Counsel Corporation
TSX : CXS

Counsel Corporation

August 13, 2008 16:42 ET

Counsel Corporation Announces 2008 Second Quarter Results

TORONTO, ONTARIO--(Marketwire - Aug. 13, 2008) - Counsel Corporation (TSX:CXS) today reported its financial results for the three and six months ended June 30, 2008. All amounts are stated in Canadian dollars.

The Company had net income of $0.3 million or $0.01 per share, basic and diluted, for the three months ended June 30, 2008, compared with $2.1 million, or $0.04 per share, basic and diluted, for the three months ended June 30, 2007. Income from continuing operations for the period was $0.3 million, or $0.01 per share, basic and diluted, compared with income of $1.7 million, or $0.04 per share, basic and diluted, in 2007.

For the three months ended June 30, 2008, the Company's consolidated revenue from continuing operations was $19.9 million, an increase of 85 per cent from $10.8 million in the second quarter of 2007. The increase in revenue was generated across all of Counsel's businesses: real estate, intellectual property licensing, and private equity, including case goods.

For the six months ended June 30, 2008, the Company had net income of $49.6 million or $1.06 per share, basic and diluted, compared with $2.3 million, or $0.05 per share, basic and diluted, for the six months ended June 30, 2007. Income from continuing operations was $1.7 million, or $0.04 per share, basic and diluted, for the six months ended June 30, 2008, compared with $1.6 million, or $0.03 per share, basic and diluted, for the same six month period in 2007.

For the six months ended June 30, 2008, the Company's consolidated revenue from continuing operations was $40.2 million, an increase of 93 per cent from $20.8 million in the first six 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.

"Throughout the second quarter Counsel continued to implement its three-part strategy, designed to build net asset value in the Company's real estate and private equity core businesses," said Allan Silber, Chairman and CEO of Counsel.

"First, we acquire assets or businesses - where we believe that we are able to add value. Second, we add value through active management, such as changing the business' direction, improving its capital structure or recruiting operating management. Finally, at the appropriate time, we realize on that increased value by selling the asset or otherwise locking in our gains, as we did with the divestiture of CJ Apparel in the second quarter of this year.

"We are pleased with the Company's progress in the year to date and look forward to continuing our momentum through the balance of 2008," he added.

Significant developments in the second quarter of 2008 are:

- 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.

- In June 2008, Counsel's 91 per cent owned U.S. public subsidiary, C2 Global Technologies Inc. ("C2"), entered into a settlement and license agreement with Sprint 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 June 2008, Counsel and C2 settled the litigation commenced in April 2004 by certain shareholders of C2 against Counsel, C2, several affiliated companies, and four present and former officers and directors of C2. To settle the litigation - without any admission of liability - Counsel paid $520,000 plus shares of C2, which reduced Counsel's percentage ownership in C2 from approximately 92.5 per cent to 90.8 per cent. In 2007, Counsel accrued a liability for the approximate amount of the settlement; as a result, the settlement did not have a material effect on its business, results of operations, financial position or liquidity.

The Company's Management's Discussion and Analysis and Financial Statements for the six months ended June 30, 2008 have been filed and are available on SEDAR (www.sedar.com).

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

Three months ended Six months ended
June 30, June 30,
2008 2007 2008 2007
$ $ $ $
----------------------------------------
Revenues
Case goods 10,582 7,315 19,891 13,470
Real estate 4,887 3,050 8,738 5,378
Patent licensing 1,914 - 8,158 -
Private equity income 2,474 313 3,163 1,661
Interest income 92 109 294 330
----------------------------------------
19,949 10,787 40,244 20,839
----------------------------------------

Expenses (exclusive of depreciation,
amortization and interest
expense shown below) and other
(income)losses
Case goods expense 8,815 5,288 16,362 9,580
Real estate expense 2,685 1,548 4,682 2,864
Patent licensing expense 1,316 - 4,510 -
Selling, general and
administrative expense 4,036 2,532 7,698 4,933
Foreign exchange (gain)loss (279) (3,189) 98 (3,645)
Loss on short-term investments 95 25 141 41
Other 13 (24) (1,044) 310
----------------------------------------

16,681 6,180 32,447 14,083
----------------------------------------

Income before depreciation,
amortization, interest expense,
income taxes, non-controlling
interest and discontinued
operations 3,268 4,607 7,797 6,756

Depreciation and amortization 1,133 1,268 2,249 2,229
Interest expense 1,910 1,684 3,732 3,269
----------------------------------------
Income before income taxes,
non-controlling interest and
discontinued operations 225 1,655 1,816 1,258

Income tax provision(recovery) 345 (41) 384 (303)
Non-controlling interest (451) (42) (311) 2
----------------------------------------
Income from continuing operations 331 1,738 1,743 1,559

Income(loss) from discontinued
operations (29) 327 47,856 748
----------------------------------------

Net Income 302 2,065 49,599 2,307
----------------------------------------
----------------------------------------

Basic and diluted net income
per share:
Continuing operations 0.01 0.04 0.04 0.03
Discontinued operations 0.00 0.00 1.02 0.02
----------------------------------------
Basic and diluted net income
per share 0.01 0.04 1.06 0.05
----------------------------------------
----------------------------------------

Weighted average number of common
shares outstanding (in thousands)
- basic and diluted 46,514 46,492 46,888 46,492

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



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

June 30, December 31,
2008 2007
$ $
----------------------

Assets

Current assets
Cash and cash equivalents 22,320 6,357
Short-term investments 1,603 977
Accounts receivable (net of allowance for
doubtful accounts of $80; 2007 - $97) 4,740 3,735
Inventories 1,362 1,863
Prepaid expenses and deposits 3,383 4,777
Future income tax asset - 8,402
Assets of discontinued operations 2,270 2,268
----------------------
35,678 28,379

Long-term assets
Income producing properties, net 96,111 74,624
Properties under development 3,520 919
Property, plant and equipment, net 2,971 3,051
Portfolio investments 10,227 6,548
Intangible assets, net 4,629 3,853
Goodwill 26,153 26,035
Other assets 2,933 2,001
Assets of discontinued operations 3,303 12,665
----------------------
185,525 158,075
----------------------
----------------------
Liabilities

Current liabilities
Accounts payable and accrued liabilities 9,325 10,015
Customer deposits 2,636 7,174
Income taxes payable 163 184
Future income tax liabilities 86 -
Current portion of mortgages and loans payable 18,071 4,895
Convertible preferred shares 17,808 -
Liabilities of discontinued operations 804 15,543
----------------------
48,893 37,811
Long-term liabilities
Mortgages and loans payable 69,932 66,607
Convertible preferred shares - 16,780
Intangible liabilities 1,068 1,225
Future income tax liabilities 9,196 7,856
Liabilities of discontinued operations 1,376 34,454
----------------------
130,465 164,733

Non-controlling interest 32,788 19,440

Shareholders' equity (deficiency) 22,272 (26,098)
----------------------

185,525 158,075
----------------------
----------------------

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


Contact Information

  • Counsel Corporation
    Stephen Weintraub
    Executive Vice President, Secretary & CFO
    (416) 866-3058
    Website: www.counselcorp.com