Counsel Corporation

Counsel Corporation

May 13, 2008 08:00 ET

Counsel Corporation Announces 2008 First Quarter Results-Net Income is $49.3 Million or $1.04 per Share

TORONTO, ONTARIO--(Marketwire - May 13, 2008) - Counsel Corporation (TSX:CXS) today reported its financial results for the three months ended March 31, 2008. All amounts are stated in Canadian dollars.

Including discontinued operations, the Company had net income of $49.3 million or $1.04 per share, basic and diluted, for the three months ended March 31, 2008, compared with net income of $0.2 million, or $0.01 per share, basic and diluted, for the three months ended March 31, 2007. Income from continuing operations was $1.4 million, or $0.03 per share, basic and diluted, for the three months ended March 31, 2008, compared with a loss of $0.2 million, or $0.00 per share, basic and diluted, for the three months ended March 31, 2007.

For the three months ended March 31, 2008, the Company's consolidated revenue from continuing operations was $19.5 million, an increase of 130% from $8.5 million in the first three months of 2007. The increase in revenue was generated by all of Counsel's businesses: real estate, intellectual property licensing, and private equity, including case goods.

"The progress during the first quarter of 2008 was reflected across all of our major businesses," said Allan Silber, Chairman and CEO of Counsel.

"In real estate, we continued to increase our holdings to take advantage of the opportunities that are starting to appear for diligent purchasers.

"In intellectual property licensing, we believe the settlements achieved by C2 Global Technologies Inc. provide benchmarks for potential settlements and licensing arrangements with other parties that are infringing C2's patents.

"Finally, in private equity investing, we have successfully realized the value in our investment in the fashion industry, and established a platform for further growth. At the same time, we were able to close the Knight's Bridge Capital Partners Fund I, which has begun its first round of investments. And our investment in the case goods industry is moving forward with its new Asian sourcing initiative."

"We look forward to building further successes for our investors and shareholders through the balance of the year," Mr. Silber added.

Significant developments in 2008 to date are:

- At the end of January, following the receipt of approval from Ontario's Ministry of Health and Long-Term Care, Counsel completed the sale of its Long-term Care business, comprised of the assets and operations of seven nursing homes in Ontario.

- In January, Counsel acquired, for its own account and on behalf of a group of investors, 149-159 Hartzel Road, a retail centre in St. Catharines, Ontario. The centre contains approximately 68,000 square feet of leasable area, situated on a 6.64 acre site.

- Also in January, Counsel acquired a 32% interest in a 110.8 acre land development site in East Gwillimbury, Ontario.

- In February, Counsel acquired, for its own account and on behalf of an investor, a portfolio of six retail, office and industrial properties consisting of 170,000 square feet of net rentable area on 19.6 acres, in Brockville, Ontario. The acquisition also includes a 6.8 acre land parcel of which approximately 4 acres are available for future development.

- In February, Counsel's 93%-owned U.S. public subsidiary, C2 Global Technologies Inc., entered into settlement and license agreements with AT&T, Inc. and Verizon Communications, Inc. in connection with a patent infringement lawsuit filed on June 15, 2006 by a wholly owned subsidiary of C2, against seven major U.S. telecommunications companies.

- In March, Knight's Bridge Capital Partners Inc., a wholly-owned subsidiary of Counsel, closed Knight's Bridge Capital Partners Fund I (the "KBCP Fund I") with capital commitments in excess of $62 million, including $10 million of capital committed by Counsel and approximately $5 million of capital committed by Counsel's senior management. KBCP Fund I is expected to invest in small to mid market North American companies, in a variety of industries, which require $2 million to $10 million in equity financing.

- In April, Counsel sold its portfolio investment in CJ Apparel Group, LLC for proceeds of approximately US$8 million, resulting in a cumulative profit of approximately US$4.8 million since its original investment in December 2006.

The Company's Management's Discussion and Analysis and Financial Statements for the year ended December 31, 2007 have been filed and are available on SEDAR (

About Counsel Corporation

Counsel Corporation (TSX:CXS) is an international asset management firm that actively partners with businesses to achieve shared success and to unlock value through leveraging our relationships, our access to capital and our strategic market experience. For further information, please visit Counsel's website at

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
(in thousands of Cdn Dollars, except per share amounts)

Three months ended March 31,
2008 2007
$ $
Case goods 9,309 6,155
Real estate 3,851 2,328
Patent licensing 6,244 -
Private equity 111 -
19,515 8,483

Operating costs and expenses
Case goods (exclusive of depreciation
and amortization shown below) 7,547 4,292
Real estate (exclusive of depreciation and
amortization shown below) 1,997 1,316
Patent licensing (exclusive of depreciation
and amortization shown below) 3,194 -
Selling, general and administrative 4,039 1,945
Depreciation and amortization 1,116 961

17,893 8,514

Operating income(loss) before undernoted items 1,622 (31)

Other income and losses
Loss on sale of short-term investments,
net of write-downs (46) (16)
Earnings from equity-accounted portfolio
investments 662 1,348
Other 1,057 (334)

Income before the undernoted 3,295 967

Interest income 118 221
Interest expense (1,822) (1,585)
Income(loss) before income taxes,
non-controlling interest and
discontinued operations 1,591 (397)

Income tax provision (recovery) 39 (262)
Non-controlling interest 140 44
Income(loss) from continuing operations 1,412 (179)

Income from discontinued operations 47,885 421

Net income 49,297 242

Basic and diluted net income(loss) per share:
Continuing operations 0.03 (0.00)
Discontinued operations 1.01 0.01

Basic and diluted net income per share 1.04 0.01

Weighted average number of common shares
outstanding (in thousands)
- basic and diluted 47,524 46,492

The notes contained in the Company's interim consolidated financial
statements are an integral part of these condensed consolidated financial

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

March 31, December 31,
2008 2007
$ $

Current assets
Cash and cash equivalents 16,801 6,357
Short-term investments 684 977
Accounts receivable (net of allowance for
doubtful accounts of $80; 2005 - $97) 4,491 3,735
Inventories 1,901 1,863
Prepaid expenses and deposits 3,490 4,777
Future income tax asset 357 8,402
Assets of discontinued operations 5,394 2,268
33,118 28,379

Long-term assets
Income producing properties 96,098 74,624
Properties under development 3,509 919
Property, plant and equipment 3,007 3,051
Portfolio investments 10,464 6,548
Intangible assets 5,009 3,853
Goodwill 26,111 26,035
Other assets 2,665 2,001
Assets of discontinued operations 3,338 12,665

183,319 158,075


Current liabilities
Accounts payable and accrued liabilities 11,357 10,015
Customer deposits 5,537 7,174
Income taxes payable 405 184
Current portion of mortgages and loans payable 5,000 4,895
Convertible preferred shares 17,705 -
Liabilities of discontinued operations 698 15,543
40,702 37,811

Long-term liabilities
Mortgages and loans payable 81,839 66,607
Convertible preferred shares - 16,780
Intangible liabilities 1,178 1,225
Future income tax liabilities 9,178 7,856
Liabilities of discontinued operations 1,410 34,454
134,307 164,733

Non-controlling interest 25,973 19,440

Shareholders' equity (deficiency) 23,039 (26,098)
183,319 158,075

The notes contained in the Company's interim consolidated financial
statements are an integral part of these condensed consolidated financial

Contact Information

  • Counsel Corporation
    Stephen Weintraub
    Executive Vice President, Secretary & CFO
    (416) 866-3058