Counsel Corporation
TSX : CXS

Counsel Corporation

November 15, 2005 15:45 ET

CORRECTION FROM SOURCE: Counsel Corporation Announces 2005 Third Quarter Results

TORONTO, ONTARIO--(CCNMatthews - Nov. 15, 2005) - In the release issued on November 14, 2005 at 4:25pm ET for Counsel Corporation, there was and error in the Consolidated Statements of Operations. The complete and corrected release follows:


Counsel Corporation (TSX:CXS) today reported its financial results for the three and nine months ended September 30, 2005.

All amounts are stated in thousands of Canadian dollars.

Significant developments, to date, in 2005 are:

- The Company determined that the benefits of continued listing of its common stock in the United States did not justify the cost of maintaining its registration and, in February 2005, Counsel terminated its common stock registration in the US.

- On May 19, 2005, the Company's 92%-owned subsidiary, C2 Global Technologies Inc. (OTCBB:COBT; formerly Acceris Communications Inc.), entered into an agreement to dispose of its telecommunications business. This transaction was completed on September 30, 2005 and resulted in a net gain of $7.6 million. C2 will now focus its efforts on the licensing of its VoIP patents.

- During the third quarter of 2005, C2 was awarded patents in VoIP technology from the People's Republic of China and in Canada. The patents correspond to U.S. Patent No. 6,243,373.

- On July 19, 2005, the Company entered into an agreement to sell seven income producing properties, including thirteen acres of vacant land. This transaction was completed on September 30, 2005 and resulted in a net gain of $11.6 million, before provision for income tax. In conjunction with the sale, the Company entered into a three year property management contract with the purchaser for seven properties.

- The Company adopted Canadian dollar reporting on a retroactive basis commencing in the third quarter of 2005, given the changes in the composition of its assets and the deregistration of its common shares in the United States.

For the third quarter ended September 30, 2005, the Company's consolidated revenue from continuing operations was $11.7 million, a decrease of 6% from $12.5 million in the same period in 2004.The decrease in revenue is attributable to a reduction in occupancy rates in the Company's long-term care facilities.

The Company's income from continuing operations was $3.8 million, or $0.08 per share, basic and $0.06 per share, diluted, in the three months ended September 30, 2005, compared with a loss of $7.7 million, or $0.16 per share, basic and diluted, in the three months ended September 30, 2004. Including discontinued operations, the Company's net income was $15.4 million or $0.32 per share, basic, and $0.26 per share diluted, for the three months ended September 30, 2005, compared with a net loss of $12.6 million, or $0.26 per share, basic and diluted, for the three months ended September 30, 2004.

For the nine months ended September 30, 2005, consolidated revenues decreased 6% to $36.0 million from $38.4 million in the same period last year. The net loss was $1.4 million or $0.04 per share, basic and diluted, for the nine months ended September 30, 2005 compared to $23.6 million, or $0.49 per share, basic and diluted, in the same period of 2004.

"Counsel will continue to focus on value creation opportunities in real estate and on maximizing the value of C2's VoIP patents. In addition, Counsel will continue to pursue non-real estate investment opportunities," said Allan Silber, Chairman and CEO of Counsel.

About Counsel Corporation

Counsel Corporation (TSX:CXS) is a diversified company focused on the acquisition of businesses in diverse industry sectors and at various stages of their business life cycles. Its goal for acquired businesses is to create value within these businesses and to realize on the value creation at the appropriate time. Counsel currently operates in three specific sectors: long-term care, real estate, and patent licensing. For further information, visit Counsel's website at www.counselcorp.com.

Forward-Looking Statements

The statements made in this release that are not historical facts contain forward-looking information that involves risks and uncertainties. All statements, other than statements of historical facts, which address Counsel Corporation's expectations, should be considered as forward-looking statements. Such statements are based on knowledge of the environment in which Counsel Corporation currently operates, but because of the factors listed herein, as well as other factors beyond Counsel Corporation's control, actual results may differ materially from the expectations expressed in the forward-looking statements. Important factors that may cause actual results to differ from anticipated results include, but are not limited to, obtaining necessary approvals and other risks detailed from time to time in the Company's securities and other regulatory filings.



Counsel Corporation
Consolidated Statements of Operations
(Unaudited)
(in thousands of Cdn Dollars, except per share amounts)

Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
$ $ $ $
------------------- -------------------
Revised(1) Revised(1)
Revenues
Long-term care 11,180 12,153 34,499 36,696
Real estate 484 366 1,482 1,028
Patent licensing - - - 719
------------------- -------------------
11,664 12,519 35,981 38,443
------------------- -------------------

Operating costs and expenses
Long-term care (exclusive of
depreciation and
amortization shown below) 10,371 11,369 32,174 34,693
Real estate (exclusive of
depreciation and
amortization shown below) 329 347 1,222 1,150
Selling, general and
administrative 1,943 5,015 8,297 10,947
Depreciation and
amortization 298 270 882 772
------------------- -------------------
12,941 17,001 42,575 47,562
------------------- -------------------

Operating loss before
undernoted items (1,277) (4,482) (6,594) (9,119)

Gains and other income
Gain on sale of short-term
investments - 149 643 1,812
Other 191 - 191 -

Impairments and other losses
Write-down of short-term
investments - (12) - (675)
Write-down of portfolio
investments (656) (521) (1,446) (521)
Other (44) (95) (44) (655)
------------------- -------------------

Loss before the undernoted (1,786) (4,961) (7,250) (9,158)

Interest income 72 164 192 364
Interest expense (1,305) (1,225) (3,895) (4,137)
------------------- -------------------
Loss before income taxes,
non-controlling interest and
discontinued operations (3,019) (6,022) (10,953) (12,931)

Income tax
provision(recovery) (6,838) 1,679 (7,565) 2,789
Non-controlling interest (7) 17 19 75
------------------- -------------------
Income(loss) from continuing
operations 3,826 (7,718) (3,407) (15,795)

Income(loss) from
discontinued operations 11,543 (4,919) 2,046 (7,817)
------------------- -------------------

Net Income(loss) 15,369 (12,637) (1,361) (23,612)
------------------- -------------------
------------------- -------------------

Basic net income (loss) per
share:
Continuing operations 0.08 (0.16) (0.08) (0.33)
Discontinued operations 0.24 (0.10) 0.04 (0.16)
------------------- -------------------
------------------- -------------------

Basic net income (loss) per
share 0.32 (0.26) (0.04) (0.49)
------------------- -------------------
------------------- -------------------

Weighted average number of
common shares
outstanding (in thousands) -
basic 47,797 48,268 47,797 48,480

Diluted net income (loss)
per share:
Continuing operations 0.06 (0.16) (0.08) (0.33)
Discontinued operations 0.20 (0.10) 0.04 (0.16)
------------------- -------------------
------------------- -------------------

Diluted net income (loss)
per share 0.26 (0.26) (0.04) (0.49)
------------------- -------------------
------------------- -------------------

Weighted average number of
common shares
outstanding (in thousands) -
diluted 58,430 48,268 47,797 48,480

(1)Prior quarters have been revised to reflect: (a) the Company's
adoption of AcG-15, "Consolidation of Variable Interest Entities";
(b) discontinued operations treatment for the sale of certain real
estate assets and the telecommunication business; and (c) the
change in reporting currency, whereby the Company adopted Canadian
dollar reporting.


Counsel Corporation
Consolidated Balance Sheets
(in thousands of Cdn Dollars)
(Unaudited)

September 30, December 31,
2005 2004
$ $
---------------------------------
Revised(1)
Assets

Current assets
Cash and cash equivalents 34,869 7,346
Short-term investments (market
value $7; 2004 - $4,863) 7 4,521
Accounts receivable (net of
allowance for doubtful
accounts of $196; 2004 - $206) 840 755
Prepaid expenses and deposits 1,076 742
Assets of discontinued operations 20,017 20,240
---------------------------------
56,809 33,604

Long-term assets
Income producing properties 10,717 7,160
Properties under development - 2,566
Property, plant and equipment, net 15,320 15,886
Portfolio investments 1,277 2,776
Intangible assets, net 75 103
Goodwill 201 201
Other assets 396 706
Assets of discontinued operations - 74,670
---------------------------------
84,795 137,672
---------------------------------
---------------------------------

Liabilities

Current liabilities
Accounts payable and accrued
liabilities 26,173 19,879
Current portion of mortgages
and loans payable 9,054 7,706
Income tax payable 46 534
Liabilities of discontinued
operations 24,825 44,473
---------------------------------
60,098 72,592

Long-term liabilities
Mortgages and loans payable 39,330 41,930
Convertible preferred shares 15,753 14,802
Future income tax liabilities 13,111 17,762
Liabilities of discontinued
operations - 33,910
---------------------------------
128,292 180,996

Non-controlling interest 1,501 1,475

Contingencies and guarantees

Shareholders' equity (deficiency) (44,998) (44,799)
---------------------------------

84,795 137,672
---------------------------------
---------------------------------
(1)Prior quarters have been revised to reflect: (a) the Company's
adoption of AcG-15, "Consolidation of Variable Interest Entities";
(b) discontinued operations treatment for the sale of certain real
estate assets and the telecommunication business; and (c) the
change in reporting currency, whereby the Company adopted Canadian
dollar reporting.



Contact Information

  • Counsel Corporation
    Gary Clifford
    Executive Vice President & Chief Financial Officer
    (416) 866-8170
    or
    Counsel Corporation
    Stephen Weintraub
    Executive Vice President & Secretary
    (416) 866-3058