[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
|
For
the transition period from
|
to
|
Delaware
|
13-6174048
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer
Identification
No.)
|
|
330
Madison Ave.
New
York, NY
|
10017
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
(212)
297-3600
|
||
(Registrant’s
telephone number, including area code)
|
||
Former
name, former address and former fiscal year, if changed since last
report
|
Non-accelerated
filer x (Do not check if a smaller reporting
company)
|
PART
I – FINANCIAL INFORMATION
|
|
Item
1. Financial Statements (unaudited)
|
|
Consolidated
Statements of Financial Position as of September 30, 2009 and December 31,
2008 (audited)
|
2
|
Consolidated
Statements of Income for the three months ended September 30, 2009 and
2008
|
3
|
Consolidated
Statements of Income for the nine months ended September 30, 2009 and
2008
|
4
|
Consolidated
Statements of Changes in Equity for the nine months ended September 30,
2009 and the year ended
December
31, 2008 (audited)
|
5
|
Consolidated
Statements of Cash Flows for the nine months ended September 30, 2009 and
2008
|
6
|
Notes
to Consolidated Financial Statements
|
7
|
Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations
|
17
|
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
|
33
|
Item
4. Controls and Procedures
|
34
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PART
II –OTHER INFORMATION
|
|
Item
1. Legal Proceedings
|
34
|
Item
1A. Risk Factors
|
34
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
|
34
|
Item
3. Defaults Upon Senior Securities
|
35
|
Item
4. Submission of Matters to a Vote of Security Holders
|
35
|
Item
5. Other Information
|
35
|
Item
6. Exhibits
|
36
|
Signatures
|
37
|
As
of
|
||||||||
(in
thousands)
|
September
30, 2009
(unaudited)
|
December
31, 2008
(audited)
|
||||||
ASSETS
|
||||||||
Cash
and cash equivalents
|
$ | 165,189.5 | $ | 86,563.0 | ||||
Marketable
securities, at fair value
|
8,124.4 | 71,329.5 | ||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
51,492.2 | 54,799.1 | ||||||
Deferred
taxes, net
|
42,114.6 | 92,702.3 | ||||||
Property
and equipment, net
|
8,269.6 | 9,833.2 | ||||||
Other
assets
|
5,212.5 | 4,248.5 | ||||||
Total
assets
|
$ | 280,402.8 | $ | 319,475.6 | ||||
LIABILITIES
AND EQUITY
|
||||||||
Accrued
compensation and benefits
|
$ | 43,582.1 | $ | 268,924.7 | ||||
Accounts
payable and accrued expenses
|
10,916.5 | 9,372.4 | ||||||
Accrued
income taxes payable
|
840.3 | 1,238.6 | ||||||
Due
to GAM Holding Ltd.
|
220,805.8 | 1,311.4 | ||||||
Payable
under tax receivable agreement
|
32,651.9 | — | ||||||
Other
liabilities
|
4,971.4 | 5,383.4 | ||||||
Total
liabilities
|
313,768.0 | 286,230.5 | ||||||
Commitments
and contingencies (Notes 7 and 11)
|
||||||||
Common
stock
|
234.6 | 420.0 | ||||||
Additional
paid-in capital
|
582,547.8 | 17,930.0 | ||||||
Retained
earnings (deficit)
|
(605,984.2 | ) | 14,895.1 | |||||
Total
stockholders’ equity (deficit)
|
(23,201.8 | ) | 33,245.1 | |||||
Non-controlling
interests
|
(10,163.4 | ) | — | |||||
Total equity
(deficit)
|
(33,365.2 | ) | 33,245.1 | |||||
Total
liabilities and equity
|
$ | 280,402.8 | $ | 319,475.6 |
Three
Months Ended September 30,
|
||||||||
(in
thousands, except per share information)
|
2009
|
2008
|
||||||
Revenues
and other operating income:
|
||||||||
Investment
management fees
|
$ | 83,476.8 | $ | 107,551.5 | ||||
Net
gains (losses) on securities held for deferred
compensation
|
976.9 | (1,017.5 | ) | |||||
Foreign
currency gains (losses)
|
34.2 | (5.8 | ) | |||||
Total
revenues and other operating income
|
84,487.9 | 106,528.2 | ||||||
Expenses:
|
||||||||
Employee
compensation and benefits:
|
||||||||
Salaries,
incentive compensation and benefits
|
22,390.5 | 23,460.7 | ||||||
Allocation
of Class B profits interests
|
12,190.7 | 19,992.7 | ||||||
Change
in redemption value of Class B profits interests
|
230,571.8 | 16,920.0 | ||||||
Tax receivable
agreement
|
97,908.6 | — | ||||||
Employee
compensation and benefits
|
363,061.6 | 60,373.4 | ||||||
Shareholder
servicing and marketing
|
4,502.1 | 6,107.5 | ||||||
General
and administrative
|
15,227.9 | 12,992.8 | ||||||
Total
expenses
|
382,791.6 | 79,473.7 | ||||||
Operating
income (loss) before income tax expense
|
(298,303.7 | ) | 27,054.5 | |||||
Non-operating
income:
|
||||||||
Interest
income, net of interest expense
|
108.8 | 548.9 | ||||||
Net
gains on marketable securities
|
12.9 | 28.2 | ||||||
Other income
(loss)
|
— | (21.3 | ) | |||||
Total
non-operating income
|
121.7 | 555.8 | ||||||
Income
(loss) before income tax expense
|
(298,182.0 | ) | 27,610.3 | |||||
Income
taxes
|
113,979.7 | 11,330.1 | ||||||
Net
income (loss)
|
(412,161.7 | ) | 16,280.2 | |||||
Net
income attributable to non-controlling interests
|
261.4 | — | ||||||
Net
income (loss) attributable to Artio Global Investors
|
$ | (412,423.1 | ) | $ | 16,280.2 | |||
Per
share information:
|
||||||||
Basic
net income (loss) attributable to Artio Global Investors
|
$ | (9.81 | ) | $ | 0.39 | |||
Diluted
net income (loss) attributable to Artio Global Investors
|
$ | (9.81 | ) | $ | 0.39 | |||
Weighted
average shares used to calculate per share information:
|
||||||||
Basic
|
42,052.3 | 42,000.0 | ||||||
Diluted
|
42,052.3 | 42,000.0 | ||||||
Dividends
per basic share declared
|
$ | 4.83 | $ | — |
Nine
Months Ended September 30,
|
||||||||
(in
thousands, except per share information)
|
2009
|
2008
|
||||||
Revenues
and other operating income:
|
||||||||
Investment
management fees
|
$ | 216,053.0 | $ | 351,058.8 | ||||
Net
gains (losses) on securities held for deferred
compensation
|
1,689.1 | (1,618.5 | ) | |||||
Foreign
currency gains (losses)
|
65.8 | (27.5 | ) | |||||
Total
revenues and other operating income
|
217,807.9 | 349,412.8 | ||||||
Expenses:
|
||||||||
Employee
compensation and benefits:
|
||||||||
Salaries,
incentive compensation and benefits
|
57,307.5 | 76,315.0 | ||||||
Allocation
of Class B profits interests
|
33,662.5 | 63,983.4 | ||||||
Change
in redemption value of Class B profits interests
|
266,109.8 | 53,353.0 | ||||||
Tax
receivable agreement
|
97,908.6 | — | ||||||
Employee
compensation and benefits
|
454,988.4 | 193,651.4 | ||||||
Shareholder
servicing and marketing
|
11,710.4 | 18,832.6 | ||||||
General
and administrative
|
32,805.8 | 47,657.7 | ||||||
Total
expenses
|
499,504.6 | 260,141.7 | ||||||
Operating
income (loss) before income tax expense
|
(281,696.7 | ) | 89,271.1 | |||||
Non-operating
income:
|
||||||||
Interest
income, net of interest expense
|
310.7 | 2,325.6 | ||||||
Net
gains (losses) on marketable securities
|
(522.1 | ) | (351.4 | ) | ||||
Other income
(loss)
|
— | (21.3 | ) | |||||
Total
non-operating income (loss)
|
(211.4 | ) | 1,952.9 | |||||
Income
(loss) before income tax expense
|
(281,908.1 | ) | 91,224.0 | |||||
Income
taxes
|
121,854.0 | 43,321.8 | ||||||
Net
income (loss)
|
(403,762.1 | ) | 47,902.2 | |||||
Net
income attributable to non-controlling interests
|
261.4 | — | ||||||
Net
income (loss) attributable to Artio Global Investors
|
$ | (404,023.5 | ) | $ | 47,902.2 | |||
Per
share information:
|
||||||||
Basic
net income (loss) attributable to Artio Global Investors
|
$ | (9.62 | ) | $ | 1.14 | |||
Diluted
net income (loss) attributable to Artio Global Investors
|
$ | (9.62 | ) | $ | 1.14 | |||
Weighted
average shares used to calculate per share information:
|
||||||||
Basic
|
42,017.4 | 42,000.0 | ||||||
Diluted
|
42,017.4 | 42,000.0 | ||||||
Dividends
per basic share declared
|
$ | 5.16 | $ | 1.95 |
(in
thousands, except per
share information)
|
Number
of Class A Common Shares Outstanding
|
Class
A Common Stock
|
Number
of Class B Common Shares Outstanding
|
Class
B Common Stock
|
Number
of Class C Common Shares Outstanding
|
Class
C Common Stock
|
Additional
Paid-in Capital
|
Retained
Earnings
|
Stock-holders’
Equity
|
Non-
controlling
Interests
|
Total
Equity
|
|||||||||||||||||||||||||||||||||
Balance
as of
January
1, 2008
|
— | $ | — | — | $ | — | 42,000.0 | $ | 420.0 | $ | 17,930.0 | $ | 70,743.8 | $ | 89,093.8 | $ | — | $ | 89,093.8 | |||||||||||||||||||||||||
Net
income
|
— | — | — | — | — | — | — | 61,151.3 | 61,151.3 | — | 61,151.3 | |||||||||||||||||||||||||||||||||
Dividends
($2.79 per share)
|
— | — | — | — | — | — | — | (117,000.0 | ) | (117,000.0 | ) | — | (117,000.0 | ) | ||||||||||||||||||||||||||||||
Balance
as of December 31, 2008 (audited)
|
— | — | — | — | 42,000.0 | 420.0 | 17,930.0 | 14,895.1 | 33,245.1 | — | 33,245.1 | |||||||||||||||||||||||||||||||||
Net
income
|
— | — | — | — | — | — | — | (404,023.5 | ) | (404,023.5 | ) | 261.4 | (403,762.1 | ) | ||||||||||||||||||||||||||||||
Reclassification
of liability awards
|
— | — | — | — | — | — | 565,908.6 | — | 565,908.6 | — | 565,908.6 | |||||||||||||||||||||||||||||||||
Issuance
of Class B common stock (see Note 3 )
|
— | — | 18,000.0 | 18.0 | — | — | — | — | 18.0 | — | 18.0 | |||||||||||||||||||||||||||||||||
Net
benefit from step-up in tax basis
(see Note
4)
|
— | — | — | — | — | — | 5,762.1 | — | 5,762.1 | — | 5,762.1 | |||||||||||||||||||||||||||||||||
Initial
public offering
|
25,000.0 | 25.0 | — | — | — | — | 614,875.0 | — | 614,900.0 | — | 614,900.0 | |||||||||||||||||||||||||||||||||
Holdings
units converted into Class A common stock and retirement of Class B common
stock (see Note 2)
|
2,400.0 | 2.4 | (2,400.0 | ) | (2.4 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Stock
repurchases
|
(2,400.0 | ) | (2.4 | ) | — | — | (22,600.0 | ) | (226.0 | ) | (614,671.6 | ) | — | (614.900.0 | ) | — | (614,900.0 | ) | ||||||||||||||||||||||||||
Issuance
and amortization of share-based payments
|
6.9 | — | — | — | — | — | 268.9 | — | 268.9 | — | 268.9 | |||||||||||||||||||||||||||||||||
Distribution
to GAM Holding Ltd., including dividends of $5.16 per
share
|
— | — | — | — | — | — | (17,950.0 | ) | (216,855.8 | ) | (234,805.8 | ) | — | (234,805.8 | ) | |||||||||||||||||||||||||||||
Establishment
of non-controlling interests
|
— | — | — | — | — | — | 10,424.8 | — | 10,424.8 | (10,424.8 | ) | — | ||||||||||||||||||||||||||||||||
Balance
as of September 30, 2009 (unaudited)
|
25,006.9 | $ | 25.0 | 15,600.0 | $ | 15.6 | 19,400.0 | $ | 194.0 | $ | 582,547.8 | $ | (605,984.2 | ) | $ | (23,201.8 | ) | $ | (10,163.4 | ) | $ | (33,365.2 | ) |
Nine
Months Ended September 30,
|
||||||||
(in
thousands)
|
2009
|
2008
|
||||||
Cash
flows from operating activities:
|
||||||||
Net
income (loss)
|
$ | (403,762.1 | ) | $ | 47,902.2 | |||
Adjustments:
to reconcile net income to net cash provided by operating
activities:
|
||||||||
Depreciation
and amortization
|
2,404.7 | 2,108.3 | ||||||
Deferred
compensation
|
268,877.4 | 62,162.2 | ||||||
Deferred
income taxes
|
89,001.7 | (25,163.7 | ) | |||||
Share-based
compensation
|
268.9 | — | ||||||
Interest
accrued on marketable securities and accretion and amortization of premium
and discount
|
267.8 | 110.3 | ||||||
(Gains)/losses
on marketable securities and securities held for deferred
compensation
|
(1,167.0 | ) | 1,969.9 | |||||
Changes
in assets and liabilities:
|
||||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
3,306.9 | 14,209.4 | ||||||
Other
assets
|
(968.4 | ) | 263.4 | |||||
Accrued
compensation and benefits
|
71,688.6 | (29,404.9 | ) | |||||
Accounts
payable and accrued expenses
|
1,478.4 | (2,870.6 | ) | |||||
Due
to GAM Holding Ltd.
|
(1,307.2 | ) | 5,588.7 | |||||
Accrued
income taxes payable
|
(398.3 | ) | (3,789.6 | ) | ||||
Other
liabilities
|
(411.9 | ) | 250.0 | |||||
Net
cash provided by operating activities
|
29,279.5 | 73,335.6 | ||||||
Cash
flows from investing activities:
|
||||||||
Purchase
of marketable securities and securities held for deferred
compensation
|
(2,528.8 | ) | (88,415.8 | ) | ||||
Proceeds
from sales or maturities of marketable securities and securities held for
deferred compensation
|
66,633.1 | 39,719.1 | ||||||
Purchase
of fixed assets
|
(841.1 | ) | (2,591.7 | ) | ||||
Net
cash provided by (used in) investing activities
|
63,263.2 | (51,288.4 | ) | |||||
Cash
flows from financing activities:
|
||||||||
Proceeds
from initial public offering
|
614,900.0 | — | ||||||
Repurchase
and retirement of Class C common stock
|
(555,869.6 | ) | — | |||||
Repurchase
of Class A common stock
|
(59,030.4 | ) | — | |||||
Issuance
of Class B common stock
|
18.0 | — | ||||||
Dividends
paid
|
(14,000.0 | ) | (82,000.0 | ) | ||||
Net
cash used by financing activities
|
(13,982.0 | ) | (82,000.0 | ) | ||||
Effect
of exchange rates on cash
|
65.8 | (27.5 | ) | |||||
Net
increase (decrease) in cash and cash equivalents
|
78,626.5 | (59,980.3 | ) | |||||
Cash
and cash equivalents:
|
||||||||
Beginning
of period
|
86,563.0 | 133,447.1 | ||||||
End
of period
|
$ | 165,189.5 | $ | 73,466.8 | ||||
Cash
paid during period for:
|
||||||||
Income
taxes, net of refunds
|
$ | 34,001.4 | $ | 73,906.7 |
Class
A
Common
Stock
|
Class
B
Common
Stock
|
Class
C
Common
Stock
|
||||||||||
As
of September 30, 2009:
|
||||||||||||
Authorized
|
500,000,000 | 50,000,000 | 210,000,000 | |||||||||
Reserved
under 2009 Stock Incentive Plan
|
9,693,076 | — | — | |||||||||
Par
value
|
$ | 0.001 | $ | 0.001 | $ | 0.01 |
(in
thousands)
|
Class
A
Common
Stock
|
Class
B
Common
Stock
|
Class
C
Common
Stock
|
|||||||||
As
of December 31, 2008:
|
||||||||||||
GAM
|
— | — | 42,000.0 | |||||||||
Activity:
|
||||||||||||
Shares
issued to the Principals(a)
|
— | 18,000.0 | — | |||||||||
Shares
issued to the public(b)
|
25,000.0 | — | — | |||||||||
Stock
issued to independent directors(c)
|
6.9 | — | — | |||||||||
Exchange
by the Principals(d)
|
2,400.0 | (2,400.0 | ) | — | ||||||||
Repurchase
from GAM(e)
|
— | — | (22,600.0 | ) | ||||||||
Repurchase
from the Principals(d)
|
(2,400.0 | ) | — | — | ||||||||
As
of September 30, 2009
|
25,006.9 | 15,600.0 | 19,400.0 |
(a)
|
Represents
the 18.0 million shares of non-participating Class B common stock issued
to the Principals (see Note
2. Initial Public Offering and Changes in the Principals’
Interests). These shares have voting, but no economic
rights.
|
(b)
|
Represents
the 25.0 million shares of Class A common stock that were issued to the
public in connection with the IPO.
|
(c)
|
Represents
the 6,924 shares of fully-vested Class A common stock (subject to transfer
restrictions) that were awarded to our independent directors in connection
with the IPO. The table does not reflect 2.1 million restricted stock
units (see Note
9. Share-Based Payments) awarded to certain employees (other than
the Principals), each of which represents the right to receive one share
of Class A common stock upon the lapse of restrictions. These restrictions
generally lapse pro rata over a five-year
period.
|
(d)
|
Represents
the effect of the issuance of 1.2 million shares of Class A common stock
to each of the Principals upon exchange of an equivalent number of New
Class A Units and subsequent repurchase of such Class A common stock by us
with a portion of the net proceeds from the IPO. Upon the exchange of New
Class A Units for Class A common stock, corresponding shares of Class B
common stock were canceled.
|
(e)
|
Represents
the 22.6 million shares of Class C common stock we repurchased from GAM
and retired with a portion of the net proceeds from the
IPO.
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Funds
investment management fees
|
$ | 46,732.4 | $ | 64,635.5 | $ | 122,100.7 | $ | 212,104.5 | ||||||||
Advisory
and sub-advisory investment management fees on offshore funds(a)
|
1,148.7 | 1,431.2 | 3,255.3 | 4,735.9 |
(a)
|
Investment
management fees of $0.6 million for the three months ended September 30,
2009, $0.6 million for the three months ended September 30, 2008, $1.8
million for the nine months ended September 30, 2009, and $1.9 million for
the nine months ended September 30, 2008, were related to funds sponsored
by GAM.
|
(in
thousands)
|
September
30, 2009
|
December
31, 2008
|
||||||
Funds
investment management fees
|
$ | 16,139.1 | $ | 14,231.2 | ||||
Advisory
and sub-advisory investment management fees on offshore funds(a)
|
1,056.5 | 1,060.7 |
(a)
|
Fees
receivable related to funds sponsored by GAM were $0.4 million as of
September 30, 2009 and $0.5 million as of December 31,
2008.
|
(in
thousands)
|
Marketable
Securities
|
Cash
Equivalents
|
Total
|
|||||||||
Level
1
|
$ | 8,107.0 | $ | — | $ | 8,107.0 | ||||||
Level
2
|
— | — | — | |||||||||
Level
3
|
17.4 | — | 17.4 | |||||||||
Total
|
$ | 8,124.4 | $ | — | $ | 8,124.4 |
(in
thousands)
|
Marketable
Securities
|
Cash
Equivalents
|
Total
|
|||||||||
Level
1
|
$ | 71,314.9 | $ | 71,116.6 | $ | 142,431.5 | ||||||
Level
2
|
— | — | — | |||||||||
Level
3
|
14.6 | — | 14.6 | |||||||||
Total
|
$ | 71,329.5 | $ | 71,116.6 | $ | 142,446.1 |
(in
thousands)
|
September
30, 2009
|
September
30, 2008
|
||||||
Beginning
of year
|
$ | 14.6 | $ | 10.0 | ||||
Unrealized
gains
|
2.8 | 7.8 | ||||||
End
of period
|
$ | 17.4 | $ | 17.8 |
(in
thousands)
|
Fair
Value
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
||||||||||||
U.S.
government and agency instruments:
|
||||||||||||||||
Due
5 - 10 years
|
$ | 413.9 | $ | 437.8 | $ | — | $ | (23.9 | ) | |||||||
Artio
Global Funds
|
7,693.1 | 8,525.4 | — | (832.3 | ) | |||||||||||
Other
investments
|
17.4 | 10.0 | 7.4 | — | ||||||||||||
Total
|
$ | 8,124.4 | $ | 8,973.2 | $ | 7.4 | $ | (856.2 | ) |
(in
thousands)
|
Fair
Value
|
Amortized
Cost
|
Unrealized
Gains
|
Unrealized
Losses
|
||||||||||||
U.S.
government and agency instruments:
|
||||||||||||||||
Due
within 1 year
|
$ | 60,375.2 | $ | 60,277.3 | $ | 97.9 | $ | — | ||||||||
Due
5 - 10 years
|
5,028.3 | 4,587.6 | 440.7 | — | ||||||||||||
Artio
Global Funds
|
5,911.4 | 8,594.9 | — | (2,683.5 | ) | |||||||||||
Other
investments
|
14.6 | 10.0 | 4.6 | — | ||||||||||||
Total
|
$ | 71,329.5 | $ | 73,469.8 | $ | 543.2 | $ | (2,683.5 | ) |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
U.S.
government and agency and other securities:
|
||||||||||||||||
Unrealized
gains (losses)
|
$ | (24.7 | ) | $ | 58.7 | $ | (559.7 | ) | $ | (226.1 | ) | |||||
Realized
gains (losses)
|
37.6 | (30.5 | ) | 37.6 | (125.3 | ) | ||||||||||
Net
gains (losses) on marketable securities
|
$ | 12.9 | $ | 28.2 | $ | (522.1 | ) | $ | (351.4 | ) | ||||||
Artio
Global Funds:
|
||||||||||||||||
Unrealized
gains (losses)
|
$ | 976.9 | $ | (1,020.0 | ) | $ | 1,851.2 | $ | (1,447.9 | ) | ||||||
Realized
gains (losses)
|
— | 2.5 | (162.1 | ) | (170.6 | ) | ||||||||||
Net
gains (losses) on securities held for deferred
compensation
|
$ | 976.9 | $ | (1,017.5 | ) | $ | 1,689.1 | $ | (1,618.5 | ) |
·
|
maintenance
of a maximum consolidated leverage ratio of less than or equal to 2.00x
(calculated as the ratio of consolidated funded indebtedness plus the
remaining amount of a deferred payment to GAM of $40.1 million, which
is payable by September 30, 2010, to consolidated EBITDA for the last six
months multiplied by two); and
|
·
|
maintenance
of a minimum consolidated interest coverage ratio of greater than or equal
to 4.00x (calculated as the ratio of consolidated EBITDA for the last six
months to consolidated interest charges for such
period).
|
(in
thousands)
|
Redemption
Value
|
Liabilities
|
Unvested
Balance
|
|||||||||
September
30, 2009
|
$ | — | $ | — | $ | — | ||||||
December
31, 2008
|
504,725.0 | 201,890.3 | 302,834.7 |
Fair
Value*
|
Shares
|
|||||||
Available
for grant as of September 29, 2009
|
9,700,000 | |||||||
Fully-vested
shares granted to independent directors subject to transfer
restrictions
|
$ | 26.25 | (6,924 | ) | ||||
Unvested
RSUs granted to certain employees (other than the
Principals)
|
$ | 26.25 | (2,147,132 | ) | ||||
Available
for grant as of September 30, 2009
|
7,545,944 |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Net
income (loss) attributable to Artio Global Investors Inc.
|
$ | (412,423.1 | ) | $ | 16,280.2 | $ | (404,023.5 | ) | $ | 47,902.2 | ||||||
Weighted
average shares for basic EPS
|
42,052.3 | 42,000.0 | 42,017.4 | 42,000.0 | ||||||||||||
Dilutive
potential shares from grants of RSUs(a)
|
— | — | — | — | ||||||||||||
Weighted
average shares for diluted EPS
|
42,052.3 | 42,000.0 | 42,017.4 | 42,000.0 |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
thousands)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Current:
|
||||||||||||||||
Federal
|
$ | 12,594.1 | $ | 17,153.8 | $ | 27,716.2 | $ | 49,511.3 | ||||||||
State
and local
|
(2,248.6 | ) | 581.7 | 5,136.1 | 18,974.2 | |||||||||||
Total
|
10,345.5 | 17,735.5 | 32,852.3 | 68,485.5 | ||||||||||||
Deferred:
|
||||||||||||||||
Federal
|
71,983.0 | (7,318.8 | ) | 61,791.6 | (20,069.1 | ) | ||||||||||
State
and local
|
31,651.2 | 913.4 | 27,210.1 | (5,094.6 | ) | |||||||||||
Total
|
103,634.2 | (6,405.4 | ) | 89,001.7 | (25,163.7 | ) | ||||||||||
Income
tax expense
|
$ | 113,979.7 | $ | 11,330.1 | $ | 121,854.0 | $ | 43,321.8 |
(in
thousands)
|
September
30, 2009
|
December
31, 2008
|
||||||
Deferred
tax assets:
|
||||||||
Deferred
compensation - Class B profits interests(a)
|
$ | — | $ | 88,316.5 | ||||
Deferred
compensation - other
|
1,397.7 | 1,117.6 | ||||||
Depreciation
and amortization
|
1,017.2 | 764.5 | ||||||
Provisions
and other
|
1,295.5 | 2,503.7 | ||||||
Step-up of tax basis(b)
|
38,404.2 | — | ||||||
Total
deferred tax assets
|
42,114.6 | 92,702.3 | ||||||
Less:
valuation allowance
|
— | — | ||||||
Net
deferred tax asset
|
$ | 42,114.6 | $ | 92,702.3 |
(a)
|
As a
result of the Principals' exchange of their Class B profits interests for
New Class A Units, the Principals’ ownership interests were reclassified
to equity for financial accounting purposes and the related deferred tax
asset was de-recognized.
|
(b)
|
Under
the tax receivable agreement, 85% of the estimated future tax benefit is
payable to the Principals.
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
(in
percentages)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Federal
statutory rate
|
35 | % | 35 | % | 35 | % | 35 | % | ||||||||
State
and local, net of Federal benefit, and other
|
9 | 4 | 8 | 9 | ||||||||||||
Permanent
differences:
|
||||||||||||||||
Compensation
expenses - fully vested Class B profits interests
|
(32 | ) | — | (40 | ) | — | ||||||||||
Compensation
expenses - tax receivable agreement
|
(14 | ) | — | (14 | ) | — | ||||||||||
De-recognition
of deferred tax asset
|
(35 | ) | — | (31 | ) | — | ||||||||||
Other
|
(1 | ) | 2 | (1 | ) | 3 | ||||||||||
Total
|
(38 | )% | 41 | % | (43 | )% | 47 | % |
·
|
General Overview.
Beginning on page 18, we provide a summary of our overall business and
discuss our recent initial public offering (“IPO”) and the economic
environment.
|
·
|
Key Performance
Indicators. Beginning on page
19, we discuss some of the operating and financial indicators that guide
management’s review of our
performance.
|
·
|
Assets Under
Management. Beginning on page 21, we provide a detailed discussion
of our assets under management (“AuM”), which is a major driver of our
operating revenues and key performance
indicators.
|
·
|
Revenues and Other Operating
Income. Beginning on page 26, we discuss our revenue and other
operating income compared to the corresponding periods a year
ago.
|
·
|
Operating
Expenses. Beginning on page
27, we discuss our operating expenses compared to the corresponding
periods a year ago.
|
·
|
Liquidity and Capital
Resources. Beginning on page 30, we analyze our working capital as
of September 30, 2009, and December 31, 2008, and cash flows for the first
nine months of 2009 and 2008. Also included is a discussion of the amount
of financial capacity available to help fund our future
activities.
|
·
|
New Accounting Pronouncements
Not Yet Adopted. Beginning on page 32, we discuss new accounting
pronouncements.
|
·
|
Cautionary Note Regarding
Forward-Looking Statements. Beginning on page 32, we describe the
risks and uncertainties that could cause actual results to differ
materially from those discussed in forward-looking statements set
forth in this MD&A relating to our financial results, operations,
business plans and prospects. Such forward-looking statements are based on
management’s current expectations about future events, which are
inherently susceptible to uncertainty and changes in
circumstances.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
(in
millions, except basis points and percentages)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Operating
indicators(a)
|
||||||||||||||||
AuM
at end of period
|
$ | 55,798 | $ | 56,648 | $ | 55,798 | $ | 56,648 | ||||||||
Average
AuM for period(b)
|
51,793 | 66,525 | 46,051 | 70,806 | ||||||||||||
Net
client cash flows
|
321 | (1,038 | ) | 1,294 | 3,953 | |||||||||||
Financial
indicators
|
||||||||||||||||
Investment
management fees
|
83 | 108 | 216 | 351 | ||||||||||||
Effective
fee rate (basis points)(c)
|
64.5 | 64.7 | 62.6 | 66.1 | ||||||||||||
Operating
income (loss) before income tax expense
|
(298 | ) | 27 | (282 | ) | 89 | ||||||||||
Operating
income (loss) before income tax expense margin(d)
|
(353 | )% | 25 | % | (129 | )% | 26 | % | ||||||||
Adjusted
operating income(e)
|
43 | 66 | 116 | 213 | ||||||||||||
Adjusted
operating margin(f)
|
50.2 | % | 62.1 | % | 53.3 | % | 61.0 | % | ||||||||
EBITDA(e)
|
44 | 67 | 118 | 215 | ||||||||||||
EBITDA Margin(g)
|
51.6 | % | 62.8 | % | 54.4 | % | 61.6 | % | ||||||||
Compensation
as a % of total revenues and other operating income(h)
|
26.4 | % | 19.9 | % | 26.3 | % | 19.9 | % | ||||||||
Effective
tax rate
|
(38.2 | )% | 41.0 | % | (43.2 | )% | 47.5 | % |
(a)
|
Excluding
legacy activities.
|
(b)
|
Average
AuM for a period is computed on the beginning-of-first-month balance and
all end-of-month balances within the
period.
|
(c)
|
The
effective fee rate is computed by dividing annualized investment
management fees by average AuM for the
period.
|
(d)
|
Operating
income (loss) before income tax expense margin is calculated as Operating
income (loss) before income tax expense divided by Total
revenues and other operating
income.
|
(e)
|
See
the “Supplemental Performance Measure” section of this MD&A for a
reconciliation of Operating
income (loss) before income tax expense to Adjusted operating
income and Earnings before Interest, Taxes, Depreciation and Amortization
(“EBITDA”).
|
(f)
|
Adjusted
operating margin is calculated as Adjusted operating income divided by
Total
revenues and other operating
income.
|
(g)
|
EBITDA
margin is calculated as EBITDA divided by Total
revenues and other operating
income.
|
(h)
|
Compensation
is calculated as Salaries,
incentive compensation and benefits excluding deferred compensation
relating to the Principals and the amortization expense associated with
the RSUs awarded as part of the IPO. Such amount was approximately $0.1
million.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
(in
millions)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
Operating
income (loss) before income tax expense
|
$ | (298 | ) | $ | 27 | $ | (282 | ) | $ | 89 | ||||||
Allocation
of Class B profits interests
|
12 | 20 | 34 | 64 | ||||||||||||
Change
in redemption value of Class B profits interests
|
231 | 17 | 266 | 53 | ||||||||||||
Tax
receivable agreement
|
98 | — | 98 | — | ||||||||||||
Deferred
compensation related to the Principals
|
— | 2 | — | 7 | ||||||||||||
Amortization
expense of IPO-related RSU grants
|
— | — | — | — | ||||||||||||
Adjusted
operating income
|
43 | 66 | 116 | 213 | ||||||||||||
Depreciation
and amortization
|
1 | 1 | 2 | 2 | ||||||||||||
EBITDA
|
$ | 44 | $ | 67 | $ | 118 | $ | 215 |
·
|
investment
performance, including fluctuations in both the financial markets and
foreign currency exchange rates and the quality of our investment
decisions;
|
·
|
client
cash flows into and out of our investment
products;
|
·
|
the
mix of AuM among our various strategies;
and
|
·
|
our
introduction or closure of investment strategies and
products.
|
·
|
International
Equity;
|
·
|
Global
Equity;
|
·
|
U.S.
Equity;
|
·
|
High
Grade Fixed Income; and
|
·
|
High
Yield.
|
As
of September 30,
|
As
a % of AuM
|
|||||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
Sept.
30, 2009
|
Sept.
30, 2008
|
||||||||||||
Proprietary
Funds(a)
|
||||||||||||||||
A
shares
|
$ | 7,777 | $ | 8,541 | ||||||||||||
I
shares(b)
|
16,286 | 17,175 | ||||||||||||||
Total
|
24,063 | 25,716 | 43.1 | % | 45.4 | % | ||||||||||
Institutional
commingled funds
|
8,916 | 8,385 | 16.0 | 14.8 | ||||||||||||
Separate
accounts
|
17,396 | 16,687 | 31.2 | 29.5 | ||||||||||||
Sub-advisory
accounts
|
5,423 | 5,860 | 9.7 | 10.3 | ||||||||||||
Legacy
activities(c)
|
─
|
40 |
─
|
─
|
||||||||||||
Ending
AuM
|
$ | 55,798 | $ | 56,688 | 100.0 | % | 100.0 | % |
(a)
|
Proprietary
Funds include both SEC registered funds and private offshore funds. SEC
registered mutual funds within proprietary funds are: Artio International
Equity Fund; Artio International Equity Fund II; Artio Total Return Bond
Fund; Artio Global High Income Fund; Artio Global Equity Fund Inc.; Artio
U.S. Microcap Fund; Artio U.S. Midcap Fund; Artio U.S. Multicap Fund; and
Artio U.S. Smallcap Fund.
|
(b)
|
Amounts
invested in private offshore funds are categorized as “I”
shares.
|
(c)
|
Legacy
activities relate to a hedge fund product which we discontinued in the
fourth quarter of 2008.
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
||||||||||||||||||
Proprietary
Funds:
|
||||||||||||||||||||||||
Beginning
AuM
|
$ | 20,153 | $ | 33,974 | (41 | )% | $ | 19,466 | $ | 37,117 | (48 | )% | ||||||||||||
Gross
client cash inflows(a)
|
1,821 | 1,806 | 1 | 5,644 | 6,608 | (15 | ) | |||||||||||||||||
Gross
client cash outflows(a)
|
(1,730 | ) | (3,044 | ) | 43 | (5,071 | ) | (6,924 | ) | 27 | ||||||||||||||
Net
client cash flows
|
91 | (1,238 | ) | 107 | 573 | (316 | ) | 281 | ||||||||||||||||
Transfers
between investment vehicles(a)
|
─
|
(109 | ) | 100 |
─
|
(189 | ) | 100 | ||||||||||||||||
Total
client cash flows
|
91 | (1,347 | ) | 107 | 573 | (505 | ) | 213 | ||||||||||||||||
Market
appreciation (depreciation)
|
3,819 | (6,911 | ) | 155 | 4,024 | (10,896 | ) | 137 | ||||||||||||||||
Ending
AuM
|
24,063 | 25,716 | (6 | ) | 24,063 | 25,716 | (6 | ) | ||||||||||||||||
Institutional
Commingled Funds:
|
||||||||||||||||||||||||
Beginning
AuM
|
7,324 | 10,288 | (29 | ) | 7,056 | 9,357 | (25 | ) | ||||||||||||||||
Gross
client cash inflows(a)
|
481 | 661 | (27 | ) | 1,192 | 3,316 | (64 | ) | ||||||||||||||||
Gross
client cash outflows(a)
|
(326 | ) | (218 | ) | (50 | ) | (890 | ) | (997 | ) | 11 | |||||||||||||
Net
client cash flows
|
155 | 443 | (65 | ) | 302 | 2,319 | (87 | ) | ||||||||||||||||
Transfers
between investment vehicles(a)
|
(10 | ) | 62 | (116 | ) | (9 | ) | 187 | (105 | ) | ||||||||||||||
Total
client cash flows
|
145 | 505 | (71 | ) | 293 | 2,506 | (88 | ) | ||||||||||||||||
Market
appreciation (depreciation)
|
1,447 | (2,408 | ) | 160 | 1,567 | (3,478 | ) | 145 | ||||||||||||||||
Ending
AuM
|
8,916 | 8,385 | 6 | 8,916 | 8,385 | 6 | ||||||||||||||||||
Separate
Accounts:
|
||||||||||||||||||||||||
Beginning
AuM
|
14,778 | 21,270 | (31 | ) | 14,342 | 22,897 | (37 | ) | ||||||||||||||||
Gross
client cash inflows(a)
|
634 | 129 | 391 | 1,797 | 1,279 | 41 | ||||||||||||||||||
Gross
client cash outflows(a)
|
(624 | ) | (416 | ) | (50 | ) | (1,545 | ) | (1,078 | ) | (43 | ) | ||||||||||||
Net
client cash flows
|
10 | (287 | ) | 103 | 252 | 201 | 25 | |||||||||||||||||
Transfers
between investment vehicles(a)
|
10 |
─
|
─
|
9 | (45 | ) | 120 | |||||||||||||||||
Total
client cash flows
|
20 | (287 | ) | 107 | 261 | 156 | 67 | |||||||||||||||||
Market
appreciation (depreciation)
|
2,598 | (4,296 | ) | 160 | 2,793 | (6,366 | ) | 144 | ||||||||||||||||
Ending
AuM
|
17,396 | 16,687 | 4 | 17,396 | 16,687 | 4 | ||||||||||||||||||
Sub-advisory
Accounts:
|
||||||||||||||||||||||||
Beginning
AuM
|
4,571 | 7,072 | (35 | ) | 4,336 | 5,991 | (28 | ) | ||||||||||||||||
Gross
client cash inflows(a)
|
234 | 316 | (26 | ) | 660 | 2,491 | (74 | ) | ||||||||||||||||
Gross
client cash outflows(a)
|
(169 | ) | (272 | ) | 38 | (493 | ) | (742 | ) | 34 | ||||||||||||||
Net
client cash flows
|
65 | 44 | 48 | 167 | 1,749 | (90 | ) | |||||||||||||||||
Transfers
between investment vehicles(a)
|
─
|
47 | (100 | ) |
─
|
47 | (100 | ) | ||||||||||||||||
Total
client cash flows
|
65 | 91 | (29 | ) | 167 | 1,796 | (91 | ) | ||||||||||||||||
Market
appreciation (depreciation)
|
787 | (1,303 | ) | 160 | 920 | (1,927 | ) | 148 | ||||||||||||||||
Ending
AuM
|
5,423 | 5,860 | (7 | ) | 5,423 | 5,860 | (7 | ) |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
||||||||||||||||||
Legacy
Activities:
|
||||||||||||||||||||||||
Beginning
AuM
|
─
|
45 | (100 | ) | 4 |
─
|
100 | |||||||||||||||||
Gross
client cash inflows(a)
|
─
|
─
|
─
|
─
|
44 | (100 | ) | |||||||||||||||||
Gross
client cash outflows(a)
|
─
|
─
|
─
|
─
|
─
|
─
|
||||||||||||||||||
Net
client cash flows
|
─
|
─
|
─
|
─
|
44 | (100 | ) | |||||||||||||||||
Transfers
between investment vehicles(a)
|
─
|
─
|
─
|
─
|
─
|
─
|
||||||||||||||||||
Total
client cash flows
|
─
|
─
|
─
|
─
|
44 | (100 | ) | |||||||||||||||||
Market
appreciation (depreciation)
|
─
|
(5 | ) | 100 | (4 | ) | (4 | ) |
─
|
|||||||||||||||
Ending
AuM
|
─
|
40 | (100 | ) |
─
|
40 | (100 | ) | ||||||||||||||||
Total
AuM (including legacy activities):
|
||||||||||||||||||||||||
Beginning
AuM
|
46,826 | 72,649 | (36 | ) | 45,204 | 75,362 | (40 | ) | ||||||||||||||||
Gross
client cash inflows(a)
|
3,170 | 2,912 | 9 | 9,293 | 13,738 | (32 | ) | |||||||||||||||||
Gross
client cash outflows(a)
|
(2,849 | ) | (3,950 | ) | 28 | (7,999 | ) | (9,741 | ) | 18 | ||||||||||||||
Net
client cash flows
|
321 | (1,038 | ) | 131 | 1,294 | 3,997 | (68 | ) | ||||||||||||||||
Transfers
between investment vehicles(a)
|
─
|
─
|
─
|
─
|
─
|
─
|
||||||||||||||||||
Total
client cash flows
|
321 | (1,038 | ) | 131 | 1,294 | 3,997 | (68 | ) | ||||||||||||||||
Market
appreciation (depreciation)
|
8,651 | (14,923 | ) | 158 | 9,300 | (22,671 | ) | 141 | ||||||||||||||||
Ending
AuM
|
55,798 | 56,688 | (2 | ) | 55,798 | 56,688 | (2 | ) | ||||||||||||||||
Total
AuM (excluding legacy activities):
|
||||||||||||||||||||||||
Beginning
AuM
|
46,826 | 72,604 | (36 | ) | 45,200 | 75,362 | (40 | ) | ||||||||||||||||
Gross
client cash inflows(a)
|
3,170 | 2,912 | 9 | 9,293 | 13,694 | (32 | ) | |||||||||||||||||
Gross
client cash outflows(a)
|
(2,849 | ) | (3,950 | ) | 28 | (7,999 | ) | (9,741 | ) | 18 | ||||||||||||||
Net
client cash flows
|
321 | (1,038 | ) | 131 | 1,294 | 3,953 | (67 | ) | ||||||||||||||||
Transfers
between investment vehicles(a)
|
─
|
─
|
─
|
─
|
─
|
─
|
||||||||||||||||||
Total
client cash flows
|
321 | (1,038 | ) | 131 | 1,294 | 3,953 | (67 | ) | ||||||||||||||||
Market
appreciation (depreciation)
|
8,651 | (14,918 | ) | 158 | 9,304 | (22,667 | ) | 141 | ||||||||||||||||
Ending
AuM
|
$ | 55,798 | $ | 56,648 | (2 | ) | $ | 55,798 | $ | 56,648 | (2 | ) |
(a)
|
Gross
client cash inflows and outflows, as well as transfers between investment
vehicles, are tracked by information systems, which we believe are
accurate in all material respects. Certain of our intermediaries elect to
automatically reinvest all cash dividends in our investment vehicles and,
to the extent any of such intermediary’s underlying investors do not elect
dividend reinvestment but prefer cash, they cause such investor’s newly
received shares to be redeemed. Accordingly, the gross flows data set
forth above may overstate redemptions, although we do not believe the
effect is material.
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
(in
millions, except percentages)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
||||||||||||||||||
Market
appreciation (depreciation)
(excluding
legacy activities):
|
||||||||||||||||||||||||
International
Equity I
|
$ | 3,765 | $ | (8,375 | ) | 145 | % | $ | 3,605 | $ | (13,046 | ) | 128 | % | ||||||||||
International
Equity II
|
4,156 | (6,115 | ) | 168 | 4,385 | (9,138 | ) | 148 | ||||||||||||||||
Other
strategies
|
730 | (428 | ) | 270 | 1,314 | (483 | ) | 372 | ||||||||||||||||
Total
market appreciation (depreciation)
|
$ | 8,651 | $ | (14,918 | ) | 158 | $ | 9,304 | $ | (22,667 | ) | 141 |
(in
thousands, except for Average AuM,
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
||||||||||||||||||||||
effective
fee rate and percentages)
|
2009
|
2008
|
Change
|
2009
|
2008
|
Change
|
||||||||||||||||||
Average
AuM(a)
(in millions)
|
$ | 51,793 | $ | 66,525 | (22 | )% | $ | 46,051 | $ | 70,806 | (35 | )% | ||||||||||||
Effective
fee rate (basis points)
|
64.5 | 64.7 | (0.2 | )bp | 62.6 | 66.1 | (3.5 | )bp | ||||||||||||||||
Investment
management fees
|
$ | 83,476.8 | $ | 107,551.5 | (22 | )% | $ | 216,053.0 | $ | 351,058.8 | (38 | )% | ||||||||||||
Net
gains (losses) on securities held for deferred
compensation
|
976.9 | (1,017.5 | ) | 196 | 1,689.1 | (1,618.5 | ) | 204 | ||||||||||||||||
Foreign
currency gains (losses)
|
34.2 | (5.8 | ) | 690 | 65.8 | (27.5 | ) | 339 | ||||||||||||||||
Total
revenues and other operating income
|
$ | 84,487.9 | $ | 106,528.2 | (21 | ) | $ | 217,807.9 | $ | 349,412.8 | (38 | ) |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
||||||||||||||||||
Total
employee compensation and benefits
|
$ | 363,061.6 | $ | 60,373.4 | * | % | $ | 454,988.4 | $ | 193,651.4 | * | % | ||||||||||||
Shareholder
servicing and marketing
|
4,502.1 | 6,107.5 | (26 | ) | 11,710.4 | 18,832.6 | (38 | ) | ||||||||||||||||
General
and administrative
|
15,227.9 | 12,992.8 | 17 | 32,805.8 | 47,657.7 | (31 | ) | |||||||||||||||||
Total
operating expenses
|
$ | 382,791.6 | $ | 79,473.7 | * | $ | 499,504.6 | $ | 260,141.7 | * |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
%
Change
|
||||||||||||||||||
Salaries,
incentive compensation and benefits
|
$ | 22,390.5 | $ | 23,460.7 | (5 | )% | $ | 57,307.5 | $ | 76,315.0 | (25 | )% | ||||||||||||
Allocation
of Class B profits interests(a)
|
12,190.7 | 19,992.7 | (39 | ) | 33,662.5 | 63,983.4 | (47 | ) | ||||||||||||||||
Change
in redemption value of Class B profits interests(a)
|
230,571.8 | 16,920.0 | * | 266,109.8 | 53,353.0 | * | ||||||||||||||||||
Tax
receivable agreement
|
97,908.6 |
─
|
* | 97,908.6 |
─
|
* | ||||||||||||||||||
Total
employee compensation and benefits
|
$ | 363,061.6 | $ | 60,373.4 | * | $ | 454,988.4 | $ | 193,651.4 | * |
(a)
|
In
connection with the IPO (see the “Initial Public Offering and Changes in
Principals’ Interests” section of this MD&A), the Class B profits
interests were exchanged for New Class A Units that are reflected as
equity subsequent to the IPO.
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
2009
|
2008
|
% Change
|
||||||||||||||||||
Non-operating
income (loss)
|
$ | 121.7 | $ | 555.8 | (78 | )% | $ | (211.4 | ) | $ | 1,952.9 | (111 | )% | |||||||||||
Average
invested funds(a)
|
39,993.7 | 93,992.4 | (57 | ) | 68,482.9 | 125,029.9 | (45 | ) |
(a)
|
Computed
using the beginning and ending balances for the period of cash equivalents
and marketable securities, exclusive of securities held for deferred
compensation.
|
September
30,
|
December
31,
|
|||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Cash
and cash equivalents
|
$ | 165,189.5 | $ | 86,563.0 | 91 | % | ||||||
Marketable
securities less securities held for deferred compensation
|
431.3 | 65,418.1 | (99 | ) | ||||||||
165,620.8 | 151,981.1 | 9 | ||||||||||
Fees
receivable and accrued fees, net of allowance for doubtful
accounts
|
51,492.2 | 54,799.1 | (6 | ) | ||||||||
Total
liquid assets
|
$ | 217,113.0 | $ | 206,780.2 | 5 |
·
|
maintenance
of a maximum consolidated leverage ratio of less than or equal to 2.00x
(calculated as the ratio of consolidated funded indebtedness plus the
remaining amount of a deferred payment to GAM of $40.1 million, which
is payable by September 30, 2010, to consolidated EBITDA for the last six
months multiplied by two); and
|
·
|
maintenance
of a minimum consolidated interest coverage ratio of greater than or equal
to 4.00x (calculated as the ratio of consolidated EBITDA for the last six
months to consolidated interest charges for such
period).
|
Nine
Months Ended September 30,
|
||||||||||||
(in
thousands, except percentages)
|
2009
|
2008
|
%
Change
|
|||||||||
Cash
flow data:
|
||||||||||||
Net
cash provided by operating activities
|
$ | 29,279.5 | $ | 73,335.6 | (60 | )% | ||||||
Net
cash provided by (used in) investing activities
|
63,263.2 | (51,288.4 | ) | 223 | ||||||||
Net
cash (used in) financing activities
|
(13,982.0 | ) | (82,000.0 | ) | 83 | |||||||
Effect
of exchange rate changes on cash
|
65.8 | (27.5 | ) | 339 | ||||||||
Net
increase (decrease) in cash and cash equivalents
|
$ | 78,626.5 | $ | (59,980.3 | ) | 231 |
·
|
the
value of AuM decreasing;
|
·
|
our
clients withdrawing funds; or
|
·
|
a
shift in product mix to lower margin
products.
|
Period
|
Total
Number of Shares Repurchased (a)
|
Average
Price Paid Per Share (a)
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans
or Programs (b)
|
Approximate
Dollar Value of Shares that May Yet be Purchased Under the Plans or
Programs (b)
|
|||||||||||
July
1, 2009 through July 31, 2009
|
─
|
$ |
─
|
─
|
$ |
─
|
|||||||||
August
1, 2009 through August 31, 2009
|
─
|
─
|
─
|
─
|
|||||||||||
September
1, 2009 through September 30, 2009
|
25,000,000 | 24.596 |
─
|
─
|
|||||||||||
For
the quarter ended September 30, 2009
|
25,000,000 | 24.596 |
─
|
─
|
(a)
|
These
columns reflect the following transactions during the third quarter of
2009: the repurchase of 2.4 million shares of Class A common stock and the
repurchase and retirement of 22.6 million shares of Class C common stock
in connection with the initial public
offering.
|
(b)
|
As
of September 30, 2009, Investors did not have a share repurchase
program.
|
1)
Exhibit 31.1
|
Certification
by the Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
||
2)
Exhibit 31.2
|
Certification
by the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
3)
Exhibit 32.1
|
Certification
by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
|
4)
Exhibit 32.2
|
Certification
by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
Artio
Global Investors Inc.
|
|||
By: |
/s/
Francis Harte
|
||
Name: |
Francis
Harte
|
||
Title: |
Chief
Financial Officer
(Principal
Financial and Accounting Officer)
|