Counsel Corporation

Counsel Corporation

May 15, 2009 16:15 ET

Counsel Corporation Announces 2009 First Quarter Results

TORONTO, ONTARIO--(Marketwire - May 15, 2009) - Counsel Corporation ("Counsel" or the "Company") (TSX:CXS) today reported its financial results for the three months ended March 31, 2009. All amounts are stated in Canadian dollars, unless noted.

The first quarter loss from continuing operations was $4.0 million, or $0.09 per share basic and diluted, compared with income of $1.4 million, or $0.03 per share, basic and diluted, for the three months ended March 31, 2008. The year-over-year decline was primarily attributable to a $2.2 million reduction in the contribution from its patent licensing business, C2 Global Technologies Inc. ("C2"), where the timing of revenue does not follow a regular quarterly pattern. The Company also experienced a $0.9 million reduction in contribution from its case goods business, Fleetwood Fine Furniture, resulting from the impact of the slowdown in the North American economy on the hospitality industry, as well as a $1.1 million foreign exchange loss on the conversion of U.S. dollar assets and liabilities, due to the weakness in the Canadian dollar during the most recent quarter.

Including discontinued operations, the Company had a net loss of $3.9 million or $0.09 per share, basic and diluted, for the three months ended March 31, 2009, compared with net income of $49.3 million, or $1.04 per share, basic and diluted, for the three months ended March 31, 2008.

The year to date was characterized by two major corporate developments, both of which highlight Counsel's investment strategy and its ability to capitalize on opportunities during difficult economic times.

First, as announced in April 2009, Knight's Bridge Capital Partners Inc., a wholly owned subsidiary of Counsel, as part of an investor group, was successful in a bid to acquire Polaroid Corp. for US$87.6 million. Knight's Bridge, through its fund, Knight's Bridge Capital Partners Fund I, and other funds that it manages, invested in excess of 30% of the funds required to close the transaction.

Polaroid is one of the world's most iconic brand names, with almost 100% global awareness. Counsel and its partners intend to monetize the strength of that brand name by building a global licensing organization. Polaroid already has a substantial portfolio of innovative and patented technologies that represent both an initial revenue stream and a platform for other new products and product categories.

Second, in February 2009, the Company established Counsel RB Capital LLC ("Counsel RB"). Counsel RB is 75% owned by C2 and 25% by its Co-CEO's. It specializes in the acquisition and disposition of distressed and surplus assets throughout the United States and Canada, including industrial machinery and equipment, real estate, inventories, accounts receivable and distressed debt. In addition to purchasing various types of assets, Counsel RB also arranges traditional asset disposition services such as on-site and webcast auctions, liquidations and negotiated sales.

"These two transactions underline our focus on enhancing our growth with the opportunistic acquisition of quality assets and businesses at attractive valuation levels," said Allan Silber, Chairman and CEO of Counsel Corporation.

The Company's Management's Discussion and Analysis and Financial Statements for the three months ended March 31, 2009 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,
2009 2008
$ $

Case goods 4,418 9,309
Real estate 4,353 3,851
Patent licensing - 6,244
Private equity 1 689
Interest 49 202
8,821 20,295

Expenses (exclusive of depreciation,
amortization and interest expense shown
below) and other (income)losses
Case goods expense 3,909 7,547
Real estate expense 2,358 1,997
Patent licensing expense 1 3,194
Selling, general and administrative expense 2,640 3,662
Foreign exchange (gain)loss 1,464 377
(Gain)loss on short-term investments (158) 46
Other (182) (1,057)

10,032 15,766

Income(loss) before depreciation,
amortization, interest expense, income
taxes, non-controlling interest and
discontinued operations (1,211) 4,529

Depreciation and amortization 1,129 1,116
Interest expense 1,661 1,822
Income(loss) before income taxes,
non-controlling interest and
discontinued operations (4,001) 1,591

Income tax provision 11 39
Non-controlling interest (36) 140
Income(loss) from continuing operations (3,976) 1,412

Income(loss) from discontinued operations 99 47,885

Net income (loss) (3,877) 49,297

Basic and diluted net income (loss) per share:
Continuing operations (0.09) 0.03
Discontinued operations 0.00 1.01

Basic and diluted net income(loss) per share (0.09) 1.04

Weighted average number of common shares
outstanding (in thousands)
- basic and diluted 44,755 47,524

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,
2009 2008
$ $


Current assets
Cash and cash equivalents 12,955 16,813
Short-term investments 3,747 2,879
Accounts receivable (net of allowance
for doubtful accounts of $23; 2008 - $23) 4,404 5,001
Inventories 1,666 1,847
Prepaid expenses and deposits 2,135 1,872
Future income tax asset 1,240 1,084
Assets of discontinued operations 2,901 1,887
29,048 31,383

Long-term assets
Income producing properties, net 98,194 98,733
Properties under development 3,594 3,559
Property, plant and equipment, net 2,771 2,797
Portfolio investments 11,541 11,385
Intangible assets, net 3,616 3,789
Goodwill 26,095 26,090
Tenant related costs and other assets 4,522 4,380
Assets of discontinued operations - 1,000

179,381 183,116


Current liabilities
Accounts payable and accrued liabilities 8,911 13,811
Customer deposits 6,089 3,342
Income taxes payable 197 282
Future income tax liabilities 146 179
Current portion of mortgages and loans payable 9,410 8,706
Convertible preferred shares 22,691 22,032
Liabilities of discontinued operations 344 237
47,788 48,589
Long-term liabilities
Mortgages and loans payable 75,586 74,934
Intangible liabilities 801 858
Future income tax liabilities 10,318 10,076
Liabilities of discontinued operations - 73
134,493 134,530

Non-controlling interest 34,102 34,190

Shareholders' equity 10,786 14,396

179,381 183,116

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

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