x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-6174048 | |
(State or other jurisdiction of | (I.R.S. Employer | |
incorporation or organization) | Identification No.) | |
330 Madison Ave. | ||
New York, NY | 10017 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | x | ||||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
2 | ||||||||
3 | ||||||||
4 | ||||||||
5 | ||||||||
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44 | ||||||||
45 | ||||||||
45 | ||||||||
45 | ||||||||
45 | ||||||||
45 | ||||||||
46 | ||||||||
EX-31.1 | ||||||||
EX-31.2 | ||||||||
EX-32.1 | ||||||||
EX-32.2 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
As of | |||||||||
(in thousands, except for share amounts) | September 30, 2011 | December 31, 2010 | |||||||
ASSETS |
|||||||||
Cash |
$ | 91,971 | $ | 80,043 | |||||
Investments, at fair value: |
|||||||||
Artio Global funds held for deferred compensation |
9,834 | 9,069 | |||||||
Investments owned by the Consolidated Investment Products, and other seed money investments |
57,499 | 25,959 | |||||||
Fees receivable and accrued fees, net of allowance for doubtful accounts |
41,612 | 54,373 | |||||||
Deferred taxes |
197,107 | 198,863 | |||||||
Income taxes receivable |
13,051 | 8,586 | |||||||
Other assets |
13,234 | 11,554 | |||||||
Total assets |
$ | 424,308 | $ | 388,447 | |||||
LIABILITIES AND EQUITY |
|||||||||
Debt: |
|||||||||
Term loan |
$ | 42,000 | $ | 55,500 | |||||
Due to prime broker by the Consolidated Investment Products |
2,230 | 1,959 | |||||||
Accrued compensation and benefits |
29,487 | 39,256 | |||||||
Accounts payable and accrued expenses |
5,610 | 7,761 | |||||||
Investments sold, not yet purchased by the Consolidated Investment
Products, at fair value |
4,937 | 1,288 | |||||||
Accrued income taxes payable |
4,411 | 4,749 | |||||||
Due under tax receivable agreement |
162,092 | 167,058 | |||||||
Other liabilities |
4,729 | 4,593 | |||||||
Total liabilities |
255,496 | 282,164 | |||||||
Commitments and contingencies (Note 11) |
|||||||||
Common stock: |
|||||||||
Class A common stock (500,000,000 shares authorized, 2011
58,051,113 shares issued and outstanding; 2010 41,552,328 shares issued and outstanding) |
58 | 42 | |||||||
Class B common stock (50,000,000 shares authorized, 2011 and 2010 1,200,000 shares issued and outstanding) |
1 | 1 | |||||||
Class C common stock (210,000,000 shares authorized, 2011 no shares
issued and outstanding ; 2010 16,755,844 shares issued and outstanding) |
| 168 | |||||||
Additional paid-in capital |
624,958 | 613,065 | |||||||
Accumulated deficit |
(471,321 | ) | (509,629 | ) | |||||
Total stockholders equity |
153,696 | 103,647 | |||||||
Non-controlling interests in Holdings |
1,622 | 1,505 | |||||||
Non-controlling interests in the Consolidated Investment Products |
13,494 | 1,131 | |||||||
Total equity |
168,812 | 106,283 | |||||||
Total liabilities and equity |
$ | 424,308 | $ | 388,447 | |||||
Three Months Ended September 30, | |||||||||
(in thousands, except per share information) | 2011 | 2010 | |||||||
Revenues and other operating income: |
|||||||||
Investment management fees |
$ | 65,576 | $ | 80,173 | |||||
Net gains (losses) on funds held for deferred compensation |
(1,798 | ) | 722 | ||||||
Foreign currency gains |
6 | 35 | |||||||
Total revenues and other operating income |
63,784 | 80,930 | |||||||
Expenses: |
|||||||||
Employee compensation and benefits |
28,387 | 24,772 | |||||||
Shareholder servicing and marketing |
4,708 | 5,031 | |||||||
General and administrative |
9,470 | 11,224 | |||||||
Total expenses |
42,565 | 41,027 | |||||||
Operating income before income tax expense |
21,219 | 39,903 | |||||||
Non-operating loss: |
|||||||||
Interest income the Consolidated Investment Products |
1,019 | 33 | |||||||
Interest expense |
(461 | ) | (607 | ) | |||||
Net gains (losses) the Consolidated Investment Products and
other seed money investments |
(6,554 | ) | 145 | ||||||
Expenses the Consolidated Investment Products and other seed
money investments |
(196 | ) | (5 | ) | |||||
Other income |
2 | 3 | |||||||
Total non-operating loss |
(6,190 | ) | (431 | ) | |||||
Income before income tax expense |
15,029 | 39,472 | |||||||
Income taxes |
9,753 | 18,717 | |||||||
Net income |
5,276 | 20,755 | |||||||
Net income attributable to non-controlling interests in Holdings |
319 | 756 | |||||||
Net loss attributable to non-controlling interests in the
Consolidated Investment Products |
(1,456 | ) | | ||||||
Net income attributable to Artio Global Investors |
$ | 6,413 | $ | 19,999 | |||||
Per share information: |
|||||||||
Basic net income attributable to Artio Global Investors |
$ | 0.11 | $ | 0.34 | |||||
Diluted net income attributable to Artio Global Investors |
$ | 0.11 | $ | 0.34 | |||||
Weighted average shares used to calculate per share information: |
|||||||||
Basic |
58,157 | 58,679 | |||||||
Diluted |
58,403 | 59,012 | |||||||
Dividends per basic share declared |
$ | 0.06 | $ | 0.06 | |||||
Nine Months Ended September 30, | |||||||||
(in thousands, except per share information) | 2011 | 2010 | |||||||
Revenues and other operating income: |
|||||||||
Investment management fees |
$ | 225,561 | $ | 249,301 | |||||
Net gains (losses) on funds held for deferred compensation |
(1,435 | ) | 582 | ||||||
Foreign currency gains (losses) |
(14 | ) | 13 | ||||||
Total revenues and other operating income |
224,112 | 249,896 | |||||||
Expenses: |
|||||||||
Employee compensation and benefits |
82,217 | 74,588 | |||||||
Shareholder servicing and marketing |
14,736 | 15,177 | |||||||
General and administrative |
29,999 | 31,954 | |||||||
Total expenses |
126,952 | 121,719 | |||||||
Operating income before income tax expense |
97,160 | 128,177 | |||||||
Non-operating loss: |
|||||||||
Interest income the Consolidated Investment Products |
2,314 | 33 | |||||||
Interest expense |
(1,488 | ) | (1,927 | ) | |||||
Net gains (losses) the Consolidated Investment Products and
other seed money investments |
(6,312 | ) | 145 | ||||||
Expenses the Consolidated Investment Products and other seed money investments |
(298 | ) | (5 | ) | |||||
Other income |
3 | 14 | |||||||
Total non-operating loss |
(5,781 | ) | (1,740 | ) | |||||
Income before income tax expense |
91,379 | 126,437 | |||||||
Income taxes |
41,373 | 49,376 | |||||||
Net income |
50,006 | 77,061 | |||||||
Net income attributable to non-controlling interests in Holdings |
1,807 | 19,239 | |||||||
Net loss attributable to non-controlling interests in the
Consolidated Investment Products |
(1,396 | ) | | ||||||
Net income attributable to Artio Global Investors |
$ | 49,595 | $ | 57,822 | |||||
Per share information: |
|||||||||
Basic net income attributable to Artio Global Investors |
$ | 0.85 | $ | 1.14 | |||||
Diluted net income attributable to Artio Global Investors |
$ | 0.85 | $ | 1.13 | |||||
Weighted average shares used to calculate per share information: |
|||||||||
Basic |
58,301 | 50,907 | |||||||
Diluted |
58,431 | 51,137 | |||||||
Dividends per basic share declared |
$ | 0.18 | $ | 0.18 | |||||
Non- | ||||||||||||||||||||||||||||||||||||
controlling | ||||||||||||||||||||||||||||||||||||
Interests in | ||||||||||||||||||||||||||||||||||||
Class A | Class B | Class C | the | |||||||||||||||||||||||||||||||||
Common | Common | Common | Non- | Consoli- | ||||||||||||||||||||||||||||||||
Stock | Stock | Stock | Additional | Accum- | Stock- | controlling | dated | |||||||||||||||||||||||||||||
(in thousands, except | (par value | (par value | (par value | Paid-in | ulated | holders' | Interests in | Investment | Total | |||||||||||||||||||||||||||
per share information) | $0.001) | $0.001) | $0.01) | Capital | (Deficit) | Equity | Holdings | Products | Equity | |||||||||||||||||||||||||||
Balance as of January 1, 2010 |
$ | 28 | $ | 15 | $ | 168 | $ | 586,956 | $ | (580,275 | ) | $ | 6,892 | $ | (2,911 | ) | $ | 3,981 | ||||||||||||||||||
Net income |
| | | | 57,822 | 57,822 | 19,239 | 77,061 | ||||||||||||||||||||||||||||
Holdings units exchanged for Class A common stock and cancelation of Class B common stock |
14 | (14 | ) | | 3,253 | | 3,253 | (3,253 | ) | | ||||||||||||||||||||||||||
Net benefit from step- up in tax basis |
| | | 24,176 | | 24,176 | | 24,176 | ||||||||||||||||||||||||||||
Shares issued to the public |
4 | | | 69,286 | | 69,290 | | 69,290 | ||||||||||||||||||||||||||||
Stock repurchases |
(4 | ) | | | (77,249 | ) | | (77,253 | ) | | (77,253 | ) | ||||||||||||||||||||||||
Share-based payments: |
||||||||||||||||||||||||||||||||||||
Directors awards |
| | | 180 | | 180 | | 180 | ||||||||||||||||||||||||||||
Amortization |
| | | 9,662 | | 9,662 | | 9,662 | ||||||||||||||||||||||||||||
Forfeiture |
| | | (172 | ) | | (172 | ) | | (172 | ) | |||||||||||||||||||||||||
RSU dividend equivalents |
| | | 412 | (412 | ) | | | | |||||||||||||||||||||||||||
Distribution to non- controlling interests |
| | | | | | (12,382 | ) | (12,382 | ) | ||||||||||||||||||||||||||
Cash dividends paid ($0.18 per share) |
| | | | (8,871 | ) | (8,871 | ) | | (8,871 | ) | |||||||||||||||||||||||||
Balance as of September 30, 2010 |
$ | 42 | $ | 1 | $ | 168 | $ | 616,504 | $ | (531,736 | ) | $ | 84,979 | $ | 693 | $ | 85,672 | |||||||||||||||||||
Balance as of January 1, 2011 |
$ | 42 | $ | 1 | $ | 168 | $ | 613,065 | $ | (509,629 | ) | $ | 103,647 | $ | 1,505 | $ | 1,131 | $ | 106,283 | |||||||||||||||||
Net income |
| | | | 49,595 | 49,595 | 1,807 | (1,396 | ) | 50,006 | ||||||||||||||||||||||||||
Stock conversion |
17 | | (168 | ) | 151 | | | | | | ||||||||||||||||||||||||||
Stock repurchases |
(1 | ) | | | (6,783 | ) | | (6,784 | ) | | | (6,784 | ) | |||||||||||||||||||||||
Share-based payments: |
||||||||||||||||||||||||||||||||||||
Directors awards |
| | | 311 | | 311 | | | 311 | |||||||||||||||||||||||||||
Amortization |
| | | 17,439 | | 17,439 | | | 17,439 | |||||||||||||||||||||||||||
Forfeiture |
| | | (2 | ) | | (2 | ) | | | (2 | ) | ||||||||||||||||||||||||
RSU dividend equivalents |
| | | 777 | (777 | ) | | | | | ||||||||||||||||||||||||||
Capital contributions from non- controlling interests |
| | | | | | | 13,759 | 13,759 | |||||||||||||||||||||||||||
Distribution to non- controlling interests |
| | | | | | (1,690 | ) | | (1,690 | ) | |||||||||||||||||||||||||
Cash dividends paid ($0.18 per share) |
| | | | (10,510 | ) | (10,510 | ) | | | (10,510 | ) | ||||||||||||||||||||||||
Balance as of September 30, 2011 |
$ | 58 | $ | 1 | $ | | $ | 624,958 | $ | (471,321 | ) | $ | 153,696 | $ | 1,622 | $ | 13,494 | $ | 168,812 | |||||||||||||||||
Nine Months Ended September 30, | ||||||||
(in thousands) | 2011 | 2010 | ||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 50,006 | $ | 77,061 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation and amortization |
1,863 | 2,012 | ||||||
Deferred compensation |
4,317 | 2,982 | ||||||
Share-based compensation |
17,748 | 9,670 | ||||||
Deferred income taxes |
1,756 | 4,146 | ||||||
(Gains) losses on investments and derivatives |
7,747 | (727 | ) | |||||
Changes in assets and liabilities: |
||||||||
Purchases by the Consolidated Investment Products and of other seed money investments |
(101,361 | ) | (9,879 | ) | ||||
Proceeds from sales or maturities by the Consolidated Investment Products and from other seed money investments |
66,712 | 430 | ||||||
Due to prime broker by the Consolidated Investment Products |
271 | | ||||||
Fees receivable and accrued fees, net of allowance for doubtful accounts |
12,761 | 3,116 | ||||||
Income taxes receivable |
(4,465 | ) | (4,950 | ) | ||||
Other assets |
(1,658 | ) | 632 | |||||
Accrued compensation and benefits |
(14,086 | ) | (4,557 | ) | ||||
Accounts payable and accrued expenses |
(2,137 | ) | (1,998 | ) | ||||
Accrued income taxes payable |
(338 | ) | (8,652 | ) | ||||
Due under tax receivable agreement |
(4,966 | ) | | |||||
Other liabilities |
136 | 4,670 | ||||||
Net cash provided by operating activities |
34,306 | 73,956 | ||||||
Cash flows from investing activities: |
||||||||
Purchase of Artio Global funds held for deferred compensation |
(7,115 | ) | (4,908 | ) | ||||
Proceeds from redemptions of Artio Global funds held for deferred compensation |
4,915 | 3,809 | ||||||
Purchase of fixed assets |
(1,439 | ) | (957 | ) | ||||
Net cash used in investing activities |
(3,639 | ) | (2,056 | ) | ||||
Cash flows from financing activities: |
||||||||
Repayments of borrowing under term credit facility |
(13,500 | ) | | |||||
Proceeds from secondary offering |
| 69,290 | ||||||
Repurchase and retirement of Class A common stock |
(6,784 | ) | (77,253 | ) | ||||
Contributions from non-controlling interests in the Consolidated Investment Products |
13,759 | | ||||||
Distribution paid to GAM Holding AG |
| (40,100 | ) | |||||
Distributions paid to non-controlling interests in Holdings |
(1,690 | ) | (12,382 | ) | ||||
Cash dividends paid |
(10,510 | ) | (8,871 | ) | ||||
Net cash used in financing activities |
(18,725 | ) | (69,316 | ) | ||||
Effect of exchange rates on cash |
(14 | ) | 13 | |||||
Net increase in cash |
11,928 | 2,597 | ||||||
Cash: |
||||||||
Beginning of period |
80,043 | 60,842 | ||||||
End of period |
$ | 91,971 | $ | 63,439 | ||||
Cash paid during period for: |
||||||||
Income taxes, net of refunds |
$ | 44,459 | $ | 59,091 | ||||
Interest expense |
1,632 | 1,487 | ||||||
Nine Months Ended September 30, | ||||||||
(in thousands) | 2011 | 2010 | ||||||
Supplementary information: |
||||||||
Non-cash transactions: |
||||||||
Net benefit from step-up in tax basis |
$ | | $ | (24,176 | ) | |||
Exchange of New Class A Units for shares of Class A common stock |
| (3,267 | ) | |||||
Cancelation of Class B common stock |
| 14 | ||||||
Conversion of Class C common stock to Class A common stock |
(151 | ) | | |||||
Class A | Class B | Class C | ||||||||||
(in thousands) | Common Stock | Common Stock | Common Stock | |||||||||
As of December 31, 2009 |
27,659 | 15,600 | 16,756 | |||||||||
Activity: |
||||||||||||
Exchange by the Principals(a) |
14,400 | (14,400 | ) | | ||||||||
Shares issued to the public(b) |
4,209 | | | |||||||||
Repurchase from the Principals(b) |
(4,209 | ) | | | ||||||||
Share repurchase program(c) |
(1,000 | ) | | | ||||||||
Restricted stock units vested |
485 | | | |||||||||
Shares issued to the independent directors(d) |
8 | | | |||||||||
As of December 31, 2010(e) |
41,552 | 1,200 | 16,756 | |||||||||
Class C common stock conversion(f) |
16,756 | | (16,756 | ) | ||||||||
Share repurchase program(c) |
(774 | ) | | | ||||||||
Restricted stock units vested |
496 | | | |||||||||
Shares issued to independent directors(d) |
21 | | | |||||||||
As of September 30, 2011(e) |
58,051 | 1,200 | | |||||||||
(a) | Represents the issuance of 7.2 million shares of Class A common stock to each of the Principals upon exchange of an equivalent number of non-voting member interests in Holdings (New Class A Units) in 2010. Upon the exchange of New Class A Units for Class A common stock, corresponding shares of Class B common stock were canceled. | |
(b) | Represents the 4.2 million shares of Class A common stock that were issued to the public in connection with a synthetic secondary offering (the secondary offering) in 2010, including 0.4 million shares issued to the underwriters in connection with exercising a portion of their option to purchase additional shares of Class A common stock, and which we subsequently purchased from the Principals with the net proceeds, and retired. | |
(c) | In July 2010, our Board of Directors authorized a share repurchase program of up to 1.0 million shares of our Class A common stock. As of December 31, 2010, we had purchased and retired 1.0 million shares of our Class A common stock for approximately $14.6 million under this program. In December 2010, our Board of Directors authorized a share repurchase program of up to 3.0 million shares of our common stock. This authority expires on December 31, 2013. As of September 30, 2011, we had purchased and retired 773,939 shares of our Class A common stock for approximately $6.8 million under this program. | |
(d) | Represents the 8,376 shares of fully-vested Class A common stock (subject to transfer restrictions) that were awarded to our independent directors in 2010 and 20,848 shares of fully-vested Class A common stock (subject to transfer restrictions) that were awarded to our independent directors in the first nine months of 2011. | |
(e) | The table does not reflect 1.9 million unvested restricted stock units awarded to certain employees as of December 31, 2010, and 3.8 million unvested restricted stock units awarded to certain employees as of September 30, 2011 (see Note 8. Share-Based Payments). Each restricted stock unit represents the right to receive one share of Class A common stock upon vesting. | |
(f) | On September 29, 2011, the second anniversary of our initial public offering, all outstanding shares of Class C common stock automatically converted into Class A common stock pursuant to our certificate of incorporation. |
(in thousands) | ||||
Net income attributable to Artio Global Investors for the
nine months ended September 30, 2010 |
$ | 57,822 | ||
Increase in Additional paid-in capital due to exchange by the
Principals of New Class A Units for shares of Class A common stock |
3,253 | |||
As of September 30, 2010 |
$ | 61,075 | ||
Artio Global | ||||||||||||||||
Before | Consolidated Investment |
Investors Inc. and Subsidiaries |
||||||||||||||
(in thousands) | Consolidation (a) | Products | Eliminations | Consolidated | ||||||||||||
Assets: |
||||||||||||||||
Cash |
$ | 89,166 | $ | 2,805 | $ | | $ | 91,971 | ||||||||
Investments, at fair value |
12,491 | 54,842 | | 67,333 | ||||||||||||
Investment in the
Consolidated Investment Products |
39,812 | (39,812 | ) | | ||||||||||||
Other assets |
259,696 | 5,308 | | 265,004 | ||||||||||||
Total assets |
$ | 401,165 | $ | 62,955 | $ | (39,812 | ) | $ | 424,308 | |||||||
Liabilities and Equity: |
||||||||||||||||
Debt |
$ | 42,000 | $ | 2,230 | $ | | $ | 44,230 | ||||||||
Investments sold, not yet
purchased by the Consolidated Investment Products, at fair value |
| 4,937 | | 4,937 | ||||||||||||
Other liabilities |
203,847 | 2,482 | | 206,329 | ||||||||||||
Total liabilities |
245,847 | 9,649 | | 255,496 | ||||||||||||
Members equity |
30,534 | (30,534 | ) | | ||||||||||||
Net asset value |
22,772 | (22,772 | ) | | ||||||||||||
Common stock |
59 | | 59 | |||||||||||||
Additional paid-in capital |
624,958 | | 624,958 | |||||||||||||
Accumulated deficit |
(471,321 | ) | | (471,321 | ) | |||||||||||
Total stockholders equity |
153,696 | 53,306 | (53,306 | ) | 153,696 | |||||||||||
Non-controlling interests |
1,622 | 13,494 | 15,116 | |||||||||||||
Total equity |
155,318 | 53,306 | (39,812 | ) | 168,812 | |||||||||||
Total liabilities and equity |
$ | 401,165 | $ | 62,955 | $ | (39,812 | ) | $ | 424,308 | |||||||
(a) | Represents Artio Global Investors Inc. and subsidiaries with the investment in the Consolidated Investment Products accounted for under the equity method. |
Artio Global | ||||||||||||||||
Consolidated | Investors Inc. | |||||||||||||||
Before | Investment | and Subsidiaries | ||||||||||||||
(in thousands) | Consolidation (a) | Products | Eliminations | Consolidated | ||||||||||||
Assets: |
||||||||||||||||
Cash |
$ | 79,232 | $ | 811 | $ | | $ | 80,043 | ||||||||
Investments, at fair value |
10,386 | 24,642 | | 35,028 | ||||||||||||
Investment in the
Consolidated Investment Products |
19,912 | | (19,912 | ) | | |||||||||||
Other assets |
273,126 | 250 | | 273,376 | ||||||||||||
Total assets |
$ | 382,656 | $ | 25,703 | $ | (19,912 | ) | $ | 388,447 | |||||||
Liabilities and Equity: |
||||||||||||||||
Debt |
$ | 55,500 | $ | 1,959 | $ | | $ | 57,459 | ||||||||
Investments sold, not yet
purchased by the Consolidated Investment Products, at fair value |
| 1,288 | | 1,288 | ||||||||||||
Other liabilities |
222,004 | 1,413 | | 223,417 | ||||||||||||
Total liabilities |
277,504 | 4,660 | | 282,164 | ||||||||||||
Members equity |
21,043 | (21,043 | ) | | ||||||||||||
Common stock |
211 | | 211 | |||||||||||||
Additional paid-in capital |
613,065 | | 613,065 | |||||||||||||
Accumulated deficit |
(509,629 | ) | | (509,629 | ) | |||||||||||
Total stockholders equity |
103,647 | 21,043 | (21,043 | ) | 103,647 | |||||||||||
Non-controlling interests |
1,505 | 1,131 | 2,636 | |||||||||||||
Total equity |
105,152 | 21,043 | (19,912 | ) | 106,283 | |||||||||||
Total liabilities and equity |
$ | 382,656 | $ | 25,703 | $ | (19,912 | ) | $ | 388,447 | |||||||
(a) | Represents Artio Global Investors Inc. and subsidiaries with the investment in the Consolidated Investment Products accounted for under the equity method. |
Artio Global | ||||||||||||||||
Consolidated | Investors Inc. | |||||||||||||||
Before | Investment | and Subsidiaries | ||||||||||||||
(in thousands) | Consolidation (a) | Products | Eliminations | Consolidated | ||||||||||||
For the three months ended September 30, 2011: |
||||||||||||||||
Total revenues and other operating income |
$ | 63,727 | $ | | $ | 57 | $ | 63,784 | ||||||||
Total expenses |
42,565 | | | 42,565 | ||||||||||||
Operating income before income tax expense |
21,162 | | 57 | 21,219 | ||||||||||||
Non-operating income (loss): |
||||||||||||||||
Equity in earnings of the
Consolidated Investment Products |
(3,426 | ) | 3,426 | | ||||||||||||
Other |
(1,251 | ) | (4,882 | ) | (57 | ) | (6,190 | ) | ||||||||
Total non operating income (loss) |
(4,677 | ) | (4,882 | ) | 3,369 | (6,190 | ) | |||||||||
Income before income tax expense |
16,485 | (4,882 | ) | 3,426 | 15,029 | |||||||||||
Income taxes |
9,753 | | | 9,753 | ||||||||||||
Net income |
6,732 | (4,882 | ) | 3,426 | 5,276 | |||||||||||
Net income attributable to
non-controlling interests |
319 | | (1,456 | ) | (1,137 | ) | ||||||||||
Net income,
excluding non-controlling interests |
$ | 6,413 | $ | (4,882 | ) | $ | 4,882 | $ | 6,413 | |||||||
For the three months ended September 30, 2010: |
||||||||||||||||
Total revenues and other operating income |
$ | 80,930 | $ | | $ | | $ | 80,930 | ||||||||
Total expenses |
41,027 | | | 41,027 | ||||||||||||
Operating income before income tax expense |
39,903 | | | 39,903 | ||||||||||||
Non-operating income (loss): |
||||||||||||||||
Equity in earnings of the
Consolidated Investment Products |
77 | | (77 | ) | | |||||||||||
Other |
(508 | ) | 77 | | (431 | ) | ||||||||||
Total non operating income (loss) |
(431 | ) | 77 | (77 | ) | (431 | ) | |||||||||
Income before income tax expense |
39,472 | 77 | (77 | ) | 39,472 | |||||||||||
Income taxes |
18,717 | | | 18,717 | ||||||||||||
Net income |
20,755 | 77 | (77 | ) | 20,755 | |||||||||||
Net income attributable to
non-controlling interests |
756 | | | 756 | ||||||||||||
Net income,
excluding non-controlling interests |
$ | 19,999 | $ | 77 | $ | (77 | ) | $ | 19,999 | |||||||
(a) | Represents Artio Global Investors Inc. and subsidiaries with the investment in the Consolidated Investment Products accounted for under the equity method. |
Artio Global | ||||||||||||||||
Consolidated | Investors Inc. | |||||||||||||||
Before | Investment | and Subsidiaries | ||||||||||||||
(in thousands) | Consolidation (a) | Products | Eliminations | Consolidated | ||||||||||||
For the nine
months ended September 30, 2011: |
||||||||||||||||
Total revenues and other operating income |
$ | 224,032 | $ | | $ | 80 | $ | 224,112 | ||||||||
Total expenses |
126,952 | | | 126,952 | ||||||||||||
Operating income before income tax expense |
97,080 | | 80 | 97,160 | ||||||||||||
Non-operating income (loss): |
||||||||||||||||
Equity in earnings of the
Consolidated Investment Products |
(2,100 | ) | 2,100 | | ||||||||||||
Other |
(2,205 | ) | (3,496 | ) | (80 | ) | (5,781 | ) | ||||||||
Total non operating income (loss) |
(4,305 | ) | (3,496 | ) | 2,020 | (5,781 | ) | |||||||||
Income before income tax expense |
92,775 | (3,496 | ) | 2,100 | 91,379 | |||||||||||
Income taxes |
41,373 | | | 41,373 | ||||||||||||
Net income |
51,402 | (3,496 | ) | 2,100 | 50,006 | |||||||||||
Net income attributable to
non-controlling interests |
1,807 | | (1,396 | ) | 411 | |||||||||||
Net income, excluding non-controlling interests |
$ | 49,595 | $ | (3,496 | ) | $ | 3,496 | $ | 49,595 | |||||||
For the nine months ended September 30, 2010: |
||||||||||||||||
Total revenues and other operating income |
$ | 249,896 | $ | | $ | | $ | 249,896 | ||||||||
Total expenses |
121,719 | | | 121,719 | ||||||||||||
Operating income before income tax expense |
128,177 | | | 128,177 | ||||||||||||
Non-operating income (loss): |
||||||||||||||||
Equity in earnings of the
Consolidated Investment Products |
77 | | (77 | ) | | |||||||||||
Other |
(1,817 | ) | 77 | | (1,740 | ) | ||||||||||
Total non operating income (loss) |
(1,740 | ) | 77 | (77 | ) | (1,740 | ) | |||||||||
Income before income tax expense |
126,437 | 77 | (77 | ) | 126,437 | |||||||||||
Income taxes |
49,376 | | | 49,376 | ||||||||||||
Net income |
77,061 | 77 | (77 | ) | 77,061 | |||||||||||
Net income attributable to
non-controlling interests |
19,239 | | | 19,239 | ||||||||||||
Net income, excluding non-controlling interests |
$ | 57,822 | $ | 77 | $ | (77 | ) | $ | 57,822 | |||||||
(a) | Represents Artio Global Investors Inc. and subsidiaries with the investment in the Consolidated Investment Products accounted for under the equity method. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Funds investment management fees |
$ | 38,186 | $ | 44,911 | $ | 129,633 | $ | 141,245 | ||||||||
Sub-advisory investment management
fees on GAM-sponsored funds |
472 | 723 | 1,887 | 1,930 | ||||||||||||
As of | ||||||||
September 30, | December 31, | |||||||
(in thousands) | 2011 | 2010 | ||||||
Funds investment management fees |
$ | 10,925 | $ | 15,850 | ||||
Sub-advisory investment management fees on GAM-sponsored funds |
497 | 802 | ||||||
As of | ||||||||
September 30, | December 31, | |||||||
(in thousands) | 2011 | 2010 | ||||||
Artio Global funds held for deferred compensation Artio Global funds |
$ | 9,834 | $ | 9,069 | ||||
Total Artio Global funds held for deferred compensation |
$ | 9,834 | $ | 9,069 | ||||
Investments owned by the Consolidated Investment Products, and other seed money investments: |
||||||||
Investments owned by the Consolidated Investment Products: |
||||||||
Equity securities |
$ | 1,686 | $ | 3,142 | ||||
Fixed income investments: |
||||||||
Corporate bonds |
22,809 | 17,075 | ||||||
Foreign government debt |
13,506 | | ||||||
Term loans |
14,697 | 4,425 | ||||||
Warrants |
109 | | ||||||
Repurchase agreements |
2,035 | | ||||||
Total investments owned by the Consolidated Investment Products |
54,842 | 24,642 | ||||||
Other seed money investments: |
||||||||
Equity fund(a) |
1,584 | | ||||||
Equity securities |
1,073 | 1,317 | ||||||
Total other seed money investments |
2,657 | 1,317 | ||||||
Total investments owned by the Consolidated Investment Products, and other seed money investments |
$ | 57,499 | $ | 25,959 | ||||
Investments sold, not yet purchased by the Consolidated Investment Products: |
||||||||
Equity securities |
$ | | $ | (62 | ) | |||
Corporate bonds |
(3,317 | ) | (1,226 | ) | ||||
Repurchase agreements |
(1,620 | ) | | |||||
Total investments sold, not yet purchased by the Consolidated Investment Products |
$ | (4,937 | ) | $ | (1,288 | ) | ||
(a) | As of September 30, 2011, includes the fair value of a $2.0 million investment in the Artio U.S. Midcap Fund made during the second quarter of 2011 that would have been accounted for under the equity method had we not elected the fair value option. We did not make any seed money investments that would have been accounted for under the equity method in 2010. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net gains
(losses) on Artio
Global funds held
for deferred compensation |
$ | (1,798 | ) | $ | 722 | $ | (1,435 | ) | $ | 582 | ||||||
Less: Net gains
(losses) on
redeemed Artio Global funds held for deferred compensation |
19 | (7 | ) | 867 | 122 | |||||||||||
Unrealized gains
(losses) on Artio
Global funds held for deferred compensation |
$ | (1,817 | ) | $ | 729 | $ | (2,302 | ) | $ | 460 | ||||||
Net gains (losses)
the Consolidated
Investment Products and other seed money investments: |
||||||||||||||||
Net gains
(losses) on
investments of
the Consolidated Investment Products |
$ | (5,772 | ) | $ | 46 | $ | (5,628 | ) | $ | 46 | ||||||
Less: Net gains
(losses) on
investments of
the Consolidated Investment Products sold or matured |
(383 | ) | 19 | (123 | ) | 19 | ||||||||||
Unrealized gains
(losses) on
investments of the Consolidated Investment Products |
$ | (5,389 | ) | $ | 27 | $ | (5,505 | ) | $ | 27 | ||||||
Net gains
(losses) on
other seed money investments |
$ | (782 | )(a) | $ | 99 | $ | (684 | )(a) | $ | 99 | ||||||
Less: Net gains
(losses) on
other seed money investments sold, matured or redeemed |
(32 | ) | 1 | 153 | 1 | |||||||||||
Unrealized gains
(losses) on
other seed money investments |
$ | (750 | )(a) | $ | 98 | $ | (837 | )(a) | $ | 98 | ||||||
Total net gains
(losses) the
Consolidated Investment Products and other seed money investments |
$ | (6,554 | ) | $ | 145 | $ | (6,312 | ) | $ | 145 | ||||||
Less: Total net
gains on the
Consolidated Investment Products and other seed money investments sold, matured or redeemed |
(415 | ) | 20 | 30 | 20 | |||||||||||
Total unrealized
gains (losses) on
the Consolidated Investment Products and other seed money investments |
$ | (6,139 | ) | $ | 125 | $ | (6,342 | ) | $ | 125 | ||||||
(a) | Includes Funds that would have been accounted for under the equity method had we not elected the fair value option. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Equity securities |
$ | (486 | ) | $ | 31 | $ | (710 | ) | $ | 31 | ||||||
Fixed income investments: |
||||||||||||||||
Corporate bonds |
(3,176 | ) | 22 | (2,626 | ) | 22 | ||||||||||
Foreign government and organization debt |
(1,475 | ) | | (1,222 | ) | | ||||||||||
Term loans |
(1,834 | ) | (6 | ) | (1,690 | ) | (6 | ) | ||||||||
Credit default swaps |
644 | (1 | ) | 594 | (1 | ) | ||||||||||
Foreign exchange forward contracts |
372 | | 17 | | ||||||||||||
Options |
37 | | (163 | ) | | |||||||||||
Warrants |
(94 | ) | | (137 | ) | | ||||||||||
Repurchase agreements |
240 | | 240 | | ||||||||||||
Other |
| | 69 | | ||||||||||||
Total net gains (losses) the Consolidated |
||||||||||||||||
Investment Products |
$ | (5,772 | ) | $ | 46 | $ | (5,628 | ) | $ | 46 | ||||||
Level 2 | Level 3 | |||||||||||||||
Level 1 | Other Observable |
Significant Unobservable |
||||||||||||||
(in thousands) | Total | Quoted Prices | Inputs | Inputs | ||||||||||||
Artio Global funds held for
deferred compensation: |
||||||||||||||||
Artio Global funds |
$ | 9,834 | $ | 9,834 | $ | | $ | | ||||||||
Total Artio Global funds held for
deferred compensation |
$ | 9,834 | $ | 9,834 | $ | | $ | | ||||||||
Investments owned by the
Consolidated Investment Products, and other seed money investments: |
||||||||||||||||
Investments owned by the
Consolidated Investment Products: |
||||||||||||||||
Equity securities |
$ | 1,686 | $ | 1,621 | $ | 65 | $ | | ||||||||
Fixed income investments: |
||||||||||||||||
Corporate bonds |
22,809 | 263 | 21,917 | 629 | ||||||||||||
Foreign government debt |
13,506 | | 13,506 | | ||||||||||||
Term loans |
14,697 | | 12,753 | 1,944 | ||||||||||||
Warrants |
109 | 109 | | | ||||||||||||
Repurchase agreements |
2,035 | | 2,035 | | ||||||||||||
Total investments owned by the
Consolidated Investment Products |
54,842 | 1,993 | 50,276 | 2,573 | ||||||||||||
Other seed money investments: |
||||||||||||||||
Equity fund(a) |
1,584 | 1,584 | | | ||||||||||||
Equity securities |
1,073 | 1,073 | | | ||||||||||||
Total other seed money investments |
2,657 | 2,657 | | | ||||||||||||
Total investments owned by the
Consolidated Investment Products, and other seed money investments |
$ | 57,499 | $ | 4,650 | $ | 50,276 | $ | 2,573 | ||||||||
Investments sold, not yet purchased
by the Consolidated Investment Products: |
||||||||||||||||
Fixed income investments: |
||||||||||||||||
Corporate bonds |
$ | (3,317 | ) | $ | (769 | ) | $ | (2,548 | ) | $ | | |||||
Repurchase agreements |
(1,620 | ) | (1,620 | ) | | |||||||||||
Total investments sold, not yet
purchased by the Consolidated Investment Products |
$ | (4,937 | ) | $ | (2,389 | ) | $ | (2,548 | ) | $ | | |||||
(a) | Investment that would have been accounted for under the equity method had we not elected the fair value option. |
Level 2 | Level 3 | |||||||||||||||
Other | Significant | |||||||||||||||
Level 1 | Observable | Unobservable | ||||||||||||||
(in thousands) | Total | Quoted Prices | Inputs | Inputs | ||||||||||||
Artio Global funds held for
deferred Compensation and other investments: |
||||||||||||||||
Artio Global funds |
$ | 9,069 | $ | 9,069 | $ | | $ | | ||||||||
Total Artio Global funds held for
deferred compensation and other investments |
$ | 9,069 | $ | 9,069 | $ | | $ | | ||||||||
Investments owned by the
Consolidated Investment Products, and other seed money investments: |
||||||||||||||||
Investments owned by the
Consolidated |
||||||||||||||||
Investment Products:
|
||||||||||||||||
Equity securities |
$ | 3,142 | $ | 2,367 | $ | 629 | $ | 146 | ||||||||
Fixed income investments: |
||||||||||||||||
Corporate bonds |
17,075 | | 17,075 | | ||||||||||||
Term loans |
4,425 | | 3,470 | 955 | ||||||||||||
Total investments owned by the
Consolidated Investment Products |
24,642 | 2,367 | 21,174 | 1,101 | ||||||||||||
Other seed money investments: |
||||||||||||||||
Equity securities |
1,317 | 1,317 | | | ||||||||||||
Total other seed money investments |
1,317 | 1,317 | | | ||||||||||||
Total investments owned by the
Consolidated Investment Products, and other seed money investments |
$ | 25,959 | $ | 3,684 | $ | 21,174 | $ | 1,101 | ||||||||
Investments sold, not yet purchased
by the Consolidated Investment Products: |
||||||||||||||||
Equity securities |
$ | (62 | ) | $ | (62 | ) | $ | | $ | | ||||||
Fixed income investments: |
||||||||||||||||
Corporate bonds |
(1,226 | ) | | (1,226 | ) | | ||||||||||
Total investments sold, not yet
purchased by the Consolidated Investment Products |
$ | (1,288 | ) | $ | (62 | ) | $ | (1,226 | ) | $ | | |||||
As of | ||||
September 30, | ||||
(in thousands) | 2011 | |||
Equity securities owned by the Consolidated Investment Products: |
||||
Beginning of period |
$ | 146 | ||
Sales |
(44 | ) | ||
Transfers to level 2 |
(65 | ) | ||
Net losses during the period |
(37 | ) | ||
End of period |
$ | | ||
Equity securities total losses for the period attributable to the
change in unrealized gains or losses relating to assets still held as of September 30, 2011 |
$ | (10 | ) | |
Corporate bonds owned by the Consolidated Investment Products: |
||||
Beginning of period |
$ | | ||
Purchases |
733 | |||
Sales |
(47 | ) | ||
Net losses during the period |
(57 | ) | ||
End of period |
$ | 629 | ||
Corporate bonds total losses for the period attributable to the
change in unrealized gains or losses relating to assets still held as of September 30, 2011 |
$ | (57 | ) | |
Term loans owned by the Consolidated Investment Products: |
||||
Beginning of period |
$ | 955 | ||
Purchases |
1,948 | |||
Sales |
(765 | ) | ||
Transfers to level 2 |
(118 | ) | ||
Amortization |
16 | |||
Net losses during the period |
(92 | ) | ||
End of period |
$ | 1,944 | ||
Term loans total gains for the period attributable to the change
in unrealized gains or losses relating to assets still held as of September 30, 2011 |
$ | (108 | ) | |
Notional/Nominal Amount as of | ||||||||
September 30, | December 31, | |||||||
(in thousands) | 2011 | 2010 | ||||||
Credit default swaps |
$ | 13,660 | $ | 5,200 | ||||
Foreign exchange forward contracts |
25,957 | 2,582 | ||||||
Option contracts |
13,432 | | ||||||
Assets | Liabilities | |||||||||||||||
Statement of | Statement of | |||||||||||||||
Financial | Financial | |||||||||||||||
(in thousands) | Position Location | Fair Value | Position Location | Fair Value | ||||||||||||
As of September 30, 2011: |
||||||||||||||||
Credit default swaps |
Other assets | $ | 950 | |||||||||||||
Foreign exchange forward contracts | Other assets | 344 | ||||||||||||||
Option contracts |
Other assets | 395 | ||||||||||||||
As of December 31, 2010: |
||||||||||||||||
Credit default swaps |
Other assets | $ | 21 | Other assets | $ | 107 | ||||||||||
Foreign exchange forward contracts |
Other liabilities |
58 | ||||||||||||||
Units/Shares | ||||
Available for grant at inception |
9,700,000 | |||
Restricted
stock units (RSUs) granted, including dividend equivalents |
(4,969,411 | ) | ||
Fully-vested restricted stock granted to independent directors |
(43,867 | ) | ||
RSUs
forfeited, including dividend equivalents |
151,654 | |||
Available for grant as of September 30, 2011 |
4,838,376 | |||
Weighted-Average | ||||||||||||
Grant Date Fair | RSU Dividend | |||||||||||
Value(a) | Number of RSUs | Equivalents | ||||||||||
Granted and unvested as of December 31, 2010 |
1,856,997 | 27,225 | ||||||||||
Grants: |
||||||||||||
RSUs |
$ | 14.81 | 450,976 | |||||||||
Dividend equivalents |
33,440 | |||||||||||
Vesting: |
||||||||||||
RSUs |
25.74 | (482,865 | ) | |||||||||
Dividend equivalents |
(13,220 | ) | ||||||||||
Forfeitures: |
||||||||||||
RSUs |
25.33 | (3,072 | ) | |||||||||
Dividend equivalents |
(57 | ) | ||||||||||
Granted and unvested as of September 30, 2011(b) |
1,822,036 | 47,388 | ||||||||||
Granted and unvested as of December 31, 2009 |
2,146,758 | | ||||||||||
Grants: |
||||||||||||
RSUs |
$ | 21.86 | 232,983 | |||||||||
Dividend equivalents |
22,990 | |||||||||||
Vesting: |
||||||||||||
RSUs |
26.25 | (481,070 | ) | |||||||||
Dividend equivalents |
(4,083 | ) | ||||||||||
Forfeitures: |
||||||||||||
RSUs |
26.10 | (41,674 | ) | |||||||||
Dividend equivalents |
(206 | ) | ||||||||||
Granted and unvested as of September 30, 2010 |
1,856,997 | 18,701 | ||||||||||
(a) | Weighted-average grant date fair value for grants is based on the closing price on the grant date. | |
(b) | In September 2011, we implemented organizational changes, which included a staff reduction. As a result, there are 231,368 RSUs outstanding without any service requirements. We charged the unamortized costs of these RSUs, which totaled $3.1 million, to expense in the third quarter of 2011. Certain of these RSUs were to be forfeited upon the individuals departure, but we waived the forfeitures. The unamortized costs of these 100,550 otherwise forfeitable RSUs totaled $0.9 million. The $3.1 million total cost is included in Employee compensation and benefits in the Consolidated Statement of Operations. |
Weighted-Average | ||||||||||||
Grant Date Fair | Number of | LTIP RSU Dividend | ||||||||||
Value(a) | LTIP RSUs | Equivalents | ||||||||||
LTIP RSUs as of December 31, 2010 |
| | ||||||||||
Grants: |
||||||||||||
LTIP RSUs |
$ | 14.81 | 1,863,772 | |||||||||
Awarded LTIP RSUs with a future grant date(b) |
178,695 | |||||||||||
Dividend equivalents |
30,245 | |||||||||||
Forfeitures: |
||||||||||||
LTIP RSUs |
$ | 14.81 | (104,104 | ) | ||||||||
Dividend equivalents |
(1,541 | ) | ||||||||||
LTIP RSUs as of September 30, 2011 |
1,938,363 | 28,704 | ||||||||||
(a) | Weighted-average grant date fair value for grants is based on the closing price on the grant date. Market-based grants do not use the weighted-average grant date fair value to calculate amortization expense, but a fair value using a Monte Carlo pricing model. The model requires management to develop estimates regarding certain input variables. If we used different methods to estimate our variables for the Monte Carlo model, or if we used a different type of pricing model, the fair value of our grants might differ. | |
(b) | Performance targets have not yet been set, as they are set on an annual basis. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Current: |
||||||||||||||||
Federal |
$ | 7,935 | $ | 9,093 | $ | 30,319 | $ | 30,204 | ||||||||
State and local |
2,508 | 4,089 | 9,298 | 15,026 | ||||||||||||
Total |
10,443 | 13,182 | 39,617 | 45,230 | ||||||||||||
Deferred: |
||||||||||||||||
Federal |
(542 | ) | 4,220 | 936 | 2,925 | |||||||||||
State and local |
(148 | ) | 1,315 | 820 | 1,221 | |||||||||||
Total |
(690 | ) | 5,535 | 1,756 | 4,146 | |||||||||||
Income tax expense |
$ | 9,753 | $ | 18,717 | $ | 41,373 | $ | 49,376 | ||||||||
Tax years 2008 to the present are open for examination by Federal, state and local tax authorities.
We are currently under examination by New York State tax authorities for the years 2006 through
2008 and by New York City tax authorities for Investment Adviser for the years 2006 and 2007. There
are waivers extending our 2006 and 2007 tax years to September 2012.
|
||||||||||||||||
A reconciliation between the Federal statutory tax rate of 35% and the effective tax rates is as
follows:
|
||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in percentages) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Federal statutory rate |
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
State and local, net of Federal benefit, and other |
6 | 8 | 6 | 8 | ||||||||||||
Non-controlling interests |
3 | (1 | ) | | (7 | ) | ||||||||||
Permanent differences: |
||||||||||||||||
Vesting of RSUs(a) |
19 | 5 | 3 | 2 | ||||||||||||
Other |
2 | | 1 | 1 | ||||||||||||
Total |
65 | % | 47 | % | 45 | % | 39 | % | ||||||||
(a) | We wrote down the carrying value of the deferred tax asset by $2.8 million in the quarter ended September 30, 2011, and by $3.1 million in the nine months ended September 30, 2011, due to the vesting of RSUs at a price lower than their grant-date price. We wrote down the carrying value of the deferred tax asset by $1.9 million in the quarter and nine months ended September 30, 2010, due to the vesting of RSUs at a price lower than their grant-date price. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in thousands) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net income attributable to Artio Global Investors Basic |
$ | 6,413 | $ | 19,999 | $ | 49,595 | $ | 57,822 | ||||||||
Net income attributable to non-controlling interests(a) |
| | | | ||||||||||||
Income tax related to non-controlling interests(a) |
| | | | ||||||||||||
Net income Diluted |
$ | 6,413 | $ | 19,999 | $ | 49,595 | $ | 57,822 | ||||||||
Weighted average shares for basic EPS |
58,157 | 58,679 | 58,301 | 50,907 | ||||||||||||
Dilutive potential shares from exchange of New Class A Units by the Principals(a) |
| | | | ||||||||||||
Dilutive potential shares from grants of RSUs(b) |
246 | 333 | 130 | 230 | ||||||||||||
Weighted average shares for diluted EPS |
58,403 | 59,012 | 58,431 | 51,137 | ||||||||||||
(a) | The potential impact of the exchange of New Class A Units by the Principals, and cancelation of corresponding shares of Class B common stock, for Class A common stock of 1.2 million weighted average shares for the three months and nine months ended September 30, 2011, was antidilutive. The potential impact of the exchange of New Class A Units by the Principals, and cancelation of corresponding shares of Class B common stock, for Class A common stock of 1.2 million weighted average shares for the three months ended September 30, 2010, and 9.1 million weighted average shares for the nine months ended September 30, 2010, was antidilutive. | |
(b) | The potential impact of an additional 1.7 million granted RSUs for the three months ended September 30, 2011, and an additional 1.6 million granted RSUs for the nine months ended September 30, 2011, was antidilutive. The potential impact of an additional 1.8 million granted RSUs for the three months and nine months ended September 30, 2010, was antidilutive. |
| General Overview. Beginning on page 27, we provide a summary of our overall business, the economic environment and trends in our industry. | |
| Key Performance Indicators. Beginning on page 29, we discuss the operating and financial indicators that guide managements review of our performance. | |
| Assets Under Management. Beginning on page 31, we provide a detailed discussion of our assets under management (AuM), which is a major driver of our operating revenues and key performance indicators. | |
| Revenues and Other Operating Income. Beginning on page 37, we compare our revenue and other operating income to the corresponding periods a year ago. | |
| Operating Expenses. Beginning on page 37, we compare our operating expenses to the corresponding periods a year ago. | |
| Non-operating Income (Loss). Beginning on page 39, we compare our non-operating income (loss) to the corresponding periods a year ago. | |
| Income Taxes. Beginning on page 39, we compare our effective tax rates to the corresponding periods a year ago. | |
| Liquidity and Capital Resources. Beginning on page 40, we discuss our working capital as of September 30, 2011, and December 31, 2010, and cash flows for the first nine months of 2011 and 2010. Also included is a discussion of the financial capacity available to help fund our future activities. | |
| Cautionary Note Regarding Forward-Looking Statements. Beginning on page 42, we describe the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements set forth in this Form 10-Q relating to our financial results, operations, business plans and prospects. Such forward-looking statements are based on managements current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances. |
Three Months Ended | Nine Months Ended | |||||||||||||||
(in millions, except basis points, percentages and | September 30, | September 30, | ||||||||||||||
per share amounts) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Operating indicators |
||||||||||||||||
AuM at end of period |
$ | 34,252 | $ | 53,860 | $ | 34,252 | $ | 53,860 | ||||||||
Average AuM for period(a) |
41,670 | 51,004 | 47,829 | 52,945 | ||||||||||||
Net client cash flows |
(4,183 | ) | (1,420 | ) | (11,941 | ) | (3,140 | ) | ||||||||
Market appreciation (depreciation) |
(8,400 | ) | 6,285 | (7,214 | ) | 1,007 | ||||||||||
Financial indicators |
||||||||||||||||
Investment management fees |
66 | 80 | 226 | 249 | ||||||||||||
Effective fee rate (basis points)(b) |
62.4 | 62.4 | 63.1 | 63.0 | ||||||||||||
Adjusted operating income(c) |
32 | 43 | 113 | 137 | ||||||||||||
Adjusted operating margin(d) |
50.0 | % | 52.5 | % | 50.5 | % | 54.6 | % | ||||||||
Operating EBITDA(c) |
30 | 44 | 116 | 140 | ||||||||||||
Operating EBITDA margin(d) |
47.3 | % | 53.9 | % | 52.0 | % | 56.0 | % | ||||||||
Adjusted compensation ratio(c)(e) |
27.8 | % | 27.4 | % | 29.6 | % | 26.5 | % | ||||||||
Adjusted net income attributable to Artio Global
Investors(c) |
16 | 24 | 63 | 76 | ||||||||||||
Diluted earnings per share |
$ | 0.11 | $ | 0.34 | $ | 0.85 | $ | 1.13 | ||||||||
Adjusted diluted earnings per share(f) |
$ | 0.27 | $ | 0.40 | $ | 1.06 | $ | 1.26 | ||||||||
(a) | Average AuM for a period is computed on the beginning-of-first-month balance and all end-of-month balances within the period. | |
(b) | The effective fee rate is computed by dividing annualized investment management fees (normalized for the number of days in the period) by average AuM for the period. | |
(c) | See the Adjusted Performance Measures section of this MD&A for reconciliations of Employee compensation and benefits to Adjusted compensation; Operating income before income tax expense to Adjusted operating income; Net income to operating Earnings before Interest, Taxes, Depreciation and Amortization (Operating EBITDA); and Net income attributable to Artio Global Investors to Adjusted net income attributable to Artio Global Investors. | |
(d) | Adjusted operating and Operating EBITDA margins are calculated by dividing Adjusted operating income and Operating EBITDA by Total revenues and other operating income. | |
(e) | Calculated as Adjusted compensation(c) divided by Total revenues and other operating income. | |
(f) | Adjusted diluted earnings per share is calculated by dividing Adjusted net income attributable to Artio Global Investors by Adjusted weighted average diluted shares (see the Adjusted Performance Measures section of this MD&A). |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(in millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Employee compensation and benefits |
$ | 28 | $ | 25 | $ | 82 | $ | 75 | ||||||||
Less compensation adjustments: |
||||||||||||||||
Staff reduction costs |
8 | | 8 | | ||||||||||||
Amortization expense of IPO-related restricted stock unit grants |
3 | 3 | 8 | 9 | ||||||||||||
Total compensation adjustments |
11 | 3 | 16 | 9 | ||||||||||||
Adjusted compensation |
$ | 17 | $ | 22 | $ | 66 | $ | 66 | ||||||||
Operating income before income tax expense |
$ | 21 | $ | 40 | $ | 97 | $ | 128 | ||||||||
Add: total compensation adjustments |
11 | 3 | 16 | 9 | ||||||||||||
Adjusted operating income |
$ | 32 | $ | 43 | $ | 113 | $ | 137 | ||||||||
Net income |
$ | 5 | $ | 21 | $ | 50 | $ | 77 | ||||||||
Less: interest income |
(1 | ) | | (2 | ) | | ||||||||||
Add: interest expense |
1 | 1 | 1 | 2 | ||||||||||||
Add: income taxes |
9 | 18 | 41 | 49 | ||||||||||||
Add: depreciation and amortization |
10 | 4 | 20 | 12 | ||||||||||||
EBITDA |
24 | 44 | 110 | 140 | ||||||||||||
Less: other non-operating (income) loss(a) |
6 | | 6 | | ||||||||||||
Operating EBITDA |
$ | 30 | $ | 44 | $ | 116 | $ | 140 | ||||||||
Net income attributable to Artio
Global Investors |
$ | 6 | $ | 20 | $ | 50 | $ | 58 | ||||||||
Add: net income attributable to non- controlling interests in Holdings |
| 1 | 1 | 19 | ||||||||||||
Add: total compensation adjustments |
11 | 3 | 16 | 9 | ||||||||||||
Tax impact of adjustments |
(1 | ) | | (4 | ) | (10 | ) | |||||||||
Adjusted net income attributable to Artio Global Investors |
$ | 16 | $ | 24 | $ | 63 | $ | 76 | ||||||||
Weighted average diluted shares |
58 | 59 | 58 | 51 | ||||||||||||
Adjusted weighted average diluted shares(b) |
60 | 60 | 60 | 60 | ||||||||||||
(a) | Other non-operating income (loss) represents primarily gains and losses on investments of the Consolidated Investment Products. | |
(b) | Adjusted weighted average diluted shares assumes that the Principals had exchanged all of their non-voting Class A member interests in Holdings (New Class A Units) for Class A common stock. |
| investment performance, including our investment decisions and fluctuations in both the financial markets and foreign currency exchange rates; | |
| client cash flows into and out of our investment products; |
| the mix of AuM among our various strategies; and | |
| our introduction or closure of investment strategies and products. |
| International Equity; | |
| Global Equity; | |
| U.S. Equity; | |
| High Grade Fixed Income; | |
| High Yield; and | |
| Local Emerging Markets Debt. |
As of September 30, | As a % of AuM as of September 30, | |||||||||||||||
(in millions, except percentages) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Proprietary Funds(a) |
||||||||||||||||
A shares |
$ | 4,706 | $ | 7,334 | ||||||||||||
I shares(b) |
10,758 | 15,431 | ||||||||||||||
Total |
15,464 | 22,765 | 45.2 | % | 42.3 | % | ||||||||||
Institutional commingled funds |
5,769 | 8,894 | 16.8 | 16.5 | ||||||||||||
Separate accounts |
10,838 | 17,611 | 31.6 | 32.7 | ||||||||||||
Sub-advisory accounts |
2,181 | 4,590 | 6.4 | 8.5 | ||||||||||||
Ending AuM |
$ | 34,252 | $ | 53,860 | 100.0 | % | 100.0 | % | ||||||||
(a) | Proprietary Funds include both SEC-registered funds and private offshore funds. SEC-registered mutual funds within our proprietary funds are: Artio International Equity Fund; Artio International Equity Fund II; Artio Total Return Bond Fund; Artio Global High Income Fund; Artio Global Equity Fund Inc.; Artio U.S. Microcap Fund; Artio U.S. Midcap Fund; Artio U.S. Multicap Fund; Artio U.S. Smallcap Fund; and Artio Local Emerging Markets Debt Fund. | |
(b) | Amounts invested in private offshore funds and in the hedge fund are categorized as I shares. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
(in millions, except percentages) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
Proprietary Funds: |
||||||||||||||||||||||||
Beginning AuM |
$ | 21,192 | $ | 21,030 | 1 | % | $ | 23,013 | $ | 24,482 | (6 | )% | ||||||||||||
Gross client cash inflows |
1,085 | 1,160 | (6 | ) | 4,009 | 4,838 | (17 | ) | ||||||||||||||||
Gross client cash outflows |
(2,887 | ) | (2,045 | ) | (41 | ) | (8,099 | ) | (6,884 | ) | (18 | ) | ||||||||||||
Net client cash flows |
(1,802 | ) | (885 | ) | (104 | ) | (4,090 | ) | (2,046 | ) | (100 | ) | ||||||||||||
Transfers between investment
vehicles |
(38 | ) | | * | (38 | ) | | * | ||||||||||||||||
Total client cash flows |
(1,840 | ) | (885 | ) | (108 | ) | (4,128 | ) | (2,046 | ) | (102 | ) | ||||||||||||
Market appreciation (depreciation) |
(3,888 | ) | 2,620 | * | (3,421 | ) | 329 | * | ||||||||||||||||
Ending AuM |
15,464 | 22,765 | (32 | ) | 15,464 | 22,765 | (32 | ) | ||||||||||||||||
Institutional Commingled Funds: |
||||||||||||||||||||||||
Beginning AuM |
8,285 | 7,842 | 6 | 9,236 | 9,198 | | ||||||||||||||||||
Gross client cash inflows |
60 | 199 | (70 | ) | 317 | 667 | (52 | ) | ||||||||||||||||
Gross client cash outflows |
(919 | ) | (302 | ) | * | (2,492 | ) | (1,098 | ) | (127 | ) | |||||||||||||
Net client cash flows |
(859 | ) | (103 | ) | * | (2,175 | ) | (431 | ) | * | ||||||||||||||
Transfers between investment
vehicles |
38 | 22 | 73 | 226 | 22 | * | ||||||||||||||||||
Total client cash flows |
(821 | ) | (81 | ) | * | (1,949 | ) | (409 | ) | * | ||||||||||||||
Market appreciation (depreciation) |
(1,695 | ) | 1,133 | * | (1,518 | ) | 105 | * | ||||||||||||||||
Ending AuM |
5,769 | 8,894 | (35 | ) | 5,769 | 8,894 | (35 | ) | ||||||||||||||||
Separate Accounts: |
||||||||||||||||||||||||
Beginning AuM |
14,221 | 16,001 | (11 | ) | 16,801 | 17,854 | (6 | ) | ||||||||||||||||
Gross client cash inflows |
111 | 308 | (64 | ) | 277 | 1,411 | (80 | ) | ||||||||||||||||
Gross client cash outflows |
(1,232 | ) | (688 | ) | (79 | ) | (4,149 | ) | (2,161 | ) | (92 | ) | ||||||||||||
Net client cash flows |
(1,121 | ) | (380 | ) | (195 | ) | (3,872 | ) | (750 | ) | * | |||||||||||||
Transfers between investment
vehicles |
| (22 | ) | 100 | (188 | ) | (22 | ) | * | |||||||||||||||
Total client cash flows |
(1,121 | ) | (402 | ) | (179 | ) | (4,060 | ) | (772 | ) | * | |||||||||||||
Market appreciation (depreciation) |
(2,262 | ) | 2,012 | * | (1,903 | ) | 529 | * | ||||||||||||||||
Ending AuM |
10,838 | 17,611 | (38 | ) | 10,838 | 17,611 | (38 | ) | ||||||||||||||||
Sub-advisory Accounts: |
||||||||||||||||||||||||
Beginning AuM |
3,137 | 4,122 | (24 | ) | 4,357 | 4,459 | (2 | ) | ||||||||||||||||
Gross client cash inflows |
33 | 184 | (82 | ) | 250 | 877 | (71 | ) | ||||||||||||||||
Gross client cash outflows |
(434 | ) | (236 | ) | (84 | ) | (2,054 | ) | (790 | ) | (160 | ) | ||||||||||||
Net client cash flows |
(401 | ) | (52 | ) | * | (1,804 | ) | 87 | * | |||||||||||||||
Transfers between investment
vehicles |
| | | | | | ||||||||||||||||||
Total client cash flows |
(401 | ) | (52 | ) | * | (1,804 | ) | 87 | * | |||||||||||||||
Market appreciation (depreciation) |
(555 | ) | 520 | * | (372 | ) | 44 | * | ||||||||||||||||
Ending AuM |
2,181 | 4,590 | (52 | ) | 2,181 | 4,590 | (52 | ) | ||||||||||||||||
Total AuM: |
||||||||||||||||||||||||
Beginning AuM |
46,835 | 48,995 | (4 | ) | 53,407 | 55,993 | (5 | ) | ||||||||||||||||
Gross client cash inflows |
1,289 | 1,851 | (30 | ) | 4,853 | 7,793 | (38 | ) | ||||||||||||||||
Gross client cash outflows |
(5,472 | ) | (3,271 | ) | (67 | ) | (16,794 | ) | (10,933 | ) | (54 | ) | ||||||||||||
Net client cash flows |
(4,183 | ) | (1,420 | ) | (195 | ) | (11,941 | ) | (3,140 | ) | * | |||||||||||||
Transfers between investment
vehicles |
| | | | | | ||||||||||||||||||
Total client cash flows |
(4,183 | ) | (1,420 | ) | (195 | ) | (11,941 | ) | (3,140 | ) | * | |||||||||||||
Market appreciation (depreciation) |
(8,400 | ) | 6,285 | * | (7,214 | ) | 1,007 | * | ||||||||||||||||
Ending AuM |
$ | 34,252 | $ | 53,860 | (36 | ) | $ | 34,252 | $ | 53,860 | (36 | ) | ||||||||||||
* | Calculation not meaningful. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
(in millions, except percentages) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
Market appreciation
(depreciation): |
||||||||||||||||||||||||
International Equity I |
$ | (3,408 | ) | $ | 2,562 | * | % | $ | (3,130 | ) | $ | 146 | * | % | ||||||||||
International Equity II |
(4,316 | ) | 2,994 | * | (3,893 | ) | 102 | * | ||||||||||||||||
Other strategies |
(676 | ) | 729 | (193 | ) | (191 | ) | 759 | (125 | ) | ||||||||||||||
Total market appreciation (depreciation) |
$ | (8,400 | ) | $ | 6,285 | * | $ | (7,214 | ) | $ | 1,007 | * | ||||||||||||
* | Calculation not meaningful. |
| a $1.6 billion increase in our International Equity II strategys net client cash outflows; | |
| a $0.8 billion decrease in High Yield strategys net client cash flows, as the three months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010; and | |
| a $0.8 billion increase in our International Equity I strategys net client cash outflows, |
| a $0.5 billion increase in our High Grade Fixed Income strategys net client cash flows, as the three months ended September 30, 2011, had net client cash inflows compared to net client cash outflows in the corresponding period in 2010. |
| a $4.4 billion increase in our International Equity II strategys net client cash outflows; | |
| a $2.3 billion increase in our International Equity I strategys net client cash outflows; | |
| a $1.6 billion decrease in our High Yield strategys net client cash flows, as the nine months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010; | |
| a $0.4 billion decrease in our Global Equity strategys net client cash flows, as the nine months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010; and | |
| a $0.1 billion decrease in our U.S. Equity strategys net client cash flows, as the nine months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010. |
| a $0.6 billion increase in our International Equity II Funds net client cash outflows; | |
| a $0.4 billion decrease in our Global High Income Funds net client cash flows, as the three months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010; and | |
| a $0.2 billion increase in our International Equity I Funds net client cash outflows, |
| a $0.3 billion increase in net client cash flows in our Global Fixed Income Funds net client cash flows, as the three months ended September 30, 2011, had net client cash inflows compared to net client cash outflows in the corresponding period in 2010. |
| a $1.0 billion increase in our International Equity II Funds net client cash outflows; | |
| a $0.6 billion increase in our International Equity I Funds net client cash outflows; and | |
| a $0.5 billion decrease in our Global High Income Funds net client cash inflows, |
| a $0.2 billion decrease in our Global Fixed Income Funds net client cash flows, as the nine months ended September 30, 2011, had net client cash inflows compared to net client cash outflows in the corresponding period in 2010. |
| a $0.5 billion increase in our International Equity II vehicles net client cash outflows; and | |
| a $0.2 billion increase in our International Equity I vehicles net client cash outflows. |
| a $1.2 billion increase in our International Equity II vehicles net client cash outflows; and | |
| a $0.5 billion increase in our International Equity I vehicles net client cash outflows. |
| a $0.5 billion increase in our International Equity II strategys net client cash outflows; and | |
| a $0.4 billion increase in our International Equity I strategys net client cash outflows, |
| a $0.2 billion increase in our High Grade Fixed Income strategys net client cash flows, as the three months ended September 30, 2011, had net client cash inflows compared to net client cash outflows in the corresponding period in 2010. |
| a $1.5 billion increase in our International Equity II strategys net client cash outflows; | |
| a $1.2 billion increase in our International Equity I strategys net client cash outflows; | |
| a $0.3 billion decrease in our Global Equity strategys net client cash flows, as the nine months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010; and | |
| a $0.2 billion decrease in our High Yield strategys net client cash flows, as the nine months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010, |
| a $0.1 billion increase in our High Grade Fixed Income strategys net client cash flows, as the nine months ended September 30, 2011, had net client cash inflows compared to net client cash outflows in the corresponding period in 2010. |
| a $0.4 billion decrease in our High Yield strategys net client cash flows as the three months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010. |
| a $0.8 billion decrease in our High Yield strategys net client cash flows, as the nine months ended September 30, 2011, had net client cash outflows compared to net client cash inflows in the corresponding period in 2010; | |
| a $0.7 billion increase in our International Equity II strategys net client cash outflows; and | |
| a $0.3 billion increase in our low margin short-term U.S. dollar fixed income products net client cash outflows. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
(in thousands, except for Average AuM, | ||||||||||||||||||||||||
effective fee rate and percentages) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
Average AuM (in millions) |
$ | 41,670 | $ | 51,004 | (18 | )% | $ | 47,829 | $ | 52,945 | (10 | )% | ||||||||||||
Effective fee rate (basis points) |
62.4 | 62.4 | bp | 63.1 | 63.0 | 0.1bp | ||||||||||||||||||
Investment management fees |
$ | 65,576 | $ | 80,173 | (18 | )% | $ | 225,561 | $ | 249,301 | (10 | )% | ||||||||||||
Net gains (losses) on funds held for deferred compensation |
(1,798 | ) | 722 | * | (1,435 | ) | 582 | * | ||||||||||||||||
Foreign currency gains (losses) |
6 | 35 | (83 | ) | (14 | ) | 13 | * | ||||||||||||||||
Total revenues and other operating
income |
$ | 63,784 | $ | 80,930 | (21 | ) | $ | 224,112 | $ | 249,896 | (10 | ) | ||||||||||||
* | Calculation not meaningful. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
(in thousands, except percentages) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
Employee compensation and benefits(a) |
$ | 28,387 | $ | 24,772 | 15 | % | $ | 82,217 | $ | 74,588 | 10 | % | ||||||||||||
Shareholder servicing and marketing |
4,708 | 5,031 | (6 | ) | 14,736 | 15,177 | (3 | ) | ||||||||||||||||
General and administrative |
9,470 | 11,224 | (16 | ) | 29,999 | 31,954 | (6 | ) | ||||||||||||||||
Total operating expenses |
$ | 42,565 | $ | 41,027 | 4 | $ | 126,952 | $ | 121,719 | 4 | ||||||||||||||
(a) | The three months and nine months ended September 30, 2011, includes costs of $7.6 million associated with a staff reduction in 2011. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
(in thousands, except percentages) | 2011 | 2010 | % Change | 2011 | 2010 | % Change | ||||||||||||||||||
Interest income the
Consolidated Investment Products(a) |
$ | 1,019 | $ | 33 | * | % | $ | 2,314 | $ | 33 | * | % | ||||||||||||
Interest expense |
(461 | ) | (607 | ) | 24 | (1,488 | ) | (1,927 | ) | 23 | ||||||||||||||
Net gains (losses) the
Consolidated Investment Products and other seed money investments(a) |
(6,554 | ) | 145 | * | (6,312 | ) | 145 | * | ||||||||||||||||
Expenses the Consolidated
Investment Products and other seed money investments(a) |
(196 | ) | (5 | ) | * | (298 | ) | (5 | ) | * | ||||||||||||||
Other income |
2 | 3 | (33 | ) | 3 | 14 | (79 | ) | ||||||||||||||||
Total non-operating loss |
$ | (6,190 | ) | $ | (431 | ) | * | $ | (5,781 | ) | $ | (1,740 | ) | * | ||||||||||
* | Calculation not meaningful. | |
(a) | Includes aggregate non-operating losses of $1.5 million for the three months ended September 30, 2011, and $1.4 million for the nine months ended September 30, 2011, related to non-controlling interests in the Consolidated Investment Products. |
As of September 30, | As of December 31, | |||||||||||
(in thousands, except percentages) | 2011 | 2010 | % Change | |||||||||
Cash |
$ | 89,166 | $ | 79,232 | 13 | % | ||||||
Investments, fair value Artio Global
funds held for deferred compensation |
9,834 | 9,069 | 8 | |||||||||
Fees receivable and accrued fees, net
of allowance for doubtful accounts |
41,612 | 54,373 | (23 | ) | ||||||||
Income tax receivable |
13,051 | 8,586 | 52 | |||||||||
153,663 | 151,260 | 2 | ||||||||||
Less: |
||||||||||||
Term loan due within one year |
(18,000 | ) | (18,000 | ) | | |||||||
Accrued compensation and benefits |
(29,487 | ) | (39,256 | ) | 25 | |||||||
Accounts payable and accrued expenses |
(5,610 | ) | (7,761 | ) | 28 | |||||||
Accrued income taxes payable |
(4,411 | ) | (4,749 | ) | 7 | |||||||
Working capital |
$ | 96,155 | $ | 81,494 | 18 | |||||||
Nine Months Ended September 30, | ||||||||||||
(in thousands, except percentages) | 2011 | 2010 | % Change | |||||||||
Cash flow data: |
||||||||||||
Net cash provided by operating activities |
$ | 34,306 | $ | 73,956 | (54 | )% | ||||||
Net cash used in investing activities |
(3,639 | ) | (2,056 | ) | (77 | ) | ||||||
Net cash used in financing activities |
(18,725 | ) | (69,316 | ) | 73 | |||||||
Effect of exchange rate changes on cash |
(14 | ) | 13 | * | ||||||||
Net increase in cash |
$ | 11,928 | $ | 2,597 | * | |||||||
| the value of AuM decreasing; | |
| our clients withdrawing funds; or | |
| a shift in product mix to lower margin products. |
As of | ||||
September 30, 2011 |
||||
British pound |
13 | % | ||
Japanese yen |
8 | |||
Hong Kong dollar |
8 | |||
Euro |
6 | |||
Canadian dollar |
5 | |||
Other (representing approximately 44 currencies) |
17 | |||
57 | % | |||
As of | ||||
September 30, 2011 |
||||
Malaysian ringgit |
6 | % | ||
Turkish lira |
5 | |||
South African rand |
5 | |||
Indonesian rupiah |
4 | |||
Brazilian real |
4 | |||
Euro |
(5 | ) | ||
Other (representing approximately 13 currencies) |
12 | |||
31 | % | |||
Total Number of | Approximate | |||||||||||||||
Shares Purchased | Shares that May | |||||||||||||||
Total Number of | as Part of Publicly | Yet be Purchased | ||||||||||||||
Shares | Average Price Paid | Announced Plans | Under the Plans or | |||||||||||||
Period | Repurchased(a) | Per Share | or Programs(a) | Programs(a) | ||||||||||||
July 1, 2011 through July 31, 2011 |
| $ | | | 3,000,000 | |||||||||||
August 1, 2011 through August 31, 2011 |
773,939 | 8.77 | 773,939 | 2,226,061 | ||||||||||||
September 1, 2011 through September 30, 2011 |
| | | 2,226,061 | ||||||||||||
For the quarter ended September 30, 2011 |
773,939 | 8.77 | 773,939 | 2,226,061 | ||||||||||||
(a) | In December 2010, our Board of Directors authorized a share repurchase program of up to 3.0 million shares of our Class A common stock, which expires on December 31, 2013. As of September 30, 2011, we have purchased 773,939 shares of our Class A common stock for approximately $6.8 million under this program. |
1) Exhibit 31.1 | Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
2) Exhibit 31.2 | Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |||
3) Exhibit 32.1 | Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
4) Exhibit 32.2 | Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |||
5) Exhibit 101: | ||||
EX-101.INS | XBRL Instance Document | |||
EX-101.SCH | XBRL Taxonomy Extension Schema | |||
EX-101.CAL | XBRL Taxonomy Calculation Linkbase | |||
EX-101.LAB | XBRL Taxonomy Label Linkbase | |||
EX-101.PRE | XBRL Taxonomy Presentation Linkbase | |||
EX-101.DEF | XBRL Taxonomy Definition Document |
Artio Global Investors Inc. | ||||
By: | /s/ Francis Harte | |||
Name: | Francis Harte | |||
Title: | Chief Financial Officer (Principal Financial and Accounting Officer) |
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