Exhibit 99.1
W.P. STEWART & CO., LTD.
Press Release
Contact: Fred Ryan
telephone: 441-295-8585
W.P. Stewart & Co., Ltd. Reports Net Income For
Fourth Quarter and Full Year 2004
of $21.8 Million and $63.1 Million
Diluted earnings per share of $ 0.48 and $1.39 for the fourth quarter
and full year respectively
27 January, 2005
Hamilton, Bermuda
W.P. Stewart & Co., Ltd. today reported net income of $21.8 million, or
$0.48 per share (diluted) and $0.48 per share (basic), for the fourth quarter
ended 31 December 2004. This compares with net income in the fourth quarter of
the prior year of $10.2 million, or $0.23 per share (diluted) and $0.23 per
share (basic).
Fourth Quarter 2004 Highlights
For the fourth quarter of 2004 there were 45,676,651 common shares
outstanding on a weighted average diluted basis compared to 45,390,736 common
shares outstanding for the fourth quarter of 2003 on the same weighted average
diluted basis.
Cash earnings for the quarter ended 31 December 2004 were $23.9 million
(net income of $21.8 million adjusted to include $2.1 million representing
non-cash expenses of depreciation, amortization and other non-cash charges on a
tax effected basis), or $0.52 per share (diluted). In
Trinity Hall, 43 Cedar Avenue, Hamilton HM 12, Bermuda
mailing address: P. O. Box HM 2905, Hamilton HM LX, Bermuda
telephone: 441.295.8585 fax: 441.296.6823
the same quarter of the prior year, cash earnings were $12.0 million (net income
of $10.2 million adjusted for the inclusion of $1.8 million representing
non-cash expenses of depreciation, amortization and other non-cash charges on a
tax-effected basis), or $0.26 per share (diluted).
Results for the fourth quarter include a performance fee of $13.5 million
related to the performance, during 2004, of W.P. Stewart Holdings N.V., our
mutual fund listed on Euronext Amsterdam. Performance fees, if any, are only
recorded as of the date these are earned which, in the case of W.P. Stewart
Holdings N.V., was 31 December for 2004.
Assets under management at 31 December 2004 were more than $9.3 billion,
compared to approximately $8.5 billion at the end of the prior quarter, an
increase of 9.4% and an increase of 8.1% from the approximately $8.6 billion
reported at 31 December 2003.
Full Year Results
For the full year ended 31 December 2004, net income was up 46.6%,
compared to the prior year, to $63.1 million, or $1.39 per share (diluted) and
$1.40 per share (basic), on revenues of $152.3 million. Net income for the full
year ended 31 December 2003 was $43.1 million, or $0.95 per share (diluted) and
$0.97 per share (basic), on revenues of $118.8 million.
Cash earnings for the full year ended 31 December 2004 were $71.2 million
(net income of $63.1 million adjusted to include $8.1 million, representing
non-cash expenses of depreciation, amortization and other non-cash charges on a
tax-effected basis), or $1.56 per share (diluted). For the full year ended 31
December 2003, cash earnings were $50.4 million (net income of $43.1 million
adjusted for the inclusion of $7.3 million, representing non-cash expenses of
depreciation, amortization and other non-cash charges on a tax-effected basis),
or $1.11 per share (diluted).
For the full year ended 31 December 2004, there were 45,524,043 common
shares outstanding on a weighted average diluted basis compared to 45,197,965
common shares outstanding for the same period in 2003 on the same weighted
average diluted basis.
Performance
Performance in the W.P. Stewart & Co., Ltd. U.S. Equity Composite (the
"Composite") for the fourth quarter of 2004 was +15.9%, pre-fee, and +15.7%,
post-fee. For the full year ended 31 December 2004, performance in the Composite
was +20.4%, pre-fee, and +19.2%, post-fee. In each
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of the one, three, five and ten-year periods, ended 31 December 2004,
performance of the Composite has exceeded the performance of the S&P 500 on a
pre-fee and a post-fee basis.
Assets Under Management
Assets under management (AUM) at year-end were more than $9.3 billion,
compared with approximately $8.5 billion at 30 September 2004, and approximately
$8.6 billion reported at 31 December 2003.
Total net flows of AUM for the quarter ended 31 December 2004 were
approximately -$346 million, compared with total net flows of approximately
- -$187 million in the comparable quarter of 2003 and -$67 million in the third
quarter of 2004. Total net flows of AUM for the year ended 31 December 2004 and
2003 were approximately -$621 million and approximately -$336 million,
respectively.
In the fourth quarter of 2004, net cash flows to existing accounts were
approximately +$94 million, compared with net cash flows of -$43 million in the
fourth quarter of 2003. Net cash flows to existing accounts were approximately
+$60 million and approximately -$48 million for the full years ended 31 December
2004 and 2003, respectively.
Net new flows (net contributions to our publicly available funds and flows
from new accounts minus closed accounts) were approximately -$440 million for
the quarter, compared to approximately -$144 million for the same quarter of the
prior year. Net new flows were approximately -$681 million and approximately
- -$288 million for the full years ended 31 December 2004 and 2003, respectively.
Look Through Earning Power
W.P. Stewart & Co., Ltd. concentrates its investments in large, generally
less cyclical, growing businesses. Throughout most of the Company's history, the
growth in earning power behind clients' portfolios has ranged from approximately
11% to 22%, annually.
Currently, portfolio earnings growth remains solidly positive and the
Company's research analysts expect portfolio earnings growth to be within the
historical range over the next few years.
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Revenues and Profitability
Revenues were $48.4 million for the quarter ended 31 December 2004, up
65.1% from $29.3 million, for the same quarter of 2003. Revenues for the full
years ended 31 December 2004 and 2003 were $152.3 million and $118.8 million,
respectively.
The average gross management fee, excluding performance fees, was 1.18%
for the quarter ended 31 December 2004 and 1.19% for the year ended 31 December
2004, compared to 1.21% and 1.22% in each of the comparable periods of the prior
year.
Total operating expenses increased 38.2% to $23.4 million, for the fourth
quarter 2004, from $16.9 million in the same quarter of the prior year. Total
operating expenses were $81.3 million and $69.7 million for the full years ended
31 December 2004 and 2003, respectively.
Pre-tax income, at $25.1 million, was 51.7% of gross revenues for the
quarter ended 31 December 2004, compared to $12.4 million or 42.3% of gross
revenues in the comparable quarter of the prior year. Pre-tax income was $71.0
million (46.6 % of gross revenues) for the full year ended 31 December 2004, and
$49.1 million (41.3% of gross revenues) for the full year ended 31 December
2003.
The Company's provision for taxes for the quarter ended 31 December 2004
was $3.3 million versus $2.2 million in the comparable quarter of the prior
year, and was $7.9 and $6.0 million for the years ended 31 December, 2004 and
2003, respectively. The tax rate was approximately 11.1% and 12.2% of income
before taxes for the full years ended 31 December 2004 and 2003, respectively.
The higher than previously anticipated tax rate reflects the performance fee
earned on 31 December and the fact that a portion is being taxed as U.S.
effectively connected business income.
Other Events
The Company paid a dividend of $0.30 per common share on 29 October 2004
to shareholders of record as of 15 October 2004 and will pay a dividend of $0.30
per share on 28 January, 2005 to shareholders of record as of 14 January, 2005.
Conference Call
In conjunction with this fourth quarter 2004 earnings release, W.P.
Stewart & Co., Ltd. will host a conference call on Thursday, 27 January 2005.
The conference call will commence promptly
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at 9:15am (EST) and will conclude at 10:00am (EST). Those who are interested in
participating in the teleconference should dial 1-800-370-0898 (within the
United States) or +973-409-9260 (outside the United States). The conference ID
is "W.P. Stewart".
To listen to the live broadcast of the conference over the Internet,
simply visit our website at http://www.wpstewart.com and click on the Investor
Relations tab for a link to the web-cast.
The teleconference will be available for replay from Thursday 27 January,
2005 at 12:00 noon (EST) through Friday, 28 January, 2005 at 5:00 p.m. (EST). To
access the replay, please dial 1-877-519-4471 (within the United States) or +
973-341-3080 (outside the United States). The PIN number for accessing this
replay is 5589280.
You will be able to access a replay of the Internet broadcast through
Thursday, 3 February, 2005, on the Company's website at www.wpstewart.com. The
Company will respond to questions submitted by e-mail, following the conference.
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
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
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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.
# # #
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W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
For the Three Months Ended % Change From
----------------------------------------------- -------------------------------
Dec. 31, 2004 Sept. 30, 2004 Dec. 31, 2003 Sept. 30, 2004 Dec. 31, 2003
------------- -------------- ------------- -------------- -------------
Revenue:
Fees $38,917,688 $25,717,280 $24,064,692 51.33% 61.72%
Commissions 8,908,412 8,078,565 4,935,532 10.27% 80.50%
Interest and other 605,813 285,539 328,407 112.16% 84.47%
----------- ----------- ----------- ----------- -----------
48,431,913 34,081,384 29,328,631 42.11% 65.14%
----------- ----------- ----------- ----------- -----------
Expenses:
Employee compensation and benefits 9,686,277 6,398,023 5,372,710 51.39% 80.29%
Fees paid out 2,488,725 1,812,177 1,540,182 37.33% 61.59%
Commissions, clearance and trading 1,800,255 1,729,340 1,066,542 4.10% 68.79%
Research and administration 3,712,891 3,637,164 3,646,302 2.08% 1.83%
Marketing 1,835,205 1,056,972 1,297,621 73.63% 41.43%
Depreciation and amortization 2,009,392 2,021,273 2,001,262 -0.59% 0.41%
Other operating 1,836,197 2,230,870 1,988,878 -17.69% -7.68%
----------- ----------- ----------- ----------- -----------
23,368,942 18,885,819 16,913,497 23.74% 38.17%
----------- ----------- ----------- ----------- -----------
Income before taxes 25,062,971 15,195,565 12,415,134 64.94% 101.87%
Provision for taxes 3,258,026 1,519,556 2,187,437 114.41% 48.94%
----------- ----------- ----------- ----------- -----------
Net income $21,804,945 $13,676,009 $10,227,697 59.44% 113.20%
=========== =========== =========== =========== ===========
Earnings per share:
Basic earnings per share $ 0.48 $ 0.30 $ 0.23 60.00% 108.70%
=========== =========== =========== =========== ===========
Diluted earnings per share $ 0.48 $ 0.30 $ 0.23 60.00% 108.70%
=========== =========== =========== =========== ===========
W.P. Stewart & Co., Ltd.
Unaudited Condensed Consolidated Statements of Operations
For the Year Ended December 31,
-------------------------------------------------------
2004 2003 %
------------ ------------ ------------
Revenue:
Fees $116,005,500 $ 94,062,338 23.33%
Commissions 34,819,726 22,461,350 55.02%
Interest and other 1,496,179 2,278,783 -34.34%
------------ ------------ ------------
152,321,405 118,802,471 28.21%
------------ ------------ ------------
Expenses:
Employee compensation and benefits 29,102,102 22,941,582 26.85%
Fees paid out 7,760,372 6,058,705 28.09%
Commissions, clearance and trading 7,371,412 4,810,992 53.22%
Research and administration 14,781,318 14,429,008 2.44%
Marketing 5,617,923 4,709,203 19.30%
Depreciation and amortization 8,038,837 7,933,277 1.33%
Other operating 8,648,979 8,861,154 -2.39%
------------ ------------ ------------
81,320,943 69,743,921 16.60%
------------ ------------ ------------
Income before taxes 71,000,462 49,058,550 44.73%
Provision for taxes 7,851,775 5,983,267 31.23%
------------ ------------ ------------
Net income $ 63,148,687 $ 43,075,283 46.60%
============ ============ ============
Earnings per share:
Basic earnings per share $ 1.40 $ 0.97 44.33%
============ ============ ============
Diluted earnings per share $ 1.39 $ 0.95 46.32%
============ ============ ============
W.P. Stewart & Co., Ltd.
Net Flows of Assets Under Management*
(in millions)
For the Three Months Ended For the Year Ended
------------------------------------------------- -------------------------------
Dec. 31, 2004 Sept. 30, 2004 Dec. 31, 2003 Dec. 31, 2004 Dec. 31, 2003
------------- -------------- ------------- ------------- -------------
Existing Accounts:
Contributions $ 377 $ 156 $ 185 $ 912 $ 844
Withdrawals (283) (185) (228) (852) (892)
--------- --------- --------- --------- ---------
Net Flows of Existing Accounts 94 (29) (43) 60 (48)
--------- --------- --------- --------- ---------
Publicly Available Funds:
Contributions 44 61 32 203 171
Withdrawals (72) (40) (54) (172) (167)
Direct Accounts Opened 75 36 85 228 326
Direct Accounts Closed (487) (95) (207) (940) (618)
--------- --------- --------- --------- ---------
Net New Flows (440) (38) (144) (681) (288)
--------- --------- --------- --------- ---------
Net Flows of Assets Under Management $ (346) $ (67) $ (187) $ (621) $ (336)
========= ========= ========= ========= =========
* The table above sets forth the total net flows of assets under management for
the three months ended December 31, 2004, September 30, 2004 and December 31,
2003, respectively, and for the years ended December 31, 2004 and 2003,
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.