x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 13-6174048 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
330 Madison Ave. New York, NY | 10017 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ¨ | Accelerated filer | x | |
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
As of | ||||||||
(in thousands, except for share amounts) | March 31, 2013 | December 31, 2012 | ||||||
ASSETS | ||||||||
Cash | $ | 68,574 | $ | 91,751 | ||||
Investments, at fair value: | ||||||||
Artio Global funds held for deferred compensation | 10,186 | 10,149 | ||||||
Investments owned by the Consolidated Investment Products (including $3,060 in 2013 and $4,265 in 2012 pledged as collateral for debt) | 49,810 | 53,191 | ||||||
Fees receivable and accrued fees, net of allowance for doubtful accounts | 9,322 | 12,158 | ||||||
Deferred taxes, net of valuation allowance of $180,486 in 2013 and $178,483 in 2012 | 9,798 | 16,140 | ||||||
Income taxes receivable | 15,268 | 9,896 | ||||||
Due from brokers | 13,384 | 13,450 | ||||||
Other assets | 10,293 | 9,865 | ||||||
Total assets | $ | 186,635 | $ | 216,600 | ||||
LIABILITIES AND EQUITY | ||||||||
Liability under total return swap | $ | 2,921 | $ | 4,104 | ||||
Accrued compensation and benefits | 11,123 | 27,637 | ||||||
Accounts payable and accrued expenses | 7,066 | 5,167 | ||||||
Investments sold, not yet purchased by the Consolidated Investment Products, at fair value | 2,062 | 2,483 | ||||||
Accrued income taxes payable | 1,443 | 2,232 | ||||||
Due under tax receivable agreement | 9,985 | 14,498 | ||||||
Due to brokers | 4,209 | 4,756 | ||||||
Other liabilities | 2,082 | 1,635 | ||||||
Total liabilities | 40,891 | 62,512 | ||||||
Commitments and contingencies (Note 13) | ||||||||
Class A common stock (500,000,000 shares authorized, 2013 – 60,548,105 shares issued and outstanding; 2012 – 60,009,073 shares issued and outstanding) | 60 | 60 | ||||||
Additional paid-in capital | 665,633 | 662,529 | ||||||
Accumulated deficit | (532,293 | ) | (521,551 | ) | ||||
Total stockholders’ equity | 133,400 | 141,038 | ||||||
Non-controlling interests | 12,344 | 13,050 | ||||||
Total equity | 145,744 | 154,088 | ||||||
Total liabilities and equity | $ | 186,635 | $ | 216,600 |
Three Months Ended March 31, | ||||||||
(in thousands, except per share information) | 2013 | 2012 | ||||||
Revenues and other operating income: | ||||||||
Investment management fees | $ | 15,336 | $ | 42,771 | ||||
Net gains on funds held for deferred compensation | 299 | 1,160 | ||||||
Foreign currency losses | (39 | ) | (1 | ) | ||||
Total revenues and other operating income | 15,596 | 43,930 | ||||||
Expenses: | ||||||||
Employee compensation and benefits | 14,551 | 22,334 | ||||||
Shareholder servicing and marketing | 1,941 | 3,624 | ||||||
General and administrative | 10,718 | 9,738 | ||||||
Total expenses | 27,210 | 35,696 | ||||||
Operating income (loss) before income tax expense | (11,614 | ) | 8,234 | |||||
Non-operating income (loss): | ||||||||
The Consolidated Investment Products and other seed money investments: | ||||||||
Interest income, net | 501 | 934 | ||||||
Net gains | 1,139 | 2,081 | ||||||
Expenses | (141 | ) | (13 | ) | ||||
Total | 1,499 | 3,002 | ||||||
Interest income (expense), net | 180 | (435 | ) | |||||
Reduction in liability under tax receivable agreement | 5 | — | ||||||
Other expense | (3 | ) | (11 | ) | ||||
Total non-operating income | 1,681 | 2,556 | ||||||
Income (loss) before income tax expense | (9,933 | ) | 10,790 | |||||
Income taxes | 270 | 5,322 | ||||||
Net income (loss) | (10,203 | ) | 5,468 | |||||
Net income attributable to non-controlling interests in Holdings | — | 190 | ||||||
Net income attributable to non-controlling interests in the Consolidated Investment Products | 539 | 678 | ||||||
Net income (loss) attributable to Artio Global Investors | $ | (10,742 | ) | 4,600 | ||||
Per share information: | ||||||||
Basic net income (loss) attributable to Artio Global Investors | $ | (0.18 | ) | $ | 0.08 | |||
Diluted net income (loss) attributable to Artio Global Investors | $ | (0.18 | ) | $ | 0.08 | |||
Weighted average shares used to calculate per share information: | ||||||||
Basic | 60,350 | 58,193 | ||||||
Diluted | 60,350 | 58,475 | ||||||
Dividends per basic share declared | $ | — | $ | 0.06 |
(in thousands, except per share information) | Class A Common Stock (par value $0.001) | Class B Common Stock (par value $0.001) | Additional Paid-in Capital | Retained Earnings (Accumulated Deficit) | Total Stock- holders’ Equity | Non- controlling Interests in Holdings | Non- controlling Interests in the Consolidated Investment Products | Total Equity | ||||||||||||||||||||||||
Balance as of January 1, 2012 | $ | 58 | $ | 1 | $ | 629,553 | $ | (466,782 | ) | $ | 162,830 | $ | 1,857 | $ | 13,581 | $ | 178,268 | |||||||||||||||
Net income | — | — | — | 4,600 | 4,600 | 190 | 678 | 5,468 | ||||||||||||||||||||||||
Share-based payments: | ||||||||||||||||||||||||||||||||
Amortization | — | — | 4,542 | — | 4,542 | — | — | 4,542 | ||||||||||||||||||||||||
Dividend equivalents | — | — | 215 | (215 | ) | — | — | — | — | |||||||||||||||||||||||
Capital contributions from non- controlling interests | — | — | — | — | — | — | 151 | 151 | ||||||||||||||||||||||||
Distribution to non-controlling interests | — | — | — | — | — | (249 | ) | — | (249 | ) | ||||||||||||||||||||||
Cash dividends paid ($0.06 per share) | — | — | — | (3,497 | ) | (3,497 | ) | — | — | (3,497 | ) | |||||||||||||||||||||
Balance as of March 31, 2012 | $ | 58 | $ | 1 | $ | 634,310 | $ | (465,894 | ) | $ | 168,475 | $ | 1,798 | $ | 14,410 | $ | 184,683 | |||||||||||||||
Balance as of January 1, 2013 | $ | 60 | $ | — | $ | 662,529 | $ | (521,551 | ) | $ | 141,038 | $ | — | $ | 13,050 | $ | 154,088 | |||||||||||||||
Net loss | — | — | — | (10,742 | ) | (10,742 | ) | — | 539 | (10,203 | ) | |||||||||||||||||||||
Share-based payments: | ||||||||||||||||||||||||||||||||
Directors’ awards | — | — | 80 | — | 80 | — | — | 80 | ||||||||||||||||||||||||
Amortization | — | — | 3,031 | — | 3,031 | — | — | 3,031 | ||||||||||||||||||||||||
Forfeitures | — | — | (7 | ) | — | (7 | ) | — | — | (7 | ) | |||||||||||||||||||||
Distribution to non-controlling interests | — | — | — | — | — | — | (1,245 | ) | (1,245 | ) | ||||||||||||||||||||||
Balance as of March 31, 2013 | $ | 60 | $ | — | $ | 665,633 | $ | (532,293 | ) | $ | 133,400 | $ | — | $ | 12,344 | $ | 145,744 |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (10,203 | ) | $ | 5,468 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 608 | 598 | ||||||
Deferred compensation | 1,075 | 1,905 | ||||||
Share-based compensation | 3,104 | 4,542 | ||||||
Deferred income taxes | 6,342 | 4,905 | ||||||
Interest accrued on investments and accretion and amortization of premium and discount | 84 | — | ||||||
(Gains)/losses on investments | (338 | ) | (3,241 | ) | ||||
Changes in assets and liabilities: | ||||||||
Purchases by the Consolidated Investment Products and of other seed money investments | (8,480 | ) | (32,300 | ) | ||||
Proceeds from sales or maturities by the Consolidated Investment Products and from other seed money investments | 11,952 | 18,170 | ||||||
Fees receivable and accrued fees, net of allowance for doubtful accounts | 2,836 | 4,002 | ||||||
Income taxes receivable | (5,372 | ) | (1,962 | ) | ||||
Due from brokers | 66 | — | ||||||
Other assets | (942 | ) | (6,783 | ) | ||||
Debt of the Consolidated Investment Products | — | 10,622 | ||||||
Accrued compensation and benefits | (17,589 | ) | (27,436 | ) | ||||
Accounts payable and accrued expenses | 1,938 | (585 | ) | |||||
Accrued income taxes payable | (789 | ) | (13 | ) | ||||
Due under tax receivable agreement | (4,513 | ) | (6,981 | ) | ||||
Due to brokers | (547 | ) | 9,593 | |||||
Other liabilities | (111 | ) | (321 | ) | ||||
Net cash used in operating activities | (20,879 | ) | (19,817 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of Artio Global funds held for deferred compensation | (5,012 | ) | (4,401 | ) | ||||
Proceeds from redemptions of Artio Global funds held for deferred compensation | 5,275 | 4,971 | ||||||
Purchase of fixed assets | (94 | ) | (190 | ) | ||||
Net cash provided by investing activities | 169 | 380 |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Cash flows from financing activities: | ||||||||
Repayments of borrowing under term credit facility | — | (37,500 | ) | |||||
Repayments under the total return swap | (1,183 | ) | — | |||||
Distributions paid to non-controlling interests in Holdings | — | (249 | ) | |||||
Distributions paid to non-controlling interests in the Consolidated Investment Products | (1,245 | ) | — | |||||
Contributions from non-controlling interests in the Consolidated Investment Products | — | 151 | ||||||
Cash dividends paid | — | (3,497 | ) | |||||
Net cash used in financing activities | (2,428 | ) | (41,095 | ) | ||||
Effect of exchange rates on cash | (39 | ) | (1 | ) | ||||
Net decrease in cash | (23,177 | ) | (60,533 | ) | ||||
Cash: | ||||||||
Beginning of period | 91,751 | 110,252 | ||||||
End of period | $ | 68,574 | $ | 49,719 | ||||
Cash paid during period for: | ||||||||
Income taxes, net of refunds | $ | (8 | ) | $ | 2,392 | |||
Interest expense | — | 310 |
(in thousands) | Class A Common Stock | ||
As of December 31, 2012(b) | 60,009 | ||
Activity: | |||
Restricted stock units vested | 499 | ||
Shares issued to the independent directors(a) | 40 | ||
As of March 31, 2013(b) | 60,548 |
(a) | Represents the 39,801 shares of fully vested Class A common stock (subject to transfer restrictions) that were awarded to a new independent director during the three months ended March 31, 2013. |
(b) | The table does not reflect 3.5 million restricted stock units and shares awarded to certain employees as of December 31, 2012, and 5.6 million awarded to certain employees as of March 31, 2013 (see Note 8. Share-Based Payments). Each restricted stock unit or share represents the right to receive one share of unrestricted Class A common stock upon vesting. |
(in thousands) | Before Consolidation (a) | Consolidated Investment Products | Eliminations | Artio Global Investors Inc. and Subsidiaries Consolidated | ||||||||||||
Assets: | ||||||||||||||||
Cash | $ | 66,641 | $ | 1,933 | $ | — | $ | 68,574 | ||||||||
Investments, at fair value | 10,186 | 49,810 | — | 59,996 | ||||||||||||
Investment in the Consolidated Investment Products | 45,765 | (45,765 | ) | |||||||||||||
Other assets | 41,282 | 16,783 | — | 58,065 | ||||||||||||
Total assets | $ | 163,874 | $ | 68,526 | $ | (45,765 | ) | $ | 186,635 | |||||||
Liabilities and Equity: | ||||||||||||||||
Liabilities under the total return swap | $ | — | $ | 2,921 | $ | — | $ | 2,921 | ||||||||
Investments sold, not yet purchased by the Consolidated Investment Products, at fair value | — | 2,062 | — | 2,062 | ||||||||||||
Other liabilities | 30,474 | 5,434 | — | 35,908 | ||||||||||||
Total liabilities | 30,474 | 10,417 | — | 40,891 | ||||||||||||
Members’ equity | 33,652 | (33,652 | ) | — | ||||||||||||
Net asset value | 24,457 | (24,457 | ) | — | ||||||||||||
Common stock | 60 | — | 60 | |||||||||||||
Additional paid-in capital | 665,633 | — | 665,633 | |||||||||||||
Accumulated deficit | (532,293 | ) | — | (532,293 | ) | |||||||||||
Total stockholders’ equity | 133,400 | 58,109 | (58,109 | ) | 133,400 | |||||||||||
Non-controlling interests | — | 12,344 | 12,344 | |||||||||||||
Total equity | 133,400 | 58,109 | (45,765 | ) | 145,744 | |||||||||||
Total liabilities and equity | $ | 163,874 | $ | 68,526 | $ | (45,765 | ) | $ | 186,635 |
(a) | Represents Artio Global Investors Inc. and subsidiaries with the investment in the Consolidated Investment Products accounted for under the equity method. |
(in thousands) | Before Consolidation (a) | Consolidated Investment Products | Eliminations | Artio Global Investors Inc. and Subsidiaries Consolidated | ||||||||||||
Assets: | ||||||||||||||||
Cash | $ | 90,854 | $ | 897 | $ | — | $ | 91,751 | ||||||||
Investments, at fair value | 10,149 | 53,191 | — | 63,340 | ||||||||||||
Investment in the Consolidated Investment Products | 44,717 | (44,717 | ) | |||||||||||||
Other assets | 45,868 | 15,641 | — | 61,509 | ||||||||||||
Total assets | $ | 191,588 | $ | 69,729 | $ | (44,717 | ) | $ | 216,600 | |||||||
Liabilities and Equity: | ||||||||||||||||
Liabilities under total return swap | $ | — | $ | 4,104 | $ | — | $ | 4,104 | ||||||||
Investments sold, not yet purchased by the Consolidated Investment Products, at fair value | — | 2,483 | — | 2,483 | ||||||||||||
Other liabilities | 50,550 | 5,375 | — | 55,925 | ||||||||||||
Total liabilities | 50,550 | 11,962 | — | 62,512 | ||||||||||||
Members’ equity | 32,128 | (32,128 | ) | — | ||||||||||||
Net asset value | 25,639 | (25,639 | ) | — | ||||||||||||
Common stock | 60 | — | 60 | |||||||||||||
Additional paid-in capital | 662,529 | — | 662,529 | |||||||||||||
Accumulated deficit | (521,551 | ) | — | (521,551 | ) | |||||||||||
Total stockholders’ equity | 141,038 | 57,767 | (57,767 | ) | 141,038 | |||||||||||
Non-controlling interests | — | 13,050 | 13,050 | |||||||||||||
Total equity | 141,038 | 57,767 | (44,717 | ) | 154,088 | |||||||||||
Total liabilities and equity | $ | 191,588 | $ | 69,729 | $ | (44,717 | ) | $ | 216,600 |
(a) | Represents Artio Global Investors Inc. and subsidiaries with the investment in the Consolidated Investment Products accounted for under the equity method. |
(in thousands) | Before Consolidation (a) | Consolidated Investment Products | Eliminations | Artio Global Investors Inc. and Subsidiaries Consolidated | ||||||||||||
For the three months ended March 31, 2013: | ||||||||||||||||
Total revenues and other operating income | $ | 15,593 | $ | — | $ | 3 | $ | 15,596 | ||||||||
Total expenses | 27,210 | — | — | 27,210 | ||||||||||||
Operating income (loss) before income tax expense | (11,617 | ) | — | 3 | (11,614 | ) | ||||||||||
Non-operating income: | ||||||||||||||||
Equity in earnings of the Consolidated Investment Products | 1,048 | (1,048 | ) | — | ||||||||||||
Other | 97 | 1,587 | (3 | ) | 1,681 | |||||||||||
Total non-operating income | 1,145 | 1,587 | (1,051 | ) | 1,681 | |||||||||||
Income (loss) before income tax expense | (10,472 | ) | 1,587 | (1,048 | ) | (9,933 | ) | |||||||||
Income taxes | 270 | — | — | 270 | ||||||||||||
Net income (loss) | (10,742 | ) | 1,587 | (1,048 | ) | (10,203 | ) | |||||||||
Net income attributable to non-controlling interests | — | — | 539 | 539 | ||||||||||||
Net income (loss), excluding non-controlling interests | $ | (10,742 | ) | $ | 1,587 | $ | (1,587 | ) | $ | (10,742 | ) | |||||
For the three months ended March 31, 2012: | ||||||||||||||||
Total revenues and other operating income | $ | 43,904 | $ | — | $ | 26 | $ | 43,930 | ||||||||
Total expenses | 35,696 | — | — | 35,696 | ||||||||||||
Operating income before income tax expense | 8,208 | — | 26 | 8,234 | ||||||||||||
Non-operating income: | ||||||||||||||||
Equity in earnings of the Consolidated Investment Products | 1,883 | (1,883 | ) | — | ||||||||||||
Other | 21 | 2,561 | (26 | ) | 2,556 | |||||||||||
Total non-operating income | 1,904 | 2,561 | (1,909 | ) | 2,556 | |||||||||||
Income before income tax expense | 10,112 | 2,561 | (1,883 | ) | 10,790 | |||||||||||
Income taxes | 5,322 | — | — | 5,322 | ||||||||||||
Net income | 4,790 | 2,561 | (1,883 | ) | 5,468 | |||||||||||
Net income attributable to non-controlling interests | 190 | — | 678 | 868 | ||||||||||||
Net income, excluding non-controlling interests | $ | 4,600 | $ | 2,561 | $ | (2,561 | ) | $ | 4,600 |
(a) | Represents Artio Global Investors Inc. and subsidiaries with the investment in the Consolidated Investment Products accounted for under the equity method. |
(in thousands) | Before Consolidation | Consolidated Investment Products | Eliminations | Artio Global Investors Inc. and Subsidiaries Consolidated | ||||||||||||
For the three months ended March 31, 2013: | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | (24,343 | ) | $ | 3,464 | $ | — | $ | (20,879 | ) | ||||||
Net cash provided by investing activities | 169 | — | — | 169 | ||||||||||||
Net cash provided by (used in) financing activities | — | (2,428 | ) | — | (2,428 | ) | ||||||||||
Effect of exchange rates on cash | (39 | ) | — | — | (39 | ) | ||||||||||
Net decrease in cash | (24,213 | ) | 1,036 | — | (23,177 | ) | ||||||||||
Cash - beginning of period | 90,854 | 897 | — | 91,751 | ||||||||||||
Cash - end of period | $ | 66,641 | $ | 1,933 | $ | — | $ | 68,574 | ||||||||
For the three months ended March 31, 2012: | ||||||||||||||||
Net cash provided by (used in) operating activities | $ | (20,717 | ) | $ | 900 | $ | — | $ | (19,817 | ) | ||||||
Net cash provided by investing activities | 380 | — | — | 380 | ||||||||||||
Net cash provided by (used in) financing activities | (41,245 | ) | 150 | — | (41,095 | ) | ||||||||||
Effect of exchange rates on cash | (1 | ) | — | — | (1 | ) | ||||||||||
Net increase (decrease) in cash | (61,583 | ) | 1,050 | — | (60,533 | ) | ||||||||||
Cash - beginning of period | 108,518 | 1,734 | — | 110,252 | ||||||||||||
Cash - end of period | $ | 46,935 | $ | 2,784 | $ | — | $ | 49,719 |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Funds’ investment management fees | $ | 10,301 | $ | 24,837 | ||||
Sub-advisory investment management fees on GAM-sponsored funds | 362 | 367 |
As of | ||||||||
(in thousands) | March 31, 2013 | December 31, 2012 | ||||||
Funds’ investment management fees | $ | 2,974 | $ | 3,965 | ||||
Sub-advisory investment management fees on GAM-sponsored funds | 402 | 421 |
As of | ||||||||
(in thousands) | March 31, 2013 | December 31, 2012 | ||||||
Artio Global funds held for deferred compensation: | ||||||||
Artio Global funds | $ | 10,186 | $ | 10,149 | ||||
Total Artio Global funds held for deferred compensation | $ | 10,186 | $ | 10,149 | ||||
Investments owned by the Consolidated Investment Products: | ||||||||
Equity securities | $ | 3,473 | $ | 3,766 | ||||
Fixed income investments: | ||||||||
Corporate bonds | 23,965 | 24,291 | ||||||
Sovereign and international financial organization debt | 17,259 | 19,028 | ||||||
Term loans | 3,807 | 5,372 | ||||||
Warrants | 173 | 182 | ||||||
Asset-backed securities | 410 | 220 | ||||||
Resell agreements | 723 | 332 | ||||||
Total investments owned by the Consolidated Investment Products | $ | 49,810 | $ | 53,191 | ||||
Investments sold, not yet purchased by the Consolidated Investment Products: | ||||||||
Fixed income investments: | ||||||||
Corporate bonds | $ | (2,062 | ) | $ | (2,483 | ) | ||
Total investments sold, not yet purchased by the Consolidated Investments Products | $ | (2,062 | ) | $ | (2,483 | ) |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Net gains on Artio Global funds held for deferred compensation | $ | 299 | $ | 1,160 | ||||
Less: Net gains on redeemed Artio Global funds held for deferred compensation | 448 | 553 | ||||||
Unrealized gains (losses) on Artio Global funds held for deferred compensation | $ | (149 | ) | $ | 607 | |||
Net gains (losses) – the Consolidated Investment Products and other seed money investments: | ||||||||
Net gains on investments of the Consolidated Investment Products | $ | 1,139 | $ | 1,615 | ||||
Less: Net gains (losses) on investments of the Consolidated Investment Products sold or matured | 563 | (1,148 | ) | |||||
Unrealized gains on investments of the Consolidated Investment Products | $ | 576 | $ | 2,763 | ||||
Net gains on other seed money investments | $ | — | $ | 466 | ||||
Less: Net gains on other seed money investments sold, matured or redeemed | — | 15 | ||||||
Unrealized gains on other seed money investments | $ | — | $ | 451 | ||||
Total net gains – the Consolidated Investment Products and other seed money investments | $ | 1,139 | $ | 2,081 | ||||
Less: Total net gains (losses) on the Consolidated Investment and other seed money investments sold, matured or redeemed | 563 | (1,133 | ) | |||||
Total unrealized gains on the Consolidated Investment Products and other seed money investments | $ | 576 | $ | 3,214 |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Equity securities | $ | 64 | $ | 198 | ||||
Fixed income investments: | ||||||||
Corporate bonds | 266 | 895 | ||||||
Sovereign and international financial organization debt | (98 | ) | 908 | |||||
Term loans | 367 | 420 | ||||||
Warrants | (10 | ) | 47 | |||||
Asset-backed securities | 8 | — | ||||||
Total return swap | 794 | — | ||||||
Credit default swaps | (396 | ) | (521 | ) | ||||
Interest rate swaps | 17 | — | ||||||
Foreign exchange contracts | 19 | (136 | ) | |||||
Options | 9 | (190 | ) | |||||
Other | 99 | (6 | ) | |||||
Total net gains – the Consolidated Investment Products | $ | 1,139 | $ | 1,615 |
(in thousands) | Total | Level 1 Quoted Prices | Level 2 Other Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Artio Global funds held for deferred compensation: | ||||||||||||||||
Artio Global funds | $ | 10,186 | $ | 10,186 | $ | — | $ | — | ||||||||
Total Artio Global funds held for deferred compensation | $ | 10,186 | $ | 10,186 | $ | — | $ | — | ||||||||
Investments owned by the Consolidated Investment Products: | ||||||||||||||||
Investments owned by the Consolidated Investment Products: | ||||||||||||||||
Equity securities | $ | 3,473 | $ | 1,962 | $ | 1,469 | $ | 42 | ||||||||
Fixed income investments: | ||||||||||||||||
Corporate bonds | 23,965 | 392 | 23,573 | — | ||||||||||||
Sovereign and international financial organization debt | 17,259 | — | 17,259 | — | ||||||||||||
Term loans | 3,807 | — | 3,807 | — | ||||||||||||
Warrants | 173 | 173 | — | — | ||||||||||||
Asset-backed securities | 410 | — | 410 | — | ||||||||||||
Resell agreements | 723 | — | 723 | — | ||||||||||||
Total investments owned by the Consolidated Investment Products | $ | 49,810 | $ | 2,527 | $ | 47,241 | $ | 42 | ||||||||
Investments sold, not yet purchased by the Consolidated Investments Products: | ||||||||||||||||
Fixed income investments: | ||||||||||||||||
Corporate bonds | $ | (2,062 | ) | $ | — | $ | (2,062 | ) | $ | — | ||||||
Total investments sold, not yet purchased by the Consolidated Investment Products | $ | (2,062 | ) | $ | — | $ | (2,062 | ) | $ | — |
(in thousands) | Total | Level 1 Quoted Prices | Level 2 Other Observable Inputs | Level 3 Significant Unobservable Inputs | ||||||||||||
Artio Global funds held for deferred compensation: | ||||||||||||||||
Artio Global funds | $ | 10,149 | $ | 10,149 | $ | — | $ | — | ||||||||
Total Artio Global funds held for deferred compensation | $ | 10,149 | $ | 10,149 | $ | — | $ | — | ||||||||
Investments owned by the Consolidated Investment Products: | ||||||||||||||||
Equity securities | $ | 3,766 | $ | 2,268 | $ | 1,457 | $ | 41 | ||||||||
Fixed income investments: | ||||||||||||||||
Corporate bonds | 24,291 | — | 24,291 | — | ||||||||||||
Sovereign and international financial organization debt | 19,028 | — | 19,028 | — | ||||||||||||
Term loans | 5,372 | — | 4,375 | 997 | ||||||||||||
Warrants | 182 | 182 | — | — | ||||||||||||
Asset-backed securities | 220 | — | 220 | — | ||||||||||||
Resell agreements | 332 | — | 332 | — | ||||||||||||
Total investments owned by the Consolidated Investment Products | $ | 53,191 | $ | 2,450 | $ | 49,703 | $ | 1,038 | ||||||||
Investments sold, not yet purchased by the Consolidated Investments Products: | ||||||||||||||||
Fixed income investments: | ||||||||||||||||
Corporate bonds | $ | (2,483 | ) | $ | — | $ | (2,483 | ) | $ | — | ||||||
Total investments sold, not yet purchased by the Consolidated Investment Products | $ | (2,483 | ) | $ | — | $ | (2,483 | ) | $ | — |
As of March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Equity securities owned by the Consolidated Investment Products: | ||||||||
Beginning of period | $ | 41 | $ | 52 | ||||
Net gains (losses) during the period | 1 | (16 | ) | |||||
End of period | $ | 42 | $ | 36 | ||||
Equity securities – total gains (losses) for the year attributable to the change in unrealized gains or losses relating to assets still held as of the end of the period | $ | 1 | $ | (39 | ) | |||
Corporate bonds owned by the Consolidated Investment Products: | ||||||||
Beginning of period | $ | — | $ | 413 | ||||
Transfers to Level 2 | — | (159 | ) | |||||
Net losses during the period | — | (218 | ) | |||||
End of period | $ | — | $ | 36 | ||||
Corporate bonds – total losses for the year attributable to the change in unrealized gains or losses relating to assets still held as of the end of the period | $ | — | $ | (5 | ) | |||
Term loans owned by the Consolidated Investment Products: | ||||||||
Beginning of period | $ | 997 | $ | 947 | ||||
Purchases | — | 1,919 | ||||||
Sales | (998 | ) | (966 | ) | ||||
Amortization | (9 | ) | — | |||||
Net gains during the period | 10 | 2 | ||||||
End of period | $ | — | $ | 1,902 | ||||
Term loans – total losses for the year attributable to the change in unrealized gains or losses relating to assets still held as of the end of the period | $ | — | $ | (15 | ) |
Notional/Nominal Amounts as of | Average Notional/Nominal Amount Outstanding for the Three Months Ending | |||||||||||||||
(in thousands) | March 31, 2013 | December 31, 2012 | March 31, 2013 | March 31, 2012 | ||||||||||||
Credit default swaps | $ | 898 | $ | 20,490 | $ | 725 | $ | 15,187 | ||||||||
Total return swap | 42,104 | 37,878 | 39,991 | — | ||||||||||||
Interest rate swaps | 30,000 | 30,000 | 30,000 | — | ||||||||||||
Foreign exchange contracts | 13,374 | 12,016 | 11,092 | 16,486 | ||||||||||||
Option contracts | — | 9 | 3 | 6,120 |
Assets | Liabilities | |||||||||||
(in thousands) | Statement of Financial Position Location | Fair Value | Statement of Financial Position Location | Fair Value | ||||||||
As of March 31, 2013: | ||||||||||||
Credit default swaps | Other assets | $ | 340 | Other liabilities | $ | 558 | ||||||
Total return swap | Other assets | 1,578 | ||||||||||
Interest rate swaps | Other liabilities | 2 | ||||||||||
Foreign exchange contracts | Other assets | 142 | Other liabilities | 16 | ||||||||
As of December 31, 2012: | ||||||||||||
Credit default swaps | Other assets | $ | 180 | |||||||||
Total return swap | Other assets | 785 | ||||||||||
Interest rate swaps | Other assets | $ | 19 | |||||||||
Foreign exchange contracts | Other assets | 78 | Other liabilities | 44 | ||||||||
Option contracts | Other liabilities | 9 |
Units/Shares | |||
Available for grant at inception | 9,700,000 | ||
Restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) granted, including dividend equivalents | (8,824,360 | ) | |
Fully vested restricted stock granted to independent directors | (162,100 | ) | |
RSUs forfeited, including dividend equivalents | 1,059,839 | ||
Available for grant as of March 31, 2013 | 1,773,379 |
Weighted-Average Grant Date Fair Value | Number of RSUs and RSAs | RSU and RSA Dividend Equivalents | ||||||||
Granted and unvested as of December 31, 2012(a) | $ | 15.32 | 1,924,744 | 112,251 | ||||||
Grants: | ||||||||||
RSUs | 2.00 | 2,678,401 | ||||||||
Dividend equivalents | — | |||||||||
Vesting: | ||||||||||
RSUs | 10.16 | (475,574 | ) | |||||||
Dividend equivalents | (23,736 | ) | ||||||||
Forfeitures: | ||||||||||
RSUs | 2.01 | (62,189 | ) | |||||||
Dividend equivalents | — | |||||||||
Granted and unvested as of March 31, 2013(a) | 7.35 | 4,065,382 | 88,515 | |||||||
Granted and unvested as of December 31, 2011(a) | $ | 22.02 | 1,822,079 | 66,562 | ||||||
Grants: | ||||||||||
RSUs | 4.42 | 875,143 | ||||||||
Dividend equivalents | 30,708 | |||||||||
Vesting: | ||||||||||
RSUs | 17.63 | (219,296 | ) | |||||||
Dividend equivalents | (6,594 | ) | ||||||||
Forfeitures: | ||||||||||
RSUs | 22.87 | (33,928 | ) | |||||||
Dividend equivalents | (1,541 | ) | ||||||||
Granted and unvested as of March 31, 2012(a) | 16.94 | 2,443,998 | 89,135 |
(a) | In 2012, the Board approved the elimination of the service requirement for all unvested RSU grants made at the time of our initial public offering. These RSU awards will continue to vest in accordance with the previously existing schedule. These RSUs awards and RSU awards that meet retirement eligibility requirements are participating securities for purposes of computing earnings per share. |
Weighted-Average Grant Date Fair Value(a) | Number of LTIP RSUs | Future Grant Date LTIP RSUs | LTIP RSU Dividend Equivalents | ||||||||||
LTIP RSUs as of December 31, 2012 | $ | 10.23 | 1,357,596 | 11,479 | 81,441 | ||||||||
Grant date fair value set | — | — | — | ||||||||||
Dividend equivalents | — | ||||||||||||
Forfeitures: | |||||||||||||
RSUs | — | — | — | ||||||||||
Dividend equivalents | — | ||||||||||||
LTIP RSUs as of March 31, 2013 | 10.23 | 1,357,596 | 11,479 | 81,441 | |||||||||
LTIP RSUs as of December 31, 2011 | $ | 14.81 | 1,759,668 | 178,695 | 48,879 | ||||||||
Grant date fair value set | 6.12 | 71,304 | (71,304 | ) | |||||||||
Dividend equivalents | 24,097 | ||||||||||||
Forfeitures: | |||||||||||||
RSUs | 14.81 | (15,954 | ) | (33,929 | ) | ||||||||
Dividend equivalents | (1,888 | ) | |||||||||||
LTIP RSUs as of March 31, 2012 | 11.91 | 1,815,018 | 73,462 | 71,088 |
(a) | Weighted-average grant date fair value for grants is based on the closing price on the grant date. Market-based grants do not use the weighted-average grant date fair value to calculate amortization expense, but a fair value using a Monte Carlo pricing model. The model requires management to develop estimates regarding certain input variables. If we had used different methods to estimate our variables for the Monte Carlo model, or if we had used a different type of pricing model, the fair value of our grants might have been different. |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Current: | ||||||||
Federal | $ | (5,381 | ) | $ | 154 | |||
State and local | (691 | ) | 263 | |||||
Total | (6,072 | ) | 417 | |||||
Deferred: | ||||||||
Federal | 4,169 | 3,898 | ||||||
State and local | 2,173 | 1,007 | ||||||
Total | 6,342 | 4,905 | ||||||
Income tax expense | $ | 270 | $ | 5,322 |
Three Months Ended March 31, | ||||||
(in percentages) | 2013 | 2012 | ||||
Federal statutory rate | 35 | % | 35 | % | ||
State and local, net of Federal benefit, and other | 5 | 5 | ||||
Non-controlling interests | 2 | (3 | ) | |||
Permanent differences: | ||||||
Valuation allowance | (22 | ) | — | |||
Vesting of RSUs(a) | (16 | ) | 10 | |||
Release of unrecognized tax benefit | 5 | — | ||||
Project costs associated with the pending transaction with Aberdeen | (14 | ) | — | |||
Other | 2 | 2 | ||||
Total | (3 | )% | 49 | % |
(a) | We wrote down the carrying value of the deferred tax asset by $1.6 million for the three months ended March 31, 2013, and $1.2 million for the three months ended March 31, 2012, due to the vesting of RSUs at a price lower than their grant-date price. |
(in thousands) | ||||
Balance, January 1, 2012 | $ | 3,177 | ||
Additions (reductions) for tax provisions of prior years | (274 | ) | ||
Additions based on tax provisions related to current year | — | |||
Reductions for settlements with taxing authorities | (1,181 | ) | ||
Lapse of statute of limitations | (620 | ) | ||
Balance, December 31, 2012 | 1,102 | |||
Additions (reductions) for tax provisions of prior years | — | |||
Additions based on tax provisions related to current year | — | |||
Reductions for settlements with taxing authorities | (790 | ) | ||
Lapse of statute of limitations | — | |||
Balance, March 31, 2013 | $ | 312 |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Net income (loss) attributable to Artio Global Investors – Basic | $ | (10,742 | ) | $ | 4,600 | |||
Net income attributable to non-controlling interests(a) | — | — | ||||||
Income tax related to non-controlling interests(a) | — | — | ||||||
Net income (loss) – Diluted | $ | (10,742 | ) | $ | 4,600 | |||
Weighted average shares for basic EPS | 60,350 | 58,193 | ||||||
Dilutive potential shares from grants of RSUs(b) | — | 282 | ||||||
Weighted average shares for diluted EPS | 60,350 | 58,475 |
(a) | In April 2012, the Principals each exchanged their remaining 1.2 million New Class A Units for 1.2 million shares of Class A common stock and a corresponding number of shares of Class B common stock were canceled. The potential impact of the exchange of New Class A Units by the Principals, and cancelation of corresponding shares of Class B common stock, for Class A common stock of 1.2 million weighted average shares for the three months ended March 31, 2012, were antidilutive. |
(b) | The potential impact of 0.9 million granted RSUs for the three months ended March 31, 2013, and 1.9 million granted RSUs for the three months ended March 31, 2012, was antidilutive. |
• | General Overview. Beginning on page 26, we provide a summary of our overall business, the proposed merger and our business environment. |
• | Key Performance Indicators. Beginning on page 28, we discuss the operating and financial indicators that guide management’s review of our performance. |
• | Assets Under Management. Beginning on page 31, we provide a detailed discussion of our assets under management (“AuM”), which is the major driver of our operating revenues and key performance indicators. |
• | Revenues and Other Operating Income. Beginning on page 34, we compare our revenue and other operating income to the corresponding period a year ago. |
• | Operating Expenses. Beginning on page 35, we compare our operating expenses to the corresponding period a year ago. |
• | Non-Operating Income (Loss). Beginning on page 36, we compare our non-operating income (loss) to the corresponding period a year ago. |
• | Income Taxes. Beginning on page 36, we compare our effective tax rates to the corresponding period a year ago. |
• | Liquidity and Capital Resources. Beginning on page 37, we discuss our working capital as of March 31, 2013, and December 31, 2012, and cash flows for the first three months of 2013 and 2012. Also included is a discussion of the financial capacity available to fund our future activities. |
• | New Accounting Standards. Beginning on page 39, we discuss new accounting pronouncements that may apply to us. |
• | Cautionary Note Regarding Forward-Looking Statements. Beginning on page 39, we describe the risks and uncertainties that could cause actual results to differ materially from those discussed in forward-looking statements set forth in this MD&A relating to our financial results, operations, business plans and prospects. Such forward-looking statements are based on management’s current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances. |
As of and for the Three Months Ended March 31, | ||||||||
(in millions, except basis points, percentages and per share amounts) | 2013 | 2012 | ||||||
Operating indicators | ||||||||
AuM | $ | 11,513 | $ | 26,645 | ||||
Average AuM(a) | 12,968 | 28,551 | ||||||
Net client cash flows | (3,146 | ) | (5,995 | ) | ||||
Market appreciation (depreciation) | 327 | 2,281 | ||||||
Financial indicators | ||||||||
Investment management fees | 15 | 43 | ||||||
Effective fee rate (basis points)(b) | 48.0 | 60.3 | ||||||
Adjusted operating income (loss)(c) | (8 | ) | 11 | |||||
Adjusted operating margin(d) | (52.7 | )% | 24.5 | % | ||||
Adjusted EBITDA(c) | (5 | ) | 14 | |||||
Adjusted EBITDA margin(d) | (28.9 | )% | 31.0 | % | ||||
Adjusted compensation ratio(c)(e) | 93.3 | % | 45.3 | % | ||||
Adjusted net income (loss) attributable to Artio Global Investors(c) | (5 | ) | 6 | |||||
Diluted earnings per share | $ | (0.18 | ) | $ | 0.08 | |||
Adjusted diluted earnings per share(f) | $ | (0.09 | ) | $ | 0.11 |
(a) | Average AuM for a period is computed on the beginning-of-first-month balance and all end-of-month balances within the period. |
(b) | The effective fee rate is computed by dividing annualized investment management fees (normalized for the number of days in the period) by average AuM for the period. |
(c) | See the “Adjusted Performance Measures” section of this MD&A for reconciliations of Employee compensation and benefits to Adjusted compensation; Operating income (loss) before income tax expense to Adjusted operating income (loss); Net income (loss) to Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”); and Net income (loss) attributable to Artio Global Investors to Adjusted net income (loss) attributable to Artio Global Investors. |
(d) | Adjusted operating and Adjusted EBITDA margins are calculated by dividing Adjusted operating income and Adjusted EBITDA by Total revenues and other operating income. |
(e) | Calculated as Adjusted compensation(c) divided by Total revenues and other operating income. |
(f) | Adjusted diluted earnings per share is calculated by dividing Adjusted net income (loss) attributable to Artio Global Investors by Adjusted weighted average diluted shares (see the “Adjusted Performance Measures” section of this MD&A). |
Three Months Ended March 31, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Employee compensation and benefits | $ | 14,551 | $ | 22,334 | ||||
Less compensation adjustments: | ||||||||
Staff reduction costs | — | 213 | ||||||
Amortization expense of IPO-related restricted stock unit grants (“RSUs”) | — | 2,209 | ||||||
Total compensation adjustments | — | 2,422 | ||||||
Adjusted compensation | $ | 14,551 | $ | 19,912 | ||||
Operating income (loss) before income tax expense | $ | (11,614 | ) | $ | 8,234 | |||
Add: total compensation adjustments | — | 2,422 | ||||||
Add: write-off of unamortized debt issuance costs | — | 122 | ||||||
Add: expenses associated with acquisition by Aberdeen | 3,396 | — | ||||||
Adjusted operating income (loss) | $ | (8,218 | ) | $ | 10,778 | |||
Net income (loss) | $ | (10,203 | ) | $ | 5,468 | |||
Less: interest income | (681 | ) | (934 | ) | ||||
Add: interest expense | — | 435 | ||||||
Add: income taxes | 270 | 5,322 | ||||||
Add: depreciation and amortization | 3,712 | 5,066 | ||||||
EBITDA | (6,902 | ) | 15,357 | |||||
Add: other non-operating income(a) | (1,000 | ) | (2,057 | ) | ||||
Add: staff reduction costs, excluding amortization | — | 213 | ||||||
Add: expenses associated with acquisition by Aberdeen | 3,396 | — | ||||||
Add: write-off of unamortized debt issuance costs | — | 122 | ||||||
Adjusted EBITDA | $ | (4,506 | ) | $ | 13,635 | |||
Net income (loss) attributable to Artio Global Investors | $ | (10,742 | ) | $ | 4,600 | |||
Add: total compensation adjustments | — | 2,422 | ||||||
Add: non-controlling interests in Holdings | — | 190 | ||||||
Add: expenses associated with acquisition by Aberdeen | 3,396 | — | ||||||
Add: reduction in liability under tax receivable agreement | (5 | ) | — | |||||
Tax impact of adjustments - valuation allowance | 2,185 | — | ||||||
Add: write-off of unamortized debt issuance costs | — | 122 | ||||||
Add: non-operating income related to unamortized debt issuance costs | — | 71 | ||||||
Tax impact of adjustments - other | — | (944 | ) | |||||
Adjusted net income (loss) attributable to Artio Global Investors | $ | (5,166 | ) | $ | 6,461 | |||
Weighted average diluted shares | 60,350 | 58,475 | ||||||
Adjusted weighted average diluted shares(b) | 60,350 | 59,675 |
(a) | Other non-operating (income) loss primarily represents gains and losses on investments of the Consolidated Investment Products. |
(b) | Adjusted weighted average diluted shares for the period prior to the Principal’s exchanges in April 2012 assumes the Principals have fully exchanged all of their New Class A Units for Class A common stock. The additional shares are antidilutive in accordance with GAAP. Adjusted weighted average diluted shares for 2012, include the dilutive impact of the unvested RSUs which are anti-dilutive under GAAP. |
• | investment performance, including our investment decisions and fluctuations in both the financial markets and foreign currency exchange rates; |
• | client cash flows into and out of our investment products; |
• | the mix of AuM among our various strategies; and |
• | our introduction or closure of investment strategies and products. |
• | High Grade Fixed Income; |
• | High Yield; |
• | Emerging Markets Local Debt; |
• | International Equity; and |
• | Global Equity. |
As of March 31, | As a % of AuM as of March 31, | |||||||||||||
(in millions, except percentages) | 2013 | 2012 | 2013 | 2012 | ||||||||||
Proprietary funds(a) | ||||||||||||||
A shares | $ | 2,123 | $ | 3,922 | ||||||||||
I shares(b) | 4,117 | 8,940 | ||||||||||||
Total | 6,240 | 12,862 | 54.2 | % | 48.3 | % | ||||||||
Institutional commingled funds | 1,060 | 4,346 | 9.2 | 16.3 | ||||||||||
Separate accounts | 3,478 | 7,858 | 30.2 | 29.5 | ||||||||||
Sub-advisory accounts | 735 | 1,579 | 6.4 | 5.9 | ||||||||||
Ending AuM | $ | 11,513 | $ | 26,645 | 100.0 | % | 100.0 | % |
(a) | Proprietary funds include both SEC-registered funds and private offshore funds. SEC-registered mutual funds within our proprietary funds are: Artio International Equity Fund; Artio International Equity Fund II; Artio Total Return Bond Fund; Artio Global High Income Fund; Artio Select Opportunities Fund Inc.; Artio Local Debt Fund and four U.S. Equity funds which were liquidated in 2012. |
(b) | Amounts invested in private offshore funds and in the hedge fund are categorized as “I” shares. |
For the Three Months Ended March 31, | % Change | ||||||||||
(in millions, except percentages) | 2013 | 2012 | |||||||||
Proprietary Funds: | |||||||||||
Beginning AuM | $ | 7,202 | $ | 13,366 | (46 | )% | |||||
Gross client cash inflows | 533 | 1,235 | (57 | ) | |||||||
Gross client cash outflows | (1,666 | ) | (2,712 | ) | 39 | ||||||
Net client cash flows | (1,133 | ) | (1,477 | ) | 23 | ||||||
Transfers between investment vehicles | — | 52 | (100 | ) | |||||||
Total client cash flows | (1,133 | ) | (1,425 | ) | 20 | ||||||
Market appreciation (depreciation) | 171 | 921 | (81 | ) | |||||||
Ending AuM | $ | 6,240 | $ | 12,862 | (51 | ) | |||||
Institutional Commingled Funds: | |||||||||||
Beginning AuM | $ | 1,793 | $ | 4,912 | (63 | ) | |||||
Gross client cash inflows | 1 | 32 | (97 | ) | |||||||
Gross client cash outflows | (796 | ) | (1,107 | ) | 28 | ||||||
Net client cash flows | (795 | ) | (1,075 | ) | 26 | ||||||
Transfers between investment vehicles | (4 | ) | 13 | (131 | ) | ||||||
Total client cash flows | (799 | ) | (1,062 | ) | 25 | ||||||
Market appreciation (depreciation) | 66 | 496 | (87 | ) | |||||||
Ending AuM | $ | 1,060 | $ | 4,346 | (76 | ) | |||||
Separate Accounts: | |||||||||||
Beginning AuM | $ | 4,496 | $ | 9,799 | (54 | ) | |||||
Gross client cash inflows | 78 | 101 | (23 | ) | |||||||
Gross client cash outflows | (1,184 | ) | (2,694 | ) | 56 | ||||||
Net client cash flows | (1,106 | ) | (2,593 | ) | 57 | ||||||
Transfers between investment vehicles | 4 | (65 | ) | 106 | |||||||
Total client cash flows | (1,102 | ) | (2,658 | ) | 59 | ||||||
Market appreciation (depreciation) | 84 | 717 | (88 | ) | |||||||
Ending AuM | $ | 3,478 | $ | 7,858 | (56 | ) | |||||
Sub-advisory Accounts: | |||||||||||
Beginning AuM | $ | 841 | $ | 2,282 | (63 | ) | |||||
Gross client cash inflows | 80 | 39 | 105 | ||||||||
Gross client cash outflows | (192 | ) | (889 | ) | 78 | ||||||
Net client cash flows | (112 | ) | (850 | ) | 87 | ||||||
Transfers between investment vehicles | — | — | — | ||||||||
Total client cash flows | (112 | ) | (850 | ) | 87 | ||||||
Market appreciation (depreciation) | 6 | 147 | (96 | ) | |||||||
Ending AuM | $ | 735 | $ | 1,579 | (53 | ) | |||||
Total AuM: | |||||||||||
Beginning AuM | $ | 14,332 | $ | 30,359 | (53 | ) | |||||
Gross client cash inflows | 692 | 1,407 | (51 | ) | |||||||
Gross client cash outflows | (3,838 | ) | (7,402 | ) | 48 | ||||||
Net client cash flows | (3,146 | ) | (5,995 | ) | 48 | ||||||
Transfers between investment vehicles | — | — | — | ||||||||
Total client cash flows | (3,146 | ) | (5,995 | ) | 48 | ||||||
Market appreciation (depreciation) | 327 | 2,281 | (86 | ) | |||||||
Ending AuM | $ | 11,513 | $ | 26,645 | (57 | ) |
• | a $2.1 billion decrease in our International Equity II strategy’s net client cash outflows; and |
• | a $1.9 billion decrease in our International Equity I strategy’s net client cash outflows, |
• | a $0.9 billion decrease in our High Yield strategy’s net client cash flows, as the first quarter of 2013 had net client cash outflows compared to net client cash inflows in the corresponding period in 2012; and |
• | a $0.4 billion decrease in our High Grade Fixed Income strategies’ net client cash flows, as the first quarter of 2013 had net client cash outflows compared to net client cash inflows in the corresponding period in 2012. |
• | a $0.6 billion decrease in our International Equity II Fund’s net client cash outflows; and |
• | a $0.6 billion decrease in our International Equity I Fund’s net client cash outflows, |
• | a $0.8 billion decrease in our Global High Income Fund’s net client cash flows, as the the first quarter of 2013 had net client cash outflows compared to net client cash inflows in the corresponding period in 2012; and |
• | a $0.1 billion decrease in our Total Return Bond Fund’s net client cash flows, as the first quarter of 2013 had net client |
• | cash outflows compared to net client cash inflows in the corresponding period in 2012. |
• | a $0.3 billion decrease in our International Equity II strategy’s net client cash outflows; and |
• | a $0.1 billion decrease in our International Equity I strategy’s net client cash outflows, |
• | a $0.1 billion decrease in our High Grade Fixed Income strategy’s net client cash flows, as the first quarter of 2013 had net client cash outflows compared to net client cash inflows in the corresponding period in 2012; and |
• | a $0.1 billion increase in our Global High Income strategy’s net client cash outflows. |
• | a $1.2 billion decrease in our International Equity I strategy’s net client cash outflows; and |
• | a $0.3 billion decrease in our International Equity II strategy’s net client cash outflows. |
• | a $0.9 billion decrease in our International Equity II strategy’s net client cash outflows, |
• | a $0.1 billion increase in our low margin short-term U.S. dollar fixed income product’s net client cash outflows. |
(in thousands, except for Average AuM, effective fee rate and percentages) | Three Months Ended March 31, | |||||||||||
2013 | 2012 | % Change | ||||||||||
Average AuM (in millions) | $ | 12,968 | $ | 28,551 | (55 | )% | ||||||
Effective fee rate (basis points) | 48.0 | 60.3 | (12.3 | ) | bp | |||||||
Investment management fees | $ | 15,336 | $ | 42,771 | (64 | )% | ||||||
Net gains (losses) on securities held for deferred compensation | 299 | 1,160 | (74 | ) | ||||||||
Foreign currency gains (losses) | (39 | ) | (1 | ) | * | |||||||
Total revenues and other operating income | $ | 15,596 | $ | 43,930 | (64 | ) |
Three Months Ended March 31, | |||||||||||
(in thousands, except percentages) | 2013 | 2012 | % Change | ||||||||
Employee compensation and benefits | $ | 14,551 | $ | 22,334 | (35 | )% | |||||
Shareholder servicing and marketing | 1,941 | 3,624 | (46 | ) | |||||||
General and administrative | 10,718 | 9,738 | 10 | ||||||||
Total operating expenses | $ | 27,210 | $ | 35,696 | (24 | ) |
Three Months Ended March 31, | |||||||||||
(in thousands, except percentages) | 2013 | 2012 | % Change | ||||||||
The Consolidated Investment Products and other seed money investments: | |||||||||||
Interest income | $ | 501 | $ | 934 | (46 | )% | |||||
Net gains (losses) | 1,139 | 2,081 | (45 | ) | |||||||
Expenses | (141 | ) | (13 | ) | * | ||||||
Total(a) | 1,499 | 3,002 | (50 | ) | |||||||
Interest income (expense), net | 180 | (435 | ) | (141 | ) | ||||||
Reduction in liability under tax receivable agreement | 5 | — | * | ||||||||
Other income (expense) | (3 | ) | (11 | ) | (73 | ) | |||||
Total non-operating income (loss) | $ | 1,681 | $ | 2,556 | (34 | ) |
(a) | Includes aggregate non-operating income of $0.5 million for the three months ended March 31, 2013, and $0.7 million for the three months ended March 31, 2012, related to non-controlling interests in the Consolidated Investment Products. |
As of March 31, 2013 | As of December 31, 2012 | ||||||||||
(in thousands, except percentages) | % Change | ||||||||||
Cash | $ | 66,641 | $ | 90,854 | (27 | )% | |||||
Investments, fair value – Artio Global funds held for deferred compensation | 10,186 | 10,149 | — | ||||||||
Fees receivable and accrued fees, net of allowance for doubtful accounts | 9,322 | 12,158 | (23 | ) | |||||||
Income tax receivable | 15,268 | 9,896 | 54 | ||||||||
101,417 | 123,057 | (18 | ) | ||||||||
Less: | |||||||||||
Accrued compensation and benefits | (11,123 | ) | (27,637 | ) | (60 | ) | |||||
Accounts payable and accrued expenses | (7,066 | ) | (5,167 | ) | 37 | ||||||
Accrued income taxes payable | (1,443 | ) | (2,232 | ) | (35 | ) | |||||
Working capital | $ | 81,785 | $ | 88,021 | (7 | ) |
Three Months Ended March 31, | |||||||||||
(in thousands, except percentages) | 2013 | 2012 | % Change | ||||||||
Cash flow data: | |||||||||||
Net cash used in operating activities | $ | (20,879 | ) | $ | (19,817 | ) | (5 | )% | |||
Net cash provided by (used in) investing activities | 169 | 380 | (56 | ) | |||||||
Net cash used in financing activities | (2,428 | ) | (41,095 | ) | 94 | ||||||
Effect of exchange rate changes on cash | (39 | ) | (1 | ) | * | ||||||
Net decrease in cash | $ | (23,177 | ) | $ | (60,533 | ) | 62 |
• | the value of AuM decreasing, as a result of a decline in performance; |
• | our clients withdrawing funds; or |
• | a shift in product mix to lower margin products. |
As of March 31, 2013 | |||
Euro | 10 | % | |
British pound | 3 | ||
Japanese yen | 3 | ||
Canadian dollar | 3 | ||
Mexican peso | 2 | ||
Other (representing approximately 35 currencies) | 9 | ||
30 | % |
As of March 31, 2013 | |||
Mexican peso | 6 | % | |
Brazilian real | 5 | ||
Turkish lira | 4 | ||
Russian ruble | 4 | ||
Malaysian ringgit | 4 | ||
South African rand | 3 | ||
Other (representing approximately 10 currencies) | 14 | ||
40 | % |
Period | Total Number of Shares Repurchased(a) | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(a) | Approximate Shares that May Yet be Purchased Under the Plans or Programs(a) | |||||
January 1, 2013 through January 31, 2013 | — | $— | — | 2,226,061 | |||||
February 1, 2013 through February 28, 2013 | — | — | — | 2,226,061 | |||||
March 1, 2013 through March 31, 2013 | — | — | — | 2,226,061 | |||||
For the quarter ended March 31, 2013 | — | — | — | 2,226,061 |
(a) | In December 2010, our Board of Directors authorized a share repurchase program of up to 3.0 million shares of our Class A common stock, which expires on December 31, 2013. Pursuant to the terms of the merger agreement with Aberdeen Asset Management PLC (“Aberdeen”), Investors may not repurchase its Class A common stock without Aberdeen’s consent, except in connection with the terms of share-based payments. |
1) | Exhibit 31.1 | Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
2) | Exhibit 31.2 | Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
3) | Exhibit 32.1 | Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
4) | Exhibit 32.2 | Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
5) | Exhibit 101: | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema | ||
101.CAL | XBRL Taxonomy Calculation Linkbase | ||
101.LAB | XBRL Taxonomy Label Linkbase | ||
101.PRE | XBRL Taxonomy Presentation Linkbase | ||
101.DEF | XBRL Taxonomy Definition Document |
Artio Global Investors Inc. | ||||
By: | /s/ Francis Harte | |||
Name: | Francis Harte | |||
Title: | Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Artio Global Investors Inc. for the quarter ended March 31, 2013; | |
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 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. | |
5. | The registrant’s other certifying officer 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/ Anthony Williams |
Anthony Williams |
1. | I have reviewed this Quarterly Report on Form 10-Q of Artio Global Investors Inc. for the quarter ended March 31, 2013; | |
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 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. | |
5. | The registrant’s other certifying officer 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/ Francis Harte |
Francis Harte |
/s/ Anthony Williams |
Anthony Williams |
/s/ Francis Harte |
Francis Harte |
Income Taxes - Reconciliation between Federal Statutory Tax Rate and Effective Tax Rates (Details)
|
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|||||
Income Tax Disclosure [Abstract] | ||||||
Federal statutory rate | 35.00% | 35.00% | ||||
State and local, net of Federal benefit, and other | 5.00% | 5.00% | ||||
Non-controlling interests | 2.00% | (3.00%) | ||||
Permanent differences: | ||||||
Valuation allowance | (22.00%) | 0.00% | ||||
Vesting of RSUs | (16.00%) | [1] | 10.00% | [1] | ||
Release of unrecognized tax benefit | 5.00% | 0.00% | ||||
Project costs associated with the pending transaction with Aberdeen | (14.00%) | 0.00% | ||||
Other | 2.00% | 2.00% | ||||
Total | (3.00%) | 49.00% | ||||
|
Share-Based Payments - Activity under Stock Incentive Plan (Details)
|
42 Months Ended |
---|---|
Mar. 31, 2013
|
|
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | |
Available for grant at inception | 9,700,000 |
Restricted stock units ("RSUs") and restricted stock awards ("RSAs") granted, including dividend equivalents | (8,824,360) |
Fully-vested restricted stock granted to independent directors | (162,100) |
RSUs forfeited, including dividend equivalents | 1,059,839 |
Available for grant as of March 31, 2013 | 1,773,379 |
Income Taxes - Reconciliation of Change in Unrecognized Tax Benefits (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2013
|
Dec. 31, 2012
|
|
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | ||
Beginning of period | $ 1,102 | $ 3,177 |
Additions (reductions) for tax provisions of prior years | 0 | (274) |
Additions based on tax provisions related to current year | 0 | 0 |
Reductions for settlements with taxing authorities | (790) | (1,181) |
Lapse of statute of limitations | 0 | (620) |
End of period | $ 312 | $ 1,102 |
Derivative Contracts - Fair Value of Derivative Contracts (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Credit default swaps | Other assets
|
||
Derivatives, Fair Value [Line Items] | ||
Assets | $ 340 | $ 180 |
Credit default swaps | Other liabilities
|
||
Derivatives, Fair Value [Line Items] | ||
Liabilities | 558 | |
Total return swap | Other assets
|
||
Derivatives, Fair Value [Line Items] | ||
Assets | 1,578 | 785 |
Interest rate swap | Other assets
|
||
Derivatives, Fair Value [Line Items] | ||
Liabilities | 19 | |
Interest rate swap | Other liabilities
|
||
Derivatives, Fair Value [Line Items] | ||
Liabilities | 2 | |
Foreign exchange contracts | Other assets
|
||
Derivatives, Fair Value [Line Items] | ||
Assets | 142 | 78 |
Foreign exchange contracts | Other liabilities
|
||
Derivatives, Fair Value [Line Items] | ||
Liabilities | 16 | 44 |
Options | Other liabilities
|
||
Derivatives, Fair Value [Line Items] | ||
Liabilities | $ 9 |
Earnings Per Share ("EPS") - Additional Information (Details)
In Millions, unless otherwise specified |
1 Months Ended | 3 Months Ended | 1 Months Ended | ||
---|---|---|---|---|---|
Apr. 30, 2012
|
Mar. 31, 2012
|
Mar. 31, 2013
Restricted Stock Units (RSUs)
|
Mar. 31, 2012
Restricted Stock Units (RSUs)
|
Apr. 30, 2012
Class A Common Stock
|
|
Earnings Per Share [Line Items] | |||||
Issuance of Class A common stock | 1.2 | ||||
Class A Common Stock Issued in Exchange For New Class A Units (shares) | 1.2 | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 1.2 | 0.9 | 1.9 |
Related Party Activities (Tables)
|
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Related to Services | Revenues related to these services are included in Investment management fees on the Consolidated Statement of Operations as follows:
Fees receivable related to investment management fees are included in Fees receivable and accrued fees, net of allowance for doubtful accounts on the Consolidated Statement of Financial Position as follows:
|
Share-Based Payments - Awards having Performance or Market Conditions (Details) (USD $)
|
3 Months Ended | |||||
---|---|---|---|---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|||||
LTIP RSUs
|
||||||
Non-Option Equity Instruments Outstanding [Roll Forward] | ||||||
Beginning of period (in shares) | 1,357,596 | 1,759,668 | ||||
Grant date fair value set (in shares) | 71,304 | |||||
Forfeitures (in shares) | 0 | (15,954) | ||||
End of period (in shares) | 1,357,596 | 1,815,018 | ||||
Non-Option Equity Instruments Weighted Average Grant Date Fair Value [Roll Forward] | ||||||
Beginning of period - weighted-average grant date fair value (usd per share) | $ 10.23 | [1] | $ 14.81 | [1] | ||
Grant date fair value set (usd per share) | $ 0.00 | [1] | $ 6.12 | [1] | ||
Forfeitures - Weighted-average grant date fair value (usd per share) | $ 0.00 | [1] | $ 14.81 | [1] | ||
End of period - Weighted-average grant date fair value (usd per share) | $ 10.23 | [1] | $ 11.91 | [1] | ||
Future Grant Date LTIP RSUs
|
||||||
Non-Option Equity Instruments Outstanding [Roll Forward] | ||||||
Beginning of period (in shares) | 11,479 | 178,695 | ||||
Grant date fair value set (in shares) | 0 | (71,304) | ||||
Forfeitures (in shares) | 0 | (33,929) | ||||
End of period (in shares) | 11,479 | 73,462 | ||||
LTIP RSU Dividend Equivalents
|
||||||
Non-Option Equity Instruments Outstanding [Roll Forward] | ||||||
Beginning of period (in shares) | 81,441 | 48,879 | ||||
Declared (in shares) | 0 | 24,097 | ||||
Forfeitures (in shares) | 0 | (1,888) | ||||
End of period (in shares) | 81,441 | 71,088 | ||||
|
Investments, at Fair Value and Investments Sold, Not Yet Purchased by the Consolidated Investment Products, at Fair Value - Investments, at Fair Value, Valuation Hierarchy (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Investments, at fair value, valuation heirarchy | ||
Total Artio Global funds held for deferred compensation | $ 10,186 | $ 10,149 |
Total investments owned by the Consolidated Investment Products, and other seed money investments | 49,810 | 53,191 |
Total investments sold, not yet purchased by the Consolidated Investment Products | (2,062) | (2,483) |
Artio Global Funds
|
||
Investments, at fair value, valuation heirarchy | ||
Total Artio Global funds held for deferred compensation | 10,186 | 10,149 |
Investments owned by consolidated investment products | Equity securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 3,473 | 3,766 |
Investments owned by consolidated investment products | Warrants
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 173 | 182 |
Investments owned by consolidated investment products | Asset-backed Securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 410 | 220 |
Investments owned by consolidated investment products | Resell agreements
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 723 | 332 |
Fixed Income Investments | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments sold, not yet purchased by the Consolidated Investment Products | (2,062) | (2,483) |
Fixed Income Investments | Investments owned by consolidated investment products | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 23,965 | 24,291 |
Fixed Income Investments | Investments owned by consolidated investment products | Sovereign And International Financial Organization Debt
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 17,259 | 19,028 |
Fixed Income Investments | Investments owned by consolidated investment products | Term loans
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 3,807 | 5,372 |
Level 1 Quoted Prices | Fair Value, Measurements, Recurring
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 2,527 | 2,450 |
Total investments sold, not yet purchased by the Consolidated Investment Products | 0 | 0 |
Level 1 Quoted Prices | Fair Value, Measurements, Recurring | Artio Global Funds
|
||
Investments, at fair value, valuation heirarchy | ||
Total Artio Global funds held for deferred compensation | 10,186 | 10,149 |
Level 1 Quoted Prices | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Equity securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 1,962 | 2,268 |
Level 1 Quoted Prices | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Warrants
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 173 | 182 |
Level 1 Quoted Prices | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Asset-backed Securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 1 Quoted Prices | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Resell agreements
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 1 Quoted Prices | Fixed Income Investments | Fair Value, Measurements, Recurring | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments sold, not yet purchased by the Consolidated Investment Products | 0 | 0 |
Level 1 Quoted Prices | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 392 | 0 |
Level 1 Quoted Prices | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Sovereign And International Financial Organization Debt
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 1 Quoted Prices | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Term loans
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 2 Other Observable Inputs | Fair Value, Measurements, Recurring
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 47,241 | 49,703 |
Total investments sold, not yet purchased by the Consolidated Investment Products | (2,062) | (2,483) |
Level 2 Other Observable Inputs | Fair Value, Measurements, Recurring | Artio Global Funds
|
||
Investments, at fair value, valuation heirarchy | ||
Total Artio Global funds held for deferred compensation | 0 | 0 |
Level 2 Other Observable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Equity securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 1,469 | 1,457 |
Level 2 Other Observable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Warrants
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 2 Other Observable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Asset-backed Securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 410 | 220 |
Level 2 Other Observable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Resell agreements
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 723 | 332 |
Level 2 Other Observable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments sold, not yet purchased by the Consolidated Investment Products | (2,062) | (2,483) |
Level 2 Other Observable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 23,573 | 24,291 |
Level 2 Other Observable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Sovereign And International Financial Organization Debt
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 17,259 | 19,028 |
Level 2 Other Observable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Term loans
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 3,807 | 4,375 |
Level 3 Significant Unobservable Inputs | Fair Value, Measurements, Recurring
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 42 | 1,038 |
Total investments sold, not yet purchased by the Consolidated Investment Products | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fair Value, Measurements, Recurring | Artio Global Funds
|
||
Investments, at fair value, valuation heirarchy | ||
Total Artio Global funds held for deferred compensation | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Equity securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 42 | 41 |
Level 3 Significant Unobservable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Warrants
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Asset-backed Securities
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Resell agreements
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments sold, not yet purchased by the Consolidated Investment Products | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Corporate bonds
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Sovereign And International Financial Organization Debt
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | 0 | 0 |
Level 3 Significant Unobservable Inputs | Fixed Income Investments | Fair Value, Measurements, Recurring | Investments owned by consolidated investment products | Term loans
|
||
Investments, at fair value, valuation heirarchy | ||
Total investments owned by the Consolidated Investment Products, and other seed money investments | $ 0 | $ 997 |
Related Party Activities - Fees Receivable and Accrued Fees, Net of Allowance for Doubtful Accounts in Consolidated Statement of Financial Position (Details) (USD $)
In Thousands, unless otherwise specified |
Mar. 31, 2013
|
Dec. 31, 2012
|
---|---|---|
Funds
|
||
Related Party Transaction [Line Items] | ||
Investment management fees receivable | $ 2,974 | $ 3,965 |
Sub-advisory investment management fees on GAM-sponsored funds
|
||
Related Party Transaction [Line Items] | ||
Investment management fees receivable | $ 402 | $ 421 |
Income Taxes - Summary of Provisions For Income Taxes (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | |
---|---|---|
Mar. 31, 2013
|
Mar. 31, 2012
|
|
Current: | ||
Federal | $ (5,381) | $ 154 |
State and local | (691) | 263 |
Total | (6,072) | 417 |
Deferred: | ||
Federal | 4,169 | 3,898 |
State and local | 2,173 | 1,007 |
Total | 6,342 | 4,905 |
Income tax expense | $ 270 | $ 5,322 |
Debt - Additional Information (Details) (USD $)
In Millions, unless otherwise specified |
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
Line of Credit Facility [Line Items] | |
Interest rate | LIBOR |
Maximum portfolio book value, total return swap | $ 100.0 |
Actual Reference Portfolio Book Value For Interest Calculation | 38.2 |
Designated maturity of the total return swap | monthly |
Period after which scheduled ramp-down commences | 18 months |
Date of first required payment | Jul. 17, 2013 |
Minimum
|
|
Line of Credit Facility [Line Items] | |
Book value of portfolio | 35.0 |
Applicable Minimum Book Value Of Portfolio | 75.0 |
Maximum
|
|
Line of Credit Facility [Line Items] | |
Book value of portfolio | $ 75.0 |
Total return swap | Minimum
|
|
Line of Credit Facility [Line Items] | |
Interest under the total return swap based on LIBOR | 1.15% |
Total return swap | Maximum
|
|
Line of Credit Facility [Line Items] | |
Interest under the total return swap based on LIBOR | 1.25% |
Organization and Description of Business
|
3 Months Ended |
---|---|
Mar. 31, 2013
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Description of Business | Organization and Description of Business Artio Global Investors Inc. (“Investors” or the “Company”) and subsidiaries (collectively, “we,” “us” or “our”) comprises Investors and its subsidiaries, including Artio Global Holdings LLC (“Holdings”), an intermediate holding company that owns Artio Global Management LLC (“Investment Adviser”), a registered investment adviser under the Investment Advisers Act of 1940, as amended; Artio Global Institutional Services LLC, which was deregistered as a limited-purpose broker-dealer in the first quarter of 2013; and certain investment vehicles we consolidate because we have a controlling financial interest in them (the “Consolidated Investment Products”). The Consolidated Investment Products have investors whose interests are reflected as Non-controlling interests in the Consolidated Investment Products in the consolidated financial statements. On February 14, 2013, we announced that we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Aberdeen Asset Management PLC, a public limited company organized under the laws of the United Kingdom (“Aberdeen”), and Guardian Acquisition Corporation, a Delaware corporation and an indirect wholly owned subsidiary of Aberdeen (“Merger Subsidiary”), pursuant to which Aberdeen, subject to certain conditions, will acquire all of our outstanding Class A common stock for $2.75 in cash per share. We currently expect to complete the proposed merger by the end of the second quarter of 2013, pending the approval of the merger by our stockholders. The merger is also subject to a number of additional conditions and regulatory approvals, including, but not limited to, approval of a new advisory agreement by certain of our mutual fund shareholders. (see Note 12. Acquisition by Aberdeen). Investment Adviser is our primary operating entity and provides investment management services to institutional and mutual fund clients. It manages and advises the Artio Global Funds (the “Funds”), which are U.S. registered investment companies; commingled institutional investment vehicles; separate accounts; sub-advisory accounts; and a hedge fund. A substantial portion of our assets under management (“AuM”) are invested outside of the U.S., while our clients are primarily U.S.-based. For select new product initiatives, we invest in the related investment vehicles in order to provide critical asset mass. We refer to these investments as “seed money investments.” If a seed money investment is required to be consolidated, it is reflected within the Consolidated Investment Products. The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (”U.S. GAAP”). These principles require management to make estimates and assumptions that affect the reported amounts of assets, liabilities (including contingent liabilities), revenues, and expenses as of the date of the consolidated financial statements. Actual results could differ from those estimates and may have a material effect on the consolidated financial statements. Our interim consolidated financial statements are unaudited. Interim results reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results. Revenues and other operating income, Total non-operating income (loss) and Net income (loss) can vary significantly from quarter to quarter due to the nature of our business activities. The financial results of interim periods may not be indicative of the financial results for the entire year. As part of the preparation of the interim consolidated financial statements, we performed an evaluation of subsequent events occurring after the Consolidated Statement of Financial Position date of March 31, 2013, through to the date the interim consolidated financial statements were issued. These statements should be read in conjunction with our consolidated financial statements and related notes as of December 31, 2012, and for the three years then ended, included in our 2012 Annual Report on Form 10-K. |