|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
45-2609100
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
290 Woodcliff Drive
Fairport, New York
|
|
14450
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Class A common stock, $0.01 par value per share
|
MN
|
New York Stock Exchange
|
Large accelerated filer
|
|
¨
|
|
Accelerated filer
|
|
¨
|
|
|
|
|
|||
Non-accelerated filer
|
|
x
|
|
Smaller reporting company
|
|
x
|
|
|
|
|
|
|
|
|
|
|
|
Emerging growth company
|
|
¨
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Class
|
|
Outstanding at August 6, 2019
|
Class A common stock, $0.01 par value per share
|
|
15,620,595
|
|
|
|
Page
|
Part I
|
|
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Item 1.
|
|
|
|
||
|
||
|
||
|
||
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||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
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||
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Part II
|
|
|
Item 1A.
|
||
Item 6.
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||
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|
In this Quarterly Report on Form 10-Q, “we”, “our”, “us”, the “Company”, “Manning & Napier” and the “Registrant” refers to Manning & Napier, Inc. and, unless the context otherwise requires, its consolidated direct and indirect subsidiaries and predecessors.
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
(unaudited)
|
|
|
||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
57,169
|
|
|
$
|
59,586
|
|
Accounts receivable
|
|
12,231
|
|
|
11,447
|
|
||
Investment securities
|
|
89,619
|
|
|
91,190
|
|
||
Prepaid expenses and other assets
|
|
5,849
|
|
|
5,221
|
|
||
Current assets, held for sale
|
|
237
|
|
|
—
|
|
||
Total current assets
|
|
165,105
|
|
|
167,444
|
|
||
Property and equipment, net
|
|
5,961
|
|
|
5,649
|
|
||
Operating lease right-of-use assets
|
|
20,067
|
|
|
—
|
|
||
Net deferred tax assets, non-current
|
|
20,460
|
|
|
20,795
|
|
||
Goodwill
|
|
4,829
|
|
|
4,829
|
|
||
Other long-term assets
|
|
4,138
|
|
|
3,842
|
|
||
Total assets
|
|
$
|
220,560
|
|
|
$
|
202,559
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
1,712
|
|
|
$
|
1,845
|
|
Accrued expenses and other liabilities
|
|
21,863
|
|
|
25,126
|
|
||
Deferred revenue
|
|
10,503
|
|
|
9,305
|
|
||
Current liabilities, held for sale
|
|
48
|
|
|
—
|
|
||
Total current liabilities
|
|
34,126
|
|
|
36,276
|
|
||
Operating lease liabilities, non-current
|
|
19,939
|
|
|
—
|
|
||
Amounts payable under tax receivable agreement, non-current
|
|
17,154
|
|
|
17,349
|
|
||
Other long-term liabilities
|
|
611
|
|
|
2,691
|
|
||
Total liabilities
|
|
71,830
|
|
|
56,316
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
|
||
Shareholders’ equity
|
|
|
|
|
||||
Class A common stock, $0.01 par value; 300,000,000 shares authorized; and 15,620,595 and 15,310,958 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
|
156
|
|
|
153
|
|
||
Additional paid-in capital
|
|
198,304
|
|
|
198,604
|
|
||
Retained deficit
|
|
(38,372
|
)
|
|
(38,865
|
)
|
||
Accumulated other comprehensive income
|
|
(34
|
)
|
|
(77
|
)
|
||
Total shareholders’ equity
|
|
160,054
|
|
|
159,815
|
|
||
Noncontrolling interests
|
|
(11,324
|
)
|
|
(13,572
|
)
|
||
Total shareholders’ equity and noncontrolling interests
|
|
148,730
|
|
|
146,243
|
|
||
Total liabilities, shareholders’ equity and noncontrolling interests
|
|
$
|
220,560
|
|
|
$
|
202,559
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Revenues
|
|
|
|
|
|
|
|
|
||||||||
Management Fees
|
|
|
|
|
|
|
|
|
||||||||
Separately managed accounts
|
|
$
|
21,738
|
|
|
$
|
24,483
|
|
|
$
|
43,213
|
|
|
$
|
49,838
|
|
Mutual funds and collective investment trusts
|
|
7,403
|
|
|
11,030
|
|
|
15,631
|
|
|
22,010
|
|
||||
Distribution and shareholder servicing
|
|
2,566
|
|
|
3,033
|
|
|
5,190
|
|
|
6,211
|
|
||||
Custodial services
|
|
1,750
|
|
|
1,895
|
|
|
3,495
|
|
|
3,817
|
|
||||
Other revenue
|
|
837
|
|
|
679
|
|
|
1,562
|
|
|
1,468
|
|
||||
Total revenue
|
|
34,294
|
|
|
41,120
|
|
|
69,091
|
|
|
83,344
|
|
||||
Expenses
|
|
|
|
|
|
|
|
|
||||||||
Compensation and related costs
|
|
20,161
|
|
|
21,689
|
|
|
41,609
|
|
|
45,462
|
|
||||
Distribution, servicing and custody expenses
|
|
3,019
|
|
|
4,502
|
|
|
6,777
|
|
|
9,283
|
|
||||
Other operating costs
|
|
8,639
|
|
|
8,579
|
|
|
16,946
|
|
|
15,033
|
|
||||
Total operating expenses
|
|
31,819
|
|
|
34,770
|
|
|
65,332
|
|
|
69,778
|
|
||||
Operating income
|
|
2,475
|
|
|
6,350
|
|
|
3,759
|
|
|
13,566
|
|
||||
Non-operating income (loss)
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
|
(10
|
)
|
|
(21
|
)
|
|
(13
|
)
|
|
(30
|
)
|
||||
Interest and dividend income
|
|
837
|
|
|
374
|
|
|
1,646
|
|
|
876
|
|
||||
Change in liability under tax receivable agreement
|
|
—
|
|
|
—
|
|
|
195
|
|
|
291
|
|
||||
Net gains (losses) on investments
|
|
248
|
|
|
(21
|
)
|
|
1,122
|
|
|
(270
|
)
|
||||
Total non-operating income
|
|
1,075
|
|
|
332
|
|
|
2,950
|
|
|
867
|
|
||||
Income before provision for income taxes
|
|
3,550
|
|
|
6,682
|
|
|
6,709
|
|
|
14,433
|
|
||||
Provision for income taxes
|
|
331
|
|
|
492
|
|
|
573
|
|
|
970
|
|
||||
Net income attributable to controlling and noncontrolling interests
|
|
3,219
|
|
|
6,190
|
|
|
6,136
|
|
|
13,463
|
|
||||
Less: net income attributable to noncontrolling interests
|
|
2,805
|
|
|
5,424
|
|
|
5,161
|
|
|
11,483
|
|
||||
Net income attributable to Manning & Napier, Inc.
|
|
$
|
414
|
|
|
$
|
766
|
|
|
$
|
975
|
|
|
$
|
1,980
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per share available to Class A common stock
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
Weighted average shares of Class A common stock outstanding
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
15,267,762
|
|
|
14,691,928
|
|
|
15,098,454
|
|
|
14,503,784
|
|
||||
Diluted
|
|
15,613,939
|
|
|
14,709,403
|
|
|
78,317,986
|
|
|
14,530,398
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income attributable to controlling and noncontrolling interests
|
|
$
|
3,219
|
|
|
$
|
6,190
|
|
|
$
|
6,136
|
|
|
$
|
13,463
|
|
Net unrealized holding gains (losses) on investment securities, net of tax
|
|
116
|
|
|
—
|
|
|
232
|
|
|
(147
|
)
|
||||
Reclassification adjustment for realized (gains) losses on investment securities included in net income
|
|
8
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
||||
Comprehensive income
|
|
$
|
3,343
|
|
|
$
|
6,190
|
|
|
$
|
6,362
|
|
|
$
|
13,316
|
|
Less: Comprehensive income attributable to noncontrolling interests
|
|
2,907
|
|
|
5,424
|
|
|
5,344
|
|
|
11,363
|
|
||||
Comprehensive income attributable to Manning & Napier, Inc.
|
|
$
|
436
|
|
|
$
|
766
|
|
|
$
|
1,018
|
|
|
$
|
1,953
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Common Stock – Class A
|
|
Additional
Paid in Capital
|
|
Retained
Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Non
Controlling
Interests
|
|
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
Total
|
|||||||||||||||||
Three months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—March 31, 2019
|
15,684,573
|
|
|
$
|
157
|
|
|
$
|
198,811
|
|
|
$
|
(38,516
|
)
|
|
$
|
(56
|
)
|
|
$
|
(11,488
|
)
|
|
$
|
148,908
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
414
|
|
|
—
|
|
|
2,805
|
|
|
3,219
|
|
||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(798
|
)
|
|
(798
|
)
|
||||||
Net changes in unrealized investment securities gains or losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
94
|
|
|
116
|
|
||||||
Common stock issued under equity compensation plan, net of forfeitures
|
(63,978
|
)
|
|
(1
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares withheld to satisfy tax withholding requirements related to equity awards vested
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(63
|
)
|
|
(78
|
)
|
||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
555
|
|
|
685
|
|
||||||
Dividends declared on Class A common stock - $0.02 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(270
|
)
|
|
—
|
|
|
—
|
|
|
(270
|
)
|
||||||
Impact of changes in ownership of Manning & Napier Group, LLC
(Note 4)
|
—
|
|
|
—
|
|
|
(623
|
)
|
|
—
|
|
|
—
|
|
|
(2,429
|
)
|
|
(3,052
|
)
|
||||||
Balance—June 30, 2019
|
15,620,595
|
|
|
$
|
156
|
|
|
$
|
198,304
|
|
|
$
|
(38,372
|
)
|
|
$
|
(34
|
)
|
|
$
|
(11,324
|
)
|
|
$
|
148,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Six months ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—December 31, 2018
|
15,310,958
|
|
|
$
|
153
|
|
|
$
|
198,604
|
|
|
$
|
(38,865
|
)
|
|
$
|
(77
|
)
|
|
$
|
(13,572
|
)
|
|
$
|
146,243
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
975
|
|
|
—
|
|
|
5,161
|
|
|
6,136
|
|
||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,419
|
)
|
|
(2,419
|
)
|
||||||
Net changes in unrealized investment securities gains or losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43
|
|
|
189
|
|
|
232
|
|
||||||
Common stock issued under equity compensation plan, net of forfeitures
|
309,637
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares withheld to satisfy tax withholding requirements related to equity awards vested
|
—
|
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
—
|
|
|
(63
|
)
|
|
(78
|
)
|
||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
402
|
|
|
—
|
|
|
—
|
|
|
1,748
|
|
|
2,150
|
|
||||||
Dividends declared on Class A common stock - $0.04 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(558
|
)
|
|
—
|
|
|
—
|
|
|
(558
|
)
|
||||||
Cumulative effect of change in accounting principle, net of taxes (Note 8)
|
—
|
|
|
—
|
|
|
—
|
|
|
76
|
|
|
—
|
|
|
—
|
|
|
76
|
|
||||||
Impact of changes in ownership of Manning & Napier Group, LLC (Note 4)
|
—
|
|
|
—
|
|
|
(684
|
)
|
|
—
|
|
|
—
|
|
|
(2,368
|
)
|
|
(3,052
|
)
|
||||||
Balance—June 30, 2019
|
15,620,595
|
|
|
$
|
156
|
|
|
$
|
198,304
|
|
|
$
|
(38,372
|
)
|
|
$
|
(34
|
)
|
|
$
|
(11,324
|
)
|
|
$
|
148,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Common Stock – Class A
|
|
Additional
Paid in Capital
|
|
Retained
Deficit
|
|
Accumulated
Other
Comprehensive Income (Loss)
|
|
Non
Controlling
Interests
|
|
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|
Total
|
|||||||||||||||||
Three months ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—March 31, 2018
|
15,263,565
|
|
|
$
|
153
|
|
|
$
|
198,407
|
|
|
$
|
(38,165
|
)
|
|
$
|
(113
|
)
|
|
$
|
(20,200
|
)
|
|
$
|
140,082
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
766
|
|
|
—
|
|
|
5,424
|
|
|
6,190
|
|
||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,273
|
)
|
|
(3,273
|
)
|
||||||
Common stock issued under equity compensation plan, net of forfeitures
|
69,476
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
89
|
|
|
—
|
|
|
—
|
|
|
397
|
|
|
486
|
|
||||||
Dividends declared on Class A common stock - $0.08 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,227
|
)
|
|
—
|
|
|
—
|
|
|
(1,227
|
)
|
||||||
Cumulative effect of change in accounting principle, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Impact of changes in ownership of Manning & Napier Group, LLC
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||||
Balance—June 30, 2018
|
15,333,041
|
|
|
$
|
153
|
|
|
$
|
198,488
|
|
|
$
|
(38,626
|
)
|
|
$
|
(113
|
)
|
|
$
|
(17,644
|
)
|
|
$
|
142,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Six months ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance—December 31, 2017
|
15,039,347
|
|
|
$
|
150
|
|
|
$
|
198,641
|
|
|
$
|
(38,424
|
)
|
|
$
|
(86
|
)
|
|
$
|
(21,921
|
)
|
|
$
|
138,360
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
1,980
|
|
|
—
|
|
|
11,483
|
|
|
13,463
|
|
||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,181
|
)
|
|
(8,181
|
)
|
||||||
Net changes in unrealized investment securities gains or losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(27
|
)
|
|
(120
|
)
|
|
(147
|
)
|
||||||
Common stock issued under equity compensation plan, net of forfeitures
|
293,694
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
297
|
|
|
—
|
|
|
—
|
|
|
1,342
|
|
|
1,639
|
|
||||||
Dividends declared on Class A common stock - $0.16 per share
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,448
|
)
|
|
—
|
|
|
—
|
|
|
(2,448
|
)
|
||||||
Cumulative effect of change in accounting principle, net of taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
266
|
|
|
—
|
|
|
1,224
|
|
|
1,490
|
|
||||||
Impact of changes in ownership of Manning & Napier Group, LLC
|
—
|
|
|
—
|
|
|
(447
|
)
|
|
—
|
|
|
—
|
|
|
(1,471
|
)
|
|
(1,918
|
)
|
||||||
Balance—June 30, 2018
|
15,333,041
|
|
|
$
|
153
|
|
|
$
|
198,488
|
|
|
$
|
(38,626
|
)
|
|
$
|
(113
|
)
|
|
$
|
(17,644
|
)
|
|
$
|
142,258
|
|
|
|
Six months ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income attributable to controlling and noncontrolling interests
|
|
$
|
6,136
|
|
|
$
|
13,463
|
|
Adjustment to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Equity-based compensation
|
|
2,150
|
|
|
1,639
|
|
||
Depreciation and amortization
|
|
796
|
|
|
957
|
|
||
Change in amounts payable under tax receivable agreement
|
|
(195
|
)
|
|
(291
|
)
|
||
Gain on sale of intangible assets
|
|
(116
|
)
|
|
(2,509
|
)
|
||
Net (gains) losses on investment securities
|
|
(1,122
|
)
|
|
270
|
|
||
Deferred income taxes
|
|
410
|
|
|
721
|
|
||
(Increase) decrease in operating assets and increase (decrease) in operating liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(788
|
)
|
|
2,474
|
|
||
Prepaid expenses and other assets
|
|
(645
|
)
|
|
197
|
|
||
Long-term assets
|
|
1,211
|
|
|
(617
|
)
|
||
Accounts payable
|
|
(121
|
)
|
|
755
|
|
||
Accrued expenses and other liabilities
|
|
(5,535
|
)
|
|
(6,714
|
)
|
||
Deferred revenue
|
|
1,198
|
|
|
(327
|
)
|
||
Long-term liabilities
|
|
(1,327
|
)
|
|
(348
|
)
|
||
Net cash provided by operating activities
|
|
2,052
|
|
|
9,670
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Purchase of property and equipment
|
|
(1,084
|
)
|
|
(1,265
|
)
|
||
Sale of investments
|
|
4,734
|
|
|
1,615
|
|
||
Purchase of investments
|
|
(55,863
|
)
|
|
(25,967
|
)
|
||
Sale of intangible assets
|
|
116
|
|
|
2,509
|
|
||
Proceeds from maturity of investments
|
|
54,054
|
|
|
24,963
|
|
||
Net cash provided by investing activities
|
|
1,957
|
|
|
1,855
|
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Distributions to noncontrolling interests
|
|
(2,419
|
)
|
|
(8,181
|
)
|
||
Dividends paid on Class A common stock
|
|
(620
|
)
|
|
(2,424
|
)
|
||
Payment of shares withheld to satisfy withholding requirements
|
|
(78
|
)
|
|
—
|
|
||
Payment of capital lease obligations
|
|
(61
|
)
|
|
(66
|
)
|
||
Purchase of Class A units of Manning & Napier Group, LLC
|
|
(3,052
|
)
|
|
(1,918
|
)
|
||
Net cash used in financing activities
|
|
(6,230
|
)
|
|
(12,589
|
)
|
||
Net decrease in cash and cash equivalents, including cash classified within current assets held for sale (Note 2)
|
|
(2,221
|
)
|
|
(1,064
|
)
|
||
Less: increase in cash classified within current assets held for sale
|
|
196
|
|
|
—
|
|
||
Net decrease in cash and cash equivalents
|
|
(2,417
|
)
|
|
(1,064
|
)
|
||
Cash and cash equivalents:
|
|
|
|
|
||||
Beginning of period
|
|
59,586
|
|
|
78,262
|
|
||
End of period
|
|
$
|
57,169
|
|
|
$
|
77,198
|
|
(1)
|
The consolidated operating subsidiaries of Manning & Napier Group include Manning & Napier Advisors, LLC ("MNA"), Perspective Partners LLC, Manning & Napier Information Services, LLC, Manning & Napier Investor Services, Inc., Exeter Trust Company and Rainier Investment Management, LLC ("Rainier").
|
|
|
Three months ended June 30, 2019
|
|
Three months ended June 30, 2018
|
||||||||||||||||||||
|
|
Separately managed accounts
|
|
Mutual funds and collective investment trusts
|
|
Total
|
|
Separately managed accounts
|
|
Mutual funds and collective investment trusts
|
|
Total
|
||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||
Blended Asset
|
|
$
|
16,370
|
|
|
$
|
4,423
|
|
|
$
|
20,793
|
|
|
$
|
18,010
|
|
|
$
|
6,699
|
|
|
$
|
24,709
|
|
Equity
|
|
4,767
|
|
|
2,946
|
|
|
7,713
|
|
|
5,831
|
|
|
4,222
|
|
|
10,053
|
|
||||||
Fixed Income
|
|
601
|
|
|
34
|
|
|
635
|
|
|
642
|
|
|
109
|
|
|
751
|
|
||||||
Total
|
|
$
|
21,738
|
|
|
$
|
7,403
|
|
|
$
|
29,141
|
|
|
$
|
24,483
|
|
|
$
|
11,030
|
|
|
$
|
35,513
|
|
|
|
Six months ended June 30, 2019
|
|
Six months ended June 30, 2018
|
||||||||||||||||||||
|
|
Separately managed accounts
|
|
Mutual funds and collective investment trusts
|
|
Total
|
|
Separately managed accounts
|
|
Mutual funds and collective investment trusts
|
|
Total
|
||||||||||||
|
|
(in thousands)
|
||||||||||||||||||||||
Blended Asset
|
|
$
|
32,641
|
|
|
$
|
9,478
|
|
|
$
|
42,119
|
|
|
$
|
36,319
|
|
|
$
|
13,151
|
|
|
$
|
49,470
|
|
Equity
|
|
9,379
|
|
|
6,052
|
|
|
15,431
|
|
|
12,187
|
|
|
8,710
|
|
|
20,897
|
|
||||||
Fixed Income
|
|
1,193
|
|
|
101
|
|
|
1,294
|
|
|
1,332
|
|
|
149
|
|
|
1,481
|
|
||||||
Total
|
|
$
|
43,213
|
|
|
$
|
15,631
|
|
|
$
|
58,844
|
|
|
$
|
49,838
|
|
|
$
|
22,010
|
|
|
$
|
71,848
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
(in thousands)
|
||||||
Accounts receivable - third parties
|
|
$
|
7,799
|
|
|
$
|
5,342
|
|
Accounts receivable - affiliated mutual funds and collective investment trusts
|
|
4,432
|
|
|
6,105
|
|
||
Accounts receivable - current assets held for sale (Note 2)
|
|
4
|
|
|
—
|
|
||
Total accounts receivable
|
|
$
|
12,235
|
|
|
$
|
11,447
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
(in thousands)
|
||||||
Affiliated mutual funds
|
|
$
|
3,056
|
|
|
$
|
4,802
|
|
Affiliated collective investment trusts
|
|
1,376
|
|
|
1,303
|
|
||
Accounts receivable - affiliated mutual funds and collective investment trusts
|
|
$
|
4,432
|
|
|
$
|
6,105
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Income before provision for income taxes
|
|
$
|
3,550
|
|
|
$
|
6,682
|
|
|
$
|
6,709
|
|
|
$
|
14,433
|
|
Less: income (loss) before provision for income taxes of Manning & Napier, Inc.
(1)
|
|
(10
|
)
|
|
(12
|
)
|
|
181
|
|
|
259
|
|
||||
Income before provision for income taxes, as adjusted
|
|
3,560
|
|
|
6,694
|
|
|
6,528
|
|
|
14,174
|
|
||||
Controlling interest percentage
(2)
|
|
18.8
|
%
|
|
18.2
|
%
|
|
18.7
|
%
|
|
18.2
|
%
|
||||
Net income attributable to controlling interest
|
|
669
|
|
|
1,221
|
|
|
1,221
|
|
|
2,573
|
|
||||
Plus: income (loss) before provision for income taxes of Manning & Napier, Inc.
(1)
|
|
(10
|
)
|
|
(12
|
)
|
|
181
|
|
|
259
|
|
||||
Income before income taxes attributable to Manning & Napier, Inc.
|
|
659
|
|
|
1,209
|
|
|
1,402
|
|
|
2,832
|
|
||||
Less: provision for income taxes of Manning & Napier, Inc.
(3)
|
|
245
|
|
|
443
|
|
|
427
|
|
|
852
|
|
||||
Net income attributable to Manning & Napier, Inc.
|
|
$
|
414
|
|
|
$
|
766
|
|
|
$
|
975
|
|
|
$
|
1,980
|
|
(1)
|
Manning & Napier, Inc. incurs certain income or expenses that are only attributable to it and are therefore excluded from the net income attributable to noncontrolling interests.
|
(2)
|
Income before provision for income taxes is allocated to the controlling interest based on the percentage of units of Manning & Napier Group held by Manning & Napier, Inc. The amount represents the Company's weighted ownership of Manning & Napier Group for the respective periods.
|
(3)
|
The consolidated provision for income taxes is equal to the sum of (i) the provision for income taxes for entities other than Manning & Napier, Inc. and (ii) the provision for income taxes of Manning & Napier, Inc. which includes all U.S. federal and state income taxes. The consolidated provision for income taxes was
$0.3 million
and
$0.6 million
for the
three and six months ended
June 30, 2019
, respectively, and
$0.5 million
and
$1.0 million
for the
three and six months ended
June 30, 2018
, respectively.
|
|
Manning & Napier Group Class A Units Held
|
|
|
|||||||
|
Manning & Napier
|
|
Noncontrolling Interests |
|
Total
|
|
Manning & Napier Ownership %
|
|||
As of December 31, 2018
|
14,126,736
|
|
|
63,349,721
|
|
|
77,476,457
|
|
|
18.2%
|
Class A Units issued
|
351,532
|
|
|
—
|
|
|
351,532
|
|
|
0.4%
|
Class A Units exchanged
|
—
|
|
|
(1,315,521
|
)
|
|
(1,315,521
|
)
|
|
0.3%
|
As of June 30, 2019
|
14,478,268
|
|
|
62,034,200
|
|
|
76,512,468
|
|
|
18.9%
|
|
|
June 30, 2019
|
||||||||||||||
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury notes
|
|
$
|
15,459
|
|
|
$
|
175
|
|
|
$
|
—
|
|
|
$
|
15,634
|
|
Fixed income securities
|
|
22,173
|
|
|
18
|
|
|
—
|
|
|
22,191
|
|
||||
Short-term investments
|
|
42,386
|
|
|
—
|
|
|
—
|
|
|
42,386
|
|
||||
|
|
|
|
|
|
|
|
80,211
|
|
|||||||
Trading securities
|
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
|
|
|
|
|
|
|
5,442
|
|
|||||||
Mutual funds
|
|
|
|
|
|
|
|
3,966
|
|
|||||||
|
|
|
|
|
|
|
|
9,408
|
|
|||||||
Total investment securities
|
|
|
|
|
|
|
|
$
|
89,619
|
|
|
|
December 31, 2018
|
||||||||||||||
|
|
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury notes
|
|
$
|
21,613
|
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
21,649
|
|
Fixed income securities
|
|
15,488
|
|
|
—
|
|
|
(75
|
)
|
|
15,413
|
|
||||
Short-term investments
|
|
45,879
|
|
|
—
|
|
|
—
|
|
|
45,879
|
|
||||
|
|
|
|
|
|
|
|
82,941
|
|
|||||||
Trading securities
|
|
|
|
|
|
|
|
|
||||||||
Equity securities
|
|
|
|
|
|
|
|
4,683
|
|
|||||||
Mutual funds
|
|
|
|
|
|
|
|
3,566
|
|
|||||||
|
|
|
|
|
|
|
|
8,249
|
|
|||||||
Total investment securities
|
|
|
|
|
|
|
|
$
|
91,190
|
|
•
|
Level 2—other significant observable inputs (including but not limited to quoted prices for similar securities, interest rates, prepayment rates, credit risk, etc.); and
|
•
|
Level 3—significant unobservable inputs (including the Company’s own assumptions in determining the fair value of investments).
|
|
|
June 30, 2019
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Totals
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Equity securities
|
|
$
|
5,442
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,442
|
|
Fixed income securities
|
|
—
|
|
|
22,191
|
|
|
—
|
|
|
22,191
|
|
||||
Mutual funds
|
|
3,966
|
|
|
—
|
|
|
—
|
|
|
3,966
|
|
||||
U.S. Treasury notes
|
|
—
|
|
|
15,634
|
|
|
—
|
|
|
15,634
|
|
||||
Short-term investments
|
|
32,950
|
|
|
9,436
|
|
|
—
|
|
|
42,386
|
|
||||
Total assets at fair value
|
|
$
|
42,358
|
|
|
$
|
47,261
|
|
|
$
|
—
|
|
|
$
|
89,619
|
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
December 31, 2018
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Totals
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Equity securities
|
|
$
|
4,683
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,683
|
|
Fixed income securities
|
|
—
|
|
|
15,413
|
|
|
—
|
|
|
15,413
|
|
||||
Mutual funds
|
|
3,566
|
|
|
—
|
|
|
—
|
|
|
3,566
|
|
||||
U.S. Treasury notes
|
|
—
|
|
|
21,649
|
|
|
—
|
|
|
21,649
|
|
||||
Short-term investments
|
|
43,914
|
|
|
1,965
|
|
|
—
|
|
|
45,879
|
|
||||
Total assets at fair value
|
|
$
|
52,163
|
|
|
$
|
39,027
|
|
|
$
|
—
|
|
|
$
|
91,190
|
|
|
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Total liabilities at fair value
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
(in thousands)
|
||||||
Accrued bonus and sales commissions
|
|
$
|
12,518
|
|
|
$
|
16,121
|
|
Accrued payroll and benefits
|
|
2,366
|
|
|
4,087
|
|
||
Accrued sub-transfer agent fees
|
|
555
|
|
|
1,451
|
|
||
Dividends payable
|
|
313
|
|
|
306
|
|
||
Amounts payable under tax receivable agreement
|
|
674
|
|
|
674
|
|
||
Short-term operating lease liabilities
|
|
2,791
|
|
|
—
|
|
||
Other accruals and liabilities
|
|
2,646
|
|
|
2,487
|
|
||
Total accrued expenses and other liabilities
|
|
$
|
21,863
|
|
|
$
|
25,126
|
|
|
|
Six months ended June 30, 2019
|
||
|
|
(in thousands)
|
||
Accrued employee severance costs as of December 31, 2018
|
|
$
|
1,642
|
|
Employee severance costs recognized
|
|
1,011
|
|
|
Payment of employee severance costs
|
|
(2,068
|
)
|
|
Accrued employee severance costs as of June 30, 2019
|
|
$
|
585
|
|
|
|
Three months ended June 30, 2019
|
|
Six months ended June 30, 2019
|
||||
|
|
(in thousands)
|
||||||
Finance lease expense
|
|
|
|
|
||||
Amortization of right-of-use assets
|
|
$
|
30
|
|
|
$
|
59
|
|
Interest on lease liabilities
|
|
2
|
|
|
5
|
|
||
Operating lease expense
|
|
934
|
|
|
1,857
|
|
||
Short-term lease expense
|
|
4
|
|
|
8
|
|
||
Variable lease expense
|
|
65
|
|
|
111
|
|
||
Sublease income
|
|
(174
|
)
|
|
(297
|
)
|
||
Total
|
|
$
|
861
|
|
|
$
|
1,743
|
|
|
|
Three months ended June 30, 2019
|
|
Six months ended June 30, 2019
|
||||
|
|
(in thousands)
|
||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
|
|
|
||||
Operating cash flows from finance leases
|
|
$
|
3
|
|
|
$
|
5
|
|
Finance cash flows from finance leases
|
|
$
|
33
|
|
|
$
|
61
|
|
Operating cash flows from operating leases
|
|
$
|
1,159
|
|
|
$
|
1,953
|
|
|
|
|
|
|
||||
Right-of-use assets obtained in exchange for new lease obligations:
|
|
|
|
|
||||
Finance leases
|
|
$
|
15
|
|
|
$
|
175
|
|
Operating leases
|
|
$
|
862
|
|
|
$
|
862
|
|
(in thousands, except lease term and discount rate)
|
|
June 30, 2019
|
||
Finance Leases
|
|
|
||
Finance lease right-of-use assets
(1)
|
|
$
|
268
|
|
|
|
|
||
Accrued expenses and other liabilities
|
|
$
|
120
|
|
Other long-term liabilities
|
|
162
|
|
|
Total finance lease liabilities
|
|
$
|
282
|
|
|
|
|
||
Operating Leases
|
|
|
||
Operating lease right-of-use assets
|
|
$
|
20,067
|
|
|
|
|
||
Accrued expenses and other liabilities
|
|
$
|
2,791
|
|
Operating lease liabilities, non-current
|
|
19,939
|
|
|
Total operating lease liabilities
|
|
$
|
22,730
|
|
|
|
|
||
Weighted average remaining lease term
|
|
|
||
Finance leases
|
|
2.98 years
|
|
|
Operating leases
|
|
7.76 years
|
|
|
Weighted average discount rate
|
|
|
||
Finance leases
|
|
4.41
|
%
|
|
Operating leases
|
|
5.14
|
%
|
(1)
|
Amounts included in other long-term assets within the consolidated statements of financial condition.
|
Twelve month period ending June 30,
|
|
Finance Leases
|
|
Operating Leases
|
||||
|
|
(in thousands)
|
||||||
2020
|
|
$
|
131
|
|
|
$
|
3,889
|
|
2021
|
|
75
|
|
|
3,887
|
|
||
2022
|
|
55
|
|
|
3,558
|
|
||
2023
|
|
28
|
|
|
3,272
|
|
||
2024
|
|
14
|
|
|
3,132
|
|
||
Thereafter
|
|
—
|
|
|
9,895
|
|
||
Total lease payments
|
|
303
|
|
|
27,633
|
|
||
Less imputed interest
|
|
(21
|
)
|
|
(4,903
|
)
|
||
Total lease liabilities
|
|
$
|
282
|
|
|
$
|
22,730
|
|
Year Ending December 31,
|
|
Minimum Payments
|
||
|
|
(in thousands)
|
||
2019
|
|
$
|
3,748
|
|
2020
|
|
3,780
|
|
|
2021
|
|
3,712
|
|
|
2022
|
|
3,668
|
|
|
2023
|
|
3,369
|
|
|
Thereafter
|
|
13,397
|
|
|
Total undiscounted lease payments
|
|
$
|
31,674
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except share data)
|
|
|
|
|
||||||||||
Net income attributable to controlling and noncontrolling interests
|
|
$
|
3,219
|
|
|
$
|
6,190
|
|
|
$
|
6,136
|
|
|
$
|
13,463
|
|
Less: net income attributable to noncontrolling interests
|
|
2,805
|
|
|
5,424
|
|
|
5,161
|
|
|
11,483
|
|
||||
Net income attributable to Manning & Napier, Inc.
|
|
$
|
414
|
|
|
$
|
766
|
|
|
$
|
975
|
|
|
$
|
1,980
|
|
Less: allocation to participating securities
|
|
(33
|
)
|
|
47
|
|
|
(43
|
)
|
|
95
|
|
||||
Net income available to Class A common stock
|
|
$
|
447
|
|
|
$
|
719
|
|
|
$
|
1,018
|
|
|
$
|
1,885
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares of Class A common stock outstanding - basic
|
|
15,267,762
|
|
|
14,691,928
|
|
|
15,098,454
|
|
|
14,503,784
|
|
||||
Dilutive effect of unvested equity awards
|
|
346,177
|
|
|
17,475
|
|
|
305,895
|
|
|
26,614
|
|
||||
Dilutive effect of exchangeable Class A Units
|
|
—
|
|
|
—
|
|
|
62,913,637
|
|
|
—
|
|
||||
Weighted average shares of Class A common stock outstanding - diluted
|
|
15,613,939
|
|
|
14,709,403
|
|
|
78,317,986
|
|
|
14,530,398
|
|
||||
Net income available to Class A common stock per share - basic
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
Net income available to Class A common stock per share - diluted
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
|
|
Stock Awards
|
|
Weighted Average Grant Date Fair Value
|
|||
Outstanding at January 1, 2019
|
|
1,602,337
|
|
|
$
|
5.31
|
|
Granted
|
|
770,571
|
|
|
$
|
2.38
|
|
Vested
|
|
(566,115
|
)
|
|
$
|
5.58
|
|
Forfeited
|
|
(45,000
|
)
|
|
$
|
11.03
|
|
Outstanding at June 30, 2019
|
|
1,761,793
|
|
|
$
|
3.80
|
|
|
|
Stock Option Awards
|
|
Weighted Average Exercise Price
|
|
Weighted Average Contractual Term
(years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||
Outstanding at January 1, 2019
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Granted
|
|
3,500,000
|
|
|
$
|
2.01
|
|
|
|
|
|
||
Vested
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Outstanding at June 30, 2019
|
|
3,500,000
|
|
|
$
|
2.01
|
|
|
4.2
|
|
$
|
—
|
|
Exercisable at June 30, 2019
|
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Expected volatility
|
|
45.00%
|
Expected term (in years)
|
|
4.9 - 6.9
|
Risk-free interest rate
|
|
2.49% - 2.58%
|
Expected dividend yield
|
|
3.98%
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands)
|
||||||||||||||
Income before provision for income taxes
|
|
$
|
3,550
|
|
|
$
|
6,682
|
|
|
$
|
6,709
|
|
|
$
|
14,433
|
|
Effective tax rate
|
|
9.3
|
%
|
|
7.4
|
%
|
|
8.5
|
%
|
|
6.7
|
%
|
||||
Provision for income taxes
|
|
331
|
|
|
492
|
|
|
573
|
|
|
970
|
|
||||
Provision for income taxes at statutory rate
|
|
746
|
|
|
1,403
|
|
|
1,409
|
|
|
3,031
|
|
||||
Difference between tax at effective vs. statutory rate
|
|
$
|
(415
|
)
|
|
$
|
(911
|
)
|
|
$
|
(836
|
)
|
|
$
|
(2,061
|
)
|
|
|
June 30, 2019
|
||||||||||||||
AUM - by investment vehicle and portfolio
|
|
Blended
Asset
|
|
Equity
|
|
Fixed Income
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Separately managed accounts
|
|
$
|
9,455.2
|
|
|
$
|
4,358.1
|
|
|
$
|
1,000.8
|
|
|
$
|
14,814.1
|
|
Mutual funds and collective investment trusts
|
|
4,389.1
|
|
|
1,951.4
|
|
|
96.2
|
|
|
6,436.7
|
|
||||
Total
|
|
$
|
13,844.3
|
|
|
$
|
6,309.5
|
|
|
$
|
1,097.0
|
|
|
$
|
21,250.8
|
|
|
|
June 30, 2019
|
||||||||||||||
|
|
Blended
Asset
|
|
Equity
|
|
Fixed Income
|
|
Total
|
||||||||
|
|
(dollars in millions)
|
||||||||||||||
Separate account AUM
|
|
|
|
|
|
|
|
|
||||||||
Direct Channel
|
|
$
|
7,245.9
|
|
|
$
|
2,690.7
|
|
|
$
|
882.6
|
|
|
$
|
10,819.2
|
|
Intermediary Channel
|
|
2,195.7
|
|
|
562.6
|
|
|
118.2
|
|
|
2,876.5
|
|
||||
Platform/Sub-advisor Channel
|
|
13.6
|
|
|
1,104.8
|
|
|
—
|
|
|
1,118.4
|
|
||||
Total
|
|
$
|
9,455.2
|
|
|
$
|
4,358.1
|
|
|
$
|
1,000.8
|
|
|
$
|
14,814.1
|
|
Percentage of separate account AUM
|
|
|
|
|
|
|
|
|
||||||||
Direct Channel
|
|
49
|
%
|
|
18
|
%
|
|
6
|
%
|
|
73
|
%
|
||||
Intermediary Channel
|
|
15
|
%
|
|
4
|
%
|
|
1
|
%
|
|
20
|
%
|
||||
Platform/Sub-advisor Channel
|
|
0
|
%
|
|
7
|
%
|
|
—
|
%
|
|
7
|
%
|
||||
Total
|
|
64
|
%
|
|
29
|
%
|
|
7
|
%
|
|
100
|
%
|
||||
Percentage of portfolio by channel
|
|
|
|
|
|
|
|
|
||||||||
Direct Channel
|
|
77
|
%
|
|
62
|
%
|
|
88
|
%
|
|
73
|
%
|
||||
Intermediary Channel
|
|
23
|
%
|
|
13
|
%
|
|
12
|
%
|
|
19
|
%
|
||||
Platform/Sub-advisor Channel
|
|
0
|
%
|
|
25
|
%
|
|
—
|
%
|
|
8
|
%
|
||||
Total
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
||||
Percentage of channel by portfolio
|
|
|
|
|
|
|
|
|
||||||||
Direct Channel
|
|
67
|
%
|
|
25
|
%
|
|
8
|
%
|
|
100
|
%
|
||||
Intermediary Channel
|
|
76
|
%
|
|
20
|
%
|
|
4
|
%
|
|
100
|
%
|
||||
Platform/Sub-advisor Channel
|
|
1
|
%
|
|
99
|
%
|
|
—
|
%
|
|
100
|
%
|
|
|
June 30, 2019
|
||||||||||||||
|
|
Blended
Asset
|
|
Equity
|
|
Fixed Income
|
|
Total
|
||||||||
|
|
(in millions)
|
||||||||||||||
Mutual fund and collective investment trust AUM
|
|
$
|
4,389.1
|
|
|
$
|
1,951.4
|
|
|
$
|
96.2
|
|
|
$
|
6,436.7
|
|
•
|
asset-based fee rates and changes in those rates;
|
•
|
the composition of our AUM among various portfolios, vehicles and client types;
|
•
|
changes in our variable costs, including incentive compensation and distribution, servicing and custody expenses, which are affected by our investment performance, level of our AUM and revenue; and
|
•
|
fixed costs, including changes to base compensation, vendor-related costs and investment spending on new products.
|
|
Separately
managed
accounts
|
|
Mutual funds
and collective
investment
trusts
|
|
Total
|
|
Separately
managed
accounts
|
|
Mutual funds
and collective
investment
trusts
|
|
Total
|
|||||||||
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|||||||||
As of March 31, 2019
|
$
|
14,667.2
|
|
|
$
|
6,470.6
|
|
|
$
|
21,137.8
|
|
|
69
|
%
|
|
31
|
%
|
|
100
|
%
|
Gross client inflows
(1)
|
301.2
|
|
|
249.2
|
|
|
550.4
|
|
|
|
|
|
|
|
||||||
Gross client outflows
(1)
|
(613.2
|
)
|
|
(509.6
|
)
|
|
(1,122.8
|
)
|
|
|
|
|
|
|
||||||
Market appreciation/(depreciation) & other
(2)
|
458.9
|
|
|
226.5
|
|
|
685.4
|
|
|
|
|
|
|
|
||||||
As of June 30, 2019
|
$
|
14,814.1
|
|
|
$
|
6,436.7
|
|
|
$
|
21,250.8
|
|
|
70
|
%
|
|
30
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
14,647.1
|
|
|
$
|
6,383.4
|
|
|
$
|
21,030.5
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As of March 31, 2018
|
$
|
15,960.1
|
|
|
$
|
7,473.4
|
|
|
$
|
23,433.5
|
|
|
68
|
%
|
|
32
|
%
|
|
100
|
%
|
Gross client inflows
(1)
|
331.1
|
|
|
349.7
|
|
|
680.8
|
|
|
|
|
|
|
|
||||||
Gross client outflows
(1)
|
(899.7
|
)
|
|
(654.5
|
)
|
|
(1,554.2
|
)
|
|
|
|
|
|
|
||||||
Market appreciation/(depreciation) & other
(2)
|
214.4
|
|
|
63.2
|
|
|
277.6
|
|
|
|
|
|
|
|
||||||
As of June 30, 2018
|
$
|
15,605.9
|
|
|
$
|
7,231.8
|
|
|
$
|
22,837.7
|
|
|
68
|
%
|
|
32
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
15,689.8
|
|
|
$
|
7,394.2
|
|
|
$
|
23,084.0
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Separately
managed
accounts
|
|
Mutual funds
and collective
investment
trusts
|
|
Total
|
|
Separately
managed
accounts
|
|
Mutual funds
and collective
investment
trusts
|
|
Total
|
|||||||||
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|||||||
As of December 31, 2018
|
$
|
13,792.1
|
|
|
$
|
6,371.5
|
|
|
$
|
20,163.6
|
|
|
68
|
%
|
|
32
|
%
|
|
100
|
%
|
Gross client inflows
(1)
|
617.3
|
|
|
653.8
|
|
|
1,271.1
|
|
|
|
|
|
|
|
||||||
Gross client outflows
(1)
|
(1,278.1
|
)
|
|
(1,417.6
|
)
|
|
(2,695.7
|
)
|
|
|
|
|
|
|
||||||
Market appreciation/(depreciation) & other
(2)
|
1,682.8
|
|
|
829.0
|
|
|
2,511.8
|
|
|
|
|
|
|
|
||||||
As of June 30, 2019
|
$
|
14,814.1
|
|
|
$
|
6,436.7
|
|
|
$
|
21,250.8
|
|
|
70
|
%
|
|
30
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
14,459.6
|
|
|
$
|
6,361.7
|
|
|
$
|
20,821.3
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
As of December 31, 2017
|
$
|
16,856.6
|
|
|
$
|
8,256.6
|
|
|
$
|
25,113.2
|
|
|
67
|
%
|
|
33
|
%
|
|
100
|
%
|
Gross client inflows (1)
|
749.7
|
|
|
831.0
|
|
|
1,580.7
|
|
|
|
|
|
|
|
||||||
Gross client outflows (1)
|
(2,225.5
|
)
|
|
(1,685.5
|
)
|
|
(3,911.0
|
)
|
|
|
|
|
|
|
||||||
Acquired/(disposed) assets
|
—
|
|
|
(251.6
|
)
|
|
(251.6
|
)
|
|
|
|
|
|
|
||||||
Market appreciation/(depreciation) & other
(2)
|
225.1
|
|
|
81.3
|
|
|
306.4
|
|
|
|
|
|
|
|
||||||
As of June 30, 2018
|
$
|
15,605.9
|
|
|
$
|
7,231.8
|
|
|
$
|
22,837.7
|
|
|
68
|
%
|
|
32
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
16,087.8
|
|
|
$
|
7,640.0
|
|
|
$
|
23,727.8
|
|
|
|
|
|
|
|
(1)
|
Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.
|
(2)
|
Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.
|
|
Blended
Asset
|
|
Equity
|
|
Fixed
Income
|
|
Total
|
|
Blended
Asset
|
|
Equity
|
|
Fixed
Income
|
|
Total
|
||||||||||||
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
As of March 31, 2019
|
$
|
13,834.7
|
|
|
$
|
6,227.2
|
|
|
$
|
1,075.9
|
|
|
$
|
21,137.8
|
|
|
66
|
%
|
|
29
|
%
|
|
5
|
%
|
|
100
|
%
|
Gross client inflows
(1)
|
327.0
|
|
|
161.7
|
|
|
61.7
|
|
|
550.4
|
|
|
|
|
|
|
|
|
|
||||||||
Gross client outflows
(1)
|
(745.7
|
)
|
|
(308.2
|
)
|
|
(68.9
|
)
|
|
(1,122.8
|
)
|
|
|
|
|
|
|
|
|
||||||||
Market appreciation/(depreciation) & other
(2)
|
428.3
|
|
|
228.8
|
|
|
28.3
|
|
|
685.4
|
|
|
|
|
|
|
|
|
|
||||||||
As of June 30, 2019
|
$
|
13,844.3
|
|
|
$
|
6,309.5
|
|
|
$
|
1,097.0
|
|
|
$
|
21,250.8
|
|
|
65
|
%
|
|
30
|
%
|
|
5
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
13,718.9
|
|
|
$
|
6,200.7
|
|
|
$
|
1,110.9
|
|
|
$
|
21,030.5
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of March 31, 2018
|
$
|
14,998.4
|
|
|
$
|
7,214.2
|
|
|
$
|
1,220.9
|
|
|
$
|
23,433.5
|
|
|
64
|
%
|
|
31
|
%
|
|
5
|
%
|
|
100
|
%
|
Gross client inflows
(1)
|
432.6
|
|
|
231.2
|
|
|
17.0
|
|
|
680.8
|
|
|
|
|
|
|
|
|
|
||||||||
Gross client outflows
(1)
|
(718.3
|
)
|
|
(776.7
|
)
|
|
(59.2
|
)
|
|
(1,554.2
|
)
|
|
|
|
|
|
|
|
|
||||||||
Market appreciation/(depreciation) & other
(2)
|
265.2
|
|
|
2.7
|
|
|
9.7
|
|
|
277.6
|
|
|
|
|
|
|
|
|
|
||||||||
As of June 30, 2018
|
$
|
14,977.9
|
|
|
$
|
6,671.4
|
|
|
$
|
1,188.4
|
|
|
$
|
22,837.7
|
|
|
66
|
%
|
|
29
|
%
|
|
5
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
14,973.6
|
|
|
$
|
6,909.2
|
|
|
$
|
1,201.2
|
|
|
$
|
23,084.0
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Blended
Asset
|
|
Equity
|
|
Fixed
Income
|
|
Total
|
|
Blended
Asset
|
|
Equity
|
|
Fixed
Income
|
|
Total
|
||||||||||||
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
As of December 31, 2018
|
$
|
13,532.2
|
|
|
$
|
5,501.9
|
|
|
$
|
1,129.5
|
|
|
$
|
20,163.6
|
|
|
67
|
%
|
|
27
|
%
|
|
6
|
%
|
|
100
|
%
|
Gross client inflows (1)
|
629.1
|
|
|
541.0
|
|
|
101.0
|
|
|
1,271.1
|
|
|
|
|
|
|
|
|
|
||||||||
Gross client outflows (1)
|
(1,811.6
|
)
|
|
(690.9
|
)
|
|
(193.2
|
)
|
|
(2,695.7
|
)
|
|
|
|
|
|
|
|
|
||||||||
Market appreciation/(depreciation) & other
(2)
|
1,494.6
|
|
|
957.5
|
|
|
59.7
|
|
|
2,511.8
|
|
|
|
|
|
|
|
|
|
||||||||
As of June 30, 2019
|
$
|
13,844.3
|
|
|
$
|
6,309.5
|
|
|
$
|
1,097.0
|
|
|
$
|
21,250.8
|
|
|
65
|
%
|
|
30
|
%
|
|
5
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
13,661.0
|
|
|
$
|
6,048.8
|
|
|
$
|
1,111.5
|
|
|
$
|
20,821.3
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
As of December 31, 2017
|
$
|
15,666.6
|
|
|
$
|
8,120.6
|
|
|
$
|
1,326.0
|
|
|
$
|
25,113.2
|
|
|
63
|
%
|
|
32
|
%
|
|
5
|
%
|
|
100
|
%
|
Gross client inflows (1)
|
891.8
|
|
|
586.7
|
|
|
102.2
|
|
|
1,580.7
|
|
|
|
|
|
|
|
|
|
||||||||
Gross client outflows (1)
|
(1,821.0
|
)
|
|
(1,843.2
|
)
|
|
(246.8
|
)
|
|
(3,911.0
|
)
|
|
|
|
|
|
|
|
|
||||||||
Acquired/(disposed) assets
|
—
|
|
|
(251.6
|
)
|
|
—
|
|
|
(251.6
|
)
|
|
|
|
|
|
|
|
|
||||||||
Market appreciation/(depreciation) & other
(2)
|
240.5
|
|
|
58.9
|
|
|
7.0
|
|
|
306.4
|
|
|
|
|
|
|
|
|
|
||||||||
As of June 30, 2018
|
$
|
14,977.9
|
|
|
$
|
6,671.4
|
|
|
$
|
1,188.4
|
|
|
$
|
22,837.7
|
|
|
66
|
%
|
|
29
|
%
|
|
5
|
%
|
|
100
|
%
|
Average AUM for period
|
$
|
15,216.4
|
|
|
$
|
7,262.9
|
|
|
$
|
1,248.5
|
|
|
$
|
23,727.8
|
|
|
|
|
|
|
|
|
|
(1)
|
Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.
|
(2)
|
Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.
|
Key Strategies
|
AUM as of
June 30, 2019 (in millions) |
Inception Date
|
|
Annualized Returns as of June 30, 2019 (2)
|
||||||||||
|
One Year
|
|
Three Year
|
|
Five Year
|
|
Ten Year
|
|
Inception
|
|||||
Long-Term Growth (30%-80% Equity Exposure)
|
$
|
5,790.0
|
|
1/1/1973
|
|
6.2%
|
|
7.6%
|
|
4.1%
|
|
8.4%
|
|
9.4%
|
Blended Index (3)
|
|
|
|
7.8%
|
|
8.2%
|
|
5.9%
|
|
8.8%
|
|
8.8%
|
||
Core Non-U.S. Equity
|
$
|
2,076.5
|
|
10/1/1996
|
|
0.9%
|
|
6.6%
|
|
0.3%
|
|
5.8%
|
|
7.2%
|
Benchmark: ACWIxUS Index
|
|
|
|
1.3%
|
|
9.4%
|
|
2.2%
|
|
6.5%
|
|
5.1%
|
||
Growth with Reduced Volatility (20%-60% Equity Exposure)
|
$
|
2,625.0
|
|
1/1/1973
|
|
5.9%
|
|
6.0%
|
|
3.4%
|
|
6.9%
|
|
8.7%
|
Blended Index (4)
|
|
|
|
8.0%
|
|
6.6%
|
|
5.2%
|
|
7.6%
|
|
8.4%
|
||
Equity-Oriented (70%-100% Equity Exposure)
|
$
|
1,537.9
|
|
1/1/1993
|
|
7.0%
|
|
11.5%
|
|
6.0%
|
|
10.7%
|
|
9.9%
|
Blended Benchmark: 65% Russell 3000 / 20% ACWIxUS/ 15% Bloomberg Barclays U.S. Aggregate Bond
|
|
|
|
7.5%
|
|
11.4%
|
|
7.6%
|
|
11.5%
|
|
8.6%
|
||
Equity-Focused Blend (50%-90% Equity Exposure)
|
$
|
963.8
|
|
4/1/2000
|
|
6.7%
|
|
8.9%
|
|
4.7%
|
|
9.3%
|
|
7.0%
|
Blended Benchmark: 53% Russell 3000 / 20% ACWIxUS/ 30% Bloomberg Barclays U.S. Aggregate Bond
|
|
|
|
7.7%
|
|
9.8%
|
|
6.8%
|
|
10.2%
|
|
5.5%
|
||
Core Equity-Unrestricted (90%-100% Equity Exposure)
|
$
|
626.1
|
|
1/1/1995
|
|
7.8%
|
|
13.5%
|
|
7.1%
|
|
12.1%
|
|
11.1%
|
Blended Benchmark: 80% Russell 3000 / 20% ACWIxUS
|
|
|
|
7.5%
|
|
13.1%
|
|
8.6%
|
|
13.1%
|
|
9.1%
|
||
Core U.S. Equity
|
$
|
438.9
|
|
7/1/2000
|
|
9.4%
|
|
15.3%
|
|
8.7%
|
|
12.8%
|
|
8.1%
|
Benchmark: Russell 3000
|
|
|
|
9.0%
|
|
14.0%
|
|
10.2%
|
|
14.7%
|
|
6.1%
|
||
Conservative Growth (5%-35% Equity Exposure)
|
$
|
470.1
|
|
4/1/1992
|
|
5.5%
|
|
4.0%
|
|
2.5%
|
|
4.9%
|
|
5.9%
|
Blended Benchmark: 15% Russell 3000 / 5% ACWIxUS / 80% Bloomberg Barclays U.S. Intermediate Aggregate Bond
|
|
|
|
7.1%
|
|
4.3%
|
|
3.7%
|
|
5.3%
|
|
6.1%
|
||
Aggregate Fixed Income
|
$
|
217.9
|
|
1/1/1984
|
|
7.4%
|
|
2.3%
|
|
2.6%
|
|
3.8%
|
|
7.1%
|
Benchmark: Bloomberg Barclays U.S. Aggregate Bond
|
|
|
|
7.9%
|
|
2.3%
|
|
3.0%
|
|
3.9%
|
|
7.1%
|
||
Rainier International Small Cap
|
$
|
854.4
|
|
3/28/2012
|
|
(5.0)%
|
|
9.4%
|
|
6.8%
|
|
N/A
(1)
|
|
11.8%
|
Benchmark: MSCI ACWIxUS Small Cap Index
|
|
|
|
(5.9)%
|
|
7.8%
|
|
2.8%
|
|
N/A
(1)
|
|
6.0%
|
||
Disciplined Value
|
$
|
480.5
|
|
11/1/2003
|
|
9.4%
|
|
12.1%
|
|
8.8%
|
|
12.7%
|
|
10.6%
|
Benchmark: Russell 1000 Value
|
|
|
|
8.5%
|
|
10.2%
|
|
7.5%
|
|
13.2%
|
|
8.3%
|
(1)
|
Performance not available given the product's inception date.
|
(2)
|
Key investment strategy returns are presented net of fees. Benchmark returns do not reflect any fees or expenses.
|
(3)
|
Benchmark shown uses the 55/45 Blended Index from 01/01/1973-12/31/1987 and the 40/15/45 Blended Index from 01/01/1988-12/31/2018. The 55/45 Blended Index is represented by 55% S&P 500 Total Return Index ("S&P 500") and 45% Bloomberg Barclays U.S. Government/Credit Bond Index ("BGCB"). The 40/15/45 Blended Index is 40% Russell 3000 Index ("Russel 3000"), 15% MSCI ACWI ex USA Index ("ACWxUS"), and 45% Bloomberg Barclays U.S. Aggregate Bond Index ("BAB").
|
(4)
|
Benchmark shown uses the 40/60 Blended Index from 01/01/1973-12/31/1987 and the 30/10/60 Blended Index from 01/01/1988-12/31/2018. The 40/60 Blended Index is represented by 40% S&P 500 and 60% BGCB. The 30/10/60 Blended Index is represented by 30% Russell 3000, 10% ACWxUS, and 60% BAB.
|
•
|
Compensation and related costs
. Employee compensation and related costs represent our largest expense, including employee salaries and benefits, incentive compensation to investment and sales professionals, compensation issued under our long-term incentive plan as well as equity compensation. These costs are affected by changes in the employee headcount, the mix of existing job descriptions, competitive factors, the addition of new skill sets and variations in the level of our AUM and revenues. In addition, these costs are impacted by the amount of compensation granted under our equity plan and the amount of deferred cash awards granted under our long-term incentive plan. Incentive compensation for our research team considers the cumulative impact of both absolute and relative investment performance over historical time periods, with more weight placed on the recent periods. As such, incentive compensation paid to our research team will vary, in part, based on absolute and relative investment performance.
|
•
|
Distribution, servicing and custody expenses
. Distribution, servicing and custody expense represent amounts paid to various intermediaries for distribution, shareholder servicing, administrative servicing and custodial services. These expenses generally increase or decrease in line with changes in our mutual fund and collective investment trust AUM or services performed by these intermediaries. During the first quarter of 2019, we completed the effort of restructuring fees across our mutual funds that began in 2017. Given the overall pressure on fees that all active managers are facing, we believe that bringing our fund fees to a more competitive level will enhance our ability to attract additional assets in the future. The financial impacts will include a reduction in the management fees on our existing business, as well as an offsetting reduction in related distribution, servicing and custody expenses.
|
•
|
Other operating costs
. Other operating costs include accounting, legal and other professional service fees, occupancy and facility costs, travel and entertainment expenses, insurance, market data service expenses and all other miscellaneous costs associated with managing the day-to-day operations of our business.
|
|
|
Three months ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Separately managed accounts
|
|
|
|
|
|
|
|
|
|||||||
Beginning assets under management
|
|
$
|
14,667.2
|
|
|
$
|
15,960.1
|
|
|
$
|
(1,292.9
|
)
|
|
(8
|
)%
|
Gross client inflows
(1)
|
|
301.2
|
|
|
331.1
|
|
|
(29.9
|
)
|
|
(9
|
)%
|
|||
Gross client outflows
(1)
|
|
(613.2
|
)
|
|
(899.7
|
)
|
|
286.5
|
|
|
(32
|
)%
|
|||
Market appreciation (depreciation) & other
(2)
|
|
458.9
|
|
|
214.4
|
|
|
244.5
|
|
|
*
|
|
|||
Ending assets under management
|
|
$
|
14,814.1
|
|
|
$
|
15,605.9
|
|
|
$
|
(791.8
|
)
|
|
(5
|
)%
|
Average AUM for period
|
|
$
|
14,647.1
|
|
|
$
|
15,689.8
|
|
|
|
|
|
|||
Mutual funds and collective investment trusts
|
|
|
|
|
|
|
|
|
|||||||
Beginning assets under management
|
|
$
|
6,470.6
|
|
|
$
|
7,473.4
|
|
|
$
|
(1,002.8
|
)
|
|
(13
|
)%
|
Gross client inflows
(1)
|
|
249.2
|
|
|
349.7
|
|
|
(100.5
|
)
|
|
(29
|
)%
|
|||
Gross client outflows
(1)
|
|
(509.6
|
)
|
|
(654.5
|
)
|
|
144.9
|
|
|
(22
|
)%
|
|||
Market appreciation (depreciation) & other
(2)
|
|
226.5
|
|
|
63.2
|
|
|
163.3
|
|
|
*
|
|
|||
Ending assets under management
|
|
$
|
6,436.7
|
|
|
$
|
7,231.8
|
|
|
$
|
(795.1
|
)
|
|
(11
|
)%
|
Average AUM for period
|
|
$
|
6,383.4
|
|
|
$
|
7,394.2
|
|
|
|
|
|
|||
Total assets under management
|
|
|
|
|
|
|
|
|
|||||||
Beginning assets under management
|
|
$
|
21,137.8
|
|
|
$
|
23,433.5
|
|
|
$
|
(2,295.7
|
)
|
|
(10
|
)%
|
Gross client inflows
(1)
|
|
550.4
|
|
|
680.8
|
|
|
(130.4
|
)
|
|
(19
|
)%
|
|||
Gross client outflows
(1)
|
|
(1,122.8
|
)
|
|
(1,554.2
|
)
|
|
431.4
|
|
|
(28
|
)%
|
|||
Market appreciation (depreciation) & other
(2)
|
|
685.4
|
|
|
277.6
|
|
|
407.8
|
|
|
*
|
|
|||
Ending assets under management
|
|
$
|
21,250.8
|
|
|
$
|
22,837.7
|
|
|
$
|
(1,586.9
|
)
|
|
(7
|
)%
|
Average AUM for period
|
|
$
|
21,030.5
|
|
|
$
|
23,084.0
|
|
|
|
|
|
(*)
|
Percentage change not meaningful.
|
(1)
|
Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.
|
(2)
|
Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.
|
|
|
Three months ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
|
(in thousands, except share data)
|
|
|
|||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||||||
Management Fees
|
|
|
|
|
|
|
|
|
|||||||
Separately managed accounts
|
|
$
|
21,738
|
|
|
$
|
24,483
|
|
|
$
|
(2,745
|
)
|
|
(11
|
)%
|
Mutual funds and collective investment trusts
|
|
7,403
|
|
|
11,030
|
|
|
(3,627
|
)
|
|
(33
|
)%
|
|||
Distribution and shareholder servicing
|
|
2,566
|
|
|
3,033
|
|
|
(467
|
)
|
|
(15
|
)%
|
|||
Custodial services
|
|
1,750
|
|
|
1,895
|
|
|
(145
|
)
|
|
(8
|
)%
|
|||
Other revenue
|
|
837
|
|
|
679
|
|
|
158
|
|
|
23
|
%
|
|||
Total revenue
|
|
34,294
|
|
|
41,120
|
|
|
(6,826
|
)
|
|
(17
|
)%
|
|||
Expenses
|
|
|
|
|
|
|
|
|
|||||||
Compensation and related costs
|
|
20,161
|
|
|
21,689
|
|
|
(1,528
|
)
|
|
(7
|
)%
|
|||
Distribution, servicing and custody expenses
|
|
3,019
|
|
|
4,502
|
|
|
(1,483
|
)
|
|
(33
|
)%
|
|||
Other operating costs
|
|
8,639
|
|
|
8,579
|
|
|
60
|
|
|
1
|
%
|
|||
Total operating expenses
|
|
31,819
|
|
|
34,770
|
|
|
(2,951
|
)
|
|
(8
|
)%
|
|||
Operating income
|
|
2,475
|
|
|
6,350
|
|
|
(3,875
|
)
|
|
(61
|
)%
|
|||
Non-operating income (loss)
|
|
|
|
|
|
|
|
|
|||||||
Non-operating income (loss), net
|
|
1,075
|
|
|
332
|
|
|
743
|
|
|
*
|
|
|||
Income before provision for income taxes
|
|
3,550
|
|
|
6,682
|
|
|
(3,132
|
)
|
|
(47
|
)%
|
|||
Provision for income taxes
|
|
331
|
|
|
492
|
|
|
(161
|
)
|
|
(33
|
)%
|
|||
Net income attributable to controlling and noncontrolling interests
|
|
3,219
|
|
|
6,190
|
|
|
(2,971
|
)
|
|
(48
|
)%
|
|||
Less: net income attributable to noncontrolling interests
|
|
2,805
|
|
|
5,424
|
|
|
(2,619
|
)
|
|
(48
|
)%
|
|||
Net income attributable to Manning & Napier, Inc.
|
|
$
|
414
|
|
|
$
|
766
|
|
|
$
|
(352
|
)
|
|
(46
|
)%
|
Per Share Data
|
|
|
|
|
|
|
|
|
|||||||
Net income per share available to Class A common stock
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
|
|
|
|||
Diluted
|
|
$
|
0.03
|
|
|
$
|
0.05
|
|
|
|
|
|
|||
Weighted average shares of Class A common stock outstanding
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
15,267,762
|
|
|
14,691,928
|
|
|
|
|
|
|||||
Diluted
|
|
15,613,939
|
|
|
14,709,403
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Other financial and operating data
|
|
|
|
|
|
|
|
|
|||||||
Economic net income
(1)
|
|
$
|
2,520
|
|
|
$
|
4,629
|
|
|
$
|
(2,109
|
)
|
|
(46
|
)%
|
Economic net income per adjusted share
(1)
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
|
|
|
|
||
Weighted average adjusted Class A common stock outstanding
(1)
|
|
79,570,059
|
|
|
78,751,512
|
|
|
|
|
|
(*)
|
Percentage change not meaningful.
|
(1)
|
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Supplemental Non-GAAP Financial Information” for Manning & Napier’s reasons for including these measures not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP") in this report in addition to a reconciliation of non-GAAP financial measures to GAAP measures for the periods indicated.
|
|
Three months ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Non-operating income (loss)
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
$
|
(10
|
)
|
|
$
|
(21
|
)
|
|
$
|
11
|
|
|
(52
|
)%
|
Interest and dividend income
(1)
|
837
|
|
|
374
|
|
|
463
|
|
|
124
|
%
|
|||
Change in liability under tax receivable agreement
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
%
|
|||
Net gains (losses) on investments
(2)
|
248
|
|
|
(21
|
)
|
|
269
|
|
|
*
|
|
|||
Total non-operating income
|
$
|
1,075
|
|
|
$
|
332
|
|
|
$
|
743
|
|
|
*
|
|
(*)
|
Percentage change not meaningful.
|
(1)
|
The increase in interest and dividend income for the
three months ended June 30, 2019
compared to
2018
is attributable to an increase in investments, including U.S. Treasury notes and bills, corporate bonds and other short-term investments to optimize cash management opportunities, coupled with an increase in interest rates.
|
(2)
|
Amounts represent net income on investments we held to provide initial cash seeding for product development purposes. The amount varies depending on the performance of our investments and the overall amount of our investments in seeded products.
|
|
|
Six months ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
|
(in millions)
|
|
|
|||||||||||
Separately managed accounts
|
|
|
|
|
|
|
|
|
|||||||
Beginning assets under management
|
|
$
|
13,792.1
|
|
|
$
|
16,856.6
|
|
|
$
|
(3,064.5
|
)
|
|
(18
|
)%
|
Gross client inflows
(1)
|
|
617.3
|
|
|
749.7
|
|
|
(132.4
|
)
|
|
(18
|
)%
|
|||
Gross client outflows
(1)
|
|
(1,278.1
|
)
|
|
(2,225.5
|
)
|
|
947.4
|
|
|
(43
|
)%
|
|||
Market appreciation (depreciation) & other
(2)
|
|
1,682.8
|
|
|
225.1
|
|
|
1,457.7
|
|
|
*
|
|
|||
Ending assets under management
|
|
$
|
14,814.1
|
|
|
$
|
15,605.9
|
|
|
$
|
(791.8
|
)
|
|
(5
|
)%
|
Average AUM for period
|
|
$
|
14,459.6
|
|
|
$
|
16,087.8
|
|
|
|
|
|
|||
Mutual funds and collective investment trusts
|
|
|
|
|
|
|
|
|
|||||||
Beginning assets under management
|
|
$
|
6,371.5
|
|
|
$
|
8,256.6
|
|
|
$
|
(1,885.1
|
)
|
|
(23
|
)%
|
Gross client inflows
(1)
|
|
653.8
|
|
|
831.0
|
|
|
(177.2
|
)
|
|
(21
|
)%
|
|||
Gross client outflows
(1)
|
|
(1,417.6
|
)
|
|
(1,685.5
|
)
|
|
267.9
|
|
|
(16
|
)%
|
|||
Acquired/(disposed) assets
|
|
—
|
|
|
(251.6
|
)
|
|
251.6
|
|
|
*
|
|
|||
Market appreciation (depreciation) & other
(2)
|
|
829.0
|
|
|
81.3
|
|
|
747.7
|
|
|
*
|
|
|||
Ending assets under management
|
|
$
|
6,436.7
|
|
|
$
|
7,231.8
|
|
|
$
|
(795.1
|
)
|
|
(11
|
)%
|
Average AUM for period
|
|
$
|
6,361.7
|
|
|
$
|
7,640.0
|
|
|
|
|
|
|||
Total assets under management
|
|
|
|
|
|
|
|
|
|||||||
Beginning assets under management
|
|
$
|
20,163.6
|
|
|
$
|
25,113.2
|
|
|
$
|
(4,949.6
|
)
|
|
(20
|
)%
|
Gross client inflows
(1)
|
|
1,271.1
|
|
|
1,580.7
|
|
|
(309.6
|
)
|
|
(20
|
)%
|
|||
Gross client outflows
(1)
|
|
(2,695.7
|
)
|
|
(3,911.0
|
)
|
|
1,215.3
|
|
|
(31
|
)%
|
|||
Acquired/(disposed) assets
|
|
—
|
|
|
(251.6
|
)
|
|
251.6
|
|
|
*
|
|
|||
Market appreciation (depreciation) & other
(2)
|
|
2,511.8
|
|
|
306.4
|
|
|
2,205.4
|
|
|
*
|
|
|||
Ending assets under management
|
|
$
|
21,250.8
|
|
|
$
|
22,837.7
|
|
|
$
|
(1,586.9
|
)
|
|
(7
|
)%
|
Average AUM for period
|
|
$
|
20,821.3
|
|
|
$
|
23,727.8
|
|
|
|
|
|
(*)
|
Percentage change not meaningful.
|
(1)
|
Transfers of client assets between portfolios are included in gross client inflows and gross client outflows.
|
(2)
|
Market appreciation/(depreciation) and other includes investment gains/(losses) on assets under management, the impact of changes in foreign exchange rates and net flows from non-sales related activities including net reinvested dividends.
|
|
|
Six months ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
|
(in thousands, except share data)
|
|
|
|||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|||||||
Management Fees
|
|
|
|
|
|
|
|
|
|||||||
Separately managed accounts
|
|
$
|
43,213
|
|
|
$
|
49,838
|
|
|
$
|
(6,625
|
)
|
|
(13
|
)%
|
Mutual funds and collective investment trusts
|
|
15,631
|
|
|
22,010
|
|
|
(6,379
|
)
|
|
(29
|
)%
|
|||
Distribution and shareholder servicing
|
|
5,190
|
|
|
6,211
|
|
|
(1,021
|
)
|
|
(16
|
)%
|
|||
Custodial services
|
|
3,495
|
|
|
3,817
|
|
|
(322
|
)
|
|
(8
|
)%
|
|||
Other revenue
|
|
1,562
|
|
|
1,468
|
|
|
94
|
|
|
6
|
%
|
|||
Total revenue
|
|
69,091
|
|
|
83,344
|
|
|
(14,253
|
)
|
|
(17
|
)%
|
|||
Expenses
|
|
|
|
|
|
|
|
|
|||||||
Compensation and related costs
|
|
41,609
|
|
|
45,462
|
|
|
(3,853
|
)
|
|
(8
|
)%
|
|||
Distribution, servicing and custody expenses
|
|
6,777
|
|
|
9,283
|
|
|
(2,506
|
)
|
|
(27
|
)%
|
|||
Other operating costs
|
|
16,946
|
|
|
15,033
|
|
|
1,913
|
|
|
13
|
%
|
|||
Total operating expenses
|
|
65,332
|
|
|
69,778
|
|
|
(4,446
|
)
|
|
(6
|
)%
|
|||
Operating income
|
|
3,759
|
|
|
13,566
|
|
|
(9,807
|
)
|
|
(72
|
)%
|
|||
Non-operating income (loss)
|
|
|
|
|
|
|
|
|
|||||||
Non-operating income (loss), net
|
|
2,950
|
|
|
867
|
|
|
2,083
|
|
|
*
|
|
|||
Income before provision for income taxes
|
|
6,709
|
|
|
14,433
|
|
|
(7,724
|
)
|
|
(54
|
)%
|
|||
Provision for income taxes
|
|
573
|
|
|
970
|
|
|
(397
|
)
|
|
(41
|
)%
|
|||
Net income attributable to controlling and noncontrolling interests
|
|
6,136
|
|
|
13,463
|
|
|
(7,327
|
)
|
|
(54
|
)%
|
|||
Less: net income attributable to noncontrolling interests
|
|
5,161
|
|
|
11,483
|
|
|
(6,322
|
)
|
|
(55
|
)%
|
|||
Net income attributable to Manning & Napier, Inc.
|
|
$
|
975
|
|
|
$
|
1,980
|
|
|
$
|
(1,005
|
)
|
|
(51
|
)%
|
Per Share Data
|
|
|
|
|
|
|
|
|
|||||||
Net income per share available to Class A common stock
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
$
|
0.07
|
|
|
$
|
0.13
|
|
|
|
|
|
|||
Diluted
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
|
|
|
|
|||
Weighted average shares of Class A common stock outstanding
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
|
15,098,454
|
|
|
14,503,784
|
|
|
|
|
|
|||||
Diluted
|
|
78,317,986
|
|
|
14,530,398
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Other financial and operating data
|
|
|
|
|
|
|
|
|
|||||||
Economic net income
(1)
|
|
$
|
4,763
|
|
|
$
|
10,248
|
|
|
$
|
(5,485
|
)
|
|
(54
|
)%
|
Economic net income per adjusted share
(1)
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
|
|
|
|
|||
Weighted average adjusted Class A common stock outstanding
(1)
|
|
79,817,987
|
|
|
78,927,395
|
|
|
|
|
|
(*)
|
Percentage change not meaningful.
|
(1)
|
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Supplemental Non-GAAP Financial Information” for Manning & Napier’s reasons for including these non-GAAP measures in this report in addition to a reconciliation of non-GAAP financial measures to GAAP measures for the periods indicated.
|
|
Six months ended June 30,
|
|
Period-to-Period
|
|||||||||||
|
2019
|
|
2018
|
|
$
|
|
%
|
|||||||
|
(in thousands)
|
|
|
|||||||||||
Non-operating income (loss)
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
$
|
(13
|
)
|
|
$
|
(30
|
)
|
|
$
|
17
|
|
|
(57
|
)%
|
Interest and dividend income
(1)
|
1,646
|
|
|
876
|
|
|
770
|
|
|
*
|
|
|||
Change in liability under tax receivable agreement
|
195
|
|
|
291
|
|
|
(96
|
)
|
|
(33
|
)%
|
|||
Net gains (losses) on investments
(2)
|
1,122
|
|
|
(270
|
)
|
|
1,392
|
|
|
*
|
|
|||
Total non-operating income
|
$
|
2,950
|
|
|
$
|
867
|
|
|
$
|
2,083
|
|
|
*
|
|
(*)
|
Percentage change not meaningful.
|
(1)
|
The increase in interest and dividend income for the
six months ended June 30, 2019
compared to
2018
is attributable to an increase in investments, including U.S. Treasury notes and bills, corporate bonds and other short-term investments to optimize cash management opportunities, coupled with an increase in interest rates.
|
(2)
|
Amounts represent net income on investments we held to provide initial cash seeding for product development purposes. The amount varies depending on the performance of our investments and the overall amount of our investments in seeded products.
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except share data)
|
||||||||||||||
Income before provision for income taxes
|
|
$
|
3,550
|
|
|
$
|
6,682
|
|
|
$
|
6,709
|
|
|
$
|
14,433
|
|
Economic net income (Non-GAAP)
|
|
$
|
2,520
|
|
|
$
|
4,629
|
|
|
$
|
4,763
|
|
|
$
|
10,248
|
|
Economic net income per adjusted share (Non-GAAP)
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
Weighted average adjusted Class A common stock outstanding (Non-GAAP)
|
|
79,570,059
|
|
|
78,751,512
|
|
|
79,817,987
|
|
|
78,927,395
|
|
|
|
Three months ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
(in thousands, except share data)
|
||||||||||||||
Net income attributable to Manning & Napier, Inc.
|
|
$
|
414
|
|
|
$
|
766
|
|
|
$
|
975
|
|
|
$
|
1,980
|
|
Add back: Net income attributable to noncontrolling interests
|
|
2,805
|
|
|
5,424
|
|
|
5,161
|
|
|
11,483
|
|
||||
Add back: Provision for income taxes
|
|
331
|
|
|
492
|
|
|
573
|
|
|
970
|
|
||||
Income before provision for income taxes
|
|
$
|
3,550
|
|
|
$
|
6,682
|
|
|
$
|
6,709
|
|
|
$
|
14,433
|
|
Adjusted income taxes (Non-GAAP)
|
|
1,030
|
|
|
2,053
|
|
|
1,946
|
|
|
4,185
|
|
||||
Economic net income (Non-GAAP)
|
|
$
|
2,520
|
|
|
$
|
4,629
|
|
|
$
|
4,763
|
|
|
$
|
10,248
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average shares of Class A common stock outstanding - Basic
|
|
15,267,762
|
|
|
14,691,928
|
|
|
15,098,454
|
|
|
14,503,784
|
|
||||
Assumed vesting, conversion or exchange of:
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average Manning & Napier Group, LLC units outstanding (noncontrolling interest)
|
|
62,482,345
|
|
|
63,349,721
|
|
|
62,913,637
|
|
|
63,632,363
|
|
||||
Weighted average unvested restricted stock units and share awards
|
|
1,819,952
|
|
|
709,863
|
|
|
1,805,896
|
|
|
791,248
|
|
||||
Weighted average vested stock options
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average adjusted shares (Non-GAAP)
|
|
79,570,059
|
|
|
78,751,512
|
|
|
79,817,987
|
|
|
78,927,395
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Economic net income per adjusted share (Non-GAAP)
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.06
|
|
|
$
|
0.13
|
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
(in thousands)
|
||||||
Cash and cash equivalents
|
|
$
|
57,169
|
|
|
$
|
59,586
|
|
Accounts receivable
|
|
$
|
12,231
|
|
|
$
|
11,447
|
|
Investment securities
|
|
$
|
89,619
|
|
|
$
|
91,190
|
|
Amounts payable under tax receivable agreement
(1)
|
|
$
|
17,828
|
|
|
$
|
18,023
|
|
Contingent consideration liability
(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
In light of numerous factors affecting our obligation to make such payments, the timing and amounts of any such actual payments are based on our best estimate as of
June 30, 2019
and
December 31, 2018
, including our ability to realize the expected tax benefits. Actual payments may significantly differ from estimated payments.
|
(2)
|
Represents the fair value of additional cash payments related to our acquisition of Rainier of up to $32.5 million over the period ending December 31, 2019, contingent upon Rainier's achievement of certain financial targets.
|
|
|
Six months ended June 30,
|
||||||
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||
Net cash provided by operating activities
|
|
$
|
2,052
|
|
|
$
|
9,670
|
|
Net cash provided by investing activities
|
|
1,957
|
|
|
1,855
|
|
||
Net cash used in financing activities
|
|
(6,230
|
)
|
|
(12,589
|
)
|
||
Net change in cash and cash equivalents
|
|
$
|
(2,221
|
)
|
|
$
|
(1,064
|
)
|
•
|
the financial results of Manning & Napier Group;
|
•
|
our available cash, as well as anticipated cash requirements, including any debt servicing and payments required under the tax receivable agreement;
|
•
|
our capital requirements and the capital requirements of our subsidiaries, including Manning & Napier Group;
|
•
|
contractual, legal, tax and regulatory restrictions on, and implications of, the payment of dividends by us to our shareholders or distributions by Manning & Napier Group to us, including the obligation of Manning & Napier Group to make tax distributions to its unitholders, including us;
|
•
|
general economic and business conditions; and
|
•
|
any other factors that our Board of Directors may deem relevant.
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
31.1
|
|
|
|
|
|
31.2
|
|
|
|
|
|
32.1
|
|
|
|
|
|
32.2
|
|
|
|
|
|
101
|
|
Materials from the Manning & Napier, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Statements of Financial Condition, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income, (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) related Notes to the Unaudited Consolidated Financial Statements.
|
|
|
MANNING & NAPIER, INC.
|
||
|
|
|
||
Dated: August 13, 2019
|
|
By:
|
|
/s/ Marc Mayer
|
|
|
|
|
Marc Mayer
|
|
|
|
|
Chief Executive Officer
|
|
|
|
|
(principal executive officer)
|
|
|
|
||
|
|
|
|
/s/ Paul J. Battaglia
|
|
|
|
|
Paul J. Battaglia
|
|
|
|
|
Chief Financial Officer
|
|
|
|
|
(principal financial and accounting officer)
|
If to Buyer or, after Closing, to PPI:
|
Manning Partners, LLC
290 Woodcliff Drive
Fairport, New York 14450
Attention: Michelle Thomas
Facsimile: (585) 325-5617
E-mail: mthomas@manning-napier.com
|
If to Seller or, before Closing, to PPI:
|
Manning & Napier Group, LLC
290 Woodcliff Drive
Fairport, New York 14450
Attention: Corporate Secretary Facsimile: (585) 232-9079
E-mail: sturner@manning-napier.com
|
MANNING & NAPIER GROUP, LLC
|
By:
/s/ Sarah. C. Turner
Name: Sarah C. Turner Title: Corporate Secretary |
|
MANNING PARTNERS, LLC
|
By:
/s/ William Manning
Name: William Manning Title: |
|
PERSPECTIVE PARTNERS, LLC
|
By:
/s/ Michelle Thomas
Name: Michelle Thomas Title: Authorized Representative |
|
|
/s/ Marc Mayer
|
|
|
Marc Mayer
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
|
|
/s/ Paul J. Battaglia
|
|
|
Paul J. Battaglia
|
|
|
Chief Financial Officer
|
|
|
(principal financial and accounting officer)
|
|
|
/s/ Marc Mayer
|
|
|
Marc Mayer
|
|
|
Chief Executive Officer
|
|
|
(principal executive officer)
|
|
|
/s/ Paul J. Battaglia
|
|
|
Paul J. Battaglia
|
|
|
Chief Financial Officer
|
|
|
(principal financial and accounting officer)
|