England and Wales | 98-1179929 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Ground Floor, Millennium Bridge House 2 Lambeth Hill London, United Kingdom | EC4V 4GG |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ý | Accelerated filer o |
Non-accelerated filer o | Smaller reporting company o |
(Do not check if a smaller reporting company) | Emerging growth company o |
Page | ||
Part I | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II | ||
Item 1. | ||
Item 1A. | ||
Item 6. |
September 30, 2017 | December 31, 2016 | ||||||
Assets | |||||||
Cash and cash equivalents | $ | 126.4 | $ | 101.9 | |||
Investment advisory fees receivable | 194.6 | 163.7 | |||||
Fixed assets, net | 41.3 | 39.8 | |||||
Investments (includes balances reported at fair value of $189.0 and $126.1) | 255.3 | 233.3 | |||||
Acquired intangibles, net | 79.9 | 84.9 | |||||
Goodwill | 274.6 | 272.7 | |||||
Other assets | 32.6 | 29.0 | |||||
Deferred tax assets | 367.4 | 332.7 | |||||
Assets of consolidated Funds: | |||||||
Cash and cash equivalents, restricted | 8.3 | 0.4 | |||||
Investments, at fair value | 56.8 | 35.5 | |||||
Other assets | 2.5 | 0.4 | |||||
Total assets | $ | 1,439.7 | $ | 1,294.3 | |||
Liabilities and equity | |||||||
Accounts payable and accrued expenses | $ | 42.8 | $ | 45.8 | |||
Accrued incentive compensation | 169.8 | 132.3 | |||||
Other amounts due to related parties | 111.9 | 156.3 | |||||
Other compensation liabilities | 429.2 | 291.0 | |||||
Accrued income taxes | 96.6 | 90.2 | |||||
Non-recourse borrowings | 33.5 | — | |||||
Third party borrowings | 392.6 | 392.3 | |||||
Other liabilities | 8.8 | 10.1 | |||||
Liabilities of consolidated Funds: | |||||||
Total liabilities of consolidated Funds | 8.1 | 5.8 | |||||
Total liabilities | 1,293.3 | 1,123.8 | |||||
Commitments and contingencies | |||||||
Redeemable non-controlling interests in consolidated Funds | 14.4 | 5.5 | |||||
Equity: | |||||||
Ordinary shares (nominal value $0.001; 109,720,358 and 114,157,765 shares, respectively, issued) | 0.1 | 0.1 | |||||
Shareholders’ equity | 153.1 | 190.2 | |||||
Accumulated other comprehensive loss | (22.4 | ) | (26.3 | ) | |||
Non-controlling interests | 1.2 | 1.0 | |||||
Total equity and redeemable non-controlling interests in consolidated Funds | 146.4 | 170.5 | |||||
Total liabilities and equity | $ | 1,439.7 | $ | 1,294.3 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenue: | |||||||||||||||
Management fees | $ | 221.7 | $ | 171.8 | $ | 624.1 | $ | 478.5 | |||||||
Performance fees | 0.7 | (1.1 | ) | 12.1 | (1.9 | ) | |||||||||
Other revenue | 0.1 | 0.1 | 0.6 | 0.3 | |||||||||||
Consolidated Funds’ revenue | 0.7 | — | 1.4 | — | |||||||||||
Total revenue | 223.2 | 170.8 | 638.2 | 476.9 | |||||||||||
Operating expenses: | |||||||||||||||
Compensation and benefits | 182.2 | 100.0 | 498.4 | 272.1 | |||||||||||
General and administrative expense | 27.6 | 27.2 | 80.9 | 71.7 | |||||||||||
Amortization of acquired intangibles | 1.6 | 0.9 | 4.9 | 1.0 | |||||||||||
Depreciation and amortization | 3.2 | 2.5 | 8.5 | 6.9 | |||||||||||
Consolidated Funds’ expense | 0.3 | — | 0.8 | — | |||||||||||
Total operating expenses | 214.9 | 130.6 | 593.5 | 351.7 | |||||||||||
Operating income | 8.3 | 40.2 | 44.7 | 125.2 | |||||||||||
Non-operating income and (expense): | |||||||||||||||
Investment income | 9.4 | 5.6 | 20.5 | 13.6 | |||||||||||
Interest income | 0.1 | 0.3 | 0.5 | 0.3 | |||||||||||
Interest expense | (6.4 | ) | (4.4 | ) | (18.2 | ) | (5.4 | ) | |||||||
Net consolidated Funds’ investment gains | 3.4 | — | 9.9 | — | |||||||||||
Total non-operating income | 6.5 | 1.5 | 12.7 | 8.5 | |||||||||||
Income from continuing operations before taxes | 14.8 | 41.7 | 57.4 | 133.7 | |||||||||||
Income tax expense (benefit) | (5.1 | ) | 7.3 | 1.5 | 33.8 | ||||||||||
Income from continuing operations | 19.9 | 34.4 | 55.9 | 99.9 | |||||||||||
Gain (loss) on disposal of discontinued operations, net of tax | — | (0.4 | ) | (0.1 | ) | 1.2 | |||||||||
Net income | 19.9 | 34.0 | 55.8 | 101.1 | |||||||||||
Net income attributable to non-controlling interests in consolidated Funds | 1.2 | — | 2.8 | — | |||||||||||
Net income attributable to controlling interests | $ | 18.7 | $ | 34.0 | $ | 53.0 | $ | 101.1 | |||||||
Earnings per share (basic) attributable to controlling interests | $ | 0.17 | $ | 0.28 | $ | 0.47 | $ | 0.84 | |||||||
Earnings per share (diluted) attributable to controlling interests | 0.17 | 0.28 | 0.47 | 0.84 | |||||||||||
Continuing operations earnings per share (basic) attributable to controlling interests | 0.17 | 0.28 | 0.47 | 0.83 | |||||||||||
Continuing operations earnings per share (diluted) attributable to controlling interests | 0.17 | 0.28 | 0.47 | 0.83 | |||||||||||
Weighted average ordinary shares outstanding | 109.0 | 119.3 | 111.3 | 119.6 | |||||||||||
Weighted average diluted ordinary shares outstanding | 109.7 | 119.7 | 111.9 | 119.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income | $ | 19.9 | $ | 34.0 | $ | 55.8 | $ | 101.1 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Valuation and amortization related to derivative securities, net of tax | 0.6 | (1.1 | ) | 1.3 | (20.8 | ) | |||||||||
Foreign currency translation adjustment | 0.9 | (0.3 | ) | 2.6 | (1.4 | ) | |||||||||
Total other comprehensive income (loss) | 1.5 | (1.4 | ) | 3.9 | (22.2 | ) | |||||||||
Comprehensive income attributable to non-controlling interests in consolidated Funds | 1.2 | — | 2.8 | — | |||||||||||
Total comprehensive income attributable to controlling interests | $ | 20.2 | $ | 32.6 | $ | 56.9 | $ | 78.9 |
Ordinary shares (millions) | Ordinary shares, nominal value | Shareholders’ equity (deficit) | Accumulated other comprehensive income (loss) | Total shareholders’ equity (deficit) | Non- controlling interests | Total equity | Redeemable non-controlling interests in consolidated Funds | Total equity and redeemable non-controlling interests in consolidated Funds | ||||||||||||||||||||||||||
December 31, 2015 | 120.5 | $ | 0.1 | $ | 168.6 | $ | (2.8 | ) | 165.9 | $ | — | $ | 165.9 | $ | — | $ | 165.9 | |||||||||||||||||
Issuance of ordinary shares | 0.5 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Repurchase of ordinary shares | (0.9 | ) | — | (12.2 | ) | — | (12.2 | ) | — | (12.2 | ) | — | (12.2 | ) | ||||||||||||||||||||
Equity-based compensation | — | — | 9.7 | — | 9.7 | — | 9.7 | — | 9.7 | |||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | (1.4 | ) | (1.4 | ) | — | (1.4 | ) | — | (1.4 | ) | |||||||||||||||||||||
Valuation of derivative securities, net of tax | — | — | — | (20.8 | ) | (20.8 | ) | — | (20.8 | ) | — | (20.8 | ) | |||||||||||||||||||||
Business acquisition | — | — | — | — | — | 0.9 | 0.9 | — | 0.9 | |||||||||||||||||||||||||
Net consolidation of Funds | — | — | — | — | — | — | — | 5.7 | 5.7 | |||||||||||||||||||||||||
Dividends to shareholders | — | — | (10.1 | ) | — | (10.1 | ) | — | (10.1 | ) | — | (10.1 | ) | |||||||||||||||||||||
Dividends to related parties | — | — | (19.0 | ) | — | (19.0 | ) | — | (19.0 | ) | — | (19.0 | ) | |||||||||||||||||||||
Net income | — | — | 101.1 | — | 101.1 | — | 101.1 | — | 101.1 | |||||||||||||||||||||||||
September 30, 2016 | 120.1 | $ | 0.1 | $ | 238.1 | $ | (25.0 | ) | $ | 213.2 | $ | 0.9 | $ | 214.1 | $ | 5.7 | $ | 219.8 | ||||||||||||||||
December 31, 2016 | 114.1 | $ | 0.1 | $ | 190.2 | $ | (26.3 | ) | $ | 164.0 | $ | 1.0 | $ | 165.0 | $ | 5.5 | $ | 170.5 | ||||||||||||||||
Issuance of ordinary shares | 0.6 | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Repurchase of ordinary shares | (5.0 | ) | — | (73.1 | ) | — | (73.1 | ) | — | (73.1 | ) | — | (73.1 | ) | ||||||||||||||||||||
Capital contributions (redemptions) | — | — | (0.7 | ) | — | (0.7 | ) | — | (0.7 | ) | 4.8 | 4.1 | ||||||||||||||||||||||
Equity-based compensation | — | — | 12.8 | — | 12.8 | — | 12.8 | — | 12.8 | |||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | 2.6 | 2.6 | — | 2.6 | — | 2.6 | |||||||||||||||||||||||||
Amortization related to derivative securities, net of tax | — | — | — | 1.3 | 1.3 | — | 1.3 | — | 1.3 | |||||||||||||||||||||||||
Business acquisition | — | — | — | — | — | 0.2 | 0.2 | — | 0.2 | |||||||||||||||||||||||||
Net consolidation of Funds | — | — | — | — | — | — | — | 1.3 | 1.3 | |||||||||||||||||||||||||
Dividends to shareholders | — | — | (20.2 | ) | — | (20.2 | ) | — | (20.2 | ) | — | (20.2 | ) | |||||||||||||||||||||
Dividends to related parties | — | — | (8.9 | ) | — | (8.9 | ) | — | (8.9 | ) | — | (8.9 | ) | |||||||||||||||||||||
Net income | — | — | 53.0 | — | 53.0 | — | 53.0 | 2.8 | 55.8 | |||||||||||||||||||||||||
September 30, 2017 | 109.7 | $ | 0.1 | $ | 153.1 | $ | (22.4 | ) | $ | 130.8 | $ | 1.2 | $ | 132.0 | $ | 14.4 | $ | 146.4 |
OM Asset Management plc Condensed Consolidated Statements of Cash Flows (in millions, unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 55.8 | $ | 101.1 | |||
Less: Net income attributable to non-controlling interests in consolidated Funds | (2.8 | ) | — | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities from continuing operations: | |||||||
(Gain) loss on disposal of discontinued operations, excluding consolidated Funds | 0.1 | (1.2 | ) | ||||
Amortization of acquired intangibles | 4.9 | 1.0 | |||||
Depreciation and other amortization | 8.5 | 7.3 | |||||
Amortization of debt-related costs | 2.3 | — | |||||
Amortization and revaluation of non-cash compensation awards | 144.7 | 19.7 | |||||
Net earnings from Affiliates accounted for using the equity method | (11.2 | ) | (11.8 | ) | |||
Distributions received from equity method Affiliates | 15.0 | 2.3 | |||||
Deferred income taxes | (35.7 | ) | 16.5 | ||||
(Gains) losses on other investments | (28.4 | ) | (4.3 | ) | |||
Changes in operating assets and liabilities (excluding discontinued operations): | |||||||
(Increase) decrease in investment advisory fees receivable and other amounts due from related parties | (31.0 | ) | (0.3 | ) | |||
(Increase) decrease in other receivables, prepayments, deposits and other assets | (0.8 | ) | (2.0 | ) | |||
Increase (decrease) in accrued incentive compensation, other amounts due to related parties and other liabilities | 45.5 | (36.0 | ) | ||||
Increase (decrease) in accounts payable, accrued expenses and accrued income taxes | 3.5 | (34.0 | ) | ||||
Net cash flows from operating activities of continuing operations, excluding consolidated Funds | 170.4 | 58.3 | |||||
Net income attributable to non-controlling interests in consolidated Funds | 2.8 | — | |||||
Adjustments to reconcile net income (loss) attributable to non-controlling interests in consolidated Funds to net cash provided by (used in) operating activities from continuing operations of consolidated Funds: | |||||||
(Gains) losses on other investments | (2.2 | ) | — | ||||
(Increase) decrease in receivables other assets | 0.1 | — | |||||
Increase (decrease) in accounts payable and other liabilities | 0.3 | — | |||||
Net cash flows from operating activities of continuing operations of consolidated Funds | 1.0 | — | |||||
Net cash flows from operating activities of continuing operations | 171.4 | 58.3 | |||||
Net cash flows from operating activities of discontinued operations | — | 0.3 | |||||
Total net cash flows from operating activities | 171.4 | 58.6 | |||||
Cash flows from investing activities: | |||||||
Purchase of fixed assets | (10.0 | ) | (9.5 | ) | |||
Business acquisitions, net of cash acquired | (1.9 | ) | (219.0 | ) | |||
Purchase of investment securities | (80.9 | ) | (58.6 | ) | |||
Sale of investment securities | 66.1 | 10.5 | |||||
Cash flows from investing activities of consolidated Funds | |||||||
Purchase of investments | (49.2 | ) | — | ||||
Redemption of investments | 44.0 | — | |||||
Consolidation (de-consolidation) of Funds | 7.3 | 0.5 | |||||
Net cash flows from investing activities of continuing operations | (24.6 | ) | (276.1 | ) | |||
Net cash flows from investing activities of discontinued operations | — | — | |||||
Total net cash flows from investing activities | (24.6 | ) | (276.1 | ) | |||
OM Asset Management plc Condensed Consolidated Statements of Cash Flows (in millions, unaudited) | |||||||
Nine Months Ended September 30, | |||||||
2017 | 2016 | ||||||
Cash flows from financing activities: | |||||||
Proceeds from third party and non-recourse borrowings | 68.5 | 450.1 | |||||
Repayment of third party borrowings | (35.0 | ) | (148.0 | ) | |||
Payment to OM plc for deferred tax arrangement | (45.5 | ) | (22.7 | ) | |||
Payment to OM plc for co-investment redemptions | (4.4 | ) | (5.4 | ) | |||
Dividends paid to shareholders | (20.1 | ) | (9.9 | ) | |||
Dividends paid to related parties | (8.9 | ) | (19.0 | ) | |||
Repurchases of ordinary shares | (73.8 | ) | (12.2 | ) | |||
Cash flows from financing activities of consolidated Funds | |||||||
Redeemable non-controlling interest capital raised | 4.8 | — | |||||
Net cash flows from financing activities of continuing operations | (114.4 | ) | 232.9 | ||||
Net cash flows from financing activities of discontinued operations | — | — | |||||
Total net cash flows from financing activities | (114.4 | ) | 232.9 | ||||
Net increase (decrease) in cash and cash equivalents | 32.4 | 15.4 | |||||
Cash and cash equivalents at beginning of period | 102.3 | 135.9 | |||||
Cash and cash equivalents at end of period (including cash at consolidated Funds classified as restricted) | $ | 134.7 | $ | 151.3 | |||
Supplemental disclosure of cash flow information: | |||||||
Interest paid (excluding consolidated Funds) | $ | 20.4 | $ | 2.1 | |||
Income taxes paid | 32.8 | 14.1 | |||||
Consolidation (de-consolidation) of Funds | 1.3 | 5.7 |
Landmark | ||||
Purchase price | ||||
Cash | $ | 239.2 | ||
Seller's expenses | 3.5 | |||
Total consideration | 242.7 | |||
Identifiable assets and liabilities | ||||
Cash | 23.4 | |||
Receivables | 8.5 | |||
Indefinite-life trade name | 1.0 | |||
Amortizable intangible asset management contracts | 85.0 | |||
Fixed assets | 5.1 | |||
Other current assets (liabilities), net | (26.7 | ) | ||
Assets (liabilities), net | (1.7 | ) | ||
Total identifiable assets and liabilities | 94.6 | |||
Goodwill | $ | 148.1 |
Three Months Ended September 30, 2016* | Nine Months Ended September 30, 2016* | ||||||
Revenues | $ | 181.3 | $ | 526.9 | |||
Net income attributable to OMAM | 26.8 | 66.3 | |||||
Net income per share attributable to OMAM shareholders: | |||||||
Basic | $0.22 | $0.55 | |||||
Diluted | $0.22 | $0.55 |
September 30, 2017 | December 31, 2016 | ||||||
Investments of consolidated Funds held at fair value | $ | 56.8 | $ | 35.5 | |||
Other investments held at fair value | 69.0 | 17.5 | |||||
Investments related to long-term incentive compensation plans held at fair value | 90.4 | 78.1 | |||||
Equity-accounted investments in unconsolidated Funds | 29.6 | 30.5 | |||||
Total investments held at fair value | 245.8 | 161.6 | |||||
Equity-accounted investments in Affiliates | 52.4 | 55.2 | |||||
Other investments* | 13.9 | 52.0 | |||||
Total investments per Condensed Consolidated Balance Sheets | $ | 312.1 | $ | 268.8 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Investment return of equity-accounted investments in unconsolidated Funds | $ | 0.3 | $ | 0.2 | $ | 1.5 | $ | 0.7 | ||||||||
Realized and unrealized gains on other investments held at fair value | 3.4 | 0.7 | 6.1 | 0.7 | ||||||||||||
Investment return of held for sale investments | — | (0.2 | ) | 1.7 | 0.4 | |||||||||||
Total return on OMAM investments | 3.7 | 0.7 | 9.3 | 1.8 | ||||||||||||
Investment return of equity-accounted investments in Affiliates | 5.7 | 4.9 | 11.2 | 11.8 | ||||||||||||
Total investment income per Condensed Consolidated Statement of Operations | $ | 9.4 | $ | 5.6 | $ | 20.5 | $ | 13.6 |
Quoted prices in active markets (Level I) | Significant other observable inputs (Level II) | Significant unobservable inputs (Level III) | Uncategorized | Total value, September 30, 2017 | |||||||||||||||
Assets of OMAM and consolidated Funds(1) | |||||||||||||||||||
Common and preferred stock | $ | 56.0 | $ | — | $ | — | $ | — | $ | 56.0 | |||||||||
Short-term investment funds | 0.3 | — | — | — | 0.3 | ||||||||||||||
Derivatives | 0.3 | 0.2 | — | — | 0.5 | ||||||||||||||
Consolidated Funds total | 56.6 | 0.2 | — | — | 56.8 | ||||||||||||||
Investments in separate accounts(2) | 51.5 | — | — | — | 51.5 | ||||||||||||||
Investments related to long-term incentive compensation plans(3) | 90.4 | — | — | — | 90.4 | ||||||||||||||
Investments in unconsolidated Funds(4) | — | — | — | 47.1 | 47.1 | ||||||||||||||
OMAM total | 141.9 | — | — | 47.1 | 189.0 | ||||||||||||||
Total fair value assets | $ | 198.5 | $ | — | $ | — | $ | 47.1 | $ | 245.8 | |||||||||
Liabilities of consolidated Funds(1) | |||||||||||||||||||
Common stock | $ | (6.5 | ) | $ | — | $ | — | $ | — | $ | (6.5 | ) | |||||||
Derivatives | (0.3 | ) | (0.2 | ) | — | — | (0.5 | ) | |||||||||||
Consolidated Funds total | (6.8 | ) | (0.2 | ) | — | — | (7.0 | ) | |||||||||||
Total fair value liabilities | $ | (6.8 | ) | $ | (0.2 | ) | $ | — | $ | — | $ | (7.0 | ) |
Quoted prices in active markets (Level I) | Significant other observable inputs (Level II) | Significant unobservable inputs (Level III) | Uncategorized | Total value December 31, 2016 | |||||||||||||||
Assets of OMAM and consolidated Funds(1) | |||||||||||||||||||
Common and preferred stock | $ | 35.1 | $ | — | $ | — | $ | — | $ | 35.1 | |||||||||
Short-term investment funds | 0.4 | — | — | — | 0.4 | ||||||||||||||
Consolidated Funds total | 35.5 | — | — | — | 35.5 | ||||||||||||||
Investments in separate accounts(2) | 7.5 | — | — | — | 7.5 | ||||||||||||||
Investments related to long-term incentive compensation plans(3) | 78.1 | — | — | — | 78.1 | ||||||||||||||
Investments in unconsolidated Funds(4) | — | — | — | 40.5 | 40.5 | ||||||||||||||
OMAM total | 85.6 | — | — | 40.5 | 126.1 | ||||||||||||||
Total fair value assets | $ | 121.1 | $ | — | $ | — | $ | 40.5 | $ | 161.6 | |||||||||
Liabilities of OMAM and consolidated Funds(1) | |||||||||||||||||||
Common stock | $ | (5.0 | ) | $ | — | $ | — | $ | — | $ | (5.0 | ) | |||||||
Consolidated Funds total | (5.0 | ) | — | — | — | (5.0 | ) | ||||||||||||
Derivative securities | — | (0.1 | ) | — | — | (0.1 | ) | ||||||||||||
OMAM total | — | (0.1 | ) | — | — | (0.1 | ) | ||||||||||||
Total fair value liabilities | $ | (5.0 | ) | $ | (0.1 | ) | $ | — | $ | — | $ | (5.1 | ) |
(1) | Assets and liabilities measured at fair value are comprised of financial investments managed by the Company's Affiliates. $56.8 million in assets and $7.0 million in liabilities at September 30, 2017 and $35.5 million in assets and $5.0 million in liabilities at December 31, 2016 are the result of the consolidation of Funds sponsored by the Company’s Affiliates. |
(2) | Investments in separate accounts of $51.5 million at September 30, 2017 consist of approximately 1% of cash equivalents and 99% of equity securities. Investments in separate accounts of $7.5 million at December 31, 2016 consist of approximately 28% of cash equivalents and 72% of equity securities. The Company has valued these using the published price of the underlying securities as of the measurement date. Accordingly, the Company has classified these investments as Level I. |
(3) | Investments related to long term compensation plans of $90.4 million and $78.1 million at September 30, 2017 and December 31, 2016, respectively, are investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates. Accordingly, the Company has classified these investments as Level I. |
(4) | The uncategorized amounts of $47.1 million and $40.5 million at September 30, 2017 and December 31, 2016, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the Condensed Consolidated Balance Sheets. These unconsolidated Funds consist primarily of real estate investment Funds and UCITS. The NAVs that have been provided by investees have been derived from the fair values of the underlying investments as of the measurement dates. |
9/30/2017 | 12/31/2016 | ||||||
Assets | |||||||
Investments at fair value | $ | 28.4 | $ | 14.9 | |||
Other assets of consolidated Funds | 10.4 | 0.6 | |||||
Total Assets | $ | 38.8 | $ | 15.5 | |||
Liabilities | |||||||
Other liabilities of consolidated Funds | $ | 1.5 | $ | 0.7 | |||
Total Liabilities | $ | 1.5 | $ | 0.7 |
September 30, 2017 | December 31, 2016 | ||||||
Unconsolidated VIE assets | $ | 6,024.1 | $ | 6,006.3 | |||
Unconsolidated VIE liabilities | $ | 3,895.3 | $ | 3,740.2 | |||
Equity interests on the Condensed Consolidated Balance Sheet | $ | 51.5 | $ | 54.2 | |||
Maximum risk of loss(1) | $ | 55.7 | $ | 58.5 |
(1) | Includes equity investments the Company has made or is required to make and any earned but uncollected management/incentive fees. The Company does not record performance/incentive allocations until the respective measurement period has ended. |
September 30, 2017 | December 31, 2016 | |||||||||||||||||||||||
Long-term bonds: | Maturity amount | Discount and issuance costs | Carrying value | Fair Value | Carrying value | Fair Value | ||||||||||||||||||
4.80% Senior Notes Due 2026 | $ | 275.0 | $ | (3.2 | ) | $ | 271.8 | $ | 284.2 | $ | 271.6 | $ | 271.0 | |||||||||||
5.125% Senior Notes Due 2031 | 125.0 | (4.2 | ) | 120.8 | 124.9 | 120.7 | 107.9 | |||||||||||||||||
Total long-term bonds | $ | 400.0 | $ | (7.4 | ) | $ | 392.6 | $ | 409.1 | $ | 392.3 | $ | 378.9 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator: | |||||||||||||||
Net income attributable to controlling interests | $ | 18.7 | $ | 34.0 | $ | 53.0 | $ | 101.1 | |||||||
Less: Total income available to participating unvested securities(1) | (0.1 | ) | (0.2 | ) | (0.3 | ) | (0.7 | ) | |||||||
Total net income attributable to ordinary shares | $ | 18.6 | $ | 33.8 | $ | 52.7 | $ | 100.4 | |||||||
Denominator: | |||||||||||||||
Weighted-average ordinary shares outstanding—basic | 109,037,556 | 119,288,903 | 111,270,049 | 119,569,288 | |||||||||||
Potential ordinary shares: | |||||||||||||||
Restricted stock units | 629,441 | 363,401 | 669,849 | 190,497 | |||||||||||
Weighted-average ordinary shares outstanding—diluted | 109,666,997 | 119,652,304 | 111,939,898 | 119,759,785 | |||||||||||
Earnings per ordinary share attributable to controlling interests: | |||||||||||||||
Basic | $ | 0.17 | $ | 0.28 | $ | 0.47 | $ | 0.84 | |||||||
Diluted | $ | 0.17 | $ | 0.28 | $ | 0.47 | $ | 0.84 |
(1) | Income available to participating unvested securities includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings. |
For the nine months ended September 30, 2017 | |||||||||||
Pre-Tax | Tax (Expense) | Net of Tax | |||||||||
Foreign currency translation adjustment | $ | 2.6 | $ | — | $ | 2.6 | |||||
Amortization related to derivative securities | 2.0 | (0.7 | ) | 1.3 | |||||||
Other comprehensive income (loss) | $ | 4.6 | $ | (0.7 | ) | $ | 3.9 |
For the nine months ended September 30, 2016 | |||||||||||
Pre-Tax | Tax Benefit | Net of Tax | |||||||||
Foreign currency translation adjustment | $ | (1.4 | ) | $ | — | $ | (1.4 | ) | |||
Change in net realized and unrealized gain (loss) on derivative securities | (25.2 | ) | 4.4 | (20.8 | ) | ||||||
Other comprehensive income (loss) | $ | (26.6 | ) | $ | 4.4 | $ | (22.2 | ) |
Foreign currency translation adjustment | Valuation of derivative securities | Total | |||||||||
Balance, as of December 31, 2016 | $ | 0.6 | $ | (26.9 | ) | $ | (26.3 | ) | |||
Other comprehensive income | 2.6 | 1.3 | 3.9 | ||||||||
Balance, as of September 30, 2017 | $ | 3.2 | $ | (25.6 | ) | $ | (22.4 | ) |
• | Overview provides a brief description of our Affiliates, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income or ENI. This section also provides a Summary Results of Operations and information regarding our Assets Under Management by Affiliate and strategy, and net flows by asset class, client type and client location. |
• | U.S. GAAP Results of Operations for the three and nine months ended September 30, 2017 and 2016 includes an explanation of changes in our U.S. GAAP revenue, expense, and other items for the three and nine months ended September 30, 2017 and 2016 as well as key U.S. GAAP operating metrics. |
• | Non-GAAP Supplemental Performance Measure - Economic Net Income includes an explanation of the key differences between U.S. GAAP net income and ENI, the key measure management uses to evaluate our performance. This section also provides a reconciliation between U.S. GAAP net income attributable to controlling interests and ENI for the three and nine months ended September 30, 2017 and 2016 as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses. In addition, this section provides key non-GAAP operating metrics and a calculation of tax on economic net income. |
• | Capital Resources and Liquidity discusses our key balance sheet data. This section also discusses Adjusted EBITDA; Cash Flows from the business; Future Capital Needs; and Long-Term Debt. The discussion of Adjusted EBITDA includes an explanation of how we calculate Adjusted EBITDA and a reconciliation of U.S. GAAP net income attributable to controlling interests to Adjusted EBITDA. |
• | Critical Accounting Policies and Estimates provides a discussion of the key accounting policies used in the preparation of our U.S. GAAP financial statements. |
• | Acadian Asset Management LLC (“Acadian”)—a leading quantitatively-oriented manager of active global and international equity, and alternative strategies. |
• | Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”)—a widely recognized value-oriented investment manager of U.S., international and global equities, fixed income and a range of balanced investment management strategies. |
• | Campbell Global, LLC (“Campbell Global”)—a leading sustainable timber and natural resource investment manager that seeks to deliver superior investment performance by focusing on unique acquisition opportunities, client objectives and disciplined management. |
• | Copper Rock Capital Partners LLC (“Copper Rock”)—a specialized growth equity investment manager of small-cap international, global and emerging markets equity strategies. |
• | Heitman LLC (“Heitman”)(1)(2)—a leading real estate investment manager of high-quality global strategies focused on private real estate equity, public real estate securities and real estate debt. |
• | Investment Counselors of Maryland, LLC (“ICM”)(1)—a value-driven domestic equity manager with product offerings across the entire capitalization range and a primary focus on small-cap companies. |
• | Landmark Partners, LLC (“Landmark”)—a leading global secondary private equity, real estate and real asset investment firm. |
• | Thompson, Siegel & Walmsley LLC (“TSW”)—a value-oriented investment manager focused on small- and mid-cap U.S. equity, international equity and fixed income strategies. |
(1) | Accounted for under the equity method of accounting. |
(2) | We have executed a non-binding term sheet to sell our stake in Heitman LLC to Heitman’s management for cash consideration totaling $110 million. We have therefore presented operational information (including AUM and flow data) excluding Heitman for periods beginning in the third quarter of 2017 (Heitman remains in operational information for the first half of 2017). Under U.S. GAAP, financial results will continue to include Heitman until the transaction closes around year-end. We will retain our co-investment interests in Heitman-managed funds as well as any carried interest associated with these investments. |
($ in millions, unless otherwise noted) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||
2017 | 2016 | 2017 vs. 2016 | 2017 | 2016 | 2017 vs. 2016 | ||||||||||||||||||
U.S. GAAP Basis | |||||||||||||||||||||||
Revenue | $ | 223.2 | $ | 170.8 | $ | 52.4 | $ | 638.2 | $ | 476.9 | $ | 161.3 | |||||||||||
Pre-tax income from continuing operations attributable to controlling interests | 13.6 | 41.7 | (28.1 | ) | 54.6 | 133.7 | (79.1 | ) | |||||||||||||||
Net income from continuing operations attributable to controlling interests | 18.7 | 34.4 | (15.7 | ) | 53.1 | 99.9 | (46.8 | ) | |||||||||||||||
Net income attributable to controlling interests | 18.7 | 34.0 | (15.3 | ) | 53.0 | 101.1 | (48.1 | ) | |||||||||||||||
U.S. GAAP operating margin(1) | 3.7 | % | 23.5 | % | n/m | 7.0 | % | 26.3 | % | n/m | |||||||||||||
Earnings per share, basic ($) | $ | 0.17 | $ | 0.28 | $ | (0.11 | ) | $ | 0.47 | $ | 0.84 | $ | (0.37 | ) | |||||||||
Earnings per share, diluted ($) | $ | 0.17 | $ | 0.28 | $ | (0.11 | ) | $ | 0.47 | $ | 0.84 | $ | (0.37 | ) | |||||||||
Basic shares outstanding (in millions) | 109.0 | 119.3 | (10.3 | ) | 111.3 | 119.6 | (8.3 | ) | |||||||||||||||
Diluted shares outstanding (in millions) | 109.7 | 119.7 | (10.0 | ) | 111.9 | 119.8 | (7.9 | ) | |||||||||||||||
Economic Net Income Basis(2)(3) | |||||||||||||||||||||||
(Non-GAAP measure used by management) | |||||||||||||||||||||||
ENI revenue(4) | $ | 228.2 | $ | 175.8 | $ | 52.4 | $ | 648.4 | $ | 488.7 | $ | 159.7 | |||||||||||
Pre-tax economic net income(5) | 64.2 | 49.4 | 14.8 | 179.6 | 140.2 | 39.4 | |||||||||||||||||
Adjusted EBITDA | 72.0 | 55.4 | 16.6 | 202.5 | 151.0 | 51.5 | |||||||||||||||||
ENI operating margin(6) | 38.9 | % | 36.5 | % | 235 bps | 37.8 | % | 35.4 | % | 245 bps | |||||||||||||
Economic net income(7) | 46.7 | 38.0 | 8.7 | 132.2 | 106.2 | 26.0 | |||||||||||||||||
ENI diluted EPS | $ | 0.43 | $ | 0.32 | $ | 0.11 | $ | 1.18 | $ | 0.89 | $ | 0.29 | |||||||||||
Other Operational Information(8) | |||||||||||||||||||||||
Assets under management (AUM) at period end (in billions) | $ | 235.9 | $ | 234.2 | $ | 1.7 | $ | 235.9 | $ | 234.2 | $ | 1.7 | |||||||||||
Net client cash flows (in billions) | 0.5 | (2.6 | ) | 3.1 | (2.3 | ) | (3.1 | ) | 0.8 | ||||||||||||||
Annualized revenue impact of net flows (in millions)(9) | 12.2 | (7.5 | ) | 19.7 | 26.1 | (3.6 | ) | 29.7 |
(1) | U.S. GAAP operating margin equals operating income from continuing operations divided by total revenue. Our U.S. GAAP operating margin is not significantly impacted by the effect of consolidated Funds for the three and nine months ended September 30, 2017. |
(2) | Economic net income is a non-GAAP measure we use to evaluate the performance of our business. For a reconciliation to U.S. GAAP financial information and a further discussion of economic net income refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income.” |
(3) | Excludes restructuring charges associated with the CEO transition amounting to $0.2 million ($0.1 million after taxes) for the three months ended September 30, 2017 and $9.5 million ($5.5 million after taxes) for the nine months ended September 30, 2017. |
(4) | ENI revenue is the ENI measure which corresponds to U.S. GAAP revenue. |
(5) | Pre-tax economic net income is the ENI measure which corresponds to U.S. GAAP pre-tax income from continuing operations attributable to controlling interests. |
(6) | ENI operating margin is a non-GAAP efficiency measure, calculated based on ENI operating earnings divided by ENI revenue. The ENI operating margin corresponds to our U.S. GAAP operating margin, excluding the effect of consolidated Funds. |
(7) | Economic net income is the ENI measure which corresponds to U.S. GAAP net income from continuing operations attributable to controlling interests. |
(8) | As previously disclosed, in August 2017 we executed a non-binding term sheet to sell our stake in Heitman LLC to Heitman’s management. Operational information (including AUM and flow data) excludes Heitman for periods beginning in the third quarter of 2017 (Heitman remains in operational information for the first half of 2017). Under U.S. GAAP, financial results will continue to include Heitman until the transaction closes around year-end. Including Heitman, AUM, net flows, and Annualized revenue impact of net flows were $268.2 billion, $(0.4) billion, and $10.3 million for the three months ended September 30, 2017, respectively, and $268.2 billion, $(3.2) billion, and $24.2 million for the nine months ended September 30, 2017, respectively. |
(9) | Annualized revenue impact of net flows represents the difference between annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts, less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts, including equity-accounted Affiliates. The annualized management fees are calculated by multiplying the annual gross fee rate for the relevant account by the net assets gained in the account in the event of a positive flow, excluding any current or future market appreciation or depreciation, or the net assets lost in the account in the event of an outflow, excluding any current or future market appreciation or depreciation. For a further discussion of the uses and limitations of the annualized revenue impact of net flows, see "Assets Under Management" herein. |
($ in billions) | September 30, 2017 | December 31, 2016 | ||||||
Acadian Asset Management | $ | 92.8 | $ | 75.0 | ||||
Barrow, Hanley, Mewhinney & Strauss | 92.4 | 92.3 | ||||||
Campbell Global | 5.2 | 5.2 | ||||||
Copper Rock Capital Partners | 6.0 | 5.1 | ||||||
Investment Counselors of Maryland | 2.0 | 2.0 | ||||||
Landmark Partners | 13.4 | 9.7 | ||||||
Thompson, Siegel & Walmsley | 24.1 | 19.9 | ||||||
Total assets under management excluding Heitman | 235.9 | * | 209.2 | |||||
Heitman | 32.3 | 31.2 | ||||||
Total assets under management including Heitman | $ | 268.2 | $ | 240.4 | * |
i. | U.S. equity, which includes small cap through large cap securities and substantially value or blended investment styles; |
ii. | Global/non-U.S. equity, which includes global and international equities including emerging markets; |
iii. | Fixed income, which includes government bonds, corporate bonds and other fixed income investments in the United States; and |
iv. | Alternatives, which consist of real estate, timberland investments, secondary Funds and other alternative investments. |
($ in billions) | September 30, 2017 | December 31, 2016 | ||||||
U.S. equity, small/smid cap value | $ | 7.6 | $ | 7.9 | ||||
U.S. equity, mid cap value | 12.7 | 11.3 | ||||||
U.S. equity, large cap value | 57.0 | 59.2 | ||||||
U.S. equity, core/blend | 3.2 | 3.6 | ||||||
Total U.S. equity | 80.5 | 82.0 | ||||||
Global equity | 38.7 | 32.3 | ||||||
International equity | 54.6 | 42.5 | ||||||
Emerging markets equity | 28.0 | 21.6 | ||||||
Total global/non-U.S. equity | 121.3 | 96.4 | ||||||
Fixed income | 13.4 | 13.9 | ||||||
Alternatives(1) | 20.7 | 48.1 | ||||||
Total assets under management | $ | 235.9 | $ | 240.4 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
($ in billions, unless otherwise noted) | 2017 | 2016 | 2017 | 2016 | |||||||||||
U.S. equity | |||||||||||||||
Beginning balance | $ | 81.3 | $ | 78.6 | $ | 82.0 | $ | 76.9 | |||||||
Gross inflows | 0.9 | 1.3 | 3.4 | 5.4 | |||||||||||
Gross outflows | (3.3 | ) | (4.2 | ) | (11.5 | ) | (10.1 | ) | |||||||
Net flows | (2.4 | ) | (2.9 | ) | (8.1 | ) | (4.7 | ) | |||||||
Market appreciation | 1.6 | 2.8 | 6.6 | 5.8 | |||||||||||
Other | — | — | — | 0.5 | |||||||||||
Ending balance | $ | 80.5 | $ | 78.5 | $ | 80.5 | $ | 78.5 | |||||||
Average AUM | $ | 80.3 | $ | 79.2 | $ | 81.2 | $ | 77.9 | |||||||
Average AUM of consolidated Affiliates | $ | 78.4 | $ | 77.4 | $ | 79.3 | $ | 76.1 | |||||||
Global / non-U.S. equity | |||||||||||||||
Beginning balance | $ | 112.9 | $ | 89.0 | $ | 96.4 | $ | 84.8 | |||||||
Gross inflows | 4.1 | 3.8 | 13.2 | 10.2 | |||||||||||
Gross outflows | (2.8 | ) | (3.0 | ) | (10.5 | ) | (6.9 | ) | |||||||
Net flows | 1.3 | 0.8 | 2.7 | 3.3 | |||||||||||
Market appreciation | 7.1 | 5.7 | 22.2 | 7.0 | |||||||||||
Other | — | — | — | 0.4 | |||||||||||
Ending balance | $ | 121.3 | $ | 95.5 | $ | 121.3 | $ | 95.5 | |||||||
Average AUM(1) | $ | 117.8 | $ | 93.1 | $ | 109.7 | $ | 88.5 | |||||||
Fixed income | |||||||||||||||
Beginning balance | $ | 13.2 | $ | 14.3 | $ | 13.9 | $ | 13.8 | |||||||
Gross inflows | 0.3 | 0.4 | 1.1 | 0.9 | |||||||||||
Gross outflows | (0.2 | ) | (0.6 | ) | (2.3 | ) | (1.8 | ) | |||||||
Net flows | 0.1 | (0.2 | ) | (1.2 | ) | (0.9 | ) | ||||||||
Market appreciation | 0.1 | 0.3 | 0.7 | 1.5 | |||||||||||
Ending balance | $ | 13.4 | $ | 14.4 | $ | 13.4 | $ | 14.4 | |||||||
Average AUM(1) | $ | 13.3 | $ | 14.3 | $ | 13.4 | $ | 14.1 | |||||||
Alternatives(2) | |||||||||||||||
Beginning balance | $ | 51.4 | $ | 36.9 | $ | 48.1 | $ | 36.9 | |||||||
Acquisition (removal) of Affiliates | (32.4 | ) | 8.8 | (32.4 | ) | 8.8 | |||||||||
Gross inflows | 2.0 | 1.0 | 5.9 | 3.5 | |||||||||||
Gross outflows | (0.1 | ) | (0.3 | ) | (0.9 | ) | (1.0 | ) | |||||||
Hard asset disposals | (0.4 | ) | (1.0 | ) | (0.7 | ) | (3.3 | ) | |||||||
Net flows | 1.5 | (0.3 | ) | 4.3 | (0.8 | ) | |||||||||
Market appreciation | 0.2 | 0.4 | 0.7 | 1.7 | |||||||||||
Other | — | — | — | (0.8 | ) | ||||||||||
Ending balance | $ | 20.7 | $ | 45.8 | $ | 20.7 | $ | 45.8 | |||||||
Average AUM | $ | 19.6 | $ | 41.5 | $ | 39.8 | $ | 38.7 | |||||||
Average AUM of consolidated Affiliates | $ | 19.6 | $ | 11.0 | $ | 18.5 | $ | 8.4 | |||||||
Total(3) | |||||||||||||||
Beginning balance | $ | 258.8 | $ | 218.8 | $ | 240.4 | $ | 212.4 | |||||||
Acquisition (removal) of Affiliates | (32.4 | ) | 8.8 | (32.4 | ) | 8.8 | |||||||||
Gross inflows | 7.3 | 6.5 | 23.6 | 20.0 | |||||||||||
Gross outflows | (6.4 | ) | (8.1 | ) | (25.2 | ) | (19.8 | ) | |||||||
Hard asset disposals | (0.4 | ) | (1.0 | ) | (0.7 | ) | (3.3 | ) | |||||||
Net flows | 0.5 | (2.6 | ) | (2.3 | ) | (3.1 | ) | ||||||||
Market appreciation | 9.0 | 9.2 | 30.2 | 16.0 | |||||||||||
Other | — | — | — | 0.1 | |||||||||||
Ending balance | $ | 235.9 | $ | 234.2 | $ | 235.9 | $ | 234.2 | |||||||
Average AUM | $ | 231.0 | $ | 228.1 | $ | 244.1 | $ | 219.2 | |||||||
Average AUM of consolidated Affiliates | $ | 229.1 | $ | 195.8 | $ | 220.9 | $ | 187.1 | |||||||
Annualized basis points: inflows | 54.2 | 41.5 | 49.6 | 40.8 | |||||||||||
Annualized basis points: outflows | 40.2 | 37.9 | 35.1 | 36.9 | |||||||||||
Annualized revenue impact of net flows ($ in millions) | $ | 12.2 | $ | (7.5 | ) | $ | 26.1 | $ | (3.6 | ) |
(1) | Average AUM equals average AUM of consolidated Affiliates. |
(2) | Reflects removal of Heitman in Q3’17. Including Heitman, alternative net flows, market appreciation, average AUM and ending AUM would be $0.6 billion, $1.0 billion, $52.2 billion, and $53.0 billion, respectively, for the three months ended September 30, 2017 and $3.4 billion, $1.5 billion, $50.5 billion and $53.0 billion, respectively, for the nine months ended September 30, 2017. |
(3) | Including Heitman, total net flows, market appreciation, average AUM and ending AUM would be $(0.4) billion, $9.8 billion, $263.6 billion, and $268.2 billion, respectively, for the three months ended September 30, 2017 and $(3.2) billion, $31.0 billion, $254.8 billion and $268.2 billion, respectively, for the nine months ended September 30, 2017. |
i. | Sub-advisory, which includes assets managed for underlying mutual fund and variable insurance products which are sponsored by insurance companies and mutual fund platforms, where the end client is typically retail; |
ii. | Institutional, which includes assets managed for public/government pension funds, including U.S. state and local government funds and non-U.S. sovereign wealth, local government and national pension funds; also includes corporate and union-sponsored pension plans; and |
iii. | Retail/other, which includes assets managed for mutual funds sponsored by our Affiliates, defined contribution plans and accounts managed for high net worth clients. |
($ in billions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2017(1) | 2016 | 2017(1) | 2016 | ||||||||||||
Sub-advisory(2) | |||||||||||||||
Beginning balance | $ | 80.7 | $ | 71.5 | $ | 75.9 | $ | 69.0 | |||||||
Acquisition (removal) of Affiliates | (3.0 | ) | — | (3.0 | ) | — | |||||||||
Gross inflows | 2.0 | 2.2 | 6.9 | 7.9 | |||||||||||
Gross outflows | (2.3 | ) | (3.8 | ) | (9.1 | ) | (9.3 | ) | |||||||
Net flows | (0.3 | ) | (1.6 | ) | (2.2 | ) | (1.4 | ) | |||||||
Market appreciation | 2.0 | 2.8 | 8.7 | 4.8 | |||||||||||
Other | — | — | — | 0.3 | |||||||||||
Ending balance | $ | 79.4 | $ | 72.7 | $ | 79.4 | $ | 72.7 | |||||||
Institutional(3) | |||||||||||||||
Beginning balance | $ | 167.1 | $ | 137.3 | $ | 154.1 | $ | 133.8 | |||||||
Acquisition (removal) of Affiliates | (29.0 | ) | 8.6 | (29.0 | ) | 8.6 | |||||||||
Gross inflows | 5.0 | 3.9 | 15.3 | 10.8 | |||||||||||
Gross outflows | (3.7 | ) | (3.5 | ) | (14.7 | ) | (8.4 | ) | |||||||
Hard asset disposals | (0.4 | ) | (1.0 | ) | (0.7 | ) | (3.3 | ) | |||||||
Net flows | 0.9 | (0.6 | ) | (0.1 | ) | (0.9 | ) | ||||||||
Market appreciation | 6.7 | 5.9 | 20.7 | 10.3 | |||||||||||
Other | — | — | — | (0.6 | ) | ||||||||||
Ending balance | $ | 145.7 | $ | 151.2 | $ | 145.7 | $ | 151.2 | |||||||
Retail/Other(4) | |||||||||||||||
Beginning balance | $ | 11.0 | $ | 10.0 | $ | 10.4 | $ | 9.6 | |||||||
Acquisition (removal) of Affiliates | (0.4 | ) | 0.2 | (0.4 | ) | 0.2 | |||||||||
Gross inflows | 0.3 | 0.4 | 1.4 | 1.3 | |||||||||||
Gross outflows | (0.4 | ) | (0.8 | ) | (1.4 | ) | (2.1 | ) | |||||||
Net flows | (0.1 | ) | (0.4 | ) | — | (0.8 | ) | ||||||||
Market appreciation | 0.3 | 0.5 | 0.8 | 0.9 | |||||||||||
Other | — | — | — | 0.4 | |||||||||||
Ending balance | $ | 10.8 | $ | 10.3 | $ | 10.8 | $ | 10.3 | |||||||
Total(5) | |||||||||||||||
Beginning balance | $ | 258.8 | $ | 218.8 | $ | 240.4 | $ | 212.4 | |||||||
Acquisition (removal) of Affiliates | (32.4 | ) | 8.8 | (32.4 | ) | 8.8 | |||||||||
Gross inflows | 7.3 | 6.5 | 23.6 | 20.0 | |||||||||||
Gross outflows | (6.4 | ) | (8.1 | ) | (25.2 | ) | (19.8 | ) | |||||||
Hard asset disposals | (0.4 | ) | (1.0 | ) | (0.7 | ) | (3.3 | ) | |||||||
Net flows | 0.5 | (2.6 | ) | (2.3 | ) | (3.1 | ) | ||||||||
Market appreciation | 9.0 | 9.2 | 30.2 | 16.0 | |||||||||||
Other | — | — | — | 0.1 | |||||||||||
Ending balance | $ | 235.9 | $ | 234.2 | $ | 235.9 | $ | 234.2 |
(1) | Amounts reported reflect the removal of Heitman in the third quarter of 2017. |
(2) | Including Heitman, sub-advisory net flows, market appreciation and ending AUM would be $(0.4) billion, $2.2 billion and $82.5 billion, respectively, for the three months ended September 30, 2017 and $(2.3) billion, $8.9 billion and $82.5 billion, respectively, for the nine months ended September 30, 2017. |
(3) | Including Heitman, institutional net flows, market appreciation and ending AUM would be $0.1 billion, $7.3 billion and $174.5 billion, respectively, for the three months ended September 30, 2017 and $(0.9) billion, $21.3 billion and $174.5 billion, respectively, for the nine months ended September 30, 2017. |
(4) | Including Heitman, retail/other net flows, market appreciation and ending AUM would be $(0.1) billion, $0.3 billion and $11.2 billion, respectively, for the three months ended September 30, 2017 and $0.0 billion, $0.8 billion and $11.2 billion, respectively, for the nine months ended September 30, 2017. |
(5) | Including Heitman, total net flows, market appreciation and ending AUM would be $(0.4) billion, $9.8 billion and $268.2 billion, respectively, for the three months ended September 30, 2017 and $(3.2) billion, $31.0 billion and $268.2 billion, respectively, for the nine months ended September 30, 2017. |
i. | U.S.-based clients, where the contracting client is based in the United States, and |
ii. | Non-U.S.-based clients, where the contracting client is based outside the United States. |
($ in billions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
2017(1) | 2016 | 2017(1) | 2016 | ||||||||||||
U.S.(2) | |||||||||||||||
Beginning balance | $ | 205.2 | $ | 175.0 | $ | 191.6 | $ | 171.8 | |||||||
Acquisition (removal) of Affiliates | (25.5 | ) | 7.4 | (25.5 | ) | 7.4 | |||||||||
Gross inflows | 4.7 | 5.1 | 17.6 | 14.3 | |||||||||||
Gross outflows | (5.0 | ) | (7.1 | ) | (20.3 | ) | (17.1 | ) | |||||||
Hard asset disposals | (0.3 | ) | (0.6 | ) | (0.4 | ) | (2.3 | ) | |||||||
Net flows | (0.6 | ) | (2.6 | ) | (3.1 | ) | (5.1 | ) | |||||||
Market appreciation | 6.6 | 7.4 | 22.7 | 13.0 | |||||||||||
Other | — | — | — | 0.1 | |||||||||||
Ending balance | $ | 185.7 | $ | 187.2 | $ | 185.7 | $ | 187.2 | |||||||
Non-U.S.(3) | |||||||||||||||
Beginning balance | $ | 53.6 | $ | 43.8 | $ | 48.8 | $ | 40.6 | |||||||
Acquisition (removal) of Affiliates | (6.9 | ) | 1.4 | (6.9 | ) | 1.4 | |||||||||
Gross inflows | 2.6 | 1.4 | 6.0 | 5.7 | |||||||||||
Gross outflows | (1.4 | ) | (1.0 | ) | (4.9 | ) | (2.7 | ) | |||||||
Hard asset disposals | (0.1 | ) | (0.4 | ) | (0.3 | ) | (1.0 | ) | |||||||
Net flows | 1.1 | — | 0.8 | 2.0 | |||||||||||
Market appreciation | 2.4 | 1.8 | 7.5 | 3.0 | |||||||||||
Ending balance | $ | 50.2 | $ | 47.0 | $ | 50.2 | $ | 47.0 | |||||||
Total(4) | |||||||||||||||
Beginning balance | $ | 258.8 | $ | 218.8 | $ | 240.4 | $ | 212.4 | |||||||
Acquisition (removal) of Affiliates | (32.4 | ) | 8.8 | (32.4 | ) | 8.8 | |||||||||
Gross inflows | 7.3 | 6.5 | 23.6 | 20.0 | |||||||||||
Gross outflows | (6.4 | ) | (8.1 | ) | (25.2 | ) | (19.8 | ) | |||||||
Hard asset disposals | (0.4 | ) | (1.0 | ) | (0.7 | ) | (3.3 | ) | |||||||
Net flows | 0.5 | (2.6 | ) | (2.3 | ) | (3.1 | ) | ||||||||
Market appreciation | 9.0 | 9.2 | 30.2 | 16.0 | |||||||||||
Other | — | — | — | 0.1 | |||||||||||
Ending balance | $ | 235.9 | $ | 234.2 | $ | 235.9 | $ | 234.2 |
(1) | Amounts reported reflect the removal of Heitman in the third quarter of 2017. |
(2) | Including Heitman, U.S. net flows, market appreciation and ending AUM would be $(0.6) billion, $7.3 billion and $211.9 billion, respectively, for the three months ended September 30, 2017 and $(3.1) billion, $23.4 billion and $211.9 billion, respectively, for the nine months ended September 30, 2017. |
(3) | Including Heitman, non-U.S. net flows, market appreciation and ending AUM would be $0.2 billion, $2.5 billion and $56.3 billion, respectively, for the three months ended September 30, 2017 and $(0.1) billion, $7.6 billion and $56.3 billion, respectively, for the nine months ended September 30, 2017. |
(4) | Including Heitman, total net flows, market appreciation and ending AUM would be $(0.4) billion, $9.8 billion and $268.2 billion, respectively, for the three months ended September 30, 2017 and $(3.2) billion, $31.0 billion and $268.2 billion, respectively, for the nine months ended September 30, 2017. |
($ in billions) | Including Heitman, for periods ending September 30, 2017 | ||||||
Three Months | Nine Months | ||||||
Beginning AUM | $ | 258.8 | $ | 240.4 | |||
Gross inflows | 7.8 | 24.1 | |||||
Gross outflows | (6.6 | ) | (25.4 | ) | |||
Net flows before hard asset disposals | 1.2 | (1.3 | ) | ||||
Hard asset disposals | (1.6 | ) | (1.9 | ) | |||
Net flows | (0.4 | ) | (3.2 | ) | |||
Market appreciation | 9.8 | 31.0 | |||||
Ending AUM | $ | 268.2 | $ | 268.2 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
($ in millions) | 2017 | 2016 | Increase (Decrease) | 2017 | 2016 | Increase (Decrease) | |||||||||||||||||
U.S. GAAP Statement of Operations | |||||||||||||||||||||||
Management fees | $ | 221.7 | $ | 171.8 | $ | 49.9 | $ | 624.1 | $ | 478.5 | $ | 145.6 | |||||||||||
Performance fees | 0.7 | (1.1 | ) | 1.8 | 12.1 | (1.9 | ) | 14.0 | |||||||||||||||
Other revenue | 0.1 | 0.1 | — | 0.6 | 0.3 | 0.3 | |||||||||||||||||
Consolidated Funds’ revenue | 0.7 | — | 0.7 | 1.4 | — | 1.4 | |||||||||||||||||
Total revenue | 223.2 | 170.8 | 52.4 | 638.2 | 476.9 | 161.3 | |||||||||||||||||
Compensation and benefits | 182.2 | 100.0 | 82.2 | 498.4 | 272.1 | 226.3 | |||||||||||||||||
General and administrative expense | 27.6 | 27.2 | 0.4 | 80.9 | 71.7 | 9.2 | |||||||||||||||||
Amortization of acquired intangibles | 1.6 | 0.9 | 0.7 | 4.9 | 1.0 | 3.9 | |||||||||||||||||
Depreciation and amortization | 3.2 | 2.5 | 0.7 | 8.5 | 6.9 | 1.6 | |||||||||||||||||
Consolidated Funds’ expense | 0.3 | — | 0.3 | 0.8 | — | 0.8 | |||||||||||||||||
Total expenses | 214.9 | 130.6 | 84.3 | 593.5 | 351.7 | 241.8 | |||||||||||||||||
Operating income | 8.3 | 40.2 | (31.9 | ) | 44.7 | 125.2 | (80.5 | ) | |||||||||||||||
Investment income | 9.4 | 5.6 | 3.8 | 20.5 | 13.6 | 6.9 | |||||||||||||||||
Interest income | 0.1 | 0.3 | (0.2 | ) | 0.5 | 0.3 | 0.2 | ||||||||||||||||
Interest expense | (6.4 | ) | (4.4 | ) | (2.0 | ) | (18.2 | ) | (5.4 | ) | (12.8 | ) | |||||||||||
Net consolidated Funds’ investment gains | 3.4 | — | 3.4 | 9.9 | — | 9.9 | |||||||||||||||||
Income from continuing operations before taxes | 14.8 | 41.7 | (26.9 | ) | 57.4 | 133.7 | (76.3 | ) | |||||||||||||||
Income tax expense (benefit) | (5.1 | ) | 7.3 | (12.4 | ) | 1.5 | 33.8 | (32.3 | ) | ||||||||||||||
Income from continuing operations | 19.9 | 34.4 | (14.5 | ) | 55.9 | 99.9 | (44.0 | ) | |||||||||||||||
Gain (loss) on disposal of discontinued operations, net of tax | — | (0.4 | ) | 0.4 | (0.1 | ) | 1.2 | (1.3 | ) | ||||||||||||||
Net income | 19.9 | 34.0 | (14.1 | ) | 55.8 | 101.1 | (45.3 | ) | |||||||||||||||
Net income attributable to non-controlling interests in consolidated Funds | 1.2 | — | 1.2 | 2.8 | — | 2.8 | |||||||||||||||||
Net income attributable to controlling interests | $ | 18.7 | $ | 34.0 | $ | (15.3 | ) | $ | 53.0 | $ | 101.1 | $ | (48.1 | ) | |||||||||
Basic earnings per share ($) | $ | 0.17 | $ | 0.28 | $ | (0.11 | ) | $ | 0.47 | $ | 0.84 | $ | (0.37 | ) | |||||||||
Diluted earnings per share ($) | 0.17 | 0.28 | (0.11 | ) | 0.47 | 0.84 | (0.37 | ) | |||||||||||||||
Weighted average basic ordinary shares outstanding | 109.0 | 119.3 | (10.3 | ) | 111.3 | 119.6 | (8.3 | ) | |||||||||||||||
Weighted average diluted ordinary shares outstanding | 109.7 | 119.7 | (10.0 | ) | 111.9 | 119.8 | (7.9 | ) | |||||||||||||||
U.S. GAAP operating margin(1) | 3.7 | % | 23.5 | % | 7.0 | % | 26.3 | % |
($ in millions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
U.S. GAAP Statement of Operations | 2017 | 2016 | 2017 | 2016 | |||||||||||
Net income attributable to controlling interests | $ | 18.7 | $ | 34.0 | $ | 53.0 | $ | 101.1 | |||||||
Exclude: (Gain) loss on disposal of discontinued operations, net of tax | — | 0.4 | 0.1 | (1.2 | ) | ||||||||||
Net income from continuing operations attributable to controlling interests | 18.7 | 34.4 | 53.1 | 99.9 | |||||||||||
Add: Income tax expense (benefit) | (5.1 | ) | 7.3 | 1.5 | 33.8 | ||||||||||
Pre-tax income from continuing operations attributable to controlling interests | $ | 13.6 | $ | 41.7 | $ | 54.6 | $ | 133.7 |
i. | management fees earned based on our overall weighted average fee rate charged to our clients and the level of assets under management; |
ii. | performance fees earned or management fee adjustments when our Affiliates’ investment performance over agreed time periods for certain clients has differed from pre-determined hurdles; |
iii. | other revenue, consisting primarily of marketing, distribution and consulting services; and |
iv. | revenue from consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds. |
($ in millions, except AUM data in billions) | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||||||||||||||
Revenue | Basis Pts | Revenue | Basis Pts | Revenue | Basis Pts | Revenue | Basis Pts | ||||||||||||||||||||
U.S. equity | $ | 47.2 | 24 | $ | 47.6 | 24 | $ | 144.9 | 24 | $ | 139.7 | 25 | |||||||||||||||
Global/non-U.S. equity | 121.5 | 41 | 96.6 | 42 | 339.3 | 41 | 277.0 | 42 | |||||||||||||||||||
Fixed income | 6.9 | 21 | 7.5 | 21 | 20.8 | 21 | 21.9 | 21 | |||||||||||||||||||
Alternatives | 46.1 | 93 | 20.1 | 73 | 119.1 | 86 | 39.9 | 64 | |||||||||||||||||||
U.S. GAAP management fee revenue & weighted average fee rate on average AUM of consolidated Affiliates(1) | $ | 221.7 | 38.4 | $ | 171.8 | 34.9 | $ | 624.1 | 37.8 | $ | 478.5 | 34.2 | |||||||||||||||
Average AUM excluding equity-accounted Affiliates | $ | 229.1 | $ | 195.8 | $ | 220.9 | $ | 187.1 | |||||||||||||||||||
Average AUM including equity-accounted Affiliates & weighted average fee rate(2) | $ | 231.0 | 38.6 | $ | 228.1 | 35.7 | $ | 244.1 | 38.0 | $ | 219.2 | 35.2 |
(1) | Amounts shown are equivalent to ENI management fee revenue. (See “ENI Revenues”) |
(2) | Average AUM including equity-accounted Affiliates excludes Heitman as of the beginning of the third quarter, 2017. |
AUM of consolidated Affiliates at September 30, 2017 ($ in billions) | Management fees for the nine months ended September 30, 2017 ($ in millions) | Performance fees for the nine months ended September 30, 2017 ($ in millions) | ||||||||||||||||||||||||||||||||
Category | Total | AUM of accounts without perfor-mance fees | AUM of accounts with perfor-mance fees | Total | Accounts without perfor-mance fees | Accounts with perfor-mance fees | Total | As a % of total category fees among accounts with perfor-mance fees | As a % of total category fees (among all accounts) | |||||||||||||||||||||||||
Alternative products | $ | 20.7 | $ | 12.0 | * | $ | 8.7 | $ | 119.1 | $ | 70.3 | $ | 48.8 | $ | 10.6 | 17.8 | % | 8.2 | % | |||||||||||||||
Separate accounts/other products | 213.2 | 167.1 | 46.1 | 505.0 | 431.3 | 73.7 | 1.5 | 2.0 | % | 0.3 | % | |||||||||||||||||||||||
Total | $ | 233.9 | $ | 179.1 | $ | 54.8 | $ | 624.1 | $ | 501.6 | $ | 122.5 | $ | 12.1 | 9.0 | % | 1.9 | % |
* | Certain legacy Landmark Funds include a carried interest component in which we do not participate and which is not consolidated in our revenue. A majority of the $12.0 billion shown here includes such Funds managed by Landmark and any carried interest earned by these Funds is not attributable to us. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Gross performance fees | $ | 0.7 | $ | (1.1 | ) | $ | 12.1 | $ | (1.9 | ) | ||||||
Net performance fees(1) | $ | 1.0 | $ | (0.8 | ) | 6.2 | (1.1 | ) | ||||||||
Percentage of performance fees accruing to OMAM(2) | 142.9 | % | 72.7 | % | 51.2 | % | 57.9 | % | ||||||||
Gross performance fees as a percentage of total fees(3) | 0.3 | % | (0.6 | )% | 1.9 | % | (0.4 | )% |
(1) | Net performance fees are shown after the effect of contractual variable compensation and distributions to key employees of the Affiliates and represent the amount of the performance fee directly attributable to our shareholders. |
(2) | Reflects net performance fees as a percentage of gross performance fees. Net performance fees can be greater than gross performance fees when the Affiliate employees’ share of the negative performance fees are greater than the corresponding percentages of the positive fees earned. |
(3) | Total fees, comprised of management fees and performance fees, excluding the effect of consolidated Funds, were $222.4 million for the three months ended September 30, 2017, and $170.7 million for the three months ended September 30, 2016. Total fees were $636.2 million for the nine months ended September 30, 2017 and $476.6 million for the nine months ended September 30, 2016. |
i. | compensation paid to our investment professionals and other employees, including base salary, benefits, sales-based compensation, variable compensation, Affiliate distributions, revaluation of key employee owned Affiliate equity and profit interests, and the amortization of acquisition-related consideration and pre-acquisition employee equity; |
ii. | general and administrative expenses; |
iii. | amortization of acquired intangible assets; |
iv. | depreciation and amortization charges; and |
v. | expenses of consolidated Funds, the net cost of which is attributable to the holders of non-controlling interests. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Fixed compensation and benefits(1) | $ | 42.8 | $ | 36.3 | $ | 127.1 | $ | 105.7 | |||||||
Sales-based compensation(2) | 4.6 | 4.3 | 13.5 | 13.5 | |||||||||||
Variable compensation(3) | 61.5 | 45.7 | 182.6 | 124.1 | |||||||||||
Affiliate key employee distributions(4) | 19.9 | 11.3 | 51.3 | 28.8 | |||||||||||
Non-cash Affiliate key employee equity revaluations(5) | 35.8 | (6.4 | ) | 71.0 | (8.8 | ) | |||||||||
Acquisition-related consideration and pre-acquisition employee equity(6) | 17.6 | 8.8 | 52.9 | 8.8 | |||||||||||
Total U.S. GAAP compensation and benefits expense | $ | 182.2 | $ | 100.0 | $ | 498.4 | $ | 272.1 |
(1) | Fixed compensation and benefits include base salaries, payroll taxes and the cost of benefit programs provided. For the three and nine months ended September 30, 2017, $42.8 million and $126.6 million, respectively, of fixed compensation and benefits (of the $42.8 million and $127.1 million above) is included within economic net income, which excludes the compensation and benefits associated with the CEO transition costs. |
(2) | Sales-based compensation is paid to us and our Affiliates’ sales and distribution teams and represents compensation earned by our sales professionals, paid over a multi-year period, related to revenue earned on new sales. Its variability is based upon the structure of sales-based compensation due on inflows of assets under management in both current and prior periods. |
(3) | Variable compensation is contractually set and calculated individually at each Affiliate, plus Center bonuses. Variable compensation is usually awarded based on a contractual percentage of each Affiliate’s ENI profits before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests. In Affiliates with an agreed split of performance fees between Affiliate employees and OMAM, the Affiliates’ share of performance fees is allocated entirely to variable compensation. Center variable compensation includes cash and OMAM equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period. The variable compensation ratio at each Affiliate, calculated as variable compensation divided by ENI earnings before variable compensation, will typically be between 25% and 35%. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Cash variable compensation | $ | 56.8 | $ | 39.4 | $ | 162.2 | $ | 105.0 | |||||||
Non-cash equity-based award amortization | 4.7 | 6.3 | 20.4 | 19.1 | |||||||||||
Total variable compensation(a) | $ | 61.5 | $ | 45.7 | $ | 182.6 | $ | 124.1 |
(a) | For the three and nine months ended September 30, 2017, $61.5 million and $173.8 million, respectively, of variable compensation expense (of the $61.5 million and $182.6 million above) is included within economic net income, which excludes the variable compensation associated with the CEO transition costs. |
(4) | Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests. The Affiliate key employee distribution ratio at each Affiliate is calculated as Affiliate key employee distributions divided by ENI operating earnings at that Affiliate. At certain Affiliates, OMUS is entitled to an initial preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions, whereas for profits above the threshold the key employee distribution amount would be calculated based on the key employee economic percentages, which range from approximately 20% to 40% at our consolidated Affiliates. |
(5) | Non-cash Affiliate key employee equity revaluations represent changes in the value of Affiliate equity and profit interests held by Affiliate key employees. These ownership interests may in certain circumstances be repurchased by OMUS at a value based on a pre-determined fixed multiple of trailing earnings and as such this value is carried on our balance sheet as a liability. However, any equity or profit interests repurchased by OMUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our Affiliate equity and profit interest plans have been designed to ensure OMUS is not required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve month period. OMUS may also choose to retain repurchased Affiliate equity or profit interests, entitling us to an additional share of future Affiliate earnings that represents an unrecognized economic asset to us. |
(6) | Acquisition-related consideration and pre-acquisition employee equity represents the amortization of acquisition-related contingent consideration created as a result of the Landmark transaction. It also includes the value of employee equity owned pre-acquisition. These items have been included in U.S. GAAP compensation expense as a result of ongoing service requirements for employee recipients. |
i. | investment income; |
ii. | interest income; and |
iii. | interest expense. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Numerator: Operating income | $ | 8.3 | $ | 40.2 | $ | 44.7 | $ | 125.2 | |||||||
Denominator: Total revenue | $ | 223.2 | $ | 170.8 | $ | 638.2 | $ | 476.9 | |||||||
U.S. GAAP operating margin(1) | 3.7 | % | 23.5 | % | 7.0 | % | 26.3 | % | |||||||
Numerator: Total operating expenses(2) | $ | 214.6 | $ | 130.6 | $ | 592.7 | $ | 351.7 | |||||||
Denominator: Management fee revenue | $ | 221.7 | $ | 171.8 | $ | 624.1 | $ | 478.5 | |||||||
U.S. GAAP operating expense / management fee revenue(3) | 96.8 | % | 76.0 | % | 95.0 | % | 73.5 | % | |||||||
Numerator: Variable compensation | $ | 61.5 | $ | 45.7 | $ | 182.6 | $ | 124.1 | |||||||
Denominator: Operating income before variable compensation and Affiliate key employee distributions(2)(4)(5) | $ | 89.3 | $ | 97.2 | $ | 278.0 | $ | 278.1 | |||||||
U.S. GAAP variable compensation ratio(3) | 68.9 | % | 47.0 | % | 65.7 | % | 44.6 | % | |||||||
Numerator: Affiliate key employee distributions | $ | 19.9 | $ | 11.3 | $ | 51.3 | $ | 28.8 | |||||||
Denominator: Operating income before Affiliate key employee distributions(2)(4)(5) | $ | 27.8 | $ | 51.5 | $ | 95.4 | $ | 154.0 | |||||||
U.S. GAAP Affiliate key employee distributions ratio(3) | 71.6 | % | 21.9 | % | 53.8 | % | 18.7 | % |
(1) | Excluding the effect of Funds consolidation in the applicable periods, the U.S. GAAP operating margin is 3.6% for the three months ended September 30, 2017, 23.5% for the three months ended September 30, 2016, 6.9% for the nine months ended September 30, 2017 and 26.3% for the nine months ended September 30, 2016. |
(2) | Excludes consolidated Funds expense of $0.3 million and $0.8 million for the three and nine months ended September 30, 2017, respectively. We did not consolidate results from operations of any Funds in the three and nine months ended September 30, 2016. |
(3) | Excludes the effect of Funds consolidation for the three and nine months ended September 30, 2017. We did not consolidate results from operations of any Funds in the three and nine months ended September 30, 2016. |
(4) | Excludes consolidated Funds revenue of $0.7 million and $1.4 million for the three and nine months ended September 30, 2017, respectively. We did not consolidate results from operations of any Funds in the three and nine months ended September 30, 2016. |
(5) | The following table identifies the components of operating income before variable compensation and Affiliate key employee distributions, as well as operating income before Affiliate key employee distributions: |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating income | $ | 8.3 | $ | 40.2 | $ | 44.7 | $ | 125.2 | ||||||||
Affiliate key employee distributions | 19.9 | 11.3 | 51.3 | 28.8 | ||||||||||||
Operating income of consolidated Funds | (0.4 | ) | — | (0.6 | ) | — | ||||||||||
Operating income before Affiliate key employee distributions | 27.8 | 51.5 | 95.4 | 154.0 | ||||||||||||
Variable compensation | 61.5 | 45.7 | 182.6 | 124.1 | ||||||||||||
Operating income before variable compensation and Affiliate key employee distributions | $ | 89.3 | $ | 97.2 | $ | 278.0 | $ | 278.1 |
• | We exclude the effect of Funds consolidation by removing the portion of Fund revenues, expenses and investment return which were not attributable to our shareholders. |
• | We include within management fee revenue any fees paid to Affiliates by consolidated Funds, which are viewed as investment income under U.S. GAAP. |
• | We include our share of earnings from equity-accounted Affiliates within other income in ENI revenue, rather than investment income. |
• | We treat sales-based compensation as a general and administrative expense, rather than part of fixed compensation and benefits. |
• | We identify separately from operating expenses variable compensation and Affiliate key employee distributions, which represent Affiliate earnings shared with Affiliate key employees. |
i. | We exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees. These ownership interests may in certain circumstances be repurchased by OMUS at a value based on a pre-determined fixed multiple of trailing earnings and as such this value is carried on our balance sheet as a liability. Non-cash movements in the value of this liability are treated as compensation expense under U.S. GAAP. However, any equity or profit interests repurchased by OMUS can be used to fund a portion of future variable compensation awards, resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity. Our Affiliate equity and profit interest plans have been designed to ensure OMUS is never required to repurchase more equity than we can reasonably recycle through variable compensation awards in any given twelve month period. OMUS may also choose to retain repurchased Affiliate equity or profit interests, entitling us to an additional share of future Affiliate earnings that represents an unrecognized economic asset to us. |
ii. | We exclude non-cash amortization or impairment expenses related to acquired goodwill and other intangibles as these are non-cash charges that do not result in an outflow of tangible economic benefits from the business. We also exclude the amortization of acquisition-related contingent consideration, as well as the value of employee equity owned pre-acquisition, as occurred as a result of the Landmark transaction, where such items have been included in compensation expense as a result of ongoing service requirements for certain employees. Please note that the revaluations related to these acquisition-related items are included in (i) above. |
iii. | We exclude capital transaction costs, including the costs of raising debt or equity, gains or losses realized as a result of redeeming debt or equity and direct incremental costs associated with acquisitions of businesses or assets. |
iv. | We exclude seed capital and co-investment gains, losses and related financing costs. The net returns on these investments are considered and presented separately from ENI because ENI is primarily a measure of our earnings from managing client assets, which therefore differs from earnings generated by our investments in Affiliate products, which can be variable from period to period. |
v. | We include cash tax benefits associated with deductions allowed for acquired intangibles and goodwill that may not be recognized or have timing differences compared to U.S. GAAP. |
vi. | We exclude the results of discontinued operations attributable to controlling interests since they are not part of our ongoing business, and restructuring costs incurred in continuing operations which represent an exit from a distinct product or line of business. |
vii. | We exclude deferred tax resulting from changes in tax law and expiration of statutes, adjustments for uncertain tax positions, deferred tax attributable to intangible assets and other unusual items not related to current operating results to reflect ENI tax normalization. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
U.S. GAAP net income attributable to controlling interests | $ | 18.7 | $ | 34.0 | $ | 53.0 | $ | 101.1 | ||||||||
Adjustments to reflect the economic earnings of the Company: | ||||||||||||||||
i. | Non-cash key employee-owned equity and profit interest revaluations | 35.8 | (6.4 | ) | 71.0 | (8.8 | ) | |||||||||
ii. | Amortization of acquired intangible assets, acquisition-related consideration and pre-acquisition employee equity | 19.2 | 9.7 | 57.8 | 9.8 | |||||||||||
iii. | Capital transaction costs | — | 4.4 | — | 6.1 | |||||||||||
iv. | Seed/Co-investment (gains) losses and financings(1) | (4.7 | ) | 0.2 | (13.4 | ) | (0.5 | ) | ||||||||
v. | Tax benefit of goodwill and acquired intangibles deductions | 2.2 | 1.7 | 6.7 | 3.0 | |||||||||||
vi. | Discontinued operations and restructuring(2) | 0.3 | 0.4 | 9.7 | (1.2 | ) | ||||||||||
vii. | ENI tax normalization | (4.5 | ) | (2.9 | ) | (2.3 | ) | (0.7 | ) | |||||||
Tax effect of above adjustments, as applicable(3) | (20.3 | ) | (3.1 | ) | (50.3 | ) | (2.6 | ) | ||||||||
Economic net income | $ | 46.7 | $ | 38.0 | $ | 132.2 | $ | 106.2 |
(1) | The net return on seed/co-investment (gains) losses and financings for the three and nine months ended September 30, 2017 and 2016 is shown in the following table: |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | |||||||||||
Seed/Co-investment (gains) losses | $ | (6.3 | ) | $ | (0.6 | ) | $ | (16.6 | ) | $ | (1.8 | ) | |||
Financing costs: | |||||||||||||||
Seed/Co-investment average balance | 119.8 | 72.0 | 80.8 | 69.9 | |||||||||||
Blended interest rate* | 5.0 | % | 4.7 | % | 5.3 | % | 2.5 | % | |||||||
Financing costs | 1.6 | 0.8 | 3.2 | 1.3 | |||||||||||
Net seed/co-investment (gains) losses and financing | $ | (4.7 | ) | $ | 0.2 | $ | (13.4 | ) | $ | (0.5 | ) |
(2) | Included in restructuring in the three months ended September 30, 2017 is $0.2 million for CEO recruiting costs. Included in restructuring for the nine months ended September 30, 2017 is $9.5 million related to CEO transition costs, comprised of $0.5 million of fixed compensation and benefits, $8.8 million of variable compensation and $0.2 million of recruiting costs. |
(3) | Reflects the sum of line items i, ii, iii, iv and the restructuring component of line vi taxed at the 40.2% U.S. statutory rate (including state tax). |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
U.S. GAAP revenue | $ | 223.2 | $ | 170.8 | $ | 638.2 | $ | 476.9 | ||||||||
Include investment return on equity-accounted Affiliates | 5.7 | 5.0 | 11.2 | 11.8 | ||||||||||||
Exclude revenue from consolidated Funds attributable to non-controlling interests | (0.7 | ) | — | (1.4 | ) | — | ||||||||||
Other | — | — | 0.4 | — | ||||||||||||
ENI revenue | $ | 228.2 | $ | 175.8 | $ | 648.4 | $ | 488.7 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Management fees(1) | $ | 221.7 | $ | 171.8 | $ | 624.1 | $ | 478.5 | ||||||||
Performance fees(2) | 0.7 | (1.1 | ) | 12.1 | (1.9 | ) | ||||||||||
Other income, including equity-accounted Affiliates(3) | 5.8 | 5.1 | 12.2 | 12.1 | ||||||||||||
ENI revenue | $ | 228.2 | $ | 175.8 | $ | 648.4 | $ | 488.7 |
(1) | ENI management fees correspond to U.S. GAAP management fees. |
(2) | ENI performance fees correspond to U.S. GAAP performance fees. |
(3) | ENI other income is comprised primarily of other revenue under U.S. GAAP, plus our earnings from equity-accounted Affiliates of $5.7 million and $11.2 million for the three and nine months ended September 30, 2017, respectively, and $5.0 million and $11.8 million for the three and nine months ended September 30, 2016, respectively. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
U.S. GAAP other revenue | $ | 0.1 | $ | 0.1 | $ | 0.6 | $ | 0.3 | ||||||||
Income from equity-accounted Affiliates | 5.7 | 5.0 | 11.2 | 11.8 | ||||||||||||
Other reconciling items | — | — | 0.4 | — | ||||||||||||
ENI other income | $ | 5.8 | $ | 5.1 | $ | 12.2 | $ | 12.1 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
U.S. GAAP operating expense | $ | 214.9 | $ | 130.6 | $ | 593.5 | $ | 351.7 | ||||||||
Less: items excluded from economic net income | ||||||||||||||||
Acquisition-related consideration and pre-acquisition employee equity | (17.6 | ) | (8.8 | ) | (52.9 | ) | (8.8 | ) | ||||||||
Non-cash key employee equity and profit interest revaluations | (35.8 | ) | 6.4 | (71.0 | ) | 8.8 | ||||||||||
Amortization of acquired intangible assets | (1.6 | ) | (0.9 | ) | (4.9 | ) | (1.0 | ) | ||||||||
Capital transaction costs | — | (4.4 | ) | — | (6.1 | ) | ||||||||||
Restructuring costs(1) | (0.2 | ) | — | (9.5 | ) | — | ||||||||||
Funds’ operating expense | (0.3 | ) | — | (0.8 | ) | — | ||||||||||
Less: items segregated out of U.S. GAAP operating expense | ||||||||||||||||
Variable compensation(2) | (61.5 | ) | (45.7 | ) | (173.8 | ) | (124.1 | ) | ||||||||
Affiliate key employee distributions | (19.9 | ) | (11.3 | ) | (51.3 | ) | (28.8 | ) | ||||||||
ENI operating expense | $ | 78.0 | $ | 65.9 | $ | 229.3 | $ | 191.7 |
(1) | Included in restructuring in the three months ended September 30, 2017 is $0.2 million for CEO recruiting costs. Included in restructuring for the nine months ended September 30, 2017 is $9.5 million related to CEO transition costs, comprised of $0.5 million of fixed compensation and benefits, $8.8 million of variable compensation and $0.2 million of recruiting costs. |
(2) | For the nine months ended September 30, 2017, $182.6 million of variable compensation expense is included within U.S. GAAP net income, which includes variable compensation associated with the CEO transition costs presented in “Restructuring costs” in this table. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Fixed compensation & benefits(1) | $ | 42.8 | $ | 36.3 | $ | 126.6 | $ | 105.7 | ||||||||
General and administrative expenses(2) | 32.0 | 27.1 | 94.2 | 79.1 | ||||||||||||
Depreciation and amortization | 3.2 | 2.5 | 8.5 | 6.9 | ||||||||||||
ENI operating expense | $ | 78.0 | $ | 65.9 | $ | 229.3 | $ | 191.7 |
(1) | Fixed compensation and benefits include base salaries, payroll taxes and the cost of benefit programs provided. The following table reconciles U.S. GAAP compensation expense for the three and nine months ended September 30, 2017 and 2016 to ENI fixed compensation and benefits expense: |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Total U.S. GAAP compensation expense | $ | 182.2 | $ | 100.0 | $ | 498.4 | $ | 272.1 | ||||||||
Acquisition-related consideration and pre-acquisition employee equity | (17.6 | ) | (8.8 | ) | (52.9 | ) | (8.8 | ) | ||||||||
Non-cash key employee equity and profit interest revaluations excluded from ENI | (35.8 | ) | 6.4 | (71.0 | ) | 8.8 | ||||||||||
Sales-based compensation reclassified to ENI general & administrative expenses | (4.6 | ) | (4.3 | ) | (13.5 | ) | (13.5 | ) | ||||||||
Affiliate key employee distributions | (19.9 | ) | (11.3 | ) | (51.3 | ) | (28.8 | ) | ||||||||
Compensation related to restructuring expenses(a) | — | — | (9.3 | ) | — | |||||||||||
Variable compensation(b) | (61.5 | ) | (45.7 | ) | (173.8 | ) | (124.1 | ) | ||||||||
ENI fixed compensation and benefits | $ | 42.8 | $ | 36.3 | $ | 126.6 | $ | 105.7 |
(a) | Compensation related to restructuring in the nine months ended September 30, 2017 are comprised of $0.5 million of fixed compensation and benefits and $8.8 million of variable compensation associated with the CEO transition. |
(b) | For the nine months ended September 30, 2017, $182.6 million of variable compensation expense is included within U.S. GAAP net income, which includes variable compensation associated with the CEO transition costs presented in “Compensation related to restructuring expenses” in this table. |
(2) | The following table reconciles U.S. GAAP general and administrative expense to ENI general and administrative expense: |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
U.S. GAAP general and administrative expense | $ | 27.6 | $ | 27.2 | $ | 80.9 | $ | 71.7 | ||||||||
Sales-based compensation | 4.6 | 4.3 | 13.5 | 13.5 | ||||||||||||
Capital transaction costs | — | (4.4 | ) | — | (6.1 | ) | ||||||||||
Restructuring costs(a) | (0.2 | ) | — | (0.2 | ) | — | ||||||||||
ENI general and administrative expense | $ | 32.0 | $ | 27.1 | $ | 94.2 | $ | 79.1 |
(a) | Reflects pre-tax costs associated with the CEO transition. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Numerator: ENI operating earnings(1) | $ | 88.7 | $ | 64.2 | $ | 245.3 | $ | 172.9 | ||||||||
Denominator: ENI revenue | $ | 228.2 | $ | 175.8 | $ | 648.4 | $ | 488.7 | ||||||||
ENI operating margin(2) | 38.9 | % | 36.5 | % | 37.8 | % | 35.4 | % | ||||||||
Numerator: ENI operating expense | $ | 78.0 | $ | 65.9 | $ | 229.3 | $ | 191.7 | ||||||||
Denominator: ENI management fee revenue(3) | $ | 221.7 | $ | 171.8 | $ | 624.1 | $ | 478.5 | ||||||||
ENI operating expense ratio(4) | 35.2 | % | 38.4 | % | 36.7 | % | 40.1 | % | ||||||||
Numerator: ENI variable compensation | $ | 61.5 | $ | 45.7 | $ | 173.8 | $ | 124.1 | ||||||||
Denominator: ENI earnings before variable compensation(1)(5) | $ | 150.2 | $ | 109.9 | $ | 419.1 | $ | 297.0 | ||||||||
ENI variable compensation ratio(6) | 40.9 | % | 41.6 | % | 41.5 | % | 41.8 | % | ||||||||
Numerator: Affiliate key employee distributions | $ | 19.9 | $ | 11.3 | $ | 51.3 | $ | 28.8 | ||||||||
Denominator: ENI operating earnings(1) | $ | 88.7 | $ | 64.2 | $ | 245.3 | $ | 172.9 | ||||||||
ENI Affiliate key employee distributions ratio(7) | 22.4 | % | 17.6 | % | 20.9 | % | 16.7 | % |
(1) | ENI operating earnings represents ENI earnings before Affiliate key employee distributions and is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. It differs from economic net income because it does not include the effects of Affiliate key employee distributions, net interest expense or income tax expense. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
U.S. GAAP operating income | $ | 8.3 | $ | 40.2 | $ | 44.7 | $ | 125.2 | ||||||||
Include investment return on equity-accounted Affiliates | 5.7 | 5.0 | 11.2 | 11.8 | ||||||||||||
Exclude the impact of: | ||||||||||||||||
Affiliate key employee-owned equity and profit interest revaluations | 35.8 | (6.4 | ) | 71.0 | (8.8 | ) | ||||||||||
Amortization of acquired intangible assets, acquisition-related consideration and pre-acquisition employee equity | 19.2 | 9.7 | 57.8 | 9.8 | ||||||||||||
Capital transaction costs | — | 4.4 | — | 6.1 | ||||||||||||
Restructuring costs(a) | 0.2 | — | 9.5 | — | ||||||||||||
Other | — | — | 0.4 | — | ||||||||||||
Affiliate key employee distributions | 19.9 | 11.3 | 51.3 | 28.8 | ||||||||||||
Variable compensation(b) | 61.5 | 45.7 | 173.8 | 124.1 | ||||||||||||
Funds’ operating (income) loss | (0.4 | ) | — | (0.6 | ) | — | ||||||||||
ENI earnings before variable compensation | 150.2 | 109.9 | 419.1 | 297.0 | ||||||||||||
Less: ENI variable compensation | (61.5 | ) | (45.7 | ) | (173.8 | ) | (124.1 | ) | ||||||||
ENI operating earnings | 88.7 | 64.2 | 245.3 | 172.9 | ||||||||||||
Less: ENI Affiliate key employee distributions | (19.9 | ) | (11.3 | ) | (51.3 | ) | (28.8 | ) | ||||||||
ENI earnings after Affiliate key employee distributions | $ | 68.8 | $ | 52.9 | $ | 194.0 | $ | 144.1 |
(a) | Included in restructuring in the three months ended September 30, 2017 is $0.2 million for CEO recruiting costs. Included in restructuring for the nine months ended September 30, 2017 is $9.5 million related to CEO transition costs, comprised of $0.5 million of fixed compensation and benefits, $8.8 million of variable compensation and $0.2 million of recruiting costs. |
(b) | For the nine months ended September 30, 2017, $182.6 million of variable compensation expense is included within U.S. GAAP net income, which includes variable compensation associated with the CEO transition costs presented in “Restructuring costs” in this table. |
(2) | The ENI operating margin, which is calculated before Affiliate key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business without regard to our various ownership levels at each of the Affiliates. The ENI operating margin is most comparable to our U.S. GAAP operating margin. Our U.S. GAAP operating margin, excluding the effect of consolidated Funds, is 3.6% for the three months ended September 30, 2017, 23.5% for the three months ended September 30, 2016, 6.9% for the nine months ended September 30, 2017 and 26.3% for the nine months ended September 30, 2016. |
(3) | ENI management fee revenue corresponds to U.S. GAAP management fee revenue. |
(4) | The ENI operating expense ratio is used by management and is useful to investors to evaluate the level of operating expense as measured against our recurring management fee revenue. We have provided this ratio since many operating expenses, including fixed compensation & benefits and general and administrative expense, are generally linked to the overall size of the business. We track this ratio as a key measure of scale economies at OMAM because in our profit sharing economic model, scale benefits both the Affiliate employees and OMAM shareholders. The ENI operating expense ratio is most comparable to the U.S. GAAP operating expense / management fee revenue ratio. |
(5) | ENI earnings before variable compensation is calculated as ENI revenue, less ENI operating expense. |
(6) | The ENI variable compensation ratio is used by management and is useful to investors to evaluate consolidated variable compensation as measured against our ENI earnings before variable compensation. Variable compensation is contractually set and calculated individually at each Affiliate, plus Center bonuses. Variable compensation is usually awarded based on a contractual percentage of each Affiliate’s ENI earnings before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests. Center variable compensation includes cash and OMAM equity. Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period. The variable compensation ratio at each Affiliate, calculated as variable compensation divided by ENI earnings before variable compensation, will typically be between 25% and 35%. The ENI variable compensation ratio is most comparable to the U.S. GAAP variable compensation ratio. |
(7) | The ENI Affiliate key employee distribution ratio is used by management and is useful to investors to evaluate Affiliate key employee distributions as measured against our ENI operating earnings. Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests. The Affiliate key employee distribution ratio at each Affiliate is calculated as Affiliate key employee distributions divided by ENI operating earnings at that Affiliate. At certain Affiliates, OMUS is entitled to an initial preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions, whereas for profits above the threshold the key employee distribution amount would be calculated based on the key employee economic percentages, which range from approximately 20% to 40% at our consolidated Affiliates. The ENI Affiliate key employee distributions ratio is most comparable to the U.S. GAAP Affiliate key employee distributions ratio. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Pre-tax economic net income(1) | $ | 64.2 | $ | 49.4 | $ | 179.6 | $ | 140.2 | ||||||||
Intercompany interest expense deductible for U.S. tax purposes | (19.7 | ) | (18.9 | ) | (58.6 | ) | (54.3 | ) | ||||||||
Taxable economic net income | 44.5 | 30.5 | 121.0 | 85.9 | ||||||||||||
Taxes at the U.S. federal and state statutory rates(2) | (17.8 | ) | (12.2 | ) | (48.6 | ) | (34.5 | ) | ||||||||
Other reconciling tax adjustments | 0.3 | 0.8 | 1.2 | 0.5 | ||||||||||||
Tax on economic net income | (17.5 | ) | (11.4 | ) | (47.4 | ) | (34.0 | ) | ||||||||
Add back intercompany interest expense previously excluded | 19.7 | 18.9 | 58.6 | 54.3 | ||||||||||||
Economic net income | $ | 46.7 | $ | 38.0 | $ | 132.2 | $ | 106.2 | ||||||||
Economic net income effective tax rate(3) | 27.3 | % | 23.1 | % | 26.4 | % | 24.3 | % |
(1) | Includes interest income and third party ENI interest expense, as shown in the following table: |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
U.S. GAAP interest income | $ | 0.1 | $ | 0.3 | $ | 0.5 | $ | 0.3 | ||||||||
U.S. GAAP interest expense | (6.4 | ) | (4.4 | ) | (18.2 | ) | (5.4 | ) | ||||||||
U.S. GAAP net interest expense | (6.3 | ) | (4.1 | ) | (17.7 | ) | (5.1 | ) | ||||||||
Other ENI interest expense exclusions(a) | 1.7 | 0.6 | 3.3 | 1.2 | ||||||||||||
ENI net interest income (expense) | (4.6 | ) | (3.5 | ) | (14.4 | ) | (3.9 | ) | ||||||||
ENI earnings after Affiliate key employee distributions(b) | 68.8 | 52.9 | 194.0 | 144.1 | ||||||||||||
Pre-tax economic net income | $ | 64.2 | $ | 49.4 | $ | 179.6 | $ | 140.2 |
(a) | Other ENI interest expense exclusions represent cost of financing on seed capital and co-investments. |
(b) | ENI earnings after Affiliate key employee distributions is calculated as ENI operating income (ENI revenue, less ENI operating expense, less ENI variable compensation), less Affiliate key employee distributions. Refer to “—Key Non-GAAP Operating Metrics” for a reconciliation from U.S. GAAP operating income (loss) to ENI earnings after Affiliate key employee distributions. |
(2) | Taxed at U.S. Federal and State statutory rate of 40.2% |
(3) | The economic net income effective tax rate is calculated by dividing the tax on economic net income by pre-tax economic net income. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
($ in millions) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income attributable to controlling interests | $ | 18.7 | $ | 34.0 | $ | 53.0 | $ | 101.1 | ||||||||
Net interest expense to third parties | 6.3 | 4.1 | 17.7 | 5.1 | ||||||||||||
Income tax expense (including tax expenses related to discontinued operations) | (5.1 | ) | 8.4 | 1.5 | 35.5 | |||||||||||
Depreciation and amortization (including intangible assets) | 4.8 | 3.2 | 13.4 | 7.8 | ||||||||||||
EBITDA | $ | 24.7 | $ | 49.7 | $ | 85.6 | $ | 149.5 | ||||||||
Non-cash compensation costs associated with revaluation of Affiliate key employee-owned equity and profit interests | 35.8 | (6.4 | ) | 71.0 | (8.8 | ) | ||||||||||
Amortization of acquisition-related consideration and pre-acquisition employee equity | 17.6 | 8.9 | 52.9 | 8.9 | ||||||||||||
EBITDA of discontinued operations | 0.1 | (0.7 | ) | 0.2 | (2.9 | ) | ||||||||||
(Gain) loss on seed and co-investments | (6.3 | ) | (0.6 | ) | (16.6 | ) | (1.8 | ) | ||||||||
Restructuring costs(1) | 0.2 | — | 9.5 | — | ||||||||||||
Capital transaction costs | — | 4.4 | — | 6.1 | ||||||||||||
Other | (0.1 | ) | 0.1 | (0.1 | ) | — | ||||||||||
Adjusted EBITDA | $ | 72.0 | $ | 55.4 | $ | 202.5 | $ | 151.0 | ||||||||
ENI net interest expense to third parties | (4.6 | ) | (3.5 | ) | (14.4 | ) | (3.9 | ) | ||||||||
Depreciation and amortization | (3.2 | ) | (2.5 | ) | (8.5 | ) | (6.9 | ) | ||||||||
Tax on economic net income | (17.5 | ) | (11.4 | ) | (47.4 | ) | (34.0 | ) | ||||||||
Economic net income | $ | 46.7 | $ | 38.0 | $ | 132.2 | $ | 106.2 |
(1) | Included in restructuring in the three months ended September 30, 2017 is $0.2 million for CEO recruiting costs. Included in restructuring for the nine months ended September 30, 2017 is $9.5 million related to CEO transition costs, comprised of $0.5 million of fixed compensation and benefits, $8.8 million of variable compensation and $0.2 million of recruiting costs. |
Nine Months Ended September 30, | |||||||
($ in millions) | 2017 | 2016 | |||||
Cash provided by (used in)(1)(2) | |||||||
Operating activities | $ | 170.4 | $ | 58.3 | |||
Investing activities | (26.7 | ) | (276.6 | ) | |||
Financing activities | (119.2 | ) | 232.9 |
(1) | Excludes consolidated Funds. |
(2) | Cash flow data shown only includes cash flows from continuing operations. |
($ in millions) | 9/30/2017 | 12/31/2016 | Interest rate | Maturity | ||||||||
Long-term debt of OMAM, net of issuance costs | ||||||||||||
Third party obligations: | ||||||||||||
Revolving credit facility | $ | — | $ | — | LIBOR + 1.50% plus 0.25% commitment fee | October 15, 2019 | ||||||
Non-recourse seed capital facility | $ | 33.5 | $ | — | LIBOR + 1.55% plus 0.95% commitment fee | July 17, 2018 | ||||||
Long-term bonds: | ||||||||||||
4.80% Senior Notes Due 2026 | 271.8 | 271.6 | 4.80% | July 27, 2026 | ||||||||
5.125% Senior Notes Due 2031 | 120.8 | 120.7 | 5.125% | August 1, 2031 | ||||||||
Total long-term debt | $ | 426.1 | $ | 392.3 |
• | Our equity markets-based AUM includes U.S. equities (including small cap through large cap securities and substantially value or blended investment styles) and global/non-U.S. equities (including global, non-U.S. and emerging markets securities). A 10% increase or decrease in equity markets would cause our $201.8 billion of equity assets under management to increase or decrease by $20.2 billion, resulting in a change in annualized |
• | Foreign currency AUM includes equity and alternative assets denominated in foreign currencies. A 10% increase or decrease in foreign exchange rates against the U.S. dollar would cause our $100.7 billion of foreign currency denominated AUM to increase or decrease by $10.1 billion, resulting in a change in annualized management fee revenue of $43.8 million and an annual change in post-tax economic net income of $15.6 million, based on weighted average fees earned on our foreign currency denominated AUM of 44 basis points at the mix of strategies as of September 30, 2017. Approximately $12.5 billion, or 12%, of our foreign currency denominated AUM are in accounts subject to performance fees. Of these assets, approximately 90% are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns. Assuming the market change does not impact our relative performance, a 10% change in foreign currency exchange rates would have an approximate incremental $0.5 million impact from performance fees on our post-tax economic net income, given our current cost structure and operating model. |
• | Fixed income AUM includes instruments in government bonds, corporate bonds and other fixed income investments in the United States. A change in interest rates, resulting in a 10% increase or decrease in the value of our total fixed income AUM of $13.4 billion, would cause AUM to rise or fall by approximately $1.3 billion. Based on our fixed income weighted average fee rates of 21 basis points, annualized management fees would change by $2.8 million and post-tax economic net income would change by $0.9 million annually. There are currently no material fixed income assets earning performance fees as of September 30, 2017. |
Exhibit No. | Description | ||
2.1 | |||
3.1 | |||
3.2 | |||
4.1 | |||
4.2 | |||
4.3 | |||
4.4 | |||
4.5 | |||
Exhibit No. | Description | ||
4.6 | |||
4.7 | |||
10.1 | |||
10.2 | |||
10.3 | |||
10.4 | |||
10.5 | |||
10.6 | |||
10.7 | |||
10.8 | |||
10.9 | |||
10.10 | |||
10.11 | |||
Exhibit No. | Description | ||
10.12 | |||
10.13 | |||
10.14 | |||
10.15 | |||
10.16 | |||
10.17 | |||
10.18 | |||
10.19 | |||
10.20 | |||
10.21 | |||
10.22 | |||
10.23 | |||
10.24 | |||
Exhibit No. | Description | ||
10.25 | |||
10.26 | |||
10.27 | |||
10.28* | |||
31.1* | |||
31.2* | |||
32.1* | |||
32.2* | |||
101* | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Condensed Consolidated Balance Sheets as of September 30, 2017 and December 31, 2016, (ii) the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016, (iii) the Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2017 and 2016, (iv) the Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine months ended September 30, 2017 and 2016, (v) the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016, and (vi) the Notes to Condensed Consolidated Financial Statements. |
OM Asset Management plc | |||
Dated: | November 9, 2017 | ||
By: | /s/ James J. Ritchie | ||
James J. Ritchie Chairman and Interim Chief Executive Officer (principal executive officer) | |||
/s/ Stephen H. Belgrad | |||
Stephen H. Belgrad Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer) |
Signature: | |
Date |
1. | I have reviewed this Quarterly Report on Form 10-Q of OM Asset Management plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ James J. Ritchie | |
James J. Ritchie | |
Chairman and Interim Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of OM Asset Management plc; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Stephen H. Belgrad | |
Stephen H. Belgrad | |
Executive Vice President and Chief Financial Officer |
Date: | November 9, 2017 | /s/ James J. Ritchie |
James J. Ritchie | ||
Title: Chairman and Interim Chief Executive Officer |
Date: | November 9, 2017 | /s/ Stephen H. Belgrad |
Name: Stephen H. Belgrad | ||
Title: Executive Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
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Sep. 30, 2017 |
Nov. 06, 2017 |
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Document and Entity Information | ||
Entity Registrant Name | OM Asset Management plc | |
Entity Central Index Key | 0001611702 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 109,720,358 |
Condensed Consolidated Balance Sheets (Parenthetical) - Consolidated Entity Excluding Consolidated Funds - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Asset fair value | $ 189.0 | $ 126.1 |
Ordinary shares, nominal value (in dollars per share) | $ 0.001 | $ 0.001 |
Ordinary shares, issued (in shares) | 109,720,358 | 114,157,765 |
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
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Net income | $ 19.9 | $ 34.0 | $ 55.8 | $ 101.1 |
Other comprehensive income (loss): | ||||
Valuation and amortization related to derivative securities, net of tax | 0.6 | (1.1) | 1.3 | (20.8) |
Foreign currency translation adjustment | 0.9 | (0.3) | 2.6 | (1.4) |
Total other comprehensive income (loss) | 1.5 | (1.4) | 3.9 | (22.2) |
Total comprehensive income attributable to controlling interests | 20.2 | 32.6 | 56.9 | 78.9 |
Consolidated Funds | ||||
Other comprehensive income (loss): | ||||
Comprehensive income attributable to non-controlling interests in consolidated Funds | $ 1.2 | $ 0.0 | $ 2.8 | $ 0.0 |
Organization and Description of the Business |
9 Months Ended |
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Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of the Business | OM Asset Management plc (“OMAM” or the “Company”), through its subsidiaries, is a global asset management business with interests in a diverse group of boutique investment management firms (the “Affiliates”) individually headquartered in the United States. The Company provides investment management services globally to predominantly institutional investors, in asset classes that include U.S. and global equities, fixed income, alternative assets, real estate, timber and secondary Funds. Fees for services are largely asset-based and, as a result, the Company’s revenue fluctuates based on the performance of financial markets and investors’ asset flows in and out of the Company’s products. The Company’s Affiliates are organized as limited liability companies. The Company generally utilizes a profit-sharing model in structuring its compensation and ownership arrangements with Affiliates. The Affiliates’ variable compensation is generally based on each firm’s profitability. OMAM and Affiliate key employees share in profits after variable compensation according to their respective ownership interests. The profit-sharing model results in alignment of OMAM and Affiliate key employee economic interests, which is critical to the Company’s talent management strategy and long-term growth of the business. The Company operates in one reportable segment. Until May 19, 2017, the Company was a majority-owned subsidiary of Old Mutual plc (“OM plc”), an international long-term savings, protection and investment group, listed on the London Stock Exchange. On October 15, 2014, the Company completed the initial public offering (the “Offering”) by OM plc of 22,000,000 ordinary shares of the Company pursuant to the Securities Act of 1933, as amended (“the Securities Act”). Additionally, the underwriters in the Offering exercised a portion of their overallotment option and purchased an additional 2,231,375 shares of the Company from OM plc. On June 22, 2015, the Company completed a secondary public offering by OM plc of 13,300,000 ordinary shares of the Company pursuant to the Securities Act. Additionally, the underwriters in the secondary public offering exercised their full overallotment option and purchased an additional 1,995,000 shares of the Company from OM plc. On March 11, 2016, OM plc announced the results of a strategic review, which included a plan to separate its underlying businesses, including OMAM. OM plc further announced on December 12, 2016 its intention to continue the reduction of its holdings in OMAM in an orderly manner which balances value, cost, time and risk. On December 16, 2016, the Company completed a secondary public offering by OM plc of 13,000,000 ordinary shares of the Company pursuant to the Securities Act, along with 6,000,000 ordinary shares purchased and retired by the Company. Additionally, the underwriters in the secondary public offering exercised their full overallotment option and purchased an additional 1,950,000 shares of the Company from OM plc. On May 19, 2017, the Company completed a secondary public offering by OM plc of 17,300,000 ordinary shares of the Company pursuant to the Securities Act, along with 5,000,000 ordinary shares purchased and retired by the Company. Additionally, the underwriters in the secondary public offering exercised their full overallotment option and purchased an additional 2,595,000 shares of the Company from OM plc. At September 30, 2017, OM plc owned 20.1% of the Company’s outstanding ordinary shares. On March 25, 2017, OM plc announced that it had agreed to sell a 24.95% shareholding in the Company to HNA Capital US (“HNA”) in a two-step transaction (the “HNA Minority Sale”) for gross cash consideration of approximately $446 million, subject to certain closing conditions. The first tranche of the HNA Minority Sale for 11,414,676 ordinary shares closed on May 12, 2017. On May 24, 2017, OM plc appointed Dr. Guang Yang of HNA as an OM plc director. The Company has been informed by both OM plc and HNA that they are working toward completing the second tranche of the HNA Minority Sale during the fourth quarter of 2017, at which point OM plc's shareholding will reduce to 5.5% and HNA will have the right to appoint two directors to the Company’s board, including Dr. Yang, and OM plc will have no rights to appoint directors. |
Basis of Presentation and Significant Accounting Policies |
9 Months Ended |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | The Company’s significant accounting policies are as follows: Basis of presentation These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations and of comprehensive income, statements of changes in shareholders’ equity and statements of cash flows of the Company. Within these Condensed Consolidated Financial Statements, entities that are part of OM plc’s consolidated results, but are not part of OMAM, as defined above, are referred to as “related parties.” The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All dollar amounts, except per-share data in the text and tables herein, are stated in millions unless otherwise indicated. Transactions between the Company and OM plc are included in the Condensed Consolidated Financial Statements, however material intercompany balances and transactions among the Company and its consolidated Affiliates are eliminated in consolidation. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2017. The Company’s significant accounting policies, which have been consistently applied, are summarized in those Financial Statements. Consolidation Affiliates The Company evaluates each of its Affiliates and other operating entities to determine the appropriate method of accounting. Generally, majority-owned entities or otherwise controlled investments in which the Company holds a controlling financial interest as the principal shareholder, managing member, or general partner are consolidated. Funds In evaluating whether or not a legal entity must be consolidated, the Company determines if such entity is a variable interest entity (“VIE”) or a voting interest entity (“VOE”). A VOE is considered an entity in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders at risk have the obligation to absorb losses, the right to receive residual returns, and the right to direct the activities of the entity that most significantly impact the entity’s economic performance. A VIE is an entity that lacks one or more of the characteristics of a VOE. Assessing whether an entity is a VIE or VOE involves judgment and analysis. Factors considered in this assessment include the entity’s legal organization, the entity’s capital structure and equity ownership and any related party or de facto agent implications of the Company’s involvement with the entity. Investments that are determined to be VIEs are consolidated if the Company or a consolidated Affiliate is the primary beneficiary of the investment. VOEs are typically consolidated if the Company holds the majority voting interest or otherwise controls the entity. In the normal course of business, the Company’s Affiliates sponsor and manage certain investment vehicles (the “Funds”). The Company assesses consolidation requirements with respect to its Funds pursuant to Accounting Standards Codification (“ASC”) Topic 810, Consolidation, as amended by Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis ("ASU 2015-02") relating to the consolidation of VIEs. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties. For VIEs that are investment companies subject to ASU 2010-10, Consolidation: Amendments for Certain Investment Funds, the primary beneficiary of the VIE is generally the variable interest holder that absorbs a majority of the expected losses of the VIE, receives a majority of the expected residual returns of the VIE, or both. The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including interests of related parties, is substantial. The primary beneficiary of a VIE is defined as the variable interest holder that has a controlling financial interest. A controlling financial interest is defined as (i) the power to direct the activities of the VIE that most significantly impacts its economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. If no single party satisfies both criteria, but the Company and its related parties satisfy the criteria on a combined basis, then the primary beneficiary is the entity out of the related party group that is most closely associated to the VIE. The consolidation analysis can generally be performed qualitatively, however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. The Company consolidates VOEs when it has control over significant operating, financial and investing decisions of the entity or holds the majority voting interest. For VOEs organized as limited partnerships or as an entity with governance structures similar to a limited partnership (e.g., limited liability company with a managing member), the Company consolidates an entity when it holds the controlling general partnership interest and the limited partners do not hold substantive participating rights or rights to remove and replace the general partner or rights that could provide the limited partners with the ability to impact the ongoing governance and operating activities of the entity. Upon the occurrence of certain events (such as contributions and redemptions, either by the Company, its Affiliates, or third parties, or amendments to the governing documents of the Company’s investees or sponsored Funds) management reviews and reconsiders its previous conclusion regarding the status of an entity as a VIE or a VOE. Additionally, management continually reconsiders whether the Company is deemed to be a VIE’s primary beneficiary who consolidates such entity. Use of Estimates The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ significantly from those estimates. |
Acquisitions |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisitions | On August 18, 2016, the Company acquired a majority of the equity interests in Landmark Partners, LLC, (“Landmark”) a leading global secondary private equity, real estate and real asset investment firm. The Company acquired a 60% interest in Landmark in exchange for $242.7 million. There is also the potential for an additional payment of up to $225.0 million on or around December 31, 2018, subject to a service and other conditions. The equity interests of Landmark purchased by the Company entitle the Company to participate in the earnings of Landmark. Certain key members of the management team of Landmark retained the remaining 40% interest in Landmark, subject to certain vesting conditions. The Company financed the acquisition through proceeds from multiple note offerings, including $275.0 million of 4.80% senior notes due July 27, 2026 and $125.0 million of 5.125% senior notes due August 1, 2031. The Company accounted for the acquisition of Landmark as a business combination which requires assets acquired and liabilities assumed to be recorded at fair value. The following table presents a summary of the acquisition-date fair values of the assets acquired and liabilities assumed for OMAM’s acquisition of Landmark (in millions):
The primary aspects of the purchase price allocation relate to amortizable intangible asset management contracts, the indefinite-life trade name and goodwill, which is the amount by which the purchase price exceeds the fair value of the net assets acquired. Certain measurement period adjustments were recorded to the provisional values recorded as of December 31, 2016. These adjustments primarily related to updated estimates, which resulted in an increase to the total consideration paid of $0.3 million, a decrease to the fair value of the identifiable net assets acquired of $1.6 million and an increase to the amount recorded to goodwill of $1.9 million. The fair value of the amortizable intangible asset management contracts was determined using the excess earnings method, a form of the income approach. The principle behind the excess earnings method is that the value of the intangible asset is equal to the present value of the after-tax cash flows attributable to the intangible asset only. Excess earnings represent the earnings remaining after applying post-tax contributory asset charges to reflect the return required on other assets that contribute to the generation of the forecast cash flows of the intangible asset. The fair value of the trade name intangible asset was determined utilizing a relief-from-royalty method. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. The fair value for all identifiable intangible assets was based on assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). This fair value estimate could include assets that are not intended to be used, may be sold or are intended to be used in a manner other than their best use. The fair value of the acquired amortizable intangible asset management contracts had a useful life estimate of approximately 13.4 years at acquisition. Purchase price allocated to intangible assets and goodwill is expected to be deductible for U.S. tax purposes over a period of 15 years. Goodwill was calculated as the excess of the fair value of the consideration paid and the values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. During the nine months ended September 30, 2016, the Company incurred transaction costs of $6.1 million related to the acquisition of Landmark. These costs are recorded within general and administrative expense in the Condensed Consolidated Statements of Operations. There were no transaction costs incurred during the nine months ended September 30, 2017. In conjunction with the acquisition, the Company entered into compensation arrangements with employees of Landmark where pre-acquisition equity units held by Landmark employees became subject to a service condition. These units are accounted for as stock-based compensation, were fair valued as of the closing date of the acquisition and vest over varying increments from December 31, 2018 through December 31, 2024. These units contain put rights that provide liquidity to the employees upon vesting. The aforementioned additional payment of up to $225.0 million could be paid based on the growth of Landmark’s business. This arrangement is also accounted for as stock-based compensation, fair valued as of the closing date of the acquisition, and vests on December 31, 2018. Both the pre-acquisition equity units and the potential future payment are remeasured at the end of each reporting period. The financial results of Landmark included in the Company’s consolidated financial results for the nine months ended September 30, 2017, include revenues of $88.1 million, with $(45.3) million of net loss included in net income attributable to the Company, which includes amortization of intangible assets recorded in purchase accounting and compensation expense for the arrangements with the employees of Landmark noted above. Unaudited Pro Forma Financial Information The following unaudited pro forma financial information presents the combined financial results of OMAM and Landmark, as though the acquisition had occurred as of January 1, 2015. The unaudited pro forma financial information reflects certain adjustments for amortization expense related to the fair value of acquired intangible assets, interest expense related to debt incurred to finance the acquisition, amortization related to stock-based compensation arrangements entered into in conjunction with the acquisition, and the income tax impact of the pro forma adjustments. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the financial results that would have been achieved had the acquisition actually occurred at the beginning of the first period presented (in millions, except per-share amounts):
* The unaudited pro forma financial information originally provided with the Form 10-Q for the period ended September 30, 2016 has been revised to include additional expense estimates that more accurately reflect the combined financial results of OMAM and Landmark. |
Investments |
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Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments | Investments are comprised of the following as of the dates indicated (in millions):
* Other investments represent cost-basis investments made by one of our Affiliates, including investments in timber and timberlands. At December 31, 2016, $50.1 million of these investments were recorded at the lower of cost or fair value less costs to sell and subsequently sold in January 2017 for a net gain of approximately $1.7 million. In September 2016, the Company purchased approximately $39.6 million of seed investments from OM plc under the terms of the seed capital management agreement, as amended (the “Seed Capital Management Agreement”). In July 2017, the Company purchased all remaining seed capital investments covered by the Seed Capital Management Agreement from OM plc for $63.4 million. OMAM financed this purchase in part through borrowings under a non-recourse seed capital facility collateralized entirely by its seed capital holdings. See Note 8 for a further discussion of borrowings and debt. Following the closing of the first tranche of the HNA Minority Sale, OMAM provided an entity owned by senior professionals of Heitman LLC a right of first offer to buy OMAM’s interest in Heitman LLC at a price the Company determined to be its “good faith estimate of the reasonable value” of such interest. In August 2017, the Company executed a non-binding term sheet to sell its stake in Heitman LLC for cash consideration totaling $110 million. The transaction is expected to close around year-end. The carrying value of OMAM’s interest in Heitman as of September 30, 2017 was $51.0 million and is included in the “Equity-accounted investments in Affiliates” line in the table above. OMAM will retain its co-investment interests in Heitman-managed funds as well as any carried interest associated with these investments. Equity method after-tax income from Heitman represented approximately 11% of GAAP earnings for the first nine months of 2017 and approximately 6% of GAAP earnings of OMAM for the first nine months of 2016. Investment income is comprised of the following for the three and nine months ended September 30 (in millions):
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2017 (in millions):
The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2016 (in millions):
The fair value of other investments is estimated based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs and therefore classified within Level II. The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided. If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III. If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures. Equity, short-term investment funds and derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. These securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II.
These investments are subject to longer than monthly or quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds. The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one to eight years from September 30, 2017. The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams. The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, acquisitions, and research teams. For certain properties and loans, the valuation process may also include a valuation by independent appraisers. In connection with this process, changes in fair-value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions. Not included in the above are $13.9 million and $52.0 million at September 30, 2017 and December 31, 2016, respectively, of various investments carried at cost, including investments in timber and timberlands. There were no significant transfers of financial assets or liabilities among Levels I, II or III during the nine months ended September 30, 2017 or 2016. |
Variable Interest Entities |
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Variable Interest Entities | The Company, through its Affiliates, sponsors the formation of various entities considered to be VIEs. These VIEs are primarily Funds managed by Affiliates and are investment vehicles typically owned entirely by third-party investors. Certain Funds may be capitalized with seed capital investments from the Company and may be owned partially by Affiliate key employees and/or individuals that own minority interests in an Affiliate. The Company’s determination of whether it is the primary beneficiary of a Fund that is a VIE is based in part on an assessment of whether or not the Company and its related parties are exposed to the majority of the risks and rewards of the entity. Typically the Fund’s investors are entitled to substantially all of the economics of these VIEs with the exception of the management fees and performance fees, if any, earned by the Company or any investment the Company has made into the Funds. The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including interests of related parties, is substantial. The following table presents the assets and liabilities of Funds that are VIEs and consolidated by the Company (in millions):
"Investments at fair value" consist of investments in securities. The Company has also consolidated Funds that are not VIEs, and therefore the assets and liabilities of those Funds are not included in the table above. The assets of consolidated VIEs presented in the table above belong to the investors in those Funds, are available for use only by the Fund to which they belong, and are not available for use by the Company to the extent they are held by non-controlling interests. Any debt or liabilities held by consolidated Funds have no recourse to the Company's general credit. The Company’s involvement with Funds that are VIEs and not consolidated by the Company is generally limited to that of an investment manager and its investment in the unconsolidated VIE, if any. The Company’s investment in any unconsolidated VIE generally represents an insignificant interest of the Fund’s net assets and assets under management, such that the majority of the VIE’s results are attributable to third parties. The Company’s exposure to risk in these entities is generally limited to any capital contribution it has made or is required to make and any earned but uncollected management fees. The Company has not issued any investment performance guarantees to these VIEs or their investors. The following information pertains to unconsolidated VIEs for which the Company holds a variable interest (in millions):
In addition to the multiple unconsolidated VIE Funds, the Company determined that Heitman LLC, one of the Company’s Affiliates, is a VIE. The Company concluded that it is not the primary beneficiary of Heitman LLC because it does not hold the power to direct its most economically significant activities. The Company aggregated Heitman LLC with the Company’s other unconsolidated VIE Funds due to their similar risk profiles given that the risks and rewards are driven by changes in investment values and the Affiliates’ ability to manage those assets. On August 2, 2017, OMAM entered into a non-binding term sheet to sell its stake in Heitman LLC to Heitman’s management for cash consideration totaling $110 million. This transaction is expected to close around year-end. |
Related Party Transactions |
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Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | OM plc has historically provided the Company with various oversight services, including governance, which includes compensation for board and executive committees, investor relations, procurement of insurance coverage, human resources, financial reporting, internal audit, treasury, systems, risk and tax services. Many of these services have been transitioned to the Company. That portion of the above costs which (i) are directly attributable to the Company, (ii) have been charged to the Company by OM plc and (iii) have been paid to OM plc by the Company, have been recorded in the Company’s unaudited Condensed Consolidated Financial Statements and was $0.1 million and $0.2 million in the three months ended September 30, 2017 and 2016, respectively, and $0.5 million and $0.6 million in the nine months ended September 30, 2017 and 2016, respectively. During 2016, the Company made a loan to an equity-method Affiliate that was used to make co-investments in Affiliate Funds. Amounts due to the Company in connection with this loan are included in other assets on the Company’s Consolidated Balance Sheets and were $3.4 million and $2.7 million at September 30, 2017 and at December 31, 2016, respectively. During 2014, the Company entered into a Seed Capital Management Agreement, a Deferred Tax Asset Deed, a Co-investment Deed and a shareholder agreement with OM plc and/or OM plc’s subsidiaries. During 2016, the Company and OM plc agreed to amend the Seed Capital Management Agreement. As a result of the amendment, the Company purchased approximately $39.6 million of seed investments from OM plc in September 2016. The Company purchased the remaining seed capital investments covered by the Seed Capital Management Agreement valued at $63.4 million in July 2017, partially financed by borrowings under a non-recourse seed capital facility (see Note 8). The Company also purchased $4.5 million of co-investments fully financed by promissory notes payable. As of September 30, 2017, the Company no longer managed seed capital provided by OM plc. Amounts owed to OM plc associated with the Co-investment Deed were $8.6 million at September 30, 2017. As of September 30, 2017, the Company had recorded $4.4 million for redemptions and estimated taxes due under the Co-investment Deed. Amounts withheld in excess of the future tax liability will be payable to OM plc upon settlement. During 2016, the Company and OM plc agreed to amend the Deferred Tax Asset Deed. Under the terms of the Deferred Tax Asset Deed, as amended, the Company agreed to make a payment of the net present value of the future tax benefits due to OM plc valued as of December 31, 2016. This payment of $142.6 million will be made over three installments, with the first installment of $45.5 million paid on June 30, 2017 and the remaining two installments to be paid on December 31, 2017 and June 30, 2018. The Company retains an indemnity from OM plc that protects the realized and future tax benefits covered by the Deferred Tax Asset Deed (including the $142.6 million total payment referenced above) in the event of a tax law change or challenge from the IRS. As the Company is a member of a group of related businesses, it is possible that the terms of certain related party transactions are not the same as those that would result from transactions with wholly unrelated parties. |
Borrowings and Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings and Debt | The Company’s long-term debt at September 30, 2017 was comprised of a revolving credit facility, non-recourse seed capital financing and long-term bonds. Revolving Credit Facility On October 15, 2014, the Company entered into a revolving credit facility with Citibank, as administrative agent and issuing bank, and Citigroup Global Markets Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers and joint book runners (as amended, the “Credit Facility”). Pursuant to the terms of the Credit Facility, the Company may obtain loans on a revolving credit basis and procure the issuance of letters of credit in an aggregate amount at any time outstanding not in excess of $350 million. The Credit Facility has a maturity date of October 15, 2019. Borrowings under the credit facility bear interest, at OMAM’s option, at either the per annum rate equal to (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5% and (iii) the one month Adjusted LIBO Rate plus 1.0%, plus, in each case an additional amount ranging from 0.25% to 1.00%, with such additional amount based from time to time on the ratio of the Company’s total consolidated indebtedness to Adjusted EBITDA (a “Leverage Ratio”) until either Moody’s Investor Service, Inc. or Standard & Poor’s assigned an initial rating to the Company’s senior, unsecured long-term indebtedness for borrowed money that was not subject to credit enhancement, or its credit rating, at which time such additional amount became based on its credit rating or (b) the London interbank offered rate for a period, at the Company’s election, equal to one, two, three or six months plus an additional amount ranging from 1.25% to 2.00%, with such additional amount based from time to time on the Company’s Leverage Ratio until it was assigned a credit rating, at which time such additional amount became based on its credit rating. In addition, the Company is charged a commitment fee based on the average daily unused portion of the revolving credit facility at a per annum rate ranging from 0.20% to 0.50%, with such amount based from time to time on its Leverage Ratio until it was assigned a credit rating, at which time such amount became based on the Company’s credit rating. In July 2016, Moody’s Investor Service, Inc. and Standard & Poor’s each assigned an initial investment-grade rating to the Company’s senior, unsecured long-term indebtedness. As a result of the assignment of the credit ratings, the Company’s interest rate on outstanding borrowings was set at LIBOR + 1.50% and the commitment fee on the unused portion of the revolving credit facility was set at 0.25%. Prior to the assignment of the credit ratings, the Company’s interest rate on outstanding borrowings was based on the Company’s Leverage Ratio and was set at LIBOR + 1.25% and the commitment fee on the unused portion of the revolving credit facility was set at 0.20%. Under the Credit Facility, the ratio of third-party borrowings to trailing twelve months Adjusted EBITDA cannot exceed 3.0x, and the interest coverage ratio must not be less than 4.0x. At September 30, 2017 the outstanding balance of the facility was $0.0 million ($350.0 million of undrawn revolving credit facility capacity). Including $392.6 million of long-term bonds and per the terms of the revolving credit facility, which excludes non-recourse debt (see below), the Company’s ratio of third-party borrowings to trailing twelve months Adjusted EBITDA was 1.5x and interest coverage ratio was 10.8x. The fair value of borrowings on the revolving credit facility approximated the net cost basis as of September 30, 2017. At December 31, 2016 the outstanding balance of the facility was $0.0 million ($350.0 million of undrawn revolving credit facility capacity). Including $392.3 million of long-term bonds (see below), the Company’s ratio of third-party borrowings to trailing twelve months Adjusted EBITDA was 1.9x and interest coverage ratio was 18.5x. Non-recourse seed capital facility In July 2017, the Company purchased all remaining seed capital investments covered by the Seed Capital Management Agreement from OM plc for $63.4 million. OMAM financed this purchase in part through borrowings under a non-recourse seed capital facility collateralized entirely by its seed capital holdings. The Company entered into this facility as of July 17, 2017, and may borrow up to $65.0 million, so long as the borrowing does not represent more than 50% of the value of the permitted seed capital collateral. The non-recourse seed facility bears interest at LIBOR +1.55% with a commitment fee on the unused portion of this facility of 0.95%. The facility currently has a maturity date of July 17, 2018 and includes a six-month evergreen renewal option. At September 30, 2017, amounts outstanding under this non-recourse seed capital facility amounted to $33.5 million. Per the terms of the Company’s revolving credit facility, drawdowns under this facility are excluded from the Company’s third party debt levels for purposes of calculating the Company’s credit ratio covenants. The fair value of borrowings on the non-recourse seed capital facility approximated the net cost basis as of September 30, 2017. Long-term bonds The Company’s long-term bonds were comprised of the following as of the dates indicated (in millions):
In July 2016, the Company issued $275.0 million of 4.80% Senior Notes due 2026 (the “2026 Notes”) and $125.0 million of 5.125% Senior Notes due 2031 (the “2031 Notes”). The Company used the net proceeds of these offerings to finance the acquisition of Landmark in August 2016, settle an outstanding interest rate lock, purchase seed capital from OM plc and pay down the balance of the Revolving Credit Facility. 4.80% Senior Notes Due July 2026 The $275.0 million 2026 Notes were sold at a discount of $(0.5) million and the Company incurred debt issuance costs of $(3.0) million, which are being amortized to interest expense over the ten-year term. The 2026 Notes can be redeemed at any time prior to the scheduled maturity in part or in aggregate, at the greater of 100% of the principal amount at that time or the sum of the remaining scheduled payments discounted at the treasury rate (as defined) plus 0.5%, together with any related accrued and unpaid interest. 5.125% Senior Notes Due August 2031 The $125.0 million 2031 Notes incurred debt issuance costs of $(4.3) million, which are being amortized to interest expense over the fifteen-year term. The 2031 Notes can be redeemed at any time, on or after August 1, 2019 at a redemption price equal to 100% of the principal amount together with any related accrued and unpaid interest. The fair value of the long-term bonds was determined using broker quotes and any recent trading activity for each of the notes listed above, which are considered Level II inputs. Interest expense Interest expense incurred amounted to a total of $6.4 million and $4.4 million for the three months ended September 30, 2017 and 2016, respectively. Interest expense incurred amounted to a total of $18.2 million and $5.4 million for the nine months ended September 30, 2017 and 2016, respectively. Interest expense consists of interest accrued on the long-term debt, commitment fees and amortization of debt-related costs. |
Commitments and Contingencies |
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Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Operational commitments The Company had unfunded commitments to invest up to approximately $58 million in co-investments with its Affiliates as of September 30, 2017. These commitments will be funded as required through the end of the respective investment periods ranging through 2022. Certain Affiliates operate under regulatory authorities that require that they maintain minimum financial or capital requirements. Management is not aware of any violations of such financial requirements occurring during the period. Litigation The Company and its Affiliates are subject to claims, legal proceedings and other contingencies in the ordinary course of their business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company or its Affiliates. The Company and its Affiliates establish accruals for matters for which the outcome is probable and can be reasonably estimated. If an insurance claim or other indemnification for a litigation accrual is available to the Company, the associated gain will not be recognized until all contingencies related to the gain have been resolved. As of September 30, 2017, there were no material accruals for claims, legal proceedings or other contingencies. Indemnifications In the normal course of business, such as through agreements to enter into business combinations and divestitures of Affiliates, the Company enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. Foreign tax contingency The Company has clients in non-U.S. jurisdictions which require entities that are conducting certain business activities in such jurisdictions to collect and remit tax assessed on certain fees paid for goods and services provided. The Company does not believe this requirement is applicable based on its limited business activities in these jurisdictions. However, given the fact that uncertainty exists around the requirement, the Company has chosen to evaluate its potential exposure related to non-collection and remittance of these taxes. At September 30, 2017, management of the Company has estimated the potential maximum exposure and concluded that it is not material. No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at September 30, 2017. On July 13, 2017, (the “Effective Date”) the U.K. published revised draft legislation to be included in the U.K. Finance Bill (No. 2) 2017 (the “Finance Bill”) that would impact the Company’s tax position as of the Effective Date. This legislation is expected to receive Royal Assent in the fourth quarter of 2017. If enacted as originally proposed, the Company’s U.K. tax liability will increase as of the Effective Date. Consequently, if enactment occurs in the fourth quarter, the Company’s tax expense for the four quarter will reflect the impact of this increase as of the Effective Date. Considerations of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments. The Company maintains cash and cash equivalents and short term investments with various financial institutions. These financial institutions are typically located in cities in which the Company and its Affiliates operate. For the Company and certain Affiliates, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits. |
Earnings Per Share |
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Earnings Per Share | Basic earnings per share is calculated by dividing net income attributable to controlling interests by the weighted-average number of shares outstanding. Diluted earnings per share is similar to basic earnings per share, but is adjusted for the effect of potentially issuable ordinary shares, except when inclusion is antidilutive. The calculation of basic and diluted earnings per ordinary share is as follows (dollars in millions, except per share data):
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Accumulated Other Comprehensive Income |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income | The following tables show the tax effects allocated to each component of other comprehensive income (in millions):
The components of accumulated other comprehensive income (loss) for the nine months ended September 30, 2017 were as follows (in millions):
The Company reclassified $2.0 million and $0.5 million from accumulated other comprehensive income (loss) to interest expense on the Consolidated Statements of Income for the nine months ended September 30, 2017 and 2016, respectively. |
Derivatives and Hedging |
9 Months Ended |
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Sep. 30, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives and Hedging | Cash flow hedge In July 2015, the Company entered into a $300 million notional Treasury rate lock contract which was designated and qualified as a cash flow hedge. The Company documented its hedging strategy and risk management objective for this contract in anticipation of a future debt issuance. The Treasury rate lock contract eliminated the impact of fluctuations in the underlying benchmark interest rate for future forecasted debt issuances. The Company assessed the effectiveness of the hedging contract at inception and on a quarterly basis thereafter. In November 2015, at the Treasury rate lock termination date, the Company de-designated the Treasury rate lock and entered into an extension for the same $300 million notional through early July 2016. In July 2016, the Company entered into a second extension to the Treasury rate lock in conjunction with the issuances of the previously forecasted debt. The forecasted debt issuances occurred in July 2016 and the Treasury rate lock, which had an accumulated fair value of $(34.4) million, was settled. Refer to Note 8, Borrowings and Debt, for additional information on the debt issuances. Consistent with the original Treasury rate lock, the extended Treasury rate locks were designated and qualified as cash flow hedges. The Company documented its hedging strategy and risk management objective for these contracts in anticipation of the July 2016 debt issuance. The extended Treasury rate locks effectively eliminated the impact of fluctuations in the underlying benchmark interest rate for the debt issuances. The Company assessed the effectiveness of the hedging contracts at each of the extended Treasury rate locks’ inception dates and on a quarterly basis thereafter, where applicable. At the rate lock settlement, the hedging contracts were evaluated to be highly effective in offsetting changes in cash flows associated with the hedged items. The Company did not record any hedge ineffectiveness in 2016. As of September 30, 2017, the balance recorded in accumulated other comprehensive income (loss) was $(25.6) million, net of tax. This balance will be reclassified to earnings through interest expense over the life of the issued debt. Amounts of $2.0 million and $0.5 million have been reclassified for the nine months ended September 30, 2017 and 2016, respectively. During the next twelve months the Company expects to reclassify approximately $2.7 million to interest expense. |
Discontinued Operations and Restructuring |
9 Months Ended |
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Sep. 30, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations and Restructuring | All of the Company’s discontinued operations were wound down or transferred to OM plc prior to 2016. The Company recognized a gain (loss) on disposal, net of taxes, of $0.0 million and $(0.4) million, with basic and diluted discontinued operations earnings per share of $0.00 and $0.00 for the three months ended September 30, 2017 and 2016, respectively. The Company recognized a gain (loss) on disposal, net of taxes, of $(0.1) million and $1.2 million, with basic and diluted discontinued operations earnings per share of $0.00 and $0.01 for the nine months ended September 30, 2017 and 2016, respectively. Gains and losses on disposal of discontinued operations represent the Company’s rights or obligations related to contractual residual interests in previously discontinued operations. |
Basis of Presentation and Significant Accounting Policies (Policies) |
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Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations and of comprehensive income, statements of changes in shareholders’ equity and statements of cash flows of the Company. Within these Condensed Consolidated Financial Statements, entities that are part of OM plc’s consolidated results, but are not part of OMAM, as defined above, are referred to as “related parties.” The Condensed Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All dollar amounts, except per-share data in the text and tables herein, are stated in millions unless otherwise indicated. Transactions between the Company and OM plc are included in the Condensed Consolidated Financial Statements, however material intercompany balances and transactions among the Company and its consolidated Affiliates are eliminated in consolidation. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2016 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February 22, 2017. The Company’s significant accounting policies, which have been consistently applied, are summarized in those Financial Statements. |
Consolidation | Consolidation Affiliates The Company evaluates each of its Affiliates and other operating entities to determine the appropriate method of accounting. Generally, majority-owned entities or otherwise controlled investments in which the Company holds a controlling financial interest as the principal shareholder, managing member, or general partner are consolidated. Funds In evaluating whether or not a legal entity must be consolidated, the Company determines if such entity is a variable interest entity (“VIE”) or a voting interest entity (“VOE”). A VOE is considered an entity in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders at risk have the obligation to absorb losses, the right to receive residual returns, and the right to direct the activities of the entity that most significantly impact the entity’s economic performance. A VIE is an entity that lacks one or more of the characteristics of a VOE. Assessing whether an entity is a VIE or VOE involves judgment and analysis. Factors considered in this assessment include the entity’s legal organization, the entity’s capital structure and equity ownership and any related party or de facto agent implications of the Company’s involvement with the entity. Investments that are determined to be VIEs are consolidated if the Company or a consolidated Affiliate is the primary beneficiary of the investment. VOEs are typically consolidated if the Company holds the majority voting interest or otherwise controls the entity. In the normal course of business, the Company’s Affiliates sponsor and manage certain investment vehicles (the “Funds”). The Company assesses consolidation requirements with respect to its Funds pursuant to Accounting Standards Codification (“ASC”) Topic 810, Consolidation, as amended by Accounting Standards Update 2015-02, Consolidation: Amendments to the Consolidation Analysis ("ASU 2015-02") relating to the consolidation of VIEs. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties. For VIEs that are investment companies subject to ASU 2010-10, Consolidation: Amendments for Certain Investment Funds, the primary beneficiary of the VIE is generally the variable interest holder that absorbs a majority of the expected losses of the VIE, receives a majority of the expected residual returns of the VIE, or both. The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including interests of related parties, is substantial. The primary beneficiary of a VIE is defined as the variable interest holder that has a controlling financial interest. A controlling financial interest is defined as (i) the power to direct the activities of the VIE that most significantly impacts its economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. If no single party satisfies both criteria, but the Company and its related parties satisfy the criteria on a combined basis, then the primary beneficiary is the entity out of the related party group that is most closely associated to the VIE. The consolidation analysis can generally be performed qualitatively, however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. The Company consolidates VOEs when it has control over significant operating, financial and investing decisions of the entity or holds the majority voting interest. For VOEs organized as limited partnerships or as an entity with governance structures similar to a limited partnership (e.g., limited liability company with a managing member), the Company consolidates an entity when it holds the controlling general partnership interest and the limited partners do not hold substantive participating rights or rights to remove and replace the general partner or rights that could provide the limited partners with the ability to impact the ongoing governance and operating activities of the entity. Upon the occurrence of certain events (such as contributions and redemptions, either by the Company, its Affiliates, or third parties, or amendments to the governing documents of the Company’s investees or sponsored Funds) management reviews and reconsiders its previous conclusion regarding the status of an entity as a VIE or a VOE. Additionally, management continually reconsiders whether the Company is deemed to be a VIE’s primary beneficiary who consolidates such entity. |
Use of Estimates | Use of Estimates The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ significantly from those estimates. |
Acquisitions (Tables) |
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Acquisition date purchase price allocation | The following table presents a summary of the acquisition-date fair values of the assets acquired and liabilities assumed for OMAM’s acquisition of Landmark (in millions):
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Acquisition proforma information | The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the financial results that would have been achieved had the acquisition actually occurred at the beginning of the first period presented (in millions, except per-share amounts):
* The unaudited pro forma financial information originally provided with the Form 10-Q for the period ended September 30, 2016 has been revised to include additional expense estimates that more accurately reflect the combined financial results of OMAM and Landmark. |
Investment (Tables) |
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Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Investment Components | Investments are comprised of the following as of the dates indicated (in millions):
* Other investments represent cost-basis investments made by one of our Affiliates, including investments in timber and timberlands. At December 31, 2016, $50.1 million of these investments were recorded at the lower of cost or fair value less costs to sell and subsequently sold in January 2017 for a net gain of approximately $1.7 million. |
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Investment Income Including Realized Gain Loss On Investments | Investment income is comprised of the following for the three and nine months ended September 30 (in millions):
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Fair Value Measurements (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of the assets and liabilities that are measured at fair value on a recurring basis | The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at September 30, 2017 (in millions):
The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2016 (in millions):
The fair value of other investments is estimated based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs and therefore classified within Level II. The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided. If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III. If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures. Equity, short-term investment funds and derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I. These securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II.
These investments are subject to longer than monthly or quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds. The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one to eight years from September 30, 2017. The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams. The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, acquisitions, and research teams. For certain properties and loans, the valuation process may also include a valuation by independent appraisers. In connection with this process, changes in fair-value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions. Not included in the above are $13.9 million and $52.0 million at September 30, 2017 and December 31, 2016, respectively, of various investments carried at cost, including investments in timber and timberlands. |
Variable Interest Entities (Tables) |
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Schedule of assets and liabilities and information pertains to VIEs | The following table presents the assets and liabilities of Funds that are VIEs and consolidated by the Company (in millions):
The following information pertains to unconsolidated VIEs for which the Company holds a variable interest (in millions):
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Borrowings and Debt (Tables) |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long term debt | The Company’s long-term bonds were comprised of the following as of the dates indicated (in millions):
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Earnings Per Share (Tables) |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of calculation of pro forma basic and diluted earnings per share | The calculation of basic and diluted earnings per ordinary share is as follows (dollars in millions, except per share data):
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Accumulated Other Comprehensive Income (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of accumulated other comprehensive income including proportions attributable to non-controlling interests | The following tables show the tax effects allocated to each component of other comprehensive income (in millions):
The components of accumulated other comprehensive income (loss) for the nine months ended September 30, 2017 were as follows (in millions):
|
Organization and Description of the Business (Details) $ in Millions |
9 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 24, 2017
director
|
May 19, 2017
shares
|
Mar. 25, 2017
USD ($)
shares
|
Dec. 16, 2016
shares
|
Jun. 22, 2015
shares
|
Oct. 15, 2014
shares
|
Sep. 30, 2017
segment
|
|
Business Acquisition [Line Items] | |||||||
Number of reportable segments | segment | 1 | ||||||
Stock issued during period (in shares) | 17,300,000 | 13,000,000 | 13,300,000 | ||||
Stock repurchased and retied during period (in shares) | 5,000,000 | 6,000,000 | |||||
Parent owned interest | 20.10% | ||||||
Parent Company | |||||||
Business Acquisition [Line Items] | |||||||
Percent of interest sold | 24.95% | ||||||
Proceeds from sale of equity interest | $ | $ 446 | ||||||
Number of shares sold (in shares) | 11,414,676 | ||||||
Interest percent remaining after sale | 5.50% | ||||||
Number of directors to be appointed | director | 2 | ||||||
IPO | |||||||
Business Acquisition [Line Items] | |||||||
Stock issued during period (in shares) | 22,000,000 | ||||||
Over-Allotment Option | |||||||
Business Acquisition [Line Items] | |||||||
Stock issued during period (in shares) | 2,595,000 | 1,950,000 | 1,995,000 | 2,231,375 |
Acquisitions - Acquisition Date Purchase Price Allocation (Details) - Landmark $ in Millions |
Aug. 18, 2016
USD ($)
|
---|---|
Purchase price | |
Cash | $ 239.2 |
Seller's expenses | 3.5 |
Total consideration | 242.7 |
Identifiable assets and liabilities | |
Cash | 23.4 |
Receivables | 8.5 |
Indefinite-life trade name | 1.0 |
Amortizable intangible asset management contracts | 85.0 |
Fixed assets | 5.1 |
Other current assets (liabilities), net | (26.7) |
Assets (liabilities), net | (1.7) |
Total identifiable assets and liabilities | 94.6 |
Goodwill | $ 148.1 |
Acquisitions - Acquisition Pro Forma Information (Details) - Landmark - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2016 |
|
Business Acquisition [Line Items] | ||
Revenues | $ 181.3 | $ 526.9 |
Net income attributable to OMAM | $ 26.8 | $ 66.3 |
Net income per share attributable to OMAM shareholders: | ||
Basic (in dollars per share) | $ 0.22 | $ 0.55 |
Diluted (in dollars per share) | $ 0.22 | $ 0.55 |
Investments - Narrative (Details) - USD ($) $ in Millions |
1 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Aug. 31, 2017 |
Sep. 30, 2017 |
Sep. 30, 2016 |
Jul. 31, 2017 |
Dec. 31, 2016 |
|
Investment [Line Items] | |||||
Equity-accounted investments in Affiliates | $ 52.4 | $ 55.2 | |||
Parent Company | |||||
Investment [Line Items] | |||||
Payments to acquire seed investment | $ 39.6 | $ 63.4 | |||
Heitman LLC | |||||
Investment [Line Items] | |||||
Expected proceeds from sale of interest in corporation | $ 110.0 | ||||
Equity-accounted investments in Affiliates | $ 51.0 | ||||
Percent of earnings attributable to equity method investment | 11.00% | 6.00% |
Variable Interest Entities - Assets and Liabilities of Funds that are VIEs (Details) - USD ($) $ in Millions |
Sep. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Assets | ||
Investments at fair value | $ 245.8 | $ 161.6 |
Variable Interest Entity, Primary Beneficiary | ||
Assets | ||
Investments at fair value | 28.4 | 14.9 |
Other assets of consolidated Funds | 10.4 | 0.6 |
Total Assets | 38.8 | 15.5 |
Liabilities | ||
Other liabilities of consolidated Funds | 1.5 | 0.7 |
Total Liabilities | $ 1.5 | $ 0.7 |
Variable Interest Entities - Unconsolidated VIEs (Details) - USD ($) $ in Millions |
1 Months Ended | 5 Months Ended | ||
---|---|---|---|---|
Aug. 31, 2017 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Dec. 31, 2016 |
|
Heitman LLC | ||||
Variable Interest Entities | ||||
Expected proceeds from sale of interest in corporation | $ 110.0 | |||
Variable Interest Entity, Not Primary Beneficiary | ||||
Variable Interest Entities | ||||
Unconsolidated VIE assets | $ 6,024.1 | $ 6,006.3 | ||
Unconsolidated VIE liabilities | 3,895.3 | 3,740.2 | ||
Equity interests on the Condensed Consolidated Balance Sheet | 51.5 | 54.2 | ||
Maximum risk of loss | $ 55.7 | $ 58.5 | ||
Scenario, Forecast | Heitman LLC | ||||
Variable Interest Entities | ||||
Expected proceeds from sale of interest in corporation | $ 110.0 |
Related Party Transactions (Details) $ in Millions |
3 Months Ended | 6 Months Ended | 9 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Jun. 30, 2017
USD ($)
|
Sep. 30, 2017
USD ($)
|
Sep. 30, 2016
USD ($)
|
Jun. 30, 2018
installment
|
Sep. 30, 2017
USD ($)
installment
|
Sep. 30, 2016
USD ($)
|
Jul. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Related party transactions | ||||||||
Number of installment payments | installment | 3 | |||||||
Loan to Equity-Method Affiliate | ||||||||
Related party transactions | ||||||||
Related party loans | $ 3.4 | $ 3.4 | $ 2.7 | |||||
Scenario, Forecast | ||||||||
Related party transactions | ||||||||
Number of installment payments | installment | 2 | |||||||
Parent Company | ||||||||
Related party transactions | ||||||||
Costs allocated | 0.1 | $ 0.2 | 0.5 | $ 0.6 | ||||
Seed capital transferred | $ 39.6 | $ 39.6 | $ 63.4 | |||||
Promissory note payable to finance seed capital investment purchase | $ 4.5 | |||||||
Amount owed to the Parent associated with the co-investment deed | 8.6 | 8.6 | ||||||
Redemptions and estimated taxes due | $ 4.4 | 4.4 | ||||||
Amounts owed under deferred tax asset deed | $ 45.5 | $ 142.6 |
Borrowings and Debt - Long Term Debt Excluding Consolidated Funds (Details) - USD ($) |
Sep. 30, 2017 |
Dec. 31, 2016 |
Jul. 31, 2016 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Maturity amount | $ 400,000,000 | ||
Discount and issuance costs | (7,400,000) | ||
Carrying value | 392,600,000 | $ 392,300,000 | |
Fair Value | 409,100,000 | 378,900,000 | |
Senior notes | 4.80% Senior Notes Due 2026 | |||
Debt Instrument [Line Items] | |||
Maturity amount | 275,000,000 | $ 275,000,000 | |
Discount and issuance costs | (3,200,000) | ||
Carrying value | 271,800,000 | 271,600,000 | |
Fair Value | $ 284,200,000 | 271,000,000 | |
Interest rate | 4.80% | 4.80% | |
Senior notes | 5.125% Senior Notes Due 2031 | |||
Debt Instrument [Line Items] | |||
Maturity amount | $ 125,000,000 | $ 125,000,000.0 | |
Discount and issuance costs | (4,200,000) | ||
Carrying value | 120,800,000 | 120,700,000 | |
Fair Value | $ 124,900,000 | $ 107,900,000 | |
Interest rate | 5.125% | 5.125% |
Commitments and Contingencies (Details) $ in Millions |
Sep. 30, 2017
USD ($)
|
---|---|
Maximum | |
Other Commitments [Line Items] | |
Commitments to fund investment activity | $ 58 |
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Numerator: | ||||
Net income attributable to controlling interests | $ 18.7 | $ 34.0 | $ 53.0 | $ 101.1 |
Less: Total income available to participating unvested securities | (0.1) | (0.2) | (0.3) | (0.7) |
Total net income attributable to ordinary shares | $ 18.6 | $ 33.8 | $ 52.7 | $ 100.4 |
Denominator: | ||||
Weighted average ordinary shares outstanding (in shares) | 109,037,556 | 119,288,903 | 111,270,049 | 119,569,288 |
Potential ordinary shares: | ||||
Restricted stock units (in shares) | 629,441 | 363,401 | 669,849 | 190,497 |
Weighted-average diluted ordinary shares outstanding - diluted (in shares) | 109,666,997 | 119,652,304 | 111,939,898 | 119,759,785 |
Earnings per ordinary share attributable to controlling interests: | ||||
Basic (in dollars per share) | $ 0.17 | $ 0.28 | $ 0.47 | $ 0.84 |
Diluted (in dollars per share) | $ 0.17 | $ 0.28 | $ 0.47 | $ 0.84 |
Accumulated Other Comprehensive Income - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |
---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Reclassification out of Accumulated Other Comprehensive Income | Accumulated other comprehensive income (loss) | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income on Derivatives [Line Items] | ||
Interest expense | $ 2.0 | $ 0.5 |
Discontinued Operations and Restructuring (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2017 |
Sep. 30, 2016 |
Sep. 30, 2017 |
Sep. 30, 2016 |
|
Discontinued Operations and Disposal Groups [Abstract] | ||||
Gain (loss) on disposal, net of tax | $ 0.0 | $ (0.4) | $ (0.1) | $ 1.2 |
Discontinued operations earnings per share (in dollars per share) | $ 0.00 | $ 0.00 | $ 0.00 | $ 0.01 |
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