$0.63 per share (basic), for the fourth quarter ended 31 December 2000. This compares with net income in the fourth quarter of the prior year of
$24.9 million or $0.59 per share (diluted) and $0.62 per share (basic).
Fourth Quarter 2000
For the fourth quarter of 2000 there were 46,271,520 common shares outstanding on a weighted average fully diluted basis compared to
43,003,396 common shares outstanding for the fourth quarter of 1999 on the same weighted average fully diluted basis.
Cash earnings for the quarter ended 31 December 2000, which exclude non-cash expenses such as depreciation and amortization, on a tax-effected
basis, were $28.4 million, or $0.61 per share (diluted), compared with $26.1 million, or $0.61 per share (diluted) in the same quarter of the prior year.
Assets under management at quarter-end were $10.3 billion, a decline of 4.6% from $10.8 billion at the end of the prior quarter, and a decline of
16.3% from $12.3 billion at 31 December 1999.
Full Year Results
For the full year 2000, net income was up 4.6% to $99.1 million, or $2.18 per share (diluted) and $2.37 per share (basic), on revenues of
$203.3 million. Net income in 1999 was $94.8 million, or $2.21 per share (diluted) and $2.37 (basic), on revenues of $193.3 million.
Cash earnings for 2000 were $105.9 million, or $2.33 per share (diluted)versus $98.3 million or $2.29 per share (diluted), in the prior year.
For the year 2000, there were 45,523,621 common shares outstanding on a weighted average fully diluted basis compared to 42,863,538 common shares
outstanding for 1999 on the same weighted average fully diluted basis.
Performance
Performance in the W.P. Stewart & Co., Ltd. equity composite for 2000 was substantially better than the S&P 500 at -1.3% pre-fee and -2.5% post-fee, versus -9.1% for the broad market average. The Company noted that 2000 was
only the second year in its 26-year history in which it had negative performance in clients' accounts which, on both occasions, was modest.
W.P. Stewart's five-year performance record for the period ending 31 December 2000 averaged +21.4% pre-fee (20.0% post-fee), compounded annually, compared to an average of +18.3% for the S&P 500 in the period, and is substantially ahead of the Company's five-year, absolute benchmark, or minimum goal, of 15% compounded annually.
Assets Under Management
Assets under management were approximately $10.3 billion at 31 December 2000 compared to $10.8 billion at 30 September 2000 and $12.3 billion at 31 December 1999.
In 2000, net cash outflows from existing accounts were approximately 4.9%, which is consistent with the experience of the previous three years.
While investment performance in most of the Company's client accounts was significantly better than the S&P 500 for the year and for the fourth quarter, prevailing market conditions contributed to a decline in assets under
management during the final three months of the year, with most of that decline occurring during the last few weeks of December.
Net new account flows (new accounts minus closed accounts) were unsatisfactory at -$722 million for the year compared to +$600 million for
1999. As previously disclosed, a large part of this outflow occurred in the early part of the year as some newer clients were disappointed in the Company's effort to manage risk through under-weighting technology issues.
The client retention rate in 2000 was 90.7%, and was 92.7% in the fourth quarter calculated on an annualized basis.
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 21% over the past
26 years. The weighted average growth rate in earnings behind clients' portfolios in 2000 was approximately 18%. The Company's research analysts anticipate further growth in portfolio earning power of at least 15% in 2001
and for the next few years.
Revenues and Profitability
Revenues were $203.3 million for the year ended 31 December 2000, up 5.2% from $193.3 million for the year ended 31 December 1999.
The average management fee in 2000 was 1.27 %, compared to 1.31% in 1999, reflecting a slight change in client account mix to larger accounts with lower fees.
Total operating expenses increased 3.3%, to $93.1 million, for 2000 from $90.2 million in 1999.
Pre-tax income, at $110.2 million, was 54.2% of gross revenues for the year ended 31 December 2000 compared to $103.2 million or 53.4% of gross
revenues in 1999. This pre-tax margin was 57.1% in the fourth quarter of 2000 versus 53.0% in the comparable quarter of the prior year.
The Company's provision for taxes in 2000 was $11.0 million, equal to 10% of income before taxes, compared to an 8% provision in 1999.
Other Events
The Company's common stock repurchase program, announced on
13 December 2000, authorizes the repurchase of up to $20 million of shares at
the discretion of the Executive Committee of the Board, once the 90-day period
following the IPO closing date of 13 December 2000 is completed.
On 29 December 2000, the Company completed its anticipated acquisition of
the 50% of TPRS Services N.V. that it did not already own. The company
acquired the other half of TPRS in 1999. TPRS Services N.V. is a
Curacao-based company that is engaged in the business of gathering assets and
providing client service for W.P. Stewart. Under the terms of the
transaction, which were reached in late 1999, the Company issued
814,000 common shares in exchange for the remaining shares of TPRS.
The Company paid a dividend of $0.30 per share on 31 January 2001 to
shareholders of record as of 26 January 2001.
Conclusion
William P. Stewart, Chairman and CEO commented: "This past year has been
a most significant one in our proud history. We have successfully completed
the transition to a global investment company with a solid public shareholder
base and a strong, dedicated team of shareholder employees.
"We remain committed to our proven investment principles and to achieving
continued growth in the earning power behind our clients' portfolios. The
Company will continue to pursue the development of our complementary
investment advisory service in Europe and encourage the expansion of our
40% owned affiliate, Bowen Asia. Our enhanced client service group should
help us achieve much improved levels of client assets in the coming year."
In conjunction with this fourth quarter and full year 2000 earnings
release, W.P. Stewart will host a conference call on Wednesday,
7 February 2001. Those who are interested in participating in the
teleconference should dial 1-800-233-2795 (within the United States) or
785-832-1523 (outside the United States) at 9:00 a.m. (EST). The conference
ID number is "W.P. Stewart". The conference will commence promptly at
9:15 a.m. (EST) and conclude at 9:45 a.m. (EST). 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/020701/.
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
(NYSE: 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.