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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 o
    
    REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT
OF 1934
 OR
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934  FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934  For the transition period from  to
 OR
 o
    
    SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934  Date of event requiring this shell company report
 Commission file number: 001-16245
 W.P. STEWART & CO., LTD.
 (Exact name of Registrant as specified in its charter)
 BERMUDA
  
  
   Name of each exchangeTitle of Each Class
    
    on which registeredCommon Shares, par value $0.001 per share
    
    New York Stock Exchange
       o þ
 o þ
 þ o
  o þ o
  þ o o
 o o
 o þ




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##### Table of Contents



Table of Contents
 PagePart I.
    
    
    
    
    2Item 1.
    
    Identity of Directors, Senior Management and Advisors
    
    
    2Item 2.
    
    Offer Statistics and Expected Timetable
    
    
    2Item 3.
    
    Key Information
    
    
    3Item 4.
    
    Information on the Company
    
    
    13Item 4A.
    
    Unresolved Staff Comments
    
    
    32Item 5.
    
    Operating and Financial Review and Prospects
    
    
    33Item 6.
    
    Directors, Senior Management and Employees
    
    
    42Item 7.
    
    Major Shareholders and Related Party Transactions
    
    
    51Item 8.
    
    Financial Information
    
    
    54Item 9.
    
    The Offer and Listing
    
    
    55Item 10.
    
    Additional Information
    
    
    57Item 11.
    
    Qualitative and Quantitative Disclosures About Market Risk
    
    
    68Item 12.
    
    Description of Securities Other Than Equity Securities
    
    
    69Part II.
    
    
    
    
    69Item 13.
    
    Default, Dividend Arrearages and Delinquencies
    
    
    69Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    
    70Item 15.
    
    Controls and Procedures
    
    
    70Item 16A.
    
    Audit Committee Financial Expert
    
    
    71Item 16B.
    
    Code of Ethics
    
    
    71Item 16C.
    
    Principal Accountant Fees and Services
    
    
    71Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
    
    
    72Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    
    72Part III.
    
    
    
    
    73Item 17.
    
    Financial Statements
    
    
    73
 i




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PageItem 18.
    
    Financial Statements
    
    
    73Item 19.
    
    Exhibits
    
    
    73EX-8.1: SUBSIDIARIESEX-12.1: CERTIFICATIONEX-12.2: CERTIFICATIONEX-13.1: CERTIFICATIONEX-13.2: CERTIFICATIONEX-15.1: CONSENT OF PRICEWATERSHOUSECOOPERS LLP
  ii




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Forward-Looking Statements
  
    
    our need to reduce costs and increase our assets under management in order to return
to profitability;
    
    the closing of the transaction with Arrow as described under Information on the
CompanyBusiness OverviewRecent Events;
    
    general economic and business conditions;
    
    a challenge to our U.S. tax status;
    
    industry capacity and trends;
    
    competition;
    
    the loss of major clients;
    
    changes in demand for our services;
    
    changes in, or inability to implement, business strategy or development plans;
    
    changes in the laws and/or regulatory circumstances in Bermuda, the United States,
the United Kingdom, Ireland, The Netherlands or other jurisdictions;
    
    changes in contingent liabilities;
    
    the adverse effect from a decline or volatility in the securities market in general
or our products performance;
    
    quality of management;
    
    ability to attract and retain qualified personnel;
    
    actions taken or omitted to be taken by third parties, including our shareholders,
clients, competitors, legislative, regulatory, judicial and governmental authorities;
and
    
    availability, terms and deployment of capital.




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Part I.
 
 Item 1. Identity of Directors, Senior Management and Advisors
  
 Item 2. Offer Statistics and Expected Timetable
  2




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Item 3. Key Information
 A. Selected Financial and Unaudited Other Data
   As of, and for the Year Ended, December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(in thousands, except per share data)Income Statement Data:Revenues:Fees
    
    $
    64,322
    
    
    $
    107,803
    
    
    $
    113,198
    
    
    $
    116,005
    
    
    $
    94,062Commissions
    
    
    13,875
    
    
    
    29,609
    
    
    
    31,890
    
    
    
    34,820
    
    
    
    22,461Realized Gain on Sale of Aircraft
    
    
    18,465
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Realized and Unrealized Gains/(Loss) on
Investments(1)
    
    
    1,460
    
    
    
    2,229
    
    
    
    (129
    )
    
    
    (34
    )
    
    
    230Interest and Other(1)
    
    
    2,266
    
    
    
    2,490
    
    
    
    2,896
    
    
    
    1,530
    
    
    
    2,049100,388
    
    
    
    142,131
    
    
    
    147,855
    
    
    
    152,321
    
    
    
    118,802Expenses:Employee Compensation and Benefits
    
    
    48,125
    
    
    
    43,726
    
    
    
    34,153
    
    
    
    29,102
    
    
    
    22,942Fees Paid Out
    
    
    6,626
    
    
    
    8,126
    
    
    
    9,059
    
    
    
    7,760
    
    
    
    6,059Performance Fee Charge
    
    
    
    
    
    
    2,626
    
    
    
    
    
    
    
    
    
    
    
    Commissions, Clearance and Trading
    
    
    2,301
    
    
    
    5,665
    
    
    
    6,993
    
    
    
    7,371
    
    
    
    4,811Research and Administration
    
    
    12,261
    
    
    
    13,629
    
    
    
    14,399
    
    
    
    14,781
    
    
    
    14,429Marketing
    
    
    6,003
    
    
    
    6,309
    
    
    
    5,540
    
    
    
    5,618
    
    
    
    4,709Depreciation and Amortization
    
    
    5,769
    
    
    
    6,573
    
    
    
    8,206
    
    
    
    8,039
    
    
    
    7,933Impairment of Intangible Asset
    
    
    33,557
    
    
    
    
    
    
    
    12,453
    
    
    
    
    
    
    
    Other Operating
    
    
    10,351
    
    
    
    11,971
    
    
    
    9,960
    
    
    
    8,649
    
    
    
    8,861124,993
    
    
    
    98,625
    
    
    
    100,763
    
    
    
    81,320
    
    
    
    69,744Income/(Loss) Before Taxes
    
    
    (24,605
    )
    
    
    43,506
    
    
    
    47,092
    
    
    
    71,001
    
    
    
    49,058Provision for Taxes
    
    
    6,796
    
    
    
    6,031
    
    
    
    7,039
    
    
    
    7,852
    
    
    
    5,983Net Income/(Loss)
    
    $
    (31,401
    )
    
    $
    37,475
    
    
    $
    40,053
    
    
    $
    63,149
    
    
    $
    43,075Earnings/(Loss) Per Share:(2)Basic Earnings/(Loss) Per Share
    
    $
    (0.68
    )
    
    $
    0.82
    
    
    $
    0.88
    
    
    $
    1.40
    
    
    $
    0.97Diluted Earnings/(Loss) Per Share
    
    $
    (0.68
    )
    
    $
    0.82
    
    
    $
    0.87
    
    
    $
    1.39
    
    
    $
    0.95Weighted Average Shares Used in
Computation:Basic
    
    
    46,117
    
    
    
    45,817
    
    
    
    45,640
    
    
    
    45,112
    
    
    
    44,312Diluted(2)
    
    
    46,117
    
    
    
    45,866
    
    
    
    45,952
    
    
    
    45,524
    
    
    
    45,198Balance Sheet Data:Total Assets
    
    $
    85,926
    
    
    $
    146,551
    
    
    $
    152,580
    
    
    $
    164,710
    
    
    $
    141,008Total Liabilities
    
    $
    13,838
    
    
    $
    33,785
    
    
    $
    30,935
    
    
    $
    33,281
    
    
    $
    26,339Shareholders Equity
    
    $
    72,088
    
    
    $
    112,766
    
    
    $
    121,645
    
    
    $
    131,429
    
    
    $
    114,669(in millions, except per share data)Other Data(unaudited):Long-Term Debt
    
    $
    
    
    
    $
    13.8
    
    
    $
    14.6
    
    
    $
    15.4
    
    
    $
    16.2Cash Dividends Per Share
    
    $
    0.53
    
    
    $
    1.13
    
    
    $
    1.20
    
    
    $
    1.20
    
    
    $
    1.20Assets Under Management
    
    $
    4,099
    
    
    $
    8,111
    
    
    $
    9,514
    
    
    $
    9,348
    
    
    $
    8,561
 
 (1)
    
    Prior period amounts have been revised to reflect presentation consistent with current
reporting. 3




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(2)
    
    Common shares purchased by our employees, restricted shares issued to our employees and
options granted to our employees are subject to vesting. For treatment of unvested common
shares, unvested options, vested unexercised options and potentially issuable common shares,
see Note 4 of the notes to the consolidated financial statements contained herein. B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
  D. Risk Factors
 We are currently operating at a net loss and must reduce costs below current levels and/or
increase assets under management to return to profitability.
  The pending investment by Arrow is subject to a number of conditions.
    4




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Volatility in the securities markets can result in a decrease in the market value of our
assets under management and, in turn, a decrease in our earnings.
    The ability of all of our clients to terminate their asset management contracts with us at
will makes our future client and revenue base unpredictable.
   The market for qualified personnel is highly competitive. If we are unable to continue to
attract and retain qualified personnel, we will be unable to adequately serve our client
base.
  5




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Competition in our industry is intense. This competition makes client retention difficult
and our revenue base uncertain.
  
    
    investment performance;
    
    business reputation;
    
    continuity of client relationships and of assets under management;
    
    the resources and effectiveness of our marketing and client service personnel; and
    
    the level of fees and commissions charged for services.
   6




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Our U.S. tax status could be challenged. If U.S. federal, state or local taxing authorities
successfully challenge our assessment of how much of our net income was derived from
activities in the United States, we could be forced to pay significant additional taxes.
  
    
    W.P. Stewart & Co., Inc. pays U.S. income tax on its taxable income, consisting
primarily of fees received from W.P. Stewart & Co., Ltd. and W.P. Stewart Asset
Management Ltd. for sub-advisory and research services less applicable expenses;
    
    W.P. Stewart Asset Management (NA), Inc. pays U.S. income tax on its taxable client
servicing fee income on a consolidated federal basis with its wholly-owned subsidiary,
W.P. Stewart Asset Management, Inc.; and
    
    W.P. Stewart & Co., Ltd. and W.P. Stewart Asset Management Ltd. paid U.S. income tax
on approximately 6% of their earnings in 2005 and on less than 1% of their earnings in
2006, and expect to pay U.S. income tax on 7% of their earnings in 2007, (as computed
under U.S. GAAP), the percentage which is, or is expected to be, derived from
activities directly carried on in the United States.
  7




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We are subject to the control of many regulatory bodies. These regulators have the power to
restrict or limit our business activities, to cause us to change the manner in which we
conduct our businesses and to levy substantial penalties or fines on us.
 Commission de Surveillance du Secteur Financier
   8




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As a shareholder of a Bermuda company you may, in some instances, have fewer rights and
protections than you would have as a shareholder of a U.S. company.
   We are and will continue to be controlled by affiliated shareholders.
  A large portfolio manager currently holds approximately 21.7% of our outstanding common
shares; any large sales by this or other large shareholders could depress the price of our
common shares.
   9




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Our bye-laws restrict shareholders voting rights. You may not be able to vote all of the
common shares that you own.
  
    
    WPS II, Inc.;
    
    Other shareholders or groups of shareholders who were shareholders of W.P. Stewart &
Co., Ltd. immediately before our initial public offering in December 2000; and
    
    Certain persons, entities or groups that are designated by our board of directors.
   
    
    WPS II, Inc. or its affiliates;
    
    Direct or indirect subsidiaries of W.P. Stewart & Co., Ltd.;
    
    Any shareholding entity that may be established for the purpose of our employee
benefit plans and that is designated by our board of directors; and
    
    Other persons, entities or groups that are designated by our board of directors.
   10




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A change of control of the Stewart Group would automatically terminate our clients
investment advisory agreements with us unless the clients elect not to terminate and could
prevent us for a two-year period from increasing the investment advisory fees we are able to
charge our investment company clients.
     11




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Future sales of currently restricted common shares could cause the market price for the
common shares to decline. If too many shareholders who are currently restricted from selling
their common shares decide to sell these shares once the restrictions are lifted, the market
price of your common shares could be adversely affected.
    The market price of the common shares will fluctuate.
  
    
    our operating results;
    
    changes in financial estimates by securities analysts for the Stewart Group and/or
its competitors;
    
    conditions or trends in the asset management industry;
    
    adoption of new accounting standards affecting the investment advisory business;
    
    news announcements; or
    
    changes in general economic and market conditions.
  If we cannot meet the New York Stock Exchange (NYSE) continued listing requirements, the
NYSE may delist our common shares which would have an adverse impact on the liquidity and
market price of our common shares.
  12




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Item 4. Information on the Company
 A. History and Development of the Company
 The Stewart Group
      13




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The Global Consolidation
   Global Expansion
       14




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th
 B. Business Overview
     Competitive Strengths
  15




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Culture
    Long-Term Performance Record
  Look Through Earning Power
   16




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Investment Methodology
      
    
    a proven track record of consistent profit growth;
    
    strong financial condition;
    
    predictable earnings growth that we believe will continue for the next five years
and beyond;
    
    accurate and reliable information that is readily available;
    
    successful, experienced management that is accessible to our investment team;
 17




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
    
    strong product lines and competitive position, preferably with worldwide presence;
    
    relatively low levels of cyclicality; and
    
    large market capitalization and significant trading liquidity.
  Recent Events
   Business Strategy
  18




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Extend Investment Performance
  Increase Global Research Focus
  Pursue Global Clientele
  Investment Management Team
  Years in
    
    Years withName
    
    Location
    
    Age
    
    Industry
    
    CompanyStacey Brodbar
    
    New York
    
    
    35
    
    
    
    12
    
    
    
    1Dev Chakrabarti
    
    London
    
    
    30
    
    
    
    8
    
    
    
    2Christian Diebitsch
    
    London
    
    
    44
    
    
    
    17
    
    
    
    4Aadil Ebrahim
    
    Hong Kong
    
    
    32
    
    
    
    10
    
    
    
    4
    *
 19




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Years in
    
    Years withName
    
    Location
    
    Age
    
    Industry
    
    CompanySamantha Epstein
    
    New York
    
    
    38
    
    
    
    17
    
    
    
    9Jeremy Higgs
    
    Hong Kong
    
    
    53
    
    
    
    22
    
    
    
    1
    *Robert Kahn
    
    New York
    
    
    75
    
    
    
    48
    
    
    
    33Celina Lin
    
    Hong Kong
    
    
    48
    
    
    
    18
    
    
    
    13
    *Jack Mahler
    
    New York
    
    
    49
    
    
    
    11
    
    
    
    2Keith Olson
    
    Hong Kong
    
    
    49
    
    
    
    25
    
    
    
    5
    *Mark I. Phelps
    
    London
    
    
    48
    
    
    
    23
    
    
    
    3Lisa M. Stewart
    
    Hong Kong
    
    
    50
    
    
    
    25
    
    
    
    14
    *William P. Stewart
    
    Bermuda
    
    
    70
    
    
    
    53
    
    
    
    33James T. Tierney
    
    New York
    
    
    41
    
    
    
    20
    
    
    
    8
 
 *
    
    Includes years with Bowen Asia Limited. Historical Performance Record of U.S. Equity Composite
 January 1, 1975-December 31, 2007 Performance
    20




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Managed Accounts vs. S&P 500
 
 Method of Performance Calculation for the U.S. Equity Composite
 Account Inclusion
   Performance Calculation.
 21




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Effect of Advisory Fees.
  S&P 500.
 Performance Record of Other Products
 
 22




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Assets Under Management
  ASSETS UNDER MANAGEMENT
 Year EndedDecember 31,2007
    
    
    2006
    
    
    2005(in millions)Beginning Assets Under Management
    
    $
    8,111
    
    
    $
    9,514
    
    
    $
    9,348Ending Assets Under Management
    
    $
    4,099
    
    
    $
    8,111
    
    
    $
    9,514
  NET FLOWS OF ASSETS UNDER MANAGEMENT
 Year EndedDecember 31,2007
    
    
    2006
    
    
    2005(in millions)Existing Accounts:Contributions
    
    $
    303
    
    
    $
    780
    
    
    $
    988Withdrawals
    
    
    (934
    )
    
    
    (1,356
    )
    
    
    (1,036
    )Net Flows of Existing Accounts
    
    
    (631
    )
    
    
    (576
    )
    
    
    (48
    )Publicly Available Funds:Contributions
    
    
    115
    
    
    
    147
    
    
    
    256Withdrawals
    
    
    (605
    )
    
    
    (259
    )
    
    
    (149
    )Direct Accounts Opened
    
    
    161
    
    
    
    145
    
    
    
    312Direct Accounts Closed
    
    
    (3,038
    )
    
    
    (1,311
    )
    
    
    (733
    )Net New Flows
    
    
    (3,367
    )
    
    
    (1,314
    )
    
    
    (314
    )Net Flows of Assets Under Management
    
    $
    (3,998
    )
    
    $
    (1,890
    )
    
    $
    (362
    )
 23




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ACCOUNT RETENTION
 Year EndedDecember 31,2007
    
    2006
    
    2005Number of Accounts at Beginning of Period
    
    
    1,511
    
    
    
    1,841
    
    
    
    1,910Number of Accounts Closed During Period
    
    
    577
    
    
    
    399
    
    
    
    188Retention Rate
    
    
    61.8
    %
    
    
    78.3
    %
    
    
    90.2
    %
 Client Base
   ASSETS UNDER MANAGEMENT
BY RELATIONSHIP TYPE
 As of December 31,2007(1)
    
    
    2006(1)
    
    
    2005(in millions)Direct Relationship
    
    $
    3,845
    
    
    $
    7,489
    
    
    $
    8,847Consultant Related
    
    
    254
    
    
    
    622
    
    
    
    667Total
    
    $
    4,099
    
    
    $
    8,111
    
    
    $
    9,514
 
 (1)
    
    This table reflects the amount of assets under management by category based upon
whether the client had been referred to us by a consultant at the time of the opening
of their account. Due to consultants becoming related to clients subsequent to the
initial account opening, as of December 31, 2007 and 2006, $768 million and $1,352
million, respectively, of assets under management were from accounts associated with a
consultant. The remaining $3,331 million and $6,759 million of assets under management
as of December 31, 2007 and 2006, respectively, were not associated with any
consultant. NUMBER OF ACCOUNTS
BY RELATIONSHIP TYPE
 As of December 31,2007(2)
    
    2006(2)
    
    2005Direct Relationship
    
    
    919
    
    
    
    1,430
    
    
    
    1,738Consultant Related
    
    
    36
    
    
    
    81
    
    
    
    103Total
    
    
    955
    
    
    
    1,511
    
    
    
    1,841
 
 (2)
    
    This table reflects the number of accounts by category based upon whether the
relevant client had been referred to us by a consultant at the time of the opening of
their account. Due to consultants becoming related to clients subsequent to the
initial 24




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account opening, as of December 31, 2007 and 2006, 56 and 112 accounts,
respectively, were associated with a consultant. The remaining 899 and 1,399 accounts
as of December 31, 2007 and 2006, respectively, were not associated with any
consultant.   ASSETS UNDER MANAGEMENT
BY CLIENT TYPE
 Assets Under Management as of
    
    
    Number of Accounts as ofDecember 31, 2007
    
    
    December 31, 2007U.S.
    
    
    Non-U.S.
    
    
    Total
    
    
    U.S.
    
    
    Non-U.S.
    
    
    Total(in millions)High Net-Worth Individual
Relationships/Pooled Funds*
    
    $
    1,651
    
    
    $
    1,061
    
    
    $
    2,712
    
    
    
    750
    
    
    
    61
    
    
    
    811Foundations & Other
Relationship Directed
Institutional
    
    
    1,067
    
    
    
    143
    
    
    
    1,210
    
    
    
    99
    
    
    
    1
    
    
    
    100Other Institutional
    
    
    97
    
    
    
    80
    
    
    
    177
    
    
    
    27
    
    
    
    17
    
    
    
    44Total
    
    $
    2,815
    
    
    $
    1,284
    
    
    $
    4,099
    
    
    
    876
    
    
    
    79
    
    
    
    955
 
 *
    
    Pooled funds have been included in High Net-Worth Individual Relationships because the
underlying clients of the pooled fund vehicles are high net-worth individuals.  ASSETS UNDER MANAGEMENT
U.S./NON-U.S. CLIENTS
 As of December 31,2007
    
    
    2006
    
    
    2005(in millions)U.S. Clients
    
    $
    2,815
    
    
    $
    5,396
    
    
    $
    6,153Non-U.S. Clients
    
    
    1,284
    
    
    
    2,715
    
    
    
    3,361Total
    
    $
    4,099
    
    
    $
    8,111
    
    
    $
    9,514
 25




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Investment Advisory Revenues
  Average Gross ManagementFee as a Percent of AssetsUnder ManagementYear EndedClient Type
    
    December 31, 2007Institutional
    
    
    1.05
    %Non-Institutional
    
    
    1.07
    %U.S. Clients
    
    
    1.22
    %Non-U.S. Clients
    
    
    0.74
    %Overall Weighted Average
    
    
    1.06
    %
  26




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Geographic Area Data
  Fee Revenue2007
    
    
    2006
    
    
    2005U.S.
    
    $
    48,196,778
    
    
    $
    71,397,432
    
    
    $
    76,498,570Non-U.S.
    
    
    16,125,603
    
    
    
    36,405,030
    
    
    
    36,699,263Total
    
    $
    64,322,381
    
    
    $
    107,802,462
    
    
    $
    113,197,833
 Collective Investment Funds
  Jurisdiction of
    
    Assets UnderFormation of Fund
    
    Management(in millions)Luxembourg
    
    $
    585British Virgin Islands
    
    
    70United States
    
    
    58United Kingdom
    
    
    50
 Clearing Custodian and Brokerage Arrangements
  27




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Competition
   Regulation
     28




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29




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30




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31




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C. Organization Structure
  
 
 1.
    
    W.P. Stewart & Co., Ltd. has entered into an agreement pursuant to which it has an
option (exercisable from June 2004 to June 2009) to increase ownership to 50% or more.2.
    
    Indirectly owned. D. Property, Plant and Equipment
  
 Item 4A. Unresolved Staff Comments
  32




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Item 5. Operating and Financial Review and Prospects
  Overview
      33




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Critical Accounting Policies
 Goodwill and Intangible Assets.
  34




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##### Table of Contents



A. Operating Results
 Year Ended December 31, 2007 as Compared to Year Ended December 31, 2006
 Assets Under Management
   Net Flows of Assets Under Management  (in millions)
 Years EndedDecember 31,2007
    
    
    2006Existing Accounts:Contributions
    
    $
    303
    
    
    $
    780Withdrawals
    
    
    (934
    )
    
    
    (1,356
    )Net Flows of Existing Accounts
    
    
    (631
    )
    
    
    (576
    )Publicly Available Funds:Contributions
    
    
    115
    
    
    
    147Withdrawals
    
    
    (605
    )
    
    
    (295
    )Direct Accounts Opened
    
    
    161
    
    
    
    145Direct Accounts Closed
    
    
    (3,038
    )
    
    
    (1,311
    )Net New Flows
    
    
    (3,367
    )
    
    
    (1,314
    )Net Flows of Assets Under Management
    
    $
    (3,998
    )
    
    $
    (1,890
    )
 Revenues
  35




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Expenses
   36




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Net Income/(Loss)
  Year Ended December 31, 2006 as Compared to Year Ended December 31, 2005
 Assets Under Management
   Net Flows of Assets Under Management  (in millions)
 Years EndedDecember 31,2006
    
    
    2005Existing Accounts:Contributions
    
    $
    780
    
    
    $
    988Withdrawals
    
    
    (1,356
    )
    
    
    (1,036
    )Net Flows of Existing Accounts
    
    
    (576
    )
    
    
    (48
    )Publicly Available Funds:Contributions
    
    
    147
    
    
    
    256Withdrawals
    
    
    (295
    )
    
    
    (149
    )Direct Accounts Opened
    
    
    145
    
    
    
    312Direct Accounts Closed
    
    
    (1,311
    )
    
    
    (733
    )Net New Flows
    
    
    (1,314
    )
    
    
    (314
    )Net Flows of Assets Under Management
    
    $
    (1,890
    )
    
    $
    (362
    )
 Revenues
  37




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Expenses
   38




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Net Income
  Inflation
  B. Liquidity and Capital Resources
     39




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C. Research and Development, Patents and Licenses, etc.
  D. Trend Information
     40




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E. Off-Balance Sheet Arrangements
  F. Tabular Disclosure of Contractual Arrangements
  Contractual Obligations  (in millions)
 2008
    
    2009-2010
    
    2011-2012
    
    2013-Thereafter
    
    TotalMinimum Rental
Commitments
(1)
    
    $
    2.6
    
    
    $
    6.8
    
    
    $
    7.0
    
    
    $
    16.0
    
    
    $
    32.4
 
 (1)
    
    See Note 17 to the consolidated financial statements for additional information. 41




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Contingent Commitments  (in millions)
 Amount of Commitment Expiration Per Period2008
    
    2009-2010
    
    2011-2012
    
    2013-Thereafter
    
    TotalCommitments under letters of credit (2)
    
    
    
    
    
    $
    1.2
    
    
    
    
    
    
    $
    0.7
    
    
    $
    1.9Other (2)
    
    $
    2.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2.5
 (3)
 
 (2)
    
    See Note 9 to the consolidated financial statements for additional information.(3)
    
    See Note 15 to the consolidated financial statements for additional information. 
 Item 6. Directors, Senior Management and Employees
 A. Directors and Senior Management
   Name
    
    Position
    
    Position Held SinceWilliam P. Stewart
    
    Chairman, Chief Executive Officer and Director(1)
    
    June 1998
(Director);
1975-May 2005 &
January
2007-present
(officer)Henry B. Smith
    
    Deputy Chairman and Director(1)
    
    June 1998John C. Russell
    
    Director(1)
    
    June 1998Angus S. King, Jr.
    
    Director(2)(3)(4)
    
    February 2004Alfred J. Mulder
    
    Director(3)
    
    May 2007Heinrich Spängler
    
    Director(2)(4)
    
    June 1998Jan J. Spiering
    
    Director(1)(3)
    
    September 2004Richard D. Spurling
    
    Director(2)(4)
    
    June 2002Rocco Macri
    
    Managing Director  Chief Operating Officer
    
    May 2005Susan G. Leber
    
    Managing Director  Chief Financial Officer
    
    May 2005William O. Hall, III
    
    Managing Director  Marketing & Client Services
    
    February 2007Mark I. Phelps
    
    President and Managing Director  Global Investments
    
    September 2007Peter Jan P. Rubingh
    
    Managing Director  Marketing & Client Services
    
    February 2007Charles G.R. Target
    
    Managing Director  Communications and Corporate
Development
    
    February 2007Sylvia A. Cart
    
    Deputy Managing Director  Broker/Dealer
    
    April 2005Frederick M. Ryan
    
    Deputy Managing Director  Investor Relations
    
    September 2001Debra Randall
    
    Corporate Secretary
    
    January 2001
 
 (1)
    
    Denotes member of the Executive Committee of the board of directors.(2)
    
    Denotes member of the Compensation Committee of the board of directors.(3)
    
    Denotes member of the Audit Committee of the board of directors.(4)
    
    Denotes member of the Nominating and Corporate Governance Committee of the board of directors. 42




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William P. Stewart
 Henry B. Smith
 John C. Russell
 Angus S. King, Jr.
 Alfred J. Mulder
 43




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Heinrich Spängler
 Jan J. Spiering
 Richard D. Spurling
 Rocco Macri
 44




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Susan G. Leber
 William O. Hall, III
 Mark I. Phelps
 Peter Jan P. Rubingh
 Charles G.R. Target
 Sylvia A. Cart
 45




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Frederick M. Ryan
 Debra Randall
  B. Compensation
     46




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C. Board Practices
  Executive Committee
 Compensation Committee
 Audit Committee
 Nominating and Corporate Governance Committee
 Special Committee.
 47




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www.wpstewart.com IRINFO@wpstewart.com
   D. Employees
  E. Share Ownership
  48




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Number of CommonName
    
    Shares Owned
    
    PercentageWilliam P. Stewart (1)
    
    
    4,682,711
    
    
    
    9.27
    %Mark I. Phelps (2)
    
    
    605,000
    
    
    
    1.20
    %Peter Jan P. Rubingh (3)
    
    
    553,025
    
    
    
    1.09
    %All other Directors and Executive
Officers as a group (4)
    
    
    1,533,608
    
    
    
    *
 
 *
    
    Each individuals ownership is less than 1%.(1)
    
    Includes 4,144,140 shares owned by trusts for which Mr. Stewart serves as trustee (with
respect to which Mr. Stewart disclaims beneficial ownership) and 8,571 shares that may be
purchased upon exercise of currently exercisable options. On June 3, 2008, in connection with
the plan of dissolution of WPS II, Inc., the trusts for which Mr. Stewart serves as trustee
received a distribution of an additional 1,951,852 common shares. Further, in connection with
the tender offer for approximately 39.5% of our common shares by funds managed by Arrow
Management Capital LLC, Mr. Stewart has agreed to tender up to 1,950,000 shares to the extent
that such amount is not tendered by other shareholders. Mr. Stewart has indicated that he may
tender up to a total of 3,000,000 shares.(2)
    
    Mr. Phelps has indicated his intent to tender up to 86,667 common shares in the tender offer
by Arrow.(3)
    
    Includes 453,025 shares which are owned by a holding company of which Mr. Rubingh owns 100%.
Mr. Rubingh has indicated his intent to tender up to 175,000 common shares in the tender offer
by Arrow.(4)
    
    Includes 13,810 shares held by a trust (with respect to which beneficial ownership is
disclaimed) and 30,571 shares that may be purchased upon exercise of currently exercisable
options. Our directors and executive offers, other than Messrs. Stewart, Phelps and Rubingh,
have indicated that they may tender up to an aggregate of 310,869 common shares in connection
with the tender offer by Arrow.   W.P. Stewart & Co., Ltd. 2001 Employee Equity Incentive Plan, as amended
  49




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
    
    subject to certain conditions, amend the terms and conditions of any award or award
agreement and accelerate the exercisability of any award or the lapse of restrictions
relating to any award;
    
    determine whether, to what extent and under what circumstances awards may be
exercised with the payment of cash, shares, other securities, other awards or other
property, or canceled, forfeited or suspended;
    
    determine whether, to what extent and under what circumstances cash, shares, other
securities, other awards, other property and other amounts payable by W.P. Stewart &
Co., Ltd. with respect to an award under the plan shall be deferred either
automatically or at the election of the holder thereof or the committee;
    
    interpret and administer the plan and any instrument or agreement, including any
award agreement, relating to the plan;
    
    establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the plan; and
    
    make any other determination and take any other action that the committee deems
necessary or desirable for the administration of the plan.
    
    
    the number and type of shares (or other securities or other property) subject to
outstanding awards; and
    
    the purchase or exercise price with respect to any award.
  50




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Item 7. Major Shareholders and Related Party Transactions
 A. Major Shareholders
  Name
    
    Number
    
    PercentageWPS II, Inc.(1)
    
    
    19,264,557
    
    
    
    38.2
    %Van Den Berg Management
    
    
    10,930,879
    
    
    
    21.7
    %
 
 (1)
    
    WPS II has informed us that it has entered into a plan of dissolution pursuant to which it
has distributed 4,816,139 common shares to its shareholders on a pro rata basis as of June 3,
2008. The remainder of WPS IIs net assets will be distributed to WPS II shareholders no later
than December 31, 2008.    B. Related Party Transactions
   51




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Largest AmountOutstanding DuringAmount Outstanding
    
    the Year EndedName
    
    as of December 31, 2007
    
    December 31, 2007John C. Russell
    
    $
    50,089
    
    
    $
    92,925Sylvia A. Cart
    
    
    11,786
    
    
    
    17,089
     52




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53




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C. Interests of Experts and Counsel
  
 Item 8. Financial Information
 A. Consolidated Statement and Other Financial Information
    
    
    W.P. Stewart & Co., Ltd. is, or would after the dividend payment be, unable to pay
its liabilities as they become due; or
    
    the realizable value of W.P. Stewart & Co., Ltd.s assets after such payment would
be less than the aggregate of its liabilities and its issued share capital and share
premium accounts.
   54




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B. Significant Changes
  
 Item 9. The Offer and Listing
  55




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Trading Markets
  New York Stock ExchangePeriod
    
    High
    
    LowAnnual2003
    
    $
    25.57
    
    
    $
    14.942004
    
    $
    23.74
    
    
    $
    18.702005
    
    $
    25.75
    
    
    $
    20.902006
    
    $
    24.19
    
    
    $
    9.502007
    
    $
    16.28
    
    
    $
    4.68QuarterFirst Quarter 2006
    
    $
    24.19
    
    
    $
    17.43Second Quarter 2006
    
    $
    21.23
    
    
    $
    14.88Third Quarter 2006
    
    $
    15.67
    
    
    $
    9.50Fourth Quarter 2006
    
    $
    15.88
    
    
    $
    10.76First Quarter 2007
    
    $
    16.28
    
    
    $
    9.75Second Quarter 2007
    
    $
    11.19
    
    
    $
    9.66Third Quarter 2007
    
    $
    11.13
    
    
    $
    9.54Fourth Quarter 2007
    
    $
    7.50
    
    
    $
    4.68First Quarter 2008
    
    $
    5.47
    
    
    $
    1.40MonthDecember 2007
    
    $
    6.50
    
    
    $
    4.68January 2008
    
    $
    5.45
    
    
    $
    4.49February 2008
    
    $
    5.47
    
    
    $
    1.97March 2008
    
    $
    2.09
    
    
    $
    1.40April 2008
    
    $
    1.88
    
    
    $
    1.32May 2008
    
    $
    2.05
    
    
    $
    1.40June 1
 26, 2008
    
    $
    2.00
    
    
    $
    1.50
 56




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Item 10. Additional Information
 A. Share Capital
  B. Memorandum and Articles of Association
 Organization and Register
  Objects and Purposes
  
    
    To carry on business as a holding company and to acquire and hold shares, stocks,
debenture stock, bonds, mortgages, obligations and securities of any kind issued or
guaranteed by any company, corporation or undertaking of whatever nature and wherever
constituted or carrying on business, and shares, stock, debentures, debenture stock,
bonds, obligations and other securities issued or guaranteed by any government,
sovereign ruler, commissioners, trust, local authority or other public body, whether in
Bermuda or elsewhere, and to vary, transpose, dispose of or otherwise deal with from
time to time as may be considered expedient any of our investments for the time being;
    
    To acquire any such shares and other securities as are mentioned in the preceding
paragraph by subscription, syndicate participation, tender, purchase, exchange or
otherwise and to subscribe for the same, either conditionally or otherwise, and to
guarantee the subscription thereof and to exercise and enforce all rights and powers
conferred by or incident to the ownership thereof;
    
    To co-ordinate the administration, policies, management, supervision, control,
research, planning, trading and any and all other activities of any company or
companies now or hereafter incorporated or acquired which may be or may become a
company, wherever incorporated, which is or becomes a holding company or a subsidiary
of, or affiliated with, us within the meanings respectively assigned to those terms in
the Companies Act 1981 or, with the prior written approval of the Minister of Finance,
any company or companies now or hereafter incorporated or acquired with which we may be
or may become associated;
    
    To act as sponsors or representatives for any company, unit trust, partnership or
other entity seeking a listing of its shares, units or other instruments on any stock
exchange, and to act as agent or representative of any company listed on any stock
exchange and to arrange and sponsor public and private issues of shares and loan
capital and to negotiate and underwrite such issues;
    
    To act as agents for the sale and purchase of any stocks, shares or securities, or
for any other monetary or mercantile transaction and as managers and investment
advisers for any company, partnership, public or private body, association, individual
or entity
 57




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wherever incorporated, formed or based outside Bermuda and, with the prior
permission in writing of the Minister of Finance for any person or any class or group of
persons incorporated, formed or based in Bermuda;
 
    
    To act as underwriters, sponsors and agents for any government and other authority
and, for any person and, with the prior permission in writing of the Minister of
Finance, any person incorporated, formed or based in Bermuda;
    
    To provide financial services, advice and facilities of every description, including
(but without limiting the generality of the foregoing words) all these capable of being
provided by stockholders, stockjobbers, promoters and managers of investment vehicles,
investment media, financial advisers, underwriters and issuing houses to any person
and, with the prior permission in writing of the Minister of Finance, any persons
incorporated, formed or based in Bermuda;
    
    To invest the funds of or available to us in the share or loan capital of any other
company, partnership or other enterprise wherever incorporated, formed or carrying on
business, and in the bonds or other obligations of any authority, undertaking or
corporation, whether public or private; and
    
    As set forth in paragraphs (b) to (n) and (p) to (u) inclusive in the Second
Schedule to the Companies Act 1981.
 Directors Interests
  
    
    the resolution relates to our giving the director a guarantee, security or indemnity
in respect of a liability incurred by him for our benefit;
    
    the resolution relates to our giving a third party a guarantee, security or
indemnity in respect of an obligation of ours for which the director has assumed
responsibility under a guarantee or indemnity or by the giving a security;
    
    the directors interest arises in relation to the subscription or purchase by him of
our securities pursuant to a general offer to our shareholders or to the public;
    
    the directors interest arises from being a participant in the underwriting of any
of our securities;
    
    the resolution relates to a proposal concerning another corporation in which he
holds less than 1% of the shares;
    
    the resolution relates to a retirement benefits scheme which has been approved by
the authorities of any country for tax purposes;
    
    the resolution relates to any contract or arrangement for the benefit of our
employees and does not provide the director any advantage or privilege not accorded to
the employees; or
 58




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##### Table of Contents




    
    any proposal concerning any insurance which we are empowered to purchase for the
benefit of any of our directors.
  Shareholders Rights
  
    
    W.P. Stewart & Co., Ltd. is, or would after the dividend payment be, unable to pay
its liabilities as they become due; or
    
    the realizable value of W.P. Stewart & Co., Ltd.s assets after such payment would
be less than the aggregate of its liabilities and its issued share capital and share
premium accounts.
    59




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##### Table of Contents




    
    WPS II, Inc.;
    
    Other shareholders or groups of shareholders who were shareholders of W.P. Stewart &
Co., Ltd. immediately before our initial public offering; and
    
    Additional persons, entities or groups that are designated by our board of
directors.
   
    
    WPS II, Inc. or its affiliates;
    
    Direct or indirect subsidiaries of W.P. Stewart & Co., Ltd.;
    
    Any shareholding entity that may be established for the purpose of our employee
benefit plans and that is designated by our board of directors; and
    
    Other persons, entities or groups that are designated by our board of directors.
   Changes in Shareholders Rights
  General Meetings of Shareholders
  60




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No Limitation on Foreign Ownership
  Change in Control
  Disclosure of Share Holdings
   
    
    the acquisition or holding of land in Bermuda (except as required for our business
and held by way of lease or tenancy for terms of not more than 50 years or with the
consent of the Minister of Finance of Bermuda, as required to provide accommodation or
recreational facilities for our employees and held by way of lease or tenancy for terms
of not more than 21 years);
    
    the taking of mortgages on land in Bermuda to secure an amount in excess of
BD$50,000 without the consent of the Minister of Finance of Bermuda;
    
    the acquisition of any bonds or debentures secured on any land in Bermuda except
bonds or debentures issued by the Bermuda government or a public authority; or
    
    the carrying on of business of any kind in Bermuda other than with persons outside
Bermuda, except in certain limited circumstances such as doing business with another
exempted company in furtherance of the business of W.P. Stewart & Co., Ltd. carried on
outside Bermuda.
 C. Material Contracts
  61




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Investment Agreement
  The Tender Offer
 Newly Issued Share Purchases
 Representations and Warranties
 62




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Bye-law Waiver
 Maintaining Share Listing
 Listing of Newly Issued Shares
 Termination
 
    
    by mutual consent of us and Arrow;
    
    by either us or Arrow if any governmental authority shall have issued any order
which has the effect of making consummation of the tender offer or the newly issued
share purchase illegal;
    
    by Arrow if, prior to the closing, (i) our Board of Directors or any committee
of our Board of Directors shall have withdrawn or modified in a manner adverse to Arrow
its approval of the Investment Agreement, the newly issued share purchase or the Board
of Directors recommendation, or (ii) the Board of Directors approves or recommends an
acquisition proposal by a third party that the Board of Directors determines to be
superior to the transactions under the Investment Agreement, provided, that if Arrow
terminates the Investment Agreement as provided in this clause (ii), we have agreed to
pay $500,000 as liquidated damages to Arrow, provided, further that if Arrow has not
yet terminated the Investment Agreement, Arrow will no longer have the right to
terminate as provided in clause (ii) above once we have notified Arrow that our Board
of Directors has withdrawn its recommendation and approval of the third party
acquisition proposal and has reinstated its approval of the Investment Agreement and
Board recommendation;
    
    by us, upon approval of our Board of Directors, if (i) Arrow shall have
terminated the tender offer without having accepted any shares for payment or failed to
pay for shares pursuant to the tender offer by August 29, 2008, unless such action or
inaction was caused by or resulted from the failure of certain conditions of the tender
offer that pertain to obligations of or representations by us or (ii) prior to the
purchase of common shares in the tender offer, the Board of Directors determines, upon
consultation with outside counsel, that it is required to do so by its fiduciary duties
under applicable law, in which event we have agreed to pay $500,000 to Arrow as
liquidated damages; or
    
    by either us or Arrow following the date which is 90 days after the date of
issuance by any governmental authority of a temporary restraining order or preliminary
injunction, which has not been vacated or dismissed, that prohibits the consummation,
in whole or in part, of the tender offer or the share purchases described above under
Newly Issued Share Purchases.
 63




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Arrow Standstill
 Principal Shareholder Agreements
  Registration Rights Agreement
 64




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##### Table of Contents



D. Exchange Controls
  E. Taxation
   Bermuda
  United States
  U.S. Holders .
 
    
    a citizen or resident of the United States or any political subdivision thereof;
    
    a corporation or partnership created or organized in the United States or under the
laws of the United States or of any State; or
    
    an estate or trust the income of which is subject to U.S. federal income taxation
regardless of its source.
 65




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##### Table of Contents



Passive Foreign Investment Company Rules.
  
    
    dividends, interest, rent, royalties; and
    
    gains and losses from the sale of property giving rise to the income described in
the preceding item, as well as other types of income not here relevant.
   Controlled Foreign Corporation Rules
 66




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Backup Withholding.
 
    
    is a corporation or comes within certain other exempt categories, and, when
required, demonstrates this fact; or
    
    provides a correct taxpayer identification number, certifies that such holder is not
subject to backup withholding and otherwise complies with applicable requirements of
the backup withholding rules.
  Non-U.S. Holders.
 67




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##### Table of Contents




    
    in the case of a non-U.S. holder who is an individual, such non-U.S. holder is
present in the United States for a period or periods aggregating 183 days or more
during the taxable year of disposition (in which case such individual may be taxed as a
U.S. holder in any event); or
    
    any gain is effectively connected with the non-U.S. holders trade or business in
the United States.
  F. Dividends and Paying Agents
  G. Statements by Experts
  H. Documents on Display
  I. Subsidiary Information
  
 Item 11. Qualitative and Quantitative Disclosures About Market Risk
  Foreign Currency Exchange Rate Risk
  68




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Interest Rate Risk
   Equity Price Risk
    
 Item 12. Description of Securities Other Than Equity Securities
  
 Part II.
 
 Item 13. Default, Dividend Arrearages and Delinquencies
  69




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Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
  
 Item 15. Controls and Procedures
 A. Disclosure Controls and Procedures
  B. Managements Annual Report on Internal Control Over Financial Reporting
     C. Report of the Registered Public Accounting Firm
  D. Changes in Internal Control Over Financial Reporting
  70




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Item 16A. Audit Committee Financial Expert
  
 Item 16B. Code of Ethics
 www.wpstewart.com IRINFO@wpstewart.com
 www.wpstewart.com
 
 Item 16C. Principal Accountant Fees and Services
 Audit Fees
  Audit-Related Fees
  Tax Fees
  All Other Fees
   71




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Item 16D. Exemptions from the Listing Standards for Audit Committees
  
 Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
  Total Number of SharesPurchased fromEmployees
    
    Average PricePaidMonth
    
    Vested
    
    Unvested
    
    Per ShareJan 2007
    
    
    
    
    
    
    4,239
    
    
    $
    13.96Feb 2007
    
    
    
    
    
    
    168,090
    
    
    $
    10.21Mar 2007
    
    
    
    
    
    
    100
    
    
    $
    11.41Apr 2007
    
    
    
    
    
    
    89,763
    
    
    $
    9.08May 2007
    
    
    
    
    
    
    
    
    
    
    Jun 2007
    
    
    
    
    
    
    
    
    
    
    Jul 2007
    
    
    
    
    
    
    852
    
    
    $
    11.68Aug 2007
    
    
    
    
    
    
    322
    
    
    $
    12.16Sep 2007
    
    
    
    
    
    
    
    
    
    
    Oct 2007
    
    
    
    
    
    
    54
    
    
    $
    9.96Nov 2007
    
    
    
    
    
    
    
    
    
    
    Dec 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    263,420
 72




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##### Table of Contents



Part III.
 
 Item 17. Financial Statements
  
 Item 18. Financial Statements
  
 Item 19. Exhibits
 1.1*
    
    Memorandum of Association1.2*
    
    Bye-Laws2.1**
    
    Form of Stock Certificate4.1*
    
    1996 Shareholders Agreement among Global Reach, Limited and Shareholders of
Global Reach Limited4.2*
    
    Purchase Agreement, dated as of June 30, 1999, between W.P. Stewart & Co.,
Ltd. and Bowen Asia Limited4.3***
    
    Amendment to 1996 Shareholder Agreement4.4#
    
    Investment Agreement, dated May 20, 2008, between Arrow Masters LP, Arrow
Partners LP and Arrow Offshore, Ltd. and W.P. Stewart & Co., Ltd.4.5#
    
    Registration Rights Agreement, dated May 20, 2008, between Arrow Masters LP,
Arrow Partners LP and Arrow Offshore, Ltd. and W.P. Stewart & Co., Ltd.4.6##
    
    Letter from WPS II, Inc. to W.P. Stewart & Co., Ltd., dated May 20, 20084.7##
    
    Letter from William P. Stewart, Jr. to W.P. Stewart & Co., Ltd., dated May 20,
20084.8
    
    Agreement among William P. Stewart, Jr., Purchasers and W.P. Stewart & Co.,
Ltd., dated May 20, 20084.9
    
    Agreement among Robert L. Kahn, Purchasers and W.P. Stewart & Co., Ltd., dated
May 20, 20088.1
    
    Subsidiaries of the Registrant12.1
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 193412.2
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange Act of 193413.1
    
    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 200213.2
    
    Certification pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 200215.1
    
    Consent of PricewaterhouseCoopers LLP
 
 *
    
    Previously filed on November 21, 2000 as an exhibit to the Registrants Registration
Statement on
Form F-1 (333-49420). 73




---



##### Table of Contents



**
    
    Previously filed on December 6, 2000 as an exhibit to the Registrants Registration Statement
on Form 8-A/A (001-16245).***
    
    Previously filed on March 30, 2001 as an exhibit to the Registrants Report on Form 20-F
(001-16245).#
    
    Previously filed on May 28, 2008 as an exhibit to the Registrants Report on Form 6-K (001-16245).##
    
    Previously filed on May 29, 2008 as an exhibit to the Registrants Schedule 14D-9.
    
    Incorporated by reference to Exhibit (e)(5) to the Registrants Schedule 14D-9 filed on May 29, 2008.
    
    Incorporated by reference to Exhibit (e)(6) to the Registrants Schedule 14D-9 filed on May 29, 2008. 74




---



##### 



Index To Consolidated  Financial Statements
 PageConsolidated Financial Statements as of, and for the three years ended
December 31, 2007, 2006 and 2005Report of Independent Registered Public Accounting Firm
    
    F-2Consolidated Statements of Financial Condition
    
    F-4Consolidated Statements of Operations
    
    F-5Consolidated Statements of Changes in Shareholders Equity
    
    F-6Consolidated Statements of Cash Flows
    
    F-7Notes to the Consolidated Financial Statements
    
    F-8 to F-26
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control -
Integrated Framework
   F-2




---



##### Table of Contents



F-3




---



##### Table of Contents



W.P. Stewart & Co., Ltd.
Consolidated Statements of Financial Condition
December 31, 2007, 2006 and 2005
 2007
    
    
    2006
    
    
    2005Assets:Cash and cash equivalents
    
    $
    37,989,633
    
    
    $
    30,323,957
    
    
    $
    64,566,799Fees receivable
    
    
    2,248,967
    
    
    
    3,709,922
    
    
    
    4,530,566Receivable from clearing broker
    
    
    90,239
    
    
    
    315,867
    
    
    
    975,603Investments in unconsolidated affiliates (net of accumulated amortization
of $576,604, $494,232 and $411,860 for 2007, 2006 and 2005, respectively)
    
    
    3,944,336
    
    
    
    3,904,218
    
    
    
    3,829,391Receivables from affiliates, net
    
    
    1,986,260
    
    
    
    11,430,102
    
    
    
    6,006,088Investments, trading (cost $9,746,671 and $30,195,156 for 2007 and 2006, respectively)
    
    
    11,018,593
    
    
    
    31,803,543
    
    
    
    Investments, available for sale (cost $96,518, $96,518 and $8,861,345 for 2007, 2006
and 2005, respectively)
    
    
    151,262
    
    
    
    129,312
    
    
    
    8,756,877Investment in aircraft (net of accumulated depreciation of $22,451,475 and $21,450,140
for 2006 and 2005, respectively)
    
    
    
    
    
    
    
    
    
    
    1,001,335Goodwill
    
    
    8,681,797
    
    
    
    8,681,797
    
    
    
    5,631,797Intangible assets (net of accumulated amortization of $79,010,143, $40,953,034 and $36,513,924
for 2007, 2006 and 2005, respectively)
    
    
    9,771,319
    
    
    
    47,828,426
    
    
    
    49,317,537Furniture, equipment, software and leasehold improvements (net of accumulated depreciation
and amortization of $7,154,257, $6,662,378 and $5,621,096 for 2007, 2006 and 2005, respectively)
    
    
    2,333,705
    
    
    
    3,380,812
    
    
    
    3,432,340Interest receivable on shareholders notes
    
    
    13,147
    
    
    
    15,044
    
    
    
    40,700Income taxes receivable
    
    
    4,417,442
    
    
    
    2,598,921
    
    
    
    1,464,058Deferred income taxes receivable
    
    
    728,000
    
    
    
    
    
    
    
    Other assets
    
    
    2,551,425
    
    
    
    2,429,594
    
    
    
    3,027,281$
    85,926,125
    
    
    $
    146,551,515
    
    
    $
    152,580,372Liabilities and Shareholders Equity:Liabilities:Loans payable
    
    $
    
    
    
    $
    14,595,612
    
    
    $
    15,412,341Employee compensation and benefits payable
    
    
    2,807,142
    
    
    
    6,181,267
    
    
    
    4,213,626Fees payable
    
    
    2,229,638
    
    
    
    2,704,532
    
    
    
    3,097,377Vendor payables
    
    
    3,901,244
    
    
    
    4,766,374
    
    
    
    3,057,694Accrued expenses and other liabilities
    
    
    4,900,000
    
    
    
    4,900,000
    
    
    
    4,900,000Deferred income taxes payable
    
    
    
    
    
    
    637,500
    
    
    
    13,838,024
    
    
    
    33,785,285
    
    
    
    30,681,038Minority Interest
    
    
    
    
    
    
    
    
    
    
    254,348Shareholders Equity:Common shares, $0.001 par value (125,000,000 shares authorized 51,022,066, 47,569,278 and
46,837,855 shares issued and outstanding for 2007, 2006 and 2005, respectively)
    
    
    51,022
    
    
    
    47,569
    
    
    
    46,838Additional paid-in-capital
    
    
    106,077,793
    
    
    
    90,545,974
    
    
    
    85,445,648Accumulated other comprehensive income
    
    
    1,166,913
    
    
    
    1,114,075
    
    
    
    429,924Retained earnings/(deficit)
    
    
    (34,911,733
    )
    
    
    21,719,738
    
    
    
    37,519,60972,383,995
    
    
    
    113,427,356
    
    
    
    123,442,019Less: notes receivable for common shares
    
    
    (295,894
    )
    
    
    (661,126
    )
    
    
    (1,797,033
    )72,088,101
    
    
    
    112,766,230
    
    
    
    121,644,986$
    85,926,125
    
    
    $
    146,551,515
    
    
    $
    152,580,372
 The accompanying notes are an integral part of these consolidated financial statements.
 F-4




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##### Table of Contents



W.P. Stewart & Co., Ltd.
Consolidated Statements of Operations
For the Years Ended December 31, 2007, 2006 and 2005
 2007
    
    
    2006
    
    
    2005Revenue:Fees (includes fees from affiliates of $4,983,813, $15,313,602 and
$10,524,528 for 2007, 2006 and 2005, respectively)
    
    $
    64,322,381
    
    
    $
    107,802,462
    
    
    $
    113,197,833Commissions
    
    
    13,875,152
    
    
    
    29,608,834
    
    
    
    31,889,805Realized gain on sale of aircraft
    
    
    18,464,963
    
    
    
    
    
    
    
    Realized and unrealized gains/(losses) on investments
    
    
    1,460,178
    
    
    
    2,229,075
    
    
    
    (129,159
    )Interest and other
    
    
    2,265,888
    
    
    
    2,490,307
    
    
    
    2,896,376100,388,562
    
    
    
    142,130,678
    
    
    
    147,854,855Expenses:Employee compensation and benefits
    
    
    48,125,077
    
    
    
    43,725,858
    
    
    
    34,152,799Fees paid out
    
    
    6,626,482
    
    
    
    8,126,112
    
    
    
    9,058,834Performance fee charge
    
    
    
    
    
    
    2,625,642
    
    
    
    -Commissions, clearance and trading
    
    
    2,301,335
    
    
    
    5,665,123
    
    
    
    6,993,204Research and administration
    
    
    12,260,688
    
    
    
    13,628,542
    
    
    
    14,399,422Marketing
    
    
    6,002,748
    
    
    
    6,309,491
    
    
    
    5,540,294Depreciation and amortization
    
    
    5,769,095
    
    
    
    6,572,545
    
    
    
    8,206,220Impairment of intangible asset
    
    
    33,557,074
    
    
    
    
    
    
    
    12,452,978Other operating
    
    
    10,351,246
    
    
    
    11,971,467
    
    
    
    9,959,838124,993,745
    
    
    
    98,624,780
    
    
    
    100,763,589Income/(loss) before taxes
    
    
    (24,605,183
    )
    
    
    43,505,898
    
    
    
    47,091,266Provision for taxes
    
    
    6,796,053
    
    
    
    6,030,455
    
    
    
    7,038,582Net income/(loss)
    
    $
    (31,401,236
    )
    
    $
    37,475,443
    
    
    $
    40,052,684Earnings/(loss) per share:Basic earnings/(loss) per share
    
    $
    (0.68
    )
    
    $
    0.82
    
    
    $
    0.88Diluted earnings/(loss) per share
    
    $
    (0.68
    )
    
    $
    0.82
    
    
    $
    0.87
 The accompanying notes are an integral part of these consolidated financial statements.
 F-5




---



##### Table of Contents



W.P. Stewart & Co., Ltd.
Consolidated Statements of Changes in Shareholders Equity
For the Years Ended December 31, 2007, 2006 and 2005
 AccumulatedAdditional
    
    
    OtherCommon Shares
    
    
    Paid-In
    
    
    Comprehensive
    
    
    Retained
    
    
    NotesShares
    
    
    Amount
    
    
    Capital
    
    
    Income
    
    
    Earnings/(Deficit)
    
    
    Receivable
    
    
    TotalBalance @ December 31, 2004
    
    
    46,113,462
    
    
    $
    46,113
    
    
    $
    80,260,553
    
    
    $
    984,626
    
    
    $
    53,204,705
    
    
    $
    (3,066,716
    )
    
    $
    131,429,281Issuance of common shares, @ $0.001 par valueCash
    
    
    59,176
    
    
    
    59
    
    
    
    1,109,166
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,109,225Notes receivable
    
    
    714
    
    
    
    1
    
    
    
    11,837
    
    
    
    
    
    
    
    
    
    
    
    (11,838
    )
    
    
    Restricted shares
    
    
    666,035
    
    
    
    666
    
    
    
    (666
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase and cancellation of common
shares, @ $0.001 par value
    
    
    (1,000
    )
    
    
    (1
    )
    
    
    (25,159
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,160
    )Cancellation of common shares, @ $0.001
par value
    
    
    (532
    )
    
    
    
    
    
    
    (8,772
    )
    
    
    
    
    
    
    
    
    
    
    8,772
    
    
    
    Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    4,098,689
    
    
    
    
    
    
    
    
    
    
    
    8,643
    
    
    
    4,107,332Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,052,684
    
    
    
    
    
    
    
    40,052,684Dividends ($1.20 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,737,780
    )
    
    
    
    
    
    
    (55,737,780
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (554,702
    )
    
    
    
    
    
    
    
    
    
    
    (554,702
    )Proceeds from notes receivable
for common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,264,106
    
    
    
    1,264,106Balance @ December 31, 2005
    
    
    46,837,855
    
    
    
    46,838
    
    
    
    85,445,648
    
    
    
    429,924
    
    
    
    37,519,609
    
    
    
    (1,797,033
    )
    
    
    121,644,986Issuance of common shares, @ $0.001 par valueRestricted shares
    
    
    1,127,801
    
    
    
    1,127
    
    
    
    (1,127
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase and cancellation of common
shares, @ $0.001 par value
    
    
    (233,012
    )
    
    
    (233
    )
    
    
    (2,660,036
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,660,269
    )Cancellation of common shares, @ $0.001
par value
    
    
    (36,214
    )
    
    
    (36
    )
    
    
    (555,969
    )
    
    
    
    
    
    
    
    
    
    
    556,005
    
    
    
    Forfeiture of common shares, @ $0.001
par value
    
    
    (127,152
    )
    
    
    (127
    )
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    8,317,331
    
    
    
    
    
    
    
    77,582
    
    
    
    36,418
    
    
    
    8,431,331Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,475,443
    
    
    
    
    
    
    
    37,475,443Dividends ($1.13 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53,352,896
    )
    
    
    
    
    
    
    (53,352,896
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    684,151
    
    
    
    
    
    
    
    
    
    
    
    684,151Proceeds from notes receivable
for common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    543,484
    
    
    
    543,484Balance @ December 31, 2006
    
    
    47,569,278
    
    
    
    47,569
    
    
    
    90,545,974
    
    
    
    1,114,075
    
    
    
    21,719,738
    
    
    
    (661,126
    )
    
    
    112,766,230Issuance of common shares, @ $0.001 par valueRestricted shares
    
    
    3,929,000
    
    
    
    3,929
    
    
    
    (3,929
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase and cancellation of common
shares, @ $0.001 par value
    
    
    (256,931
    )
    
    
    (257
    )
    
    
    (2,518,597
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,518,854
    )Cancellation of common shares, @ $0.001
par value
    
    
    (6,489
    )
    
    
    (6
    )
    
    
    (87,250
    )
    
    
    
    
    
    
    
    
    
    
    87,256
    
    
    
    Forfeiture of common shares, @ $0.001
par value
    
    
    (212,792
    )
    
    
    (213
    )
    
    
    213
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-cash compensation
    
    
    
    
    
    
    
    
    
    
    18,141,382
    
    
    
    
    
    
    
    310,502
    
    
    
    43,993
    
    
    
    18,495,877Net (loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (31,401,236
    )
    
    
    
    
    
    
    (31,401,236
    )Dividends ($0.53 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,540,737
    )
    
    
    
    
    
    
    (25,540,737
    )Other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    52,838
    
    
    
    
    
    
    
    
    
    
    
    52,838Proceeds from notes receivable
for common shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    233,983
    
    
    
    233,983Balance @ December 31, 2007
    
    
    51,022,066
    
    
    $
    51,022
    
    
    $
    106,077,793
    
    
    $
    1,166,913
    
    
    $
    (34,911,733
    )
    
    $
    (295,894
    )
    
    $
    72,088,101
 The accompanying notes are an integral part of these consolidated financial statements.
 F-6




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##### Table of Contents



W.P. Stewart & Co., Ltd.
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2007, 2006 and 2005
 2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net (loss)/income
    
    $
    (31,401,236
    )
    
    $
    37,475,443
    
    
    $
    40,052,684Adjustments to reconcile net (loss)/income to net cash
provided by operating activities:(Gain)/loss on sale of trading securities
    
    
    (1,761,978
    )
    
    
    (204,628
    )
    
    
    (Gain)/loss on sale of available for sale securities
    
    
    (15,965
    )
    
    
    (407,030
    )
    
    
    156,746(Gain)/loss on disposition of aircraft
    
    
    (18,464,963
    )(Gain)/loss on disposition of furniture, equipment, software and
leasehold improvements
    
    
    
    
    
    
    14,952
    
    
    
    Unrealized (gain)/loss on trading securities
    
    
    336,465
    
    
    
    (1,608,387
    )
    
    
    Unrealized (gain)/loss on available for sale securities
    
    
    (18,700
    )
    
    
    4,390
    
    
    
    (22,780
    )Amortization of bond premium
    
    
    
    
    
    
    710,356
    
    
    
    384,942Depreciation and amortization
    
    
    39,326,169
    
    
    
    6,572,545
    
    
    
    20,659,198Equity in income of unconsolidated affiliates
    
    
    2,509
    
    
    
    (32,199
    )
    
    
    (53,752
    )Non-cash compensation
    
    
    18,495,877
    
    
    
    8,431,331
    
    
    
    4,107,332Minority interest
    
    
    
    
    
    
    (254,348
    )
    
    
    254,348Changes in operating assets and liabilities:Fees receivable
    
    
    1,460,955
    
    
    
    820,644
    
    
    
    (1,904,366
    )Receivable from clearing broker
    
    
    225,628
    
    
    
    659,736
    
    
    
    (700,667
    )Proceeds from sale of trading securities
    
    
    37,448,650
    
    
    
    2,664,682
    
    
    
    Purchase of trading securities
    
    
    (15,238,187
    )
    
    
    (32,655,209
    )
    
    
    Receivables from affiliates, net
    
    
    9,443,842
    
    
    
    (5,424,014
    )
    
    
    8,702,181Income taxes receivable
    
    
    (1,818,521
    )
    
    
    (1,134,863
    )
    
    
    (1,377,476
    )Deferred income taxes receivable
    
    
    (728,000
    )
    
    
    
    
    
    
    Interest receivable on shareholders notes
    
    
    1,897
    
    
    
    25,656
    
    
    
    22,194Other assets
    
    
    (121,831
    )
    
    
    597,687
    
    
    
    243,508Employee compensation and benefits payable
    
    
    (3,374,125
    )
    
    
    1,967,641
    
    
    
    (1,710,738
    )Fees payable
    
    
    (474,894
    )
    
    
    (392,845
    )
    
    
    630,816Vendor payables
    
    
    (865,130
    )
    
    
    1,708,680
    
    
    
    (229,027
    )Accrued expenses and other liabilities
    
    
    
    
    
    
    
    
    
    
    (500,000
    )Deferred income taxes payable
    
    
    (637,500
    )
    
    
    637,500
    
    
    
    Net cash provided by operating activities
    
    
    31,820,962
    
    
    
    20,177,720
    
    
    
    68,715,143Cash flows provided by/(used for) investing activities:Proceeds from sale of available for sale securities
    
    
    15,965
    
    
    
    14,922,031
    
    
    
    7,325,566Purchase of available for sale securities
    
    
    
    
    
    
    (6,554,421
    )
    
    
    (7,551,788
    )Purchase of goodwill
    
    
    
    
    
    
    (3,050,000
    )
    
    
    Purchase of intangible assets
    
    
    
    
    
    
    (2,950,000
    )
    
    
    Investment in unconsolidated affiliate
    
    
    (125,000
    )
    
    
    (125,000
    )
    
    
    (75,001
    )Purchase of furniture, equipment, software and leasehold improvements
    
    
    (139,582
    )
    
    
    (1,062,151
    )
    
    
    (941,415
    )Proceeds from disposition of aircraft
    
    
    18,464,963
    
    
    
    
    
    
    
    Proceeds from disposition of furniture, equipment, software and
leasehold improvements
    
    
    
    
    
    
    49,000
    
    
    
    Net cash provided by/(used for) investing activities
    
    
    18,216,346
    
    
    
    1,229,459
    
    
    
    (1,242,638
    )Cash flows (used for) financing activities:Payments on loans payable
    
    
    (14,595,612
    )
    
    
    (816,729
    )
    
    
    (790,651
    )Proceeds from issuance of common shares
    
    
    
    
    
    
    
    
    
    
    1,109,225Repurchase of common shares
    
    
    (2,518,854
    )
    
    
    (2,660,269
    )
    
    
    (25,160
    )Proceeds from notes receivable for common shares
    
    
    233,983
    
    
    
    543,484
    
    
    
    1,264,106Dividends to shareholders
    
    
    (25,540,737
    )
    
    
    (53,352,896
    )
    
    
    (55,737,780
    )Net cash (used for) financing activities
    
    
    (42,421,220
    )
    
    
    (56,286,410
    )
    
    
    (54,180,260
    )Effect of exchange rate changes in cash
    
    
    49,588
    
    
    
    636,389
    
    
    
    (584,592
    )Net (decrease)/increase in cash and cash equivalents
    
    
    7,665,676
    
    
    
    (34,242,842
    )
    
    
    12,707,653Cash and cash equivalents, beginning of year
    
    
    30,323,957
    
    
    
    64,566,799
    
    
    
    51,859,146Cash and cash equivalents, end of year
    
    $
    37,989,633
    
    
    $
    30,323,957
    
    
    $
    64,566,799Supplemental disclosures of cash flows information
Cash paid during the period for:Income taxes
    
    $
    9,945,000
    
    
    $
    6,732,017
    
    
    $
    8,817,574Interest
    
    $
    711,013
    
    
    $
    1,065,620
    
    
    $
    854,200
 Supplemental Schedule of Non-Cash Investing and Financing Activities:
 The Company cancelled outstanding notes of $87,256, $556,005 and $8,772 for the years ended December 31, 2007, 2006 and 2005, respectively (see Note 10).
 The Company issued common shares for notes receivable for the year ended December 31, 2005 in the amount of $11,838 (see Note 11).
 The Company issued 3,929,000, 1,127,801 and 666,035 common shares for the years ended December 31, 2007, 2006 and 2005, recorded with a fair value of $44,901,600, $20,480,649 and
$15,113,352, respectively and cancelled 212,792 and 127,152 forfeited restricted common shares for the years ended December 31, 2007 and 2006 recorded with a fair value of $4,182,592 and
$2,800,737, respectively (see Note 13).
 The accompanying notes are an integral part of these consolidated financial statements.
 F-7




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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1: BASIS OF PRESENTATION
  NOTE 2: BACKGROUND AND ORGANIZATION
          F-8




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Business Acquisitions
   1.
    
    the number of shares issued on acquisition not subject to repurchase, multiplied by the
fair value of each of those shares at the acquisition date;2.
    
    the number of shares that ceased to be subject to repurchase at each anniversary date,
multiplied by the fair value of each of those shares at that date; and3.
    
    the cumulative cash dividends paid on shares subject to repurchase.
   F-9




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Aggregate
    
    
    Shares Not
    
    
    Purchase
    
    
    IntangibleNumber of
    
    
    Subject to
    
    
    Price
    
    
    AmortizationAcquisition
    
    Shares
    
    
    Repurchase
    
    
    Allocation
    
    
    for the YearTPRS
    
    
    1,966,000
    
    
    
    1,966,000
    
    
    $
    18,881,238
    
    
    $
    2,596,633FLII
    
    
    1,200,000
    
    
    
    1,200,000
    
    
    
    13,632,548
    
    
    
    1,536,2793,166,000
    
    
    
    3,166,000
    
    
    $
    32,513,786
    
    
    $
    4,132,912
  Aggregate
    
    
    Shares Not
    
    
    Purchase
    
    
    IntangibleNumber of
    
    
    Subject to
    
    
    Price
    
    
    AmortizationAcquisition
    
    Shares
    
    
    Repurchase
    
    
    Allocation
    
    
    for the YearTPRS
    
    
    1,966,000
    
    
    
    1,966,000
    
    
    $
    42,367,772
    
    
    $
    2,596,633FLII
    
    
    1,200,000
    
    
    
    1,200,000
    
    
    
    23,703,088
    
    
    
    1,536,2793,166,000
    
    
    
    3,166,000
    
    
    $
    66,070,860
    
    
    $
    4,132,912
  Aggregate
    
    
    Shares Not
    
    
    Purchase
    
    
    IntangibleNumber of
    
    
    Subject to
    
    
    Price
    
    
    AmortizationAcquisition
    
    Shares
    
    
    Repurchase
    
    
    Allocation
    
    
    for the YearTPRS
    
    
    1,966,000
    
    
    
    1,966,000
    
    
    $
    42,367,772
    
    
    $
    2,596,633NSMM
    
    
    863,831
    
    
    
    863,831
    
    
    
    17,042,406
    
    
    
    953,839FLII
    
    
    1,200,000
    
    
    
    1,200,000
    
    
    
    23,703,088
    
    
    
    1,536,2794,029,831
    
    
    
    4,029,831
    
    
    $
    83,113,266
    
    
    $
    5,086,751
   F-10




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2008
    
    $
    1,215,3472009
    
    $
    1,553,5472010
    
    $
    1,218,3992011
    
    $
    1,053,9102012
    
    $
    962,123
 NOTE 3: ACCOUNTING POLICIES
   Principles of Consolidation
  Cash and Cash Equivalents
  Investments in Unconsolidated Affiliates
  Investments, Trading and Available for Sale
  F-11




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Furniture, Equipment, Software, Leasehold Improvements and Investment in Aircraft
  Fees and Fees Paid Out
   Commissions
  Income Taxes
    F-12




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Foreign Currency Translation
  Intangible Assets and Goodwill
   Earnings Per Share
  Share-Based Compensation
  Business Segments
  Reclassification of Comparative Financial Statements
  F-13




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New Accounting Pronouncements
  NOTE 4: EARNINGS PER SHARE
 2007
    
    
    2006
    
    
    2005Basic Earnings Per Share:Net income/(loss)
    
    $
    (31,401,236
    )
    
    $
    37,475,443
    
    
    $
    40,052,684Weighted average basic shares outstanding
    
    
    46,116,999
    
    
    
    45,816,561
    
    
    
    45,639,687Net income/(loss) per share
    
    $
    (0.68
    )
    
    $
    0.82
    
    
    $
    0.88Diluted Earnings Per Share:Net income/(loss)
    
    $
    (31,401,236
    )
    
    $
    37,475,443
    
    
    $
    40,052,684Weighted average basic shares outstanding
    
    
    46,116,999
    
    
    
    45,816,561
    
    
    
    45,639,687Add: Unvested shares, unvested options,
vested unexercised options and
dilutive potentially issuable
common shares
    
    
    
    
    
    
    49,903
    
    
    
    311,859Weighted average diluted shares outstanding
    
    
    46,116,999
    
    
    
    45,866,464
    
    
    
    45,951,546Net income/(loss) per share
    
    $
    (0.68
    )
    
    $
    0.82
    
    
    $
    0.87
   F-14




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NOTE 5: COMPREHENSIVE INCOME
  2007
    
    
    2006
    
    
    2005Net income/(loss)
    
    $
    (31,401,236
    )
    
    $
    37,475,443
    
    
    $
    40,052,684Other comprehensive income/(loss), net of tax:Reclassification adjustment for unrealized
gains/(losses) on available for sale
securities included in interest and other
    
    
    
    
    
    
    76,390
    
    
    
    83,580Unrealized gains/(losses) on available
for sale securities
    
    
    3,250
    
    
    
    (28,628
    )
    
    
    (53,690
    )Foreign currency translation adjustment
    
    
    49,588
    
    
    
    636,389
    
    
    
    (584,592
    )Comprehensive income/(loss)
    
    $
    (31,348,398
    )
    
    $
    38,159,594
    
    
    $
    39,497,982
 NOTE 6: INVESTMENTS IN UNCONSOLIDATED AFFILIATES
  2007
    
    
    2006
    
    
    2005Investment in Bowen Asia Limited
    
    $
    2,231,383
    
    
    $
    2,305,501
    
    
    $
    2,336,107Investment in Stewart Bowen Japan Ltd.
    
    
    115,791
    
    
    
    107,035
    
    
    
    99,871Investment in Kirk Management Ltd.
    
    
    1,597,162
    
    
    
    1,491,682
    
    
    
    1,393,413Total
    
    $
    3,944,336
    
    
    $
    3,904,218
    
    
    $
    3,829,391
    NOTE 7: RELATED PARTY TRANSACTIONS
  F-15




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F-16




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NOTE 8: LONG-TERM DEBT
    NOTE 9: COMMITMENTS AND CONTINGENCIES
  F-17




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F-18




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st
    NOTE 10: NOTES RECEIVABLE FOR COMMON SHARES
  F-19




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2008
    
    $
    238,0762009
    
    
    46,4132010
    
    
    4,6172011
    
    
    6,788$
    295,894
  NOTE 11: 2001 EMPLOYEE EQUITY INCENTIVE PLAN
     F-20




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NOTE 12: SHARE OPTIONS
   Weighted AverageRemainingContractual Life
    
    Weighted AverageDecember 31,
    
    Exercise Price
    
    Options Outstanding
    
    (Years)
    
    Exercise Price2007
    
    $
    20.20
    
    
    
    6,429
    
    
    
    4
    
    
    $
    20.202006
    
    $
    20.20
    
    
    
    15,750
    
    
    
    5
    
    
    $
    20.202005
    
    $
    20.20
    
    
    
    65,250
    
    
    
    5
    
    
    $
    20.20
  F-21




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##### Table of Contents



2007
    
    2006
    
    2005Expected Life
    
    
    1 to 7 years
    
    
    
    1 to 7 years
    
    
    
    1 to 7 yearsRisk free interest rate
    
    
    4.22% - 4.42
    %
    
    
    5.09% - 5.33
    %
    
    
    4.84% - 4.89
    %Dividend yield
    
    
    
    
    
    
    4.22% - 7.24
    %
    
    
    4.22% - 7.24
    %Volatility
    
    
    25% - 41
    %
    
    
    25% - 41
    %
    
    
    12.87
    %
  Weighted AverageRemainingContractual Life
    
    Weighted AverageDecember 31,
    
    Exercise Prices
    
    Options Outstanding
    
    (Years)
    
    Exercise Price2007
    
    $
    20.80
    
    
    
    115,618
    
    
    
    1
    
    
    $
    20.80$
    16.58 - $28.42
    
    
    
    81,990
    
    
    
    2
    
    
    $
    22.01197,6082006
    
    $
    20.80
    
    
    
    235,663
    
    
    
    2
    
    
    $
    20.80$
    16.58 - $28.42
    
    
    
    274,278
    
    
    
    3
    
    
    $
    22.01509,9412005
    
    $
    20.80 - $25.65
    
    
    
    438,696
    
    
    
    3
    
    
    $
    20.92$
    16.58 - $28.42
    
    
    
    347,593
    
    
    
    4
    
    
    $
    21.93786,289
  NOTE 13: RESTRICTED SHARES
    F-22




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NOTE 14: SHAREHOLDERS VOTING RIGHTS
   NOTE 15: INCOME TAXES
      F-23




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2007
    
    
    2006
    
    
    2005Current taxes:U.S.:Federal
    
    $
    5,122,280
    
    
    $
    3,460,837
    
    
    $
    5,240,844State and local
    
    
    3,015,962
    
    
    
    2,125,293
    
    
    
    1,784,4998,138,242
    
    
    
    5,586,130
    
    
    
    7,025,343Other:
    
    
    23,311
    
    
    
    (193,175
    )
    
    
    13,2398,161,553
    
    
    
    5,392,955
    
    
    
    7,038,582Deferred taxes:U.S.:Federal
    
    
    (850,500
    )
    
    
    360,000
    
    
    
    State and local
    
    
    (515,000
    )
    
    
    277,500
    
    
    
    (1,365,500
    )
    
    
    637,500
    
    
    
    Net tax expense
    
    $
    6,796,053
    
    
    $
    6,030,455
    
    
    $
    7,038,582
    F-24




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NOTE 16: PENSION BENEFITS
   NOTE 17: LEASE COMMITMENTS
   2008
    
    $
    2,553,9852009
    
    
    3,446,4152010
    
    
    3,415,8472011
    
    
    3,620,4012012
    
    
    3,376,336Thereafter (through 2021)
    
    
    16,002,126$
    32,415,110
   NOTE 18: GEOGRAPHIC AREA DATA
  Fee Revenue2007
    
    
    2006
    
    
    2005U.S.
    
    $
    48,196,778
    
    
    $
    71,397,432
    
    
    $
    76,498,570Non-U.S.
    
    
    16,125,603
    
    
    
    36,405,030
    
    
    
    36,699,263Total
    
    $
    64,322,381
    
    
    $
    107,802,462
    
    
    $
    113,197,833
 F-25




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NOTE 19: SUBSEQUENT EVENTS
     F-26




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##### Table of Contents



SIGNATURES
  W.P. STEWART & CO., LTD.By:
    /s/ Rocco MacriName:
    Rocco MacriTitle:
    Managing Director 
Chief Operating Officer




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##### Table of Contents



INDEX TO EXHIBITS
 Number
    
    Exhibit8.1
    
    Subsidiaries of the Registrant12.1
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 193412.2
    
    Certification pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 193413.1
    
    Certification pursuant to Rule 13a-14(b) and 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2
    
    Certification pursuant to Rule 13a-14(b) and 18 U.S.C. 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1
    
    Consent of PricewaterhouseCoopers LLP