Exhibit 99.1
W.P. STEWART & CO., LTD.
Contact: Fred M. Ryan
W.P. STEWART & CO., LTD. REPORTS
NET INCOME FOR SECOND QUARTER AND FIRST SIX MONTHS OF 2001
OF $19.8 MILLION AND $43.1 MILLION
Diluted earnings per share of $0.42 and $0.91
for the second quarter and first six months, respectively
1st August 2001
Hamilton, Bermuda
W.P. Stewart & Co., Ltd. today reported net income of $19.8 million, or $0.42
per share (diluted) and $0.45 per share (basic), for the second quarter ended 30
June 2001. This compares with net income in the second quarter of the prior year
of $22.8 million or $0.50 per share (diluted) and $0.55 per share (basic).
Second Quarter 2001 Highlights
For the second quarter of 2001 there were 47,226,097 common shares outstanding
on a weighted average fully diluted basis compared to 45,303,001 common shares
outstanding for the second quarter of 2000 on the same weighted average fully
diluted basis.
Cash earnings for the quarter ended 30 June 2001, adjusted to include non-cash
expenses such as depreciation and amortization, on a tax-effected basis, were
$21.5 million, or $0.46 per share (diluted), compared with $24.5 million, or
$0.54 per share (diluted) in the same quarter of the prior year.
Assets under management at quarter-end were $9.3 billion, reflecting no change
from the end of the prior quarter, and a decline of 19.8% from $11.6 billion at
30 June 2000.
Six Month Results
For the six months ended 30 June 2001, net income was down 12.9% to $43.1
million, or $0.91 per share (diluted) and $0.99 per share (basic), on revenues
of $86.9 million. Net income for the six months ended 30 June 2000 was $49.5
million, or $1.09 per share (diluted) and $1.19 (basic), on revenues of $102.8
million.
Cash earnings for the six months ended 30 June 2001 were $46.4 million, or $0.98
per share (diluted) versus $52.8 million or $1.17 per share (diluted), in the
same period of the prior year.
For the six months ended 30 June 2001, there were 47,270,362 common shares
outstanding on a weighted average fully diluted basis compared to 45,249,720
common shares outstanding for the same period in 2000 on the same weighted
average fully diluted basis.
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Trinity Hall, 43 Cedar Avenue, Hamilton HM 12, Bermuda
Mailing Address: P.O. Box HM 2905, Hamilton HM LX, Bermuda
Performance
Performance in the W.P. Stewart & Co., Ltd. U.S. equity composite for the second
quarter of 2001 was 0.8% pre-fee and 0.5% post-fee. For the six months ended 30
June 2001, the Company's performance was -6.0% pre-fee and -6.6% post-fee.
W.P. Stewart's five-year performance record for the period ended 30 June 2001
averaged 16.1% pre-fee (14.8% post-fee), compounded annually, compared to an
average of 14.5% for the S&P 500 in the period, and is ahead of the Company's
five-year pre-fee goal of 15% compounded annually.
Assets Under Management
Assets under management (AUM) at quarter-end were $9.3 billion, compared with
$9.3 billion for the quarter ended 31 March 2001, and $11.6 billion at the
quarter ended 30 June 2000.
Net flows of AUM for the quarter ended 30 June 2001 were $22 million, compared
with -$275 million in the comparable quarter of 2000. Net flows of AUM for the
six months ended 30 June 2001 and 2000 were -$271 million and -$921 million,
respectively.
In the second quarter of 2001, net cash outflows from existing accounts were
approximately -$7 million or 0.08%, compared with approximately -$156 million or
1.3% in the second quarter of 2000. Net cash outflows from existing accounts for
the six months ended 30 June 2001 and 2000, respectively, were -$163 million or
1.6% and -$400 million or 3.3%.
Net new account flows (new accounts minus closed accounts) were $29 million for
the quarter compared to -$119 million for the same quarter of the prior year.
Net new account flows were -$108 million and -$521 million for the six months
ended 30 June 2001 and 2000, respectively.
Look Through Earning Power
W.P. Stewart & Co., Ltd. concentrates its investments in large, generally less
cyclical, growing businesses. Annual growth in earning power behind clients'
portfolios has ranged from approximately 11% to 22% over the past 26 years. The
Company's research analysts anticipate further growth in portfolio earning power
of approximately 10% in 2001 and approaching 15% for the next few years.
Revenues and Profitability
Revenues were $38.5 million for the quarter ended 30 June 2001, down 18.8%, from
$47.3 million, for the same quarter 2000. Revenues for the six months ended 30
June 2001 and 2000 were $86.9 million and $102.8 million, respectively.
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The average gross management fee was 1.26% for the quarter ended 30 June 2001
and 1.25% for the six months ended 30 June 2001, compared to 1.28% and 1.27% in
the comparable periods of the prior year. The average fee was less than our
standard fee of 1.5% because a number of advisory contracts were entered into
prior to 1989, when we adopted our current fee arrangement, and because account
balances in excess of $25 million are subject to a lower fee.
Total operating expenses decreased 25.2%, to $16.4 million, for the second
quarter 2001, from $22.0 million in the same quarter of the prior year. Total
operating expenses were $39.1 million and $47.9 million for the six months ended
30 June 2001 and 2000, respectively.
Pre-tax income, at $22.0 million, was 57.3% of gross revenues for the quarter
ended 30 June 2001 compared to $25.4 million or 53.6% of gross revenues in the
comparable quarter of the prior year. Pre-tax income was $47.9 million (55.1% of
gross revenues) for the six months ended 30 June 2001, and $54.9 million (53.4%
of gross revenues) for the six months ended 30 June 2000.
The Company's provision for taxes for the quarter ended 30 June 2001 was $2.2
million versus $2.5 million in the comparable quarter of the prior year, and was
$4.8 million versus $5.5 million for the six months ended 30 June 2001 and 2000,
respectively. The tax rate is 10% of income before taxes for both periods.
Other Events
On 26 June 2001, the Company repurchased an aggregate of 873,661 common shares
of the Company from certain former employees at a purchase price of $20 per
share, for an aggregate purchase price of $17,473,220. Following that
repurchase, the Board of Directors replenished the Company's authority to
repurchase up to $20 million of the Company's shares at the discretion of the
Company's Executive Committee.
The Company paid a dividend of $0.30 per common share on 31 July 2001 to
shareholders of record as of 20 July 2001.
The Company has adopted its 2001 Equity Plan for employees of the Company and
its affiliates, effective on 24 July 2001. The three-year plan contemplates
grants composed of a combination of restricted shares and stock options, of
which an amount not exceeding 1% of the Company's outstanding shares will vest
or be exercisable in any year. The Company expects to register the shares under
the plan with the Securities and Exchange Commission. The Company intends to
seek shareholder approval for the Plan at its 2002 annual general meeting,
although grants under the plan may be made prior to that time.
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Investor Conference
In conjunction with this second quarter 2001 earnings release, W.P. Stewart &
Co., Ltd. will host a conference call on Thursday, 2 August 2001. The conference
will commence promptly at 9:15 a.m. (EDT) and conclude at 9:45 a.m. (EDT). Those
who are interested in participating in the teleconference should dial
1-800-711-5301 (within the United States) or +785-832-0301 (outside the United
States). The conference ID is "W.P. Stewart". To listen to the live broadcast of
the conference over the Internet, simply log on to the web at the following
address: http://www.videonewswire.com/WP/080201.
The teleconference will be available for replay from Thursday, 2 August 2001 at
12:00 noon (EDT) until Monday, 6 August 2001 at 5:00 p.m. (EDT). To access the
replay, please dial 1-888-566-0175 (within the United States) or +402-530-9314
(outside the United States). The webcast will be accessible for replay on the
Company's website until Friday, 10 August 2001.
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 listed for trading on the New York Stock Exchange
(symbol: WPL) and on the Bermuda Stock Exchange (symbol: 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, a 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, 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.
(Consolidated Statements of Operations appear on following page)
# # #
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W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
For the Three Months Ended June 30, For the Six Months Ended June 30,
----------------------------------- -------------------------------------
2001 2000 % 2001 2000 %
----------- ----------- ------- ------------ ------------ -------
Revenue:
Fees $29,068,474 $35,747,579 -18.68% $ 61,223,600 $ 77,360,190 -20.86%
Commissions 7,888,557 9,443,420 -16.47% 22,534,800 22,415,866 0.53%
Interest and other 1,501,290 2,160,289 -30.51% 3,184,302 3,099,572 2.73%
----------- ----------- ------- ------------ ------------ -------
38,458,321 47,351,288 -18.78% 86,942,702 102,875,628 -15.49%
----------- ----------- ------- ------------ ------------ -------
Expenses:
Employee compensation and benefits 4,923,804 9,365,055 -47.42% 14,543,260 19,623,337 -25.89%
Marketing fees 1,542,544 1,977,032 -21.98% 3,216,080 5,126,126 -37.26%
Commissions, clearance and trading 1,742,236 2,146,667 -18.84% 4,321,018 4,512,733 -4.25%
Research and administration 2,770,126 3,313,310 -16.39% 6,912,160 7,459,041 -7.33%
Depreciation and amortization 1,845,443 1,867,513 -1.18% 3,658,849 3,698,518 -1.07%
Other operating 3,603,868 3,300,104 9.20% 6,413,656 7,528,539 -14.81%
----------- ----------- ------- ------------ ------------ -------
16,428,021 21,969,681 -25.22% 39,065,023 47,948,294 -18.53%
----------- ----------- ------- ------------ ------------ -------
Income before taxes 22,030,300 25,381,607 -13.20% 47,877,679 54,927,334 -12.83%
Provision for taxes 2,203,030 2,524,814 -12.74% 4,787,768 5,464,324 -12.38%
----------- ----------- ------- ------------ ------------ -------
Net income $19,827,270 $22,856,793 -13.25% $ 43,089,911 $ 49,463,010 -12.88%
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Earnings per share:
Basic earnings per share $ 0.45 $ 0.55 -18.18% $ 0.99 $ 1.19 -16.81%
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Diluted earnings per share $ 0.42 $ 0.50 -16.00% $ 0.91 $ 1.09 -16.51%
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