Delaware
|
6282
|
13-6174048
|
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
330 Madison
Avenue
New York, NY 10017
(212)
297-3600
|
||
(Address,
including zip code, and telephone number, including area code, of
registrant’s principal executive
offices)
|
ADAM
SPILKA
General
Counsel and Corporate Secretary
Artio
Global Investors Inc.
330
Madison Avenue
New
York, NY 10017
(212)
297-3600
|
||||
(Name,
address, including zip code, and telephone number, including area code, of
agent for service)
|
Copies
to:
|
||||
MICHAEL
KAPLAN
Davis
Polk & Wardwell LLP
450
Lexington Avenue
New
York, NY 10017
(212)
450-4000
|
CATHERINE
CLARKIN
JAY
CLAYTON
Sullivan
& Cromwell LLP
125
Broad Street
New
York, NY 10004
(212)
558-4000
|
JAMES
GERKIS
Proskauer
Rose LLP
1585
Broadway
New
York, NY 10036
(212)
969-3000
|
Large
accelerated filer o
|
Non-accelerated
filer x
|
|
Accelerated
filer o
|
Smaller
reporting company o
|
|
(Do
not check if a smaller reporting
company)
|
CALCULATION
OF REGISTRATION FEE
|
||||||||||||||||
Title
of Each Class
of
Security Being Registered
|
Amount
To Be Registered
|
Proposed
Maximum Offering Price per Share(1)(2)
|
Proposed
Maximum Aggregate Offering
Price(1)(2)
|
Amount
of
Registration
Fee
|
||||||||||||
Class A Common Stock, $0.001 par value | 4,200,000 | $ | 20.40 | $ | 85,680,000 | $ | 6,108.98 |
(1)
|
Includes
additional shares of Class A common stock that the underwriters have the
option to purchase.
|
(2)
|
Estimated
solely for the purpose of calculating the registration fee pursuant to
Rule 457(c) of the Securities Act of 1933, as amended, based on an average
of the high and low reported prices of the shares of the registrant’s
Class A common stock on the New York Stock Exchange on May 20,
2010.
|
Per
Share
|
Total
|
|||||||
Public
offering price
|
$ | $ | ||||||
Underwriting
discount
|
$ | $ | ||||||
Proceeds,
before expenses, to Artio Global Investors Inc.
|
$ | $ |
International Equity
I
|
International Equity
II
|
|
Inception: May 1995; AuM:
$21.0bn
|
Inception: April 2005; AuM:
$24.6bn
|
|
Global
Equity
|
Total Return
Bond
|
|
Inception: July 1995; AuM:
$0.9bn
|
Inception: February 1995; AuM:
$4.5bn
|
|
High
Yield
|
Inception: April 2003; AuM:
$4.5bn
|
*
|
Note:
Historical returns presented above represent an aggregate of various
performance composites and are not indicative of future returns, or of
returns of other strategies. The above five strategies accounted for 98.2%
of assets under management (“AuM”) at March 31, 2010. See also
“Performance Information Used in this
Prospectus”.
|
Page
|
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1
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15
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29
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30
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32
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33
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34
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35
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43
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69
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89
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91
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93
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97
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99
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105
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107
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109
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113
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113
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113
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114
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|
F-1
|
|
·
|
“Artio
Global Investors Inc.”, the “Company”, “we”, “us” and “our” refer to Artio
Global Investors Inc. and, unless the context otherwise requires, its
direct and indirect subsidiaries;
|
|
·
|
“operating
company” and “Holdings” refer to Artio Global Holdings LLC and, unless the
context otherwise requires, its subsidiary Artio Global Management LLC, or
“Investment Adviser”, our “operating subsidiary”;
and
|
|
·
|
“GAM”
refers to GAM Holding Ltd., a Zurich-based financial holding company whose
shares are listed on the SIX Swiss Exchange, the sole holder of our Class
C common stock.
|
|
·
|
our
International Equity I composite has outperformed its benchmark, the MSCI
AC World ex USA IndexSM
ND, by 7.67% on an annualized basis since its inception in 1995 through
March 31, 2010 (calculated on a gross basis before payment of
fees);
|
|
·
|
as
of March 31, 2010, eight out of nine publicly-reported composites had also
outperformed their benchmarks on a gross basis since inception;
and
|
|
·
|
as
of March 31, 2010, six out of nine mutual funds (as represented by the
Class I-shares), representing over 99% of our mutual fund assets under
management, were rated 4- or 5- stars by Morningstar and of
those nine funds, six were in the top quartile of Lipper rankings for
performance since inception.
|
|
·
|
each
new investment strategy and offering must provide the potential for
attractive risk adjusted returns for clients in these new strategies
without negatively affecting return prospects for existing
clients;
|
|
·
|
new
client segments or distribution sources must value our approach and be
willing to appropriately compensate us for our services;
and
|
|
·
|
new
product offerings and client segments must be consistent with the broad
investment mission and not alter the investment-centric nature of our
firm’s culture.
|
|
·
|
The
loss of either of our Principals or other key investment professionals or
members of our senior management team could have a material adverse effect
on our business. Our ability to attract and retain qualified investment
professionals is critical to our
success.
|
|
·
|
If
our investment strategies perform poorly for any reason, including due to
a declining stock market, general economic downturn or otherwise, clients
could withdraw their funds and we could suffer a decline in assets under
management, which would reduce our
earnings.
|
|
·
|
The
historical returns of our existing investment strategies may not be
indicative of their future results or of the results of investment
strategies we are in the process of
developing.
|
|
·
|
Most
of our investment strategies consist of investments in the securities of
issuers located outside of the United States, which involve foreign
currency exchange, tax, political, social and economic uncertainties and
risks.
|
|
·
|
We
derive a substantial portion of our revenues from a limited number of our
products.
|
|
·
|
The
deterioration in global economic and market conditions over the past two
years has adversely affected and may continue to adversely affect our
business.
|
Class
A common stock we are offering
|
3,700,000
shares of Class A common stock.
|
|
Class
A common stock to be outstanding immediately after this offering and the
application of the net proceeds as
|
||
described
under “—Use of Proceeds”
|
42,141,675
shares of Class A common stock. If all holders of New Class A Units (other
than us) immediately after this offering elected to exchange them for
shares of our Class A common stock and all shares of Class C common stock
were converted into shares of Class A common stock, 60,097,519 shares of
Class A common stock would be outstanding immediately after this
offering.
|
|
Class
B common stock to be outstanding immediately after this offering and the
application of the net proceeds as
|
||
described
under “—Use of Proceeds”
|
1,200,000
shares of Class B common stock. Shares of our Class B common stock have
voting but no economic rights (including no rights to dividends and
distributions upon liquidation). When a New Class A Unit is exchanged by a
Principal for a share of Class A common stock, a share of Class B common
stock held by such Principal is cancelled. At the time of the Exchange and
the purchase of New Class A Units in connection with this offering,
14,400,000 shares of Class B common stock will be surrendered and
cancelled.
|
|
Class
C common stock to be outstanding
|
||
immediately
after this offering
|
16,755,844
shares of Class C common stock. Shares of Class C common stock have
economic rights (including rights to dividends and distributions upon
liquidation) equal to the economic rights of the Class A common stock. If
GAM transfers any shares of Class C common stock to anyone other than any
of its subsidiaries or us, such shares will automatically convert into an
equal number of shares of Class A common stock. In addition, on September
29, 2011, any outstanding shares of Class C common stock will
automatically convert into Class A common stock on a one-for-one
basis.
|
|
Voting
rights
|
One
vote per share of Class A common stock and Class B common stock. Shares of
Class C common stock have an aggregate vote equal to the greater of (1)
the number of votes they would be entitled to on a one-vote per share
basis and (2) 20% of the combined voting power of all classes of common
stock. GAM entered into a shareholders agreement under which it agreed
that, to the extent it has voting power as a holder of the Class C common
stock in excess of that which it would be entitled to on a one-vote per
share basis, it will on all matters vote the shares representing such
excess on the same basis and in the same proportion as the votes cast by
the holders of our Class A and Class B common stock. Under this
|
|
shareholders
agreement, as long as GAM owns shares of our Class C common stock
constituting at least 10% of our outstanding common stock, it is entitled
to appoint a member to our Board of Directors or to exercise observer
rights. GAM has appointed an observer to our Board, but may in the future
decide to appoint a member to our Board in lieu of exercising such
observer rights.
Following
the application of the net proceeds of this offering, our Principals will
each have approximately 9.9% of the voting power in us through their
respective ownership of the shares of our Class A and Class B common
stock, and GAM will have approximately 27.9% through its ownership of the
shares of our Class C common stock. |
||
Use
of proceeds
|
We
estimate that the net proceeds from the sale of shares of our Class A
common stock in this offering will be approximately $75.6 million, or
approximately $85.8 million if the underwriters exercise their option to
purchase additional shares of Class A common stock in full, based on an
offering price of $21.49 per share, in each case after deducting assumed
underwriting discounts payable by us.
|
|
We
intend to use the net proceeds from this offering to purchase 1,850,000
New Class A Units and, if the underwriters exercise in full their option
to purchase additional shares, to repurchase and retire 250,000 shares of
Class A common stock, from each of Richard Pell and Rudolph-Riad Younes.
We will not retain any of the net proceeds from this
offering.
As
a result of the Exchange and purchase of New Class A Units, we expect to
incur payment obligations to our Principals of approximately $153.4
million in the aggregate (assuming no changes in the relevant tax law and
that we can earn sufficient taxable income to realize the full tax
benefits generated by the exchange and/or purchase of an aggregate of
14,400,000 New Class A Units) over the 15-year period from the assumed
year of Exchange and purchase based on an assumed price of $21.49 per
share of our Class A common stock (the last reported sale price for our
Class A common stock on May 18, 2010, which is the date on which each
Principal exchanged 3,000,000 shares of New Class A Units for 3,000,000
shares of Class A common stock). See “Related Party Transactions — Tax
Receivable Agreement”.
|
||
Dividend
policy
|
In
respect of each of the last quarter of 2009 and the first quarter of 2010,
we declared a cash dividend of $0.06 per share of Class A and
Class C common stock.
|
|
The
declaration and payment of all future dividends, if any, will be at the
sole discretion of our Board of Directors and may be discontinued at any
time. In determining the amount of any future dividends, our Board of
Directors will take into account
|
any
legal or contractual limitations, our actual and anticipated future
earnings, cash flow, debt service and capital requirements and the amount
of distributions to us from our operating company. See “Dividend
Policy”.
|
||
As
a holding company, we have no material assets other than our ownership of
New Class A Units of Holdings and, accordingly, depend on distributions
from it to fund any dividends we may pay. We intend to cause it to make
distributions to us with available cash generated from its subsidiaries’
operations in an amount sufficient to cover dividends, if any, declared by
us. If Holdings makes such distributions, the other holders of New Class A
Units will be entitled to receive equivalent distributions on a pro rata
basis.
|
||
Risk
Factors
|
The
“Risk Factors” section included in this prospectus contains a discussion
of factors that you should carefully consider before deciding to invest in
shares of our Class A common stock.
|
|
New
York Stock Exchange symbol
|
“ART”
|
|
·
|
1,200,000
shares of Class A common stock reserved for issuance upon the exchange of
the remaining New Class A Units held by the Principals and 16,755,844
shares of Class A common stock reserved for issuance upon the conversion
of the Class C common stock held by
GAM;
|
|
·
|
7,319,502
shares of Class A common stock reserved for issuance under the Artio
Global Investors Inc. 2009 Stock Incentive Plan;
and
|
|
·
|
2,282,979
shares of Class A common stock, reserved for delivery upon vesting of
outstanding restricted stock units.
|
Historical
|
Pro
Forma
|
|||||||||||||||||||||||||||
Years
Ended December 31,
|
Three
Months Ended March 31,
|
Three
Months Ended
March
31,
|
Year
Ended December 31,
|
|||||||||||||||||||||||||
2009
|
2008
|
2007
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||||||||||||||
Statement
of Income Data:
|
||||||||||||||||||||||||||||
Revenues
and other operating income:
|
||||||||||||||||||||||||||||
Investment
management fees
|
$ | 305,335 | $ | 425,003 | $ | 445,558 | $ | 85,287 | $ | 62,816 | $ | 85,287 | $ | 305,335 | ||||||||||||||
Net
gains (losses) on securities held for deferred
compensation
|
1,970 | (2,856 | ) | — | 321 | (273 | ) | 321 | 1,970 | |||||||||||||||||||
Foreign
currency gains (losses)
|
87 | (101 | ) | 186 | 23 | (16 | ) | 23 | 87 | |||||||||||||||||||
Total
revenues and other operating income
|
307,392 | 422,046 | 445,744 | 85,631 | 62,527 | 85,631 | 307,392 | |||||||||||||||||||||
Expenses:
|
||||||||||||||||||||||||||||
Employee
compensation and benefits
|
||||||||||||||||||||||||||||
Salaries,
incentive compensation and benefits
|
79,036 | 92,487 | 92,277 | 25,169 | 16,940 | 24,726 | 88,274 | |||||||||||||||||||||
Allocation
of Class B profits interests
|
33,662 | 76,074 | 83,512 | — | 10,215 | — | — | |||||||||||||||||||||
Change
in redemption value of Class B profits interests
|
266,110 | 54,558 | 76,844 | — | 18,126 | — | — | |||||||||||||||||||||
Tax
Receivable Agreement
|
97,909 | — | — | — | — | — | — | |||||||||||||||||||||
Total
employee compensation and benefits
|
476,717 | 223,119 | 252,633 | 25,169 | 45,281 | 24,726 | 88,274 | |||||||||||||||||||||
Shareholder
servicing and marketing
|
16,886 | 23,369 | 25,356 | 4,548 | 3,069 | 4,548 | 16,886 | |||||||||||||||||||||
General
and administrative
|
42,317 | 62,833 | 50,002 | 10,285 | 8,174 | 10,285 | 34,144 | |||||||||||||||||||||
Total
expenses
|
535,920 | 309,321 | 327,991 | 40,002 | 56,524 | 39,559 | 139,304 | |||||||||||||||||||||
Non-operating
income (loss)
|
(1,395 | ) | 3,181 | 7,034 | (661 | ) | (81 | ) | (661 | ) | (3,592 | ) |
Historical
|
Pro
Forma
|
|||||||||||||||||||||||||||
Years
Ended December 31,
|
Three
Months Ended March 31,
|
Three
Months Ended
March
31,
|
Year
Ended December 31,
|
|||||||||||||||||||||||||
2009
|
2008
|
2007
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||||||||||||||
Income
(loss) from continuing operations before income tax
expense
|
(229,923 | ) | 115,906 | 124,787 | 44,968 | 5,922 | 45,411 | 164,496 | ||||||||||||||||||||
Income
tax expense
|
134,287 | 54,755 | 58,417 | 14,767 | 2,877 | 19,142 | 69,830 | |||||||||||||||||||||
Income
from continuing operations
|
(364,210 | ) | 61,151 | 66,370 | 30,201 | 3,045 | 26,269 | 94,666 | ||||||||||||||||||||
Income
from discontinued operations, net of taxes
|
— | — | 1,616 | — | — | — | — | |||||||||||||||||||||
Net
income (loss)
|
(364,210 | ) | 61,151 | 67,986 | 30,201 | 3,045 | 26,269 | 94,666 | ||||||||||||||||||||
Less:
Net income attributable to non-controlling interests
|
14,104 | — | — | 11,333 | — | 874 | 3,252 | |||||||||||||||||||||
Net
income (loss) attributable to Artio Global Investors
|
$ | (378,314 | ) | $ | 61,151 | $ | 67,986 | $ | 18,868 | $ | 3,045 | $ | 25,395 | $ | 91,414 | |||||||||||||
Income
(loss) from continuing operations
|
$ | (8.88 | ) | $ | 1.46 | $ | 1.58 | $ | 0.42 | $ | 0.07 | $ | 0.43 | $ | 1.55 | |||||||||||||
Income
from discontinued operations, net of taxes
|
— | — | 0.04 | — | — | — | — | |||||||||||||||||||||
Net
income (loss) attributable to Artio Global Investors per share
information–
|
||||||||||||||||||||||||||||
Basic:
|
$ | (8.88 | ) | $ | 1.46 | $ | 1.62 | $ | 0.42 | $ | 0.07 | $ | 0.43 | $ | 1.55 | |||||||||||||
Diluted:
|
(8.88 | ) | 1.46 | 1.62 | 0.42 | 0.07 | $ | 0.43 | $ | 1.55 | ||||||||||||||||||
Cash
dividends per basic share
|
$ | 5.16 | $ | 2.79 | $ | 1.43 | $ | 0.06 | $ | $ | $ | |||||||||||||||||
Weighted
average shares used to calculate per share information –
|
||||||||||||||||||||||||||||
Basic:
|
42,620 | 42,000 | 42,000 | 44,460 | 42,000 | 59,304 | 58,890 | |||||||||||||||||||||
Diluted:
|
42,620 | 42,000 | 42,000 | 44,629 | 42,000 | 60,510 | 60,090 |
As
of
December
31,
|
As
of
December
31,
|
As
of March 31, 2010
|
||||||||||||||
2009
|
2008
|
Historical
|
Pro
Forma
|
|||||||||||||
(In
thousands)
|
||||||||||||||||
Statement
of Financial Position Data:
|
||||||||||||||||
Cash
and cash equivalents
|
$ | 60,842 | $ | 86,563 | $ | 74,771 | $ | 74,771 | ||||||||
Total
assets
|
195,954 | 319,476 | 210,077 | 390,559 | ||||||||||||
Accrued
compensation and benefits
|
31,478 | 268,925 | 10,896 | 10,896 | ||||||||||||
Long-term
debt
|
60,000 | — | 60,000 | 60,000 | ||||||||||||
Total
liabilities
|
191,973 | 286,231 | 176,094 | 329,504 | ||||||||||||
Total
stockholders’ equity
|
6,892 | 33,245 | 26,497 | 60,479 | ||||||||||||
Non-controlling
interests
|
(2,911 | ) | — | 7,486 | 576 | |||||||||||
Total
equity
|
$ | 3,981 | $ | 33,245 | $ | 33,983 | $ | 61,055 |
Years
Ended December 31,
|
Three
Months Ended March 31,
|
|||||||||||||||||||
2009
|
2008
|
2007
|
2010
|
2009
|
||||||||||||||||
(In
millions)
|
||||||||||||||||||||
Selected
Unaudited Operating Data (excluding legacy activities):
|
||||||||||||||||||||
Assets
under management(1)
|
$ | 55,993 | $ | 45,200 | $ | 75,362 | $ | 56,417 | $ | 38,941 | ||||||||||
Net
client cash flows(2)
|
338 | 1,930 | 12,150 | 95 | 222 | |||||||||||||||
Market
appreciation (depreciation)(3)
|
10,455 | (32,092 | ) | 9,726 | 329 | (6,481 | ) |
(1)
|
Reflects
the amount of money our clients have invested in our strategies as of the
period-end date.
|
(2)
|
Reflects
the amount of money our clients have invested in our strategies during the
period, net of outflows and excluding appreciation (depreciation) due to
changes in market value.
|
(3)
|
Represents
the appreciation (depreciation) of the value of assets under our
management during the period due to market performance and fluctuations in
exchange rates.
|
|
·
|
our
existing clients may withdraw their funds from our investment strategies,
which would cause the revenues that we generate from investment management
fees to decline;
|
|
·
|
our
Morningstar and
Lipper ratings
may decline, which may adversely affect our ability to attract new assets
or retain existing assets, especially assets in the Artio Global
Funds;
|
|
·
|
third-party
financial intermediaries, advisors or consultants may rate our investment
products poorly, which may lead our existing clients to withdraw funds
from our investment strategies or to reduce asset inflows from these third
parties or their clients; or
|
|
·
|
the
mutual funds and other investment funds that we advise or sub-advise may
decide not to renew or to terminate the agreements pursuant to which we
advise or sub-advise them and we may not be able to replace these
relationships.
|
|
·
|
a
number of our competitors have greater financial, technical, marketing and
other resources, better name recognition and more personnel than we
do;
|
|
·
|
there
are relatively low barriers impeding entry to new investment funds,
including a relatively low cost of entering these
businesses;
|
|
·
|
the
recent trend toward consolidation in the investment management industry,
and the securities business in general, has served to increase the size
and strength of a number of our
competitors;
|
|
·
|
some
investors may prefer to invest with an investment manager that is not
publicly traded based on the perception that publicly traded companies
focus on growth to the detriment of
performance;
|
|
·
|
some
competitors may invest according to different investment styles or in
alternative asset classes that the markets may perceive as more attractive
than our investment approach;
|
|
·
|
some
competitors may have a lower cost of capital and access to funding sources
that are not available to us, which may create competitive disadvantages
for us with respect to investment opportunities;
and
|
|
·
|
other
industry participants, hedge funds and alternative asset managers may seek
to recruit our qualified investment
professionals.
|
|
·
|
variations
in our quarterly operating results or dividends, or a decision to continue
not paying a regular dividend;
|
|
·
|
failure
to meet analysts’ earnings
estimates;
|
|
·
|
difficulty
in complying with the provisions in our credit agreement such as financial
covenants and amortization
requirements;
|
|
·
|
publication
of research reports or press reports about us, our investments or the
investment management industry or the failure of securities analysts to
cover our Class A common stock;
|
|
·
|
additions
or departures of our Principals and other key management
personnel;
|
|
·
|
adverse
market reaction to any indebtedness we may incur or securities we may
issue in the future;
|
|
·
|
actions
by stockholders;
|
|
·
|
changes
in market valuations of similar
companies;
|
|
·
|
speculation
in the press or investment
community;
|
|
·
|
changes
or proposed changes in laws or regulations or differing interpretations
thereof affecting our business or enforcement of these laws and
regulations, or announcements relating to these
matters;
|
|
·
|
litigation
or governmental investigations;
|
|
·
|
fluctuations
in the performance or share price of other industry participants, hedge
funds or alternative asset
managers;
|
|
·
|
poor
performance or other complications affecting our funds or current or
proposed investments;
|
|
·
|
adverse
publicity about the asset management industry generally or individual
scandals, specifically;
|
|
·
|
sales
of a large number of our Class A common stock or the perception that such
sales could occur; and
|
|
·
|
general
market and economic conditions.
|
Period
|
Amount
|
|||
(in
thousands)
|
||||
Year
ended December 31, 2008
|
$ | 117,000 | ||
Year
ended December 31, 2009
|
$ | 219,525 | ||
Quarter
ended March 31, 2010
|
$ | 2,669 |
High
|
Low
|
Last
Sale
|
Dividends
Declared
|
|||||||||||||
September
24, 2009 through September 30, 2009
|
$ | 27.25 | $ | 25.50 | $ | 26.15 | $ | — | ||||||||
For
the quarter ended December 31, 2009
|
$ | 26.54 | $ | 22.66 | $ | 25.49 | $ | 0.06 | ||||||||
For
the quarter ended March 31, 2010
|
$ | 26.50 | $ | 22.30 | $ | 24.74 | $ | 0.06 |
|
·
|
on
an actual basis; and
|
|
·
|
on
a pro forma basis after giving effect to the transactions described under
“Unaudited Pro Forma Consolidated Financial
Information”.
|
As
of March 31, 2010
|
||||||||
(In
thousands except shares and per share amounts)
|
Actual
|
Pro
Forma
|
||||||
Cash
and cash equivalents
|
$ | 74,771 | $ | 74,771 | ||||
Long-term
debt
|
$ | 60,000 | $ | 60,000 | ||||
Artio
Global Investors stockholders’ equity:
|
||||||||
Class
A common stock, $0.001 par value per share (500,000,000 shares authorized,
27,733,299 shares issued and outstanding, actual; 42,133,299 issued and
outstanding on a pro forma basis)
|
28 | 43 | ||||||
Class
B common stock, $0.001 par value per share (50,000,000 shares authorized,
15,600,000 shares issued and outstanding, actual; 1,200,000 issued and
outstanding on a pro forma basis)
|
15 | 1 | ||||||
Class
C common stock, $0.01 par value per share (210,000,000 shares authorized,
16,755,844 shares issued and outstanding, actual and on a pro forma
basis);
|
168 | 168 | ||||||
Additional
paid-in capital
|
590,499 | 624,481 | ||||||
Accumulated
deficit
|
(564,214 | ) | (564,214 | ) | ||||
Total
stockholders’ equity
|
26,496 | 60,479 | ||||||
Non-controlling
interests
|
7,486 | 576 | ||||||
Total
equity
|
$ | 33,982 | $ | 61,055 | ||||
Total
capitalization
|
$ | 93,982 | $ | 121,055 |
|
·
|
the
reversal of the effect of certain transactions related to the IPO and
recorded in 2009. These transactions are assumed in the
unaudited pro forma consolidated statements of operations to have occurred
prior to January 1, 2009;
|
|
·
|
the
exchange or sale by the Principals of 14,400,000 New Class A Units of
Artio Global Holdings LLC in connection with this offering through the
exchange by each of the Principals of 5,350,000 New Class A Units of Artio
Global Holdings LLC for 5,350,000 shares of our Class A common stock
(inclusive of the 3,000,000 New Class A Units of Artio Global
Holdings LLC each Principal exchanged for shares of our Class A common
stock prior to this offering), and the purchase by us of 1,850,000 New
Class A Units of Artio Global Holdings LLC from each of our Principals.
After such exchanges and unit sales, the Principals will each own 600,000
New Class A Units of Artio Global Holdings
LLC;
|
|
·
|
upon
the exchange and sales, the cancellation of 14,400,000 shares of our Class
B common stock;
|
|
·
|
the
sale by us of 3,700,000 shares of our Class A common stock in this
offering; and
|
|
·
|
the
recording of a deferred tax asset as a result of the step-up in tax basis
that is expected to result from the exchange by each of our Principals of
5,350,000 New Class A Units and the purchase by us, from each of our
Principals, of 1,850,000 New Class A Units, and the liability that is
expected to be incurred as a result under the tax receivable agreement
that requires us to pay 85% of such benefits to our
Principals.
|
Actual
|
Adjustments
|
Pro
Forma
|
||||||||||
(In
thousands, except per share amounts)
|
||||||||||||
Revenues
and other operating income:
|
||||||||||||
Investment
management fees
|
$ | 305,335 | $ | $ | 305,335 | |||||||
Net
gains on securities held for deferred compensation
|
1,970 | 1,970 | ||||||||||
Foreign
currency gains
|
87 | 87 | ||||||||||
Total
revenues and other operating income
|
307,392 | 307,392 | ||||||||||
Expenses
|
||||||||||||
Employee
compensation and benefits
|
||||||||||||
Salaries,
incentive compensation and benefits
|
79,036 | 6,585 | (a) | 88,274 | ||||||||
2,653 | (b) | |||||||||||
Allocation
of Class B profits interests
|
33,663 | (33,663 | )(c) | — | ||||||||
Change
in redemption value of Class B profits interests
|
266,109 | (50,309 | )(c) | — | ||||||||
(215,800 | )(d) | |||||||||||
Tax
receivable agreement
|
97,909 | (97,909 | )(d) | — | ||||||||
Total
employee compensation and benefits
|
476,717 | (388,443 | ) | 88,274 | ||||||||
Shareholder
servicing and marketing
|
16,886 | 16,886 | ||||||||||
General
and administrative
|
42,317 | (2,653 | )(e) | 34,144 | ||||||||
(5,520 | )(f) | |||||||||||
Total
expenses
|
535,920 | (396,616 | ) | 139,304 | ||||||||
Operating
income before income tax expense
|
(228,528 | ) | 396,616 | 168,088 | ||||||||
Interest
income
|
327 | (327 | )(g) | — | ||||||||
Interest
expense
|
(1,194 | ) | (1,870 | )(h) | (3,064 | ) | ||||||
Net
gains (losses) on marketable securities
|
(528 | ) | (528 | ) | ||||||||
Non-operating
loss
|
(1,395 | ) | (2,197 | ) | (3,592 | ) | ||||||
Income
before income tax expense
|
(229,923 | ) | 394,419 | 164,496 | ||||||||
Income
tax expense
|
134,287 | (88,317 | )(d) | 69,830 | ||||||||
10,599 | (i) | |||||||||||
5,752 | (j) | |||||||||||
7,509 | (k) | |||||||||||
Net
income
|
(364,210 | ) | 458,876 | 94,666 | ||||||||
Less:
Net income attributable to non-controlling interests
|
14,104 | (10,852 | )(l) | 3,252 | ||||||||
Net
income attributable to Artio Global Investors
|
$ | (378,314 | ) | $ | 469,728 | $ | 91,414 | |||||
Basic
net income per share attributable to Artio Global
Investors
|
$ | (8.88 | ) | $ | 1.55 | |||||||
Diluted
net income per share attributable to Artio Global
Investors
|
$ | (8.88 | ) | $ | 1.55 | |||||||
Weighted
average shares used in basic net income per share attributable to Artio
Global Investors
|
42,620 | 16,270 | (m) | 58,890 | ||||||||
Weighted
average shares used in diluted net income per share attributable to Artio
Global Investors
|
42,620 | 17,470 | (n) | 60,090 |
Actual
|
Adjustments
|
Pro
Forma
|
||||||||||
(In
thousands, except per share amounts)
|
||||||||||||
Revenues
and other operating income:
|
||||||||||||
Investment
management fees
|
$ | 85,287 | $ | $ | 85,287 | |||||||
Net
gains on securities held for deferred compensation
|
321 | 321 | ||||||||||
Foreign
currency gains
|
23 | 23 | ||||||||||
Total
revenues and other operating income
|
85,631 | 85,631 | ||||||||||
Expenses
|
||||||||||||
Salaries,
incentive compensation and benefits
|
25,169 | (443 | )(a) | 24,726 | ||||||||
Shareholder
servicing and marketing
|
4,548 | 4,548 | ||||||||||
General
and administrative
|
10,285 | 10,285 | ||||||||||
Total
expenses
|
40,002 | (443 | ) | 39,559 | ||||||||
Operating
income before income tax expense
|
45,629 | 443 | 46,072 | |||||||||
Interest
income
|
1 | 1 | ||||||||||
Interest
expense
|
(661 | ) | (661 | ) | ||||||||
Net
(losses) on marketable securities
|
(1 | ) | (1 | ) | ||||||||
Non-operating
income (loss)
|
(661 | ) | (661 | ) | ||||||||
Income
before income tax expense
|
44,968 | 443 | 45,411 | |||||||||
Income
tax expense
|
14,767 | 193 | (i) | 19,142 | ||||||||
4,182 | (j) | |||||||||||
Net
income
|
30,201 | (3,932 | ) | 26,269 | ||||||||
Less:
Net income attributable to non-controlling interests
|
11,333 | (10,459 | )(l) | 874 | ||||||||
Net
income attributable to Artio Global Investors
|
18,868 | $ | 6,527 | $ | 25,395 | |||||||
$ | 0.42 | $ | 0.43 | |||||||||
Diluted
net income per share attributable to Artio Global
Investors
|
$ | 0.42 | $ | 0.43 | ||||||||
Weighted
average shares used in basic net income per share attributable to Artio
Global Investors
|
44,460 | 14,844 | (m) | 59,304 | ||||||||
Weighted
average shares used in diluted net income per share attributable to Artio
Global Investors
|
44,629 | 15,881 | (n) | 60,510 |
(a)
|
In
connection with the IPO, we granted 2,147,758 restricted stock units to
our employees (other than our Principals), approximating $56.4 million in
value (based on a price of $26.25 per share, which was the last reported
sale price of our Class A common stock on the NYSE on the date such
restricted stock units were awarded). Approximately $54.4 million of these
restricted stock units vest pro rata, on an annual basis, over a five-year
period from the date of grant. The remaining 74,500 restricted stock units
vested in February 2010. As the restricted stock units that vested in
February 2010 represent a non-recurring expense, they are assumed to have
vested immediately at the date of the completion of the IPO and to have
been outstanding during the entire period. This adjustment represents the
change in compensation expense associated only with the awards that vest
over a five-year period and assumes the completion of the IPO, and the
grant of restricted stock units in connection with the IPO, were made at
the beginning of 2009. Costs related to the amortization of the 74,500
restricted stock units vested in February 2010 are excluded from 2009 and
2010.
|
(b)
|
Upon
the completion of the IPO, each of the Principals entered into an
employment agreement with us that provided for an annual base salary of
not less than $0.5 million and an annual bonus for each calendar year,
targeted at a minimum of $3.5 million annually for each of the first two
years after the date of the completion of the IPO. This adjustment
represents the increase (net of deferrals) in compensation expense from
these contracts.
|
(c)
|
Prior
to the completion of the IPO, each Principal had a 15% Class B profits
interests in Investment Adviser, which was accounted for as compensation
expense. In connection with the IPO, each Principal exchanged his profits
interest for New Class A Units of Holdings, resulting in the compensation
liability being reclassified as equity. Accordingly, we no longer record
as a compensation expense the allocation of income relating to the profits
interests of the Principals or changes in the redemption value of each
Principal’s profits interests. These adjustments represent the reversal of
these compensation expenses, since the IPO is assumed to have occurred
prior to January 1, 2009.
|
(d)
|
We
incurred compensation charges (including the present value of projected
future benefits under the tax receivable agreement) as a result of
the Principals’ exchanges of their profits interests for New Class A
Units. Because these expenses are non-recurring (after the IPO), we have
eliminated them in this pro forma consolidated statement of operations. We
also excluded the existing $88.3 million deferred tax asset resulting from
the financial accounting treatment of prior years’ profits
interests.
|
(e)
|
Represents
license fees paid to GAM, our former sole stockholder, that were no longer
payable after the IPO. This adjustment represents the reversal of those
expenses that were paid in 2009.
|
(f)
|
Represents
expenses incurred during 2009 that were directly associated with the IPO
and that are not expected to recur.
|
(g)
|
We
earned interest in 2009 on certain balances that were held for
distribution to GAM. This adjustment represents the estimated decrease in
non-operating income in 2009 if these balances had been paid at the
beginning of 2009.
|
(h)
|
Represents
the additional interest expenses on the $60 million term debt facility of
Holdings that would have been paid had the debt been drawn down at the
beginning of 2009.
|
(i)
|
Reflects
the 2009 income tax expense relating to the 2009 adjustments set forth
above, including:
|
Pro
Forma
Footnote
Reference
|
||||
Increase/(decrease)
in pre-tax income:
|
||||
Increase
in compensation expense associated with share grants of restricted stock
units to employees
|
(a)
|
$(6.6)
million
|
||
Incremental
increase in salary and incentive compensation expense
|
(b)
|
(2.7)
|
Pro
Forma
Footnote
Reference
|
||||
Elimination
of compensation expense associated with the allocation of income relating
to profits interests
|
(c)
|
33.6
|
||
Elimination
of compensation charge associated with the changes in redemption value of
our Principals’ profits interests
|
(c)
|
*
|
||
Elimination
of compensation charges recorded upon the exchange of Class B profits
interests for New Class A Units
|
(d)
|
*
|
||
Elimination
of license fees expense that will be no longer paid to GAM
|
(e)
|
2.7
|
||
Elimination
of general and administrative costs directly associated with the
IPO
|
(f)
|
*
|
||
Elimination
of non-operating income associated with invested cash
balances
|
(g)
|
(0.3)
|
||
Increased
expenses due to interest costs, commitment fees, and amortization of
deferred financing costs
|
(h)
|
(1.9)
|
||
Decrease
in pre-tax income
|
24.8
|
|||
Effective
tax rate(1)
|
43%
|
|||
Tax
effect
|
$10.6
million
|
*
|
No
tax effect, as the IPO and related transactions are assumed to have
occurred prior to 2009.
|
(1)
|
Effective
tax rate utilized represents the incremental tax rate for the year ended
December 31, 2009.
|
Pro
Forma
Footnote
Reference
|
||||
Decrease
in compensation expense associated with share grants of restricted stock
units to employees
|
(a)
|
$0.4
million
|
||
Increase
in pre-tax income
|
0.4
|
|||
Effective
tax rate(1)
|
43%
|
|||
Tax
effect
|
$0.2
million
|
(1)
|
Effective
tax rate utilized represents the incremental tax rate for the quarter
ended March 31, 2010.
|
(j)
|
The
adjustments to 2009 and 2010 tax expense reflect the increase in the
expected tax rate following the exchange and sale of New Class A Units.
Currently, approximately 74% of our income is subject to the corporate tax
rate, and the remaining 26 percent is subject only to the much lower New
York City unincorporated business tax (“UBT”) rate. After the exchange and
sale, approximately 98% of our income will be subject to the corporate
business tax rate, and only 2% to the lower UBT
rate.
|
(k)
|
Represents
non-recurring tax benefits in 2009 primarily relating to the tax benefits
associated with the anticipated amendments of prior years’ tax returns as
well as a true up to reflect a lower apportionment of income for state and
local tax purposes.
|
(l)
|
Represent
adjustments to reduce the non-controlling interests of the Principals’
remaining interest in Holdings’ Income before income tax expense as a
result of the exchanges and sales of their New Class A
Units.
|
(m)
|
Adjustment
to reflect the following shares outstanding for 2009 and 2010 for basic
EPS (in thousands):
|
Common
shares outstanding immediately prior to IPO
|
42,000 | |||
Additional
shares issued in connection with IPO
|
2,400 | |||
Additional
shares being issued in connection with Exchange
|
10,700 | |||
Additional
shares being issued in this offering
|
3,700 |
Shares
issued to employees vesting in February 2010, assumed in this presentation
to vest upon issuance (see note (a) above)
|
75 | |||
Shares
issued to directors
|
15 | |||
Weighted
average shares outstanding during 2009
|
58,890 | |||
Shares
vesting to employees, one-fifth assumed vesting as of the beginning of
2010
|
414 | |||
Weighted
average shares outstanding during 2010
|
59,304 |
(n)
|
The
adjustments in 2009 and 2010 reflect the potentially dilutive effect of
these shares, as follows (in
thousands):
|
Weighted
average shares for basic EPS during 2009
|
58,890 | |||
Dilutive
potential of shares from exchange of remaining New Class A Units by the
Principals
|
1,200 | |||
Dilutive
potential of shares from grants of RSUs
|
– | |||
Weighted
average shares for diluted EPS during 2009
|
60,090 | |||
Weighted
average shares for basic EPS during 2010
|
59,304 | |||
Dilutive
potential of shares from exchange of remaining New Class A Units by the
Principals
|
1,200 | |||
Dilutive
potential of shares from grants of RSUs
|
6 | |||
Weighted
average shares for diluted EPS in 2010
|
60,510 |
(In
thousands, except shares and per share amounts)
|
Actual
|
Adjustments
|
Pro
Forma
|
|||||||||
Assets
|
||||||||||||
Cash
and cash equivalents
|
$ | 74,771 | $ | 75,554 | (b) | $ | 74,771 | |||||
(75,554 | )(b) | |||||||||||
Marketable
securities, at fair value
|
8,253 | 8,253 | ||||||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
55,065 | 55,065 | ||||||||||
Deferred
taxes, net
|
46,829 | 180,482 | (d) | 227,311 | ||||||||
Income
taxes receivable
|
11,668 | 11,668 | ||||||||||
Property
and equipment, net
|
7,290 | 7,290 | ||||||||||
Other
assets
|
6,201 | 6,201 | ||||||||||
Total
assets
|
$ | 210,077 | $ | 180,482 | $ | 390,559 | ||||||
Liabilities
and stockholders’ equity (deficit)
|
||||||||||||
Long-term
debt
|
$ | 60,000 | $ | $ | 60,000 | |||||||
Accrued
compensation and benefits
|
10,896 | 10,896 | ||||||||||
Accounts
payable and accrued expenses
|
7,146 | 7,146 | ||||||||||
Accrued
income taxes payable
|
20,006 | 20,006 | ||||||||||
Due
to affiliates
|
40,100 | 40,100 | ||||||||||
Amounts
payable pursuant to tax receivable agreement
|
33,655 | 153,410 | (d) | 187,065 | ||||||||
Other
liabilities
|
4,291 | 4,291 | ||||||||||
Total
liabilities
|
176,094 | 153,410 | 329,504 | |||||||||
Artio
Global Investors stockholders’ equity (deficit)
|
||||||||||||
Common
stock
|
||||||||||||
Class A
common stock — $0.001 par value per share,
500,000,000 shares authorized, 27,733,299 shares issued and
outstanding on an actual basis and 42,133,299 outstanding on a pro forma
basis
|
28 | 11 | (a) | 43 | ||||||||
4 | (b) | |||||||||||
Class B
common stock — $0.001 par value per share,
50,000,000 shares authorized, 15,600,000 shares issued and
outstanding on an actual basis and 1,200,000 shares issued and outstanding
on a pro forma basis
|
16 | (11 | )(a) | 1 | ||||||||
(4 | )(b) | |||||||||||
Class C
common stock — $0.01 par value per share, 210,000,000
authorized; 16,755,844 issued and outstanding on an actual and pro forma
basis
|
168 | 168 | ||||||||||
Additional
paid-in capital
|
590,499 | 5,135 | (c) | 624,481 | ||||||||
1,775 | (c) | |||||||||||
75,550 | (b) | |||||||||||
(75,550 | )(b) | |||||||||||
27,072 | (d) | |||||||||||
Accumulated
deficit
|
(564,214 | ) | (564,214 | ) | ||||||||
Total
stockholders’ equity
|
26,497 | 33,982 | 60,479 | |||||||||
(5,135 | )(c) | |||||||||||
Non-controlling
interests
|
7,486 | (1,775 | )(c) | 576 | ||||||||
Total
equity
|
33,983 | 27,072 | 61,055 | |||||||||
Total
liabilities and equity
|
$ | 210,077 | $ | 180,482 | $ | 390,559 |
(a)
|
Represents
the effect of each of the Principals exchanging an aggregate of 5,350,000
New Class A Units for an aggregate of 5,350,000 shares Class A common
stock (inclusive of the 3,000,000 New Class A Units each Principal
exchanged for shares of Class A common stock prior to this offering). At
the time of such exchanges, an aggregate of 10,700,000 shares Class B
common stock will be cancelled.
|
(b)
|
Represents
the proceeds of the issuance of 3,700,000 shares of Class A common stock
in this offering (assuming the underwriters do not exercise their option
to purchase additional shares) at an assumed price of $21.49 (the last
reported sale price for our Class A common stock on May 18, 2010, which is
the date on which each Principal exchanged 3,000,000 shares of New Class A
Units for 3,000,000 shares of Class A common stock), less underwriting
discount, and the use of the proceeds to purchase 1,850,000 New Class A
Units from each Principal. One share of Class B common stock
will be cancelled for each New Class A Unit purchased from a
Principal.
|
(c)
|
Represents
the reduction in non-controlling interests resulting from the exchange and
purchase of New Class A Units described in (a) and
(b).
|
(d)
|
Represents
the deferred tax benefit resulting from the increase in tax basis of
Holdings resulting from the exchange of an aggregate of 10,700,000 New
Class A Units by the Principals, as referred to in (a), at an assumed
closing price on an assumed March 31, 2010 exercise date of $21.49 per
share of Class A common stock (the last reported sale price for our Class
A common stock on May 18, 2010, which is the date on which each Principal
exchanged 3,000,000 shares of New Class A Units for 3,000,000 shares of
Class A common stock) , less underwriting discount, and the purchase by
us, from the Principals, of an aggregate of 3,700,000 New Class A Units.
Under the provisions of the tax receivable agreement, 85 percent of the
expected deferred tax benefit is payable to the
Principals.
|
|
·
|
General Overview.
Beginning on page 43, we provide a summary of our overall business, our
2009 initial public offering (“IPO”) and the economic
environment.
|
|
·
|
Key Performance
Indicators. Beginning on page 45, we discuss some of the operating
and financial indicators that guide management’s review of our
performance.
|
|
·
|
Assets Under
Management. Beginning on page 48, 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 pages 51, 56 and 63, we discuss our revenue
and other operating income compared to the corresponding period a year
ago.
|
|
·
|
Operating Expenses.
Beginning on pages 52, 57 and 63, we discuss our operating expenses
compared to the corresponding period a year
ago.
|
|
·
|
Non-operating Income
(Loss). Beginning on pages 53, 58 and 64, we discuss our
non-operating income (loss) compared to the corresponding period a year
ago.
|
|
·
|
Income Taxes. Beginning
on pages 53, 58 and 65, we discuss our effective tax rates compared to the
corresponding period a year ago.
|
|
·
|
Liquidity and Capital
Resources. Beginning on page 65, we discuss our working capital as
of March 31, 2010, and December 31, 2009, and cash flows for the first
three months of 2010 and 2009. Also included is a discussion of the amount
of financial capacity available to help fund our future
activities.
|
|
·
|
New Accounting
Standards. Beginning on page 68, we discuss new accounting
pronouncements that may apply to
us.
|
For
the Three Months Ended March 31,
|
For
the Years Ended December 31,
|
|||||||||||||||||||
(in
millions, except basis points, percentages and per share
amounts)
|
2010
|
2009
|
2009
|
2008
|
2007
|
|||||||||||||||
Operating
indicators(1)
|
||||||||||||||||||||
AuM
at end of period
|
$ | 56,417 | $ | 38,941 | $ | 55,993 | $ | 45,200 | $ | 75,362 | ||||||||||
Average
AuM for period(2)
|
54,711 | 40,711 | 48,166 | 64,776 | 66,619 | |||||||||||||||
Net
client cash flows
|
95 | 222 | 338 | 1,930 | 12,150 | |||||||||||||||
Financial
indicators
|
||||||||||||||||||||
Investment
management fees
|
85 | 63 | 305 | 425 | 446 | |||||||||||||||
Effective
fee rate (basis points)(3)
|
63.2 | 62.6 | 63.4 | 65.6 | 66.9 | |||||||||||||||
Adjusted
operating income(4)
|
49 | 34 | 173 | 252 | 280 | |||||||||||||||
Adjusted
operating margin(5)
|
57.0 | % | 54.9 | % | 56.4 | % | 59.8 | % | 62.7 | % | ||||||||||
Adjusted
EBITDA(4)
|
50 | 35 | 176 | 255 | 282 | |||||||||||||||
Adjusted
EBITDA margin(5)
|
58.1 | % | 55.9 | % | 57.4 | % | 60.5 | % | 63.1 | % | ||||||||||
Adjusted
compensation ratio(4)(6)
|
25.7 | % | 27.1 | % | 24.3 | % | 19.8 | % | 20.4 | % | ||||||||||
Adjusted
net income attributable to Artio Global Investors(4)
|
27 | 19 | 105 | 143 | 156 | |||||||||||||||
Diluted
earnings per share
|
$ | 0.42 | $ | 0.07 | $ | (8.88 | ) | $ | 1.46 | $ | 1.62 | |||||||||
Adjusted
diluted earnings per share(7)
|
$ | 0.46 | $ | 0.32 | $ | 1.75 | $ | 2.38 | $ | 2.61 |
(1)
|
Excluding
legacy activities.
|
(2)
|
Average
AuM for a period is computed on the beginning-of-first-month balance and
all end-of-month balances within the
period.
|
(3)
|
The
effective fee rate is computed by dividing annualized investment
management fees (based on the number of days in the period) by average AuM
for the period.
|
(4)
|
Represents
financial measures that are not presented in accordance with U.S.
Generally Accepted Accounting Principles (“GAAP”). See “— Adjusted
Performance Measures” for reconciliations of these items to the most
directly comparable GAAP items (Employee compensation and
benefits to Adjusted compensation; Operating income before income
tax expense to Adjusted operating income; Net income attributable to
Artio Global Investors to Adjusted Earnings before Interest, Taxes,
Depreciation and Amortization (“EBITDA”); and Net income attributable to
Artio Global Investors to Adjusted net income attributable to Artio
Global Investors).
|
(5)
|
Adjusted
operating and Adjusted EBITDA margins are calculated by dividing Adjusted
operating income and Adjusted EBITDA by Total revenues and other
operating income.
|
(6)
|
Calculated
as Adjusted compensation(4) divided by Total revenues and other
operating income.
|
(7)
|
Adjusted
diluted earnings per share is calculated by dividing Adjusted net income
attributable to Artio Global Investors by Adjusted weighted average
diluted shares. See “— Adjusted Performance Measures”
.
|
Three
Months Ended March 31,
|
Years
Ended December 31,
|
|||||||||||||||||||
(in
millions)
|
2010
|
2009
|
2009
|
2008
|
2007
|
|||||||||||||||
Employee
compensation and benefits
|
$ | 25 | $ | 45 | $ | 477 | $ | 223 | $ | 253 | ||||||||||
Less
compensation adjustments:
|
||||||||||||||||||||
Allocation
of Class B profits interests
|
— | 10 | 34 | 76 | 84 | |||||||||||||||
Change
in redemption value of Class B profits interests
|
— | 18 | 266 | 54 | 77 | |||||||||||||||
Tax
receivable agreement
|
— | — | 98 | — | — | |||||||||||||||
Principals’
deferred compensation
|
— | — | — | 9 | 1 | |||||||||||||||
Amortization
expense of IPO-related RSU grants
|
3 | — | 4 | — | — | |||||||||||||||
Total
compensation adjustments
|
3 | 28 | 402 | 139 | 162 | |||||||||||||||
Adjusted
compensation
|
$ | 22 | $ | 17 | $ | 75 | $ | 84 | $ | 91 | ||||||||||
Operating
income before income tax expense
|
46 | 6 | (229 | ) | 113 | 118 | ||||||||||||||
Add:
total compensation adjustments
|
3 | 28 | 402 | 139 | 162 | |||||||||||||||
Adjusted
operating income
|
$ | 49 | $ | 34 | $ | 173 | $ | 252 | $ | 280 | ||||||||||
Net
income attributable to Artio Global Investors
|
$ | 19 | $ | 3 | $ | (378 | ) | $ | 61 | $ | 68 | |||||||||
Add:
net income attributable to non-controlling interests
|
11 | — | 14 | — | — | |||||||||||||||
Add:
income taxes
|
15 | 3 | ||||||||||||||||||
Less:
income from discontinued operations, net of tax
|
— | — | — | — | (2 | ) | ||||||||||||||
Add:
income taxes relating to income from continuing operations
|
— | — | 134 | 55 | 59 | |||||||||||||||
Less:
non-operating (income) loss(1)
|
1 | — | 1 | (3 | ) | (7 | ) | |||||||||||||
Add:
depreciation and amortization(2)
|
1 | 1 | 3 | 3 | 2 | |||||||||||||||
Add:
total compensation adjustments
|
3 | 28 | 402 | 139 | 162 | |||||||||||||||
Adjusted
EBITDA
|
$ | 50 | $ | 35 | $ | 176 | $ | 255 | $ | 282 | ||||||||||
Net
income attributable to Artio Global Investors
|
$ | 19 | $ | 3 | $ | (378 | ) | $ | 61 | $ | 68 | |||||||||
Add:
net income attributable to non-controlling interests
|
11 | — | 14 | — | — | |||||||||||||||
Less:
income from discontinued operations, net of tax
|
— | — | — | — | (2 | ) | ||||||||||||||
Tax
impact of adjustments
|
(6 | ) | (12 | ) | 67 | (57 | ) | (72 | ) | |||||||||||
Add:
total compensation adjustments
|
3 | 28 | 402 | 139 | 162 | |||||||||||||||
Adjusted
net income attributable to Artio Global Investors
|
$ | 27 | $ | 19 | $ | 105 | $ | 143 | $ | 156 | ||||||||||
Weighted
average diluted shares
|
45 | 42 | 43 | 42 | 42 | |||||||||||||||
Adjusted
weighted average diluted shares(3)
|
60 | 60 | 60 | 60 | 60 |
(1)
|
Non-operating income
(loss) represents primarily interest income and expense, including
gains and losses on interest-bearing marketable
securities.
|
(2)
|
Excludes
amortization expense associated with one-time equity awards granted at the
time of the IPO, as such expense is included in total compensation
adjustments.
|
(3)
|
Adjusted
weighted average diluted shares assumes Investors ownership structure
following the IPO was in effect at the beginning of each period and that
the Principals have exchanged all of their New Class A Units for Class A
common stock. These figures do not reflect the purchase of New Class A
Units and, in the event that the underwriters exercise their option to
purchase additional shares, the repurchase of Class A common stock, in
connection with this offering.
|
|
·
|
investment
performance, including fluctuations in both the financial markets and
foreign currency exchange rates and our investment
decisions;
|
|
·
|
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; and
|
|
·
|
High
Yield.
|
As
of March 31,
|
As
a % of AuM as of March 31,
|
|||||||||||||||
(in
millions, except percentages)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Proprietary
funds(1)
|
||||||||||||||||
A shares
|
$ | 7,851 | $ | 5,309 | ||||||||||||
I shares(2)
|
16,900 | 11,058 | ||||||||||||||
Total
|
24,751 | 16,367 | 43.9 | % | 42.0 | % | ||||||||||
Institutional
commingled funds
|
9,256 | 5,943 | 16.4 | 15.3 | ||||||||||||
Separate
accounts
|
17,786 | 12,757 | 31.5 | 32.8 | ||||||||||||
Sub-advisory
accounts
|
4,624 | 3,874 | 8.2 | 9.9 | ||||||||||||
Ending
AuM
|
$ | 56,417 | $ | 38,941 | $ | 100.0 | % | $ | 100.0 | % |
(1)
|
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; and Artio U.S. Smallcap
Fund.
|
(2)
|
Amounts
invested in private offshore funds are categorized as “I”
shares.
|
As
of December 31,
|
As
a % of AuM as of December 31,
|
|||||||||||||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
2007
|
2009
|
2008
|
2007
|
||||||||||||||||||
Proprietary
funds(1)
|
||||||||||||||||||||||||
A shares
|
$ | 7,919 | $ | 6,251 | $ | 13,217 | ||||||||||||||||||
I shares(2)
|
16,563 | 13,215 | 23,900 | |||||||||||||||||||||
Total
|
24,482 | 19,466 | 37,117 | 43.7 | % | 43.1 | % | 49.3 | % | |||||||||||||||
Institutional
commingled funds
|
9,198 | 7,056 | 9,357 | 16.4 | 15.6 | 12.4 | ||||||||||||||||||
Separate
accounts
|
17,854 | 14,342 | 22,897 | 31.9 | 31.7 | 30.4 | ||||||||||||||||||
Sub-advisory
accounts
|
4,459 | 4,336 | 5,991 | 8.0 | 9.6 | 7.9 | ||||||||||||||||||
Legacy
activities(3)
|
─
|
4 |
─
|
─
|
─
|
─
|
||||||||||||||||||
Ending
AuM
|
$ | 55,993 | $ | 45,204 | $ | 75,362 | 100.0 | % | 100.0 | % | 100.0 | % |
(1)
|
Proprietary
funds include both SEC registered funds and private offshore funds. SEC
registered mutual funds within 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; and
Artio U.S. Smallcap Fund.
|
(2)
|
Amounts
invested in private offshore funds are categorized as “I”
shares.
|
(3)
|
Legacy
activities relate to a hedge fund product which we discontinued in the
fourth quarter of 2008.
|
Three
Months Ended March 31,
|
||||||||||||
(in
millions, except percentages)
|
2010
|
2009
|
%
Change
|
|||||||||
Proprietary
Funds:
|
||||||||||||
Beginning
AuM
|
$ | 24,482 | $ | 19,466 | 26 | % | ||||||
Gross
client cash inflows
|
2,021 | 1,908 | 6 | |||||||||
Gross
client cash outflows
|
(1,995 | ) | (1,970 | ) | (1 | ) | ||||||
Net
client cash flows
|
26 | (62 | ) | 142 | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
26 | (62 | ) | 142 | ||||||||
Market
appreciation (depreciation)
|
243 | (3,037 | ) | 108 | ||||||||
Ending
AuM
|
24,751 | 16,367 | 51 | |||||||||
Institutional
Commingled Funds:
|
||||||||||||
Beginning
AuM
|
9,198 | 7,056 | 30 | |||||||||
Gross
client cash inflows
|
302 | 270 | 12 | |||||||||
Gross
client cash outflows
|
(262 | ) | (302 | ) | 13 | |||||||
Net
client cash flows
|
40 | (32 | ) | 225 | ||||||||
Transfers
between investment vehicles
|
─
|
(4 | ) | 100 | ||||||||
Total
client cash flows
|
40 | (36 | ) | 211 | ||||||||
Market
appreciation (depreciation)
|
18 | (1,077 | ) | 102 | ||||||||
Ending
AuM
|
9,256 | 5,943 | 56 | |||||||||
Separate
Accounts:
|
||||||||||||
Beginning
AuM
|
17,854 | 14,342 | 24 |
Three
Months Ended March 31,
|
||||||||||||
(in
millions, except percentages)
|
2010
|
2009
|
%
Change
|
|||||||||
Gross
client cash inflows
|
418 | 563 | (26 | ) | ||||||||
Gross
client cash outflows
|
(567 | ) | (273 | ) | (108 | ) | ||||||
Net
client cash flows
|
(149 | ) | 290 | (151 | ) | |||||||
Transfers
between investment vehicles
|
─
|
4 | (100 | ) | ||||||||
Total
client cash flows
|
(149 | ) | 294 | (151 | ) | |||||||
Market
appreciation (depreciation)
|
81 | (1,879 | ) | 104 | ||||||||
Ending
AuM
|
17,786 | 12,757 | 39 | |||||||||
Sub-advisory
Accounts:
|
||||||||||||
Beginning
AuM
|
4,459 | 4,336 | 3 | |||||||||
Gross
client cash inflows
|
313 | 204 | 53 | |||||||||
Gross
client cash outflows
|
(135 | ) | (178 | ) | 24 | |||||||
Net
client cash flows
|
178 | 26 | 584 | |||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
178 | 26 | 584 | |||||||||
Market
appreciation (depreciation)
|
(13 | ) | (488 | ) | 97 | |||||||
Ending
AuM
|
4,624 | 3,874 | 19 | |||||||||
Legacy
Activities:
|
||||||||||||
Beginning
AuM
|
─
|
4 | (100 | ) | ||||||||
Gross
client cash inflows
|
─
|
─
|
─
|
|||||||||
Gross
client cash outflows
|
─
|
─
|
─
|
|||||||||
Net
client cash flows
|
─
|
─
|
─
|
|||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
─
|
─
|
─
|
|||||||||
Market
appreciation (depreciation)
|
─
|
(4 | ) | 100 | ||||||||
Ending
AuM
|
─
|
─
|
─
|
|||||||||
Total
AuM:
|
||||||||||||
Beginning
AuM
|
55,993 | 45,204 | 24 | |||||||||
Gross
client cash inflows
|
3,054 | 2,945 | 4 | |||||||||
Gross
client cash outflows
|
(2,959 | ) | (2,723 | ) | (9 | ) | ||||||
Net
client cash flows
|
95 | 222 | (57 | ) | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
95 | 222 | (57 | ) | ||||||||
Market
appreciation (depreciation)
|
329 | (6,485 | ) | 105 | ||||||||
Ending
AuM
|
56,417 | 38,941 | 45 | |||||||||
Total
AuM (excluding legacy activities):
|
||||||||||||
Beginning
AuM
|
55,993 | 45,200 | 24 | |||||||||
Gross
client cash inflows
|
3,054 | 2,945 | 4 | |||||||||
Gross
client cash outflows
|
(2,959 | ) | (2,723 | ) | (9 | ) | ||||||
Net
client cash flows
|
95 | 222 | (57 | ) | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
95 | 222 | (57 | ) | ||||||||
Market
appreciation (depreciation)
|
329 | (6,481 | ) | 105 | ||||||||
Ending
AuM
|
$ | 56,417 | $ | 38,941 | 45 |
Three
Months Ended March 31,
|
||||||||||||
(in
millions, except percentages)
|
2010
|
2009
|
%
Change
|
|||||||||
Market
appreciation (depreciation) (excluding legacy activities):
|
||||||||||||
International
Equity I
|
$ | 60 | $ | (3,485 | ) | 102 | % | |||||
International
Equity II
|
(12 | ) | (2,968 | ) | 100 | |||||||
Other
strategies
|
281 | (28 | ) | 1,104 | ||||||||
Total
market appreciation (depreciation)
|
$ | 329 | $ | (6,481 | ) | 105 |
Three
Months Ended March 31,
|
||||||||||||
(in
thousands, except for Average AuM, effective fee rate and
percentages)
|
2010
|
2009
|
%
Change
|
|||||||||
Average
AuM (in millions)(1)
|
$ | 54,711 | $ | 40,711 | 34 | % | ||||||
Effective
fee rate (basis points)
|
63.2 | 62.6 | 0.6 | bp | ||||||||
Investment
management fees
|
$ | 85,286.5 | $ | 62,815.8 | 36 | % | ||||||
Net
gains (losses) on securities held for deferred
compensation
|
321.4 | (273.3 | ) | 218 | ||||||||
Foreign
currency gains (losses)
|
23.2 | (15.6 | ) | 249 | ||||||||
Total
revenues and other operating income
|
$ | 85,631.1 | $ | 62,526.9 | 37 |
(1)
|
Excluding
legacy activities.
|
Three
Months Ended March 31,
|
||||||||||||
(in
thousands, except percentages)
|
2010
|
2009
|
%
Change
|
|||||||||
Total
employee compensation and benefits
|
$ | 25,168.7 | $ | 45,281.1 | * | % | ||||||
Shareholder
servicing and marketing
|
4,548.3 | 3,069.4 | 48 | |||||||||
General
and administrative
|
10,285.3 | 8,173.4 | 26 | |||||||||
Total
operating expenses
|
$ | 40,002.3 | $ | 56,523.9 | * |
*
|
Calculation
not meaningful, due to the impact of the reorganization transactions in
connection with the IPO.
|
Three
Months Ended March 31,
|
||||||||||||
(in
thousands, except percentages)
|
2010
|
2009
|
%
Change
|
|||||||||
Salaries,
incentive compensation and benefits
|
$ | 25,168.7 | $ | 16,939.9 | 49 | % | ||||||
Allocation
of Class B profits interests(1)
|
─
|
10,215.2 | * | |||||||||
Change
in redemption value of Class B profits interests(1)
|
─
|
18,126.0 | * | |||||||||
Total
employee compensation and benefits
|
25,168.7 | 45,281.1 | * |
*
|
Calculation
not meaningful, due to the impact of the reorganization transactions in
connection with the IPO.
|
(1)
|
At
the time of the IPO (see “— General Overview — Initial
Public Offering and Changes in Principals’ Interests”), the Class B
profits interests were exchanged for New Class A Units that are reflected
as equity subsequent to the IPO.
|
Three
Months Ended March 31,
|
||||||||||||
(in
thousands, except percentages)
|
2010
|
2009
|
%
Change
|
|||||||||
Total
non-operating income (loss)
|
$ | (660.6 | ) | $ | (81.0 | ) | (716 | )% |
Years
Ended December 31,
|
||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Proprietary
Funds:
|
||||||||||||
Beginning
AuM
|
$ | 19,466 | $ | 37,117 | (48 | )% | ||||||
Gross
client cash inflows
|
7,659 | 8,716 | (12 | ) | ||||||||
Gross
client cash outflows
|
(7,038 | ) | (10,973 | ) | 36 | |||||||
Net
client cash flows
|
621 | (2,257 | ) | 128 | ||||||||
Transfers
between investment vehicles
|
(38 | ) | (188 | ) | 80 | |||||||
Total
client cash flows
|
583 | (2,445 | ) | 124 | ||||||||
Market
appreciation (depreciation)
|
4,433 | (15,206 | ) | 129 | ||||||||
Ending
AuM
|
24,482 | 19,466 | 26 | |||||||||
Institutional
Commingled Funds:
|
||||||||||||
Beginning
AuM
|
7,056 | 9,357 | (25 | ) | ||||||||
Gross
client cash inflows
|
1,391 | 3,617 | (62 | ) | ||||||||
Gross
client cash outflows
|
(1,118 | ) | (1,135 | ) | 1 | |||||||
Net
client cash flows
|
273 | 2,482 | (89 | ) | ||||||||
Transfers
between investment vehicles
|
29 | 194 | (85 | ) | ||||||||
Total
client cash flows
|
302 | 2,676 | (89 | ) | ||||||||
Market
appreciation (depreciation)
|
1,840 | (4,977 | ) | 137 | ||||||||
Ending
AuM
|
9,198 | 7,056 | 30 | |||||||||
Separate
Accounts:
|
||||||||||||
Beginning
AuM
|
14,342 | 22,897 | (37 | ) | ||||||||
Gross
client cash inflows
|
2,273 | 2,361 | (4 | ) | ||||||||
Gross
client cash outflows
|
(2,028 | ) | (1,803 | ) | (12 | ) | ||||||
Net
client cash flows
|
245 | 558 | (56 | ) | ||||||||
Transfers
between investment vehicles
|
9 | (53 | ) | 117 | ||||||||
Total
client cash flows
|
254 | 505 | (50 | ) | ||||||||
Market
appreciation (depreciation)
|
3,258 | (9,060 | ) | 136 | ||||||||
Ending
AuM
|
17,854 | 14,342 | 24 | |||||||||
Sub-advisory
Accounts:
|
||||||||||||
Beginning
AuM
|
4,336 | 5,991 | (28 | ) | ||||||||
Gross
client cash inflows
|
768 | 2,557 | (70 | ) | ||||||||
Gross
client cash outflows
|
(1,569 | ) | (1,410 | ) | (11 | ) | ||||||
Net
client cash flows
|
(801 | ) | 1,147 | (170 | ) | |||||||
Transfers
between investment vehicles
|
─
|
47 | (100 | ) | ||||||||
Total
client cash flows
|
(801 | ) | 1,194 | (167 | ) | |||||||
Market
appreciation (depreciation)
|
924 | (2,849 | ) | 132 | ||||||||
Ending
AuM
|
4,459 | 4,336 | 3 | |||||||||
Legacy
Activities:
|
||||||||||||
Beginning
AuM
|
4 |
─
|
─
|
|||||||||
Gross
client cash inflows
|
─
|
44 | (100 | ) | ||||||||
Gross
client cash outflows
|
─
|
(35 | ) | 100 | ||||||||
Net
client cash flows
|
─
|
9 | (100 | ) | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
─
|
9 | (100 | ) | ||||||||
Market
appreciation (depreciation)
|
(4 | ) | (5 | ) | 20 | |||||||
Ending
AuM
|
─
|
4 | (100 | ) | ||||||||
Total
AuM:
|
||||||||||||
Beginning
AuM
|
45,204 | 75,362 | (40 | ) | ||||||||
Gross
client cash inflows
|
12,091 | 17,295 | (30 | ) | ||||||||
Gross
client cash outflows
|
(11,753 | ) | (15,356 | ) | 23 | |||||||
Net
client cash flows
|
338 | 1,939 | (83 | ) | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
338 | 1,939 | (83 | ) | ||||||||
Market
appreciation (depreciation)
|
10,451 | (32,097 | ) | 133 | ||||||||
Ending
AuM
|
55,993 | 45,204 | 24 |
Years
Ended December 31,
|
||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Total
AuM (excluding legacy activities):
|
||||||||||||
Beginning
AuM
|
45,200 | 75,362 | (40 | ) | ||||||||
Gross
client cash inflows
|
12,091 | 17,251 | (30 | ) | ||||||||
Gross
client cash outflows
|
(11,753 | ) | (15,321 | ) | 23 | |||||||
Net
client cash flows
|
338 | 1,930 | (82 | ) | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
338 | 1,930 | (82 | ) | ||||||||
Market
appreciation (depreciation)
|
10,455 | (32,092 | ) | 133 | ||||||||
Ending
AuM
|
$ | 55,993 | $ | 45,200 | 24 |
Year
Ended December 31,
|
||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Market
appreciation (depreciation) (excluding legacy activities):
|
||||||||||||
International
Equity I
|
$ | 4,105 | $ | (17,916 | ) | 123 | % | |||||
International
Equity II
|
4,919 | (13,288 | ) | 137 | ||||||||
Other
strategies
|
1,431 | (888 | ) | 261 | ||||||||
Total
market appreciation (depreciation)
|
10,455 | (32,092 | ) | 133 |
(in
millions)
|
Total(1)
|
Level
1
Quoted
Prices
|
Level
2
Other
Observable Inputs
|
Level
3 Significant Unobservable Inputs
|
||||||||||||
December
31, 2008:
|
||||||||||||||||
Proprietary
funds
|
$ | 15,802 | $ | 13,545 | $ | 1,817 | $ | 440 | ||||||||
Institutional
commingled funds
|
6,494 | 6,384 | 79 | 31 | ||||||||||||
December
31, 2009:
|
||||||||||||||||
Proprietary
funds
|
23,813 | 1,987 | 21,482 | 344 | ||||||||||||
Institutional
commingled Funds
|
8,998 | 1,894 | 7,069 | 35 |
(in
millions)
|
Total(1)
|
Level
1
Quoted
Prices
|
Level
2
Other
Observable Inputs
|
Level
3 Significant Unobservable Inputs
|
||||||||||||
December
31, 2008
|
$ | 17,958 | $ | 14,061 | $ | 3,753 | $ | 144 | ||||||||
December
31, 2009
|
21,698 | 17,272 | 4,368 | 58 |
Years
Ended December 31,
|
||||||||||||
(in
thousands, except for Average AuM, effective fee rate and
percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Average
AuM (in millions)(1)
|
$ | 48,166 | $ | 64,776 | (26 | )% | ||||||
Effective
fee rate (basis points)
|
63.4 | 65.6 | (2.2 | )bp | ||||||||
Investment
management fees
|
$ | 305,334.9 | $ | 425,002.6 | (28 | )% | ||||||
Net
gains (losses) on securities held for deferred
compensation
|
1,970.1 | (2,856.5 | ) | 169 | ||||||||
Foreign
currency gains (losses)
|
87.0 | (100.6 | ) | 186 | ||||||||
Total
revenues and other operating income
|
$ | 307,392.0 | $ | 422,045.5 | (27 | ) |
(1)
|
Excluding
legacy activities.
|
Years Ended
December 31,
|
||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Total
employee compensation and benefits
|
$ | 476,716.6 | $ | 223,118.3 | * | % | ||||||
Shareholder
servicing and marketing
|
16,886.0 | 23,369.1 | (28 | ) | ||||||||
General
and administrative
|
42,317.1 | 62,833.1 | (33 | ) | ||||||||
Total
operating expenses
|
$ | 535,919.7 | $ | 309,320.5 | * |
*
|
Calculation
not meaningful, due to the impact of the reorganization transactions in
connection with the IPO.
|
Years
Ended
December
31,
|
||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Salaries,
incentive compensation and benefits
|
$ | 79,035.7 | $ | 92,487.1 | (15 | )% | ||||||
Allocation
of Class B profits interests(1)
|
33,662.5 | 76,073.8 | (56 | ) | ||||||||
Change
in redemption value of Class B profits interests(1)
|
266,109.8 | 54,557.4 | * | |||||||||
Tax
receivable agreement
|
97,908.6 | − | * | |||||||||
Total
employee compensation and benefits
|
$ | 476,716.6 | $ | 223,118.3 | * |
*
|
Calculation
not meaningful, due to the impact of the IPO and the related
transactions.
|
(1)
|
At
the time of the IPO (see “— General Overview — Initial
Public Offering and Changes in Principals’ Interests”), the Class B
profits interests were exchanged for New Class A Units that are reflected
as equity subsequent to the IPO.
|
Years
Ended
December
31,
|
||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Total
non-operating income (loss)
|
$ | (1,395.4 | ) | $ | 3,181.4 | (144 | )% | |||||
Average
invested funds(1)
|
68,276.3 | 149,146.5 | (54 | ) |
(1)
|
Computed
using the beginning and ending balances for the period of cash equivalents
and marketable securities, exclusive of securities held for deferred
compensation.
|
Years
Ended
December
31,
|
||||||||||||
(in
millions, except percentages)
|
2008
|
2007
|
%
Change
|
|||||||||
Proprietary
Funds:
|
||||||||||||
Beginning
AuM
|
$ | 37,117 | $ | 26,600 | 40 | % | ||||||
Gross
client cash inflows
|
8,716 | 10,999 | (21 | ) | ||||||||
Gross
client cash outflows
|
(10,973 | ) | (5,103 | ) | (115 | ) | ||||||
Net
client cash flows
|
(2,257 | ) | 5,896 | (138 | ) | |||||||
Transfers
between investment vehicles
|
(188 | ) | (92 | ) | (104 | ) | ||||||
Total
client cash flows
|
(2,445 | ) | 5,804 | (142 | ) | |||||||
Market
appreciation (depreciation)
|
(15,206 | ) | 4,713 | (423 | ) | |||||||
Ending
AuM
|
19,466 | 37,117 | (48 | ) | ||||||||
Institutional
Commingled Funds:
|
||||||||||||
Beginning
AuM
|
9,357 | 5,676 | 65 | |||||||||
Gross
client cash inflows
|
3,617 | 2,886 | 25 | |||||||||
Gross
client cash outflows
|
(1,135 | ) | (813 | ) | (40 | ) | ||||||
Net
client cash flows
|
2,482 | 2,073 | 20 | |||||||||
Transfers
between investment vehicles
|
194 | 371 | (48 | ) | ||||||||
Total
client cash flows
|
2,676 | 2,444 | 9 | |||||||||
Market
appreciation (depreciation)
|
(4,977 | ) | 1,237 | (502 | ) | |||||||
Ending
AuM
|
7,056 | 9,357 | (25 | ) | ||||||||
Separate
Accounts:
|
||||||||||||
Beginning
AuM
|
22,897 | 16,574 | 38 | |||||||||
Gross
client cash inflows
|
2,361 | 5,928 | (60 | ) | ||||||||
Gross
client cash outflows
|
(1,803 | ) | (2,315 | ) | 22 | |||||||
Net
client cash flows
|
558 | 3,613 | (85 | ) | ||||||||
Transfers
between investment vehicles
|
(53 | ) | (279 | ) | 81 | |||||||
Total
client cash flows
|
505 | 3,334 | (85 | ) | ||||||||
Market
appreciation (depreciation)
|
(9,060 | ) | 2,989 | (403 | ) | |||||||
Ending
AuM
|
14,342 | 22,897 | (37 | ) | ||||||||
Sub-advisory
Accounts:
|
||||||||||||
Beginning
AuM
|
5,991 | 4,636 | 29 | |||||||||
Gross
client cash inflows
|
2,557 | 1,359 | 88 | |||||||||
Gross
client cash outflows
|
(1,410 | ) | (791 | ) | 78 | |||||||
Net
client cash flows
|
1,147 | 568 | 102 | |||||||||
Transfers
between investment vehicles
|
47 |
─
|
100 | |||||||||
Total
client cash flows
|
1,194 | 568 | 110 | |||||||||
Market
appreciation (depreciation)
|
(2,849 | ) | 787 | (462 | ) | |||||||
Ending
AuM
|
4,336 | 5,991 | (28 | ) | ||||||||
Legacy
Activities:
|
||||||||||||
Beginning
AuM
|
─
|
─
|
─
|
|||||||||
Gross
client cash inflows
|
44 |
─
|
─
|
|||||||||
Gross
client cash outflows
|
(35 | ) |
─
|
─
|
||||||||
Net
client cash flows
|
9 |
─
|
─
|
|||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
9 |
─
|
─
|
|||||||||
Market
appreciation (depreciation)
|
(5 | ) |
─
|
─
|
||||||||
Ending
AuM
|
4 |
─
|
─
|
|||||||||
Total
AuM:
|
||||||||||||
Beginning
AuM
|
75,362 | 53,486 | 41 | |||||||||
Gross
client cash inflows
|
17,295 | 21,172 | (18 | ) | ||||||||
Gross
client cash outflows
|
(15,356 | ) | (9,022 | ) | (70 | ) | ||||||
Net
client cash flows
|
1,939 | 12,150 | (84 | ) | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
1,939 | 12,150 | (84 | ) | ||||||||
Market
appreciation (depreciation)
|
(32,097 | ) | 9,726 | (430 | ) | |||||||
Ending
AuM
|
45,204 | 75,362 | (40 | ) | ||||||||
Total
AuM (excluding legacy activities):
|
||||||||||||
Beginning
AuM
|
75,362 | 53,486 | 41 | |||||||||
Gross
client cash inflows
|
17,251 | 21,172 | (19 | ) | ||||||||
Gross
client cash outflows
|
(15,321 | ) | (9,022 | ) | (70 | ) | ||||||
Net
client cash flows
|
1,930 | 12,150 | (84 | ) | ||||||||
Transfers
between investment vehicles
|
─
|
─
|
─
|
|||||||||
Total
client cash flows
|
1,930 | 12,150 | (84 | ) | ||||||||
Market
appreciation (depreciation)
|
(32,092 | ) | 9,726 | (430 | ) | |||||||
Ending
AuM
|
$ | 45,200 | $ | 75,362 | (40 | ) |
Years
Ended December 31,
|
||||||||||||
(in
millions, except percentages)
|
2008
|
2007
|
%
Change
|
|||||||||
Market
appreciation (depreciation) (excluding legacy activities):
|
||||||||||||
International
Equity I
|
$ | (17,916 | ) | $ | 6,372 | (381 | )% | |||||
International
Equity II
|
(13,288 | ) | 2,803 | (574 | ) | |||||||
Other
strategies
|
(888 | ) | 551 | (261 | ) | |||||||
Total
market appreciation (depreciation)
|
(32,092 | ) | 9,726 | (430 | ) |
·
|
fundamental
analytical data relating to the investment and its
issuer;
|
·
|
the
value of other comparable securities or relevant financial instruments,
including derivative securities, traded on other markets or among
dealers;
|
·
|
an
evaluation of the forces which influence the market in which these
securities are purchased and sold (e.g., the existence of
merger proposals or tender offers for similarly situated companies that
might affect the value of the
security);
|
·
|
information
obtained from the issuer, analysts, other financial institutions and/or
the appropriate stock exchange (for exchange-traded
securities);
|
·
|
government
(domestic or foreign) actions or
pronouncements; and
|
·
|
other
news events.
|
As
of December 31,
|
%
of Ending
|
|||||||
(in
millions, except percentages)
|
2007
|
AuM
|
||||||
Independent
pricing agents using quoted market prices
|
$ | 11,734 | 31.6 | % | ||||
Independent
pricing agents using adjusted market prices to reflect “best” price at
U.S. market closing
|
23,709 | 63.9 | ||||||
Other
|
1,674 | 4.5 | ||||||
Ending
AuM
|
$ | 37,117 | 100.0 | % |
As
of December 31,
|
%
of Ending
|
|||||||
(in
millions, except percentages)
|
2007
|
AuM
|
||||||
Independent
pricing agents using quoted market prices
|
$ | 28,179 | 97.5 | % | ||||
Independent
pricing agents using adjusted market prices to reflect “best” price at
U.S. market closing
|
709 | 2.5 | ||||||
Ending
AuM
|
$ | 28,888 | 100.0 | % |
Years
Ended December 31,
|
||||||||||||
(in
thousands, except for Average AuM, effective fee rate and
percentages)
|
2008
|
2007
|
%
Change
|
|||||||||
Average
AuM (in millions)(1)
|
$ | 64,776 | $ | 66,619 | (3 | )% | ||||||
Effective
fee rate (basis points)
|
65.6 | 66.9 | (1.3 | )bp | ||||||||
Investment
management fees
|
$ | 425,002.6 | 445,558.4 | (5 | )% | |||||||
Net
gains (losses) on securities held for deferred
compensation
|
(2,856.5 | ) | − | − | ||||||||
Foreign
currency gains (losses)
|
(100.6 | ) | 185.9 | (154 | ) | |||||||
Total
revenues and other operating income
|
$ | 422,045.5 | 445,744.3 | (5 | ) |
(1)
|
Excluding
legacy activities.
|
Years Ended
December 31,
|
||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
%
Change
|
|||||||||
Total
employee compensation and benefits
|
$ | 223,118.3 | $ | 252,633.1 | (12 | )% | ||||||
Shareholder
servicing and marketing
|
23,369.1 | 25,356.3 | (8 | ) | ||||||||
General
and administrative
|
62,833.1 | 50,001.5 | 26 | |||||||||
Total
operating expenses
|
$ | 309,320.5 | $ | 327,990.9 | (6 | ) |
Years
Ended
December
31,
|
||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
%
Change
|
|||||||||
Salaries,
incentive compensation and benefits
|
$ | 92,487.1 | $ | 92,276.9 | − | % | ||||||
Allocation
of Class B profits interests(1)
|
76,073.8 | 83,512.3 | (9 | ) | ||||||||
Change
in redemption value of Class B profits interests(1)
|
54,557.4 | 76,843.9 | (29 | ) | ||||||||
Total
employee compensation and benefits
|
$ | 223,118.3 | $ | 252,633.1 | (12 | ) |
Years
Ended
December
31,
|
||||||||||||
(in
thousands, except percentages)
|
2008
|
2007
|
%
Change
|
|||||||||
Total
non-operating income (loss)
|
$ | 3,181.4 | $ | 7,033.6 | (55 | )% | ||||||
Average
invested funds(1)
|
149,146.5 | 126,848.7 | 18 |
(1)
|
Computed
using the beginning and ending balances for the period of cash equivalents
and marketable securities, exclusive of securities held for deferred
compensation.
|
As
of
March
31,
|
As
of
December
31,
|
As
of
December
31,
|
||||||||||||||||||
(in
thousands, except percentages)
|
2010
|
2009
|
%
Change
|
2008
|
%
Change 09/08
|
|||||||||||||||
Cash
|
$ | 74,771.2 | $ | 60,841.7 | 23 | % | $ | 86,563.0 | (30 | )% | ||||||||||
Marketable
securities less securities held for deferred compensation
|
− | 18.0 | (100 | ) | 65,418.1 | (100 | ) | |||||||||||||
74,771.2 | 60,859.7 | 23 | 151,981.1 | (60 | ) | |||||||||||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
55,064.5 | 56,911.1 | (3 | ) | 54,799.1 | 4 | ||||||||||||||
Total
liquid assets
|
$ | 129,835.7 | $ | 117,770.8 | 10 | $ | 206,780.2 | (43 | ) |
Three
Months Ended March 31,
|
Years
Ended December 31,
|
YE
09/08
|
YE
08/07
|
|||||||||||||||||||||||||||||
(in
thousands, except percentages)
|
2010
|
2009
|
%
Change
|
2009
|
2008
|
2007
|
%
Change
|
%
Change
|
||||||||||||||||||||||||
Cash
flow data:
|
||||||||||||||||||||||||||||||||
Net
cash provided by (used in) operating activities
|
$ | 17,864.5 | $ | (18,565.8 | ) | 196 | % | $ | 51,707.4 | $ | 100,108.8 | $ | 112,215.3 | (48 | )% | (11 | )% | |||||||||||||||
Net
cash provided by (used in) investing activities
|
(352.8 | ) | 42,220.4 | (101 | ) | 63,761.7 | (29,892.3 | ) | 19,991.0 | 313 | (250 | ) | ||||||||||||||||||||
Net
cash used in financing activities
|
(3,605.4 | ) | (14,000.0 | ) | 74 | (141,277.4 | ) | (117,000.0 | ) | (60,000.0 | ) | (21 | ) | (95 | ) | |||||||||||||||||
Effect
of exchange rate changes on cash
|
23.2 | (15.6 | ) | 249 | 87.0 | (100.6 | ) | 185.9 | 186 | (154 | ) | |||||||||||||||||||||
Net
increase in cash and cash equivalents
|
$ | 13,929.5 | $ | 9,639.0 | 45 | $ | (25,721.3 | ) | $ | (46,884.1 | ) | $ | 72,392.2 | 45 | (165 | ) |
Payments
Due By Pay Period
|
||||||||||||||||||||
(in
thousands)
|
Total
|
Less
Than 1 Year
|
1-3
Years
|
3-5
Years
|
More
than 5 Years
|
|||||||||||||||
Borrowings
under term credit facility(1)
|
$ | 60,000.0 | $ |
─
|
$ | 60,000.0 | $ |
─
|
$ |
─
|
||||||||||
Operating
lease obligations
|
16,899.2 | 3,738.7 | 11,279.6 | 1,880.9 |
─
|
|||||||||||||||
Recordkeeping
service provider
|
8,000.0 | 1,600.0 | 3,200.0 | 3,200.0 |
─
|
|||||||||||||||
Other
|
16,933.6 | 10,218.8 | 5,571.8 | 1,143.0 |
─
|
|||||||||||||||
Total
|
$ | 101,832.8 | $ | 15,557.5 | $ | 80,051.4 | $ | 6,223.9 | $ |
─
|
(1)
|
Excludes
accrued interest expense. Interest is payable at a variable
rate.
|
Investment
Vehicles (As of March 31, 2010)
|
Investment
Strategies (As of March 31, 2010)
|
|
·
|
our
International Equity I composite has outperformed its benchmark, the MSCI
AC World ex USA IndexSM
ND, by 7.67% on an annualized basis since its inception in 1995 through
March 31, 2010 (calculated on a gross basis before payment of
fees);
|
|
·
|
as
of March 31, 2010, eight out of nine publicly-reported composites had
also outperformed their benchmarks on a gross basis since inception;
and
|
|
·
|
as
of March 31, 2010, six out of nine mutual funds (as represented by Class
I-shares), representing over 99% of our mutual fund assets under
management, were rated 4- or 5- stars by Morningstar and of
those nine mutual funds, six were in the top quartile of Lipper rankings for
performance since inception.
|
|
·
|
each
new investment strategy and offering must provide the potential for
attractive risk adjusted returns for clients in these new strategies
without negatively affecting return prospects for existing
clients;
|
|
·
|
new
client segments or distribution sources must value our approach and be
willing to appropriately compensate us for our services;
and
|
|
·
|
new
product offerings and client segments must be consistent with the broad
investment mission and not alter the investment-centric nature of our
firm’s culture.
|
|
·
|
A
team-based approach;
|
|
·
|
A
reliance on internally generated research and independent
thinking;
|
|
·
|
A
belief that broad-based quantitative screening prior to the application of
a fundamental research overlay is as likely to hide opportunities as it is
to reveal them;
|
|
·
|
A
significant emphasis on top-down/macro inputs and broad-based global
investment themes to complement unique industry specific bottom-up
analysis;
|
|
·
|
An
intense focus on risk management, but not an aversion to taking risk that
is rewarded with an appropriate premium;
and
|
|
·
|
A
belief that ultimate investment authority and accountability should reside
with individuals within each investment team rather than
committees.
|
Strategy
|
Total
AuM as of March 31, 2010
|
Strategy
Inception Date
|
Quartile
Ranking Since Inception
|
||||||
(in
millions)
|
|||||||||
International
Equity
|
|||||||||
International
Equity I
|
$ | 20,955 |
May
1995
|
1 | |||||
International
Equity II
|
24,559 |
April
2005(1)
|
1 | ||||||
Other
International Equity
|
74 |
Various
|
– | ||||||
High
Grade Fixed Income
|
|||||||||
Total
Return Bond
|
4,473 |
February
1995
|
1 | ||||||
U.S.
Fixed Income & Cash
|
778 |
Various
|
– | ||||||
High
Yield
|
|||||||||
High
Yield
|
4,523 |
April
2003
|
1 | ||||||
Global
Equity
|
|||||||||
Global
Equity
|
892 |
July
1995
|
2 | ||||||
U.S.
Equity
|
|||||||||
Micro-Cap
|
64 |
August
2006
|
1 | ||||||
Small-Cap
|
48 |
August
2006
|
1 | ||||||
Mid-Cap
|
6 |
August
2006(2)
|
3 | ||||||
Multi-Cap
|
8 |
August
2006(3)
|
2 | ||||||
Other
|
37 | ||||||||
Total
|
$ | 56,417 |
(1)
|
We
classify within International Equity II certain sub-advised mandates that
were initially part of our International Equity I strategy because net
client cash flows into these mandates, since 2005, have been invested
according to the International Equity II strategy and the overall
portfolios of these mandates are currently more similar to our
International Equity II strategy.
|
(2)
|
Lipper
compares our Mid-Cap fund with the Lipper
“Mid-Cap Growth Funds” class category. We believe the Lipper
“Mid-Cap Core Funds” class category is better aligned with the strategies
with which we compete. Our ranking since inception in the “Mid-Cap Core
Funds” class category as of March 31, 2010 was in the 2nd quartile. See
“Performance Information Used in This
Prospectus”.
|
(3)
|
Lipper
compares our Multi-Cap fund with the Lipper
“Multi-Cap Growth Funds” class category. We believe the Lipper
“Multi-Cap Core Funds” class category is better aligned with the
strategies with which we compete. Our ranking since inception in the
“Multi-Cap Core Funds” class category as of March 31, 2010 was in the 1st
quartile. See “Performance Information Used in This
Prospectus”.
|
|
·
|
International Equity I (“IE
I”)
|
International
Equity I
|
Three
Months Ended March 31,
|
Year
Ended December 31,
|
||||||||||
2010
|
2009
|
2008
|
||||||||||
(in
millions)
|
||||||||||||
Beginning
assets under management
|
$ | 21,656 | $ | 20,188 | $ | 42,517 | ||||||
Gross
client cash inflows
|
340 | 1,759 | 3,126 | |||||||||
Gross
client cash outflows
|
(1,101 | ) | (4,406 | ) | (7,384 | ) | ||||||
Net
client cash flows
|
(761 | ) | (2,647 | ) | (4,258 | ) | ||||||
Transfers
between investment strategies
|
- | 10 | (155 | ) | ||||||||
Total
client cash flows
|
(761 | ) | (2,637 | ) | (4,413 | ) | ||||||
Market
appreciation (depreciation)
|
60 | 4,105 | (17,916 | ) | ||||||||
Ending
assets under management
|
$ | 20,955 | $ | 21,656 | $ | 20,188 |
|
·
|
International Equity II (“IE
II”)
|
International
Equity II
|
Three
Months Ended March 31,
|
Year
Ended December 31,
|
||||||||||
2010
|
2009
|
2008
|
||||||||||
(in
millions)
|
||||||||||||
Beginning
assets under management
|
$ | 24,716 | $ | 18,697 | $ | 26,050 | ||||||
Gross
client cash inflows
|
984 | 6,349 | 11,532 | |||||||||
Gross
client cash outflows
|
(1,179 | ) | (5,249 | ) | (5,706 | ) | ||||||
Net
client cash flows
|
(195 | ) | 1,100 | 5,826 | ||||||||
Transfers
between investment strategies
|
50 | - | 109 | |||||||||
Total
client cash flows
|
(145 | ) | 1,100 | 5,935 | ||||||||
Market
appreciation (depreciation)
|
(12 | ) | 4,919 | (13,288 | ) | |||||||
Ending
assets under management
|
$ | 24,559 | $ | 24,716 | $ | 18,697 |
|
·
|
Other International
Equity
|
Period
Ended March 31, 2010
|
||||||||||||||||
Since
Inception
|
5
Years
|
3
Years
|
1
Year
|
|||||||||||||
International
Equity I
|
||||||||||||||||
Annualized
Gross Returns
|
12.9 | % | 5.6 | % | (7.2 | )% | 51.0 | % | ||||||||
Annualized
Net Returns
|
11.3 | % | 4.7 | % | (7.9 | )% | 49.9 | % | ||||||||
MSCI
EAFE Index®
|
4.6 | % | 3.8 | % | (7.0 | )% | 54.4 | % | ||||||||
MSCI
AC World ex USA IndexSM
ND
|
5.2 | % | 6.1 | % | (4.2 | )% | 60.9 | % | ||||||||
International
Equity II
|
||||||||||||||||
Annualized
Gross Returns
|
5.8 | % | 5.8 | % | (6.1 | )% | 49.1 | % | ||||||||
Annualized
Net Returns
|
5.1 | % | 5.1 | % | (6.7 | )% | 48.1 | % | ||||||||
MSCI
EAFE Index®
|
3.8 | % | 3.8 | % | (7.0 | )% | 54.4 | % | ||||||||
MSCI
AC World ex USA IndexSM
ND
|
6.1 | % | 6.1 | % | (4.2 | )% | 60.9 | % |
Year
Ended December 31,
|
Three
Months
Ended
March 31,
|
|||||||||||||||||||||||
2009
|
2008
|
2007
|
2006
|
2005
|
2010
|
|||||||||||||||||||
International
Equity I
|
||||||||||||||||||||||||
Gross
Returns
|
26.0 | % | (44.1 | )% | 18.4 | % | 32.9 | % | 18.3 | % | 0.6 | % | ||||||||||||
Net
Returns
|
25.0 | % | (44.6 | )% | 17.5 | % | 31.5 | % | 17.1 | % | 0.4 | % | ||||||||||||
MSCI
EAFE Index®
|
31.8 | % | (43.4 | )% | 11.2 | % | 26.3 | % | 13.5 | % | 0.9 | % | ||||||||||||
MSCI
ACWI ex USA IndexSM
ND
|
41.4 | % | (45.5 | )% | 16.7 | % | 26.7 | % | 16.6 | % | 1.6 | % | ||||||||||||
International Equity II
(1)
|
||||||||||||||||||||||||
Gross
Returns
|
26.1 | % | (42.3 | )% | 18.2 | % | 31.0 | % | 17.4 | % | 0.1 | % | ||||||||||||
Net
Returns
|
25.3 | % | (42.6 | )% | 17.4 | % | 30.0 | % | 16.9 | % | (0.1 | )% | ||||||||||||
MSCI
EAFE Index®
|
31.8 | % | (43.4 | )% | 11.2 | % | 26.3 | % | 13.7 | % | 0.9 | % | ||||||||||||
MSCI
ACWI ex USA IndexSM
ND
|
41.4 | % | (45.5 | )% | 16.7 | % | 26.7 | % | 16.3 | % | 1.6 | % |
(1)
|
Results
for the year ended December 31, 2005 are for the period from April 1, 2005
(the inception of IE II) through December 31,
2005.
|
|
·
|
Total Return Bond — We
launched this product in February 1995 and, as of March 31, 2010, it
accounted for approximately $4.5 billion of assets under management. As of
March 31, 2010, the Total Return Bond Fund (I-Shares) ranked in the 3rd
quartile of its Lipper universe over
the past one-year period and in the 1st quartile over the past three- and
five-year periods.
|
|
·
|
U.S. Fixed Income &
Cash — As of March 31, 2010, these products accounted for
approximately $0.8 billion of assets under management, mostly through
sub-advisory arrangements with GAM’s offshore funds. See Notes to the
Financial Consolidated Statements, Note
6. “Related Party
Transactions”.
|
High
Grade Fixed Income
|
Three
Months Ended March 31,
|
Year
Ended December 31,
|
||||||||||
2010
|
2009
|
2008
|
||||||||||
(in
millions)
|
||||||||||||
Beginning
assets under management
|
$ | 5,293 | $ | 4,566 | $ | 4,657 | ||||||
Gross
client cash inflows
|
191 | 1,481 | 1,550 | |||||||||
Gross
client cash outflows
|
(389 | ) | (1,230 | ) | (1,523 | ) | ||||||
Net
client cash flows
|
(198 | ) | 251 | 27 | ||||||||
Transfers
between investment strategies
|
10 | (16 | ) | (117 | ) | |||||||
Total
client cash flows
|
(188 | ) | 235 | (90 | ) | |||||||
Market
appreciation (depreciation)
|
146 | 492 | (1 | ) | ||||||||
Ending
assets under management
|
$ | 5,251 | $ | 5,293 | $ | 4,566 |
Period
Ended March 31, 2010
|
||||||||||||||||
Since
Inception
|
5
Years
|
3
Years
|
1
Year
|
|||||||||||||
Annualized
Gross Returns
|
7.9 | % | 6.2 | % | 7.1 | % | 13.9 | % | ||||||||
Annualized
Net Returns
|
7.0 | % | 5.6 | % | 6.7 | % | 13.4 | % | ||||||||
Barclays
Capital U.S. Aggregate Bond Index
|
6.7 | % | 5.4 | % | 6.1 | % | 7.7 | % | ||||||||
Customized
Index(1)
|
6.2 | % | 5.1 | % | 6.2 | % | 7.6 | % |
(1)
|
The
customized index is composed of 80% of the Merrill Lynch 1-10 year U.S.
Government/Corporate Index and 20% of the JP Morgan Global Government Bond
(non-U.S.) Index.
|
Year
Ended December 31,
|
Three
Months Ended March 31,
|
|||||||||||||||||||||||
Total
Return Bond
|
2009
|
2008
|
2007
|
2006
|
2005
|
2010
|
||||||||||||||||||
Gross
Returns
|
11.2 | % | 0.9 | % | 8.3 | % | 5.5 | % | 2.7 | % | 2.4 | % | ||||||||||||
Net
Returns
|
10.7 | % | 0.4 | % | 7.7 | % | 4.8 | % | 1.7 | % | 2.3 | % | ||||||||||||
Barclays
Capital U.S. Aggregate Bond Index
|
5.9 | % | 5.2 | % | 7.0 | % | 4.3 | % | 2.4 | % | 1.8 | % | ||||||||||||
Customized
Index(1)
|
5.4 | % | 5.6 | % | 8.2 | % | 4.7 | % | (0.6 | )% | 0.9 | % |
(1)
|
The
customized index is comprised of 80% of the Merrill Lynch 1-10 year U.S.
Government/Corporate Index and 20% of the JP Morgan Global Government Bond
(non-U.S.) Index.
|
High
Yield
|
Three
Months Ended March 31,
|
Year
Ended December 31,
|
||||||||||
2010
|
2009
|
2008
|
||||||||||
(in
millions)
|
||||||||||||
Beginning
assets under management
|
$ | 3,516 | $ | 977 | $ | 852 | ||||||
Gross
client cash inflows
|
1,199 | 2,399 | 807 | |||||||||
Gross
client cash outflows
|
(274 | ) | (639 | ) | (442 | ) | ||||||
Net
client cash flows
|
925 | 1,760 | 365 | |||||||||
Transfers
between investment strategies
|
(10 | ) | 6 | 117 | ||||||||
Total
client cash flows
|
915 | 1,766 | 482 | |||||||||
Market
appreciation (depreciation)
|
92 | 773 | (357 | ) | ||||||||
Ending
assets under management
|
$ | 4,523 | $ | 3,516 | $ | 977 |
Period
Ended March 31, 2010
|
||||||||||||||||
High
Yield
|
Since
Inception
|
5
Years
|
3
Years
|
1
Year
|
||||||||||||
Annualized
Gross Returns
|
11.6 | % | 9.7 | % | 8.6 | % | 54.8 | % | ||||||||
Annualized
Net Returns
|
10.3 | % | 8.6 | % | 7.6 | % | 53.3 | % | ||||||||
ML
Global High Yield USD Constrained Index
|
10.2 | % | 8.1 | % | 7.3 | % | 61.3 | % |
Year
Ended December 31,
|
Three
Months Ended March 31,
|
|||||||||||||||||||||||
High
Yield
|
2009
|
2008
|
2007
|
2006
|
2005
|
2010
|
||||||||||||||||||
Gross
Returns
|
56.4 | % | (23.6 | )% | 5.2 | % | 12.6 | % | 5.7 | % | 4.8 | % | ||||||||||||
Net
Returns
|
55.0 | % | (24.3 | )% | 4.1 | % | 11.2 | % | 4.4 | % | 4.5 | % | ||||||||||||
ML
Global High Yield USD Constrained Index
|
62.2 | % | (27.5 | )% | 3.4 | % | 12.2 | % | 1.6 | % | 4.5 | % |
Global
Equity
|
Three
Months Ended March 31,
|
Year
Ended December 31,
|
||||||||||
2010
|
2009
|
2008
|
||||||||||
(in
millions)
|
||||||||||||
Beginning
assets under management
|
$ | 618 | $ | 591 | $ | 761 | ||||||
Gross
client cash inflows
|
305 | 89 | 210 | |||||||||
Gross
client cash outflows
|
(12 | ) | (186 | ) | (95 | ) | ||||||
Net
client cash flows
|
293 | (97 | ) | 115 | ||||||||
Transfers
between investment strategies
|
(50 | ) | - | 46 | ||||||||
Total
client cash flows
|
243 | (97 | ) | 161 | ||||||||
Market
appreciation (depreciation)
|
31 | 124 | (331 | ) | ||||||||
Ending
assets under management
|
$ | 892 | $ | 618 | $ | 591 |
Period
Ended March 31, 2010
|
||||||||||||||||
Global
Equity
|
Since
Inception
|
5
Years
|
3
Years
|
1
Year
|
||||||||||||
Annualized
Gross Returns
|
9.7 | % | 5.2 | % | (3.9 | )% | 57.6 | % | ||||||||
Annualized
Net Returns
|
8.5 | % | 4.2 | % | (4.4 | )% | 56.7 | % | ||||||||
MSCI
World Index
|
5.7 | % | 2.9 | % | (5.4 | )% | 52.4 | % | ||||||||
MSCI
AC World IndexSM
|
5.6 | % | 3.9 | % | (4.4 | )% | 55.5 | % |
Year
Ended December 31,
|
Three
Months Ended
March
31,
|
|||||||||||||||||||||||
Global
Equity
|
2009
|
2008
|
2007
|
2006
|
2005
|
2010
|
||||||||||||||||||
Gross
Returns
|
32.2 | % | (40.8 | )% | 12.5 | % | 23.2 | % | 13.9 | % | 3.6 | % | ||||||||||||
Net
Returns
|
31.5 | % | (41.2 | )% | 11.7 | % | 21.4 | % | 11.8 | % | 3.5 | % | ||||||||||||
MSCI
World Index
|
30.0 | % | (40.7 | )% | 9.0 | % | 20.1 | % | 9.5 | % | 3.2 | % | ||||||||||||
MSCI
AC World IndexSM
|
34.6 | % | (42.2 | )% | 11.7 | % | 21.0 | % | 10.8 | % | 3.1 | % |
|
·
|
Multicap — We launched
this strategy in July 2006 and, as of March 31, 2010, it accounted for
approximately $8 million of assets under management. The Multicap strategy
ranked in the 2nd quartile of the Lipper “Multi-Cap Growth Funds” class
category since inception as of March 31,
2010.
|
|
·
|
Midcap — We launched
this strategy in July 2006 and, as of March 31, 2010, it accounted for
approximately $6 million of assets under management. The Midcap strategy
ranked in the 3rd quartile of the Lipper “Mid-Cap Growth Funds” class
category since inception as of March 31,
2010.
|
|
·
|
Smallcap — We launched
this strategy in July 2006 and, as of March 31, 2010, it accounted for
approximately $48 million of assets under management. The Smallcap
strategy ranked in the top decile in the Lipper “Small-Cap Growth Funds”
class category since inception as of March 31,
2010.
|
|
·
|
Microcap — We launched
this strategy in July 2006 and, as of March 31, 2010, it accounted for
approximately $64 million of assets under management. The Microcap
strategy ranked in the 1st quartile of its Lipper universe since inception
as of March 31, 2010.
|
US
Equity
|
Three
Months Ended March 31,
|
Year
Ended December 31,
|
||||||||||
2010
|
2009
|
2008
|
||||||||||
(in
millions)
|
||||||||||||
Beginning
assets under management
|
$ | 81 | $ | 49 | $ | 133 | ||||||
Gross
client cash inflows
|
35 | 14 | 18 | |||||||||
Gross
client cash outflows
|
(3 | ) | (9 | ) | (38 | ) | ||||||
Net
client cash flows
|
32 | 5 | (20 | ) | ||||||||
Transfers
between investment strategies
|
- | - | - | |||||||||
Total
client cash flows
|
32 | 5 | (20 | ) | ||||||||
Market
appreciation (depreciation)
|
13 | 27 | (64 | ) | ||||||||
Ending
assets under management
|
$ | 126 | $ | 81 | $ | 49 |
Period
Ended March 31, 2010
|
||||||||||||
US
Equity
|
Since
Inception
|
3
Years
|
1
Year
|
|||||||||
Multi-Cap
|
||||||||||||
Annualized
Gross Returns
|
4.4 | % | (0.1 | )% | 66.3 | % | ||||||
Annualized
Net Returns
|
3.5 | % | (0.9 | )% | 65.1 | % | ||||||
Russell
3000® Index
|
0.2 | % | (4.0 | )% | 52.4 | % | ||||||
Mid-Cap
|
||||||||||||
Annualized
Gross Returns
|
3.1 | % | (2.5 | )% | 68.6 | % | ||||||
Annualized
Net Returns
|
2.3 | % | (3.2 | )% | 67.2 | % | ||||||
Russell
Mid-Cap® Index
|
1.6 | % | (3.3 | )% | 67.7 | % | ||||||
Small-Cap
|
||||||||||||
Annualized
Gross Returns
|
9.8 | % | 5.8 | % | 95.5 | % | ||||||
Annualized
Net Returns
|
8.9 | % | 5.0 | % | 93.7 | % | ||||||
Russell
2000® Index
|
0.5 | % | (4.0 | )% | 62.8 | % | ||||||
Micro-Cap
|
||||||||||||
Annualized
Gross Returns
|
2.5 | % | (2.4 | )% | 103.8 | % | ||||||
Annualized
Net Returns
|
1.6 | % | (3.3 | )% | 101.9 | % | ||||||
Russell
2000® Index
|
0.5 | % | (4.0 | )% | 62.8 | % | ||||||
Russell
Micro-Cap® Index
|
(3.4 | )% | (8.4 | )% | 65.1 | % |
Year
Ended December 31,
|
Three
Months Ended
March
31,
|
|||||||||||||||||||||||
2009
|
2008
|
2007
|
2006(1)
|
2005
|
2010
|
|||||||||||||||||||
Multi-Cap
|
||||||||||||||||||||||||
Gross
Returns
|
51.1 | % | (41.4 | )% | 6.1 | % | 17.1 | % | N/A | 6.5 | % | |||||||||||||
Net
Returns
|
49.9 | % | (41.8 | )% | 5.1 | % | 16.4 | % | N/A | 6.3 | % | |||||||||||||
Russell
3000 ® Index
|
28.3 | % | (37.3 | )% | 5.1 | % | 12.2 | % | N/A | 5.9 | % | |||||||||||||
Mid-Cap
|
||||||||||||||||||||||||
Gross
Returns
|
53.4 | % | (44.7 | )% | 3.7 | % | 18.3 | % | N/A | 7.4 | % | |||||||||||||
Net
Returns
|
52.1 | % | (45.1 | )% | 3.0 | % | 17.7 | % | N/A | 7.2 | % | |||||||||||||
Russell
Mid-Cap ® Index
|
40.5 | % | (41.5 | )% | 5.6 | % | 12.4 | % | N/A | 8.7 | % | |||||||||||||
Small-Cap
|
||||||||||||||||||||||||
Gross
Returns
|
66.9 | % | (41.1 | )% | 11.3 | % | 14.5 | % | N/A | 12.4 | % | |||||||||||||
Net
Returns
|
65.3 | % | (41.5 | )% | 10.7 | % | 13.9 | % | N/A | 12.1 | % | |||||||||||||
Russell
2000 ® Index
|
27.2 | % | (33.8 | )% | (1.6 | )% | 13.1 | % | N/A | 8.9 | % | |||||||||||||
Micro-Cap
|
||||||||||||||||||||||||
Gross
Returns
|
60.8 | % | (50.4 | )% | (0.2 | )% | 17.0 | % | N/A | 17.6 | % | |||||||||||||
Net
Returns
|
59.3 | % | (50.8 | )% | (1.0 | )% | 16.3 | % | N/A | 17.3 | % | |||||||||||||
Russell
2000 ® Index
|
27.2 | % | (33.8 | )% | (1.6 | )% | 13.1 | % | N/A | 8.9 | % | |||||||||||||
Russell
Micro-Cap ® Index
|
27.5 | % | (39.8 | )% | (8.0 | )% | 13.7 | % | N/A | 9.9 | % |
(1)
|
Results
for the year ended December 31, 2006 are for the period from July 31, 2006
to December 31, 2006.
|
|
·
|
investment
performance;
|
|
·
|
continuity
of investment professionals;
|
|
·
|
quality
of service provided to clients;
|
|
·
|
corporate
positioning and business
reputation;
|
|
·
|
continuity
of our selling arrangements with intermediaries;
and
|
|
·
|
differentiated
products.
|
|
·
|
each
person who is known by us to beneficially own more than 5% of any class of
our outstanding shares;
|
|
·
|
each
of our named executive officers;
|
|
·
|
each
of our directors; and
|
|
·
|
all
of our executive officers and directors as a
group.
|
Name
of Beneficial Owner
|
Common
Stock Beneficially Owned Before Offering
|
Total
Voting Power Before Offering (%)
|
Common
Stock Beneficially Owned After Offering and Application of the Net
Proceeds
|
Total
Voting Power After Offering (%)
|
||||||||||||||||||||||||||||
Number
of Shares
|
Class
|
Percent
of Class (%)
|
Number
of Shares
|
Class
|
Percent
of Class (%)
|
|||||||||||||||||||||||||||
Richard
Pell
|
3,000,000 | (1) | A | 8.9 | – | 5,350,000 |
A
|
12.7 | – | |||||||||||||||||||||||
4,800,000 | B | 50.0 | – | 600,000 |
B
|
50.0 | – | |||||||||||||||||||||||||
7,800,000 | A,B | – | 13.0 | 5,950,000 |
A,B
|
– | 9.9 | |||||||||||||||||||||||||
Rudolph-Riad
Younes
|
3,000,000 | (2) | A | 8.9 | – | 5,350,000 |
A
|
12.7 | – | |||||||||||||||||||||||
4,800,000 | B | 50.0 | – | 600,000 |
B
|
50.0 | – | |||||||||||||||||||||||||
7,800,000 | A,B | – | 13.0 | 5,950,000 |
A,B
|
– | 9.9 | |||||||||||||||||||||||||
Glen
Wisher
|
– | (3) | – | 0.0 | 0.0 | – | (3) |
–
|
0.0 | 0.0 | ||||||||||||||||||||||
Tony
Williams
|
– | (3) | – | 0.0 | 0.0 | – | (3) |
–
|
0.0 | 0.0 | ||||||||||||||||||||||
Francis
Harte
|
– | (3) | – | 0.0 | 0.0 | – | (3) |
–
|
0.0 | 0.0 | ||||||||||||||||||||||
Elizabeth
Buse
|
7,673 | A | * | * | 7,673 |
A
|
* | * | ||||||||||||||||||||||||
Duane
Kullberg
|
7,673 | A | * | * | 7,673 |
A
|
|
* | * | |||||||||||||||||||||||
Francis
Ledwidge
|
9,573 | (4) | A | * | * | 9,573 | (4) |
A
|
* | * | ||||||||||||||||||||||
Directors
and executive officers as a group (9 persons)
|
6,024,919 | (3)(5) | A | 17.9 | – | 10,724,919 | (3)(5) |
A
|
25.4 | – | ||||||||||||||||||||||
9,600,000 | B | 100.0 | – | 1,200,000 |
|
B
|
100.0 | – | ||||||||||||||||||||||||
15,624,919 | A,B | – | 26.0 | 11,924,919 |
A,B
|
– | 19.8 | |||||||||||||||||||||||||
5%
Shareholders
|
|
|||||||||||||||||||||||||||||||
GAM
Holding Ltd.
|
16,755,844 | (6) | C | 100.0 | 27.9 | 16,755,844 | (6) |
C
|
100.0 | 27.9 | ||||||||||||||||||||||
Royce
& Associates, LLC.
|
3,109,803 | (7) | A | 9.2 | 5.2 | 3,109,803 | (7) |
A
|
7.4 | 5.2 | ||||||||||||||||||||||
Cramer
|
2,286,832 | (8) | A | 6.8 | 3.8 | 2,286,832 | (8) |
A
|
5.4 | 3.8 | ||||||||||||||||||||||
Pennant
Capital
|
2,033,000 | (9) | A | 6.0 | 3.4 | 2,033,000 | (9) |
A
|
4.8 | 3.4 | ||||||||||||||||||||||
Norges
Bank (Central Bank of Norway)
|
1,825,058 | (10) | A | 5.4 | 3.0 | 1,825,058 | (10) |
A
|
4.3 | 3.0 | ||||||||||||||||||||||
Samlyn
Capital
|
1,677,700 | (11) | A | 5.0 | 2.8 | 1,677,700 | (11) |
A
|
4.0 | 2.8 |
(1)
|
Includes
Class A common stock held by a Grantor Retained Annuity Trust (“GRAT”), as
to which Mr. Pell is the settlor and trustee and receives annual annuity
payments therefrom. Mr. Pell’s spouse and children are the remaindermen.
Pursuant to SEC rules, Mr. Pell is considered the beneficial owner of such
securities.
|
(2)
|
Includes
Class A common stock held by a GRAT, as to which Mr. Younes is the settlor
and trustee and receives annual annuity payments therefrom. Mr. Younes’
spouse, if any, and the lineal descendants of his parents (other than Mr.
Younes) are the remaindermen. Pursuant to SEC rules, Mr. Younes is
considered the beneficial owner of such
securities.
|
(3)
|
Does
not include approximately 226,562 restricted stock units (including
dividend equivalents) held by each of Messrs. Wisher and Williams or
approximately 92,767 restricted stock units (including dividend
equivalents) held by Mr. Harte; these restricted stock units will not
convert to Class A common stock within 60
days.
|
(4)
|
Includes
400 shares of Class A common stock held by Mr. Ledwidge’s wife and 200
shares of Class A common stock held by Mr. Ledwidge’s son, as to which Mr.
Ledwidge serves as custodian pursuant to the Uniform Transfers to Minors
Act.
|
(5)
|
Does
not include approximately 26,398 restricted stock units (including
dividend equivalents) held by Mr. Spilka; these restricted stock units
will not convert to Class A common stock within 60
days.
|
(6)
|
Based
on information contained in a Schedule 13G filed with the SEC on February
16, 2010, by GAM, Klausstrasse 10, 8034 Zurich, Switzerland. According to
the Schedule 13G, GAM beneficially owns and has sole voting and
dispositive power over 16,755,844 shares of Class C common stock. Each
share of Class C common stock has economic rights (including rights to
dividends and distributions upon liquidation) equal to the economic rights
of a share of the Class A common stock. On September 29, 2011, any
outstanding shares of Class C common stock will automatically convert on a
one-for-one basis to Class A common stock. If GAM transfers the shares of
Class C common stock to anyone other than any of its subsidiaries, or us,
such shares would automatically convert to shares of Class A common
stock.
|
(7)
|
Based
on information contained in Schedule 13G filed with the SEC on May
7, 2010, by Royce & Associates, LLC, 745 Fifth Avenue, New
York, NY 10151. According to the Schedule 13G, Royce &
Associates, LLC has sole voting and dispositive power over 3,109,803
shares of Class A common stock.
|
(8)
|
Based
on information contained in Schedule 13G filed with the SEC on February
10, 2010, by Cramer Rosenthal McGlynn, LLC (“Cramer”), 520 Madison Avenue,
New York, New York 10022. According to the Schedule 13G, Cramer has sole
voting power over 2,229,982 shares of our Class A common stock and sole
dispositive power over 2,286,832 shares of our Class A common
stock.
|
(9)
|
Based
on information contained in Schedule 13G/A filed with the SEC on December
10, 2009, jointly by Alan Fournier c/o Pennant Capital Management, L.L.C.,
Pennant Capital Management, L.L.C. and Pennant Windward Master Fund, L.P.
c/o Pennant Capital Management, L.L.C. (collectively, “Pennant Capital”),
26 Main Street, Suite 203, Chatham, New Jersey 07928. According to the
Schedule 13G/A, Alan Fournier and Pennant Capital Management, L.L.C., each
beneficially own 2,033,000 shares of Class A common stock and have shared
voting and dispositive power over 2,033,000 shares of Class A common
stock. Further, according to the Schedule 13G/A, Pennant Windward Master
Fund, L.P. beneficially owns 1,435,710 shares of Class A common stock and
has shared voting and dispositive power over 1,435,710 shares of Class A
common stock.
|
(10)
|
Based
on information contained in Schedule 13G/A filed with the SEC on February
3, 2010, by Norges Bank (Central Bank of Norway), Bankplassen 2, PO Box
1179 Sentrum, NO 0107 Oslo, Norway. According to the Schedule 13G/A,
Norges Bank has sole voting and dispositive power over 1,825,058 shares of
Class A common stock.
|
(11)
|
Based
on information contained in Schedule 13G filed with the SEC on November 6,
2009, by Samlyn Capital, LLC and Robert Pohly c/o Samlyn Capital, LLC
(together with Samlyn Capital, LLC “Samlyn Capital”), 500 Park Avenue, 2nd
Floor, New York, New York 10022. According to the Schedule 13G, Samlyn
Capital, LLC and Robert Pohly c/o Samlyn Capital LLC each have shared
voting and dispositive power over 1,677,700 shares of Class A common
stock.
|
|
·
|
the
designation of the series;
|
|
·
|
the
number of shares of the series, which our Board of Directors may, except
where otherwise provided in the preferred stock designation, increase or
decrease, but not below the number of shares then
outstanding;
|
|
·
|
whether
dividends, if any, will be cumulative or non-cumulative and the dividend
rate of the series;
|
|
·
|
the
dates at which dividends, if any, will be
payable;
|
|
·
|
the
redemption rights and price or prices, if any, for shares of the
series;
|
|
·
|
the
terms and amounts of any sinking fund provided for the purchase or
redemption of shares of the series;
|
|
·
|
the
amounts payable on shares of the series in the event of any voluntary or
involuntary liquidation, dissolution or winding-up of our
affairs;
|
|
·
|
whether
the shares of the series will be convertible into shares of any other
class or series, or any other security, of ours or any other entity, and,
if so, the specification of the other class or series or other security,
the conversion price or prices or rate or rates, any rate adjustments, the
date or dates at which the shares will be convertible and all other terms
and conditions upon which the conversion may be
made;
|
|
·
|
restrictions
on the issuance of shares of the same series or of any other class or
series; and
|
|
·
|
the
voting rights, if any, of the holders of the
series.
|
|
·
|
prior
to such time, our Board of Directors approved either the business
combination or the transaction that resulted in the stockholder becoming
an interested stockholder;
|
|
·
|
upon
consummation of the transaction that resulted in the stockholder becoming
an interested stockholder, the interested stockholder owned at least 85%
of our voting stock outstanding at the time the transaction commenced,
excluding certain shares; or
|
|
·
|
at
or subsequent to the consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the business combination
is approved by our Board of Directors and by the affirmative vote of
holders of at least 66 2/3 % of the outstanding voting stock that is not
owned by the interested
stockholder.
|
Name
|
Age
|
Position
|
Richard
Pell
|
55
|
Chief
Executive Officer and Chief Investment Officer and
Director
|
Glen
Wisher
|
46
|
President
and Director
|
Francis
Harte
|
48
|
Chief
Financial Officer
|
Tony
Williams
|
46
|
Chief
Operating Officer
|
Rudolph-Riad
Younes
|
48
|
Head
of International Equity
|
Adam
Spilka
|
54
|
General
Counsel and Corporate Secretary
|
Elizabeth
Buse
|
49
|
Director
|
Duane
Kullberg
|
77
|
Director
|
Francis
Ledwidge
|
60
|
Director
|
Year
ended December 31, 2009
|
$173.3
million
|
Year
ended December 31, 2008
|
$253.9
million
|
Year
ended December 31, 2007
|
$278.7
million
|
Quarter
ended March 31, 2010
|
$48.9
million
|
Year
ended December 31, 2009
|
$1.9
million
|
Year
ended December 31, 2008
|
$2.4
million
|
Year
ended December 31, 2007
|
$2.3
million
|
Quarter
ended March 31, 2010
|
$0.6
million
|
Number
of Shares
|
Date
|
31,418,656
|
On
the date of this prospectus.
|
16,755,844
|
On
the date of this prospectus (subject to volume
limitations).
|
11,900,000
|
After
90 days from the date of this prospectus (subject to volume
limitations).(1)
|
|
·
|
non-resident
alien individual, other than certain former citizens and residents of the
United States subject to tax as
expatriates;
|
|
·
|
foreign
corporation; or
|
|
·
|
foreign
estate or trust.
|
|
·
|
the
gain is effectively connected with the conduct of a trade or business of
the non-U.S. holder in the United States, subject to an applicable treaty
providing otherwise, or
|
|
·
|
we
are or have been a U.S. real property holding corporation at any time
within the five-year period preceding the disposition or the non-U.S.
holder’s holding period, whichever period is shorter, and our Class A
common stock has ceased to be traded on an established securities market
prior to the beginning of the calendar year in which the sale or
disposition occurs.
|
Underwriters
|
Number
of Shares of Class A Common Stock
|
|||
Goldman,
Sachs & Co
|
||||
Total
|
3,700,000 |
No
Exercise
|
Full
Exercise
|
|
Per
Share
|
$
|
|
Total
|
$
|
|
·
|
Our
Annual Report on Form 10-K for the year ended December 31, 2009, filed on
March 5, 2010;
|
|
·
|
Our
Proxy Statement on Schedule 14A, filed on March 26, 2010;
and
|
|
·
|
Our
Quarterly Report on Form 10-Q for the quarterly period ended March 31,
2010, filed on May 6,
2010.
|
F-2
|
|
F-3
|
|
F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-24
|
|
F-25
|
|
F-26
|
|
F-27
|
|
F-28
|
As
of December 31,
|
||||||||
(in
thousands, except for share amounts)
|
2009
|
2008
|
||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 60,841.7 | $ | 86,563.0 | ||||
Marketable
securities, at fair value
|
7,910.5 | 71,329.5 | ||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
56,911.1 | 54,799.1 | ||||||
Deferred
taxes, net
|
46,316.3 | 92,702.3 | ||||||
Income
taxes receivable
|
10,982.5 | 1,283.6 | ||||||
Property
and equipment, net
|
7,634.9 | 9,833.2 | ||||||
Other
assets
|
5,357.2 | 2,964.9 | ||||||
Total
assets
|
$ | 195,954.2 | $ | 319,475.6 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Debt
|
$ | 60,000.0 | $ | — | ||||
Accrued
compensation and benefits
|
31,478.0 | 268,924.7 | ||||||
Accounts
payable and accrued expenses
|
9,092.7 | 9,372.4 | ||||||
Accrued
income taxes payable
|
13,017.0 | 1,238.6 | ||||||
Due
to GAM Holding Ltd.
|
40,100.0 | 1,311.4 | ||||||
Due
under tax receivable agreement
|
33,655.1 | — | ||||||
Other
liabilities
|
4,629.8 | 5,383.4 | ||||||
Total
liabilities
|
191,972.6 | 286,230.5 | ||||||
Commitments
and contingencies (Notes 5, 16 and 17)
|
||||||||
Class
A common stock (2009 - 500,000,000 shares authorized, 27,658,799 shares
issued and outstanding; 2008 – none authorized and outstanding
)
|
27.6 | — | ||||||
Class
B common stock (2009 - 50,000,000 shares authorized, 15,600,000 shares
issued and outstanding; 2008 – none authorized and
outstanding)
|
15.6 | — | ||||||
Class
C common stock (210,000,000 shares authorized, 2009 - 16,755,844 shares
issued and outstanding; 2008 – 42,000,000 shares issued and outstanding
)
|
167.6 | 420.0 | ||||||
Additional
paid-in capital
|
586,956.2 | 17,930.0 | ||||||
Retained
earnings (deficit)
|
(580,274.8 | ) | 14,895.1 | |||||
Total
stockholders’ equity
|
6,892.2 | 33,245.1 | ||||||
Non-controlling
interests
|
(2,910.6 | ) | — | |||||
Total equity
|
3,981.6 | 33,245.1 | ||||||
Total
liabilities and equity
|
$ | 195,954.2 | $ | 319,475.6 |
Years
Ended December 31,
|
||||||||||||
(in
thousands, except per share information)
|
2009
|
2008
|
2007
|
|||||||||
Revenues
and other operating income:
|
||||||||||||
Investment
management fees
|
$ | 305,334.9 | $ | 425,002.6 | $ | 445,558.4 | ||||||
Net
gains (losses) on securities held for deferred compensation
|
1,970.1 | (2,856.5 | ) | — | ||||||||
Foreign
currency gains (losses)
|
87.0 | (100.6 | ) | 185.9 | ||||||||
Total
revenues and other operating income
|
307,392.0 | 422,045.5 | 445,744.3 | |||||||||
Expenses:
|
||||||||||||
Employee
compensation and benefits:
|
||||||||||||
Salaries,
incentive compensation and benefits
|
79,035.7 | 92,487.1 | 92,276.9 | |||||||||
Allocation
of Class B profits interests
|
33,662.5 | 76,073.8 | 83,512.3 | |||||||||
Change
in redemption value of Class B profits interests
|
266,109.8 | 54,557.4 | 76,843.9 | |||||||||
Tax receivable agreement
|
97,908.6 | — | — | |||||||||
Employee
compensation and benefits
|
476,716.6 | 223,118.3 | 252,633.1 | |||||||||
Shareholder
servicing and marketing
|
16,886.0 | 23,369.1 | 25,356.3 | |||||||||
General
and administrative
|
42,317.1 | 62,833.1 | 50,001.5 | |||||||||
Total
expenses
|
535,919.7 | 309,320.5 | 327,990.9 | |||||||||
Operating
income (loss) before income tax expense
|
(228,527.7 | ) | 112,725.0 | 117,753.4 | ||||||||
Non-operating
income (loss):
|
||||||||||||
Interest
income, net of interest expense
|
(867.5 | ) | 2,947.9 | 6,930.4 | ||||||||
Net
gains (losses) on marketable securities
|
(527.9 | ) | 252.1 | 81.8 | ||||||||
Other income (loss)
|
— | (18.6 | ) | 21.4 | ||||||||
Total
non-operating income (loss)
|
(1,395.4 | ) | 3,181.4 | 7,033.6 | ||||||||
Income
(loss) from continuing operations before income tax
expense
|
(229,923.1 | ) | 115,906.4 | 124,787.0 | ||||||||
Income
taxes relating to income from continuing operations
|
134,287.2 | 54,755.1 | 58,417.4 | |||||||||
Income
(loss) from continuing operations, net of taxes
|
(364,210.3 | ) | 61,151.3 | 66,369.6 | ||||||||
Income
from discontinued operations, net of taxes
|
— | — | 1,616.2 | |||||||||
Net
income (loss)
|
(364,210.3 | ) | 61,151.3 | 67,985.8 | ||||||||
Net
income attributable to non-controlling interests
|
14,103.8 | — | — | |||||||||
Net
income (loss) attributable to Artio Global Investors
|
$ | (378,314.1 | ) | $ | 61,151.3 | $ | 67,985.8 | |||||
Per
share data:
|
||||||||||||
Net
income (loss) attributable to Artio Global Investors per share information
– Basic and Diluted:
|
||||||||||||
Income
(loss) from continuing operations, net of taxes
|
$ | (8.88 | ) | $ | 1.46 | $ | 1.58 | |||||
Income
from discontinued operations, net of taxes
|
— | — | 0.04 | |||||||||
Net
income (loss)
|
$ | (8.88 | ) | $ | 1.46 | $ | 1.62 | |||||
Weighted
average shares used to calculate per share information:
|
||||||||||||
Basic
|
42,620.4 | 42,000.0 | 42,000.0 | |||||||||
Diluted
|
42,620.4 | 42,000.0 | 42,000.0 |
(in
thousands, except per share information)
|
Class
A Common Stock
(par
value $0.001)
|
Class
B Common Stock
(par
value $0.001)
|
Class
C Common Stock
(par
value $0.01)
|
Additional
Paid-in Capital
|
Retained
Earnings (Deficit)
|
Accumulated
Other Comprehensive Income
|
Stock-holders’
Equity
|
Non-
controlling
Interests
|
Total
Equity
|
|||||||||||||||||||||||||||
Balance
as of January 1, 2007
|
$ | — | $ | — | $ | 420.0 | $ | 17,930.0 | $ | 62,534.2 | $ | — | $ | 80,884.2 | $ | — | $ | 80,884.2 | ||||||||||||||||||
Net
income
|
— | — | — | — | 67,985.8 | — | 67,985.8 | — | 67,985.8 | |||||||||||||||||||||||||||
Other
comprehensive income:
|
||||||||||||||||||||||||||||||||||||
Unrealized
gains on available for sale securities
|
— | — | — | — | — | 632.1 | 632.1 | — | 632.1 | |||||||||||||||||||||||||||
Income taxes
|
— | — | — | — | — | (308.3 | ) | (308.3 | ) | — | (308.3 | ) | ||||||||||||||||||||||||
Total
other comprehensive income
|
— | — | — | — | — | 323.8 | 323.8 | — | 323.8 | |||||||||||||||||||||||||||
Dividends
($1.43 per share)
|
— | — | — | — | (60,100.0 | ) | — | (60,100.0 | ) | — | (60,100.0 | ) | ||||||||||||||||||||||||
Balance
as of December 31, 2007
|
— | — | 420.0 | 17,930.0 | 70,420.0 | 323.8 | 89,093.8 | — | 89,093.8 | |||||||||||||||||||||||||||
Cumulative
effect of adoption of fair value option
|
— | — | — | — | 323.8 | (323.8 | ) | — | — | — | ||||||||||||||||||||||||||
Balance
as of January 1, 2008
|
— | — | 420.0 | 17,930.0 | 70,743.8 | $ | — | 89,093.8 | — | 89,093.8 | ||||||||||||||||||||||||||
Net
income
|
— | — | — | — | 61,151.3 | 61,151.3 | — | 61,151.3 | ||||||||||||||||||||||||||||
Dividends
($2.79 per share)
|
— | — | — | — | (117,000.0 | ) | (117,000.0 | ) | — | (117,000.0 | ) | |||||||||||||||||||||||||
Balance
as of December 31, 2008
|
— | — | 420.0 | 17,930.0 | 14,895.1 | 33,245.1 | — | 33,245.1 | ||||||||||||||||||||||||||||
Net
income
|
— | — | — | — | (378,314.1 | ) | (378,314.1 | ) | 14,103.8 | (364,210.3 | ) | |||||||||||||||||||||||||
Reclassification
of liability awards
|
— | — | — | 565,908.6 | — | 565,908.6 | — | 565,908.6 | ||||||||||||||||||||||||||||
Issuance
of Class B common stock (see Note 2 )
|
— | 18.0 | — | — | — | 18.0 | — | 18.0 | ||||||||||||||||||||||||||||
Net
benefit from step-up in tax basis (see Note 5)
|
— | — | — | 5,762.1 | — | 5,762.1 | — | 5,762.1 | ||||||||||||||||||||||||||||
Initial
public offering
|
25.0 | — | — | 614,875.0 | — | 614,900.0 | — | 614,900.0 | ||||||||||||||||||||||||||||
Underwriters’
option exercise
|
2.6 | — | — | 65,033.1 | — | 65,035.7 | — | 65,035.7 | ||||||||||||||||||||||||||||
Holdings
units exchanged for Class A common stock and cancelation of Class B common
stock (see Note 2)
|
2.4 | (2.4 | ) | — | — | — | — | — | — | |||||||||||||||||||||||||||
Stock
repurchases
|
(2.4 | ) | — | (252.4 | ) | (679,680.9 | ) | — | (679,935.7 | ) | — | (679,935.7 | ) | |||||||||||||||||||||||
Establishment
of non-controlling interests
|
— | — | — | 10,424.8 | — | 10,424.8 | (10,424.8 | ) | — | |||||||||||||||||||||||||||
Distribution
to GAM Holding Ltd., including dividends ($5.16 per share)
|
— | — | — | (17,950.0 | ) | (216,855.8 | ) | (234,805.8 | ) | — | (234,805.8 | ) | ||||||||||||||||||||||||
Issuance
and amortization of share-based payments, net of
forfeitures
|
— | — | — | 4,653.5 | — | 4,653.5 | — | 4,653.5 | ||||||||||||||||||||||||||||
Distribution
to non-controlling interests
|
— | — | — | — | — | — | (6,589.6 | ) | (6,589.6 | ) | ||||||||||||||||||||||||||
Balance
as of December 31, 2009
|
$ | 27.6 | $ | 15.6 | $ | 167.6 | $ | 586,956.2 | $ | (580,274.8 | ) | $ | 6,892.2 | $ | (2,910.6 | ) | $ | 3,981.6 |
Years
Ended December 31,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
income (loss)
|
$ | (364,210.3 | ) | $ | 61,151.3 | $ | 67,985.8 | |||||
Adjustments
to reconcile net income (loss) to net cash provided by operating
activities:
|
||||||||||||
Depreciation
and amortization
|
3,029.1 | 2,904.1 | 1,925.4 | |||||||||
Deferred
compensation and share-based compensation
|
274,557.1 | 57,001.4 | 80,433.7 | |||||||||
Deferred
income taxes
|
85,803.2 | (21,519.9 | ) | (35,509.4 | ) | |||||||
Interest
accrued on marketable securities and accretion and amortization of
discount and premium
|
268.7 | (60.2 | ) | (1,304.8 | ) | |||||||
(Gains)/losses
on marketable securities and securities held for deferred
compensation
|
(1,442.2 | ) | 2,604.4 | (81.8 | ) | |||||||
Changes
in assets and liabilities:
|
||||||||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
(2,112.0 | ) | 32,578.4 | (31,851.3 | ) | |||||||
Due
to/from GAM Holding Ltd.
|
(1,307.0 | ) | 5,287.5 | (7,142.5 | ) | |||||||
Income
taxes receivable
|
(9,698.9 | ) | (1,283.6 | ) | — | |||||||
Other
assets
|
(2,396.8 | ) | (407.0 | ) | (348.9 | ) | ||||||
Accrued
compensation and benefits
|
58,558.3 | (33,322.1 | ) | 26,724.6 | ||||||||
Accounts
payable and accrued expenses
|
(366.6 | ) | (4,750.0 | ) | 3,336.7 | |||||||
Accrued
income taxes payable
|
11,778.4 | (2,551.0 | ) | 522.2 | ||||||||
Other
liabilities
|
(753.6 | ) | 2,475.5 | (412.9 | ) | |||||||
Cash
flows provided by discontinued operations
|
— | — | 7,938.5 | |||||||||
Net
cash provided by operating activities
|
51,707.4 | 100,108.8 | 112,215.3 | |||||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of marketable securities and securities held for deferred
compensation
|
(2,528.9 | ) | (120,807.4 | ) | (199,936.4 | ) | ||||||
Proceeds
from sales or maturities of marketable securities and securities held for
deferred compensation
|
67,121.4 | 94,399.6 | 221,931.3 | |||||||||
Purchase
of fixed assets
|
(830.8 | ) | (3,484.5 | ) | (2,003.9 | ) | ||||||
Net
cash provided by (used in) investing activities
|
63,761.7 | (29,892.3 | ) | 19,991.0 | ||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from borrowings
|
60,000.0 | — | — | |||||||||
Proceeds
from initial public offering
|
614,900.0 | — | — | |||||||||
Proceeds
from underwriters’ option exercise
|
65,035.7 | — | — | |||||||||
Repurchase
and retirement of Class C common stock
|
(620,905.3 | ) | — | — | ||||||||
Repurchase
of Class A common stock
|
(59,030.4 | ) | — | — | ||||||||
Issuance
of Class B common stock
|
18.0 | — | — | |||||||||
Distributions
paid to non-controlling interests
|
(6,589.6 | ) | — | — | ||||||||
Dividends
paid
|
(194,705.8 | ) | (117,000.0 | ) | (60,000.0 | ) | ||||||
Net
cash used by financing activities
|
(141,277.4 | ) | (117,000.0 | ) | (60,000.0 | ) | ||||||
Effect
of exchange rates on cash
|
87.0 | (100.6 | ) | 185.9 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
(25,721.3 | ) | (46,884.1 | ) | 72,392.2 | |||||||
Cash
and cash equivalents:
|
||||||||||||
Beginning
of period
|
86,563.0 | 133,447.1 | 61,054.9 | |||||||||
End
of period
|
$ | 60,841.7 | $ | 86,563.0 | $ | 133,447.1 | ||||||
Cash
paid during period for:
|
||||||||||||
Income
taxes, net of refunds
|
$ | 47,248.9 | $ | 80,109.6 | $ | 94,783.3 | ||||||
Supplementary
information:
|
||||||||||||
Non-cash
transactions:
|
||||||||||||
Distribution to GAM Holding
Ltd.
|
$ | — | $ | — | $ | 100.0 | ||||||
Distribution to GAM Holding
Ltd. payable by September 29, 2010
|
40,100.0 | — | — | |||||||||
Reclassification of liability
awards
|
565,908.6 | — | — | |||||||||
Deferred taxes from step-up in
tax basis
|
39,417.2 | — | — |
·
|
Artio
Global Funds (the “Funds”) are considered voting interest entities but are
controlled by their independent Boards of Directors or
Trustees.
|
·
|
Certain
of the commingled investment vehicles are trusts and are considered
variable interest entities (“VIEs”). We are not the primary beneficiary of
these trusts.
|
·
|
Other
investment vehicles are membership organizations and are considered voting
interest entities. Although our interests in these vehicles are nominal
and do not meet the ownership threshold for consolidation, we are the
managing member of these organizations. Each operating agreement of the
organizations provides to its unaffiliated non-managing members
substantive rights to remove us as managing member. As a result, we do not
have a controlling financial interest in these
organizations.
|
·
|
The
benefits payable to the Principals, which amount to 85% of such deferred
tax asset, are recorded as Due under tax receivable
agreement on our Consolidated Statement of Financial Position. If
we adjust the deferred tax asset, we adjust the payable for 85% of the
adjustment.
|
·
|
The
remaining 15% is recorded in Additional paid-in
capital on our Consolidated Statement of Financial Position. If we
adjust the deferred tax asset, 15% of the adjustment is recorded in Income taxes relating to
income from continuing operations on our Consolidated Statement of
Operations.
|
Class
|
Voting
Rights
|
Economic
Rights, Including Rights to Dividends and Distributions Upon
Liquidation
|
Special
Provisions
|
A
|
One
vote per share
|
Yes
|
—
|
B
|
One
vote per share
|
No
|
—
|
C
|
·
Voting power is the greater of the number of votes on a
one-vote-per-share basis and 20% of the combined voting power of all
classes of common stock.
·
Prior to the IPO, GAM entered into an agreement under which it
agreed that, if it has voting power as holder of Class C common stock in
excess of what it would be entitled to on a one-vote-per-share basis, it
would on all matters vote those excess shares on the same basis and in the
same proportion as the votes cast by Class A and Class B
shareholders.
|
Yes
|
·
If GAM transfers any of its shares to anyone other than any of its
subsidiaries, or us, such shares automatically convert to an equal number
of shares of Class A common stock.
·
On the second anniversary of the IPO, all outstanding shares of
Class C common stock will automatically convert to shares of Class A
common stock on a one-for-one
basis.
|
Class
A
Common
Stock
|
Class
B
Common
Stock
|
Class
C
Common
Stock
|
||||||||||
As
of December 31, 2009:
|
||||||||||||
Authorized
|
500,000,000 | 50,000,000 | 210,000,000 | |||||||||
Reserved
under 2009 Stock Incentive Plan
|
9,685,357 | — | — | |||||||||
Par
value
|
$ | 0.001 | $ | 0.001 | $ | 0.01 |
(in
thousands)
|
Class
A
Common
Stock
|
Class
B
Common
Stock
|
Class
C
Common
Stock
|
|||||||||
As
of January 1, 2007
|
— | — | 42,000.0 | |||||||||
Activity
|
— | — | — | |||||||||
As
of December 31, 2007
|
— | — | 42,000.0 | |||||||||
Activity
|
— | — | — | |||||||||
As
of December 31, 2008
|
— | — | 42,000.0 | |||||||||
Activity:
|
||||||||||||
Shares
issued to the Principals(a)
|
— | 18,000.0 | — | |||||||||
Shares
issued to the public(b)
|
27,644.2 | — | — | |||||||||
Shares
issued to the independent directors(c)
|
14.6 | — | — | |||||||||
Exchange
by the Principals(d)
|
2,400.0 | (2,400.0 | ) | — | ||||||||
Repurchase
from GAM(e)
|
— | — | (25,244.2 | ) | ||||||||
Repurchase
from the Principals(d)
|
(2,400.0 | ) | — | — | ||||||||
As
of December 31, 2009
|
27,658.8 | 15,600.0 | 16,755.8 |
(a)
|
Represents
the 9.0 million shares of non-participating Class B common stock issued to
each of the Principals (see Note
2. Initial Public Offering and Changes in the Principals’
Interests).
|
(b)
|
Represents
the 25.0 million shares of Class A common stock that were issued to the
public in connection with the IPO and the underwriters exercising their
option to purchase 2,644,156 shares of Class A common
stock.
|
(c)
|
Represents
the 6,924 shares of fully-vested Class A common stock (subject to transfer
restrictions) that were awarded to our independent directors in connection
with the IPO and 7,719 shares of fully-vested Class A common stock
(subject to transfer restrictions) granted to our independent directors in
December 2009. The table does not reflect 2.1 million of unvested
restricted stock units (see Note
12. Share-Based Payments) awarded to certain employees (other than
the Principals), each of which represents the right to receive one share
of Class A common stock upon
vesting.
|
(d)
|
Represents
the effect of the issuance of 1.2 million shares of Class A common stock
to each of the Principals upon exchange of an equivalent number of New
Class A Units and subsequent repurchase of such Class A common stock by us
with a portion of the net proceeds from the IPO. Upon the exchange of New
Class A Units for Class A common stock, corresponding shares of Class B
common stock were canceled.
|
(e)
|
Includes
the 25.2 million shares of Class C common stock we repurchased from GAM
and retired with a portion of the net proceeds from the IPO and the shares
issued pursuant to the underwriters exercising their
option.
|
Years
Ended December 31,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Funds
investment management fees
|
$ | 173,336.3 | $ | 253,926.0 | $ | 278,696.7 | ||||||
Sub-advisory
investment management fees on GAM-sponsored funds
|
1,924.8 | 2,376.2 | 2,310.3 |
As
of December 31,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Funds
investment management fees
|
$ | 17,189.6 | $ | 14,231.2 | ||||
Sub-advisory
investment management fees on GAM-sponsored funds
|
614.9 | 509.9 |
(in
thousands)
|
Fair
Value
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
||||||||||||
As
of December 31, 2009:
|
||||||||||||||||
Artio
Global Funds
|
$ | 7,892.5 | $ | 8,448.6 | $ | — | $ | (556.1 | ) | |||||||
Other
investments
|
18.0 | 10.0 | 8.0 | — | ||||||||||||
Total
marketable securities
|
$ | 7,910.5 | $ | 8,458.6 | $ | 8.0 | $ | (556.1 | ) | |||||||
As
of December 31, 2008:
|
||||||||||||||||
U.S.
government and agency instruments:
|
||||||||||||||||
Due
within 1 year
|
$ | 60,375.2 | $ | 60,277.3 | $ | 97.9 | $ | — | ||||||||
Due
5 - 10 years
|
5,028.3 | 4,587.6 | 440.7 | — | ||||||||||||
Artio
Global Funds
|
5,911.4 | 8,594.9 | — | (2,683.5 | ) | |||||||||||
Other
investments
|
14.6 | 10.0 | 4.6 | — | ||||||||||||
Total
marketable securities
|
$ | 71,329.5 | $ | 73,469.8 | $ | 543.2 | $ | (2,683.5 | ) |
(in
thousands)
|
Total
|
Level
1
Quoted
Prices
|
Level
2
Other
Observable Inputs
|
Level
3
Significant
Unobservable Inputs
|
||||||||||||
As
of December 31, 2009:
|
||||||||||||||||
Cash
equivalents
|
$ | — | $ | — | $ | — | $ | — | ||||||||
Marketable
securities
|
7,910.5 | 7,892.5 | — | 18.0 | ||||||||||||
Total
|
$ | 7,910.5 | $ | 7,892.5 | $ | — | $ | 18.0 | ||||||||
As
of December 31, 2008:
|
||||||||||||||||
Cash
equivalents
|
$ | 71,116.6 | $ | 71,116.6 | $ | — | $ | — | ||||||||
Marketable
securities
|
71,329.5 | 71,314.9 | — | 14.6 | ||||||||||||
Total
|
$ | 142,446.1 | $ | 142,431.5 | $ | — | $ | 14.6 |
As
of December 31,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Beginning
of year
|
$ | 14.6 | $ | 10.0 | ||||
Unrealized
gains
|
3.4 | 4.6 | ||||||
End
of period
|
$ | 18.0 | $ | 14.6 |
Years
Ended December 31,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
U.S.
government and agency and other securities:
|
||||||||||||
Change
in unrealized gains (losses)
|
$ | (535.2 | ) | $ | 543.2 | $ | — | |||||
Realized
gains (losses)
|
7.3 | (291.1 | ) | 81.8 | ||||||||
Net
gains (losses) on marketable securities
|
$ | (527.9 | ) | $ | 252.1 | $ | 81.8 | |||||
Artio
Global Funds:
|
||||||||||||
Change
in unrealized gains (losses)
|
$ | 2,127.4 | $ | (2,683.5 | ) | $ | — | |||||
Realized
gains (losses)
|
(157.3 | ) | (173.0 | ) | — | |||||||
Net
gains (losses) on securities held for deferred
compensation
|
$ | 1,970.1 | $ | (2,856.5 | ) | $ | — |
As
of December 31,
|
|||||||||
(in
thousands)
|
2009
|
2008
|
|||||||
Furniture,
fixtures, software and equipment
|
$ | 10,127.6 | $ | 9,574.6 | |||||
Leasehold
improvements
|
10,636.2 | 10,358.4 | |||||||
Less:
accumulated depreciation and amortization
|
(13,128.9 | ) | (10,099.8 | ) | |||||
Property
and equipment, net
|
$ | 7,634.9 | $ | 9,833.2 |
·
|
maintenance
of a maximum consolidated leverage ratio of less than or equal to 2.00x
(calculated as the ratio of consolidated funded indebtedness plus the
remaining amount of a deferred payment to GAM of $40.1 million, which
is payable by September 29, 2010, to consolidated EBITDA for the last six
months multiplied by two); and
|
·
|
maintenance
of a minimum consolidated interest coverage ratio of greater than or equal
to 4.00x (calculated as the ratio of consolidated EBITDA for the last six
months to consolidated interest charges for such
period).
|
(in
thousands)
|
Redemption
Value
|
Liabilities
|
Unvested
Balance
|
|||||||||
December
31, 2009
|
$ | — | $ | — | $ | — | ||||||
December
31, 2008
|
504,725.0 | 201,890.3 | 302,834.7 |
As
of December 31, 2009
|
As
of December 31, 2008
|
|||||||||||||||
(in
thousands)
|
Assets
|
Liabilities
|
Assets
|
Liabilities
|
||||||||||||
Funded
Plan
|
$ | 7,892.5 | $ | 3,741.8 | $ | 5,911.4 | $ | 2,499.7 |
Years
Ended December 31,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Qualified
Plan
|
$ | 2,380.7 | $ | 2,847.9 | $ | 1,553.7 | ||||||
Non-qualified
Plan
|
148.0 | 223.2 | 273.4 | |||||||||
Funded
Plan
|
3,793.8 | 2,444.0 | 2,187.8 | |||||||||
Unfunded
Plan
|
— | 8,877.7 | 1,402.0 | |||||||||
$ | 6,322.5 | $ | 14,392.8 | $ | 5,416.9 |
Weighted-Average
Grant Date Fair Value(a)
|
Number
of Shares
|
|||||||
Outstanding
as of December 31, 2008
|
$ | — | — | |||||
Grants:
|
||||||||
Fully-vested
shares granted to independent directors, subject to transfer
restrictions
|
25.62 | 14,643 | ||||||
Outstanding
as of December 31, 2009
|
14,643 |
(a)
|
Weighted-average
grant date fair value for grants are based on closing price on the grant
date.
|
Weighted-Average
Grant Date Fair Value(a)
|
Number
of Shares
|
|||||||
Outstanding
as of December 31, 2008
|
$ | — | — | |||||
Grants:
|
||||||||
Unvested RSUs
granted to certain employees (other than the Principals) in connection
with the IPO
|
26.25 | 2,147,758 | ||||||
Forfeitures
|
26.25 | (1,000 | ) | |||||
Outstanding
as of December 31, 2009
|
2,146,758 |
(a)
|
Weighted-average
grant date fair value for grants are based on closing price on the grant
date.
|
Years
Ended December 31,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Current:
|
||||||||||||
Federal
|
$ | 43,529.2 | $ | 54,127.6 | $ | 59,806.1 | ||||||
State
and local
|
4,954.8 | 22,147.4 | 34,109.5 | |||||||||
Total
|
48,484.0 | 76,275.0 | 93,915.6 | |||||||||
Deferred:
|
||||||||||||
Federal
|
59,401.5 | (17,380.9 | ) | (23,851.9 | ) | |||||||
State
and local
|
26,401.7 | (4,139.0 | ) | (11,646.3 | ) | |||||||
Total
|
85,803.2 | (21,519.9 | ) | (35,498.2 | ) | |||||||
Income
tax expense
|
$ | 134,287.2 | $ | 54,755.1 | $ | 58,417.4 |
As
of December 31,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Deferred
tax assets:
|
||||||||
Deferred
compensation - Class B profits interests(a)
|
$ | — | $ | 88,316.5 | ||||
Deferred
compensation - other
|
3,605.0 | 1,117.6 | ||||||
Depreciation
and amortization
|
1,161.2 | 764.5 | ||||||
Provisions
and other
|
2,417.0 | 2,503.7 | ||||||
Step-up of tax basis(b)
|
39,133.1 | — | ||||||
Total
deferred tax assets
|
46,316.3 | 92,702.3 | ||||||
Less:
valuation allowance
|
— | — | ||||||
Net
deferred tax asset
|
$ | 46,316.3 | $ | 92,702.3 |
(a)
|
As a
result of the Principals’ exchange of their Class B profits interests for
New Class A Units, the Principals’ ownership interests were reclassified
to equity and the related deferred tax asset was
de-recognized.
|
(b)
|
Under
the tax receivable agreement, 85% of the estimated future tax benefit is
payable to the Principals.
|
Years
Ended December 31,
|
||||||||||||
(in
percentages)
|
2009
|
2008
|
2007
|
|||||||||
Federal
statutory rate
|
35 | % | 35 | % | 35 | % | ||||||
State
and local, net of Federal benefit, and other
|
7 | 10 | 12 | |||||||||
Anticipated
amendment to prior year tax returns
|
3 | — | — | |||||||||
Non-controlling
interests
|
3 | — | — | |||||||||
Permanent
differences:
|
||||||||||||
Compensation
expenses - fully vested Class B profits interests
|
(49 | ) | — | — | ||||||||
Compensation
expenses - tax receivable agreement
|
(18 | ) | — | — | ||||||||
De-recognition
of deferred tax asset
|
(38 | ) | — | — | ||||||||
Other
|
(1 | ) | 2 | — | ||||||||
Total
|
(58 | )% | 47 | % | 47 | % |
(in
thousands)
|
||||
Balance,
January 1, 2008
|
$ | — | ||
Additions (reductions) for tax
provisions of prior years
|
— | |||
Additions based on tax
provisions related to current year
|
— | |||
Reductions for settlements with
taxing authorities
|
— | |||
Lapse of statute of
limitations
|
— | |||
Balance,
January 1, 2009
|
— | |||
Additions (reductions) for tax
provisions of prior years
|
— | |||
Additions based on tax
provisions related to current year
|
3,281.6 | |||
Reductions for settlements with
taxing authorities
|
— | |||
Lapse of statute of
limitations
|
— | |||
Balance,
December 31, 2009
|
$ | 3,281.6 |
Year
Ended
December
31,
|
||||
(in
thousands)
|
2007
|
|||
Revenues
|
$ | 8,694.8 | ||
Income
before income taxes
|
$ | 2,994.9 | ||
Income
taxes
|
1,378.7 | |||
Income
from discontinued operations, net of taxes
|
$ | 1,616.2 | ||
Net
cash provided by discontinued operations
|
$ | 7,938.5 |
Years
Ended December 31,
|
||||||||||||
(in
thousands)
|
2009
|
2008
|
2007
|
|||||||||
Net
income (loss) attributable to Artio Global Investors
|
$ | (378,314.1 | ) | $ | 61,151.3 | $ | 67,985.8 | |||||
Weighted
average shares for basic EPS
|
42,620.4 | 42,000.0 | 42,000.0 | |||||||||
Dilutive
potential shares from exchange of New Class A Units by the Principals(a)
|
— | — | — | |||||||||
Dilutive
potential shares from grants of RSUs(a)
|
— | — | — | |||||||||
Weighted
average shares for diluted EPS
|
42,620.4 | 42,000.0 | 42,000.0 |
(a)
|
The
potential impact of both 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 and the RSU grants were anti-dilutive for
2009.
|
Years
ending December 31,
|
(in
thousands)
|
|||
2010
|
$ | 3,738.7 | ||
2011
|
3,756.0 | |||
2012
|
3,761.8 | |||
2013
|
3,761.8 | |||
2014
|
1,880.9 | |||
$ | 16,899.2 |
(in
thousands)
|
||||
Balance,
January 1, 2008
|
$ | 2,868.7 | ||
2009 rent
payments
|
(889.2 | ) | ||
Fair value
adjustment
|
622.5 | |||
Balance,
December 31, 2009
|
$ | 2,602.0 |
2009
|
||||||||||||||||
(in
thousands, except per share amounts)
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter(a)
|
4th
Quarter
|
||||||||||||
Total
revenues and other operating income
|
$ | 62,526.9 | $ | 70,793.1 | $ | 84,487.9 | $ | 89,584.1 | ||||||||
Operating
income (loss) before income tax expense(a)
|
6,003.0 | 10,604.0 | (298,303.7 | ) | 53,169.0 | |||||||||||
Net
income (loss) attributable to Artio Global Investors(a)
|
3,045.2 | 5,354.4 | (412,423.1 | ) | 25,709.4 | |||||||||||
Basic
EPS, net income (loss) attributable to Artio Global Investors(a)
|
$ | 0.07 | $ | 0.13 | $ | (9.81 | ) | $ | 0.58 | |||||||
Diluted
EPS, net income (loss) attributable to Artio Global Investors(a)(b)(d)
|
$ | 0.07 | $ | 0.13 | $ | (9.81 | ) | $ | 0.56 | |||||||
Dividends
per basic share declared(e)
|
$ | 0.33 | $ | — | $ | 4.83 | $ | — | ||||||||
Common
stock price per share(c):
|
||||||||||||||||
High
|
N/A | N/A | $ | 27.25 | $ | 26.54 | ||||||||||
Low
|
N/A | N/A | $ | 25.50 | $ | 22.66 | ||||||||||
Close
|
N/A | N/A | $ | 26.15 | $ | 25.49 |
(a)
|
The
third quarter of 2009 includes non-recurring compensation charges of
$313.8 million in connection with the
IPO.
|
(b)
|
RSUs
were granted in connection with the IPO in the third quarter of 2009. The
RSUs were anti-dilutive for both the third and fourth quarters of
2009.
|
(c)
|
On
September 29, 2009, we completed an IPO of 25.0 million shares of Class A
common stock.
|
(d)
|
Fourth-quarter
2009 diluted EPS assumes the full exchange of the Principals’ New Class A
Units, and cancelation of corresponding shares of Class B common stock, to
shares of Class A common stock and reflects the elimination of
non-controlling interests and resulting increase in the effective tax
rate.
|
(e)
|
Represents
dividends declared prior to the
IPO.
|
2008
|
||||||||||||||||
(in
thousands, except per share amounts)
|
1st
Quarter
|
2nd
Quarter
|
3rd
Quarter
|
4th
Quarter
|
||||||||||||
Total
revenues and other operating income
|
$ | 116,316.9 | $ | 126,567.7 | $ | 106,528.2 | $ | 72,632.7 | ||||||||
Operating
income before income tax expense
|
22,590.3 | 39,626.3 | 27,054.5 | 23,453.9 | ||||||||||||
Net
income (loss) attributable to Artio Global Investors
|
11,410.4 | 20,211.6 | 16,280.2 | 13,249.1 | ||||||||||||
Basic
EPS, net income attributable to Artio Global Investors
|
$ | 0.27 | $ | 0.48 | $ | 0.39 | $ | 0.32 | ||||||||
Diluted
EPS, net income attributable to Artio Global Investors
|
$ | 0.27 | $ | 0.48 | $ | 0.39 | $ | 0.32 | ||||||||
Dividends
per basic share declared
|
$ | 1.45 | $ | 0.50 | $ | — | $ | 0.84 |
As
of
|
||||||||
(in
thousands, except for share amounts)
|
March
31, 2010
|
December
31, 2009
|
||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 74,771.2 | $ | 60,841.7 | ||||
Marketable
securities, at fair value
|
8,253.3 | 7,910.5 | ||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
55,064.5 | 56,911.1 | ||||||
Deferred
taxes
|
46,828.7 | 46,316.3 | ||||||
Income
taxes receivable
|
11,668.3 | 10,982.5 | ||||||
Property
and equipment, net
|
7,289.5 | 7,634.9 | ||||||
Other
assets
|
6,201.3 | 5,357.2 | ||||||
Total
assets
|
$ | 210,076.8 | $ | 195,954.2 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Debt
|
$ | 60,000.0 | $ | 60,000.0 | ||||
Accrued
compensation and benefits
|
10,895.8 | 31,478.0 | ||||||
Accounts
payable and accrued expenses
|
7,145.7 | 9,092.7 | ||||||
Accrued
income taxes payable
|
20,006.4 | 13,017.0 | ||||||
Due
to GAM Holding Ltd.
|
40,100.0 | 40,100.0 | ||||||
Due
under tax receivable agreement
|
33,655.1 | 33,655.1 | ||||||
Other
liabilities
|
4,291.4 | 4,629.8 | ||||||
Total
liabilities
|
176,094.4 | 191,972.6 | ||||||
Commitments
and contingencies (Note 9)
|
||||||||
Class
A common stock (500,000,000 shares authorized, 2010 – 27,733,299 shares
issued and outstanding; 2009 – 27,658,799 shares issued and
outstanding)
|
27.7 | 27.6 | ||||||
Class
B common stock (50,000,000 shares authorized, 2010 – 15,600,000 shares
issued and outstanding; 2009 – 15,600,000 shares issued and
outstanding)
|
15.6 | 15.6 | ||||||
Class
C common stock (210,000,000 shares authorized, 2010 – 16,755,844 shares
issued and outstanding; 2009 – 16,755,844 shares issued and
outstanding)
|
167.6 | 167.6 | ||||||
Additional
paid-in capital
|
590,498.6 | 586,956.2 | ||||||
Accumulated
deficit
|
(564,213.5 | ) | (580,274.8 | ) | ||||
Total
stockholders’ equity
|
26,496.0 | 6,892.2 | ||||||
Non-controlling
interests
|
7,486.4 | (2,910.6 | ) | |||||
Total
equity
|
33,982.4 | 3,981.6 | ||||||
Total
liabilities and equity
|
$ | 210,076.8 | $ | 195,954.2 |
Three
Months Ended March 31,
|
||||||||
(in
thousands, except per share information)
|
2010
|
2009
|
||||||
Revenues
and other operating income:
|
||||||||
Investment
management fees
|
$ | 85,286.5 | $ | 62,815.8 | ||||
Net
gains (losses) on securities held for deferred
compensation
|
321.4 | (273.3 | ) | |||||
Foreign
currency gains (losses)
|
23.2 | (15.6 | ) | |||||
Total
revenues and other operating income
|
85,631.1 | 62,526.9 | ||||||
Expenses:
|
||||||||
Employee
compensation and benefits:
|
||||||||
Salaries,
incentive compensation and benefits
|
25,168.7 | 16,939.9 | ||||||
Allocation
of Class B profits interests
|
— | 10,215.2 | ||||||
Change
in redemption value of Class B profits interests
|
— | 18,126.0 | ||||||
Employee
compensation and benefits
|
25,168.7 | 45,281.1 | ||||||
Shareholder
servicing and marketing
|
4,548.3 | 3,069.4 | ||||||
General
and administrative
|
10,285.3 | 8,173.4 | ||||||
Total
expenses
|
40,002.3 | 56,523.9 | ||||||
Operating
income before income tax expense
|
45,628.8 | 6,003.0 | ||||||
Non-operating
income (loss):
|
||||||||
Interest
income
|
1.1 | 116.9 | ||||||
Interest
expense
|
(660.7 | ) | (0.1 | ) | ||||
Net
gains (losses) on marketable securities
|
(1.0 | ) | (197.8 | ) | ||||
Total
non-operating loss
|
(660.6 | ) | (81.0 | ) | ||||
Income
before income tax expense
|
44,968.2 | 5,922.0 | ||||||
Income
taxes
|
14,767.3 | 2,876.8 | ||||||
Net
income
|
30,200.9 | 3,045.2 | ||||||
Net
income attributable to non-controlling interests
|
11,333.0 | — | ||||||
Net
income attributable to Artio Global Investors
|
$ | 18,867.9 | $ | 3,045.2 | ||||
Per
share information:
|
||||||||
Basic
net income attributable to Artio Global Investors
|
$ | 0.42 | $ | 0.07 | ||||
Diluted
net income attributable to Artio Global Investors
|
$ | 0.42 | $ | 0.07 | ||||
Weighted
average shares used to calculate per share information:
|
||||||||
Basic
|
44,460.2 | 42,000.0 | ||||||
Diluted
|
44,628.8 | 42,000.0 | ||||||
Dividends
per basic share declared
|
$ | 0.06 | $ | 0.33 |
(in
thousands, except per share information)
|
Class
A Common Stock (par value $0.001)
|
Class
B Common Stock (par value $0.001)
|
Class
C Common Stock (par value $0.01)
|
Additional
Paid-in Capital
|
Retained
Earnings (Deficit)
|
Stockholders’
Equity
|
Non-controlling
Interests
|
Total
Equity
|
||||||||||||||||||||||||
Balance
as of January 1, 2009
|
$ | — | $ | — | $ | 420.0 | $ | 17,930.0 | $ | 14,895.1 | $ | 33,245.1 | $ | — | $ | 33,245.1 | ||||||||||||||||
Net
income
|
— | — | — | — | 3,045.2 | 3,045.2 | — | 3,045.2 | ||||||||||||||||||||||||
Distribution
to GAM Holding Ltd. of $0.33 per share
|
— | — | — | — | (14,000.0 | ) | (14,000.0 | ) | — | (14,000.0 | ) | |||||||||||||||||||||
Balance
as of March 31, 2009
|
$ | — | $ | — | $ | 420.0 | $ | 17,930.0 | $ | 3,940.3 | $ | 22,290.3 | $ | — | $ | 22,290.3 | ||||||||||||||||
Balance
as of January 1, 2010
|
$ | 27.6 | $ | 15.6 | $ | 167.6 | $ | 586,956.2 | $ | (580,274.8 | ) | $ | 6,892.2 | $ | (2,910.6 | ) | $ | 3,981.6 | ||||||||||||||
Net
income
|
— | — | — | — | 18,867.9 | 18,867.9 | 11,333.0 | 30,200.9 | ||||||||||||||||||||||||
Amortization
of share-based payments
|
— | — | — | 3,418.4 | — | 3,418.4 | — | 3,418.4 | ||||||||||||||||||||||||
Vesting
of share-based payments
|
0.1 | — | — | (0.1 | ) | — | — | — | — | |||||||||||||||||||||||
Forfeiture
of share-based payments
|
— | — | — | (13.1 | ) | — | (13.1 | ) | — | (13.1 | ) | |||||||||||||||||||||
Distribution
to non-controlling interests
|
— | — | — | — | — | — | (936.0 | ) | (936.0 | ) | ||||||||||||||||||||||
Dividends
of $0.06 per share
|
— | — | — | — | (2,669.4 | ) | (2,669.4 | ) | — | (2,669.4 | ) | |||||||||||||||||||||
RSU
dividend equivalents
|
— | — | — | 137.2 | (137.2 | ) | — | — | — | |||||||||||||||||||||||
Balance
as of March 31, 2010
|
$ | 27.7 | $ | 15.6 | $ | 167.6 | $ | 590,498.6 | $ | (564,213.5 | ) | $ | 26,496.0 | $ | 7,486.4 | $ | 33,982.4 |
Three
Months Ended March 31,
|
||||||||
(in
thousands)
|
2010
|
2009
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income
|
$ | 30,200.9 | $ | 3,045.2 | ||||
Adjustments
to reconcile net income to net cash provided by (used in) operating
activities:
|
||||||||
Depreciation
and amortization
|
675.8 | 636.8 | ||||||
Deferred
compensation and share-based compensation
|
3,405.3 | 18,632.0 | ||||||
Deferred
income taxes
|
(512.4 | ) | (7,099.8 | ) | ||||
Interest
accrued on marketable securities and accretion and amortization of
discount and premium
|
— | 89.1 | ||||||
(Gains)/losses
on marketable securities and securities held for deferred
compensation
|
(320.4 | ) | 471.1 | |||||
Changes
in assets and liabilities:
|
||||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
1,846.6 | 13,687.1 | ||||||
Due
to/from GAM Holding Ltd.
|
— | (543.2 | ) | |||||
Income
taxes receivable
|
(685.8 | ) | — | |||||
Other
assets
|
(844.1 | ) | 737.9 | |||||
Accrued
compensation and benefits
|
(20,582.2 | ) | (48,851.4 | ) | ||||
Accounts
payable and accrued expenses
|
(1,970.2 | ) | (1,503.3 | ) | ||||
Accrued
income taxes payable
|
6,989.4 | 2,464.3 | ||||||
Other
liabilities
|
(338.4 | ) | (331.6 | ) | ||||
Net
cash provided by (used in) operating activities
|
17,864.5 | (18,565.8 | ) | |||||
Cash
flows from investing activities:
|
||||||||
Purchase
of marketable securities and securities held for deferred
compensation
|
(3,607.8 | ) | (2,528.9 | ) | ||||
Proceeds
from sales or maturities of marketable securities and securities held for
deferred compensation
|
3,585.4 | 45,226.7 | ||||||
Purchase
of fixed assets
|
(330.4 | ) | (477.4 | ) | ||||
Net
cash provided by (used in) investing activities
|
(352.8 | ) | 42,220.4 | |||||
Cash
flows from financing activities:
|
||||||||
Distributions
paid to non-controlling interests
|
(936.0 | ) | — | |||||
Dividends
paid
|
(2,669.4 | ) | (14,000.0 | ) | ||||
Net
cash used by financing activities
|
(3,605.4 | ) | (14,000.0 | ) | ||||
Effect
of exchange rates on cash
|
23.2 | (15.6 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
13,929.5 | 9,639.0 | ||||||
Cash
and cash equivalents:
|
||||||||
Beginning
of period
|
60,841.7 | 86,563.0 | ||||||
End
of period
|
$ | 74,771.2 | $ | 96,202.0 | ||||
Cash
paid during period for:
|
||||||||
Income
taxes, net of refunds
|
$ | 9,137.5 | $ | 6,228.7 | ||||
Interest
expense
|
498.1 | 0.1 |
Three
Months Ended March 31,
|
||||||||
(in
thousands)
|
2010
|
2009
|
||||||
Funds
investment management fees
|
$ | 48,900.2 | $ | 35,662.3 | ||||
Sub-advisory
investment management fees on GAM-sponsored funds
|
592.2 | 362.9 |
(in
thousands)
|
As
of March 31,
2010
|
As
of December 31, 2009
|
||||||
Funds
investment management fees
|
$ | 17,831.1 | $ | 17,189.6 | ||||
Sub-advisory
investment management fees on GAM-sponsored funds
|
671.2 | 614.9 |
(in
thousands)
|
Fair
Value
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
||||||||||||
As
of March 31, 2010:
|
||||||||||||||||
Artio
Global Funds
|
$ | 8,236.3 | $ | 8,421.2 | $ | — | $ | (184.9 | ) | |||||||
Other
investments
|
17.0 | 10.0 | 7.0 | — | ||||||||||||
Total
|
$ | 8,253.3 | $ | 8,431.2 | $ | 7.0 | $ | (184.9 | ) | |||||||
As
of December 31, 2009:
|
||||||||||||||||
Artio
Global Funds
|
$ | 7,892.5 | $ | 8,448.6 | $ | — | $ | (556.1 | ) | |||||||
Other
investments
|
18.0 | 10.0 | 8.0 | — | ||||||||||||
Total
|
$ | 7,910.5 | $ | 8,458.6 | $ | 8.0 | $ | (556.1 | ) |
(in
thousands)
|
Total
|
Level
1
Quoted
Prices
|
Level
2
Other
Observable Inputs
|
Level
3
Significant
Unobservable Inputs
|
||||||||||||
As
of March 31, 2010
|
$ | 8,253.3 | $ | 8,236.3 | $ | — | $ | 17.0 | ||||||||
As
of December 31, 2009
|
7,910.5 | 7,892.5 | — | 18.0 |
(in
thousands)
|
March
31, 2010
|
March
31, 2009
|
||||||
Beginning
of period
|
$ | 18.0 | $ | 14.6 | ||||
Unrealized
losses
|
(1.0 | ) | (2.5 | ) | ||||
End
of period
|
$ | 17.0 | $ | 12.1 |
Three
Months Ended March 31,
|
||||||||
(in
thousands)
|
2010
|
2009
|
||||||
U.S.
government and agency and other securities:
|
||||||||
Change
in unrealized losses
|
$ | (1.0 | ) | $ | (197.8 | ) | ||
Net
gains (losses) on marketable securities
|
$ | (1.0 | ) | $ | (197.8 | ) | ||
Artio
Global Funds:
|
||||||||
Change
in unrealized gains (losses)
|
$ | 371.2 | $ | (141.5 | ) | |||
Realized
losses
|
(49.8 | ) | (131.8 | ) | ||||
Net
gains (losses) on securities held for deferred compensation
|
$ | 321.4 | $ | (273.3 | ) |
Weighted-Average
Grant Date Fair Value(a)
|
Number
of RSUs
|
RSU
Dividend Equivalents
|
||||||||||
Outstanding
as of January 1, 2010
|
2,146,758 | — | ||||||||||
Grants:
|
||||||||||||
Unvested
RSUs granted to certain officers and employees
|
$ | 23.58 | 215,398 | — | ||||||||
Dividend
equivalents
|
5,704 | |||||||||||
Vested
|
26.25 | (74,500 | ) | — | ||||||||
Forfeitures
|
26.25 | (500 | ) | — | ||||||||
Outstanding
as of March 31, 2010
|
2,287,156 | 5,704 |
(a)
|
Weighted-average
grant date fair value for grants is based on the closing price on the
grant date.
|
Units
|
||||
Available
for grant at inception
|
9,700,000 | |||
RSUs
outstanding as of March 31, 2010
|
(2,287,156 | ) | ||
RSU
dividend equivalents outstanding as of March 31, 2010
|
(5,704 | ) | ||
RSUs
vested as of March 31, 2010
|
(74,500 | ) | ||
Fully-vested
restricted stock granted to independent directors
|
(14,643 | ) | ||
Available
for grant as of March 31, 2010
|
7,317,997 |
Three
Months Ended March 31,
|
||||||||
(in
thousands)
|
2010
|
2009
|
||||||
Current:
|
||||||||
Federal
|
$ | 10,712.6 | $ | 6,694.2 | ||||
State
and local
|
4,567.1 | 3,282.4 | ||||||
Total
|
15,279.7 | 9,976.6 | ||||||
Deferred:
|
||||||||
Federal
|
(368.1 | ) | (4,970.2 | ) | ||||
State
and local
|
(144.3 | ) | (2,129.6 | ) | ||||
Total
|
(512.4 | ) | (7,099.8 | ) | ||||
Income
tax expense
|
$ | 14,767.3 | $ | 2,876.8 |
Three
Months Ended March 31,
|
||||||||
(in
percentages)
|
2010
|
2009
|
||||||
Federal
statutory rate
|
35 | % | 35 | % | ||||
State
and local, net of federal benefit, and other
|
9 | 13 | ||||||
Non-controlling
interests
|
(11 | ) | — | |||||
Permanent
differences:
|
||||||||
Other
|
— | 1 | ||||||
Total
|
33 | % | 49 | % |
Three
Months Ended March 31,
|
||||||||
(in
thousands)
|
2010
|
2009
|
||||||
Net
income attributable to Artio Global Investors
|
$ | 18,867.9 | $ | 3,045.2 | ||||
Weighted
average shares for basic EPS
|
44,460.2 | 42,000.0 | ||||||
Dilutive
potential shares from grants of RSUs(a)
|
168.6 | — | ||||||
Dilutive
potential shares from exchange of New Class A Units by the Principals(b)
|
— | — | ||||||
Weighted
average shares for diluted EPS
|
44,628.8 | 42,000.0 |
(a)
|
The
potential impact of approximately 1.7 million granted RSUs was
antidilutive for the three months ended March 31,
2010.
|
(b)
|
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 was antidilutive for the three months ended March 31,
2010.
|
Amount
to be Paid
|
||||
Registration
fee
|
$ | 6,108.98 | ||
Financial
Industry Regulatory Authority, Inc. filing fee
|
$ | 9,068 | ||
Blue
Sky fees and expenses
|
$ | * | ||
Printing
and engraving expenses
|
$ | * | ||
Legal
fees and expenses
|
$ | * | ||
Accounting
fees and expenses
|
$ | * | ||
Transfer
Agent’s fees
|
$ | * | ||
Miscellaneous
|
$ | * | ||
Total
|
$ | * |
|
*
To be included by amendment.
|
Artio
Global Investors Inc.
|
|||
By:
|
/s/
Richard Pell
|
||
Name:
|
Richard
Pell
|
||
Title:
|
Principal
Executive Officer
|
Signature
|
Title
|
Date
|
/s/
Richard Pell
|
Principal
Executive
|
May
21, 2010
|
Richard
Pell
|
Officer
and Director
|
|
/s/
Francis Harte
|
Principal
Financial and Accounting
|
May
21, 2010
|
Francis
Harte
|
Officer
|
|
/s/
Glen Wisher
|
Director,
President
|
May
21, 2010
|
Glen
Wisher
|
||
/s/
Francis Ledwidge
|
Director
|
May
21, 2010
|
Francis
Ledwidge
|
||
/s/
Duane Kullberg
|
Director
|
May
21, 2010
|
Duane
Kullberg
|
||
/s/
Elizabeth Buse
|
Director
|
May
21, 2010
|
Elizabeth
Buse
|
||
Exhibit
Number
|
Description
|
1
|
Form
of Underwriting Agreement+
|
3.1
|
Form
of Amended and Restated Certificate of Incorporation of Artio Global
Investors Inc. (incorporated by reference to
Amendment No. 7 to the Company’s Registration Statement on
Form S-1 (File No. 333-149178)
Exhibit 3.1)
|
3.2
|
Form
of Amended and Restated Bylaws of Artio Global Investors Inc. (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 3.2)
|
4.1
|
Form
of Class A Common Stock Certificate (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 4.1)
|
5
|
Opinion
of Davis Polk & Wardwell LLP+
|
10.1
|
Form
of Amended and Restated Limited Liability Company Agreement of Artio
Global Holdings LLC (incorporated by
reference to Amendment No. 7 to the Company’s Registration Statement
on Form S-1 (File No. 333-149178)
Exhibit 10.1)
|
10.2
|
Form
of Registration Rights Agreement (incorporated by reference to Amendment No. 1
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.2)
|
10.3
|
Form
of Exchange Agreement (incorporated by
reference to Amendment No. 7 to the Company’s Registration Statement
on Form S-1 (File No. 333-149178)
Exhibit 10.3)
|
10.4
|
Form
of Tax Receivable Agreement (incorporated by
reference to Amendment No. 6 to the Company’s Registration Statement
on Form S-1 (File No. 333-149178)
Exhibit 10.4)
|
10.5
|
Form
of Transition Services Agreement among Julius Baer Group Ltd., Bank Julius
Baer & Co. Ltd. and Artio Global Management LLC (incorporated by reference to Amendment No. 7
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.5)
|
10.6
|
Julius
Baer Holding Ltd. Shareholders Agreement (incorporated by reference to Amendment No. 7
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.7)
|
10.7
|
Form
of Younes Shareholders Agreement (incorporated by reference to Amendment No. 3
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.8)
|
10.8
|
Form
of Employment Agreement with Richard Pell (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.9)
|
10.9
|
Form
of Employment Agreement with Glen Wisher (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.10)
|
10.10
|
Form
of Employment Agreement with Francis Harte (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.11)
|
10.11
|
Form
of Employment Agreement with Tony Williams (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.12)
|
10.12
|
Form
of Employment Agreement with Rudolph-Riad Younes (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.13)
|
10.13
|
Form
of Stock Repurchase Agreement (incorporated
by reference to Amendment No. 6 to the Company’s Registration
Statement on Form S-1 (File No. 333-149178)
Exhibit 10.14)
|
10.14
|
Form
of Pell Shareholders Agreement (incorporated
by reference to Amendment No. 3 to the Company’s Registration
Statement on Form S-1 (File No. 333-149178)
Exhibit 10.15)
|
10.15
|
Artio
Global Investors Inc. 2009 Stock Incentive Plan (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.16)
|
10.16
|
Artio
Global Investors Inc. Management Incentive Plan (incorporated by reference to Amendment No. 6
to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.17)
|
10.17
|
Forms
of Restricted Stock Unit Award Agreements under the Artio Global Investors
Inc. 2009 Stock Incentive Plan (incorporated
by reference to Amendment No. 7 to the Company’s Registration
Statement on Form S-1 (File No. 333-149178)
Exhibit 10.18)
|
10.18
|
Form
of Independent Director Stock Award Agreement under the Artio Global
Investors Inc. 2009 Stock Incentive Plan (incorporated by reference to Amendment No. 7
to the Company’s Registration Statement on Form S-1/A (File
No. 333-149178) Exhibit 10.19)
|
10.19
|
Credit
Facility dated as of September 4, 2009 among Artio Global Holdings
LLC, the Guarantors party thereto and Bank of America, N.A., as
Administrative Agent and L/C Issuer and the other lenders party thereto
(incorporated by reference to Amendment
No. 7 to the Company’s Registration Statement on Form S-1 (File
No. 333-149178) Exhibit 10.20)
|
10.20
|
Form
of Indemnification Agreement (incorporated
by reference to Amendment No. 7 to the Company’s Registration
Statement on Form S-1 (File No. 333-149178)
Exhibit 10.21)
|
10.21
|
Form
of Indemnification and Co-operation Agreement between Artio Global
Management LLC and Julius Baer Holding Ltd. (incorporated by reference to Amendment No. 7
to the Company’s Registration Statement on Form S-1/A (File
No. 333-149178) Exhibit 10.22)
|
10.22
|
Amendment No. 1 to the Exchange Agreement
dated as of September 29, 2009 by and among Artio Global Investors
Inc., Richard C. Pell, Rudolph-Riad Younes, the Richard Pell Family Trust,
and the Rudolph-Riad Younes Family Trust +
|
10.23
|
Form
of Stock Repurchase Agreement and Unit Sale Agreement+
|
21
|
Subsidiaries
of the Registrant (incorporated by reference
to Amendment No. 3 to the Company’s Registration Statement on
Form S-1/A (File No. 333-149178)
Exhibit 21)
|
23.1
|
Consent
of KPMG LLP
|
23.2
|
Consent
of Davis Polk & Wardwell LLP (included in Exhibit
5)
|
24.1
|
Power
of Attorney
|
|
+ To
be filed by amendment.
|