DGAP-News: W.P. Stewart&Co., Ltd. Reports Second Half and Full Year 2010 Financial Results and Provides Corporate Update

W.P. Stewart&Co., Ltd.

26.08.2011 22:44
—————————————————————————

NEW YORK, 2011-08-26 22:43 CEST (GLOBE NEWSWIRE) — W.P. Stewart&Co., Ltd.
Reports Second Half and Full Year 2010 Financial Results and Provides Corporate
Update, Including:

— AUM of $1.5 Billion at June 30, 2011
— Cash/Marketable Securities of $25.2 Million at August 8, 2011
— Repurchase of 450,000 Shares

Financial Results

Second Half Highlights

W.P. Stewart&Co., Ltd. (–W.P. Stewart– or the –Company–) today reported a net
loss of $6.6 million, or $1.28 per share (diluted) and $1.28 per share (basic),
for the six months ended December 31, 2010. This loss includes cash and
non-cash charges of approximately $2.6 million or $0.50 per share (diluted), on
a tax-effected basis, related to (a) professional fees incurred in connection
with the corporate restructuring of the Company and certain of its formerly
Bermuda-based subsidiaries that was concluded in May 2010 as previously
reported, (b) other costs relating to corporate consolidation and cost
rationalization efforts, (c) severance payments and non-cash compensation
charges related to employees whose employment terminated during the period and
(d) an adjustment to tax assets and liabilities. Excluding these cash and
non-cash charges, the net loss for the six months ended December 31, 2010 was
$4.0 million, or $0.78 per share (diluted). These results compare with a net
loss for the six months ended December 31, 2009 of $7.5 million, or $1.42 per
share (diluted) and $1.42 per share (basic). These prior year results include
cash and non-cash charges aggregating approximately $2.6 million, or $0.49 per
share (diluted), on a tax-effected basis, primarily relating to (i)
professional fees incurred in connection with (1) the reorganization of our
U.S. mutual fund, (2) the exploration of a strategic transaction that was not
completed and (3) the corporate restructuring of the Company and certain of its
formerly Bermuda-based subsidiaries that was concluded in May 2010 as
previously reported and (ii) severance payments and non-cash compensation
charges related to employees terminated in connection with the corporate
restructuring. The prior year results also include non-cash income of $2.8
million, or $0.53 per share (diluted), on a tax-effected basis, related to (a)
a reversal of an over-accrual of fees paid out expense relating to fees payable
to solicitors and (b) an adjustment to tax assets and liabilities. Excluding
these cash and non-cash charges and non-cash income, the net loss for the six
months ended December 31, 2009 was $7.7 million, or $1.46 per share (diluted).

Net results on a cash basis for the six months ended December 31, 2010 were
-$2.1 million (net loss of $6.6 million adjusted for $4.5 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 -$0.40 per share (diluted). In the same six months
of the prior year, net results on a cash basis were -$6.8 million (net loss of
$7.5 million adjusted to include $0.7 million, representing non-cash income and
expenses consisting of unrealized gains and losses, non-cash compensation,
depreciation, amortization, the reversalof an over-accrual of fees paid out
and the effect of an adjustment to tax assets and liabilities mentioned above,
and other non-cash charges, on a tax-effected basis), or -$1.28 per share
(diluted).

For the six months ended December 31, 2010 there were 5,155,550 common shares
outstanding on a weighted average diluted basis (5,155,550 – weighted average
basic) compared to 5,303,361 common shares outstanding for the six months ended
December 31, 2009 on the same weighted average diluted basis (5,303,361 –
weighted average basic).

Full Year 2010 Highlights

For the year ended December 31, 2010, the net loss was $11.5 million, or $2.20
per share (diluted) and $2.20 per share (basic), on revenues of $19.7 million.
This loss includes cash and non-cash charges of approximately $3.2 million or
$0.61 per share (diluted), on a tax-effected basis, related to (a) professional
fees incurred in connection with (1) the exploration of a strategic transaction
not completed and (2) the corporate restructuring concluded in May 2010, (b)
other costs relating to corporate consolidation and cost rationalization
efforts, (c) severance payments and non-cash compensation charges related to
employees whose employment terminated during the period and (d) an adjustment
to tax assets and liabilities. Excluding these cash and non-cash charges, the
net loss for the year ended December 31, 2010 was $8.3 million, or $1.59 per
share (diluted). For the year ended December 31, 2009, the Company recorded a
net loss of $17.1 million or $3.24 per share (diluted) and $3.24 per share
(basic), on revenues of $19.7 million. In 2009, results include certain cash
and non-cash charges aggregating $3.7 million or $0.71 per share (diluted), on
a tax-effected basis, consisting of non-cash charges of approximately $625,000
related to an adjustment in the carrying value of an investment in an affiliate
and cash and non-cash charges of approximately $3.1 million primarily
reflecting (i) the disposal of a portion of leased space in New York, (ii)
professional fees related to the reorganization of our U.S. mutual fund, the
exploration of a strategic transaction not completed and the corporate
restructuring concluded in May 2010 and (iii) severance payments and non-cash
compensation charges related to employees terminated in connection with the
corporate restructuring. The loss in 2009 also includes non-cash income of $2.8
million, or $0.53 per share (diluted), on a tax-effected basis, related to (a)
a reversal of an over-accrual of fees paid out expense relating to fees payable
to solicitors and (b) an adjustment to tax assets and liabilities. Excluding
these cash and non-cash charges and non-cash income, the net loss for the year
ended December 31, 2009 was $16.2 million, or $3.07 (diluted).

Net results on a cash basis for the year ended December 31, 2010 were -$2.7
million (net loss of $11.5 million adjusted for $8.8 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 -$0.51 per share (diluted). For the year ended
December 31, 2009, net results on a cash basis were -$12.6 million (net loss of
$17.1 million adjusted for $4.5 million, representing non-cash income and
expenses consisting of unrealized gains and losses, non-cash compensation,
depreciation, amortization, the reversal of an over-accrual of fees paid out
and the effect of an adjustment to tax assets and liabilities mentioned above,
and other non-cash charges, on a tax-effected basis), or -$2.39 per share
(diluted).

For the full year ended December 31, 2010 there were 5,234,651 common shares
outstanding on a weighted average diluted basis (5,234,651 – weighted average
basic) compared to 5,278,126 common shares outstanding for the year ended
December 31, 2009 on the same weighted average diluted basis (5,278,126 –
weighted average basic).

Included in this release are tables containing revenue and expense detail for
the six months and year ended December 31, 2010 with comparisons to prior
periods.

Investment Performance and Assets Under Management Update

The performance for the W.P. Stewart U.S. Equity Composite (the –Composite–)
for the year ended December 31, 2010, was 13.4%, pre-fee, and 12.4%, post-fee,
compared with 15.1% for the S&P 500. As of July 31, 2011, year-to-date
performance for the Composite was 2.2%, pre-fee, and 1.6%, post-fee, compared
with 3.9% for the S&P 500. For the three years ending June 30, 2011, annualized
performance for the Composite was 7.5%, pre-fee, and 6.4%, post-fee, which was
3.1% ahead of the S&P 500 at 3.3% for the same period. Interim monthly and
quarterly performance for the Composite for 2011 are posted on the Company–s
website at www.wpstewart.com.

Assets under management (–AUM–) at June 30, 2011 were approximately $1.5
billion (preliminary), compared with approximately $1.6 billion at December 31,
2010. In the attached tables a complete breakdown of AUM flows for the year
ended December 31, 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 $9.1 million for the six months ended December 31, 2010, down
10.4% from $10.1 million for the same period in the prior year. Revenues were
$19.7 million for the full year ended December 31, 2010, compared to $19.7
million for 2009.

The average gross management fee, annualized, was 1.07% for the six months
ended December 31, 2010 and 1.06% for the year ended December 31, 2010,
compared to 1.07% for six months ended December 31, 2009 on an annualized basis
and 1.08% for the year ended December 31, 2009. 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 December 31, 2010 and 1.27% for the year ended
December 31, 2010, compared to 1.29% for the six months ended December 31, 2009
on an annualized basis and 1.29% for the year ended December 31, 2009
respectively, in each of the comparable periods of the prior year.

Total operating expenses for the six months ended December 31, 2010 were $14.6
million, including $1.4 million in cash and non-cash charges, on a tax-effected
basis, related to (a) professional fees incurred in the exploration of a
strategic transaction not completed and the corporate restructuring concluded
in May 2010 as mentioned above, (b) other costs relating to corporate
consolidation and cost rationalization efforts, and (c) severance payments and
non-cash compensation charges related to employees whose employment terminated
during the period. For the same six months of the prior year, total operating
expenses were $19.5 million, including $2.6 million in cash and non-cash
charges, on a tax-effected basis, related to (i) professional fees incurred in
the reorganization of our U.S. mutual fund, the exploration of a strategic
transaction not completed and the corporate restructuring concluded in May 2010
as mentioned above and (ii) severance payments and non-cash compensation
charges related to employees terminated in connection with the corporate
restructuring. These expenses were somewhat offset by $1.5 million of non-cash
income included in fees paid out resulting from a reversal of an over-accrual
of certain fees payable to solicitors. Total operating expenses for the year
ended December 31, 2010 were $29.1 million, including $2.0 million in cash and
non-cash charges, on a tax-effected basis, relating to (a) professional fees
incurred in the exploration of a strategic transaction and the corporate
restructuring concluded in May 2010, (b) other costs relating to corporate
consolidation and cost rationalization efforts, and (c) severance payments and
non-cash compensation related to employees whose employment terminated during
the period. This compares to total operating expenses for the year ended
December 31, 2009 of $39.7 million, including $3.7 million in charges (cash and
non-cash), on a tax-effected basis, relating to (1) an adjustment in the
carrying value of an investment in an affiliate, (2) the disposal of a portion
of leased spaced in New York, (3) professional fees incurred in the
reorganization of our U.S. mutual fund, the exploration of a strategic
transaction and the corporate restructuring concluded in May 2010, and (4)
severance payments and non-cash compensation charges related to employees
terminated in connection with the corporate restructuring. These expenses were
somewhat offset by $1.5 million of non-cash income included in fees paid out
resulting from a reversal of an over-accrual of certain fees payable to
solicitors.

For the six months and year ended December 31, 2010 non-cash compensation
expense related to the Company–s restricted share issuances to employees was
approximately $3.0 million and $5.5 million, respectively. For the same periods
of the prior year, these non-cash compensation charges were approximately $3.8
million and $7.0 million, respectively. These non-cash compensation expenses
are included in –employee compensation and benefits.–

The Company–s provision/(benefit) for taxes for the six months ended December
31, 2010 was $1.0 million versus -$1.8 million in the comparable period of the
previous year, and was $2.1 million versus -$2.9 million for the years ended
December 31, 2010 and 2009, respectively. The Company is currently engaged in
audits with two taxing authorities.

Please see the tables included in this release for further detail on revenue
and expenses for the six months and full years ended December 31, 2010 and
2009.

The Company had cash and marketable securities at December 31, 2010 of $25.8
million. The Company has no debt. As of August 8, 2011, the Company had cash
and marketable securities balances of approximately $25.2 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 is expected to
shortly distribute its assets, including the proceeds of the sale, to its joint
venture partners, The Bank of Bermuda and the Company.

Shareholders– equity at December 31, 2010 was approximately $25.9 million.

Other Items

From January through July 25, 2011, the Company repurchased 450,000 shares of
its common stock for an aggregate amount of $2,389,500. Of such number of
shares, 400,000 were repurchased from funds managed by Arrow Capital
Management, and the remainder were purchased from an employee of the firm. The
Board of Directors also recently reapproved (subsequent to the 400,000 share
repurchase noted above) a stock repurchase program of up to 10% of the
currently outstanding common shares from time to time in the discretion of the
Board–s Executive Committee, whether in open market or privately negotiated
transactions. The Company has approximately 5.0 million shares of common stock
outstanding. Any repurchased shares will be cancelled or held in treasury for
general corporate purposes. The Company intends to fund any repurchases with
cash on hand.

The firm has recently hired one new member for its investment management team.
David Tsoupros is a Vice President and analyst for WPS Advisors, Inc., the
firm–s wholly-owned investment research subsidiary. In May 2011, Heath Bogin,
who joined the firm–s investment management team in June 2010, left the firm to
pursue other interests. At the end of 2011 Samantha Epstein–s role will
transition from a member of the investment team to that of a consultant
focusing on client service.

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

December 31, December 31,
2010 2009
—————————–

Assets:
Cash and cash equivalents $ 23,676,690 $ 21,407,458
Fees receivable 204,718 755,093
Receivable from clearing broker — 13,039
Investments in unconsolidated affiliates 2,017,832 1,757,919
Receivables from affiliates, net 536,784 476,830
Investments, trading (cost $1,719,847 at December 31, 2010 and
$2,785,735 at
December 31, 2009, respectively) 2,058,284 3,311,434
Investments, available for sale (cost $12,400 at December 31,
2010 and $7,968,192 at
December 31, 2009, respectively) 23,730 8,484,910Furniture, equipment, software and leasehold improvements (net of
accumulated depreciation
and amortization of $3,570,177 and $7,862,722 418,081 663,607
for December 31, 2010 and December 31, 2009,
respectively)
Interest receivable on shareholders– notes — 17,709
Income taxes receivable 4,795,996 6,995,505
Deferred income taxes receivable 437,392 363,555
Other assets 2,582,134 3,061,412
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$ 36,751,641 $ 47,308,471
=============================

Liabilities and Shareholders– Equity:
Liabilities:
Employee compensation and benefits payable $ 2,633,827 $ 4,642,976
Fees payable 163,898 97,755
Vendor payables 2,719,774 5,011,748
Accrued expenses and other liabilities 5,334,677 3,892,192
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10,852,176 13,644,671
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Shareholders– Equity:
Common shares, $0.01 par value (12,500,000 shares authorized;
5,379,036 shares issued,
5,376,536 shares outstanding at December 31, 2010; 5,587,464
shares issued, 5,584,964
shares outstanding at December 31, 2009, 53,790 55,875
respectively)
Additional paid-in-capital 138,134,599 134,021,928
Accumulated other comprehensive income 566,310 1,164,630
Retained earnings/(deficit) (112,849,909) (101,337,258)
Common shares held in treasury, at cost, $0.01
par value (2,500 shares at
December 31, 2010 and December 31, 2009, (5,325) (5,325)
respectively)
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25,899,465 33,899,850

Less: notes receivable for common shares — (236,050)
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25,899,465 33,663,800
—————————–$ 36,751,641 $ 47,308,471
=============================

W.P. Stewart&Co., Ltd.
Unaudited Condensed Consolidated
Statements of Operations

For the Year Ended December 31,
—————————————–
2010 2009 %
—————————————–

Revenue:
Fees $ 16,077,616 $ 16,300,824 -1.37%
Commissions 781,623 1,350,944 -42.14%
Realized and unrealized 1,279,339 647,945 97.45%
gains/(losses) on investments
Interest and other 1,548,042 1,443,699 7.23%
—————————————–

19,686,620 19,743,412 -0.29%
—————————————–

Expenses:
Employee compensation and benefits 16,569,791 22,043,945 -24.83%
Fees paid out 1,666,712 (238,152) -799.85%
Commissions, clearance and trading 486,392 789,014 -38.35%
Research and administration 5,047,545 7,932,095 -36.37%
Marketing 1,360,920 1,427,933 -4.69%
Depreciation and amortization 90,791 722,419 -87.43%
Other operating 3,922,337 7,045,413 -44.33%
—————————————–
29,144,488 39,722,667 -26.63%
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Income/(loss) before taxes (9,457,868) (19,979,255) -52.66%

Provision/(benefit) for taxes 2,054,783 (2,865,608) -171.70%
—————————————–

Net income/(loss) $ (11,512,651) $ (17,113,647) -32.73%
=========================================

Earnings/(loss) per share:

Basic earnings/(loss) per share $ (2.20) $ (3.24) -32.10%=========================================

Diluted earnings/(loss) per share $ (2.20) $ (3.24) -32.10%
=========================================

W.P. Stewart&Co., Ltd.
Unaudited Condensed Consolidated
Statements of Operations

For the Six Months Ended December 31,
—————————————
2010 2009 %
—————————————

Revenue:
Fees $ 7,714,586 $ 8,244,337 -6.43%
Commissions 412,024 657,356 -37.32%
Realized and unrealized gains/(losses) 734,364 478,446 53.49%
on investments
Interest and other 229,649 766,673 -70.05%
—————————————

9,090,623 10,146,812 -10.41%
—————————————

Expenses:
Employee compensation and benefits 8,499,777 11,711,532 -27.42%
Fees paid out 751,695 (766,430) -198.08%
Commissions, clearance and trading 222,288 390,911 -43.14%
Research and administration 2,422,853 3,323,580 -27.10%
Marketing 762,920 750,239 1.69%
Depreciation and amortization 47,723 346,148 -86.21%
Other operating 1,942,009 3,718,608 -47.78%
—————————————
14,649,265 19,474,588 -24.78%
—————————————

Income/(loss) before taxes (5,558,642) (9,327,776) -40.41%

Provision/(benefit) for taxes 1,045,254 (1,781,032) -158.69%
—————————————

Net income/(loss) $ (6,603,896) $ (7,546,744) -12.49%
=======================================Earnings/(loss) per share:

Basic earnings/(loss) per share $ (1.28) $ (1.42) -9.86%
=======================================

Diluted earnings/(loss) per share $ (1.28) $ (1.42) -9.86%
=======================================

W.P. Stewart&Co., Ltd.
Net Flows of Assets Under
Management*

(in millions)

For the Six Months Ended For the Year Ended
——————————————————
Dec. 31, Jun. 30, Dec. 31, Dec. 31, Dec. 31,
2010 2010 2009 2010 2009
——————————————————

Existing Accounts:
Contributions $ 46 $ 56 $ 40 $ 102 $ 91
Withdrawals (47) (49) (53) (96) (111)
——————————————————
Net Flows of Existing (1) 7 (13) 6 (20)
Accounts
——————————————————
Publicly Available Funds:
Contributions 78 70 47 148 57
Withdrawals (60) (49) (50) (109) (76)
Direct Accounts Opened 4 36 13 40 26
Direct Accounts Closed (47) (44) (54) (91) (207)
——————————————————
Net New Flows (25) 13 (44) (12) (200)
——————————————————

Net Flows of Assets Under $ (26) $ 20 $ (57) $ (6) $ (220)
Management
======================================================

* The table above sets forth the total net flows of assets under management for
the six months ended December 31, 2010, June 30, 2010 and December 31, 2009,
respectively, and for the years ended December 31, 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.

CONTACT: IRINFO@wpstewart.com
telephone:
888-695-4092 (toll-free within the U.S.)
212-750-8585 (outside the U.S.)
News Source: NASDAQ OMX

26.08.2011 Dissemination of a Corporate News, transmitted by DGAP –
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

DGAP–s Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

—————————————————————————

Language: English
Company: W.P. Stewart&Co., Ltd.

Bermuda
Phone:
Fax:
E-mail:
Internet:
ISIN: BMG849221061
WKN:

End of Announcement DGAP News-Service

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