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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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95-4191764
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Large accelerated filer
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¨
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Accelerated filer
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x
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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Item 1.
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Item 1A.
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Item 2.
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Item 6.
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March 31,
2017 |
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December 31,
2016 |
||||
($ in thousands, except share data)
|
|
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|
||||
Assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
235,930
|
|
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$
|
64,588
|
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Investments
|
86,066
|
|
|
89,371
|
|
||
Accounts receivable, net
|
37,841
|
|
|
35,879
|
|
||
Assets of consolidated sponsored investment products
|
|
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|
||||
Cash of consolidated sponsored investment products
|
1,866
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|
|
3,650
|
|
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Cash pledged or on deposit of consolidated sponsored investment products
|
1,107
|
|
|
984
|
|
||
Investments of consolidated sponsored investment products
|
112,930
|
|
|
142,075
|
|
||
Other assets of consolidated sponsored investment products
|
39,702
|
|
|
3,270
|
|
||
Assets of consolidated investment product
|
|
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|
||||
Cash equivalents of consolidated investment product
|
13,957
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|
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14,449
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|
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Investments of consolidated investment product
|
354,002
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|
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346,967
|
|
||
Other assets of consolidated investment product
|
6,152
|
|
|
5,888
|
|
||
Furniture, equipment and leasehold improvements, net
|
7,264
|
|
|
7,728
|
|
||
Intangible assets, net
|
38,194
|
|
|
38,427
|
|
||
Goodwill
|
6,788
|
|
|
6,788
|
|
||
Deferred taxes, net
|
45,716
|
|
|
47,535
|
|
||
Other assets
|
25,908
|
|
|
16,789
|
|
||
Total assets
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$
|
1,013,423
|
|
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$
|
824,388
|
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Liabilities and Equity
|
|
|
|
||||
Liabilities:
|
|
|
|
||||
Accrued compensation and benefits
|
$
|
16,519
|
|
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$
|
47,885
|
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Accounts payable and accrued liabilities
|
30,364
|
|
|
25,176
|
|
||
Dividends payable
|
5,991
|
|
|
3,479
|
|
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Debt
|
—
|
|
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30,000
|
|
||
Other liabilities
|
13,702
|
|
|
13,505
|
|
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Liabilities of consolidated sponsored investment products
|
2,834
|
|
|
4,109
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|
||
Liabilities of consolidated investment product
|
|
|
|
||||
Notes payable of consolidated investment product
|
325,843
|
|
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328,761
|
|
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Securities purchased payable and other liabilities of consolidated investment product
|
20,806
|
|
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12,534
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|
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Total liabilities
|
416,059
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|
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465,449
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
||||
Redeemable noncontrolling interests
|
44,976
|
|
|
37,266
|
|
||
Equity:
|
|
|
|
||||
Equity attributable to stockholders:
|
|
|
|
||||
Series D mandatory convertible preferred stock, $0.01 par value, 1,150,000 shares authorized; 1,150,000 and 0 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively.
|
110,837
|
|
|
—
|
|
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Common stock, $0.01 par value, 1,000,000,000 shares authorized; 10,219,189 shares issued and 6,989,144 shares outstanding at March 31, 2017 and 9,119,058 shares issued and 5,889,013 shares outstanding at December 31, 2016
|
102
|
|
|
91
|
|
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Additional paid-in capital
|
1,196,031
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1,090,331
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|
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Accumulated deficit
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(410,200
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)
|
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(424,279
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)
|
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Accumulated other comprehensive loss
|
(136
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)
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|
(224
|
)
|
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Treasury stock, at cost, 3,230,045 and 3,230,045 shares at March 31, 2017 and December 31, 2016, respectively
|
(344,246
|
)
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|
(344,246
|
)
|
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Total equity attributable to stockholders
|
552,388
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|
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321,673
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|
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Total liabilities and equity
|
$
|
1,013,423
|
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$
|
824,388
|
|
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Three Months Ended
March 31, |
|
||||||
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2017
|
|
2016
|
|
||||
($ in thousands, except per share data)
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|
|
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|
||||
Revenues
|
|
|
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|
||||
Investment management fees
|
$
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59,271
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$
|
57,644
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Distribution and service fees
|
10,783
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|
|
12,478
|
|
|
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Administration and transfer agent fees
|
8,981
|
|
|
9,998
|
|
|
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Other income and fees
|
741
|
|
|
175
|
|
|
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Total revenues
|
79,776
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|
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80,295
|
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|
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Operating Expenses
|
|
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|
||||
Employment expenses
|
39,641
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|
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35,977
|
|
|
||
Distribution and other asset-based expenses
|
15,323
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|
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18,101
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|
|
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Other operating expenses
|
13,226
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|
|
10,765
|
|
|
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Other operating expenses of consolidated sponsored investment products
|
577
|
|
|
1,133
|
|
|
||
Other operating expenses of consolidated investment product
|
65
|
|
|
56
|
|
|
||
Depreciation and other amortization
|
664
|
|
|
862
|
|
|
||
Amortization expense
|
233
|
|
|
651
|
|
|
||
Total operating expenses
|
69,729
|
|
|
67,545
|
|
|
||
Operating Income
|
10,047
|
|
|
12,750
|
|
|
||
Other Income (Expense)
|
|
|
|
|
||||
Realized and unrealized gain (loss) on investments, net
|
297
|
|
|
(658
|
)
|
|
||
Realized and unrealized gain on investments of consolidated sponsored investment products, net
|
3,726
|
|
|
295
|
|
|
||
Realized and unrealized gain of consolidated investment product, net
|
718
|
|
|
2,235
|
|
|
||
Other income, net
|
646
|
|
|
228
|
|
|
||
Total other income, net
|
5,387
|
|
|
2,100
|
|
|
||
Interest Income (Expense)
|
|
|
|
|
||||
Interest expense
|
(243
|
)
|
|
(132
|
)
|
|
||
Interest and dividend income
|
188
|
|
|
273
|
|
|
||
Interest and dividend income of investments of consolidated sponsored investment products
|
1,495
|
|
|
2,961
|
|
|
||
Interest income of consolidated investment product
|
4,161
|
|
|
2,206
|
|
|
||
Interest expense of consolidated investment product
|
(2,857
|
)
|
|
(732
|
)
|
|
||
Total interest income, net
|
2,744
|
|
|
4,576
|
|
|
||
Income Before Income Taxes
|
18,178
|
|
|
19,426
|
|
|
||
Income tax expense
|
4,433
|
|
|
7,556
|
|
|
||
Net Income
|
13,745
|
|
|
11,870
|
|
|
||
Noncontrolling interests
|
(718
|
)
|
|
493
|
|
|
||
Net Income Attributable to Stockholders
|
13,027
|
|
|
12,363
|
|
|
||
Preferred stockholder dividends
|
(2,084
|
)
|
|
—
|
|
|
||
Net Income Attributable to Common Stockholders
|
$
|
10,943
|
|
|
$
|
12,363
|
|
|
Earnings per Share—Basic
|
$
|
1.67
|
|
|
$
|
1.48
|
|
|
Earnings per Share—Diluted
|
$
|
1.62
|
|
|
$
|
1.45
|
|
|
Cash Dividends Declared per Preferred Share
|
$
|
1.81
|
|
|
$
|
—
|
|
|
Cash Dividends Declared per Common Share
|
$
|
0.45
|
|
|
$
|
0.45
|
|
|
Weighted Average Shares Outstanding—Basic (in thousands)
|
6,542
|
|
|
8,344
|
|
|
||
Weighted Average Shares Outstanding—Diluted (in thousands)
|
6,773
|
|
|
8,506
|
|
|
|
Three Months Ended
March 31, |
|
||||||
|
2017
|
|
2016
|
|
||||
($ in thousands)
|
|
|
|
|
||||
Net Income
|
$
|
13,745
|
|
|
$
|
11,870
|
|
|
Other comprehensive income, net of tax:
|
|
|
|
|
||||
Foreign currency translation adjustment, net of tax of ($61) for the three months ended March 31, 2016
|
—
|
|
|
99
|
|
|
||
Unrealized gain on available-for-sale securities, net of tax of $(54) and ($97) for the three months ended March 31, 2017 and 2016, respectively
|
88
|
|
|
160
|
|
|
||
Other comprehensive income
|
88
|
|
|
259
|
|
|
||
Comprehensive income
|
13,833
|
|
|
12,129
|
|
|
||
Comprehensive (income) loss attributable to noncontrolling interests
|
(718
|
)
|
|
493
|
|
|
||
Comprehensive Income Attributable to Stockholders
|
$
|
13,115
|
|
|
$
|
12,622
|
|
|
|
Three Months Ended
March 31, |
||||||
|
2017
|
|
2016
|
||||
($ in thousands)
|
|
|
|
||||
Cash Flows from Operating Activities:
|
|
|
|
||||
Net income
|
$
|
13,745
|
|
|
$
|
11,870
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation expense, intangible asset and other amortization
|
960
|
|
|
1,573
|
|
||
Stock-based compensation
|
3,491
|
|
|
3,270
|
|
||
Excess tax benefit from stock-based compensation
|
—
|
|
|
(130
|
)
|
||
Amortization of deferred commissions
|
516
|
|
|
763
|
|
||
Payments of deferred commissions
|
(671
|
)
|
|
(500
|
)
|
||
Equity in earnings of equity method investments
|
(629
|
)
|
|
(218
|
)
|
||
Realized and unrealized (gains) losses on trading securities, net
|
(297
|
)
|
|
658
|
|
||
Sales of trading securities, net
|
2,396
|
|
|
11,197
|
|
||
Deferred taxes, net
|
2,817
|
|
|
4,900
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable, net and other assets
|
(13,013
|
)
|
|
(4,944
|
)
|
||
Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities
|
(24,305
|
)
|
|
(35,710
|
)
|
||
Operating activities of consolidated sponsored investment products:
|
|
|
|
||||
Realized and unrealized gains on investments of consolidated sponsored investment products, net
|
(4,139
|
)
|
|
(683
|
)
|
||
Purchases of investments by consolidated sponsored investment products
|
(32,805
|
)
|
|
(112,013
|
)
|
||
Sales of investments by consolidated sponsored investment products
|
39,706
|
|
|
103,196
|
|
||
Net purchases of short term investments by consolidated sponsored investment products
|
(1,735
|
)
|
|
(12,728
|
)
|
||
Purchases of securities sold short by consolidated sponsored investment products, net
|
(20
|
)
|
|
(3,655
|
)
|
||
Change in cash pledged or on deposit of consolidated sponsored investment products
|
(123
|
)
|
|
1,682
|
|
||
Change in other assets of consolidated sponsored investment products
|
118
|
|
|
(1,292
|
)
|
||
Change in liabilities of consolidated sponsored investment products
|
128
|
|
|
618
|
|
||
Operating activities of consolidated investment product:
|
|
|
|
||||
Realized and unrealized gains of consolidated investment product, net
|
(718
|
)
|
|
(2,235
|
)
|
||
Purchases of investments by consolidated investment product
|
(59,673
|
)
|
|
(7,481
|
)
|
||
Sales of investments by consolidated investment product
|
58,485
|
|
|
3,402
|
|
||
Change in other assets of consolidated investment product
|
417
|
|
|
(163
|
)
|
||
Change in liabilities of consolidated investment product
|
44
|
|
|
248
|
|
||
Net cash used in operating activities
|
(15,305
|
)
|
|
(38,375
|
)
|
||
Cash Flows from Investing Activities:
|
|
|
|
||||
Capital expenditures
|
(369
|
)
|
|
(591
|
)
|
||
Increase in cash and cash equivalents of consolidated sponsored investment products due to consolidation, net
|
5,615
|
|
|
103
|
|
||
Equity method investment contributions
|
—
|
|
|
(759
|
)
|
||
Purchases of available-for-sale securities
|
(66
|
)
|
|
(60
|
)
|
||
Net cash provided by (used in) investing activities
|
5,180
|
|
|
(1,307
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
||||
Borrowings (Payments) on borrowings by consolidated sponsored investment products, net
|
73
|
|
|
(1,839
|
)
|
||
Borrowings of debt of consolidated investment product
|
—
|
|
|
2,867
|
|
||
Repayment of notes payable by consolidated investment product
|
(500
|
)
|
|
—
|
|
||
Repayments on credit facility
|
(30,000
|
)
|
|
—
|
|
||
Proceeds from issuance of mandatory convertible preferred stock, net of issuance costs
|
111,280
|
|
|
—
|
|
||
Proceeds from issuance of common stock, net of issuance costs
|
109,762
|
|
|
—
|
|
||
Common stock dividends paid
|
(2,894
|
)
|
|
(3,911
|
)
|
||
Repurchases of common shares
|
—
|
|
|
(15,000
|
)
|
||
Proceeds from exercise of stock options
|
86
|
|
|
375
|
|
||
Taxes paid related to net share settlement of restricted stock units
|
(2,464
|
)
|
|
(1,001
|
)
|
||
Excess tax benefits from stock-based compensation
|
—
|
|
|
130
|
|
||
Payment of deferred financing costs
|
(61
|
)
|
|
—
|
|
||
(Redemptions) Contributions of noncontrolling interests, net
|
(6,091
|
)
|
|
19,928
|
|
||
Net cash provided by financing activities
|
179,191
|
|
|
1,549
|
|
||
Net increase (decrease) in cash and cash equivalents
|
169,066
|
|
|
(38,133
|
)
|
||
Cash and cash equivalents, beginning of period
|
82,687
|
|
|
97,384
|
|
||
Cash and Cash Equivalents, End of Period
|
$
|
251,753
|
|
|
$
|
59,251
|
|
Non-Cash Investing Activities:
|
|
|
|
||||
Change in accrual for capital expenditures
|
$
|
(166
|
)
|
|
$
|
(153
|
)
|
Non-Cash Financing Activities:
|
|
|
|
||||
Decrease to noncontrolling interest due to consolidation and (deconsolidation) of consolidated sponsored investment products
|
$
|
13,083
|
|
|
$
|
(52,874
|
)
|
Common stock dividends payable
|
$
|
3,145
|
|
|
$
|
4,173
|
|
Preferred stock dividends payable
|
$
|
2,084
|
|
|
$
|
—
|
|
Accrued stock issuance costs
|
$
|
886
|
|
|
$
|
—
|
|
|
Common Stock
|
|
Preferred Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Treasury Stock
|
|
Total
Attributed To
Stockholders
|
|
Non-
controlling
Interests
|
|
Total
Equity
|
|
Redeemable
Non-
controlling
Interests
|
||||||||||||||||||||||||||||
($ in thousands except per share data)
|
Shares
|
|
Par Value
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
|||||||||||||||||||||||||||||||||||
Balances at December 31, 2015
|
8,398,944
|
|
|
$
|
96
|
|
|
—
|
|
|
—
|
|
|
$
|
1,140,875
|
|
|
$
|
(472,614
|
)
|
|
$
|
(1,034
|
)
|
|
1,214,144
|
|
|
$
|
(157,699
|
)
|
|
$
|
509,624
|
|
|
$
|
(167
|
)
|
|
$
|
509,457
|
|
|
$
|
73,864
|
|
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,363
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,363
|
|
|
—
|
|
|
12,363
|
|
|
(493
|
)
|
|||||||||
Net unrealized loss on securities available-for-sale
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|
160
|
|
|
—
|
|
|||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|
99
|
|
|
—
|
|
|||||||||
Activity of noncontrolling interests, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32,946
|
)
|
|||||||||
Cash dividends declared ($0.45 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,850
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,850
|
)
|
|
|
|
(3,850
|
)
|
|
—
|
|
||||||||||
Repurchases of common shares
|
(176,204
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
176,204
|
|
|
(15,000
|
)
|
|
(15,000
|
)
|
|
—
|
|
|
(15,000
|
)
|
|
—
|
|
|||||||||
Issuance of common shares related to employee stock transactions
|
37,091
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
374
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
375
|
|
|
—
|
|
|
375
|
|
|
—
|
|
|||||||||
Taxes paid on stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,001
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,001
|
)
|
|
—
|
|
|
(1,001
|
)
|
|
—
|
|
|||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,029
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,029
|
|
|
—
|
|
|
4,029
|
|
|
—
|
|
|||||||||
Tax deficiencies from stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,246
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,246
|
)
|
|
—
|
|
|
(1,246
|
)
|
|
—
|
|
|||||||||
Balances at March 31, 2016
|
8,259,831
|
|
|
$
|
97
|
|
|
—
|
|
|
—
|
|
|
$
|
1,139,181
|
|
|
$
|
(460,251
|
)
|
|
$
|
(775
|
)
|
|
1,390,348
|
|
|
$
|
(172,699
|
)
|
|
$
|
505,553
|
|
|
$
|
(167
|
)
|
|
$
|
505,386
|
|
|
$
|
40,425
|
|
Balances at December 31, 2016
|
5,889,013
|
|
|
$
|
91
|
|
|
—
|
|
|
—
|
|
|
$
|
1,090,331
|
|
|
$
|
(424,279
|
)
|
|
$
|
(224
|
)
|
|
3,230,045
|
|
|
$
|
(344,246
|
)
|
|
$
|
321,673
|
|
|
$
|
—
|
|
|
$
|
321,673
|
|
|
$
|
37,266
|
|
Adjustment for adoption of ASU 2016-09
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,052
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,052
|
|
|
—
|
|
|
1,052
|
|
|
—
|
|
|||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,027
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13,027
|
|
|
—
|
|
|
13,027
|
|
|
718
|
|
|||||||||
Net unrealized gain on securities available-for-sale
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|
88
|
|
|
—
|
|
|||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||
Activity of noncontrolling interests, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,992
|
|
|||||||||
Issuance of mandatory convertible preferred stock, net of offering costs
|
—
|
|
|
—
|
|
|
1,150,000
|
|
|
110,837
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
110,837
|
|
|
—
|
|
|
110,837
|
|
|
—
|
|
|||||||||
Cash dividends declared ($1.8125 per preferred share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,084
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,084
|
)
|
|
—
|
|
|
(2,084
|
)
|
|
—
|
|
|||||||||
Issuance of common stock, net of offering costs
|
1,046,500
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
109,310
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
109,320
|
|
|
—
|
|
|
109,320
|
|
|
—
|
|
|||||||||
Cash dividends declared ($0.45 per common share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,322
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,322
|
)
|
|
—
|
|
|
(3,322
|
)
|
|
—
|
|
|||||||||
Issuance of common shares related to employee stock transactions
|
53,631
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
|||||||||
Taxes paid on stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,464
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,464
|
)
|
|
|
|
(2,464
|
)
|
|
—
|
|
||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,175
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,175
|
|
|
—
|
|
|
4,175
|
|
|
—
|
|
|||||||||
Balances at March 31, 2017
|
6,989,144
|
|
|
$
|
102
|
|
|
1,150,000
|
|
|
110,837
|
|
|
$
|
1,196,031
|
|
|
$
|
(410,200
|
)
|
|
$
|
(136
|
)
|
|
3,230,045
|
|
|
$
|
(344,246
|
)
|
|
$
|
552,388
|
|
|
$
|
—
|
|
|
$
|
552,388
|
|
|
$
|
44,976
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
($ in thousands)
|
|
|
|
||||
Definite-lived intangible assets:
|
|
|
|
||||
Investment contracts
|
$
|
158,747
|
|
|
$
|
158,747
|
|
Accumulated amortization
|
(155,369
|
)
|
|
(155,136
|
)
|
||
Definite-lived intangible assets, net
|
3,378
|
|
|
3,611
|
|
||
Indefinite-lived intangible assets
|
34,816
|
|
|
34,816
|
|
||
Total intangible assets, net
|
$
|
38,194
|
|
|
$
|
38,427
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
($ in thousands)
|
|
|
|
||||
Intangible assets, net
|
|
|
|
||||
Balance, beginning of period
|
$
|
38,427
|
|
|
$
|
40,887
|
|
Amortization
|
(233
|
)
|
|
(651
|
)
|
||
Balance, end of period
|
$
|
38,194
|
|
|
$
|
40,236
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
($ in thousands)
|
|
|
|
||||
Marketable securities
|
$
|
70,595
|
|
|
$
|
74,907
|
|
Equity method investments
|
8,360
|
|
|
7,731
|
|
||
Nonqualified retirement plan assets
|
6,186
|
|
|
5,808
|
|
||
Other investments
|
925
|
|
|
925
|
|
||
Total investments
|
$
|
86,066
|
|
|
$
|
89,371
|
|
|
Cost
|
|
Unrealized
Loss
|
|
Unrealized
Gain
|
|
Fair
Value
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Trading:
|
|
|
|
|
|
|
|
||||||||
Sponsored mutual funds
|
$
|
57,071
|
|
|
$
|
(2,185
|
)
|
|
$
|
112
|
|
|
$
|
54,998
|
|
Equity securities
|
10,705
|
|
|
—
|
|
|
1,269
|
|
|
11,974
|
|
||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Sponsored closed-end funds
|
3,566
|
|
|
(247
|
)
|
|
304
|
|
|
3,623
|
|
||||
Total marketable securities
|
$
|
71,342
|
|
|
$
|
(2,432
|
)
|
|
$
|
1,685
|
|
|
$
|
70,595
|
|
|
Cost
|
|
Unrealized
Loss
|
|
Unrealized
Gain
|
|
Fair
Value
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Trading:
|
|
|
|
|
|
|
|
||||||||
Sponsored mutual funds
|
$
|
61,784
|
|
|
$
|
(1,942
|
)
|
|
$
|
177
|
|
|
$
|
60,019
|
|
Equity securities
|
10,578
|
|
|
—
|
|
|
895
|
|
|
11,473
|
|
||||
Available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Sponsored closed-end funds
|
3,500
|
|
|
(265
|
)
|
|
180
|
|
|
3,415
|
|
||||
Total marketable securities
|
$
|
75,862
|
|
|
$
|
(2,207
|
)
|
|
$
|
1,252
|
|
|
$
|
74,907
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
223,087
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
223,087
|
|
Marketable securities trading:
|
|
|
|
|
|
|
|
||||||||
Sponsored mutual funds
|
54,998
|
|
|
—
|
|
|
—
|
|
|
54,998
|
|
||||
Equity securities
|
11,974
|
|
|
—
|
|
|
—
|
|
|
11,974
|
|
||||
Marketable securities available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Sponsored closed-end funds
|
3,623
|
|
|
—
|
|
|
—
|
|
|
3,623
|
|
||||
Other investments:
|
|
|
|
|
|
|
|
||||||||
Nonqualified retirement plan assets
|
6,186
|
|
|
—
|
|
|
—
|
|
|
6,186
|
|
||||
Total assets measured at fair value
|
$
|
299,868
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
299,868
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
48,620
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
48,620
|
|
Marketable securities trading:
|
|
|
|
|
|
|
|
||||||||
Sponsored mutual funds
|
60,019
|
|
|
—
|
|
|
—
|
|
|
60,019
|
|
||||
Equity securities
|
11,473
|
|
|
—
|
|
|
—
|
|
|
11,473
|
|
||||
Marketable securities available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Sponsored closed-end funds
|
3,415
|
|
|
—
|
|
|
—
|
|
|
3,415
|
|
||||
Other investments
|
|
|
|
|
|
|
|
||||||||
Nonqualified retirement plan assets
|
5,808
|
|
|
—
|
|
|
—
|
|
|
5,808
|
|
||||
Total assets measured at fair value
|
$
|
129,335
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
129,335
|
|
|
Unrealized
Gains
and (Losses)
on Securities
Available-for-
Sale
|
|
|
||||
($ in thousands)
|
|
|
|
||||
Balance December 31, 2016
|
$
|
(224
|
)
|
|
|
||
Unrealized net gains on securities available-for-sale, net of tax of ($54)
|
88
|
|
|
|
|||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
|
|||
Net current-period other comprehensive income
|
88
|
|
|
|
|||
Balance March 31, 2017
|
$
|
(136
|
)
|
|
|
||
|
|
|
|
||||
|
Unrealized
Gains
and (Losses)
on Securities
Available-for-
Sale
|
|
Foreign
Currency
Translation
Adjustments
|
||||
($ in thousands)
|
|
|
|
||||
Balance December 31, 2015
|
$
|
(465
|
)
|
|
$
|
(569
|
)
|
Unrealized net losses on securities available-for-sale, net of tax of $(97)
|
160
|
|
|
—
|
|
||
Foreign currency translation adjustments, net of tax of $(61)
|
—
|
|
|
99
|
|
||
Amounts reclassified from accumulated other comprehensive income
|
—
|
|
|
—
|
|
||
Net current-period other comprehensive loss
|
160
|
|
|
99
|
|
||
Balance March 31, 2016
|
$
|
(305
|
)
|
|
$
|
(470
|
)
|
|
Number
of Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|||
Outstanding at December 31, 2016
|
302,824
|
|
|
$
|
111.56
|
|
Granted
|
158,687
|
|
|
$
|
111.38
|
|
Forfeited
|
(26,329
|
)
|
|
$
|
124.22
|
|
Settled
|
(55,418
|
)
|
|
$
|
129.75
|
|
Outstanding at March 31, 2017
|
379,764
|
|
|
$
|
107.95
|
|
|
Number
of Shares
|
|
Weighted
Average
Exercise Price
|
|||
Outstanding at December 31, 2016
|
137,157
|
|
|
$
|
17.77
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Exercised
|
(26,149
|
)
|
|
$
|
23.25
|
|
Forfeited
|
—
|
|
|
$
|
—
|
|
Outstanding at March 31, 2017
|
111,008
|
|
|
$
|
16.48
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
($ in thousands, except per share amounts)
|
|
|
|
||||
Net Income
|
$
|
13,745
|
|
|
$
|
11,870
|
|
Noncontrolling interests
|
(718
|
)
|
|
493
|
|
||
Net Income Attributable to Stockholders
|
13,027
|
|
|
12,363
|
|
||
Preferred stock dividends
|
(2,084
|
)
|
|
—
|
|
||
Net Income Attributable to Common Stockholders
|
$
|
10,943
|
|
|
$
|
12,363
|
|
Shares
(in thousands)
:
|
|
|
|
||||
Basic: Weighted-average number of shares outstanding
|
6,542
|
|
|
8,344
|
|
||
Plus: Incremental shares from assumed conversion of dilutive instruments
|
231
|
|
|
162
|
|
||
Diluted: Weighted-average number of shares outstanding
|
6,773
|
|
|
8,506
|
|
||
Earnings per Share—Basic
|
$
|
1.67
|
|
|
$
|
1.48
|
|
Earnings per Share—Diluted
|
$
|
1.62
|
|
|
$
|
1.45
|
|
|
Three Months Ended March 31,
|
||||
|
2017
|
|
2016
|
||
(in thousands)
|
|
|
|
||
Restricted stock units
|
—
|
|
|
14
|
|
Preferred stock
|
674
|
|
|
—
|
|
Total anti-dilutive securities
|
674
|
|
|
14
|
|
|
As of
|
||||||||||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
|
VOEs
|
|
VIE
|
|
VOEs
|
|
VIE
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Total cash and cash equivalents
|
$
|
2,044
|
|
|
$
|
929
|
|
|
$
|
1,859
|
|
|
$
|
2,775
|
|
Investments
|
61,028
|
|
|
51,902
|
|
|
99,247
|
|
|
42,828
|
|
||||
All other assets
|
38,603
|
|
|
1,099
|
|
|
2,211
|
|
|
1,059
|
|
||||
Total liabilities
|
(2,033
|
)
|
|
(801
|
)
|
|
(2,310
|
)
|
|
(1,799
|
)
|
||||
Redeemable noncontrolling interests
|
(12,175
|
)
|
|
(32,801
|
)
|
|
(12,505
|
)
|
|
(24,761
|
)
|
||||
The Company’s net interests in consolidated sponsored investment products
|
$
|
87,467
|
|
|
$
|
20,328
|
|
|
$
|
88,502
|
|
|
$
|
20,102
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
$
|
—
|
|
|
$
|
71,932
|
|
|
$
|
161
|
|
|
$
|
72,093
|
|
Equity securities
|
40,470
|
|
|
367
|
|
|
—
|
|
|
40,837
|
|
||||
Total Assets Measured at Fair Value
|
$
|
40,470
|
|
|
$
|
72,299
|
|
|
$
|
161
|
|
|
$
|
112,930
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
1
|
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
281
|
|
Short sales
|
588
|
|
|
—
|
|
|
—
|
|
|
588
|
|
||||
Total Liabilities Measured at Fair Value
|
$
|
589
|
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
869
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Debt securities
|
$
|
—
|
|
|
$
|
101,510
|
|
|
$
|
87
|
|
|
$
|
101,597
|
|
Equity securities
|
40,270
|
|
|
208
|
|
|
—
|
|
|
40,478
|
|
||||
Derivatives
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Total Assets Measured at Fair Value
|
$
|
40,274
|
|
|
$
|
101,718
|
|
|
$
|
87
|
|
|
$
|
142,079
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Derivatives
|
$
|
3
|
|
|
$
|
235
|
|
|
$
|
62
|
|
|
$
|
300
|
|
Short sales
|
649
|
|
|
—
|
|
|
—
|
|
|
649
|
|
||||
Total Liabilities Measured at Fair Value
|
$
|
652
|
|
|
$
|
235
|
|
|
$
|
62
|
|
|
$
|
949
|
|
|
Three Months Ended March 31,
|
||||||
($ in thousands)
|
2017
|
|
2016
|
||||
Level 3 Debt securities (a)
|
|
|
|
||||
Balance at beginning of period
|
$
|
25
|
|
|
$
|
1,397
|
|
Realized losses, net
|
(65
|
)
|
|
(102
|
)
|
||
Purchases
|
100
|
|
|
19
|
|
||
Paydowns
|
(1
|
)
|
|
(1
|
)
|
||
Sales
|
(36
|
)
|
|
(498
|
)
|
||
Transferred to Level 2
|
—
|
|
|
(618
|
)
|
||
Transfers from Level 2
|
76
|
|
|
710
|
|
||
Change in unrealized gain, net
|
62
|
|
|
89
|
|
||
Balance at end of period
|
$
|
161
|
|
|
$
|
996
|
|
(a)
|
None of the securities reflected in the table were internally fair valued at
March 31, 2017
or
March 31, 2016
. The investments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment.
|
|
As of
|
||||||
|
March 31, 2017
|
|
December 31, 2016
|
||||
($ in thousands)
|
|
|
|
||||
Cash equivalents
|
$
|
13,957
|
|
|
$
|
14,449
|
|
Investments
|
354,002
|
|
|
346,967
|
|
||
Other assets
|
6,152
|
|
|
5,888
|
|
||
Notes payable
|
(325,843
|
)
|
|
(328,761
|
)
|
||
Securities purchased payable and other liabilities
|
(20,806
|
)
|
|
(12,534
|
)
|
||
The Company’s net interests in the consolidated investment product
|
$
|
27,462
|
|
|
$
|
26,009
|
|
|
As of
|
||
Beneficial Interests
|
March 31, 2017
|
||
($ in thousands)
|
|
||
Subordinated notes
|
$
|
27,091
|
|
Accrued investment management fees
|
371
|
|
|
Total Beneficial Interests
|
$
|
27,462
|
|
|
Three Months Ended March 31,
|
||
($ in thousands)
|
2017
|
||
Income:
|
|
||
Realized and unrealized gain, net
|
$
|
718
|
|
Interest Income
|
4,161
|
|
|
Total Income
|
$
|
4,879
|
|
|
|
||
Expenses:
|
|
||
Other operating expenses
|
65
|
|
|
Interest expense
|
2,857
|
|
|
Total Expense
|
$
|
2,922
|
|
Net Income (loss) attributable to consolidated investment product
|
$
|
1,957
|
|
Economic Interests
|
Three Months Ended March 31,
|
||
($ in thousands)
|
2017
|
||
Distributions received and unrealized gains on the subordinated notes held by the Company
|
$
|
1,477
|
|
Investment management fees
|
480
|
||
Total Economic Interests
|
$
|
1,957
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
13,957
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,957
|
|
Bank loans
|
—
|
|
|
352,440
|
|
|
$
|
1,562
|
|
|
$
|
354,002
|
|
||
Total Assets Measured at Fair Value
|
$
|
13,957
|
|
|
$
|
352,440
|
|
|
$
|
1,562
|
|
|
$
|
367,959
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Notes payable
|
$
|
—
|
|
|
$
|
325,843
|
|
|
$
|
—
|
|
|
$
|
325,843
|
|
Total Liabilities Measured at Fair Value
|
—
|
|
|
325,843
|
|
|
—
|
|
|
325,843
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
($ in thousands)
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
14,449
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,449
|
|
Bank loans
|
—
|
|
|
346,967
|
|
|
—
|
|
|
346,967
|
|
||||
Total Assets Measured at Fair Value
|
$
|
14,449
|
|
|
$
|
346,967
|
|
|
$
|
—
|
|
|
$
|
361,416
|
|
Liabilities
|
|
|
|
|
|
|
|
||||||||
Notes payable
|
$
|
—
|
|
|
$
|
328,761
|
|
|
$
|
—
|
|
|
$
|
328,761
|
|
Total Liabilities Measured at Fair Value
|
$
|
—
|
|
|
$
|
328,761
|
|
|
$
|
—
|
|
|
$
|
328,761
|
|
|
Three Months Ended March 31,
|
||
($ in thousands)
|
2017
|
||
Level 3 Debt securities
(a)
|
|
||
Balance at beginning of period
|
$
|
—
|
|
Purchases
|
—
|
|
|
Sales
|
—
|
|
|
Transferred from Level 2
|
1,562
|
|
|
Realized gains
|
—
|
|
|
Balance at end of period
|
$
|
1,562
|
|
(a)
|
None of the securities reflected in the table were internally fair valued at
March 31, 2017
. The investments that are categorized as Level 3 were valued utilizing third party pricing information without adjustment. All transfers are deemed to occur at the end of period. Transfers between Level 2 and Level 3 were due to a decrease in trading activities at period end.
|
•
|
Net income per diluted share was
$1.62
in the
first
quarter of
2017
, an increase of $0.17, or 12% from $1.45 in the
first
quarter of
2016
.
|
•
|
Total sales (inflows) were
$3.3 billion
in the
first
quarter of
2017
, an increase of $0.5 billion or 18% from $2.8 billion in the
first
quarter of
2016
. Net flows were
$0.5 billion
in the
first
quarter of
2017
, an improvement from $(2.6) billion in the
first
quarter of
2016
.
|
•
|
Assets under management were
$48.0 billion
at
March 31, 2017
, an increase of
$45.7 billion
at
March 31, 2016
.
|
|
As of March 31,
|
|
Change
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
($ in millions)
|
|
|
|
|
|
|
|
|||||||
Fund assets
|
|
|
|
|
|
|
|
|||||||
Open-end funds (1)
|
$
|
24,716.8
|
|
|
$
|
26,536.0
|
|
|
$
|
(1,819.2
|
)
|
|
(6.9
|
)%
|
Closed-end funds
|
6,814.3
|
|
|
6,543.6
|
|
|
270.7
|
|
|
4.1
|
%
|
|||
Exchange traded funds
|
863.3
|
|
|
353.6
|
|
|
509.7
|
|
|
144.1
|
%
|
|||
Total fund assets
|
32,394.4
|
|
|
33,433.2
|
|
|
(1,038.8
|
)
|
|
(3.1
|
)%
|
|||
Separately managed accounts (2)
|
9,312.1
|
|
|
7,021.1
|
|
|
2,291.0
|
|
|
32.6
|
%
|
|||
Total retail assets
|
41,706.5
|
|
|
40,454.3
|
|
|
1,252.2
|
|
|
3.1
|
%
|
|||
Total institutional assets (2)
|
6,313.3
|
|
|
5,196.9
|
|
|
1,116.4
|
|
|
21.5
|
%
|
|||
Total Assets Under Management
|
$
|
48,019.8
|
|
|
$
|
45,651.2
|
|
|
$
|
2,368.6
|
|
|
5.2
|
%
|
Average Assets Under Management (3)
|
$
|
46,373.0
|
|
|
$
|
45,666.1
|
|
|
$
|
706.9
|
|
|
1.5
|
%
|
(1)
|
Includes assets under management of retail and variable insurance funds.
|
(2)
|
Includes assets under management related to option strategies and structured products.
|
(3)
|
Averages are calculated as follows:
|
|
Three Months Ended March 31,
|
|
||||||
($ in millions)
|
2017
|
|
2016
|
|
||||
Open-End Funds (1)
|
|
|
|
|
||||
Beginning balance
|
$
|
23,432.8
|
|
|
$
|
28,882.1
|
|
|
Inflows
|
2,032.7
|
|
|
2,193.4
|
|
|
||
Outflows
|
(2,134.7
|
)
|
|
(4,794.3
|
)
|
|
||
Net flows
|
(102.0
|
)
|
|
(2,600.9
|
)
|
|
||
Market performance
|
1,444.5
|
|
|
295.9
|
|
|
||
Other (2)
|
(58.5
|
)
|
|
(41.1
|
)
|
|
||
Ending balance
|
$
|
24,716.8
|
|
|
$
|
26,536.0
|
|
|
Closed-End Funds
|
|
|
|
|
||||
Beginning balance
|
$
|
6,757.4
|
|
|
$
|
6,222.3
|
|
|
Inflows
|
—
|
|
|
—
|
|
|
||
Outflows
|
(81.6
|
)
|
|
—
|
|
|
||
Net flows
|
(81.6
|
)
|
|
—
|
|
|
||
Market performance
|
280.8
|
|
|
421.3
|
|
|
||
Other (2)
|
(142.3
|
)
|
|
(100.0
|
)
|
|
||
Ending balance
|
$
|
6,814.3
|
|
|
$
|
6,543.6
|
|
|
Exchange Traded Funds
|
|
|
|
|
||||
Beginning balance
|
$
|
596.8
|
|
|
$
|
340.8
|
|
|
Inflows
|
265.7
|
|
|
62.3
|
|
|
||
Outflows
|
(23.0
|
)
|
|
(33.8
|
)
|
|
||
Net flows
|
242.7
|
|
|
28.5
|
|
|
||
Market performance
|
34.6
|
|
|
(13.6
|
)
|
|
||
Other (2)
|
(10.8
|
)
|
|
(2.1
|
)
|
|
||
Ending balance
|
$
|
863.3
|
|
|
$
|
353.6
|
|
|
Separately Managed Accounts (3)
|
|
|
|
|
||||
Beginning balance
|
$
|
8,473.5
|
|
|
$
|
6,784.4
|
|
|
Inflows
|
689.2
|
|
|
399.2
|
|
|
||
Outflows
|
(297.9
|
)
|
|
(364.3
|
)
|
|
||
Net flows
|
391.3
|
|
|
34.9
|
|
|
||
Market performance
|
453.8
|
|
|
210.8
|
|
|
||
Other (2)
|
(6.5
|
)
|
|
(9.0
|
)
|
|
||
Ending balance
|
$
|
9,312.1
|
|
|
$
|
7,021.1
|
|
|
Institutional Accounts (3)(4)
|
|
|
|
|
||||
Beginning balance
|
$
|
6,105.8
|
|
|
$
|
5,155.7
|
|
|
Inflows
|
277.7
|
|
|
186.2
|
|
|
||
Outflows
|
(208.6
|
)
|
|
(276.6
|
)
|
|
||
Net flows
|
69.1
|
|
|
(90.4
|
)
|
|
||
Market performance
|
148.6
|
|
|
148.4
|
|
|
||
Other (2)
|
(10.2
|
)
|
|
(16.8
|
)
|
|
||
Ending balance
|
$
|
6,313.3
|
|
|
$
|
5,196.9
|
|
|
Total
|
|
|
|
|
||||
Beginning balance
|
$
|
45,366.3
|
|
|
$
|
47,385.3
|
|
|
Inflows
|
3,265.3
|
|
|
2,841.1
|
|
|
||
Outflows
|
(2,745.8
|
)
|
|
(5,469.0
|
)
|
|
||
Net flows
|
519.5
|
|
|
(2,627.9
|
)
|
|
||
Market performance
|
2,362.3
|
|
|
1,062.8
|
|
|
||
Other (2)
|
(228.3
|
)
|
|
(169.0
|
)
|
|
||
Ending balance
|
$
|
48,019.8
|
|
|
$
|
45,651.2
|
|
|
(1)
|
Includes assets under management of retail and variable insurance funds.
|
(2)
|
Represents open-end and closed-end mutual fund distributions, net of reinvestments, net flows of cash management strategies, net flows from non-sales related activities such as asset acquisitions/(dispositions), marketable securities investments/(withdrawals) and the impact on assets from the use of leverage.
|
(3)
|
Includes assets under management related to option strategies.
|
(4)
|
Includes assets under management related to structured products.
|
(1)
|
Consists of real estate securities, master-limited partnerships and other.
|
(2)
|
Consists of option strategies.
|
|
Three Months Ended March 31,
|
||||||||||||
|
Average Fees Earned
(expressed in basis points) |
|
Average Assets Under Management (3)
($ in millions) |
||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||
Products
|
|
|
|
||||||||||
Open-End Funds (1)
|
50.5
|
|
|
47.3
|
|
|
$
|
24,157.6
|
|
|
$
|
27,295.9
|
|
Closed-End Funds
|
66.2
|
|
|
65.4
|
|
|
6,786.1
|
|
|
6,152.3
|
|
||
Exchange Traded Funds
|
31.7
|
|
|
34.6
|
|
|
759.2
|
|
|
337.1
|
|
||
Separately Managed Accounts (2)
|
53.9
|
|
|
56.1
|
|
|
8,463.6
|
|
|
6,768.4
|
|
||
Institutional Accounts (2)
|
36.8
|
|
|
36.7
|
|
|
6,206.5
|
|
|
5,112.4
|
|
||
All Products
|
51.3
|
|
|
49.7
|
|
|
$
|
46,373.0
|
|
|
$
|
45,666.1
|
|
(1)
|
Includes assets under management of retail and variable insurance funds.
|
(2)
|
Includes assets under management related to option strategies.
|
(3)
|
Averages are calculated as follows:
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|
%
|
|||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||
Results of Operations
|
|
|
|
|
|
|
|
|||||||
Investment management fees
|
$
|
59,271
|
|
|
$
|
57,644
|
|
|
$
|
1,627
|
|
|
2.8
|
%
|
Other revenue
|
20,505
|
|
|
22,651
|
|
|
(2,146
|
)
|
|
(9.5
|
)%
|
|||
Total revenues
|
79,776
|
|
|
80,295
|
|
|
(519
|
)
|
|
(0.6
|
)%
|
|||
Total operating expenses
|
69,729
|
|
|
67,545
|
|
|
2,184
|
|
|
3.2
|
%
|
|||
Operating income
|
10,047
|
|
|
12,750
|
|
|
(2,703
|
)
|
|
(21.2
|
)%
|
|||
Other income (expense), net
|
5,387
|
|
|
2,100
|
|
|
3,287
|
|
|
156.5
|
%
|
|||
Interest income, net
|
2,744
|
|
|
4,576
|
|
|
(1,832
|
)
|
|
(40.0
|
)%
|
|||
Income before income taxes
|
18,178
|
|
|
19,426
|
|
|
(1,248
|
)
|
|
(6.4
|
)%
|
|||
Income tax expense
|
4,433
|
|
|
7,556
|
|
|
(3,123
|
)
|
|
(41.3
|
)%
|
|||
Net income
|
13,745
|
|
|
11,870
|
|
|
1,875
|
|
|
15.8
|
%
|
|||
Noncontrolling interests
|
(718
|
)
|
|
493
|
|
|
(1,211
|
)
|
|
(245.6
|
)%
|
|||
Net Income Attributable to Stockholders
|
13,027
|
|
|
12,363
|
|
|
664
|
|
|
5.4
|
%
|
|||
Preferred stockholder dividends
|
(2,084
|
)
|
|
—
|
|
|
(2,084
|
)
|
|
(100.0
|
)%
|
|||
Net Income Attributable to Common Stockholders
|
$
|
10,943
|
|
|
$
|
12,363
|
|
|
$
|
(1,420
|
)
|
|
(11.5
|
)%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|
%
|
|||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||
Investment management fees
|
|
|
|
|
|
|
|
|||||||
Funds
|
$
|
42,198
|
|
|
$
|
43,502
|
|
|
$
|
(1,304
|
)
|
|
(3.0
|
)%
|
Separately managed accounts
|
11,434
|
|
|
9,475
|
|
|
1,959
|
|
|
20.7
|
%
|
|||
Institutional accounts
|
5,639
|
|
|
4,667
|
|
|
972
|
|
|
20.8
|
%
|
|||
Total investment management fees
|
59,271
|
|
|
57,644
|
|
|
1,627
|
|
|
2.8
|
%
|
|||
Distribution and service fees
|
10,783
|
|
|
12,478
|
|
|
(1,695
|
)
|
|
(13.6
|
)%
|
|||
Administration and transfer agent fees
|
8,981
|
|
|
9,998
|
|
|
(1,017
|
)
|
|
(10.2
|
)%
|
|||
Other income and fees
|
741
|
|
|
175
|
|
|
566
|
|
|
323.4
|
%
|
|||
Total revenues
|
$
|
79,776
|
|
|
$
|
80,295
|
|
|
$
|
(519
|
)
|
|
(0.6
|
)%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|
%
|
|||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||
Operating expenses
|
|
|
|
|
|
|
|
|||||||
Employment expenses
|
$
|
39,641
|
|
|
$
|
35,977
|
|
|
$
|
3,664
|
|
|
10.2
|
%
|
Distribution and other asset-based expenses
|
15,323
|
|
|
18,101
|
|
|
(2,778
|
)
|
|
(15.3
|
)%
|
|||
Other operating expenses
|
13,868
|
|
|
11,954
|
|
|
1,914
|
|
|
16.0
|
%
|
|||
Depreciation and amortization expense
|
897
|
|
|
1,513
|
|
|
(616
|
)
|
|
(40.7
|
)%
|
|||
Total operating expenses
|
$
|
69,729
|
|
|
$
|
67,545
|
|
|
$
|
2,184
|
|
|
3.2
|
%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|
%
|
|||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||
Other Income (Expense)
|
|
|
|
|
|
|
|
|||||||
Realized and unrealized gain (loss) on investments, net
|
$
|
297
|
|
|
$
|
(658
|
)
|
|
$
|
955
|
|
|
145.1
|
%
|
Realized and unrealized gain on investments of consolidated sponsored investment products, net
|
3,726
|
|
|
295
|
|
|
3,431
|
|
|
1,163.1
|
%
|
|||
Realized and unrealized gain of consolidated investment product, net
|
718
|
|
|
2,235
|
|
|
(1,517
|
)
|
|
(67.9
|
)%
|
|||
Other income, net
|
646
|
|
|
228
|
|
|
418
|
|
|
183.3
|
%
|
|||
Total Other Income, net
|
$
|
5,387
|
|
|
$
|
2,100
|
|
|
$
|
3,287
|
|
|
(156.5
|
)%
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|
%
|
|||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||
Interest Income (Expense)
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
$
|
(243
|
)
|
|
$
|
(132
|
)
|
|
$
|
(111
|
)
|
|
(84.1
|
)%
|
Interest and dividend income
|
188
|
|
|
273
|
|
|
$
|
(85
|
)
|
|
(31.1
|
)%
|
||
Interest and dividend income of investments of consolidated sponsored investment products
|
1,495
|
|
|
2,961
|
|
|
$
|
(1,466
|
)
|
|
(49.5
|
)%
|
||
Interest income of consolidated investment product
|
4,161
|
|
|
2,206
|
|
|
$
|
1,955
|
|
|
88.6
|
%
|
||
Interest expense of consolidated investment product
|
(2,857
|
)
|
|
(732
|
)
|
|
(2,125
|
)
|
|
(290.3
|
)%
|
|||
Total Interest Income, net
|
$
|
2,744
|
|
|
$
|
4,576
|
|
|
$
|
(1,832
|
)
|
|
(40.0
|
)%
|
|
March 31, 2017
|
|
December 31, 2016
|
|
Change
|
|||||||||
|
2017 vs. 2016
|
|
%
|
|||||||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||
Balance Sheet Data
|
|
|
|
|
|
|
|
|||||||
Cash and cash equivalents
|
$
|
235,930
|
|
|
$
|
64,588
|
|
|
$
|
171,342
|
|
|
265.3
|
%
|
Investments
|
86,066
|
|
|
89,371
|
|
|
(3,305
|
)
|
|
(3.7
|
)%
|
|||
Deferred taxes, net
|
45,716
|
|
|
47,535
|
|
|
(1,819
|
)
|
|
(3.8
|
)%
|
|||
Dividends payable
|
5,991
|
|
|
3,479
|
|
|
2,512
|
|
|
72.2
|
%
|
|||
Total equity
|
552,388
|
|
|
321,673
|
|
|
230,715
|
|
|
71.7
|
%
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
2017
|
|
2016
|
|
2017 vs. 2016
|
|
%
|
|||||||
($ in thousands)
|
|
|
|
|
|
|
|
|||||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|||||||
Provided by (Used In):
|
|
|
|
|
|
|
|
|||||||
Operating Activities
|
$
|
(15,305
|
)
|
|
$
|
(38,375
|
)
|
|
$
|
23,070
|
|
|
60.1
|
%
|
Investing Activities
|
5,180
|
|
|
(1,307
|
)
|
|
6,487
|
|
|
496.3
|
%
|
|||
Financing Activities
|
179,191
|
|
|
1,549
|
|
|
177,642
|
|
|
11,468.2
|
%
|
|
March 31, 2017
|
||||||
$ in thousands
|
Fair Value
|
|
10% Change
|
||||
|
|
|
|
||||
Marketable Securities - Available for Sale
(a)
|
$
|
3,623
|
|
|
$
|
362.3
|
|
Marketable Securities - Trading
(b)
|
66,972
|
|
|
6,697.2
|
|
||
Company's net interests in Consolidated Sponsored Investment Products
(c)
|
107,795
|
|
|
10,779.5
|
|
||
Company's net interest in Consolidated Investment Product
(c)
|
27,091
|
|
|
2,709.1
|
|
||
Total Investments subject to Market Risk
|
$
|
205,481
|
|
|
$
|
20,548.1
|
|
(a)
|
Any gains or losses arising from changes in the fair value of available-for-sale investments are recognized in accumulated other comprehensive income, net of tax, until the investment is sold or otherwise disposed of, or if the investment is determined to be other-than-temporarily impaired, at which time the cumulative gain or loss previously reported in equity is included in income. The Company evaluates the carrying value of investments for impairment on a quarterly basis. In its impairment analysis, the Company takes into consideration numerous criteria, including the duration and extent of any decline in fair value, and the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value. If the decline in value is determined to be other-than-temporary, the carrying value of the security is generally written down to fair value through the Condensed Consolidated Statement of Operations. If such a 10% increase or decrease in fair value were to occur, it would not result in an other-than-temporary impairment charge that would be material to the Company's pre-tax earnings.
|
(b)
|
If such a 10% increase or decrease in fair values were to occur, the change of these trading investments would result in a corresponding increase or decrease in our pre-tax earnings.
|
(c)
|
These represent the Company's direct investments in investment products that are consolidated. Upon consolidation, these direct investments are eliminated, and the assets and liabilities of CIP and CSIP are consolidated in the Condensed Consolidated Balance Sheet, together with a noncontrolling interest balance representing the portion of the CIP or CSIP owned by third parties. If a 10% increase or decrease in the fair values of the Company's direct investments in CIP and CSIP were to occur, it would result in a corresponding increase or decrease in the Company's pre-tax earnings.
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
Certificate of Designations of the 7.25% Series D Mandatory Convertible Preferred Stock of Virtus Investment Partners, Inc., filed with the Secretary of State of the State of Delaware on February 1, 2017 (incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed February 1, 2017)
|
|
|
|
4.1
|
|
Specimen 7.25% Series D Mandatory Convertible Preferred Stock Share Certificate (incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on February 1, 2017)
|
|
|
|
10.1
|
|
Form of Virtus Investment Partners, Inc. Performance Share Units Agreement (Special Integration Award) under the Virtus Investment Partners, Inc. Omnibus Incentive and Equity Plan
|
|
|
|
31.1
|
|
Certification of the Registrant’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2
|
|
Certification of the Registrant’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1
|
|
Certification of the Registrant’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101
|
|
The following information formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets (Unaudited) as of March 31, 2017 and December 31, 2016, (ii) Condensed Consolidated Statements of Operations (Unaudited) for the three months ended March 31, 2017 and 2016, (iii) Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three months ended March 31, 2017 and 2016, (iv) Condensed Consolidated Statements of Cash Flows (Unaudited) for the three months ended March 31, 2017 and 2016, (v) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2017 and 2016 and (vi) Notes to Condensed Consolidated Financial Statements (Unaudited).
|
|
|
|
|
|
|
|
VIRTUS INVESTMENT PARTNERS, INC.
|
|
|
(Registrant)
|
|
|
|
|
|
By:
|
/s/ Michael A. Angerthal
|
|
|
Michael A. Angerthal
|
|
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VIRTUS INVESTMENT PARTNERS, INC.
|
|||
|
|
||
By:
|
|
/s/ Mardelle Peña
|
|
Title:
|
|
EVP Human Resources
|
|
(X)
|
equals the product of the number of Performance Share Units awarded multiplied by the ratio of (1) the number of days that you were actively employed by the Company since the Award Date divided by (2) the number of days between the Award Date and the final scheduled vesting date for the Restriction Stock Units covered by this Agreement; and
|
|
(Y)
|
equals the number of Performance Share Units that have already vested in accordance with Section 1.2 as of your termination date;
|
1
|
I have reviewed this quarterly report on Form 10-Q of Virtus Investment Partners, Inc.;
|
|
|
|
|
2
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
|
|
|
3
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
|
|
|
4
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
|
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ George R. Aylward
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George R. Aylward
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President, Chief Executive Officer and Director
(Principal Executive Officer)
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1
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I have reviewed this quarterly report on Form 10-Q of Virtus Investment Partners, Inc.;
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2
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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/s/ Michael A. Angerthal
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Michael A. Angerthal
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Executive Vice President, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ George R. Aylward
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George R. Aylward
President, Chief Executive Officer and Director
(Principal Executive Officer)
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/s/ Michael A. Angerthal
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Michael A. Angerthal
Executive Vice President, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
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