INVESCO LTD. 
By ATLANTA, Jan. 31, 2013 /PRNewswire/ -- Invesco Ltd. (NYSE: IVZ) today reported financial results for the three months and year ended December 31, 2012.
(Logo: http://photos.prnewswire.com/prnh/20121024/CL98700LOGO )
"Invesco's focus on delivering strong, long-term investment performance to our clients contributed to a 10.4% increase in operating income for the quarter," said Martin L. Flanagan, president and CEO of Invesco. "During 2012, we continued to make progress against our strategic objectives, while further investing in the business for long-term success. Reflecting continued confidence in the fundamentals of our business, we raised our dividend early in 2012 and returned in excess of $550 million to shareholders during the year."
Q4-12 vs. Q4-12 vs.
Q4-12 Q3-12 Q3-12 Q4-11 Q4-11
Adjusted
Financial
Measures(1)
------------
Net revenues $775.9m $734.7m 5.6% $716.8m 8.2%
Operating
income $276.5m $250.4m 10.4% $256.3m 7.9%
Operating
margin 35.6% 34.1% 35.8%
Net income
attributable
to common $202.6m $188.4m 7.5% $190.5m 6.4%
shareholders
Diluted EPS $0.45 $0.42 7.1% $0.42 7.1%
U.S. GAAP
Financial
Measures
----------
Operating
revenues $1,092.9m $1,041.4m 4.9% $997.1m 9.6%
Operating
income $222.8m $216.0m 3.1% $211.6m 5.3%
Operating
margin 20.4% 20.7% 21.2%
Net income
attributable
to common $158.7m $170.6m (7.0)% $202.3m (21.6)%
shareholders
Diluted EPS $0.35 $0.38 (7.9)% $0.44 (20.5)%
Assets Under
Management
------------
Ending AUM $687.7bn $683.0bn 0.7% $625.3bn 10.0%
Average AUM $680.2bn $667.9bn 1.8% $621.7bn 9.4%
(1) The adjusted financial measures are all non-GAAP financial measures. See
the information on pages 12 through 16 for a reconciliation to their most
directly comparable U.S. GAAP measures and the notes beginning on page 23 for
other important disclosures.
2012 2011 % Change
Adjusted Financial Measures(1)
-----------------------------
Net revenues $2,959.0m $2,898.4m 2.1%
Operating income $1,045.1m $1,068.9m (2.2)%
Operating margin 35.3% 36.9%
Net income attributable to common shareholders $776.7m $781.6m (0.6)%
Diluted EPS 1.71 1.68 1.8%
U.S. GAAP Financial Measures
----------------------------
Operating revenues $4,177.0m $4,092.2m 2.1%
Operating income $871.5m $898.1m (3.0)%
Operating margin 20.9% 21.9%
Net income attributable to common shareholders $677.1m $729.7m (7.2)%
Diluted EPS 1.49 1.57 (5.1)%
Assets Under Management
-----------------------
Ending AUM $687.7bn $625.3bn 10.0%
Average AUM $664.4bn $634.3bn 4.7%
(1) The adjusted financial measures are all non-GAAP financial measures. See
the information on pages 12 through 16 for a reconciliation to their most
directly comparable U.S. GAAP measures and the notes beginning on page 23 for
other important disclosures.
Assets Under Management
Total assets under management (AUM) at December 31, 2012 were $687.7 billion (September 30, 2012: $683.0 billion), an increase of $4.7 billion during the fourth quarter. Total net inflows were $1.0 billion for the fourth quarter as detailed below. Long-term net flows during the fourth quarter include a $1.6 billion outflow related to a CDO maturity.
Quarterly Year-to-date
Summary of net flows (in Dec 31, Dec 31,
billions) Q4-12 Q3-12 Q4-11 2012 2011
------------------------
Active $1.8 $3.6 ($0.2) $1.3 $1.7
Passive (0.9) 5.8 5.8 11.1 17.5
Long-term net flows 0.9 9.4 5.6 12.4 19.2
Money market 0.1 2.3 0.4 0.1 5.3
Total net flows $1.0 $11.7 $6.0 $12.5 $24.5
Net market gains led to a $4.9 billion increase in AUM during the fourth quarter, compared to a $22.1 billion increase in the third quarter 2012. Foreign exchange rate movements led to a $1.2 billion decrease in AUM during the fourth quarter, compared to a $4.3 billion increase in the third quarter 2012.
Average AUM during the fourth quarter were $680.2 billion, compared to $667.9 billion for the third quarter 2012, a 1.8% increase. Further analysis is included in the supplementary schedules to this release.
Earnings Summary
The company is presenting both U.S. GAAP earnings information and non-GAAP earnings information in this release. The company believes that the additional disclosure of non-GAAP earnings, as described more fully in the Form 10-K for the year ended December 31, 2011, provides further transparency into the business and allows more appropriate comparisons with our industry peers. Management uses these non-GAAP performance measures to evaluate the business, and they are consistent with internal management reporting.
Non-GAAP Earnings
This section discusses the company's fourth quarter 2012 compared to the third quarter 2012 non-GAAP financial results. The phrase "as adjusted" is used in the following earnings discussion to identify non-GAAP information, together with the non-GAAP financial measures of net revenues (and by calculation net revenue yield), adjusted operating income, adjusted operating margin, adjusted net income attributable to common shareholders and adjusted diluted EPS. The most directly comparable U.S. GAAP items are reconciled to these non-GAAP items on pages 12 through 16 of this release.
Net revenues increased by $41.2 million (5.6%) to $775.9 million in the fourth quarter from $734.7 million in the third quarter 2012. The change was principally due to increases in investment management fees and performance fee revenues. Net revenue yield before performance fees improved by 0.6 basis points from 43.8 basis points to 44.4 basis points, reflecting an average AUM weighting move towards higher fee-earning asset classes. Foreign exchange rate changes increased fourth quarter net revenues by $2.5 million when compared to the third quarter 2012.
Investment management fees, as adjusted, increased $25.1 million (3.0%) to $865.0 million in the fourth quarter from $839.9 million in the third quarter 2012. The increase reflects higher average AUM as well as increasing revenue yields. Foreign exchange rate changes increased fourth quarter management fees by $3.8 million when compared to third quarter 2012.
Service and distribution fees, as adjusted, increased $3.3 million (1.7%) to $199.4 million in the fourth quarter from $196.1 million in the third quarter 2012, reflecting the higher average AUM. Foreign exchange rate changes increased fourth quarter service and distribution fees by $0.3 million when compared to third quarter 2012.
Performance fees, as adjusted, were $21.1 million in the fourth quarter compared to $3.4 million in the third quarter 2012. The fourth quarter performance fees were primarily earned by our private wealth management business. Other revenues, as adjusted, increased by $3.0 million (12.3%) in the fourth quarter to $27.4 million, compared to $24.4 million in the third quarter 2012, principally due to improved transaction fees from real estate fund activities.
Third-party distribution, service and advisory expenses, as adjusted, increased by $7.9 million (2.4%) to $337.0 million in the fourth quarter compared to $329.1 million in the third quarter 2012, increasing in line with higher investment management fees and service and distribution fees. Foreign exchange rate changes increased the fourth quarter third-party distribution, services and advisory expenses by $1.6 million.
Total operating expenses, as adjusted, increased by $15.1 million (3.1%) to $499.4 million in the fourth quarter from $484.3 million in the third quarter 2012 primarily due to increased employee compensation expenses. Foreign exchange rate changes increased operating expenses by $1.4 million when compared to the third quarter 2012.
Employee compensation expenses, as adjusted, increased by $14.3 million (4.4%) to $342.0 million in the fourth quarter from $327.7 million in the third quarter 2012. The fourth quarter includes additional bonus expense predominately linked to the quarter's performance fee revenues and increases in operating income. In addition, the fourth quarter included a $1.5 million increase in sales commissions in our Continental European business, and a $4.8 million increase in other staff related expenses driven by investment in our fixed income business and year-end staff benefit expense adjustments. Foreign exchange rate changes increased fourth quarter employee compensation expenses by $0.7 million when compared to the third quarter 2012.
Marketing expenses, as adjusted, decreased by $2.7 million (10.2%) to $23.8 million in the fourth quarter from $26.5 million in the third quarter 2012 due to reduced advertising expenditure. Foreign exchange rate changes increased fourth quarter marketing expenses by $0.2 million when compared to the third quarter 2012.
Property, office and technology expenses, as adjusted, increased $2.4 million (3.5%) to $71.7 million in the fourth quarter from $69.3 million in the third quarter 2012. The fourth quarter included increases in outsourced administration in Europe as we transitioned the U.K. transfer agency processes to a third party provider. Foreign exchange rate changes increased fourth quarter property, office and technology expenses by $0.2 million when compared to the third quarter 2012.
General and administrative expenses, as adjusted, increased $1.1 million (1.8%) to $61.9 million in the fourth quarter from $60.8 million in the third quarter 2012. The fourth quarter included additional professional services expenses associated with increasing regulatory requirements in Europe. Foreign exchange rate changes increased fourth quarter general and administrative expenses by $0.2 million when compared to the third quarter 2012.
Non-operating other income and expenses, as adjusted, included equity in earnings from partnership investments of $2.8 million in the fourth quarter compared to $1.6 million in the third quarter 2012. Other gains and losses, net in the fourth quarter were a loss of $0.4 million compared to third quarter investment realized gains of $9.5 million. The effective tax rate decreased to 25.0% for the fourth quarter from 25.8% for the third quarter 2012.
U.S. GAAP Earnings
Operating revenues increased 4.9% to $1,092.9 million in the fourth quarter from $1,041.4 million in the third quarter 2012. Operating expenses increased by 5.4% to $870.1 million in the fourth quarter from $825.4 million in the third quarter 2012.
Operating expenses include $21.7 million in the fourth quarter related to the European infrastructure initiative, compared to $4.0 million for the third quarter. As part of the outsourcing of the U.K. transfer agency, operational process changes resulted in an accounting adjustment recognizing additional distribution expense of $15.3 million in the fourth quarter. This additional expense is attributable to periods prior to 2012 and has no impact on cash flows.
Operating expenses included $2.6 million of transaction and integration charges incurred in the fourth quarter relating to the remaining closed-end fund merger expenses associated with the 2010 acquisition of Morgan Stanley's retail asset management business, including Van Kampen Investments, together with incurred professional services costs associated with the pending acquisition of a 49.0% ownership interest in Religare Asset Management Limited. Transaction and integration charges were $3.0 million in the third quarter 2012.
Other gains and losses, net included a charge of $23.5 million in the fourth quarter related to the call premiums on the redemption of the $333.5 million principal amount of 5.375% Senior Notes due February 27, 2013 and the $197.1 million principal amount of the 5.375% Senior Notes due December 15, 2014. The third quarter included an $8.3 million gain on the sale of certain European CLO management contracts.
The effective tax rate, excluding noncontrolling interests, decreased to 28.1% for the fourth quarter from 30.3% for the third quarter 2012.
Balance Sheet and Cash Flow Statement Presentation
The company is presenting both a U.S. GAAP balance sheet and balance sheet information excluding consolidated investment products, along with a U.S. GAAP statement of cash flows and cash flow statement information excluding consolidated investment products in this release. The information presented excluding consolidated investment products are non-GAAP presentations. Balance sheet and cash flow statement information before and after the consolidation of investment products are reconciled on pages 19 and 22, respectively.
The company believes that, by excluding the consolidation of investment products, the non-GAAP balance sheet and cash flow statement information provide a more representative presentation of our financial risks and the company's cash and debt positions, allowing more appropriate comparisons with our industry peers. Management uses these non-GAAP presentations to evaluate the business and the presentations are consistent with internal management reporting. As demonstrated by the selected balance sheet data that follows, inclusion of the long-term debt of consolidated investment products within liquidity measures, such as debt-to-equity ratios, causes the company to appear to be far more indebted than is the case.
Balance Sheets and Capital Management
Selected balance sheet information is reflected in the table below:
Excluding Consolidated Including Consolidated
Investment Products Investment Products
(CIP) (CIP)
(Non-GAAP)(1) (U.S. GAAP)
December December 31, December December 31,
31, 2012 2011 31, 2012 2011
$in millions
Cash
and
cash
equivalents $835.5 $727.4 $835.5 $727.4
Investments
of
CIP - - 4,550.6 6,629.0
Total
assets(1) $12,640.9 $12,329.2 $17,492.4 $19,347.0
Current
maturities
of
total
debt $- $215.1 $- $215.1
Long-
term
debt 1,186.0 1,069.6 1,186.0 1,069.6
Long-
term
debt
of
CIP - - 3,899.4 5,512.9
Total
debt
/
Total
debt
plus
CIP
debt $1,186.0 $1,284.7 $5,085.4 $6,797.6
Total
liabilities(1) $4,448.6 $4,541.0 $8,443.4 $10,209.4
Total
equity(1) $8,192.3 $7,788.2 $9,049.0 $9,137.6
Debt/
Equity
%
(1)
(2) 14.5% 16.5% 56.2% 74.4%
(1) The balance sheet line items excluding consolidated investment products
are non-GAAP financial measures. See the reconciliation information on page
19 for a fully expanded balance sheet before and after the consolidation of
investment products.
(2) The debt/equity ratio excluding CIP is a non-GAAP financial measure. The
debt/equity ratio is calculated as total debt divided by total equity for
the balance sheet excluding CIP and total debt plus long-term debt of CIP
divided by equity for the balance sheet including CIP.
As of December 31, 2012, the company's cash and cash equivalents were $835.5 million with total debt of $1,186.0 million The credit facility balance was $586.5 million at December 31, 2012, compared to $754.5 million at September 30, 2012 and $539.0 million at December 31, 2011.
During the fourth quarter the company issued an initial aggregate principal amount of $600.0 million of 3.125% senior notes with a maturity of November 30, 2022. The majority of the proceeds were used to redeem the $333.5 million principal amount of 5.375% Senior Notes due February 27, 2013 and the $197.1 million principal amount of the 5.375% Senior Notes due December 15, 2014.
During the fourth quarter, the company repurchased $75.0 million of its stock, representing 3.0 million shares at a weighted average share price of $24.64, bringing the total 2012 full-year stock repurchases to $265.0 million.
Dividends paid in the fourth quarter were $77.6 million bringing the total 2012 full-year cash dividends to $289.0 million. Today the company is announcing a fourth-quarter cash dividend of 17.25 cents per share to holders of common shares. The dividend is payable on March 8, 2013 to shareholders of record at the close of business on February 21, 2013.
Headcount
As of December 31, 2012, the company had 6,128 employees, compared to 6,101 employees as of September 30, 2012.
Invesco Ltd. is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our retail, institutional and high net worth clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at www.invesco.com.
Members of the investment community and general public are invited to listen to the conference call today, Thursday, January 31, 2013, at 9:00 a.m. ET by dialing one of the following numbers: 1-866-617-1526 for U.S. and Canadian callers and 0800-279-9630 for U.K. callers or 1-210-795-0624 for international callers. An audio replay of the conference call will be available until Thursday, February 14, 2013 at 5:00 p.m. ET by calling 1-866-365-2384 for U.S. and Canadian callers or 1-203-369-0214 for international callers. A presentation highlighting the company's performance will be available during a live Webcast and on Invesco's Website at www.invesco.com.
This release, and comments made in the associated conference call today, may include "forward-looking statements." Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as "believes," "expects," "anticipates," "intends," "plans," "estimates," "projects," "forecasts," and future or conditional verbs such as "will," "may," "could," "should," and "would" as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.
Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission. You may obtain these reports from the SEC's Web site at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.
Invesco Ltd.
Non-GAAP Condensed Consolidated Income Statement
Information
(Unaudited, in millions, other than per share
amounts, headcount and AUM)
% %
Q4-12 Q3-12 Change Q4-11 Change
Adjusted
revenues
Investment
management
fees $865.0 $839.9 3.0% $770.8 12.2%
Service
and
distribution
fees 199.4 196.1 1.7% 181.1 10.1%
Performance
fees 21.1 3.4 N/A 24.0 (12.1)%
Other 27.4 24.4 12.3% 44.9 (39.0)%
Third-
party
distribution,
service
and
advisory (337.0) (329.1) 2.4% (304.0) 10.9%
Net
revenues 775.9 734.7 5.6% 716.8 8.2%
Adjusted
operating
expenses
Employee
compensation 342.0 327.7 4.4% 312.3 9.5%
Marketing 23.8 26.5 (10.2)% 22.1 7.7%
Property,
office
and
technology 71.7 69.3 3.5% 61.9 15.8%
General
and
administrative 61.9 60.8 1.8% 64.2 (3.6)%
Total
adjusted
operating
expenses 499.4 484.3 3.1% 460.5 8.4%
Adjusted
operating
income 276.5 250.4 10.4% 256.3 7.9%
Adjusted
other
income/
(expense)
Equity
in
earnings
of
unconsolidated
affiliates 2.8 1.6 75.0% (1.1) N/A
Interest
and
dividend
income 4.1 5.0 (18.0)% 6.2 (33.9)%
Interest
expense (12.7) (12.6) 0.8% (14.3) (11.2)%
Other
gains
and
losses,
net (0.4) 9.5 N/A (0.1) N/A
Adjusted
income
before
income
taxes 270.3 253.9 6.5% 247.0 9.4%
Adjusted
income
tax
provision (67.7) (65.5) 3.4% (56.5) 19.8%
Adjusted
net
income 202.6 188.4 7.5% 190.5 6.4%
Adjusted
net
(income)/loss
attributable
to - - N/A - N/A
noncontrolling
interests
in
consolidated
entities
Adjusted
net
income
attributable
to
common
shareholders $202.6 $188.4 7.5% $190.5 6.4%
Adjusted
diluted
EPS $0.45 $0.42 7.1% $0.42 7.1%
Average
diluted
shares
outstanding 451.2 452.8 (0.4)% 458.3 (1.5)%
Ending
Headcount 6,128 6,101 0.4% 6,162 (0.6)%
Ending
AUM
(in
billions) $687.7 $683.0 0.7% $625.3 10.0%
Average
AUM
(in
billions) $680.2 $667.9 1.8% $621.7 9.4%
Invesco Ltd.
Non-GAAP Condensed Consolidated Income Statement Information
(Unaudited, in millions, other than per share amounts, headcount and
AUM)
Year Ended December 31,
2012 2011 % Change
Adjusted revenues
Investment management fees $3,319.1 $3,235.3 2.6%
Service and distribution
fees 771.6 775.1 (0.5)%
Performance fees 61.2 38.4 59.4%
Other 110.9 136.5 (18.8)%
Third-party distribution,
service and advisory (1,303.8) (1,286.9) 1.3%
Net revenues 2,959.0 2,898.4 2.1%
Adjusted operating expenses
Employee compensation 1,289.2 1,229.2 4.9%
Marketing 104.1 99.5 4.6%
Property, office and
technology 275.1 251.8 9.3%
General and administrative 245.5 249.0 (1.4)%
Total adjusted operating
expenses 1,913.9 1,829.5 4.6%
Adjusted operating income 1,045.1 1,068.9 (2.2)%
Adjusted other income/(expense)
Equity in earnings of
unconsolidated affiliates 14.6 9.2 58.7%
Interest and dividend
income 19.8 16.6 19.3%
Interest expense (52.3) (61.8) (15.4)%
Other gains and losses, net 9.8 6.7 46.3%
Adjusted income before
income taxes 1,037.0 1,039.6 (0.3)%
Adjusted income tax
provision (260.3) (258.1) 0.9%
Adjusted net income 776.7 781.5 (0.6)%
Adjusted net (income)/loss
attributable to - 0.1 N/A
noncontrolling interests in
consolidated entities
Adjusted net income
attributable to common
shareholders $776.7 $781.6 (0.6)%
Adjusted diluted EPS $1.71 $1.68 1.8%
Average diluted shares
outstanding 453.8 464.7 (2.3)%
Ending Headcount 6,128 6,162 (0.6)%
Ending AUM (in billions) $687.7 $625.3 10.0%
Average AUM (in billions) $664.4 $634.3 4.7%
Invesco Ltd.
U.S. GAAP Condensed Consolidated Income
Statements
(Unaudited, in millions, other than per
share amounts)
% %
Q4-12 Q3-12 Change Q4-11 Change
Operating
revenues
Investment
management
fees $846.9 $818.0 3.5% $747.6 13.3%
Service
and
distribution
fees 199.4 196.1 1.7% 181.1 10.1%
Performance
fees 19.9 3.0 N/A 23.9 (16.7)%
Other 26.7 24.3 9.9% 44.5 (40.0)%
Total
operating
revenues 1,092.9 1,041.4 4.9% 997.1 9.6%
Operating
expenses
Employee
compensation 343.7 330.9 3.9% 316.5 8.6%
Third-
party
distribution,
service
and
advisory 350.9 327.2 7.2% 301.8 16.3%
Marketing 23.3 26.4 (11.7)% 21.1 10.4%
Property,
office
and
technology 73.2 69.1 5.9% 66.0 10.9%
General
and
administrative 76.4 68.8 11.0% 74.6 2.4%
Transaction
and
integration 2.6 3.0 (13.3)% 5.5 (52.7)%
Total
operating
expenses 870.1 825.4 5.4% 785.5 10.8%
Operating
income 222.8 216.0 3.1% 211.6 5.3%
Other income/
(expense)
Equity in
earnings
of
unconsolidated
affiliates 7.9 5.2 51.9% 4.9 61.2%
Interest
and
dividend
income 2.7 2.5 8.0% 2.7 -
Interest
income of
consolidated
investment
products 52.1 68.7 (24.2)% 73.6 (29.2)%
Other
gains/
(losses)
of
consolidated
investment
products,
net (27.8) (25.2) 10.3% 104.4 N/A
Interest
expense (12.7) (12.6) 0.8% (14.3) (11.2)%
Interest
expense
of
consolidated
investment
products (33.9) (41.9) (19.1)% (51.8) (34.6)%
Other
gains and
losses,
net (21.0) 18.4 N/A 54.8 N/A
Income
before
income
taxes 190.1 231.1 (17.7)% 385.9 (50.7)%
Income tax
provision (62.1) (74.2) (16.3)% (76.0) (18.3)%
Net income 128.0 156.9 (18.4)% 309.9 (58.7)%
Net
(income)/loss
attributable
to
noncontrolling
interests
in
consolidated
entities 30.7 13.7 124.1% (107.6) N/A
Net income
attributable
to common
shareholders $158.7 $170.6 (7.0)% $202.3 (21.6)%
Earnings per
share:
---basic $0.35 $0.38 (7.9)% $0.44 (20.5)%
---diluted $0.35 $0.38 (7.9)% $0.44 (20.5)%
Average shares
outstanding:
---basic 449.9 451.3 (0.3)% 456.8 (1.5)%
---diluted 451.2 452.8 (0.4)% 458.3 (1.5)%
Invesco Ltd.
U.S. GAAP Condensed Consolidated Income Statements
(Unaudited, in millions, other than per share amounts)
Year ended December
31,
%
2012 2011 Change
Operating revenues
Investment management fees $3,236.9 $3,138.5 3.1%
Service and distribution fees 771.6 780.3 (1.1)%
Performance fees 58.8 37.9 55.1%
Other 109.7 135.5 (19.0)%
Total operating revenues 4,177.0 4,092.2 2.1%
Operating expenses
Employee compensation 1,297.7 1,246.2 4.1%
Third-party distribution, service
and advisory 1,311.8 1,282.5 2.3%
Marketing 103.0 86.0 19.8%
Property, office and technology 277.6 254.6 9.0%
General and administrative 307.2 295.4 4.0%
Transaction and integration 8.2 29.4 (72.1)%
Total operating expenses 3,305.5 3,194.1 3.5%
Operating income 871.5 898.1 (3.0)%
Other income/(expense)
Equity in earnings of unconsolidated
affiliates 29.7 30.5 (2.6)%
Interest and dividend income 9.8 11.0 (10.9)%
Interest income of consolidated
investment products 258.5 307.2 (15.9)%
Other gains/(losses) of consolidated
investment products, net (97.7) (138.9) (29.7)%
Interest expense (52.3) (61.8) (15.4)%
Interest expense of consolidated
investment products (168.3) (187.0) (10.0)%
Other gains and losses, net 8.3 49.0 (83.1)%
Income before income taxes 859.5 908.1 (5.4)%
Income tax provision (272.2) (286.1) (4.9)%
Net income 587.3 622.0 (5.6)%
Net (income)/loss attributable to
noncontrolling interests in
consolidated entities 89.8 107.7 (16.6)%
Net income attributable to common
shareholders $677.1 $729.7 (7.2)%
Earnings per share:
---basic $1.50 $1.58 (5.1)%
---diluted $1.49 $1.57 (5.1)%
Average shares outstanding:
---basic 452.3 462.9 (2.3)%
---diluted 453.8 464.7 (2.3)%
Invesco Ltd.
Reconciliation of U.S. GAAP Condensed Consolidated Income
Statement to Non-GAAP Condensed Consolidated Income
Statement Information
(Unaudited, in millions, other than per share amounts)
Three months ended December 31, 2012
Market
Third appreciation
party /
Proportional distribution, depreciation
consolidation service of
U.S. of and deferred Non-
GAAP joint advisory compensation Consolidated GAAP
basis ventures expenses Acquisition / awards investment Other basis
reconciling
Disposition products items
related
Operating revenues
Investment
management fees $846.9 $10.7 $- $- $- $7.4 $- $865.0
Service and
distribution fees 199.4 - - - - - - 199.4
Performance fees 19.9 - - - - 1.2 - 21.1
Other 26.7 0.7 - - - - - 27.4
Third-party
distribution,
service and
advisory - (1.4) (350.9) - - - 15.3 (337.0)
Total operating
revenues
reconciled to net
revenues 1,092.9 10.0 (350.9) - - 8.6 15.3 775.9
Operating expenses
Employee
compensation 343.7 3.5 - - (3.3) - (1.9) 342.0
Third-party
distribution,
service and
advisory 350.9 - (350.9) - - - - -
Marketing 23.3 0.6 - - - - (0.1) 23.8
Property, office
and technology 73.2 0.8 - - - - (2.3) 71.7
General and
administrative 76.4 1.0 - (4.9) - (8.5) (2.1) 61.9
Transaction and
integration 2.6 - - (2.6) - - - -
Total operating
expenses 870.1 5.9 (350.9) (7.5) (3.3) (8.5) (6.4) 499.4
Operating income
reconciled to
adjusted
operating income 222.8 4.1 - 7.5 3.3 17.1 21.7 276.5
Other income/
(expense)
Equity in earnings
of unconsolidated
affiliates 7.9 (4.7) - - - (0.4) - 2.8
Interest and
dividend income 2.7 0.6 - - (1.2) 2.0 - 4.1
Interest income of
consolidated
investment
products 52.1 - - - - (52.1) - -
Other gains/
(losses) of
consolidated
investment
products, net (27.8) - - - - 27.8 - -
Interest expense (12.7) - - - - - (12.7)
Interest expense
of consolidated
investment
products (33.9) - - - - 33.9 - -
Other gains and
losses, net (21.0) - - - (2.3) - 22.9 (0.4)
Income before
income taxes 190.1 - - 7.5 (0.2) 28.3 44.6 270.3
Income tax
provision (62.1) - - 5.0 - - (10.6) (67.7)
Net income 128.0 - - 12.5 (0.2) 28.3 34.0 202.6
Net (income)/loss
attributable to
noncontrolling
interests in
consolidated
entities 30.7 - - - - (30.7) - -
Net income
attributable to
common
shareholders
reconciled to
adjusted net
income
attributable to
common
shareholders $158.7 $- $- $12.5 ($0.2) ($2.4) $34.0 $202.6
Adjusted
operating
Operating margin 20.4% margin 35.6%
Average
Average diluted diluted
shares shares
outstanding 451.2 outstanding 451.2
Adjusted
Diluted EPS $0.35 diluted EPS $0.45
See pages 23 through 26 for notes to the reconciliation.
Invesco Ltd.
Reconciliation of U.S. GAAP Condensed Consolidated Income
Statement to Non-GAAP Condensed Consolidated Income
Statement Information
(Unaudited, in millions, other than per share amounts)
Three months ended September 30, 2012
Market
Third appreciation
party /
distribution, depreciation
Proportional service of
U.S. consolidation and deferred Consolidated Non-
GAAP of advisory compensation investment GAAP
basis joint expenses Acquisition / awards products Other basis
reconciling
ventures Disposition items
related
Operating revenues
Investment
management fees $818.0 $10.8 $- $- $- $11.1 $- $839.9
Service and
distribution fees 196.1 - - - - - - 196.1
Performance fees 3.0 - - - - 0.4 - 3.4
Other 24.3 0.1 - - - - - 24.4
Third-party
distribution,
service and
advisory - (1.9) (327.2) - - - - (329.1)
Total operating
revenues
reconciled to net
revenues 1,041.4 9.0 (327.2) - - 11.5 - 734.7
Operating expenses
Employee
compensation 330.9 2.8 - - (4.7) - (1.3) 327.7
Third-party
distribution,
service and
advisory 327.2 - (327.2) - - - - -
Marketing 26.4 0.7 - - - - (0.6) 26.5
Property, office
and technology 69.1 0.9 - - - - (0.7) 69.3
General and
administrative 68.8 1.0 - (5.3) - (2.3) (1.4) 60.8
Transaction and
integration 3.0 - - (3.0) - - - -
Total operating
expenses 825.4 5.4 (327.2) (8.3) (4.7) (2.3) (4.0) 484.3
Operating income
reconciled to
adjusted
operating income 216.0 3.6 - 8.3 4.7 13.8 4.0 250.4
Other income/
(expense)
Equity in earnings
of unconsolidated
affiliates 5.2 (4.1) - - - 0.5 - 1.6
Interest and
dividend income 2.5 0.5 - - (1.4) 3.4 - 5.0
Interest income of
consolidated
investment
products 68.7 - - - - (68.7) - -
Other gains/
(losses) of
consolidated
investment
products, net (25.2) - - - - 25.2 - -
Interest expense (12.6) - - - - - - (12.6)
Interest expense
of consolidated
investment
products (41.9) - - - - 41.9 - -
Other gains and
losses, net 18.4 - - (8.3) (9.7) 8.7 0.4 9.5
Income before
income taxes 231.1 - - - (6.4) 24.8 4.4 253.9
Income tax
provision (74.2) - - 7.6 1.9 - (0.8) (65.5)
Net income 156.9 - - 7.6 (4.5) 24.8 3.6 188.4
Net (income)/loss
attributable to
noncontrolling
interests in
consolidated
entities 13.7 - - - - (13.7) - -
Net income
attributable to
common
shareholders
reconciled to
adjusted net
income
attributable to
common
shareholders $170.6 $- $- $7.6 ($4.5) $11.1 $3.6 $188.4
Adjusted
operating
Operating margin 20.7% margin 34.1%
Average
Average diluted diluted
shares shares
outstanding 452.8 outstanding 452.8
Adjusted
Diluted EPS $0.38 diluted EPS $0.42
See pages 23 through 26 for notes to the reconciliation.
Invesco Ltd.
Reconciliation of U.S. GAAP Condensed Consolidated Income
Statement to Non-GAAP Condensed Consolidated Income
Statement Information
(Unaudited, in millions, other than per share amounts)
Three months ended December 31, 2011
Market
Third appreciation
party /
Proportional distribution, depreciation
consolidation service Acquisition of
U.S. of and / deferred Consolidated Other Non-
GAAP joint advisory Disposition compensation investment reconciling GAAP
basis ventures expenses related awards products items basis
Operating revenues
Investment
management fees $747.6 $11.6 $- $- $- $11.6 $- $770.8
Service and
distribution fees 181.1 - - - - - - 181.1
Performance fees 23.9 - - - - 0.1 - 24.0
Other 44.5 0.4 - - - - - 44.9
Third-party
distribution,
service and
advisory - (2.2) (301.8) - - - - (304.0)
Total operating
revenues
reconciled to net
revenues 997.1 9.8 (301.8) - - 11.7 - 716.8
Operating expenses
Employee
compensation 316.5 2.5 - - (5.5) - (1.2) 312.3
Third-party
distribution,
service and
advisory 301.8 - (301.8) - - - - -
Marketing 21.1 1.0 - - - - - 22.1
Property, office
and technology 66.0 0.9 - - - - (5.0) 61.9
General and
administrative 74.6 1.1 - (3.7) - (3.0) (4.8) 64.2
Transaction and
integration 5.5 - - (5.5) - - - -
Total operating
expenses 785.5 5.5 (301.8) (9.2) (5.5) (3.0) (11.0) 460.5
Operating income
reconciled to
adjusted
operating income 211.6 4.3 - 9.2 5.5 14.7 11.0 256.3
Other income/
(expense)
Equity in earnings
of unconsolidated
affiliates 4.9 (5.1) - - - (0.9) - (1.1)
Interest and
dividend income 2.7 0.8 - - (0.2) 2.9 - 6.2
Interest income of
consolidated
investment
products 73.6 - - - - (73.6) - -
Other gains/
(losses) of
consolidated
investment
products, net 104.4 - - - - (104.4) - -
Interest expense (14.3) - - - - - - (14.3)
Interest expense
of consolidated
investment
products (51.8) - - - - 51.8 - -
Other gains and
losses, net 54.8 - - - (9.9) - (45.0) (0.1)
Income before
income taxes 385.9 - - 9.2 (4.6) (109.5) (34.0) 247.0
Income tax
provision (76.0) - - 3.2 1.4 - 14.9 (56.5)
Net income 309.9 - - 12.4 (3.2) (109.5) (19.1) 190.5
Net (income)/loss
attributable to
noncontrolling
interests in
consolidated
entities (107.6) - - - - 107.6 - -
Net income
attributable to
common
shareholders
reconciled to
adjusted net
income
attributable to
common
shareholders $202.3 $- $- $12.4 ($3.2) ($1.9) ($19.1) $190.5
Adjusted
operating
Operating margin 21.2% margin 35.8%
Average diluted Average diluted
shares shares
outstanding 458.3 outstanding 458.3
Adjusted diluted
Diluted EPS $0.44 EPS $0.42
See pages 23 through 26 for notes to the reconciliation.
Invesco Ltd.
Reconciliation of U.S. GAAP Condensed Consolidated Income
Statement to Non-GAAP Condensed Consolidated Income
Statement Information
(Unaudited, in millions, other than per share amounts)
Year ended December 31, 2012
Market
Third appreciation
party /
distribution, depreciation
Proportional service Acquisition of
U.S. consolidation and / deferred Consolidated
GAAP of advisory Disposition compensation investment Non-
basis joint expenses related awards products Other GAAP
reconciling
ventures items basis
Operating revenues
Investment
management fees $3,236.9 $43.6 $- $- $- $38.6 $- $3,319.1
Service and
distribution fees 771.6 - - - - - - 771.6
Performance fees 58.8 - - - - 2.4 - 61.2
Other 109.7 1.2 - - - - - 110.9
Third-party
distribution,
service and
advisory - (7.3) (1,311.8) - - - 15.3 (1,303.8)
Total operating
revenues
reconciled to net
revenues 4,177.0 37.5 (1,311.8) - - 41.0 15.3 2,959.0
Operating expenses
Employee
compensation 1,297.7 11.4 - - (14.3) - (5.6) 1,289.2
Third-party
distribution,
service and
advisory 1,311.8 - (1,311.8) - - - - -
Marketing 103.0 2.7 - - - - (1.6) 104.1
Property, office
and technology 277.6 3.3 - - - - (5.8) 275.1
General and
administrative 307.2 4.4 - (27.3) - (31.5) (7.3) 245.5
Transaction and
integration 8.2 - - (8.2) - - - -
Total operating
expenses 3,305.5 21.8 (1,311.8) (35.5) (14.3) (31.5) (20.3) 1,913.9
Operating income
reconciled to
adjusted
operating income 871.5 15.7 - 35.5 14.3 72.5 35.6 1,045.1
Other income/
(expense)
Equity in earnings
of unconsolidated
affiliates 29.7 (18.1) - 3.5 - (0.5) - 14.6
Interest and
dividend income 9.8 2.4 - - (4.7) 12.3 - 19.8
Interest income of
consolidated
investment
products 258.5 - - - - (258.5) - -
Other gains/
(losses) of
consolidated
investment
products, net (97.7) - - - - 97.7 - -
Interest expense (52.3) - - - - - - (52.3)
Interest expense
of consolidated
investment
products (168.3) - - - - 168.3 - -
Other gains and
losses, net 8.3 (11.8) (19.7) 8.7 24.3 9.8
Income before
income taxes 859.5 - - 27.2 (10.1) 100.5 59.9 1,037.0
Income tax
provision (272.2) - - 22.8 2.7 - (13.6) (260.3)
Net income 587.3 - - 50.0 (7.4) 100.5 46.3 776.7
Net (income)/loss
attributable to
noncontrolling
interests in
consolidated
entities 89.8 - - - - (89.8) - -
Net income
attributable to
common
shareholders
reconciled to
adjusted net
income
attributable to
common
shareholders $677.1 $- $- $50.0 ($7.4) $10.7 $46.3 $776.7
Adjusted
operating
Operating margin 20.9% margin 35.3%
Average
Average diluted diluted
shares shares
outstanding 453.8 outstanding 453.8
Adjusted
Diluted EPS $1.49 diluted EPS $1.71
See pages 23 through 26 for notes to the reconciliation.
Invesco Ltd.
Reconciliation of U.S. GAAP Condensed Consolidated Income
Statement to Non-GAAP Condensed Consolidated Income
Statement Information
(Unaudited, in millions, other than per share amounts)
Year ended December 31, 2011
Market
Third appreciation
party /
distribution, depreciation
Proportional service of
U.S. consolidation and Acquisition deferred Consolidated
GAAP of advisory / compensation investment Non-
basis joint expenses Disposition awards products Other GAAP
ventures related reconciling basis
items
Operating revenues
Investment
management fees $3,138.5 $50.0 $- $- $- $46.8 $- $3,235.3
Service and
distribution fees 780.3 - - (5.2) - - - 775.1
Performance fees 37.9 - - - - 0.5 - 38.4
Other 135.5 1.0 - - - - - 136.5
Third-party
distribution,
service and
advisory - (9.6) (1,282.5) 5.2 - - - (1,286.9)
Total operating
revenues
reconciled to net
revenues 4,092.2 41.4 (1,282.5) - - 47.3 - 2,898.4
Operating expenses
Employee
compensation 1,246.2 11.4 - (15.0) (5.8) - (7.6) 1,229.2
Third-party
distribution,
service and
advisory 1,282.5 - (1,282.5) - - - - -
Marketing 86.0 3.1 - - - - 10.4 99.5
Property, office
and technology 254.6 3.1 - - - - (5.9) 251.8
General and
administrative 295.4 4.6 - (29.0) - (13.0) (9.0) 249.0
Transaction and
integration 29.4 - - (29.4) - - - -
Total operating
expenses 3,194.1 22.2 (1,282.5) (73.4) (5.8) (13.0) (12.1) 1,829.5
Operating income
reconciled to
adjusted
operating income 898.1 19.2 - 73.4 5.8 60.3 12.1 1,068.9
Other income/
(expense)
Equity in earnings
of unconsolidated
affiliates 30.5 (21.5) - - - 0.2 - 9.2
Interest and
dividend income 11.0 2.3 - - (4.9) 8.2 - 16.6
Interest income of
consolidated
investment
products 307.2 - - - - (307.2) - -
Other gains/
(losses) of
consolidated
investment
products, net (138.9) - - - - 138.9 - -
Interest expense (61.8) - - - - - - (61.8)
Interest expense
of consolidated
investment
products (187.0) - - - - 187.0 - -
Other gains and
losses, net 49.0 - - - 2.7 - (45.0) 6.7
Income before
income taxes 908.1 - - 73.4 3.6 87.4 (32.9) 1,039.6
Income tax
provision (286.1) - - 11.4 (1.1) - 17.7 (258.1)
Net income 622.0 - - 84.8 2.5 87.4 (15.2) 781.5
Net (income)/loss
attributable to
noncontrolling
interests in
consolidated
entities 107.7 - - - - (107.6) - 0.1
Net income
attributable to
common
shareholders
reconciled to
adjusted net
income
attributable to
common
shareholders $729.7 $- $- $84.8 $2.5 ($20.2) ($15.2) $781.6
Adjusted
operating
Operating margin 21.9% margin 36.9%
Average
Average diluted diluted
shares shares
outstanding 464.7 outstanding 464.7
Adjusted
Diluted EPS $1.57 diluted EPS $1.68
See pages 23 through 26 for notes to the reconciliation.
Invesco Ltd.
Condensed Consolidated Balance Sheet Information Excluding Consolidated
Investment Products
(a non-GAAP presentation, unaudited, in millions)
December 31, December 31,
2012 2011
ADJUSTED ASSETS
Adjusted current assets:
Cash and cash equivalents $835.5 $727.4
Unsettled fund receivables 550.1 444.4
Accounts receivable 453.8 434.6
Investments 363.9 283.7
Prepaid assets 50.3 51.2
Other current assets 94.5 139.2
Deferred tax asset, net 38.4 28.7
Assets held for policyholders 1,153.6 1,243.5
Total adjusted current assets 3,540.1 3,352.7
Adjusted non-current assets:
Investments 313.4 293.4
Security deposit assets and
receivables 27.4 81.2
Other non-current assets 26.8 17.9
Deferred sales commissions 47.7 40.5
Property and equipment, net 349.6 312.8
Intangible assets, net 1,287.7 1,322.8
Goodwill 7,048.2 6,907.9
Total adjusted non-current assets 9,100.8 8,976.5
Total adjusted assets $12,640.9 $12,329.2
ADJUSTED LIABILITIES AND EQUITY
Adjusted current liabilities:
Current maturities of total debt $- $215.1
Unsettled fund payables 552.5 439.6
Income taxes payable 77.9 59.6
Other current liabilities 833.6 861.1
Policyholder payables 1,153.6 1,243.5
Total adjusted current liabilities 2,617.6 2,818.9
Adjusted non-current liabilities:
Long-term debt 1,186.0 1,069.6
Deferred tax liabilities, net 311.4 274.0
Security deposits payable 27.4 81.2
Other non-current liabilities 306.2 297.3
Total adjusted non-current
liabilities 1,831.0 1,722.1
Total adjusted liabilities 4,448.6 4,541.0
Adjusted equity:
Equity attributable to common shareholders:
Common shares 98.1 98.1
Additional paid-in-capital 6,141.0 6,180.6
Treasury shares (1,382.9) (1,280.4)
Retained earnings 2,780.1 2,381.3
Accumulated other comprehensive
income, net of tax 551.4 404.1
Total adjusted equity attributable to
common shareholders 8,187.7 7,783.7
Adjusted equity attributable to
noncontrolling interests in
consolidated 4.6 4.5
entities
Total adjusted equity 8,192.3 7,788.2
Total adjusted liabilities and equity $12,640.9 $12,329.2
Invesco Ltd.
U.S. GAAP Condensed Consolidated Balance Sheets
(Unaudited, in millions)
December 31, December 31,
2012 2011
ASSETS
Current assets:
Cash and cash equivalents $835.5 $727.4
Cash and cash equivalents of consolidated
investment products 287.8 382.3
Unsettled fund receivables 550.1 444.4
Accounts receivable 449.4 424.4
Accounts receivable of consolidated investment
products 84.1 98.5
Investments 363.9 283.7
Prepaid assets 50.3 51.2
Other current assets 94.5 150.0
Deferred tax asset, net 38.4 28.7
Assets held for policyholders 1,153.6 1,243.5
Total current assets 3,907.6 3,834.1
Non-current assets:
Investments 246.8 200.8
Investments of consolidated investment products 4,550.6 6,629.0
Security deposit assets and receivables 27.4 81.2
Other non-current assets 26.8 17.9
Deferred sales commissions 47.7 40.5
Property and equipment, net 349.6 312.8
Intangible assets, net 1,287.7 1,322.8
Goodwill 7,048.2 6,907.9
Total non-current assets 13,584.8 15,512.9
Total assets $17,492.4 $19,347.0
LIABILITIES AND EQUITY
Current liabilities:
Current maturities of total debt $- $215.1
Unsettled fund payables 552.5 439.6
Income taxes payable 77.9 59.6
Other current liabilities 824.7 841.5
Other current liabilities of consolidated
investment products 104.3 175.1
Policyholder payables 1,153.6 1,243.5
Total current liabilities 2,713.0 2,974.4
Non-current liabilities:
Long-term debt 1,186.0 1,069.6
Long-term debt of consolidated investment products 3,899.4 5,512.9
Deferred tax liabilities, net 311.4 274.0
Security deposits payable 27.4 81.2
Other non-current liabilities 306.2 297.3
Total non-current liabilities 5,730.4 7,235.0
Total liabilities 8,443.4 10,209.4
Equity:
Equity attributable to common shareholders:
Common shares 98.1 98.1
Additional paid-in-capital 6,141.0 6,180.6
Treasury shares (1,382.9) (1,280.4)
Retained earnings 2,801.3 2,413.2
Retained earnings appropriated for investors in
consolidated investment products 128.8 334.3
Accumulated other comprehensive income, net of tax 530.5 373.3
Total equity attributable to common shareholders 8,316.8 8,119.1
Equity attributable to noncontrolling interests in
consolidated entities 732.2 1,018.5
Total equity 9,049.0 9,137.6
Total liabilities and equity $17,492.4 $19,347.0
Invesco Ltd.
Reconciliations of Condensed Consolidated Balance Sheet
Information Excluding Consolidated
Investment Products to U.S. GAAP Condensed Consolidated
Balance Sheets (unaudited, in millions)
December 31, 2012 December 31, 2011
Impact Impact
Before of Total Before of Total
(U.S. (U.S.
Consolidation Consolidation GAAP) Consolidation Consolidation GAAP)
(non- (non-
GAAP) GAAP)
ASSETS
Current assets:
Cash and cash
equivalents $835.5 $- $835.5 $727.4 $- $727.4
Cash and cash
equivalents of
consolidated
investment
products - 287.8 287.8 - 382.3 382.3
Unsettled fund
receivables 550.1 - 550.1 444.4 - 444.4
Accounts
receivable 453.8 (4.4) 449.4 434.6 (10.2) 424.4
Accounts
receivable of
consolidated
investment
products - 84.1 84.1 - 98.5 98.5
Investments 363.9 - 363.9 283.7 - 283.7
Prepaid assets 50.3 - 50.3 51.2 - 51.2
Other current
assets 94.5 - 94.5 139.2 10.8 150.0
Deferred tax
asset, net 38.4 - 38.4 28.7 - 28.7
Assets held for
policyholders 1,153.6 - 1,153.6 1,243.5 - 1,243.5
Total current
assets 3,540.1 367.5 3,907.6 3,352.7 481.4 3,834.1
Non-current assets:
Investments 313.4 (66.6) 246.8 293.4 (92.6) 200.8
Investments of
consolidated
investment
products - 4,550.6 4,550.6 - 6,629.0 6,629.0
Security deposit
assets and
receivables 27.4 - 27.4 81.2 - 81.2
Other non-
current assets 26.8 - 26.8 17.9 - 17.9
Deferred sales
commissions 47.7 - 47.7 40.5 - 40.5
Property and
equipment, net 349.6 - 349.6 312.8 - 312.8
Intangible
assets, net 1,287.7 - 1,287.7 1,322.8 - 1,322.8
Goodwill 7,048.2 - 7,048.2 6,907.9 - 6,907.9
Total non-
current assets 9,100.8 4,484.0 13,584.8 8,976.5 6,536.4 15,512.9
Total assets $12,640.9 $4,851.5 $17,492.4 $12,329.2 $7,017.8 $19,347.0
LIABILITIES AND EQUITY
Current liabilities:
Current
maturities of
total debt $- $- $- $215.1 $- $215.1
Unsettled fund
payables 552.5 - 552.5 439.6 - 439.6
Income taxes
payable 77.9 - 77.9 59.6 - 59.6
Other current
liabilities 833.6 (8.9) 824.7 861.1 (19.6) 841.5
Other current
liabilities of
consolidated
investment
products - 104.3 104.3 - 175.1 175.1
Policyholder
payables 1,153.6 - 1,153.6 1,243.5 - 1,243.5
Total current
liabilities 2,617.6 95.4 2,713.0 2,818.9 155.5 2,974.4
Non-current liabilities:
Long-term debt 1,186.0 - 1,186.0 1,069.6 - 1,069.6
Long-term debt
of consolidated
investment
products - 3,899.4 3,899.4 - 5,512.9 5,512.9
Deferred tax
liabilities,
net 311.4 - 311.4 274.0 - 274.0
Security
deposits
payable 27.4 - 27.4 81.2 - 81.2
Other non-
current
liabilities 306.2 - 306.2 297.3 - 297.3
Total non-
current
liabilities 1,831.0 3,899.4 5,730.4 1,722.1 5,512.9 7,235.0
Total
liabilities 4,448.6 3,994.8 8,443.4 4,541.0 5,668.4 10,209.4
Equity:
Equity attributable to
common shareholders:
Common shares 98.1 - 98.1 98.1 - 98.1
Additional paid-
in-capital 6,141.0 - 6,141.0 6,180.6 - 6,180.6
Treasury shares (1,382.9) - (1,382.9) (1,280.4) - (1,280.4)
Retained
earnings 2,780.1 21.2 2,801.3 2,381.3 31.9 2,413.2
Retained
earnings
appropriated
for investors
in consolidated
investment
products - 128.8 128.8 - 334.3 334.3
Accumulated
other
comprehensive
income, net of
tax 551.4 (20.9) 530.5 404.1 (30.8) 373.3
Total equity
attributable to
common
shareholders 8,187.7 129.1 8,316.8 7,783.7 335.4 8,119.1
Equity
attributable to
noncontrolling
interests in
consolidated
entities 4.6 727.6 732.2 4.5 1,014.0 1,018.5
Total equity 8,192.3 856.7 9,049.0 7,788.2 1,349.4 9,137.6
Total
liabilities and
equity $12,640.9 $4,851.5 $17,492.4 $12,329.2 $7,017.8 $19,347.0
See pages 23 through 26 for notes to the reconciliation.
Invesco Ltd.
Condensed Consolidated Cash Flow Statement Information Excluding Consolidated
Investment Products
(a non-GAAP presentation, unaudited, in millions)
Year ended December 31,
2012 2011
Adjusted operating activities:
U.S. GAAP net income $587.3 $622.0
Consolidated investment product net
income 100.6 87.5
Net income adjusted to remove
impact of CIP 687.9 709.5
Adjustments to reconcile net income to net cash
provided by operating
activities:
Amortization and depreciation 95.0 117.4
Share-based compensation expense 136.4 115.1
Gains on disposals of property,
equipment, and software, net (0.9) (5.8)
Purchase of trading investments (10,192.5) (10,548.6)
Proceeds from sale of trading
investments 10,185.3 10,537.6
Other gains and losses, net (17.0) (49.0)
Call premium on debt extinguishment (23.0) -
Tax benefit from share-based
compensation 52.2 77.8
Excess tax benefits from share-
based compensation (12.7) (14.7)
Equity in earnings of
unconsolidated affiliates (29.3) (30.8)
Dividends from unconsolidated
affiliates 15.6 21.3
Changes in operating assets and liabilities:
Decrease/(increase) in receivables 97.4 204.7
(Decrease)/increase in payables (122.3) (331.7)
Adjusted net cash provided by/
(used in) operating activities 872.1 802.8
Adjusted investing activities:
Purchase of property and equipment (99.3) (107.0)
Disposal of property and equipment 0.6 12.6
Purchase of available-for-sale
investments (97.8) (31.4)
Sale of available-for-sale
investments 68.4 65.2
Purchase of other investments (126.4) (150.4)
Sale of other investments 83.6 64.6
Returns of capital and
distributions from equity method
investments 32.0 39.7
Acquisitions of businesses - (14.9)
Acquisition earn-out payments (37.2) (16.8)
Sale of management contracts 16.4 -
Adjusted net cash provided by/
(used in) investing activities (159.7) (138.4)
Adjusted financing activities:
Proceeds from exercises of share
options 23.0 12.4
Purchases of treasury shares (265.0) (436.5)
Dividends paid (289.0) (220.9)
Excess tax benefits from share-
based compensation 12.7 14.7
Net borrowings/(repayments) under
credit facility 47.5 (31.0)
Net proceeds from issuance of
senior notes 595.1 -
Repayments of senior notes (745.7) -
Acquisition of interest in
consolidated investment products - (12.3)
Adjusted net cash (used
in)/provided by financing
activities (621.4) (673.6)
Increase/(decrease) in cash and
cash equivalents 91.0 (9.2)
Foreign exchange movement on cash
and cash equivalents 17.1 (3.9)
Cash and cash equivalents,
beginning of year 727.4 740.5
Cash and cash equivalents, end of
year $835.5 $727.4
Invesco Ltd.
U.S. GAAP Condensed Consolidated Statements of Cash Flows
(Unaudited, in millions)
Year ended December 31,
2012 2011
Operating activities:
Net income $587.3 $622.0
Adjustments to reconcile net income to net cash provided by
operating
activities:
Amortization and depreciation 95.0 117.4
Share-based compensation expense 136.4 115.1
Gains on disposals of property, equipment, and
software, net (0.9) (5.8)
Purchase of trading investments (10,192.5) (10,548.6)
Proceeds from sale of trading investments 10,185.3 10,537.6
Other gains and losses, net (8.3) (49.0)
Call premium on debt extinguishment (23.0) -
Losses/(gains) of consolidated investment
products, net 97.7 138.9
Tax benefit from share-based compensation 52.2 77.8
Excess tax benefits from share-based
compensation (12.7) (14.7)
Equity in earnings of unconsolidated
affiliates (29.7) (30.5)
Dividends from unconsolidated affiliates 15.6 21.3
Changes in operating assets and liabilities:
Decrease/(increase) in cash held by
consolidated investment products (36.2) 264.2
Decrease/(increase) in receivables 113.8 213.4
(Decrease)/increase in payables (160.7) (494.3)
Net cash provided by/(used in) operating
activities 819.3 964.8
Investing activities:
Purchase of property and equipment (99.3) (107.0)
Disposal of property and equipment 0.6 12.6
Purchase of available-for-sale investments (85.9) (31.4)
Sale of available-for-sale investments 50.6 60.2
Purchase of investments by consolidated
investment products (3,252.0) (2,991.4)
Sale of investments by consolidated investment
products 3,346.8 3,479.0
Purchase of other investments (126.0) (143.4)
Sale of other investments 83.6 64.6
Returns of capital and distributions from
equity method investments 20.0 36.6
Acquisitions of businesses - (14.9)
Acquisition earn-out payments (37.2) (16.8)
Sale of management contracts 16.4 -
Net cash provided by/(used in) investing
activities (82.4) 348.1
Financing activities:
Proceeds from exercises of share options 23.0 12.4
Purchases of treasury shares (265.0) (436.5)
Dividends paid (289.0) (220.9)
Excess tax benefits from share-based
compensation 12.7 14.7
Capital invested into consolidated investment
products 20.0 37.2
Capital distributed by consolidated investment
products (277.0) (172.4)
Net borrowings/(repayments) of debt of
consolidated investment products 232.5 (513.3)
Net borrowings/(repayments) under credit
facility 47.5 (31.0)
Net proceeds from issuance of senior notes 595.1 -
Repayments of senior notes (745.7) -
Acquisition of interest in consolidated
investment products - (12.3)
Net cash provided by/(used in) financing
activities (645.9) (1,322.1)
Increase/(decrease) in cash and cash
equivalents 91.0 (9.2)
Foreign exchange movement on cash and cash
equivalents 17.1 (3.9)
Cash and cash equivalents, beginning of year 727.4 740.5
Cash and cash equivalents, end of year $835.5 $727.4
Invesco Ltd.
Reconciliations of Condensed Consolidated Cash Flow Statement
Information Excluding Consolidated
Investment Products to U.S. GAAP Condensed Consolidated
Statements of Cash Flows
(unaudited, in millions)
Year ended December 31, Year ended December 31,
2012 2011
Impact Impact
Before of Total Before of Total
(U.S. (U.S.
Consolidation Consolidation GAAP) Consolidation Consolidation GAAP)
(non- (non-
GAAP) GAAP)
Operating activities:
Net income $687.9 ($100.6) $587.3 $709.5 ($87.5) $622.0
Amortization
and
depreciation 95.0 - 95.0 117.4 - 117.4
Share-based
compensation
expense 136.4 - 136.4 115.1 - 115.1
Gains on
disposals
of
property,
equipment,
and
software,
net (0.9) - (0.9) (5.8) - (5.8)
Purchase of
trading
investments (10,192.5) - (10,192.5) (10,548.6) - (10,548.6)
Proceeds
from sale
of trading
investments 10,185.3 - 10,185.3 10,537.6 - 10,537.6
Other gains
and losses,
net (17.0) 8.7 (8.3) (49.0) - (49.0)
Call premium
on debt
extinguishment (23.0) - (23.0) - - -
Losses/
(gains) of
consolidated
investment
products,
net - 97.7 97.7 - 138.9 138.9
Tax benefit
from share-
based
compensation 52.2 - 52.2 77.8 - 77.8
Excess tax
benefits
from share-
based
compensation (12.7) - (12.7) (14.7) - (14.7)
Equity in
earnings of
unconsolidated
affiliates (29.3) (0.4) (29.7) (30.8) 0.3 (30.5)
Dividends
from
unconsolidated
affiliates 15.6 - 15.6 21.3 - 21.3
Changes in operating
assets and
liabilities:
Decrease/
(increase)
in cash
held by CIP - (36.2) (36.2) - 264.2 264.2
Decrease/
(increase)
in
receivables 97.4 16.4 113.8 204.7 8.7 213.4
(Decrease)/increase
in payables (122.3) (38.4) (160.7) (331.7) (162.6) (494.3)
Net cash
provided
by/(used
in)
adjusted
operating
activities 872.1 (52.8) 819.3 802.8 162.0 964.8
Investing activities:
Purchase of
property
and
equipment (99.3) - (99.3) (107.0) - (107.0)
Disposal of
property
and
equipment 0.6 - 0.6 12.6 - 12.6
Purchase of
available-
for-sale
investments (97.8) 11.9 (85.9) (31.4) - (31.4)
Sale of
available-
for-sale
investments 68.4 (17.8) 50.6 65.2 (5.0) 60.2
Purchase of
investments
by CIP - (3,252.0) (3,252.0) - (2,991.4) (2,991.4)
Sale of
investments
by CIP - 3,346.8 3,346.8 - 3,479.0 3,479.0
Purchase of
other
investments (126.4) 0.4 (126.0) (150.4) 7.0 (143.4)
Sale of
other
investments 83.6 - 83.6 64.6 - 64.6
Returns of
capital and
distributions
from equity
method
investments 32.0 (12.0) 20.0 39.7 (3.1) 36.6
Acquisitions
of
businesses - - - (14.9) - (14.9)
Acquisition
earn-out
payments (37.2) - (37.2) (16.8) - (16.8)
Sale of
management
contracts 16.4 - 16.4 - - -
Net cash
provided
by/(used
in)
adjusted
investing
activities (159.7) 77.3 (82.4) (138.4) 486.5 348.1
Financing activities:
Proceeds
from
exercises
of share
options 23.0 - 23.0 12.4 - 12.4
Purchases of
treasury
shares (265.0) - (265.0) (436.5) - (436.5)
Dividends
paid (289.0) - (289.0) (220.9) - (220.9)
Excess tax
benefits
from share-
based
compensation 12.7 - 12.7 14.7 - 14.7
Capital
invested
into CIP - 20.0 20.0 - 37.2 37.2
Capital
distributed
by CIP - (277.0) (277.0) - (172.4) (172.4)
Net
borrowings/
(repayments)
of debt of
CIP - 232.5 232.5 - (513.3) (513.3)
Net
borrowings/
(repayments)
under
credit
facility 47.5 - 47.5 (31.0) - (31.0)
Net proceeds
from
issuance of
senior
notes 595.1 - 595.1 - - -
Repayments
of senior
notes (745.7) - (745.7) - - -
Acquisition
of interest
in CIP - - - (12.3) - (12.3)
Net cash
(used
in)/provided
by adjusted
financing
activities (621.4) (24.5) (645.9) (673.6) (648.5) (1,322.1)
Increase/
(decrease)
in cash and
cash
equivalents 91.0 - 91.0 (9.2) - (9.2)
Foreign
exchange
movement on
cash and
cash
equivalents 17.1 - 17.1 (3.9) - (3.9)
Cash and
cash
equivalents,
beginning
of year 727.4 - 727.4 740.5 - 740.5
Cash and
cash
equivalents,
end of year $835.5 $- $835.5 $727.4 $- $727.4
See pages 23 through 26 for notes to the reconciliation.
Invesco Ltd.
Notes
Notes 1 through 8 relate to the income statement reconciliations presented on pages 12 through 16. Further explanations of the reasons the company considers it appropriate to present these adjustments in arriving at the non-GAAP measures can be found in the Form 10-K for the year ended December 31, 2011.
Note 9 relates to the balance sheet and cash flow statement reconciliations on pages 19 and 22, respectively.
Non-GAAP measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies.
1. Acquisition/disposition related adjustments
Acquisition related adjustments are comprised of amounts incurred by the company in connection with business combinations, including transaction and integration expenses, intangible asset amortization (including any increased amortization related to the write-off of related management contract intangible assets), changes in estimates of acquisition earn-out liabilities booked from prior acquisitions, gains and losses related to dispositions, and all related tax effects.
Adjustments related to acquisition and disposition amounts are as follows:
Quarterly Year-to-date
in Dec 31, Dec 31,
millions Q4-12 Q3-12 Q4-11 2012 2011
---------
Equity in
earnings
of
unconsolidated
affiliates $ - $ - $ - $3.5 $ -
Other
gains
and
losses,
net - - - (3.5) -
Service
and
distribution
fees - - - - (5.2)
Third-
party
distribution,
service
and
advisory
expenses - - - - 5.2
Transaction
and
integration 2.6 3.0 5.5 8.2 29.4
Taxation
on
transaction
and
integration (1.0) (1.1) (2.1) (3.1) (11.2)
Intangible
amortization 4.9 5.3 6.1 29.6 42.2
Taxation
on
amortization (0.4) (0.4) (1.0) (2.6) (4.4)
Prepaid
compensation
amortization - - - - 15.0
Deferred
taxation 6.4 6.6 6.3 26.0 27.0
Change in
contingent
consideration
estimates - - (2.4) (2.3) (13.2)
Gain on
sale of
CLO
management
contracts - (8.3) - (8.3) -
Taxation
on gain
on sale
of CLO
management
contracts - 2.5 - 2.5 -
$12.5 $7.6 $12.4 $50.0 $84.8
2. Third-party distribution, service and advisory expenses
Third-party distribution, service and advisory expenses include renewal commissions, management fee rebates and distribution costs (12b-1 and marketing support) paid to brokers and independent financial advisors, which are all closely linked to the revenue earned by Invesco from AUM but vary extensively by geography due to differences in distribution channels. The non-GAAP presentation nets these costs against revenues to arrive at net revenues, which serves to reflect these costs as revenue sharing activities and to remove distortions caused by differing distribution channel fees.
3. Proportional share of net revenues and operating income from joint venture investments
The company has two joint ventures in China. Enhancing operations in China is one effort that the company believes could improve its competitive position over time. U.S. GAAP requires classification of the pre-tax joint venture income as equity in earnings of unconsolidated affiliates. The non-GAAP adjustment proportionately consolidates these joint ventures, serving to illustrate the contribution of these joint ventures to the operations of the business.
4. Consolidated investment products (CIP)
Management and performance fees earned by the company, which were eliminated from operating revenues upon consolidation of investment products, were $8.6 million in the fourth quarter (third quarter 2012: $11.5 million; fourth quarter 2011: $11.7 million; 2012: $41.0 million; 2011: $47.3 million). By deconsolidating these products in the non-GAAP information, the management and performance fees are added back into net revenues. Similarly, the consolidated investment products' operating expenses and impact on interest income, interest expense, gains and losses, and noncontrolling interests are removed in reconciling from the U.S. GAAP income statement to the non-GAAP information. The consolidation of the investment products resulted in a increase of $2.4 million in net income attributable to common shareholders in the fourth quarter U.S. GAAP earnings (third quarter 2012: $11.1 million decrease; fourth quarter 2011: $1.9 million increase; 2012: $10.7 million decrease; 2011: $20.2 million increase). The above adjustments remove this impact.
5. Market appreciation / depreciation of deferred compensation awards
This adjustment relates to deferred cash compensation that is linked in value to investment products. The market appreciation of the compensation liability was $3.3 million in the fourth quarter (third quarter 2012: $4.7 million appreciation; fourth quarter 2011: $5.5 million appreciation; 2012: $14.3 million appreciation; 2011: $5.8 million appreciation) with an investment gain, inclusive of interest and dividend income, of $3.5 million in the fourth quarter (third quarter 2012: $11.1 million gain; fourth quarter 2011: $10.1 million gain; 2012: $24.4 million gain; 2011: $2.2 million gain) on the assets held to hedge economically the compensation liability. This change in compensation expense and the investment income are adjusted in arriving at the non-GAAP information and, net of the applicable taxation charge (fourth quarter 2012: zero; third quarter 2012: $1.9 million charge; fourth quarter 2011: $1.4 million charge; 2012: $2.7 million charge; 2011: $1.1 million credit), result in a net income deduction of $0.2 million for the fourth quarter (third quarter 2012: $4.5 million deduction; fourth quarter 2011: $3.2 million deduction; 2012: $7.4 million deduction; 2011: $2.5 million addition).
6. Other reconciling items
European infrastructure transformational initiative: As announced in 2011, the company is outsourcing its European transfer agency and is making certain structural changes to product and distribution platforms. Expenses incurred related to the European infrastructure activities are excluded in arriving at the non-GAAP financial information. As part of the outsourcing of the U.K. transfer agency, operational process changes resulted in an accounting adjustment recognizing additional distribution expense of $15.3 million in the fourth quarter and year ended December 31, 2012. The initiative also incurred $1.9 million in compensation expenses, primarily due to severance costs (third quarter 2012: $1.3 million; fourth quarter 2011: $1.2 million; 2012: $5.6 million; 2011: $7.6 million); $2.1 million in general and administrative costs, primarily related to professional contractor services and mutual fund costs (third quarter 2012: $1.4 million; fourth quarter 2011: $1.5 million; 2012: $7.3 million; 2011: $5.3 million); $0.1 million in marketing costs (third quarter 2012: $0.6 million; fourth quarter 2011: none; 2012: $1.6 million; 2011: none); and $2.3 million of property, office and technology costs (third quarter 2012: $0.7 million; fourth quarter 2011: $5.0 million; 2012: $5.8 million; 2011: $5.9 million). The company's income tax provision included tax benefits of $4.9 million in the fourth quarter 2012 relating to these charges (third quarter 2012: $0.7 million; fourth quarter 2011: $0.8 million; 2012: $7.5 million; 2011: $1.9 million).
Included within other gains and losses, net for the fourth quarter 2012 is a loss of $0.1 million related to the mark-to-market of four foreign exchange put option contracts, purchased in the second quarter 2012, intended to provide protection against the impact of a significant decline in the pound sterling/U.S. dollar foreign exchange rate (third quarter 2012: $1.2 million; 2012: $2.5 million). The cost to the company of these contracts was $2.5 million at their inception date, which represents the company's maximum exposure to loss from the contracts over the 12-month cumulative contract period, and contract maturity ranges from September 25, 2012 to June 25, 2013. The adjustment from U.S. GAAP to non-GAAP earnings for the fourth quarter 2012 is a charge of $0.6 million (third quarter 2012: $0.4 million credit; 2012: $0.8 million credit) that removes the impact of market volatility; therefore, the company's non-GAAP results include only the amortization of the cost of the contracts during the contract period. The related non-GAAP adjustment to the company's income tax provision is a credit of $0.1 million in the fourth quarter of 2012 (third quarter 2012: $0.1 million charge; 2012: $0.2 million charge).
Other gains and losses, net included a charge of $23.5 million in the fourth quarter of and year ended December 31, 2012 related to the call premiums on the redemption of the $333.5 million principal amount of 5.375% Senior Notes due February 27, 2013 and the $197.1 million principal amount of the 5.375% Senior Notes due December 15, 2014. The company's income tax provision included a taxation credit of $5.8 million related to the charge.
Included within marketing expenses in 2011 is a credit of $10.4 million related to the termination of naming rights to the Denver Broncos stadium. The company's income tax provision included a taxation charge of $4.0 million relating to the credit.
Included within other gains and losses in the fourth quarter and year ended December 31, 2011 is a credit of $45.0 million related to a legal settlement. Included within general and administrative expenses are legal fees associated with this litigation of $3.6 million. A tax charge of $15.6 million is related to the settlement, net of legal fees.
Included within general and administrative expenses in the fourth quarter and year ended December 31, 2011 is a $0.3 million credit related to the final amount reimbursed associated with the 2010 correction of historic foreign exchange allocations in the fund accounting process that impacted the reporting of fund performance in certain funds, together with an associated $0.1 million tax charge.
Included within general and administrative expenses in the year ended December 31, 2011 is a $0.4 million charge reflecting revisions to a 2010 levy from the U.K. Financial Services Compensation Scheme. The company's tax provision included tax benefits of $0.1 million related to this revision.
Due to the unique character and magnitude of these items, their impact has been excluded in calculating the non-GAAP financial measures.
7. Definition of operating margin and adjusted operating margin
Operating margin is equal to operating income divided by operating revenues. Adjusted operating margin is equal to adjusted operating income divided by net revenues.
8. Definition of adjusted diluted EPS
Adjusted diluted EPS is equal to adjusted net income attributable to common shareholders divided by the weighted average number of shares outstanding.
9. Balance sheets and cash flow statements excluding CIP
U.S. GAAP condensed consolidating balance sheets and condensed consolidated statements of cash flows reflect the consolidation of investment products. The majority of the company's consolidated investment products balances were CLO-related as of December 31, 2012 and December 31, 2011. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs, beyond the company's minimal direct investments in, and management fees generated from, CLOs. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider them to be company assets. Additionally, the investors in the CLOs have no recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be a company liability. Similarly, cash held by consolidated investment products is not available for general use by Invesco, nor is Invesco cash available for general use by its consolidated investment products.
By deconsolidating the consolidated investment products in the condensed consolidated balance sheet information excluding consolidated investment products, the assets, liabilities and equity of the consolidated investment products are removed and the company's equity interest in the investment products, accounted for as equity method and available-for-sale investments, are replaced. The company considers this a more representative presentation of the company's financial position, and calculations made therefrom, such as debt-to-equity ratios, are more meaningful excluding these balances.
The condensed consolidated cash flow statement information excluding consolidated investment products present the cash flows of the company separately and before consolidation of investment products, as the cash flows of consolidated investment products do not form part of the company's cash flow management processes, nor do they form part of the company's significant liquidity evaluations and decisions for the reasons noted.
Invesco Ltd.
Quarterly Assets Under Management
%
(in billions) Q4-12 Q3-12 Change Q4-11
Beginning Assets $683.0 $646.6 5.6% $598.4
Long-term inflows 41.7 42.3 (1.4)% 41.1
Long-term outflows (40.8) (32.9) 24.0% (35.5)
Long-term net flows 0.9 9.4 (90.4)% 5.6
Net flows in institutional
money market funds 0.1 2.3 (95.7)% 0.4
Market gains and losses/
reinvestment 4.9 22.1 (77.8)% 20.8
Acquisitions/dispositions,
net - (1.7) N/A -
Foreign currency translation (1.2) 4.3 N/A 0.1
Ending Assets $687.7 $683.0 0.7% $625.3
Average long-term AUM $610.6 $599.8 1.8% $552.1
Average institutional money
market AUM 69.6 68.1 2.2% 69.6
Average AUM $680.2 $667.9 1.8% $621.7
Gross revenue yield on AUM(a) 64.5bps 62.6bps 64.5bps
Gross revenue yield on AUM
before performance fees(a) 63.4bps 62.5bps 62.9bps
Net revenue yield on AUM(b) 45.6bps 44.0bps 46.1bps
Net revenue yield on AUM
before performance fees(b) 44.4bps 43.8bps 44.6bps
(in billions) Total AUM Active(e) Passive(e)
September 30, 2012 $683.0 $565.1 $117.9
Long-term inflows 41.7 29.1 12.6
Long-term outflows (40.8) (27.3) (13.5)
Long-term net flows 0.9 1.8 (0.9)
Net flows in institutional money market funds 0.1 0.1 -
Market gains and losses/reinvestment 4.9 7.5 (2.6)
Foreign currency translation (1.2) (0.8) (0.4)
December 31, 2012 $687.7 $573.7 $114.0
Average AUM $680.2 $566.6 $113.6
Gross revenue yield on AUM(a) 64.5bps 75.5bps 10.0bps
Net revenue yield on AUM(b) 45.6bps 52.8bps 10.0bps
Private
By channel: (in billions) Total Retail Institutional Wealth
Management
September 30, 2012 $683.0 $423.4 $240.0 $19.6
Long-term inflows 41.7 32.8 7.5 1.4
Long-term outflows (40.8) (33.2) (6.9) (0.7)
Long-term net flows 0.9 (0.4) 0.6 0.7
Net flows in institutional money
market funds 0.1 - 0.1 -
Market gains and losses/reinvestment 4.9 2.6 2.7 (0.4)
Foreign currency translation (1.2) 0.2 (1.4) -
December 31, 2012 $687.7 $425.8 $242.0 $19.9
See the footnotes immediately following these tables.
Invesco Ltd.
Quarterly Assets Under Management (continued)
By
asset
class:
(in Fixed
billions) Total Equity Income Balanced Money Alternatives(c)
Market
(d)
September
30,
2012 $683.0 $300.6 $167.0 $57.9 $73.2 $84.3
Long-
term
inflows 41.7 19.3 9.5 6.3 0.6 6.0
Long-
term
outflows (40.8) (25.0) (6.1) (2.4) (0.7) (6.6)
Long-
term
net
flows 0.9 (5.7) 3.4 3.9 (0.1) (0.6)
Net
flows
in
institutional
money
market
funds 0.1 - - - 0.1 -
Market
gains
and
losses/
reinvestment 4.9 2.9 1.7 0.3 0.1 (0.1)
Foreign
currency
translation (1.2) (0.4) (0.2) - - (0.6)
December
31,
2012 $687.7 $297.4 $171.9 $62.1 $73.3 $83.0
By client
domicile: (in
billions) Total U.S. Canada U.K. Continental Asia
Europe
September 30,
2012 $683.0 $474.5 $25.0 $99.6 $35.6 $48.3
Long-term
inflows 41.7 27.9 1.3 3.3 5.8 3.4
Long-term
outflows (40.8) (29.4) (1.3) (3.4) (3.9) (2.8)
Long-term net
flows 0.9 (1.5) - (0.1) 1.9 0.6
Net flows in
institutional
money market
funds 0.1 0.4 (0.1) (0.2) - -
Market gains
and losses/
reinvestment 4.9 (0.6) 0.6 1.9 1.1 1.9
Foreign
currency
translation (1.2) - (0.3) 0.7 0.2 (1.8)
December 31,
2012 $687.7 $472.8 $25.2 $101.9 $38.8 $49.0
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management
(in billions) 2012 2011 % Change
Beginning Assets $625.3 $616.5 1.4%
Long-term inflows 164.0 177.6 (7.7)%
Long-term outflows (151.6) (158.4) (4.3)%
Long-term net flows 12.4 19.2 (35.4)%
Net flows in institutional money market
funds 0.1 5.3 (98.1)%
Market gains and losses/reinvestment 48.8 (15.3) N/A
Acquisitions/dispositions, net (1.7) - N/A
Foreign currency translation 2.8 (0.4) N/A
Ending Assets $687.7 $625.3 10.0%
Average long-term AUM $595.4 $566.0 5.2%
Average institutional money market AUM 69.0 68.3 1.0%
Average AUM $664.4 $634.3 4.7%
Gross revenue yield on AUM(a) 63.2bps 64.9bps
Gross revenue yield on AUM before
performance fees(a) 62.3bps 64.3bps
Net revenue yield on AUM(b) 44.5bps 45.7bps
Net revenue yield on AUM before performance
fees(b) 43.6bps 45.1bps
(in billions) Total AUM Active(e) Passive(e)
December 31, 2011 $625.3 $529.0 $96.3
Long-term inflows 164.0 106.6 57.4
Long-term outflows (151.6) (105.3) (46.3)
Long-term net flows 12.4 1.3 11.1
Net flows in institutional money market
funds 0.1 0.1 -
Market gains and losses/reinvestment 48.8 41.8 7.0
Acquisitions/dispositions, net (1.7) (1.7) -
Foreign currency translation 2.8 3.2 (0.4)
December 31, 2012 $687.7 $573.7 $114.0
Average AUM $664.4 $554.2 $110.2
Gross revenue yield on AUM(a) 63.2bps 73.9bps 9.3bps
Net revenue yield on AUM(b) 44.5bps 51.6bps 9.3bps
Private
By channel: (in billions) Total Retail Institutional Wealth
Management
December 31, 2011 $625.3 $373.9 $233.5 $17.9
Long-term inflows 164.0 131.7 28.0 4.3
Long-term outflows (151.6) (121.3) (27.7) (2.6)
Long-term net flows 12.4 10.4 0.3 1.7
Net flows in institutional money
market funds 0.1 - 0.1 -
Market gains and losses/reinvestment 48.8 37.3 11.2 0.3
Acquisitions/dispositions, net (1.7) - (1.7) -
Foreign currency translation 2.8 4.2 (1.4) -
December 31, 2012 $687.7 $425.8 $242.0 $19.9
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management
(continued)
By
asset
class:
(in Fixed
billions) Total Equity Income Balanced Money Alternatives(c)
Market
(d)
December
31,
2011 $625.3 $271.0 $149.0 $44.6 $74.0 $86.7
Long-
term
inflows 164.0 81.4 38.9 21.5 2.7 19.5
Long-
term
outflows (151.6) (90.7) (25.8) (8.5) (3.4) (23.2)
Long-
term
net
flows 12.4 (9.3) 13.1 13.0 (0.7) (3.7)
Net
flows
in
institutional
money
market
funds 0.1 - - - 0.1 -
Market
gains
and
losses/
reinvestment 48.8 33.3 9.4 3.8 (0.1) 2.4
Acquisitions/
dispositions,
net (1.7) - - - - (1.7)
Foreign
currency
translation 2.8 2.4 0.4 0.7 - (0.7)
December
31,
2012 $687.7 $297.4 $171.9 $62.1 $73.3 $83.0
By client
domicile: (in
billions) Total U.S. Canada U.K. Continental Asia
Europe
December 31,
2011 $625.3 $430.0 $23.4 $89.8 $32.0 $50.1
Long-term
inflows 164.0 113.7 3.8 13.4 20.6 12.5
Long-term
outflows (151.6) (101.5) (5.0) (15.2) (14.9) (15.0)
Long-term net
flows 12.4 12.2 (1.2) (1.8) 5.7 (2.5)
Net flows in
institutional
money market
funds 0.1 0.6 0.1 (0.2) - (0.4)
Market gains
and losses/
reinvestment 48.8 30.0 2.3 10.4 2.5 3.6
Acquisitions/
dispositions,
net (1.7) - - - (1.7) -
Foreign
currency
translation 2.8 - 0.6 3.7 0.3 (1.8)
December 31,
2012 $687.7 $472.8 $25.2 $101.9 $38.8 $49.0
See the footnotes immediately following these tables.
Invesco Ltd.
Quarterly Assets Under Management - Passive
%
(in billions) Q4-12 Q3-12 Change Q4-11
Beginning Assets $117.9 $107.6 9.6% $87.4
Long-term inflows 12.6 16.0 (21.3)% 19.5
Long-term outflows (13.5) (10.2) 32.4% (137)
Long-term net flows (0.9) 5.8 N/A 5.8
Net flows in institutional
money market funds - - N/A -
Market gains and losses/
reinvestment (2.6) 4.4 N/A 3.0
Foreign currency translation (0.4) 0.1 N/A 0.1
Ending Assets $114.0 $117.9 (3.3)% $96.3
Average long-term AUM 113.6 113.6 - 93.6
Average institutional money
market AUM - - N/A -
Average AUM $113.6 $113.6 - $93.6
Gross revenue yield on AUM(a) 10.0bps 9.5bps 10.6bps
Gross revenue yield on AUM
before performance fees(a) 10.0bps 9.5bps 10.6bps
Net revenue yield on AUM(b) 10.0bps 9.5bps 10.6bps
Net revenue yield on AUM
before performance fees(b) 10.0bps 9.5bps 10.6bps
Private
By channel: (in billions) Total Retail Institutional Wealth
Management
September 30, 2012 $117.9 $94.7 $23.2 $-
Long-term inflows 12.6 12.2 0.4 -
Long-term outflows (13.5) (13.0) (0.5) -
Long-term net flows (0.9) (0.8) (0.1) -
Net flows in institutional money
market funds - - - -
Market gains and losses/reinvestment (2.6) (2.7) 0.1 -
Foreign currency translation (0.4) - (0.4) -
December 31, 2012 $114.0 $91.2 $22.8 $-
By asset
class: (in Fixed
billions) Total Equity Income Balanced Money Alternatives(c)
Market
September 30,
2012 $117.9 $59.2 $37.6 $- $- $21.1
Long-term
inflows 12.6 9.5 2.5 - - 0.6
Long-term
outflows (13.5) (11.0) (1.0) - - (1.5)
Long-term
net flows (0.9) (1.5) 1.5 - - (0.9)
Net flows in
institutional
money market
funds - - - - - -
Market gains
and losses/
reinvestment (2.6) (2.2) (0.1) - - (0.3)
Foreign
currency
translation (0.4) - - - - (0.4)
December 31,
2012 $114.0 $55.5 $39.0 $- $- $19.5
By client domicile: (in
billions) Total U.S. Canada U.K. Continental Asia
Europe
September 30, 2012 $117.9 $110.8 $- $- $1.3 $5.8
Long-term inflows 12.6 12.5 0.1 - - -
Long-term outflows (13.5) (12.9) - - (0.2) (0.4)
Long-term net flows (0.9) (0.4) 0.1 - (0.2) (0.4)
Net flows in
institutional money
market funds - - - - - -
Market gains and
losses/reinvestment (2.6) (2.6) - - - -
Foreign currency
translation (0.4) - - - - (0.4)
December 31, 2012 $114.0 $107.8 $0.1 $- $1.1 $5.0
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management - Passive
(in billions) 2012 2011 % Change
Beginning Assets $96.3 $80.8 19.2%
Long-term inflows 57.4 71.3 (19.5)%
Long-term outflows (46.3) (53.8) (13.9)%
Long-term net flows 11.1 17.5 (36.6)%
Net flows in institutional money market
funds - - N/A
Market gains and losses/reinvestment 7.0 (2.1) N/A
Foreign currency translation (0.4) 0.1 N/A
Ending Assets $114.0 $96.3 18.4%
Average long-term AUM 110.2 91.3 20.7%
Average institutional money market AUM - - N/A
Average AUM $110.2 $91.3 20.7%
Gross revenue yield on AUM(a) 9.3bps 10.8bps
Gross revenue yield on AUM before
performance fees(a) 9.3bps 10.8bps
Net revenue yield on AUM(b) 9.3bps 10.8bps
Net revenue yield on AUM before
performance fees(b) 9.3bps 10.8bps
Private
By channel: (in billions) Total Retail Institutional Wealth
Management
December 31, 2011 $96.3 $76.9 $19.4 $-
Long-term inflows 57.4 52.4 5.0 -
Long-term outflows (46.3) (44.9) (1.4) -
Long-term net flows 11.1 7.5 3.6 -
Net flows in institutional money
market funds - - - -
Market gains and losses/reinvestment 7.0 6.8 0.2 -
Foreign currency translation (0.4) - (0.4) -
December 31, 2012 $114.0 $91.2 $22.8 $-
By asset
class: (in Fixed
billions) Total Equity Income Balanced Money Alternatives(c)
Market
December 31,
2011 $96.3 $45.6 $30.0 $- $- $20.7
Long-term
inflows 57.4 41.7 11.2 - - 4.5
Long-term
outflows (46.3) (37.7) (2.7) - - (5.9)
Long-term
net flows 11.1 4.0 8.5 - - (1.4)
Net flows in
institutional
money
market
funds - - - - - -
Market gains
and losses/
reinvestment 7.0 5.9 0.5 - - 0.6
Foreign
currency
translation (0.4) - - - - (0.4)
December 31,
2012 $114.0 $55.5 $39.0 $- $- $19.5
By client domicile: (in
billions) Total U.S. Canada U.K. Continental Asia
Europe
December 31, 2011 $96.3 $89.6 $- $- $1.3 $5.4
Long-term inflows 57.4 56.7 0.1 - 0.2 0.4
Long-term outflows (46.3) (45.2) - - (0.6) (0.5)
Long-term net flows 11.1 11.5 0.1 - (0.4) (0.1)
Net flows in institutional
money market funds - - - - - -
Market gains and losses/
reinvestment 7.0 6.7 - - 0.2 0.1
Foreign currency translation (0.4) - - - - (0.4)
December 31, 2012 $114.0 $107.8 $0.1 $- $1.1 $5.0
See the footnotes immediately following these tables.
Invesco Ltd.
Footnotes to the Assets Under Management Tables
(a) Gross revenue yield on AUM is equal to annualized total operating revenues
divided by average AUM, excluding joint venture (JV) AUM. For quarterly AUM,
our share of the average AUM in the fourth quarter for our JVs in China was
$2.9 billion (third quarter 2012: $2.9 billion; fourth quarter 2011: $3.1
billion). For year to date AUM, our share of the average AUM in the twelve
months of 2012 for our JVs in China was $3.0 billion (twelve months of 2011:
$3.3 billion). It is appropriate to exclude the average AUM of our JVs for
purposes of computing gross revenue yield on AUM, because the revenues
resulting from these AUM are not presented in our operating revenues. Under
U.S. GAAP, our share of the pre-tax earnings of the JVs is recorded as
equity in earnings of unconsolidated affiliates on our Condensed Consolidated
Statements of Income. Gross revenue yield, the most comparable U.S. GAAP-
based measure to net revenue yield, is not considered a meaningful effective
fee rate measure. The numerator of the gross revenue yield measure, operating
revenues, excludes the management fees earned from consolidated investment
products; however, the denominator of the measure includes the AUM of these
investment products. Therefore, the gross revenue yield measure is not
considered representative of the company's true effective fee rate from AUM.
The company evaluates net revenue yield instead. See the Reconciliations of
U.S. GAAP to Non-GAAP information on pages 12 through 16 of this release for
a reconciliation of operating revenues to net revenues.
(b) Net revenue yield on AUM is equal to annualized net revenues divided by
average AUM. See the reconciliations of U.S. GAAP to Non-GAAP Information on
pages 12 through 16 of this release for a reconciliation of operating
revenues to net revenues.
(c) The alternatives asset class includes absolute return, Asian direct real
estate, commodities, currencies, European direct real estate, financial
structures, Global REITS, private capital -direct, private capital -fund of
funds, Risk Premia Capture, U.S.direct real estate, and U.S. REITS.
(d) Ending Money Market AUM includes $69.4 billion in institutional money
market AUM and $3.9 billion in retail money market AUM.
(e) Passive AUM includes ETFs, UITs, non-fee earning leverage, foreign
exchange overlays and other passive mandates. Active AUM is total AUM less
Passive AUM.
Invesco Ltd.
Investment Capabilities Performance Overview
Benchmark Peer Group
Comparison Comparison
% of AUM Ahead of
Benchmark % of AUM In
Top Half of
Peer
Group
Equities 1yr 3yr 5yr 1yr 3yr 5yr
U.S. Core 22% 29% 82% 37% 40% 60%
U.S. Growth 35% 29% 24% 30% 25% 62%
U.S. Value 53% 55% 99% 74% 73% 94%
Sector 63% 65% 58% 43% 29% 39%
U.K. 11% 99% 98% 9% 98% 94%
Canadian 100% 56% 81% 100% 52% 56%
Asian 49% 45% 46% 37% 44% 44%
Continental European 70% 70% 94% 45% 58% 58%
Global 59% 80% 88% 62% 73% 60%
Global Ex U.S. and
Emerging Markets 25% 88% 99% 15% 87% 90%
Other
Alternatives 51% 60% 68% 73% 54% 6%
Balanced 47% 45% 77% 97% 83% 95%
Fixed
Income
Money Market 60% 33% 72% 97% 96% 93%
U.S. Fixed Income 64% 90% 58% 81% 81% 77%
Global Fixed Income 86% 62% 89% 91% 41% 86%
Stable Value 100% 100% 100% 100% 100% 100%
Note: AUM measured in the one-, three-, and five-year peer group rankings
represents 59%, 59%, and 56% of total Invesco AUM, respectively, and AUM
measured versus benchmark on a one-, three-, and five-year basis
represents 72%, 71%, and 67% of total Invesco AUM, respectively, as of
December 31, 2012. Peer group rankings are sourced from a widely-used third
party ranking agency in each fund's market (Lipper, Morningstar, IMA,
Russell, Mercer, eVestment Alliance, SITCA) and asset-weighted in USD.
Rankings are as of prior quarter-end for most institutional products and
preceding month-end for Australian retail funds due to their late release by
third parties. Rankings for the most representative fund in each GIPS
composite are applied to all products within each GIPS composite. Excludes
passive products, closed-end funds, private equity limited partnerships,
non-discretionary direct real estate, unit investment trusts fund of funds
with component funds managed by Invesco, stable value building block funds
and CLOs. Certain funds and products were excluded from the analysis because
of limited benchmark or peer group data. Had these been available, results
may have been different. These results are preliminary and subject to
revision. Performance assumes the reinvestment of dividends. Past performance
is not indicative of future results and may not reflect an investor's
experience.
SOURCE Invesco Ltd.
