INVESCO LTD. 
By ATLANTA, Jan. 26, 2012 /PRNewswire/ -- Invesco Ltd. (NYSE: IVZ) today reported financial results for the year and three months ended December 31, 2011.
(Logo: http://photos.prnewswire.com/prnh/20110131/MM39469LOGO-a )
"Invesco's efforts to provide strong, long-term investment performance to our clients contributed to the third year of long-term organic growth for the firm in spite of volatile markets, particularly during the final quarter of 2011," said Martin L. Flanagan, president and CEO of Invesco. "Strong investment performance led to positive net flows of $24.5 billion for the year and contributed to a 21.7% increase in adjusted earnings per share. Our efforts to enhance our business over the past year have positioned us to provide solid results in volatile markets and even stronger results should the markets further strengthen in 2012."
%
2011 2010 Change
---- ---- ------
Adjusted Financial Measures(1)(2)
---------------------------------
Net revenues $2,898.4m $2,521.1m 15.0%
Operating income $1,068.9m $897.7m 19.1%
Operating margin 36.9% 35.6%
Net income attributable to
common shareholders $781.6m $639.7m 22.2%
Diluted EPS $1.68 $1.38 21.7%
U.S. GAAP Financial Measures(2)
-------------------------------
Operating revenues $4,092.2m $3,487.7m 17.3%
Operating income $898.1m $589.9m 52.2%
Operating margin 21.9% 16.9%
Net income attributable to
common shareholders $729.7m $465.7m 56.7%
Diluted EPS $1.57 $1.01 55.4%
Assets Under Management
-----------------------
Ending AUM $625.3bn $616.5bn 1.4%
Average AUM(2) $634.3bn $532.3bn 19.2%
(1) The adjusted financial measures are all non-
GAAP financial measures. See the information on pages
8 through 15 for a reconciliation to their most
directly comparable U.S. GAAP measures.
(2) The 2011 results include a full year of
activity for the acquired Morgan Stanley retail asset
management business. The 2010 results include the 7
months of activity following the June 1, 2010
acquisition.
Q4-11
Q4-11 Q3-11 vs. Q4-10 Q4-11 vs.
----- ----- ----- ----- ---------
Q3-11 Q4-10
----- -----
Adjusted
Financial
Measures(1)
------------
Net
revenues $716.8m $706.1m 1.5% $736.0m (2.6)%
Operating
income $256.3m $255.7m 0.2% $280.2m (8.5)%
Operating
margin 35.8% 36.2% 38.1%
Net
income
attributable
to
common
shareholders $190.5m $192.3m (0.9)% $209.3m (9.0)%
Diluted
EPS $0.42 $0.42 -% $0.44 (4.5)%
U.S. GAAP
Financial
Measures
----------
Operating
revenues $997.1m $997.8m (0.1)% $1,028.5m (3.1)%
Operating
income $211.6m $227.8m (7.1)% $198.7m 6.5%
Operating
margin 21.2% 22.8% 19.3%
Net
income
attributable
to
common
shareholders $202.3m $166.9m 21.2% $175.2m 15.5%
Diluted
EPS $0.44 $0.36 22.2% $0.37 18.9%
Assets
Under
Management
-----------
Ending
AUM $625.3bn $598.4bn 4.5% $616.5bn 1.4%
Average
AUM $621.7bn $632.7bn (1.7)% $616.0bn 0.9%
(1) The adjusted financial measures are all non-
GAAP financial measures. See the information on pages
8 through 15 for a reconciliation to their most
directly comparable U.S. GAAP measures.
Assets Under Management
Total assets under management (AUM) at December 31, 2011 were $625.3 billion (September 30, 2011: $598.4 billion), an increase of $26.9 billion during the fourth quarter. Total net inflows were $6.0 billion for the fourth quarter as detailed below:
Summary of
net flows
(in
billions) Quarterly Year-to-date
---------- --------- ------------
Dec 31, Dec 31,
Q4-11 Q3-11 2011 2010
----- ----- -------- --------
AUM
excluding
ETF, UIT
and
Passive ($0.2) $0.6 $1.7 $1.2
ETF, UIT
and
Passive 5.8 2.7 17.5 4.3
--- --- ---- ---
Net long-
term flows 5.6 3.3 19.2 5.5
Institutional
money
market 0.4 (1.1) 5.3 (15.5)
--- ---- --- -----
Total net
flows $6.0 $2.2 $24.5 ($10.0)
==== ==== ===== ======
Net market gains led to a $20.8 billion increase in AUM during the fourth quarter, compared to a $52.2 billion decrease in the third quarter 2011. Foreign exchange rate movements led to a $0.1 billion increase in AUM during the fourth quarter, compared to a $5.3 billion decrease in the third quarter 2011.
Average AUM during the fourth quarter were $621.7 billion, compared to $632.7 billion for the third quarter 2011, a 1.7% decrease. Average long-term AUM during the fourth quarter were $552.1 billion compared to $564.3 billion for the third quarter 2011, a 2.2% decrease.
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 most recent Form 10-Q and the Form 10-K for the year ended December 31, 2010, 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 2011 compared to the third quarter 2011 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, 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 8 through 15 of this release.
Net revenues increased by $10.7 million (1.5%) to $716.8 million in the fourth quarter from $706.1 million in the third quarter 2011. The increase was principally due to increases in performance fees and other revenue earned in the fourth quarter compared to the third quarter, offset by decreases in management fees and service distribution fees. Foreign exchange rate changes decreased fourth quarter net revenues by $6.1 million when compared to the third quarter 2011.
Investment management fees, as adjusted, decreased $33.3 million (4.1%) to $770.8 million in the fourth quarter from $804.1 million in the third quarter 2011. The decrease in management fees correlates with lower average AUM. Additionally, the average AUM reduction was weighted towards the higher fee-earning equity asset class. Foreign exchange rate changes decreased fourth quarter management fees by $7.7 million when compared to third quarter 2011.
Service and distribution fees, as adjusted, decreased $8.0 million (4.2%) to $181.1 million in the fourth quarter from $189.1 million in the third quarter 2011, also correlating with lower average AUM.
Performance fees, as adjusted, in the fourth quarter were $24.0 million compared to $3.0 million in the third quarter 2011. The fourth quarter fees were earned by the private wealth management and real estate teams. Other revenues, as adjusted, increased by $18.2 million in the fourth quarter to $44.9 million compared to $26.7 million in the third quarter 2011, principally due to transaction fees related to private equity and real estate activities.
Third-party distribution, service and advisory expenses, as adjusted, were $304.0 million in the fourth quarter compared to $316.8 million in the third quarter 2011. The decrease of $12.8 million (4.0%) primarily reflects the decrease in investment management fees and service and distribution fees, partially offset by an increase in distribution fees payable to third-parties linked to earned real estate performance fee and transaction fee revenues. Foreign exchange rate changes decreased the fourth quarter third-party distribution, services and advisory expenses by $2.6 million.
Total operating expenses, as adjusted, increased by $10.1 million (2.2%) to $460.5 million in the fourth quarter from $450.4 million in the third quarter 2011. Foreign exchange rate changes decreased operating expenses, as adjusted, by $4.2 million when compared to the third quarter 2011.
Employee compensation expenses, as adjusted, increased by $6.0 million (2.0%) to $312.3 million in the fourth quarter from $306.3 million in the third quarter 2011. The increase is primarily in variable compensation, particularly bonuses linked to fourth quarter performance fees and transaction fees. Foreign exchange rate changes decreased fourth quarter employee compensation expenses by $2.7 million when compared to the third quarter 2011.
Marketing expenses, as adjusted, decreased by $2.3 million (9.4%) to $22.1 million in the fourth quarter from $24.4 million in the third quarter 2011.
Property, office and technology expenses, as adjusted, decreased $0.9 million (1.4%) to $61.9 million in the fourth quarter from $62.8 million in the third quarter 2011.
General and administrative expenses, as adjusted, increased $7.3 million (12.8%) to $64.2 million in the fourth quarter from $56.9 million in the third quarter 2011. Approximately half of the increase is attributable to an elevated level of business activities in the fourth quarter, with the remaining increase resulting from unusual items.
Non-operating other income and expenses, as adjusted, included reduced equity in earnings from partnership investments and reduced gains from seed investments in the fourth quarter when compared to the third quarter. The effective tax rate increased to 22.9% for the fourth quarter from 22.5% for the third quarter 2011. The third quarter tax rate benefited from the release of a provision made for uncertain tax positions. Additionally, the fourth quarter rate was lower than anticipated due to adjustments to tax positions to reflect actual tax returns filed.
U.S. GAAP Earnings
Operating revenues decreased 0.1% to $997.1 million in the fourth quarter from $997.8 million in the third quarter 2011. Operating expenses increased by 2.0% to $785.5 million in the fourth quarter from $770.0 million in the third quarter 2011.
Operating expenses included $5.5 million of transaction and integration charges incurred in the fourth quarter compared to $4.7 million in the third quarter 2011. Operating expenses also included $7.7 million of European infrastructure expenses for the fourth quarter compared to $5.3 million for the third quarter. Fourth quarter non-operating other income and expenses includes a $45.0 million credit related to the settlement of litigation arising from the 2007 departure of certain investment professionals to a competitor. Legal fees associated with this litigation were $3.6 million and are included within operating expenses.
The effective tax rate, excluding noncontrolling interests, increased to 27.3% for the fourth quarter from 26.2% for the third quarter 2011 due to the same factors discussed above.
Capital Management
Cash and cash equivalents were $727.4 million at December 31, 2011 compared to $757.0 million at September 30, 2011. Total debt was $1,284.7 million at December 31, 2011 compared to $1,389.7 million at September 30, 2011, the reduction reflecting repayment of $105.0 million of the credit facility. The credit facility balance was $539.0 million at December 31, 2011 compared to $644.0 million at September 30, 2011.
During the fourth quarter, the company repurchased $103.5 million of its shares, representing 5.3 million shares at a weighted average share price of $19.35. There were no share repurchases during the third quarter. Share repurchases under the company's share repurchase program in 2011 totaled $436.5 million with $732.0 million remaining authorized under the program at December 31, 2011.
Today the company is announcing a fourth-quarter cash dividend of 12.25 cents per share to holders of common shares. The dividend is payable on March 9, 2012 to shareholders of record at the close of business on February 23, 2012.
Headcount
As of December 31, 2011, the company had 6,162 employees compared to 6,192 employees as at September 30, 2011.
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 26, 2012, at 9:00 a.m. ET by dialing one of the following numbers: 1-866-803-2143 for U.S. and Canadian callers and 0800-279-3953 for U.K. callers or 1-210-795-1098 for international callers. An audio replay of the conference call will be available until Thursday, February 23, 2012 at 5:00 p.m. ET by calling 1-866-490-2541 for U.S. and Canadian callers or 1-203-369-1697 for international callers. The presentation will be made available via a simultaneous Webcast at www.invesco.com. The presentation slides that will be reviewed during the conference call will also be available on Invesco's Web site 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)
Year Ended December 31,
-----------------------
2011 2010 % Change
---- ---- --------
Adjusted revenues
Investment
management fees $3,235.3 $2,818.4 14.8%
Service and
distribution
fees 775.1 645.5 20.1%
Performance fees 38.4 26.1 47.1%
Other 136.5 95.6 42.8%
Third-party
distribution,
service and
advisory (1,286.9) (1,064.5) 20.9%
Net revenues 2,898.4 2,521.1 15.0%
------- ------- ----
Adjusted
operating
expenses
Employee
compensation 1,229.2 1,097.0 12.1%
Marketing 99.5 79.8 24.7%
Property, office
and technology 251.8 241.0 4.5%
General and
administrative 249.0 205.6 21.1%
Total adjusted
operating
expenses 1,829.5 1,623.4 12.7%
------- ------- ----
Adjusted
operating income 1,068.9 897.7 19.1%
Adjusted other
income/
(expense)
Equity in
earnings of
unconsolidated
affiliates 9.2 16.9 (45.6)%
Interest and
dividend income 16.6 8.8 88.6%
Interest expense (61.8) (58.6) 5.5%
Other gains and
losses, net 6.7 1.4 378.6%
--- --- -----
Adjusted income
before income
taxes 1,039.6 866.2 20.0%
Adjusted income
tax provision (258.1) (229.3) 12.6%
------ ------ ----
Adjusted net
income 781.5 636.9 22.7%
Adjusted
(gains)/losses
attributable to
noncontrolling
interests in
consolidated
entities, net 0.1 2.8 (96.4)%
--- --- ------
Adjusted net
income
attributable to
common
shareholders $781.6 $639.7 22.2%
====== ====== ====
Adjusted diluted
EPS $1.68 $1.38 21.7%
Average diluted
shares
outstanding 464.7 463.2 0.3%
Ending Headcount 6,162 5,617 9.7%
Ending AUM (in
billions) $625.3 $616.5 1.4%
Average AUM (in
billions) $634.3 $532.3 19.2%
Invesco Ltd.
Non-GAAP Condensed Consolidated Income Statement Information
(Unaudited, in millions, other than per share amounts, headcount and AUM)
Q4-11 Q3-11 % Change Q4-10 % Change
----- ----- -------- ----- --------
Adjusted
revenues
Investment
management
fees $770.8 $804.1 (4.1)% $799.1 (3.5)%
Service and
distribution
fees 181.1 189.1 (4.2)% 202.0 (10.3)%
Performance
fees 24.0 3.0 N/A 18.7 28.3%
Other 44.9 26.7 68.2% 34.6 29.8%
Third-party
distribution,
service and
advisory (304.0) (316.8) (4.0)% (318.4) (4.5)%
Net revenues 716.8 706.1 1.5% 736.0 (2.6)%
----- ----- --- ----- -----
Adjusted
operating
expenses
Employee
compensation 312.3 306.3 2.0% 305.1 2.4%
Marketing 22.1 24.4 (9.4)% 26.2 (15.6)%
Property,
office and
technology 61.9 62.8 (1.4)% 66.3 (6.6)%
General and
administrative 64.2 56.9 12.8% 58.2 10.3%
Total adjusted
operating
expenses 460.5 450.4 2.2% 455.8 1.0%
----- ----- --- ----- ---
Adjusted
operating
income 256.3 255.7 0.2% 280.2 (8.5)%
Adjusted other
income/
(expense)
Equity in
earnings of
unconsolidated
affiliates (1.1) 3.0 N/A 7.3 N/A
Interest and
dividend
income 6.2 4.5 37.8% 2.5 148.0%
Interest
expense (14.3) (15.3) (6.5)% (16.0) (10.6)%
Other gains and
losses, net (0.1) 0.3 N/A 5.6 N/A
---- --- --- --- ---
Adjusted income
before income
taxes 247.0 248.2 (0.5)% 279.6 (11.7)%
Adjusted income
tax provision (56.5) (55.9) 1.1% (73.5) (23.1)%
----- ----- --- ----- ------
Adjusted net
income 190.5 192.3 (0.9)% 206.1 (7.6)%
Adjusted
(gains)/losses
attributable
to
noncontrolling
interests in
consolidated
entities, net - - N/A 3.2 (100.0)%
--- --- --- --- -------
Adjusted net
income
attributable
to common
shareholders $190.5 $192.3 (0.9)% $209.3 (9.0)%
====== ====== ===== ====== =====
Adjusted
diluted EPS $0.42 $0.42 - % $0.44 (4.5)%
Average diluted
shares
outstanding 458.3 461.0 (0.6)% 473.1 (3.1)%
Ending
Headcount 6,162 6,192 (0.5)% 5,617 9.7%
Ending AUM (in
billions) $625.3 $598.4 4.5% $616.5 1.4%
Average AUM (in
billions) $621.7 $632.7 (1.7)% $616.0 0.9%
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
consolidation and deferred Consolidated Other
U.S. of joint advisory Acquisition compensation investment reconciling Non-
GAAP ventures expenses related awards products items GAAP
basis ------------- -------------- ------------ ------------- ------------- ------------ basis
----- -----
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) - -
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
(Gains)/losses
attributable
to
noncontrolling
interests in
consolidated
entities, net 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
====== === === === === ===== ==== ====== ====== ======
Operating Adjusted
margin 21.9% operating margin 36.9%
Average diluted Average diluted
shares shares
outstanding 464.7 outstanding 464.7
Adjusted diluted
Diluted EPS $1.57 EPS $1.68
See pages 13 through 15 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, 2010
Market
Third appreciation
party /
distribution, depreciation
Proportional service of
consolidation and deferred Consolidated Other
U.S. of joint advisory Acquisition compensation investment reconciling Non-
GAAP ventures expenses related awards products items GAAP
basis ------------- -------------- ------------ ------------- ------------- ------------ basis
----- -----
Operating
revenues
Investment
management
fees $2,720.9 $52.2 $ - $ - $ - $45.3 $ - $2,818.4
Service and
distribution
fees 645.5 - - - - - - 645.5
Performance
fees 26.1 - - - - - - 26.1
Other 95.2 0.7 - - - (0.3) - 95.6
Third-party
distribution,
service and
advisory - (10.7) (1,053.8) - - - - (1,064.5)
---
Total operating
revenues
reconciled to
net revenues 3,487.7 42.2 (1,053.8) - - 45.0 - 2,521.1
------- ---- -------- --- --- ---- --- -------
Operating
expenses
Employee
compensation 1,114.9 11.4 - (20.0) (9.3) - - 1,097.0
Third-party
distribution,
service and
advisory 1,053.8 - (1,053.8) - - - - -
Marketing 78.5 1.3 - - - - - 79.8
Property,
office and
technology 238.4 2.6 - - - - - 241.0
General and
administrative 262.2 4.0 - (26.5) - (9.9) (24.2) 205.6
Transaction and
integration 150.0 - - (150.0) - - - -
Total operating
expenses 2,897.8 19.3 (1,053.8) (196.5) (9.3) (9.9) (24.2) 1,623.4
------- ---- -------- ------ ---- ---- ----- -------
Operating
income
reconciled to
adjusted
operating
income 589.9 22.9 - 196.5 9.3 54.9 24.2 897.7
Other income/
(expense)
Equity in
earnings of
unconsolidated
affiliates 40.2 (24.0) - - - 0.7 - 16.9
Interest and
dividend
income 10.4 1.1 - - (2.7) - - 8.8
Interest income
of
consolidated
investment
products 240.9 - - - - (240.9) - -
Gains/(losses)
of
consolidated
investment
products, net 114.0 - - - - (114.0) - -
Interest
expense (58.6) - - - - - - (58.6)
Interest
expense of
consolidated
investment
products (118.6) - - - - 118.6 - -
Other gains and
losses, net 15.6 - - - (14.2) - - 1.4
---- --- --- --- ----- --- --- ---
Income before
income taxes 833.8 - - 196.5 (7.6) (180.7) 24.2 866.2
Income tax
provision (197.0) - - (27.4) 2.3 - (7.2) (229.3)
------ --- --- ----- --- --- ---- ------
Net income 636.8 - - 169.1 (5.3) (180.7) 17.0 636.9
(Gains)/losses
attributable
to
noncontrolling
interests in
consolidated
entities, net (171.1) - - - - 173.9 - 2.8
------ --- --- --- --- ----- --- ---
Net income
attributable
to common
shareholders
reconciled to
adjusted net
income
attributable
to common
shareholders $465.7 $ - $ - $169.1 ($5.3) ($6.8) $17.0 $639.7
====== === === === === ====== ===== ===== ===== ======
Operating Adjusted
margin 16.9% operating margin 35.6%
Average diluted Average diluted
shares shares
outstanding 463.2 outstanding 463.2
Adjusted diluted
Diluted EPS $1.01 EPS $1.38
See pages 13 through 15 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 /
distribution, depreciation
Proportional service of
U.S. consolidation and deferred Consolidated Other Non-
GAAP of joint advisory Acquisition 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) - -
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
(Gains)/losses
attributable
to
noncontrolling
interests in
consolidated
entities, net (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
====== === === === === ===== ===== ===== ====== ======
Operating Adjusted
margin 21.2% operating 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 13 through 15 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, 2011
Market
Third appreciation
party /
distribution, depreciation
Proportional service of
U.S. consolidation and deferred Consolidated Other Non-
GAAP of joint advisory Acquisition compensation investment reconciling GAAP
basis ventures expenses related awards products items basis
----- ------------- -------------- ------------ ------------- ------------- ------------ -----
Operating
revenues
Investment
management fees $779.5 $12.7 $ - $ - $ - $11.9 $ - $804.1
Service and
distribution
fees 189.1 - - - - - - 189.1
Performance fees 2.6 - - - - 0.4 - 3.0
Other 26.6 0.1 - - - - - 26.7
Third-party
distribution,
service and
advisory - (2.4) (314.4) - - - - (316.8)
---
Total operating
revenues
reconciled to
net revenues 997.8 10.4 (314.4) - - 12.3 - 706.1
----- ---- ------ --- --- ---- --- -----
Operating
expenses
Employee
compensation 305.5 2.8 - (5.0) 6.3 - (3.3) 306.3
Third-party
distribution,
service and
advisory 314.4 - (314.4) - - - - -
Marketing 13.1 0.9 - - - - 10.4 24.4
Property, office
and technology 62.7 0.8 - - - - (0.7) 62.8
General and
administrative 69.6 1.2 - (9.8) - (2.8) (1.3) 56.9
Transaction and
integration 4.7 - - (4.7) - - - -
Total operating
expenses 770.0 5.7 (314.4) (19.5) 6.3 (2.8) 5.1 450.4
----- --- ------ ----- --- ---- --- -----
Operating income
reconciled to
adjusted
operating
income 227.8 4.7 - 19.5 (6.3) 15.1 (5.1) 255.7
Other income/
(expense)
Equity in
earnings of
unconsolidated
affiliates 8.1 (5.2) - - - 0.1 - 3.0
Interest and
dividend income 3.8 0.5 - - (2.4) 2.6 - 4.5
Interest income
of consolidated
investment
products 79.6 - - - - (79.6) - -
Gains/(losses)
of consolidated
investment
products, net (93.1) - - - - 93.1 - -
Interest expense (15.3) - - - - - - (15.3)
Interest expense
of consolidated
investment
products (48.7) - - - - 48.7 - -
Other gains and
losses, net (19.7) - - - 20.0 - - 0.3
----- --- --- --- ---- --- --- ---
Income before
income taxes 142.5 - - 19.5 11.3 80.0 (5.1) 248.2
Income tax
provision (59.1) - - 3.1 (3.4) - 3.5 (55.9)
----- --- --- --- ---- --- --- -----
Net income 83.4 - - 22.6 7.9 80.0 (1.6) 192.3
(Gains)/losses
attributable to
noncontrolling
interests in
consolidated
entities, net 83.5 - - - - (83.5) - -
---- --- --- --- --- ----- --- ---
Net income
attributable to
common
shareholders
reconciled to
adjusted net
income
attributable to
common
shareholders $166.9 $ - $ - $22.6 $7.9 ($3.5) ($1.6) $192.3
====== === === === === ===== ==== ===== ===== ======
Adjusted
Operating margin 22.8% operating margin 36.2%
Average diluted Average diluted
shares shares
outstanding 461.0 outstanding 461.0
Adjusted diluted
Diluted EPS $0.36 EPS $0.42
See pages 13 through 15 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, 2010
Market
Third appreciation
party /
Proportional distribution, depreciation
consolidation service of
U.S. of and deferred Consolidated Other Non-
GAAP joint advisory Acquisition compensation investment reconciling GAAP
basis ventures expenses related awards products adjustments basis
----- ------------- -------------- ------------ ------------- ------------- ------------ -----
Operating
revenues
Investment
management fees $773.7 $13.5 $ - $ - $ - $11.9 $ - $799.1
Service and
distribution
fees 202.0 - - - - - - 202.0
Performance fees 18.7 - - - - - - 18.7
Other 34.1 0.5 - - - - - 34.6
Third-party
distribution,
service and
advisory - (2.8) (315.6) - - - - (318.4)
Total operating
revenues
reconciled to
net revenues 1,028.5 11.2 (315.6) - - 11.9 - 736.0
------- ---- ------ --- --- ---- --- -----
Operating
expenses
Employee
compensation 312.7 2.9 - (5.0) (5.5) - - 305.1
Third-party
distribution,
service and
advisory 315.6 - (315.6) - - - - -
Marketing 25.6 0.6 - - - - - 26.2
Property, office
and technology 65.6 0.7 - - - - - 66.3
General and
administrative 83.6 1.0 - (8.8) - (2.3) (15.3) 58.2
Transaction and
integration 26.7 - - (26.7) - - - -
---- --- --- ----- --- --- ---
Total operating
expenses 829.8 5.2 (315.6) (40.5) (5.5) (2.3) (15.3) 455.8
----- --- ------ ----- ---- ---- ----- -----
Operating income
reconciled to
adjusted
operating income 198.7 6.0 - 40.5 5.5 14.2 15.3 280.2
Other income/
(expense)
Equity in
earnings of
unconsolidated
affiliates 13.3 (6.3) - - - 0.3 - 7.3
Interest and
dividend income 3.6 0.3 - - (1.4) - - 2.5
Interest income
of consolidated
investment
products 65.0 - - - - (65.0) - -
Gains/(losses)
of consolidated
investment
products, net (28.0) - - - - 28.0 - -
Interest expense (16.0) - - - - - - (16.0)
Interest expense
of consolidated
investment
products (36.6) - - - - 36.6 - -
Other gains and
losses, net 12.4 - - - (6.8) - - 5.6
---- --- --- --- ---- --- ---
Income before
income taxes,
including gains
and losses
attributable to
noncontrolling
interests 212.4 - - 40.5 (2.7) 14.1 15.3 279.6
Income tax
provision (55.7) - - (14.4) 0.9 - (4.3) (73.5)
----- --- --- ----- --- --- -----
Net income,
including gains
and losses
attributable to
noncontrolling
interests 156.7 - - 26.1 (1.8) 14.1 11.0 206.1
(Gains)/losses
attributable to
noncontrolling
interests in
consolidated
entities, net 18.5 - - - - (15.3) - 3.2
---- --- --- --- --- ----- ---
Net income
attributable to
common
shareholders
reconciled to
adjusted net
income
attributable to
common
shareholders $175.2 $ - $ - $26.1 ($1.8) ($1.2) $11.0 $209.3
====== === === === === ===== ===== ===== ===== ======
Adjusted
operating
Operating margin 19.3% margin 38.1%
Average diluted Average diluted
shares shares
outstanding 473.1 outstanding 473.1
Adjusted diluted
Diluted EPS $0.37 EPS $0.44
See pages 13 through 15 for notes to the reconciliation.
Invesco Ltd.
Notes to the Reconciliation of U.S. GAAP Condensed Consolidated Income Statements to Non-GAAP Condensed Consolidated Income Statement Information
The following are notes to the reconciliations presented on pages 8 through 12. 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 most recent Form 10-Q and the Form 10-K for the year ended December 31, 2010. 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 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, amortization of prepaid compensation related to the October 2006 acquisition of W.L. Ross & Co. and all related tax effects. Additionally, acquisition-related reconciling items include changes in estimates of acquisition earn-out liabilities booked from prior acquisitions, which are offset in the period by increased amortization related to the write-off of related management contract intangible assets. Adjustment amounts are as follows:
in
millions Q4-11 Q3-11 Q4-10 2011 2010
----- ----- ----- ---- ----
Service
and
distribution
fees $ - $ - $ - ($5.2) $ -
Third-
party
distribution,
service
and
advisory
expenses - - - 5.2 -
Transaction
and
integration 5.5 4.7 26.7 29.4 150.0
Taxation
on
transaction
and
integration (2.1) (1.8) (21.3) (11.2) (46.9)
Intangible
amortization 6.1 14.2 12.6 42.2 30.3
Taxation
on
amortization (1.0) (1.1) (1.1) (4.4) (2.9)
Prepaid
compensation
amortization - 5.0 5.0 15.0 20.0
Deferred
taxation 6.3 6.0 6.7 27.0 21.1
Change
in
contingent
consideration
estimates (2.4) (4.4) (3.8) (13.2) (3.8)
Taxation
on
change
in
contingent
consideration
estimates - - 1.3 - 1.3
$12.4 $22.6 $26.1 $84.8 $169.1
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
Certain collateralized loan obligation products were consolidated on January 1, 2010, upon adoption of additional guidance included in Accounting Standards Codification Topic 810 "Consolidation."
Management and performance fees earned by the company which were eliminated from operating revenues upon consolidation of investment products were $11.7 million in the fourth quarter (third quarter 2011: $12.3 million; fourth quarter 2010: $11.9 million; 2011: $47.3 million; 2010: $45.3 million). There were no other revenues recorded by the consolidated investment products for the year (2010: $0.3 million). By deconsolidating these products in the non-GAAP information, the management and performance fees are added back into net revenues while other revenues are excluded. 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 an increase of $1.9 million in net income attributable to common shareholders in the fourth quarter U.S. GAAP earnings (third quarter 2011: $3.5 million; fourth quarter 2010: $1.2 million; 2011: $20.2 million; 2010: $6.8 million). 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 $5.5 million in the fourth quarter (third quarter 2011: $6.3 million depreciation; fourth quarter 2010: $5.5 million appreciation; 2011: $5.8 million appreciation; 2010: $9.3 million appreciation) with an investment gain, net of interest and dividend income, of $10.1 million in the fourth quarter (third quarter 2011: $17.6 million loss; fourth quarter 2010: $8.2 million gain; 2011: $2.2 million gain; 2010: $16.9 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 of $1.4 million in the fourth quarter (third quarter 2011: $3.4 million credit; fourth quarter 2010: $0.9 million charge; 2011: $1.1 million credit; 2010: $2.3 million charge), result in a net income deduction of $3.2 million for the fourth quarter (third quarter 2011: $7.9 million addition; fourth quarter 2010: $1.8 million deduction; 2011: $2.5 million addition; 2010: $5.3 million deduction).
6. Other reconciling items
-- European infrastructure: As announced earlier this year, 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. For the fourth
quarter 2011, this adjustment includes $1.2 million in compensation
expenses, primarily due to severance costs (third quarter 2011: $3.3
million; 2011: $7.6 million; 2010: none); $1.5 million in general and
administrative costs, primarily related to consulting services (third
quarter 2011: $1.3 million; 2011: $5.3 million; 2010: none); and $5.0
million of property and technology costs (third quarter 2011: $0.7
million; 2011: $5.9 million; 2010: none). The company's income tax
provision included tax benefits of $0.8 million in the fourth quarter
2011 relating to this charge (third quarter 2011: $0.5 million; 2011:
$1.9 million; 2010: none).
-- 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 the
settlement of litigation arising from the 2007 departure of certain
investment professionals. Included within general and administrative
expenses are legal fees associated with this litigation of $3.6 million
for the year. The company's income tax provision included a taxation
charge of $15.6 million related to the settlement credit, net of legal
fees.
-- Included within marketing expenses in the third quarter and year ended
December 31, 2011 is a credit of $10.4 million related to the
termination of naming rights to the Denver Broncos stadium that occurred
during the third quarter. The company's income tax provision included a
taxation charge of $4.0 million in the third quarter 2011 and year ended
December 31, 2011 relating to the credit.
-- Included within general and administrative expenses in the fourth
quarter and year ended December 31, 2010 was a charge of $15.3 million
relating to a levy from the U.K. Financial Services Compensation Scheme.
The company's tax provision included tax benefits of $4.3 million
relating to this charge. An additional $0.4 million charge was recorded
in the first quarter and year ended December 31, 2011 reflecting revised
estimates of the levy. The company's tax provision included tax benefits
of $0.1 million relating to this revision.
-- Included within general and administrative expenses in the year ended
December 31, 2010 was a charge of $8.9 million representing
reimbursement costs from the correction of historical foreign exchange
allocations in the fund accounting process that impacted the reporting
of fund performance in certain funds. The company's income tax provision
included tax benefits of $2.9 million related to this charge. A $0.3
million credit was recorded in the fourth quarter and year ended
December 31, 2011 reflecting the final amount reimbursed, together with
an associated $0.1 million tax charge.
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 divided by the weighted average number of shares outstanding.
Invesco Ltd.
U.S. GAAP Condensed Consolidated Income Statements
(Unaudited, in millions, other than per share amounts)
Year ended December
31,
--------------------
2011 2010 % Change
---- ---- --------
Operating revenues
Investment management
fees $3,138.5 $2,720.9 15.3%
Service and distribution
fees 780.3 645.5 20.9%
Performance fees 37.9 26.1 45.2%
Other 135.5 95.2 42.3%
----- ----
Total operating revenues 4,092.2 3,487.7 17.3%
------- ------- ----
Operating expenses
Employee compensation 1,246.2 1,114.9 11.8%
Third-party
distribution, service
and advisory 1,282.5 1,053.8 21.7%
Marketing 86.0 78.5 9.6%
Property, office and
technology 254.6 238.4 6.8%
General and
administrative 295.4 262.2 12.7%
Transaction and
integration 29.4 150.0 (80.4)%
Total operating expenses 3,194.1 2,897.8 10.2%
------- ------- ----
Operating income 898.1 589.9 52.2%
Other income/(expense)
Equity in earnings of
unconsolidated
affiliates 30.5 40.2 (24.1)%
Interest and dividend
income 11.0 10.4 5.8%
Interest income of
consolidated investment
products 307.2 240.9 27.5%
Gains/(losses) of
consolidated investment
products, net (138.9) 114.0 N/A
Interest expense (61.8) (58.6) 5.5%
Interest expense of
consolidated investment
products (187.0) (118.6) 57.7%
Other gains and losses,
net 49.0 15.6 214.1%
---- ----
Income before income
taxes 908.1 833.8 8.9%
Income tax provision (286.1) (197.0) 45.2%
------ ------
Net income 622.0 636.8 (2.3)%
(Gains)/losses
attributable to
noncontrolling
interests in
consolidated entities,
net 107.7 (171.1) N/A
----- ------
Net income attributable
to common shareholders $729.7 $465.7 56.7%
====== ====== ====
Earnings per share:
---basic $1.58 $1.01 56.4%
---diluted $1.57 $1.01 55.4%
Average shares
outstanding:
---basic 462.9 460.4 0.5%
---diluted 464.7 463.2 0.3%
Invesco Ltd.
U.S. GAAP Condensed Consolidated Income
Statements
(Unaudited, in millions, other than per share
amounts)
Q4-11 Q3-11 % Change Q4-10 % Change
----- ----- -------- ----- --------
Operating
revenues
Investment
management
fees $747.6 $779.5 (4.1)% $773.7 (3.4)%
Service
and
distribution
fees 181.1 189.1 (4.2)% 202.0 (10.3)%
Performance
fees 23.9 2.6 N/A 18.7 27.8%
Other 44.5 26.6 67.3% 34.1 30.5%
---- ---- ----
Total
operating
revenues 997.1 997.8 (0.1)% 1,028.5 (3.1)%
----- ----- ----- ------- -----
Operating
expenses
Employee
compensation 316.5 305.5 3.6% 312.7 1.2%
Third-
party
distribution,
service
and
advisory 301.8 314.4 (4.0)% 315.6 (4.4)%
Marketing 21.1 13.1 61.1% 25.6 (17.6)%
Property,
office
and
technology 66.0 62.7 5.3% 65.6 0.6%
General
and
administrative 74.6 69.6 7.2% 83.6 (10.8)%
Transaction
and
integration 5.5 4.7 17.0% 26.7 (79.4)%
--- ---
Total
operating
expenses 785.5 770.0 2.0% 829.8 (5.3)%
----- ----- --- ----- -----
Operating
income 211.6 227.8 (7.1)% 198.7 6.5%
Other
income/
(expense)
Equity
in
earnings
of
unconsolidated
affiliates 4.9 8.1 (39.5)% 13.3 (63.2)%
Interest
and
dividend
income 2.7 3.8 (28.9)% 3.6 (25.0)%
Interest
income
of
consolidated
investment
products 73.6 79.6 (7.5)% 65.0 13.2%
Gains/
(losses)
of
consolidated
investment
products,
net 104.4 (93.1) N/A (28.0) N/A
Interest
expense (14.3) (15.3) (6.5)% (16.0) (10.6)%
Interest
expense
of
consolidated
investment
products (51.8) (48.7) 6.4% (36.6) 41.5%
Other
gains
and
losses,
net 54.8 (19.7) N/A 12.4 N/A
---- ----- ----
Income
before
income
taxes 385.9 142.5 170.8% 212.4 81.7%
Income
tax
provision (76.0) (59.1) 28.6% (55.7) 36.4%
----- ----- -----
Net
income 309.9 83.4 271.6% 156.7 97.8%
(Gains)/losses
attributable
to
noncontrolling
interests
in
consolidated
entities,
net (107.6) 83.5 N/A 18.5 N/A
------ ---- ----
Net
income
attributable
to
common
shareholders $202.3 $166.9 21.2% $175.2 15.5%
====== ====== ==== ====== ====
Earnings
per
share:
---basic $0.44 $0.36 22.2% $0.37 18.9%
---diluted $0.44 $0.36 22.2% $0.37 18.9%
Average
shares
outstanding:
---basic 456.8 459.5 (0.6)% 470.5 (2.9)%
---diluted 458.3 461.0 (0.6)% 473.1 (3.1)%
Invesco Ltd.
Quarterly Assets Under Management
(in billions) Q4-11 Q3-11 % Change Q4-10
------------- ----- ----- -------- -----
Beginning
Assets $598.4 $653.7 (8.5)% $604.5
Long-term
inflows 41.1 45.9 (10.5)% 40.4
Long-term
outflows (35.5) (42.6) (16.7)% (57.4)
----- ----- -----
Long-term
net flows 5.6 3.3 69.7% (17.0)
Net flows in
institutional
money market
funds 0.4 (1.1) N/A (1.6)
Market gains
and losses/
reinvestment 20.8 (52.2) N/A 24.2
Acquisitions/
(dispositions),
net - - N/A 5.0
Foreign
currency
translation 0.1 (5.3) N/A 1.4
--- ---- ---
Ending Assets $625.3 $598.4 4.5% $616.5
====== ====== ======
Average long-
term AUM $552.1 $564.3 (2.2)% $550.9
Average
institutional
money market
AUM 69.6 68.4 1.8% 65.1
---- ---- ----
Average AUM $621.7 $632.7 (1.7)% $616.0
====== ====== ======
Gross revenue
yield on
AUM(b) 64.5bps 63.4bps 67.2bps
Gross revenue
yield on AUM
before
performance
fees(b) 62.9bps 63.2bps 66.0bps
Net revenue
yield on
AUM(c) 46.1bps 44.6bps 47.8bps
Net revenue
yield on AUM
before
performance
fees(c) 44.6bps 44.5bps 46.6bps
------------- ------- ------- -------
AUM (ex
ETF, UIT
and ETF, UIT and
(in billions) Total AUM passive) passive
------------- --------- -------- ------------
September 30,
2011 $598.4 $511.0 $87.4
Long-term inflows 41.1 21.6 19.5
Long-term
outflows (35.5) (21.8) (13.7)
----- ----- -----
Long-term net
flows 5.6 (0.2) 5.8
Net flows in
institutional
money market
funds 0.4 0.4 -
Market gains and
losses/
reinvestment 20.8 17.8 3.0
Foreign currency
translation 0.1 - 0.1
--- --- ---
December 31, 2011 $625.3 $529.0 $96.3
====== ====== =====
Average AUM $621.7 $528.1 $93.6
====== ====== =====
Gross revenue
yield on AUM(b) 64.5bps 74.1bps 10.6bps
Net revenue yield
on AUM(c) 46.1bps 52.4bps 10.6bps
By
channel: Private
(in Wealth
billions) Total Retail Institutional Management
--------- ----- ------ ------------- ----------
September
30,
2011 $598.4 $354.4 $227.2 $16.8
Long-
term
inflows 41.1 30.2 9.9 1.0
Long-
term
outflows (35.5) (29.0) (6.0) (0.5)
----- ----- ---- ----
Long-
term
net
flows 5.6 1.2 3.9 0.5
Net
flows
in
institutional
money
market
funds 0.4 - 0.4 -
Market
gains
and
losses/
reinvestment 20.8 18.1 2.1 0.6
Foreign
currency
translation 0.1 0.2 (0.1) -
--- --- ---- ---
December
31,
2011 $625.3 $373.9 $233.5 $17.9
====== ====== ====== =====
Invesco Ltd.
Quarterly Assets Under Management (continued)
By asset
class: Money
(in Fixed Market
billions) Total Equity Income Balanced (e) Alternatives(d)
---------- ----- ------ ------ -------- ------ ---------------
September
30, 2011 $598.4 $253.2 $146.7 $41.5 $73.6 $83.4
Long-term
inflows 41.1 22.6 6.4 3.3 0.6 8.2
Long-term
outflows (35.5) (21.8) (5.4) (1.7) (0.6) (6.0)
----- ----- ---- ---- ---- ----
Long-term
net flows 5.6 0.8 1.0 1.6 - 2.2
Net flows
in
institutional
money
market
funds 0.4 - - - 0.4 -
Market
gains and
losses/
reinvestment 20.8 17.0 1.3 1.4 - 1.1
Foreign
currency
translation 0.1 - - 0.1 - -
--- --- --- --- --- ---
December
31, 2011 $625.3 $271.0 $149.0 $44.6 $74.0 $86.7
====== ====== ====== ===== ===== =====
By
client
domicile:
(in Continental
billions) Total U.S. Canada U.K. Europe Asia
---------- ----- ---- ------ ---- ----------- ----
September
30,
2011 $598.4 $411.0 $22.8 $86.7 $31.9 $46.0
Long-
term
inflows 41.1 28.2 0.6 3.0 3.2 6.1
Long-
term
outflows (35.5) (24.8) (1.3) (3.0) (3.4) (3.0)
----- ----- ---- ---- ---- ----
Long-
term
net
flows 5.6 3.4 (0.7) - (0.2) 3.1
Net
flows
in
institutional
money
market
funds 0.4 0.2 - - - 0.2
Market
gains
and
losses/
reinvestment 20.8 15.4 0.8 3.4 0.7 0.5
Foreign
currency
translation 0.1 - 0.5 (0.3) (0.4) 0.3
--- --- --- ---- ---- ---
December
31,
2011 $625.3 $430.0 $23.4 $89.8 $32.0 $50.1
====== ====== ===== ===== ===== =====
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management
Dec 31, Dec 31,
(in billions) 2011 2010 % Change
------------- -------- -------- --------
Beginning Assets $616.5 $459.5 34.2%
Long-term inflows 177.6 154.7 14.8%
Long-term outflows (158.4) (149.2) 6.2%
------ ------
Long-term net flows 19.2 5.5 249.1%
Net flows in
institutional money
market funds 5.3 (15.5) N/A
Market gains and
losses/reinvestment (15.3) 43.9 N/A
Acquisitions/
(dispositions), net
(g) - 121.5 (100.0)%
Foreign currency
translation (0.4) 1.6 N/A
---- ---
Ending Assets $625.3 $616.5 1.4%
====== ======
Average long-term AUM $566.0 $463.5 22.1%
Average institutional
money market AUM 68.3 68.8 (0.7)%
---- ----
Average AUM $634.3 $532.3 19.2%
====== ======
Gross revenue yield on
AUM(a,b) 64.9bps 66.0bps
Gross revenue yield on
AUM before performance
fees(a,b) 64.3bps 65.5bps
Net revenue yield on
AUM(a,c) 45.7bps 47.4bps
Net revenue yield on
AUM before performance
fees(a,c) 45.1bps 46.9bps
----------------------- ------- -------
AUM ex
ETF, UIT
and ETF, UIT and
(in billions) Total AUM Passive Passive
------------- --------- -------- ------------
December 31, 2010 $616.5 $535.7 $80.8
Long-term inflows 177.6 106.3 71.3
Long-term
outflows (158.4) (104.6) (53.8)
------ ------ -----
Long-term net
flows 19.2 1.7 17.5
Net flows in
institutional
money market
funds 5.3 5.3 -
Market gains and
losses/
reinvestment (15.3) (13.2) (2.1)
Foreign currency
translation (0.4) (0.5) 0.1
December 31, 2011 $625.3 $529.0 $96.3
====== ====== =====
Average AUM $634.3 $543.0 $91.3
====== ====== =====
Gross revenue
yield on
AUM(a,b) 64.9bps 74.0bps 10.8bps
Net revenue yield
on AUM(a,c) 45.7bps 51.6bps 10.8bps
----------------- ------- ------- -------
By
channel: Private
(in Wealth
billions) Total Retail Institutional Management
--------- ----- ------ ------------- ----------
December
31,
2010(a) $616.5 $378.1 $221.4 $17.0
Long-
term
inflows 177.6 135.4 38.7 3.5
Long-
term
outflows (158.4) (126.3) (29.8) (2.3)
------ ------ ----- ----
Long-
term
net
flows 19.2 9.1 8.9 1.2
Net
flows
in
institutional
money
market
funds 5.3 - 5.3 -
Market
gains
and
losses/
reinvestment (15.3) (12.3) (2.7) (0.3)
Foreign
currency
translation (0.4) (1.0) 0.6 -
December
31,
2011 $625.3 $373.9 $233.5 $17.9
====== ====== ====== =====
Invesco Ltd.
Year-to-Date Assets Under Management (continued)
By asset
class: Money
(in Fixed Market
billions) Total Equity Income Balanced (e) Alternatives(d)
---------- ----- ------ ------ -------- ------ ---------------
December
31,
2010(a) $616.5 $294.0 $132.0 $43.5 $68.3 $78.7
Long-term
inflows 177.6 94.2 38.8 10.9 2.2 31.5
Long-term
outflows (158.4) (102.1) (25.1) (7.9) (2.0) (21.3)
------ ------ ----- ---- ---- -----
Long-term
net flows 19.2 (7.9) 13.7 3.0 0.2 10.2
Net flows
in
institutional
money
market
funds 5.3 - - - 5.3 -
Market
gains and
losses/
reinvestment(f) (15.3) (14.8) 3.2 (1.6) 0.2 (2.3)
Foreign
currency
translation (0.4) (0.3) 0.1 (0.3) - 0.1
December
31, 2011 $625.3 $271.0 $149.0 $44.6 $74.0 $86.7
====== ====== ====== ===== ===== =====
By
client
domicile:
(in Continental
billions) Total U.S. Canada U.K. Europe Asia
---------- ----- ---- ------ ---- ----------- ----
December
31,
2010 $616.5 $415.4 $27.9 $92.1 $35.3 $45.8
Long-
term
inflows 177.6 120.4 2.6 14.3 17.2 23.1
Long-
term
outflows (158.4) (106.9) (5.7) (13.8) (18.4) (13.6)
------ ------ ---- ----- ----- -----
Long-
term
net
flows 19.2 13.5 (3.1) 0.5 (1.2) 9.5
Net
flows
in
institutional
money
market
funds 5.3 5.7 0.1 (0.7) (0.1) 0.3
Market
gains
and
losses/
reinvestment (15.3) (4.6) (0.8) (1.6) (1.6) (6.7)
Foreign
currency
translation (0.4) - (0.7) (0.5) (0.4) 1.2
December
31,
2011 $625.3 $430.0 $23.4 $89.8 $32.0 $50.1
====== ====== ===== ===== ===== =====
See the footnotes immediately following these tables.
Invesco Ltd.
Quarterly Assets Under Management -ETF, UIT &
Passive
(in
billions) Q4-11 Q3-11 % Change Q4-10
---------- ----- ----- -------- -----
Beginning
Assets $87.4 $91.8 (4.8)% $89.9
Long-
term
inflows 19.5 18.1 7.7% 15.8
Long-
term
outflows (13.7) (15.4) (11.0)% (30.4)
----- ----- -----
Long-
term
net
flows 5.8 2.7 114.8% (14.6)
Net
flows
in
institutional
money
market
funds - - N/A -
Market
gains
and
losses/
reinvestment 3.0 (7.0) N/A 4.3
Acquisitions/
(dispositions),
net - - N/A 0.7
Foreign
currency
translation 0.1 (0.1) N/A 0.5
--- ---- ---
Ending
Assets $96.3 $87.4 10.2% $80.8
===== ===== =====
Average
long-
term
AUM 93.6 91.4 2.4% 90.2
Average
institutional
money
market
AUM - - N/A -
--- --- ---
Average
AUM $93.6 $91.4 2.4% $90.2
===== ===== =====
Gross
revenue
yield
on
AUM(b) 10.6bps 10.4bps 9.5bps
Gross
revenue
yield
on
AUM
before
performance
fees(b) 10.6bps 10.4bps 9.5bps
Net
revenue
yield
on
AUM(c) 10.6bps 10.4bps 9.5bps
Net
revenue
yield
on
AUM
before
performance
fees(c) 10.6bps 10.4bps 9.5bps
------------ ------- ------- ------
By
channel: Private
(in Wealth
billions) Total Retail Institutional Management
--------- ----- ------ ------------- ----------
September
30,
2011 $87.4 $71.0 $16.4 $ -
Long-
term
inflows 19.5 15.6 3.9 -
Long-
term
outflows (13.7) (12.8) (0.9) -
----- ----- ---- ---
Long-
term
net
flows 5.8 2.8 3.0 -
Net
flows
in
institutional
money
market
funds - - - -
Market
gains
and
losses/
reinvestment 3.0 3.1 (0.1) -
Foreign
currency
translation 0.1 - 0.1 -
--- --- --- ---
December
31,
2011 $96.3 $76.9 $19.4 $ -
===== ===== ===== === ===
By asset
class:
(in Fixed Money
billions) Total Equity Income Balanced Market Alternatives(d)
---------- ----- ------ ------ -------- ------ ---------------
September
30, 2011 $87.4 $39.7 $29.5 $ - $ - $18.2
Long-term
inflows 19.5 13.1 1.7 - - 4.7
Long-term
outflows (13.7) (10.3) (1.2) - - (2.2)
----- ----- ---- --- --- ----
Long-term
net flows 5.8 2.8 0.5 - - 2.5
Net flows
in
institutional
money
market
funds - - - - - -
Market
gains and
losses/
reinvestment 3.0 3.1 - - - (0.1)
Foreign
currency
translation 0.1 - - - - 0.1
December
31, 2011 $96.3 $45.6 $30.0 $ - $ - $20.7
===== ===== ===== === === === === =====
By
client
domicile:
(in Continental
billions) Total U.S. Canada U.K. Europe Asia
---------- ----- ---- ------ ---- ----------- ----
September
30,
2011 $87.4 $84.1 $ - $ - $1.2 $2.1
Long-
term
inflows 19.5 16.1 - - 0.1 3.3
Long-
term
outflows (13.7) (13.6) - - (0.1) -
----- ----- --- --- ---- ---
Long-
term
net
flows 5.8 2.5 - - - 3.3
Net
flows
in
institutional
money
market
funds - - - - - -
Market
gains
and
losses/
reinvestment 3.0 3.0 - - 0.1 (0.1)
Foreign
currency
translation 0.1 - - - - 0.1
December
31,
2011 $96.3 $89.6 $ - $ - $1.3 $5.4
===== ===== === === === === ==== ====
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management - ETF, UIT &
Passive
Dec 31, Dec 31,
(in billions) 2011 2010 % Change
------------- -------- -------- --------
Beginning Assets $80.8 $53.0 52.5%
Long-term inflows 71.3 70.1 1.7%
Long-term outflows (53.8) (65.8) (18.2)%
----- -----
Long-term net flows 17.5 4.3 307.0%
Net flows in
institutional money
market funds - - N/A
Market gains and
losses/
reinvestment (2.1) 7.6 N/A
Acquisitions/
(dispositions), net
(g) - 14.4 (100.0)%
Foreign currency
translation 0.1 1.5 (93.3)%
--- ---
Ending Assets $96.3 $80.8 19.2%
===== =====
Average long-term
AUM 91.3 69.7 31.0%
Average
institutional money
market AUM - - N/A
--- ---
Average AUM $91.3 $69.7 31.0%
===== =====
Gross revenue yield
on AUM(b) 10.8bps 10.8bps
Gross revenue yield
on AUM before
performance fees(b) 10.8bps 10.8bps
Net revenue yield on
AUM(c) 10.8bps 10.8bps
Net revenue yield on
AUM before
performance fees(c) 10.8bps 10.8bps
-------------------- ------- -------
By
channel: Private
(in Wealth
billions) Total Retail Institutional Management
--------- ----- ------ ------------- ----------
December
31,
2010(a) $80.8 $70.6 $10.2 $ -
Long-
term
inflows 71.3 59.9 11.4 -
Long-
term
outflows (53.8) (52.0) (1.8) -
----- ----- ---- ---
Long-
term
net
flows 17.5 7.9 9.6 -
Net
flows
in
institutional
money
market
funds - - - -
Market
gains
and
losses/
reinvestment (2.1) (1.6) (0.5) -
Foreign
currency
translation 0.1 - 0.1 -
--- --- --- ---
December
31,
2011 $96.3 $76.9 $19.4 $ -
===== ===== ===== === ===
By asset
class:
(in Fixed Money
billions) Total Equity Income Balanced Market Alternatives(d)
---------- ----- ------ ------ -------- ------ ---------------
December
31, 2010 $80.8 $42.8 $19.8 $ - $ - $18.2
Long-term
inflows 71.3 46.9 12.1 - - 12.3
Long-term
outflows (53.8) (42.6) (2.6) - - (8.6)
----- ----- ---- --- --- ----
Long-term
net flows 17.5 4.3 9.5 - - 3.7
Net flows
in
institutional
money
market
funds - - - - - -
Market
gains and
losses/
reinvestment (2.1) (1.5) 0.7 - - (1.3)
Foreign
currency
translation 0.1 - - - - 0.1
December
31, 2011 $96.3 $45.6 $30.0 $ - $ - $20.7
===== ===== ===== === === === === =====
By
client
domicile:
(in Continental
billions) Total U.S. Canada U.K. Europe Asia
---------- ----- ---- ------ ---- ----------- ----
December
31,
2010(a) $80.8 $77.3 $ - $ - $1.2 $2.3
Long-
term
inflows 71.3 67.5 - - 0.5 3.3
Long-
term
outflows (53.8) (53.4) - - (0.4) -
----- ----- --- --- ---- ---
Long-
term
net
flows 17.5 14.1 - - 0.1 3.3
Net
flows
in
institutional
money
market
funds - - - - - -
Market
gains
and
losses/
reinvestment (2.1) (1.8) - - - (0.3)
Foreign
currency
translation 0.1 - - - - 0.1
December
31,
2011 $96.3 $89.6 $ - $ - $1.3 $5.4
===== ===== === === === === ==== ====
See the footnotes immediately following these tables.
Invesco Ltd.
Footnotes to the Assets Under Management Tables
(a) The beginning balances were adjusted to reflect certain asset reclassifications.
(b) 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 $3.1 billion (third quarter 2011: $3.3 billion; fourth quarter 2010: $3.6 billion). For year to date AUM, our share of the average AUM in the twelve months of 2011 for our JVs in China was $3.3 billion (twelve months of 2010: $3.6 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 8 through 15 of this release for a reconciliation of operating revenues to net revenues.
(c) 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 8 through 15 of this release for a reconciliation of operating revenues to net revenues.
(d) The alternatives asset class includes absolute return, real estate, commodities, currencies, financial structures, Global Macro, REITS, private capital, and Risk Premia Capture.
(e) Ending Money Market AUM includes $69.4 billion in institutional money market AUM and $4.6 billion in retail money market AUM.
(f) As a result of fund mergers in the second quarter of 2011, the market gains and losses / reinvestment line includes $0.9 billion transferred from the balanced to the equity asset class.
(g) The company acquired $114.6 billion in AUM at June 1, 2010 as part of the acquisition of Morgan Stanley's retail asset management business, including Van Kampen Investments. Other acquisitions during 2010 added $6.9 billion of AUM, net of minor dispositions related to the integration of the acquired business.
Invesco Ltd.
Investment Capabilities Performance Overview
Benchmark Comparison Peer Group Comparison
-------------------- ---------------------
% of AUM Ahead of % of AUM In Top Half
Benchmark of Peer Group
------------------ ---------------------
Equities 1yr 3yr 5yr 1yr 3yr 5yr
--- --- --- --- --- ---
U.S. Core 39% 21% 83% 85% 31% 81%
--------- --- --- --- --- --- ---
U.S. Growth 28% 28% 33% 21% 9% 69%
----------- --- --- --- --- --- ---
U.S. Value 7% 100% 96% 89% 92% 96%
---------- --- --- --- --- --- ---
Sector 26% 85% 92% 45% 50% 63%
------ --- --- --- --- --- ---
U.K. 100% 8% 96% 100% - % 93%
---- --- --- --- --- --- --- ---
Canadian 18% 48% 4% 49% 48% 36%
-------- --- --- --- --- --- ---
Asian 29% 69% 87% 33% 42% 81%
----- --- --- --- --- --- ---
Continental European 93% 64% 93% 56% 58% 90%
-------------------- --- --- --- --- --- ---
Global 70% 47% 71% 80% 47% 23%
------ --- --- --- --- --- ---
Global Ex U.S. and
Emerging Markets 80% 87% 98% 74% 77% 78%
------------------- --- --- --- --- --- ---
Other
Alternatives 70% 50% 82% 32% 14% 41%
------------ --- --- --- --- --- ---
Balanced 15% 93% 82% 71% 29% 77%
-------- --- --- --- --- --- ---
Fixed
Income
Money Market 37% 62% 72% 96% 93% 94%
------------ --- --- --- --- --- ---
U.S. Fixed Income 62% 79% 46% 65% 63% 71%
----------------- --- --- --- --- --- ---
Global Fixed Income 27% 92% 66% 18% 77% 80%
------------------- --- --- --- --- --- ---
Stable Value 100% 100% 100% 100% 100% 100%
------------ --- --- --- --- --- ---
Note: AUM measured in the one-, three-, and five-year peer group rankings represents 59%, 58%, and 58% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one-, three-, and five-year basis represents 70%, 69%, and 67% of total Invesco AUM, respectively, as of 12/31/2011. Peer group rankings are sourced from a widely-used third party ranking agency in each fund's market (Lipper, Morningstar, 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 and CDOs. 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.
