HARTFORD, Conn., April 28, 2017 /PRNewswire/ -- Virtus
Investment Partners, Inc. (NASDAQ: VRTS) today reported financial results for the three months ended March 31,
2017.
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Financial Highlights (Unaudited)
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(Dollars in millions, except per share data or as noted)
|
|
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Three Months Ended
|
|
|
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Three Months
Ended
|
|
|
|
3/31/2017
|
|
3/31/2016
|
|
Change
|
|
12/31/2016
|
|
Change
|
|
|
|
|
|
|
|
|
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|
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U.S. GAAP Financial Measures
|
|
|
|
|
|
|
|
|
|
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Revenues
|
$
|
79.8
|
|
$
|
80.3
|
|
(1%)
|
|
$
|
79.9
|
|
—%
|
|
Operating expenses
|
$
|
69.7
|
|
$
|
67.5
|
|
3%
|
|
$
|
67.1
|
|
4%
|
|
Operating income
|
$
|
10.0
|
|
$
|
12.8
|
|
(21%)
|
|
$
|
12.8
|
|
(21%)
|
|
Operating margin
|
12.6%
|
|
15.9%
|
|
|
|
16.0%
|
|
|
|
Net income attributable to common stockholders
|
$
|
10.9
|
|
$
|
12.4
|
|
(11%)
|
|
$
|
12.4
|
|
(12%)
|
|
Earnings per share - diluted
|
$
|
1.62
|
|
$
|
1.45
|
|
12%
|
|
$
|
1.87
|
|
(13%)
|
|
Weighted average shares outstanding - diluted
|
6.773
|
|
8.506
|
|
(20%)
|
|
6.627
|
|
2%
|
|
|
|
|
|
|
|
|
|
|
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Non-GAAP Financial Measures (1)
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Revenues, as adjusted
|
$
|
64.7
|
|
$
|
62.4
|
|
4%
|
|
$
|
64.0
|
|
1%
|
|
Operating expenses, as adjusted
|
$
|
51.2
|
|
$
|
47.2
|
|
9%
|
|
$
|
45.9
|
|
12%
|
|
Operating income, as adjusted
|
$
|
13.5
|
|
$
|
15.2
|
|
(11%)
|
|
$
|
18.2
|
|
(26%)
|
|
Operating margin, as adjusted
|
20.9%
|
|
24.4%
|
|
|
|
28.4%
|
|
|
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Net income attributable to common stockholders, as adjusted
|
$
|
8.6
|
|
$
|
9.5
|
|
(10%)
|
|
$
|
11.6
|
|
(26%)
|
|
Earnings per share - diluted, as adjusted
|
$
|
1.16
|
|
$
|
1.12
|
|
4%
|
|
$
|
1.75
|
|
(34%)
|
|
Weighted average shares outstanding - diluted, as adjusted
A
|
7.447
|
|
8.506
|
|
(12%)
|
|
6.627
|
|
12%
|
|
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(1) See the information beginning on page 9 for a reconciliation to their
most directly comparable U.S. GAAP measures and other important disclosures.
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A Assumes conversion of preferred shares to common
shares
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Earnings Summary
The company presents U.S. GAAP earnings information and non-GAAP earnings information in this release. Management believes
that the non-GAAP financial measures presented most accurately reflect the company's operating results from providing investment
management and related services to individuals and institutions and uses these measures to evaluate financial performance.
Non-GAAP financial measures have material limitations and should not be viewed in isolation or as a substitute for U.S. GAAP
measures. Reconciliations of the non-GAAP financial measures to the most comparable U.S. GAAP measures can be found beginning on
page 9 of this earnings release.
GAAP Results
Operating income decreased sequentially due to increased operating expenses as higher employment costs more than offset lower
other operating expenses. First quarter other operating expenses included acquisition and integration costs of $1.6 million, which consist of professional fees and other expenses. These costs relate to the pending
acquisition of RidgeWorth Investments, a multi-manager with $42.3 billion of total assets under
management at March 31, 2017 that include $35.7 billion of long-term
assets and $6.6 billion of liquidity products. The company currently expects to close the
RidgeWorth acquisition by the end of the second quarter.
Earnings per diluted common share of $1.62 decreased from $1.87 in
the fourth quarter. First quarter earnings per share included $0.71 of unrealized gains on
investments, a ($0.48) impact from equity issuances, ($0.45) of
specific employment expenses, and ($0.15) of acquisition and integration costs. Fourth quarter
earnings per share included a $0.65 benefit from the release of a deferred tax asset valuation
allowance related to realized capital losses, ($0.49) of unrealized losses on investments, and
($0.31) of acquisition and integration costs.
The effective tax rate of 24 percent included the release of a $2.0 million net valuation
allowance related to marketable securities and $0.3 million of excess tax benefits related to
stock-based compensation.
Non-GAAP Results
Revenues, as adjusted, increased 1 percent sequentially, as higher average assets were offset by the impact of two fewer days
in the quarter, and 4 percent over the prior-year quarter. Operating expenses, as adjusted, increased sequentially due to higher
employment expenses, as adjusted, which reflect $4.9 million of specific expenses, including
$3.4 million of seasonal compensation expenses, primarily payroll taxes, and $1.5 million of incremental incentive compensation primarily related to efforts associated with the RidgeWorth
transaction. Other operating expenses, as adjusted, decreased 7 percent sequentially on lower marketing and product-related
costs.
Operating income, as adjusted, and the related margin were $13.5 million and 20.9 percent,
respectively, compared with $18.2 million and 28.4 percent in the sequential quarter. Excluding the
$4.9 million of specific employment expenses, operating income, as adjusted, and the related margin
were $18.4 million and 28.4 percent, respectively.
Net income attributable to common stockholders, as adjusted, of $1.16 per diluted common share
included ($0.41) of specific employment expenses and ($0.24) related to the higher share count
following the January equity issuances in connection with the pending RidgeWorth acquisition.
The effective tax rate, as adjusted, of 39 percent was relatively unchanged from prior periods.
|
Asset Flows and Assets Under Management
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(in billions)
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Three Months Ended
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Three Months
Ended
|
|
|
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3/31/2017
|
|
3/31/2016
|
|
Change
|
|
12/31/2016
|
|
Change
|
|
Ending assets under management
|
$
|
48.0
|
|
|
$
|
45.7
|
|
|
5%
|
|
$
|
45.4
|
|
|
6%
|
|
Average assets under management
|
$
|
46.4
|
|
|
$
|
45.7
|
|
|
2%
|
|
$
|
45.3
|
|
|
2%
|
|
Gross sales
|
$
|
3.3
|
|
|
$
|
2.8
|
|
|
15%
|
|
$
|
2.6
|
|
|
24%
|
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Net flows
|
$
|
0.5
|
|
|
$
|
(2.6)
|
|
|
N/M
|
|
$
|
(0.4)
|
|
|
N/M
|
|
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N/M - Not Meaningful
|
Assets under management of $48.0 billion at March 31, 2017 increased $2.7 billion, or 6 percent, from December 31, 2016, due to market appreciation and positive net flows, and
$2.4 billion, or 5 percent, from March 31, 2016 on market appreciation.
Total sales of $3.3 billion increased 24 percent sequentially and 15 percent from the prior-year
quarter. The sequential-quarter increase reflects higher sales in open-end funds, separately managed accounts (SMAs), and
exchange traded funds (ETFs), while the year-over-year change includes higher sales in SMAs, ETFs, and institutional. The
$0.4 billion sequential-quarter increase in mutual fund sales is primarily attributable to higher
sales in the Multi-Sector Short Term Bond Fund, managed by Newfleet Asset Management, and the Small-Cap Sustainable Growth Fund,
managed by Kayne Anderson Rudnick Investment Management.1
Net flows were positive $0.5 billion, an improvement from ($0.4)
billion in the fourth quarter and ($2.6) billion in the prior-year quarter reflecting
improved net flows in all product categories. Mutual fund net flows in the first quarter were ($0.1)
billion compared with ($0.7) billion in the fourth quarter and ($2.6)
billion in the prior-year quarter. The sequential-quarter change reflects higher sales and lower redemptions while the
year-over-year improvement is due primarily to lower redemptions in emerging markets and domestic equity strategies.
|
Balance Sheet Highlights (Unaudited)
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(in millions)
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|
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As of
|
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|
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As of
|
|
|
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3/31/2017
|
|
3/31/2016
|
|
Change
|
|
12/31/2016
|
|
Change
|
|
Cash and cash equivalents
|
$
|
235.9
|
|
|
$
|
50.4
|
|
|
36%
|
|
$
|
64.6
|
|
|
265%
|
|
Seed investments (1)
|
174.8
|
|
|
280.9
|
|
|
(38%)
|
|
180.1
|
|
|
(3%)
|
|
Investments - other (2)
|
30.7
|
|
|
51.2
|
|
|
(40%)
|
|
29.1
|
|
|
5%
|
|
Total - cash and investments
|
$
|
441.4
|
|
|
$
|
382.5
|
|
|
15%
|
|
$
|
273.8
|
|
|
61%
|
|
|
|
|
|
|
|
|
|
|
|
Deferred taxes, net
|
$
|
45.7
|
|
|
$
|
49.1
|
|
|
(7%)
|
|
$
|
47.5
|
|
|
(4%)
|
|
Dividends payable
|
$
|
6.0
|
|
|
$
|
4.2
|
|
|
43%
|
|
$
|
3.5
|
|
|
71%
|
|
Debt
|
$
|
—
|
|
|
$
|
—
|
|
|
—%
|
|
$
|
30.0
|
|
|
N/M
|
|
Total equity attributable to stockholders
|
$
|
552.4
|
|
|
$
|
505.6
|
|
|
9%
|
|
$
|
321.7
|
|
|
72%
|
|
|
|
|
|
|
|
|
|
|
|
Working capital (3)
|
$
|
224.8
|
|
|
$
|
59.1
|
|
|
280%
|
|
$
|
27.7
|
|
|
N/M
|
|
|
|
|
|
|
|
|
|
|
|
Ending common shares outstanding
|
6.989
|
|
|
8.260
|
|
|
(15%)
|
|
5.889
|
|
|
19%
|
|
Ending preferred shares outstanding, as converted (4)
|
1.045
|
|
|
—
|
|
|
N/M
|
|
—
|
|
|
N/M
|
|
Ending common shares outstanding, as adjusted (4)
|
8.035
|
|
|
8.260
|
|
|
(3%)
|
|
5.889
|
|
|
36%
|
|
|
(1) Represents the company's investments in sponsored investment products
including consolidated sponsored investment products (CSIPs), net of noncontrolling interests. For the periods ending
March 31, 2017, March 31, 2016, and December 31, 2016, net assets of CSIPs represent $155.6 million,
$272.5 million, and $150.0 million of total assets, $2.8 million, $20.2 million, and $4.1 million of total liabilities,
and $45.0 million, $40.4 million, and $37.3 million of redeemable noncontrolling interests, respectively.
|
|
(2) Represents investments that are not related to the company's seed
investments, including sponsored [mutual funds] and an investment in a company-managed CLO, which is a consolidated
investment product (CIP). For the periods ended March 31, 2017, March 31, 2016, and December 31, 2016, the
CIP consisted of $373.7 million, $202.7 million, and $367.0 million of total assets and $346.6 million, $162.0 million,
and $341.3 million of total liabilities, respectively.
|
|
(3) Defined as cash and investments plus accounts receivable, net, less
seed capital investments, a company-managed CLO, accrued compensation and benefits, accounts payable and accrued
liabilities, and dividends payable
|
|
(4) Assumes conversion of preferred shares to common shares at period
end
|
|
N/M - Not Meaningful
|
During the quarter, the company finalized the financing for the pending RidgeWorth acquisition by issuing 1.0 million shares
of common stock and 1.2 million shares of mandatory convertible preferred stock for net proceeds of $221.4
million. The preferred shares, which carry a 7.25 percent dividend, automatically convert into common shares on
February 1, 2020, at a price between $110.00 per share and
$132.00 per share.
In March, the company priced a $260.0 million seven-year term loan, with a variable rate of
interest, that will be drawn at the closing of the RidgeWorth acquisition. In addition to the term loan, the company established
a $100.0 million five-year revolving credit facility.
Conference Call
Virtus Investment Partners management will host an investor conference call on Friday, April 28,
at 10 a.m. Eastern to discuss these financial results and related matters. The webcast of the call can be accessed in the Investor Relations section of www.virtus.com or by telephone at 877-930-7765 if calling from within the U.S. or 253-336-7413 if calling
from outside the U.S. (Conference ID: 12975698). The presentation that will be reviewed as part of the conference call will be
available prior to the call in the Investor Relations section of www.virtus.com. A replay of the call will be available through May 5, 2017 by
telephone at 855-859-2056 if calling from within the U.S. or 404-537-3406 if calling from outside the U.S. (Conference ID:
12975698).
About Virtus Investment Partners
Virtus Investment Partners (NASDAQ: VRTS) is a distinctive partnership of boutique investment managers singularly committed to
the long-term success of individual and institutional investors. Virtus offers access to a variety of investment styles across
multiple disciplines to meet a wide array of investor needs, and provides products and services through affiliated managers and
select subadvisers, each with a distinct investment style, autonomous investment process, and individual brand. Its affiliates
include Duff & Phelps
Investment Management, Kayne Anderson Rudnick Investment Management, Newfleet Asset Management, Rampart Investment
Management, and Virtus ETF Solutions. Additional information can be found at www.virtus.com.
|
U.S. GAAP Consolidated Statements of Operations
|
|
(in thousands, except per share data)
|
|
Three Months Ended
|
|
|
|
Three Months
Ended
|
|
|
|
3/31/2017
|
|
3/31/2016
|
|
Change
|
|
12/31/2016
|
|
Change
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
Investment management fees
|
$
|
59,271
|
|
|
$
|
57,644
|
|
|
3%
|
|
$
|
58,996
|
|
|
—%
|
|
Distribution and service fees
|
10,783
|
|
|
12,478
|
|
|
(14%)
|
|
11,489
|
|
|
(6%)
|
|
Administration and transfer agent fees
|
8,981
|
|
|
9,998
|
|
|
(10%)
|
|
9,176
|
|
|
(2%)
|
|
Other income and fees
|
741
|
|
|
175
|
|
|
323%
|
|
189
|
|
|
292%
|
|
Total revenues
|
79,776
|
|
|
80,295
|
|
|
(1%)
|
|
79,850
|
|
|
—%
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
Employment expenses
|
39,641
|
|
|
35,977
|
|
|
10%
|
|
33,457
|
|
|
18%
|
|
Distribution and other asset-based expenses
|
15,323
|
|
|
18,101
|
|
|
(15%)
|
|
16,136
|
|
|
(5%)
|
|
Other operating expenses
|
13,226
|
|
|
10,765
|
|
|
23%
|
|
15,660
|
|
|
(16%)
|
|
Other operating expenses of consolidated sponsored investment
products
|
577
|
|
|
1,133
|
|
|
(49%)
|
|
488
|
|
|
18%
|
|
Other operating expenses of consolidated investment product
|
65
|
|
|
56
|
|
|
16%
|
|
23
|
|
|
183%
|
|
Depreciation and other amortization
|
664
|
|
|
862
|
|
|
(23%)
|
|
700
|
|
|
(5%)
|
|
Amortization expense
|
233
|
|
|
651
|
|
|
(64%)
|
|
603
|
|
|
(61%)
|
|
Total operating expenses
|
69,729
|
|
|
67,545
|
|
|
3%
|
|
67,067
|
|
|
4%
|
|
Operating Income
|
10,047
|
|
|
12,750
|
|
|
(21%)
|
|
12,783
|
|
|
(21%)
|
|
Other Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
Realized and unrealized gain (loss) on investments, net
|
297
|
|
|
(658)
|
|
|
N/M
|
|
1,398
|
|
|
(79%)
|
|
Realized and unrealized gain (loss) on investments of consolidated
sponsored investment products, net
|
3,726
|
|
|
295
|
|
|
N/M
|
|
(3,110)
|
|
|
N/M
|
|
Realized and unrealized gain (loss) of consolidated investment product,
net
|
718
|
|
|
2,235
|
|
|
(68%)
|
|
(4,030)
|
|
|
N/M
|
|
Other income, net
|
646
|
|
|
228
|
|
|
183%
|
|
626
|
|
|
3%
|
|
Total other income (expense), net
|
5,387
|
|
|
2,100
|
|
|
157%
|
|
(5,116)
|
|
|
N/M
|
|
Interest Income (Expense)
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
(243)
|
|
|
(132)
|
|
|
(84%)
|
|
(290)
|
|
|
16%
|
|
Interest and dividend income
|
188
|
|
|
273
|
|
|
(31%)
|
|
630
|
|
|
(70%)
|
|
Interest and dividend income of investments of consolidated sponsored
investment products
|
1,495
|
|
|
2,961
|
|
|
(50%)
|
|
1,488
|
|
|
—%
|
|
Interest income of consolidated investment product
|
4,161
|
|
|
2,206
|
|
|
89%
|
|
4,058
|
|
|
3%
|
|
Interest expense of consolidated investment product
|
(2,857)
|
|
|
(732)
|
|
|
(290%)
|
|
(1,104)
|
|
|
(159%)
|
|
Total interest income, net
|
2,744
|
|
|
4,576
|
|
|
(40%)
|
|
4,782
|
|
|
(43%)
|
|
Income Before Income Taxes
|
18,178
|
|
|
19,426
|
|
|
(6%)
|
|
12,449
|
|
|
46%
|
|
Income tax expense
|
4,433
|
|
|
7,556
|
|
|
(41%)
|
|
532
|
|
|
N/M
|
|
Net Income
|
13,745
|
|
|
11,870
|
|
|
16%
|
|
11,917
|
|
|
15%
|
|
Noncontrolling interests
|
(718)
|
|
|
493
|
|
|
N/M
|
|
509
|
|
|
N/M
|
|
Net Income Attributable to Stockholders
|
13,027
|
|
|
12,363
|
|
|
5%
|
|
12,426
|
|
|
5%
|
|
Preferred stockholder dividends
|
(2,084)
|
|
|
—
|
|
|
N/M
|
|
—
|
|
|
N/M
|
|
Net Income Attributable to Common Stockholders
|
$
|
10,943
|
|
|
$
|
12,363
|
|
|
(11%)
|
|
$
|
12,426
|
|
|
(12%)
|
|
Earnings Per Share - Basic
|
$
|
1.67
|
|
|
$
|
1.48
|
|
|
13%
|
|
$
|
1.94
|
|
|
(14%)
|
|
Earnings Per Share - Diluted
|
$
|
1.62
|
|
|
$
|
1.45
|
|
|
12%
|
|
$
|
1.87
|
|
|
(13%)
|
|
Cash Dividends Declared Per Preferred Share
|
$
|
1.81
|
|
|
$
|
—
|
|
|
N/M
|
|
$
|
—
|
|
|
N/M
|
|
Cash Dividends Declared Per Common Share
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
—%
|
|
$
|
0.45
|
|
|
—%
|
|
Weighted Average Shares Outstanding - Basic
|
6,542
|
|
|
8,344
|
|
|
(22%)
|
|
6,413
|
|
|
2%
|
|
Weighted Average Shares Outstanding - Diluted
|
6,773
|
|
|
8,506
|
|
|
(20%)
|
|
6,627
|
|
|
2%
|
|
|
N/M - Not Meaningful
|
|
Assets Under Management - Product and Asset Class
|
|
(in millions)
|
|
|
Three Months Ended
|
|
Mar 31, 2016
|
|
Jun 30, 2016
|
|
Sep 30, 2016
|
|
Dec 31, 2016
|
|
Mar 31, 2017
|
|
By product (period end):
|
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1)
|
$
|
26,536.0
|
|
|
$
|
24,813.8
|
|
|
$
|
25,266.4
|
|
|
$
|
23,432.8
|
|
|
$
|
24,716.8
|
|
|
Closed-End Funds
|
6,543.6
|
|
|
6,959.6
|
|
|
6,887.3
|
|
|
6,757.4
|
|
|
6,814.3
|
|
|
Exchange Traded Funds
|
353.6
|
|
|
399.4
|
|
|
460.6
|
|
|
596.8
|
|
|
863.3
|
|
|
Separately Managed Accounts (2)
|
7,021.1
|
|
|
7,407.2
|
|
|
7,924.8
|
|
|
8,473.5
|
|
|
9,312.1
|
|
|
Institutional Accounts (2)
|
5,196.9
|
|
|
5,589.7
|
|
|
6,000.4
|
|
|
6,105.8
|
|
|
6,313.3
|
|
|
Total
|
$
|
45,651.2
|
|
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
|
|
|
|
|
|
|
|
|
|
By product (average) (3)
|
|
|
|
|
|
|
|
|
|
|
Open-End Funds (1)
|
$
|
27,295.9
|
|
|
$
|
25,537.7
|
|
|
$
|
25,149.9
|
|
|
$
|
24,223.1
|
|
|
$
|
24,157.6
|
|
|
Closed-End Funds
|
6,152.3
|
|
|
6,659.9
|
|
|
6,853.4
|
|
|
6,668.9
|
|
|
6,786.1
|
|
|
Exchange Traded Funds
|
337.1
|
|
|
371.9
|
|
|
426.0
|
|
|
490.1
|
|
|
759.2
|
|
|
Separately Managed Accounts (2)
|
6,768.4
|
|
|
7,015.0
|
|
|
7,413.6
|
|
|
7,898.6
|
|
|
8,463.6
|
|
|
Institutional Accounts (2)
|
5,112.4
|
|
|
5,223.9
|
|
|
5,687.6
|
|
|
6,015.0
|
|
|
6,206.5
|
|
|
Total
|
$
|
45,666.1
|
|
|
$
|
44,808.4
|
|
|
$
|
45,530.5
|
|
|
$
|
45,295.7
|
|
|
$
|
46,373.0
|
|
|
|
|
|
|
|
|
|
|
|
|
By asset class (period end):
|
|
|
|
|
|
|
|
|
|
|
Equity
|
$
|
27,061.4
|
|
|
$
|
26,206.9
|
|
|
$
|
26,669.5
|
|
|
$
|
25,822.3
|
|
|
$
|
27,990.5
|
|
|
Fixed Income
|
14,994.2
|
|
|
15,450.6
|
|
|
15,756.8
|
|
|
15,523.6
|
|
|
15,908.7
|
|
|
Alternatives (4)
|
3,091.0
|
|
|
3,056.8
|
|
|
3,691.6
|
|
|
3,548.3
|
|
|
3,622.4
|
|
|
Other (5)
|
504.6
|
|
|
455.4
|
|
|
421.6
|
|
|
472.1
|
|
|
498.2
|
|
|
Total
|
$
|
45,651.2
|
|
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
Assets Under Management - Average Net Management Fees Earned
(6)
|
|
(In basis points)
|
|
Three Months Ended
|
|
Mar 31, 2016
|
|
Jun 30, 2016
|
|
Sep 30, 2016
|
|
Dec 31, 2016
|
|
Mar 31, 2017
|
|
Open-End Funds (1)
|
47.3
|
|
|
49.4
|
|
|
50.1
|
|
|
50.5
|
|
|
50.5
|
|
|
Closed-End Funds
|
65.4
|
|
|
65.4
|
|
|
65.9
|
|
|
66.5
|
|
|
66.2
|
|
|
Exchange Traded Funds
|
34.6
|
|
|
36.2
|
|
|
32.4
|
|
|
24.6
|
|
|
31.7
|
|
|
Separately Managed Accounts (2)
|
56.1
|
|
|
55.2
|
|
|
53.2
|
|
|
52.8
|
|
|
53.9
|
|
|
Institutional Accounts (2)
|
36.7
|
|
|
36.2
|
|
|
41.5
|
|
|
37.2
|
|
|
36.8
|
|
|
All Products
|
49.7
|
|
|
51.1
|
|
|
51.8
|
|
|
51.2
|
|
|
51.3
|
|
|
|
(1) Includes assets under management of retail and variable insurance
funds
|
|
(2) Includes assets under management related to option
strategies
|
|
(3) Averages are calculated as follows:
|
|
- Funds - average daily or weekly
balances
|
|
- Separately Managed Accounts - prior
quarter ending balance or average of month-end balances in quarter
|
|
- Institutional Accounts - average of
month-end balances in quarter
|
|
(4) Consists of real estate securities, master-limited partnerships and
other
|
|
(5) Consists of option strategies
|
|
(6) Represents net investment management fees divided by average assets.
Net investment management fees are investment
management fees, as adjusted, less fees paid to third party service providers for investment
management related services,
which impacted the fee rate in the three months ended March 31, 2017 for Open-End Funds and
All Products by 1.1 and 0.7
basis points, respectively.
|
|
Assets Under Management - Asset Flows by Product
|
|
(In millions)
|
|
|
Three Months Ended
|
|
Three Months Ended
|
|
3/31/2016
|
|
6/30/2016
|
|
9/30/2016
|
|
12/31/2016
|
|
3/31/2017
|
|
3/31/2016
|
|
3/31/2017
|
|
Open-End Funds (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
28,882.1
|
|
|
$
|
26,536.0
|
|
|
$
|
24,813.8
|
|
|
$
|
25,266.4
|
|
|
$
|
23,432.8
|
|
|
$
|
28,882.1
|
|
|
$
|
23,432.8
|
|
|
Inflows
|
2,193.4
|
|
|
1,351.9
|
|
|
1,882.5
|
|
|
1,642.3
|
|
|
2,032.7
|
|
|
2,193.4
|
|
|
2,032.7
|
|
|
Outflows
|
(4,794.3)
|
|
|
(3,799.8)
|
|
|
(2,139.4)
|
|
|
(2,384.2)
|
|
|
(2,134.7)
|
|
|
(4,794.3)
|
|
|
(2,134.7)
|
|
|
Net Flows
|
(2,600.9)
|
|
|
(2,447.9)
|
|
|
(256.9)
|
|
|
(741.9)
|
|
|
(102.0)
|
|
|
(2,600.9)
|
|
|
(102.0)
|
|
|
Market performance
|
295.9
|
|
|
887.5
|
|
|
736.5
|
|
|
(1,021.2)
|
|
|
1,444.5
|
|
|
295.9
|
|
|
1,444.5
|
|
|
Other (2)
|
(41.1)
|
|
|
(161.8)
|
|
|
(27.0)
|
|
|
(70.5)
|
|
|
(58.5)
|
|
|
(41.1)
|
|
|
(58.5)
|
|
|
Ending balance
|
$
|
26,536.0
|
|
|
$
|
24,813.8
|
|
|
$
|
25,266.4
|
|
|
$
|
23,432.8
|
|
|
$
|
24,716.8
|
|
|
$
|
26,536.0
|
|
|
$
|
24,716.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed-End Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
6,222.3
|
|
|
$
|
6,543.6
|
|
|
$
|
6,959.6
|
|
|
$
|
6,887.3
|
|
|
$
|
6,757.4
|
|
|
$
|
6,222.3
|
|
|
$
|
6,757.4
|
|
|
Inflows
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Outflows
|
—
|
|
|
(103.3)
|
|
|
—
|
|
|
—
|
|
|
(81.6)
|
|
|
—
|
|
|
(81.6)
|
|
|
Net Flows
|
—
|
|
|
(103.3)
|
|
|
—
|
|
|
—
|
|
|
(81.6)
|
|
|
—
|
|
|
(81.6)
|
|
|
Market performance
|
421.3
|
|
|
481.7
|
|
|
(63.3)
|
|
|
(44.8)
|
|
|
280.8
|
|
|
421.3
|
|
|
280.8
|
|
|
Other (2)
|
(100.0)
|
|
|
37.6
|
|
|
(9.0)
|
|
|
(85.1)
|
|
|
(142.3)
|
|
|
(100.0)
|
|
|
(142.3)
|
|
|
Ending balance
|
$
|
6,543.6
|
|
|
$
|
6,959.6
|
|
|
$
|
6,887.3
|
|
|
$
|
6,757.4
|
|
|
$
|
6,814.3
|
|
|
$
|
6,543.6
|
|
|
$
|
6,814.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange Traded Funds
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
340.8
|
|
|
$
|
353.6
|
|
|
$
|
399.4
|
|
|
$
|
460.6
|
|
|
$
|
596.8
|
|
|
$
|
340.8
|
|
|
$
|
596.8
|
|
|
Inflows
|
62.3
|
|
|
52.8
|
|
|
66.9
|
|
|
200.8
|
|
|
265.7
|
|
|
62.3
|
|
|
265.7
|
|
|
Outflows
|
(33.8)
|
|
|
(20.8)
|
|
|
(19.6)
|
|
|
(50.6)
|
|
|
(23.0)
|
|
|
(33.8)
|
|
|
(23.0)
|
|
|
Net Flows
|
28.5
|
|
|
32.0
|
|
|
47.3
|
|
|
150.2
|
|
|
242.7
|
|
|
28.5
|
|
|
242.7
|
|
|
Market performance
|
(13.6)
|
|
|
17.4
|
|
|
19.4
|
|
|
(2.9)
|
|
|
34.6
|
|
|
(13.6)
|
|
|
34.6
|
|
|
Other (2)
|
(2.1)
|
|
|
(3.6)
|
|
|
(5.5)
|
|
|
(11.1)
|
|
|
(10.8)
|
|
|
(2.1)
|
|
|
(10.8)
|
|
|
Ending balance
|
$
|
353.6
|
|
|
$
|
399.4
|
|
|
$
|
460.6
|
|
|
$
|
596.8
|
|
|
$
|
863.3
|
|
|
$
|
353.6
|
|
|
$
|
863.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Separately Managed Accounts (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
6,784.4
|
|
|
$
|
7,021.1
|
|
|
$
|
7,407.2
|
|
|
$
|
7,924.8
|
|
|
$
|
8,473.5
|
|
|
$
|
6,784.4
|
|
|
$
|
8,473.5
|
|
|
Inflows
|
399.2
|
|
|
444.2
|
|
|
516.1
|
|
|
466.0
|
|
|
689.2
|
|
|
399.2
|
|
|
689.2
|
|
|
Outflows
|
(364.3)
|
|
|
(314.6)
|
|
|
(182.0)
|
|
|
(296.0)
|
|
|
(297.9)
|
|
|
(364.3)
|
|
|
(297.9)
|
|
|
Net Flows
|
34.9
|
|
|
129.6
|
|
|
334.1
|
|
|
170.0
|
|
|
391.3
|
|
|
34.9
|
|
|
391.3
|
|
|
Market performance
|
210.8
|
|
|
246.5
|
|
|
189.9
|
|
|
376.3
|
|
|
453.8
|
|
|
210.8
|
|
|
453.8
|
|
|
Other (2)
|
(9.0)
|
|
|
10.0
|
|
|
(6.4)
|
|
|
2.4
|
|
|
(6.5)
|
|
|
(9.0)
|
|
|
(6.5)
|
|
|
Ending balance
|
$
|
7,021.1
|
|
|
$
|
7,407.2
|
|
|
$
|
7,924.8
|
|
|
$
|
8,473.5
|
|
|
$
|
9,312.1
|
|
|
$
|
7,021.1
|
|
|
$
|
9,312.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Institutional Accounts (3)(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
5,155.7
|
|
|
$
|
5,196.9
|
|
|
$
|
5,589.7
|
|
|
$
|
6,000.4
|
|
|
$
|
6,105.8
|
|
|
$
|
5,155.7
|
|
|
$
|
6,105.8
|
|
|
Inflows
|
186.2
|
|
|
541.2
|
|
|
612.5
|
|
|
321.7
|
|
|
277.7
|
|
|
186.2
|
|
|
277.7
|
|
|
Outflows
|
(276.6)
|
|
|
(305.5)
|
|
|
(252.4)
|
|
|
(275.1)
|
|
|
(208.6)
|
|
|
(276.6)
|
|
|
(208.6)
|
|
|
Net Flows
|
(90.4)
|
|
|
235.7
|
|
|
360.1
|
|
|
46.6
|
|
|
69.1
|
|
|
(90.4)
|
|
|
69.1
|
|
|
Market performance
|
148.4
|
|
|
153.6
|
|
|
60.3
|
|
|
70.4
|
|
|
148.6
|
|
|
148.4
|
|
|
148.6
|
|
|
Other (2)
|
(16.8)
|
|
|
3.5
|
|
|
(9.7)
|
|
|
(11.6)
|
|
|
(10.2)
|
|
|
(16.8)
|
|
|
(10.2)
|
|
|
Ending balance
|
$
|
5,196.9
|
|
|
$
|
5,589.7
|
|
|
$
|
6,000.4
|
|
|
$
|
6,105.8
|
|
|
$
|
6,313.3
|
|
|
$
|
5,196.9
|
|
|
$
|
6,313.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
$
|
47,385.3
|
|
|
$
|
45,651.2
|
|
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
47,385.3
|
|
|
$
|
45,366.3
|
|
|
Inflows
|
2,841.1
|
|
|
2,390.1
|
|
|
3,078.0
|
|
|
2,630.8
|
|
|
3,265.3
|
|
|
2,841.1
|
|
|
3,265.3
|
|
|
Outflows
|
(5,469.0)
|
|
|
(4,544.0)
|
|
|
(2,593.4)
|
|
|
(3,005.9)
|
|
|
(2,745.8)
|
|
|
(5,469.0)
|
|
|
(2,745.8)
|
|
|
Net Flows
|
(2,627.9)
|
|
|
(2,153.9)
|
|
|
484.6
|
|
|
(375.1)
|
|
|
519.5
|
|
|
(2,627.9)
|
|
|
519.5
|
|
|
Market performance
|
1,062.8
|
|
|
1,786.7
|
|
|
942.8
|
|
|
(622.2)
|
|
|
2,362.3
|
|
|
1,062.8
|
|
|
2,362.3
|
|
|
Other (2)
|
(169.0)
|
|
|
(114.3)
|
|
|
(57.6)
|
|
|
(175.9)
|
|
|
(228.3)
|
|
|
(169.0)
|
|
|
(228.3)
|
|
|
Ending balance
|
$
|
45,651.2
|
|
|
$
|
45,169.7
|
|
|
$
|
46,539.5
|
|
|
$
|
45,366.3
|
|
|
$
|
48,019.8
|
|
|
$
|
45,651.2
|
|
|
$
|
48,019.8
|
|
|
|
(1) Includes assets under management of retail and variable insurance
funds
|
|
(2) Represents open-end and closed-end mutual fund distributions, net of
reinvestments, net flows of cash management strategies, net flows from non-sales related activities such as asset
acquisitions/
(dispositions), marketable securities investments/(withdrawals), and the impact on assets from
the use of leverage
|
|
(3) Includes assets under management related to option
strategies
|
|
(4) Includes assets under management related to structured
products
|
|
Non-GAAP Information and Reconciliations
|
|
(In thousands except per share data)
|
|
|
The following are reconciliations and related notes of the most comparable
U.S. GAAP measure to each non-GAAP measure.
|
|
|
The non-GAAP financial measures included in this release differ from
financial measures determined in accordance with U.S. GAAP as a result of the reclassification of certain income
statement items, as well as the exclusion of certain expenses and other items that are not reflective of the earnings
generated from providing investment management and related services. Non-GAAP financial measures have material
limitations and should not be viewed in isolation or as a substitute for U.S. GAAP measures.
|
|
|
Reconciliation of Total Revenues, GAAP to Total Revenues, as
Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Total revenues, GAAP
|
$
|
79,776
|
|
|
$
|
80,295
|
|
|
$
|
79,850
|
|
|
Distribution and other asset-based expenses (1)
|
(15,323)
|
|
|
(18,101)
|
|
|
(16,136)
|
|
|
Consolidated products revenues (2)
|
286
|
|
|
209
|
|
|
329
|
|
|
Total revenues, as adjusted
|
$
|
64,739
|
|
|
$
|
62,403
|
|
|
$
|
64,043
|
|
|
|
|
Reconciliation of Total Operating Expenses, GAAP to Operating Expenses,
as Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Total operating expenses, GAAP
|
$
|
69,729
|
|
|
$
|
67,545
|
|
|
$
|
67,067
|
|
|
Distribution and other asset-based expenses (1)
|
(15,323)
|
|
|
(18,101)
|
|
|
(16,136)
|
|
|
Consolidated products expenses (2)
|
(642)
|
|
|
(1,189)
|
|
|
(511)
|
|
|
Amortization of intangible assets (3)
|
(233)
|
|
|
(651)
|
|
|
(603)
|
|
|
Restructuring and severance (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
Acquisition and integration expenses (6)
|
(1,629)
|
|
|
—
|
|
|
(3,347)
|
|
|
Other (7)
|
(669)
|
|
|
(414)
|
|
|
(611)
|
|
|
Total operating expenses, as adjusted
|
$
|
51,233
|
|
|
$
|
47,190
|
|
|
$
|
45,859
|
|
|
|
|
Reconciliation of Operating Income, GAAP to Operating Income, as
Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Operating income, GAAP
|
$
|
10,047
|
|
|
$
|
12,750
|
|
|
$
|
12,783
|
|
|
Consolidated products earnings (2)
|
928
|
|
|
1,398
|
|
|
840
|
|
|
Amortization of intangible assets (3)
|
233
|
|
|
651
|
|
|
603
|
|
|
Restructuring and severance (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
Acquisition and integration expenses (6)
|
1,629
|
|
|
—
|
|
|
3,347
|
|
|
Other (7)
|
669
|
|
|
414
|
|
|
611
|
|
|
Operating income, as adjusted
|
$
|
13,506
|
|
|
$
|
15,213
|
|
|
$
|
18,184
|
|
|
|
|
|
|
|
|
Operating margin, GAAP
|
12.6%
|
|
|
15.9%
|
|
|
16.0%
|
|
|
Operating margin, as adjusted
|
20.9%
|
|
|
24.4%
|
|
|
28.4%
|
|
|
|
|
Reconciliation of Net Income Attributable to Common
Stockholders, GAAP to Net Income Attributable to Common Stockholders, as
Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Net income attributable to common stockholders, GAAP
|
$
|
10,943
|
|
|
$
|
12,363
|
|
|
$
|
12,426
|
|
|
Amortization of intangible assets, net of tax (3)
|
143
|
|
|
401
|
|
|
376
|
|
|
Restructuring and severance, net of tax (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
Seed capital and CLO investments earnings/(losses), net of tax
(5)
|
(5,679)
|
|
|
(3,497)
|
|
|
(3,670)
|
|
|
Acquisition and integration expenses, net of tax (6)
|
1,001
|
|
|
—
|
|
|
2,087
|
|
|
Other, net of tax (7)
|
2,209
|
|
|
255
|
|
|
381
|
|
|
Net income attributable to common stockholders, as adjusted
|
$
|
8,617
|
|
|
$
|
9,522
|
|
|
$
|
11,600
|
|
|
|
|
|
|
|
|
Weighted Average Shares Outstanding - Basic
|
6,542
|
|
|
8,344
|
|
|
6,413
|
|
|
Weighted Average Shares Outstanding - Diluted
|
6,773
|
|
|
8,506
|
|
|
6,627
|
|
|
Weighted Average Shares Outstanding - Basic, as
adjustedA
|
7,217
|
|
|
8,344
|
|
|
6,413
|
|
|
Weighted Average Shares Outstanding - Diluted, as adjusted
A
|
7,447
|
|
|
8,506
|
|
|
6,627
|
|
|
|
|
|
|
|
|
Earnings Per Share - Basic, GAAP
|
$
|
1.67
|
|
|
$
|
1.48
|
|
|
$
|
1.94
|
|
|
Earnings Per Share - Diluted, GAAP
|
$
|
1.62
|
|
|
$
|
1.45
|
|
|
$
|
1.87
|
|
|
|
|
|
|
|
|
Earnings Per Share - Basic, as adjusted
|
$
|
1.19
|
|
|
$
|
1.14
|
|
|
$
|
1.81
|
|
|
Earnings Per Share - Diluted, as adjusted
|
$
|
1.16
|
|
|
$
|
1.12
|
|
|
$
|
1.75
|
|
|
AAssumes conversion of preferred shares to common
shares
|
|
|
|
Reconciliation of Income Before Taxes, GAAP to Income Before Taxes, as
Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Income before taxes, GAAP
|
$
|
18,178
|
|
|
$
|
19,426
|
|
|
$
|
12,449
|
|
|
Consolidated products (earnings)/losses(2)
|
(718)
|
|
|
493
|
|
|
509
|
|
|
Amortization of intangible assets (3)
|
233
|
|
|
651
|
|
|
603
|
|
|
Restructuring and severance (4)
|
—
|
|
|
—
|
|
|
—
|
|
|
Seed capital and CLO investments (earnings)/losses (5)
|
(5,967)
|
|
|
(5,542)
|
|
|
1,084
|
|
|
Acquisition and integration expenses (6)
|
1,629
|
|
|
—
|
|
|
3,347
|
|
|
Other (7)
|
669
|
|
|
414
|
|
|
611
|
|
|
Income before taxes, as adjusted
|
$
|
14,024
|
|
|
$
|
15,442
|
|
|
$
|
18,603
|
|
|
|
|
Reconciliation of Income Tax Expense, GAAP to Income Tax Expense, as
Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Income tax expense, GAAP
|
$
|
4,433
|
|
|
$
|
7,556
|
|
|
$
|
532
|
|
|
Tax impact of:
|
|
|
|
|
|
|
Amortization of intangible assets
|
90
|
|
|
250
|
|
|
227
|
|
|
Restructuring and severance
|
—
|
|
|
—
|
|
|
—
|
|
|
Seed capital and CLO investments earnings/(losses)
|
(288)
|
|
|
(2,045)
|
|
|
4,754
|
|
|
Acquisition and integration expenses
|
628
|
|
|
—
|
|
|
1,260
|
|
|
Other
|
544
|
|
|
159
|
|
|
230
|
|
|
Income tax expense, as adjusted
|
$
|
5,407
|
|
|
$
|
5,920
|
|
|
$
|
7,003
|
|
|
|
|
|
|
|
|
Effective tax rate, GAAPA
|
24.4%
|
|
|
38.9%
|
|
|
4.3%
|
|
|
Effective tax rate, as adjustedB
|
38.6%
|
|
|
38.3%
|
|
|
37.6%
|
|
|
|
A Reflects Income tax expense, GAAP, divided by Income before
taxes, GAAP
|
|
B Reflects Income tax expense, as adjusted, divided by Income
before taxes, as adjusted
|
|
|
|
Reconciliation of Investment Management Fees, GAAP to Investment
Management Fees, as Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Investment management fees, GAAP
|
$
|
59,271
|
|
|
$
|
57,644
|
|
|
$
|
58,996
|
|
|
Consolidated products fees (2)
|
242
|
|
|
91
|
|
|
283
|
|
|
Investment management fees, as adjusted
|
$
|
59,513
|
|
|
$
|
57,735
|
|
|
$
|
59,279
|
|
|
|
|
Reconciliation of Administration and Transfer Agent Fees,
GAAP to Administration and Transfer Agent Fees, as Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Administration and transfer agent fees, GAAP
|
$
|
8,981
|
|
|
$
|
9,998
|
|
|
$
|
9,176
|
|
|
Consolidated products fees (2)
|
34
|
|
|
94
|
|
|
35
|
|
|
Administration and transfer agent fees, as adjusted
|
$
|
9,015
|
|
|
$
|
10,092
|
|
|
$
|
9,211
|
|
|
|
|
Reconciliation of Employment Expenses, GAAP to Employment Expenses, as
Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Employment expenses, GAAP
|
$
|
39,641
|
|
|
$
|
35,977
|
|
|
$
|
33,457
|
|
|
Employment expenses, as adjusted
|
$
|
39,641
|
|
|
$
|
35,977
|
|
|
$
|
33,457
|
|
|
|
|
Reconciliation of Other Operating Expenses, GAAP to Other Operating
Expenses, as Adjusted:
|
|
|
Three Months Ended
|
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
Other operating expenses, GAAP
|
$
|
13,226
|
|
|
$
|
10,765
|
|
|
$
|
15,660
|
|
|
Acquisition and integration expenses (6)
|
(1,629)
|
|
|
—
|
|
|
(3,347)
|
|
|
Other (7)
|
(669)
|
|
|
(414)
|
|
|
(611)
|
|
|
Other operating expenses, as adjusted
|
$
|
10,928
|
|
|
$
|
10,351
|
|
|
$
|
11,702
|
|
Notes to Reconciliations:
- Distribution and other asset-based expenses - Primarily payments to third-party distribution partners for providing
services to investors in our sponsored funds and payments to third-party service providers for investment management-related
services. Management believes that making this adjustment aids in comparing the company's operating results with other asset
management firms that do not utilize intermediary distribution partners or third-party service providers.
- Consolidated investment products - Revenues and expenses generated by operating activities of majority owned seed capital
related mutual funds and CLOs. Management believes that excluding these operating activities to reflect revenues and expenses
of the company prior to the consolidation of these products is consistent with the approach of reflecting its operating results
from managing client assets.
- Amortization of intangible assets - Non-cash amortization expense or impairment expense, if any, attributable to
acquisition-related intangible assets. Management believes that making this adjustment aids in comparing the company's
operating results with other asset management firms that have not engaged in acquisitions.
- Restructuring and severance - Certain expenses associated with restructuring the business, including lease
abandonment-related expenses, and severance costs associated with staff reductions, that are not reflective of the ongoing
earnings generation of the business. Management believes that making this adjustment aids in comparing the company's operating
results with prior periods.
- Seed capital and CLO investments earnings/(losses) - Gains and losses (realized and unrealized), dividends and interest
income generated by seed capital and CLO investments. Earnings or losses generated by investments in seed capital and CLO
investments can vary significantly from period to period and do not reflect the company's operating results from providing
investment management and related services. Management believes that making this adjustment aids in comparing the company's
operating results with prior periods and with other asset management firms that do not have meaningful seed capital and CLO
investments.
- Acquisition and integration expenses - Expenses that are directly related to acquisition and integration activities.
Acquisition expenses include transaction closing costs, professional fees and financing fees. Integration expenses include
costs incurred that are directly attributable to combining the businesses, including compensation, restructuring and severance
charges, professional fees, consulting fees and other expenses. Management believes that making these adjustments aids in
comparing the company's operating results with other asset management firms that have not engaged in acquisitions.
- Other - Certain expenses that are not reflective of the ongoing earnings generation of the business. In addition, it
includes income tax expense/(benefit) items, such as adjustments for uncertain tax positions, valuation allowances and other
unusual or infrequent items not related to current operating results to reflect a normalized effective rate. Management
believes that making these adjustments aids in comparing the company's operating results with prior periods.
|
Components of Other for the respective periods are shown in the table
below:
|
|
|
Three Months Ended
|
|
Other (in thousands)
|
3/31/2017
|
|
3/31/2016
|
|
12/31/2016
|
|
System transition expenses
|
$
|
669
|
|
|
$
|
414
|
|
|
$
|
611
|
|
|
Tax impact of system transition expenses
|
(258)
|
|
|
(159)
|
|
|
(230)
|
|
|
Discrete tax adjustments
|
(286)
|
|
|
—
|
|
|
—
|
|
|
Preferred stockholder dividends
|
2,084
|
|
|
—
|
|
|
—
|
|
|
Total Other
|
$
|
2,209
|
|
|
$
|
255
|
|
|
$
|
381
|
|
Definitions:
Revenues, as adjusted, comprise the fee revenues paid by clients for investment management and related
services. Revenues, as adjusted, for purposes of calculating net income attributable to common stockholders, as adjusted, differ
from U.S. GAAP revenues in that they are reduced by distribution and other asset-based expenses that are generally passed through
to external parties, and exclude the impact of consolidated sponsored investment products.
Operating expenses, as adjusted, is calculated to reflect expenses from ongoing continuing operations
attributable to stockholders. Operating expenses, as adjusted, for purposes of calculating net income attributable to common
stockholders, as adjusted, differ from U.S. GAAP expenses in that they exclude amortization or impairment, if any, of intangible
assets, restructuring and severance, the impact of consolidated sponsored investment products, acquisition and
integration-related expenses and certain other expenses that do not reflect the ongoing earnings generation of the business.
Operating margin, as adjusted, is a metric used to evaluate efficiency represented by operating income, as
adjusted, divided by revenues, as adjusted.
Earnings per share, as adjusted, represent net income attributable to common stockholders, as adjusted,
divided by weighted average shares outstanding, on either a basic or diluted basis.
1Please carefully consider a fund's investment objectives, risks, charges, and expenses before investing. For
this and other information about any Virtus mutual fund, call 1-800-243-4361, or visit Virtus.com for a prospectus or summary
prospectus. Read it carefully before investing.
Virtus Mutual Funds are distributed by VP Distributors, LLC, member, FINRA and subsidiary of Virtus Investment Partners,
Inc.
Forward-Looking Information
This press release contains statements that are, or may be considered to be, forward-looking statements. All
statements that are not historical facts, including statements about our beliefs or expectations, are "forward-looking
statements" within the meaning of The Private Securities Litigation Reform Act of 1995. These statements may be identified by
such forward-looking terminology as "expect," "estimate," "plan," "intend," "believe," "anticipate," "may," "will," "should,"
"could," "continue," "project," or similar statements or variations of such terms.
Our forward-looking statements are based on a series of expectations, assumptions and projections about our company, are not
guarantees of future results or performance, and involve substantial risks and uncertainty, including assumptions and projections
concerning our assets under management, cash inflows and outflows, operating cash flows, our ability to expand distribution and
product offerings, and future credit facilities, for all forward periods. All of our forward-looking statements are as of the
date of this release only. The company can give no assurance that such expectations or forward-looking statements will prove to
be correct. Actual results may differ materially.
Our business and our forward-looking statements involve substantial known and unknown risks and uncertainties, including those
discussed under "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in
our 2016 Annual Report on Form 10-K as well as the following risks and uncertainties: (a) any reduction in our assets under
management; (b) the withdrawal, renegotiation or termination of investment advisory agreements; (c) damage to our reputation; (d)
failure to comply with investment guidelines or other contractual requirements; (e) the inability to attract and retain key
personnel; (f) challenges from the competition we face in our business; (g) adverse regulatory and legal developments; (h)
unfavorable changes in tax laws or limitations; (i) adverse developments related to unaffiliated subadvisers; (j) negative
implications of changes in key distribution relationships; (k) interruptions in or failure to provide service by third parties;
(l) volatility associated with our common stock; (m) adverse civil litigation and government investigations or proceedings; (n)
the risk of loss on our investments; (o) the inability to make quarterly distributions; (p) the lack of sufficient capital on
satisfactory terms; (q) liabilities and losses not covered by insurance; (r) the inability to satisfy financial covenants; (s)
the failure to complete the acquisition of RidgeWorth; (t) the inability to achieve expected acquisition-related financial
benefits and synergies; and other risks and uncertainties described in our 2016 Annual Report on Form 10-K or in any of our
filings with the Securities and Exchange Commission ("SEC").
Certain other factors which may impact our continuing operations, prospects, financial results and liquidity, or which may
cause actual results to differ from such forward-looking statements, are discussed or included in the company's periodic reports
filed with the SEC and are available on our website at www.virtus.com under "Investor Relations." You are urged to carefully consider all such factors.
The company does not undertake or plan to update or revise any such forward-looking statements to reflect actual results,
changes in plans, assumptions, estimates or projections, or other circumstances occurring after the date of this release, even if
such results, changes or circumstances make it clear that any forward-looking information will not be realized. If there are any
future public statements or disclosures by us which modify or impact any of the forward-looking statements contained in or
accompanying this release, such statements or disclosures will be deemed to modify or supersede such statements in this
release.
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SOURCE Virtus Investment Partners, Inc.