on
1 January 2009, the beginning of its fiscal year.
The Company has applied to the Bermuda Stock Exchange ("BSX") to convert its
secondary listing on the BSX to a primary listing. The Company expects its
common shares will also continue to trade in the Pink Sheets, a centralized
electronic quotation service for over-the-counter securities, so long as market
makers demonstrate an interest in trading in the Company's common shares. The
Company will provide its new ticker symbol for trading on the Pink Sheets as
soon as it becomes available. Although the Company currently intends to
publicly provide information necessary to maintain trading in these markets,
including quarterly earnings reports consistent with its historical practice,
the Company can give no assurance that its common shares will continue to be
actively traded on the Pink Sheets, on the BSX or on any other securities
exchange or quotation medium.
The Company's third quarter and nine month results are set forth below. The
Company's client portfolios significantly outperformed the S&P 500 in 2008, and
the Company continues to seek opportunities to grow its business. In relation
to today's announcements, Mark Phelps, President and Chief Executive Officer,
commented: "2008 has been a challenging year for W.P. Stewart, exacerbated by
the dramatic fall in the stock market in the second half of the year.
Nevertheless, against this background the Company has continued to restructure
itself and has performed relatively well for its clients compared to the
market. We have also welcomed Arrow Capital Management as a significant new
shareholder through the investment by several of its funds. As we move into
2009, it is clear that we need to take further steps to reduce costs,
consolidate the corporate structure and enter into new distribution
arrangements that will enable us once again to grow our assets under
management. The deregistering of the common shares and ceasing to trade on the
NYSE will go a significant way toward reducing the Company's costs, and it will
better enable management to focus on investment performance and potential new
distribution arrangements that are central to our long-term strategy for
success. Following the delisting of the Company's common shares on the NYSE, we
expect that shareholders will be able to continue trading on the BSX and the
Pink Sheets and have taken steps to facilitate continued trading in these
markets."
In light of the severe downturn in the securities markets and the global
economic recession, the Company has now concluded that it can no longer sustain
the burdens of being a publicly reporting company under the Exchange Act. The
Board of Directors' decision to deregister under the Exchange Act was based on
the recommendation of a Special Committee of independent directors. The Special
Committee and the Board were of the view that compliance with the reporting
requirements of the Exchange Act and with the requirements of the
Sarbanes-Oxley Act of 2002 is disproportionately expensive and unduly complex
in relation to the Company's business, earnings and size. The Board of
Directors believes that its decision will result in significant cost-savings
and will enable management to focus more intensely on delivering long-term
shareholder value. In reaching its decision, the Board considered a number of
specific factors, including among other things:
-- the ongoing direct and indirect costs of Exchange Act
compliance and the disproportionate impact of the foregoing
costs on the Company's profitability;
-- the significant burden on the Company's management involved in
the preparation of the Company's public reports and compliance
with accounting and other requirements of the Exchange Act;
-- the limited benefits to the Company and its unaffiliated
shareholders from the Company's status as a "reporting company"
in light of, among other things, the fact that the price of the
common shares has been low and the common shares have had
limited liquidity in recent periods;
-- the availability of a means to provide continued transparency
and some liquidity for shareholders in the Pink Sheets and on
the BSX;
-- the market value of the common shares and the Company's
imminent delisting from the NYSE; and
-- the substantially reduced scale of operations of the Company
over the past two years.
Stock Repurchase Program
The Company also announced today that its Board of Directors has authorized a
stock repurchase program of up to $1.5 million of repurchase cost. The Company
said that such purchases may be made in the discretion of the Company from time
to time at prevailing prices in the open market, by block purchases, in private
transactions or in derivative transactions in compliance with any applicable
SEC or BSX regulations. The Company has approximately 5.54 million common
shares outstanding. Any repurchased shares will be cancelled or held in
treasury for general corporate purposes. The Company intends to fund any such
repurchases with cash on hand.
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 -31.2%, post-fee,
compared to -37.0% for the S&P 500. These performance results are preliminary
and subject to change on final reconciliation of all relevant data.
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.
In respect of the above results, Alex von Furstenberg of Arrow Capital
Management stated, "While W.P. Stewart's market value has dramatically declined
since our initial investment, we are very pleased with the firm's investment
performance and the steps it has taken to prepare for growth in the years
ahead. I remain convinced that the kind of high quality work that the firm does
will be very much back in favor as investors take stock of what has happened in
the recent past."
Business Update
As previously reported, at the Company's Annual General Meeting of shareholders
in November, the following slate of Directors was elected: William P. Stewart
(Executive Chairman), Angus S. King, Alfred J. Mulder, Mark I. Phelps, John C.
Russell, Henry B. Smith, Heinrich Spangler, Richard D. Spurling, and Alexandre
von Furstenberg. Going forward, the Company's executive officers consist of the
following individuals: Mark I. Phelps, President and Chief Executive Officer;
Rocco Macri, Managing Director - Chief Operating Officer; Susan G. Leber,
Managing Director - Chief Financial Officer; Sylvia A. Cart, Deputy Managing
Director - Broker/Dealer; Frederick M. Ryan, Deputy Managing Director -
Investor Relations; and Debra Randall, Corporate Secretary.
As a result of the Company's continued expense rationalization, overhead
throughout the Company has been reduced and employee headcount has been lowered
to 43 as of 31 December 2008. In addition, the Company is concentrating its
research efforts primarily in New York and Bermuda and accordingly the expense
base with respect to its operations in London has been significantly decreased.
The Company also is concentrating its U.S. client service and marketing efforts
in New York. The Company expects to maintain a strong on-going business
relationship with the former employees of the Company's Portland, Maine
operations, who have formed a new company to conduct this business.
Assets Under Management
Assets under management ("AUM") at 30 September 2008 were approximately $1.9
billion, compared with approximately $2.2 billion at 30 June 2008. In the
attached tables a complete breakdown of AUM flows with comparisons to earlier
periods is provided.
As of 31 December 2008, AUM was approximately $1.4 billion; the majority of the
decline from 30 September 2008 reflects market value changes.
Third Quarter 2008 Financial Results
The Company today reported a net loss of $31.2 million, or $0.62 per share
(diluted) and $0.62 per share (basic), for the third quarter ended 30 September
2008. This loss includes third quarter non-recurring, cash and non-cash charges
of approximately $22.2 million or $0.44 per share (diluted). Of such amount,
the non-recurring, non-cash charges of approximately $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,
non-recurring, cash charges of approximately $3.5 million were incurred in the
period reflecting agreements with certain employees whose employment terminated
during the quarter and the 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, the third
quarter 2008 net loss was $9.0 million, or $0.18 per share (diluted). These
results compare with net income in the third quarter of 2007 of $9.2 million,
or $0.20 per share (diluted) and $0.20 per share (basic). These prior year
results include a non-recurring gain on the sale of the Company's aircraft of
$10.2 million, post tax, as well as non-recurring expenses of $2.0 million
related to agreements with employees whose employment with the Company
terminated in the quarter.
Net results on a cash basis for the quarter ended 30 September 2008 were -$7.6
million (net loss of $31.2 million adjusted to include $23.6 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 -$0.15 per share (diluted). In the same quarter of the
prior year, cash earnings were $13.3 million (net income of $9.2 million
adjusted for the inclusion of $4.1 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 $0.29 per share (diluted).
For the third quarter of 2008 there were 50,406,516 common shares outstanding
on a weighted average diluted basis (50,406,516 - weighted average basic)
compared to 46,242,070 common shares outstanding for the third quarter of 2007
on the same weighted average diluted basis (46,190,607 - weighted average
basic). Subsequent to the third quarter, the Company completed a one-for-ten
share consolidation, pursuant to which every ten common shares, par value
$0.001 per share, outstanding as of 19 November 2008 were consolidated,
reclassified and converted into one new common share of the Company, par value
$0.01 per share. All share numbers and per share dollar figures for the period
ended 30 September 2008 are provided prior to, and without giving effect to,
the share consolidation.
Nine Month Results
For the nine months ended 30 September 2008 the net loss was $42.8 million, or
$0.90 per share (diluted) and $0.90 per share (basic), on revenues of $27.7
million. This loss includes non-recurring cash and non-cash charges of
approximately $24.4 million or $0.51 per share (diluted). For the nine-month
period there were non-recurring, non-cash charges of approximately $18.8
million or $0.39 per share (diluted), which as noted above for the third
quarter, included $18.7 million related to an impairment of intangible assets
and goodwill. In addition, during the nine-month period there were certain
non-recurring cash charges 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 nine months ended 2008, the net loss was $18.3
million, or $0.38 per share (diluted). For the nine months ended 30 September
2007 the Company recorded a net loss of $10.4 million or $0.23 per share
(diluted) and $0.23 per share (basic), on revenues of $84.8 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 $18.0
million, taken in the second quarter of 2007, related to an impairment of
intangible assets and non-recurring charges of approximately $7.8 million
related to agreements with certain employees, reached in the first and third
quarters of 2007, whose employment with the Company terminated in those
quarters.
Net results on a cash basis for the nine months ended 30 September 2008 were
-$10.3 million (net loss of $42.8 million adjusted to include $32.5 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 -$0.22 per share (diluted). In the same period of the
prior year, cash earnings were $26.0 million (net loss of $10.4 million
adjusted for the inclusion of $36.4 million representing non-cash income and
expenses consisting of unrealized gains and losses, non-cash compensation,
depreciation, amortization and other non-cash charges, including a
non-recurring impairment charge, on a tax-effected basis), or $0.56 per share
(diluted).
For the nine months ended 30 September 2008, there were 47,738,182 common
shares outstanding on a weighted average diluted basis (47,738,182 - weighted
average basic) compared to 46,097,326 common shares outstanding for the same
period in 2007 on the same weighted average diluted basis (46,071,553 -
weighted average basic).
Included with this release are tables containing revenue and expense detail for
the third quarter and nine months ended 30 September 2008 with comparisons with
prior periods.
Other Items
The average gross management fee was 1.09%, annualized, for the quarter ended
30 September 2008 and 1.07%, annualized, for the nine months ended 30 September
2008 compared to 1.05% and 1.07%, annualized, for each of the comparable
periods of the prior year. Excluding performance fee based accounts, the
average gross management fee was 1.30%, annualized, for the quarter ended 30
September 2008 and 1.26%, annualized, for the nine months ended 30 September
2008 compared to 1.27% and 1.23%, annualized, for each of the comparable
periods of the prior year.
For the third quarter of 2008 non-cash compensation expense related to the
Company's restricted share issuances to employees was approximately $3.5
million. For the nine months ended 30 September 2008, these non-cash
compensation charges were approximately $10.2 million. In the third quarter and
nine months of 2007, these non-cash compensation charges were approximately
$4.6 million and $13.9 million, respectively. These non-cash compensation
expenses are included in "employee compensation and benefits".
The Company currently anticipates that full year 2008 total revenue will be in
the range of approximately $31.5 million to $32.5 million. The Company will not
recognize further impairment charges due to the total impairment reported above
for the third quarter of 2008.
The Company had cash and marketable securities at 30 September 2008 of $44.6
million. The Company has no debt.
As of 31 December 2008, the Company had cash and marketable securities balances
in excess of $41.0 million.
Shareholders' equity at 30 September 2008 was approximately $47.5 million.
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 New York Stock
Exchange (NYSE:WPL) and on the Bermuda Stock Exchange (BSX:WPS).
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 and the delisting and deregistration of the
Company's common shares under the Exchange Act, 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, 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 Nine Months Ended September 30,
------------------------------------------
2008 2007 %
------------ ------------ ------------
Revenue:
Fees $ 23,496,009 $ 50,816,699 -53.76%
Commissions 5,003,740 11,610,603 -56.90%
Realized gain on sale
of aircraft -- 18,464,963 -100.00%
Realized and unrealized
gains/(losses)
on investments (1,749,388) 2,260,780 -177.38%
Interest and other 931,847 1,630,446 -42.85%
------------ ------------ ------------
27,682,208 84,783,491 -67.35%
------------ ------------ ------------
Expenses:
Employee compensation
and benefits 27,238,879 36,800,176 -25.98%
Fees paid out 2,570,256 5,327,871 -51.76%
Commissions, clearance
and trading 1,065,629 1,918,189 -44.45%
Research and
administration 7,358,174 9,790,618 -24.84%
Marketing 2,483,012 4,169,310 -40.45%
Depreciation and
amortization 1,291,829 4,327,881 -70.15%
Impairment of intangible
asset 18,692,284 17,985,000 3.93%
Other operating 9,749,635 7,698,772 26.64%
------------ ------------ ------------
70,449,698 88,017,817 -19.96%
------------ ------------ -------------
Income/(loss) before taxes (42,767,490) (3,234,326) 1222.30%
Provision for taxes (12,842) 7,196,279 -100.18%
------------ ------------ ------------
Net income/(loss) $(42,754,648) $(10,430,605) 309.90%
============ ============ ============
Earnings/(loss) per share:
Basic earnings/(loss) per
share $ (0.90) $ (0.23) 291.30%
============ ============ ============
Diluted earnings/(loss)
per share $ (0.90) $ (0.23) 291.30%
============ ============ ============
W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
For the Three Months Ended
----------------------------------------
Sept. 30, June 30, Sept. 30,
2008 2008 2007
------------ ------------ ------------
Revenue:
Fees $ 5,905,879 $ 7,475,737 $ 13,735,183
Commissions 661,987 2,626,279 2,894,860
Realized gain on sale
of aircraft -- -- 18,464,963
Realized and unrealized
gains/(losses)
on investments (94,785) (16,541) 981,738
Interest and other 270,609 283,260 609,683
------------ ------------ ------------
6,743,690 10,368,735 36,686,427
------------ ------------ ------------
Expenses:
Employee compensation and
benefits 8,793,763 7,597,035 11,162,970
Fees paid out 462,730 945,459 1,699,434
Commissions, clearance and
trading 319,482 429,174 403,276
Research and administration 2,446,129 2,411,088 3,327,352
Marketing 802,227 834,452 1,325,121
Depreciation and
amortization 675,462 (194,787) 1,441,374
Impairment of intangible
asset 18,692,284 -- --
Other operating 4,466,607 3,131,292 2,101,628
------------ ------------ ------------
36,658,684 15,153,713 21,461,155
------------ ------------ ------------
Income/(loss) before taxes (29,914,994) (4,784,978) 15,225,272
Provision for taxes 1,323,690 383,047 6,006,852
------------ ------------ ------------
Net income/(loss) $(31,238,684) $ (5,168,025) $ 9,218,420
============ ============ ============
Earnings/(loss) per share:
Basic earnings/(loss)
per share $ (0.62) $ (0.11) $ 0.20
============ ============ ============
Diluted earnings/(loss)
per share $ (0.62) $ (0.11) $ 0.20
============ ============ ============
% Change From
------------------------------
June 30, 2008 Sept.30, 2007
------------- -------------
Revenue:
Fees -21.00% -57.00%
Commissions -74.79% -77.13%
Realized gain on sale of aircraft -- -100.00%
Realized and unrealized gains/(losses)
on investments 473.03% -109.65%
Interest and other -4.47% -55.61%
------------- -------------
-34.96% -81.62%
------------- -------------
Expenses:
Employee compensation and benefits 15.75% -21.22%
Fees paid out -51.06% -72.77%
Commissions, clearance and trading -25.56% -20.78%
Research and administration 1.45% -26.48%
Marketing -3.86% -39.46%
Depreciation and amortization -446.77% -53.14%
Impairment of intangible asset -- --
Other operating 42.64% 112.53%
------------- -------------
141.91% 70.81%
------------- -------------
Income/(loss) before taxes 525.19% -296.48%
Provision for taxes 245.57% -77.96%
------------- -------------
Net income/(loss) 504.46% -438.87%
============= =============
Earnings/(loss) per share:
Basic earnings/(loss) per share 463.64% -410.00%
============= =============
Diluted earnings/(loss) per share 463.64% -410.00%
============= =============
W.P. Stewart & Co., Ltd.
Net Flows of Assets Under Management*
(in millions)
-----------
For the Three For the Nine
Months Ended Months Ended
----------------------------- ------------------
Sept.30, June 30, Sept.30, Sept.30, Sept.30,
2008 2008 2007 2008 2007
--------- -------- -------- -------- --------
Existing Accounts:
Contributions $ 23 $ 43 $ 58 $ 113 $ 197
Withdrawals (57) (259) (151) (541) (780)
--------- -------- -------- -------- --------
Net Flows of
Existing Accounts (34) (216) (93) (428) (583)
--------- -------- -------- -------- --------
Publicly Available
Funds:
Contributions 8 21 13 45 107
Withdrawals (74) (70) (168) (292) (477)
Direct Accounts
Opened 1 -- 7 6 150
Direct Accounts
Closed (187) (222) (312) (1,111) (2,569)
--------- -------- -------- -------- --------
Net New Flows (252) (271) (460) (1,352) (2,789)
--------- -------- -------- -------- --------
Net Flows of Assets
Under Management $ (286) $ (487) $ (553) $ (1,780) $ (3,372)
========= ======== ======== ======== ========
* The table above sets forth the total net flows of assets under
management for the three months ended September 30, 2008, June 30,
2008 and September 30, 2007, respectively, and for the nine months
ended September 30, 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 Trading to Cease On the NYSE, Company to Deregister Its Common Shares, Investment Performance and Business Update and 3Q and 9 Months 2008 Financial Results
| Source: W.P. Stewart & Co., Ltd.