INVESCO LTD. ATLANTA, July 31, 2014 /PRNewswire/ -- Invesco Ltd. (NYSE: IVZ) today reported financial results for the three months ended June 30, 2014.
http://photos.prnewswire.com/prnvar/20110131/MM39469LOGO-a
"By delivering strong investment performance to clients during the second quarter, Invesco achieved positive flows across our global business (ex-UK)," said Martin L. Flanagan, president and CEO. "As a result of these positive flows and our continued focus on effectively managing our business, Invesco's adjusted operating margin improved to 41.8% from 39.3% in the same quarter a year ago."
Q2-14 Q1-14 Q2-14 vs. Q2-13 Q2-14 vs.
Q1-14 Q2-13
----- -----
Adjusted Financial Measures(1)
-----------------------------
Net revenues $901.0 m $887.8 m 1.5% $790.3 m 14.0%
Operating income $377.0 m $363.0 m 3.9% $310.6 m 21.4%
Operating margin 41.8% 40.9% 39.3%
Net income attributable to common shareholders $282.4 m $261.6 m 8.0% $223.7 m 26.2%
Diluted EPS $0.65 $0.60 8.3% $0.50 30.0%
U.S. GAAP Financial Measures
----------------------------
Operating revenues $1,289.9 m $1,269.5 m 1.6% $1,135.5 m 13.6%
Operating income $354.8 m $244.3 m 45.2% $273.9 m 29.5%
Operating margin 27.5% 19.2% 24.1%
Net income attributable to common shareholders $274.5 m $187.8 m 46.2% $202.6 m 35.5%
Diluted EPS $0.63 $0.43 46.5% $0.45 40.0%
Assets Under Management
-----------------------
Ending AUM $802.4 bn $787.3 bn 1.9% $705.6 bn 13.7%
Average AUM $790.1 bn $779.6 bn 1.3% $719.8 bn 9.8%
----------- ------ --- ------ --- --- ------ --- ---
(1) The adjusted financial measures
are all non-GAAP financial
measures. See the information on
pages 10 through 12 for a
reconciliation to their most
directly comparable U.S. GAAP
measures and the notes beginning
on page 19 for other important
disclosures.
Assets Under Management
Total assets under management (AUM) at June 30, 2014, were $802.4 billion (March 31, 2014: $787.3 billion), an increase of $15.1 billion during the second quarter. Total net outflows were $8.8 billion for the second quarter, as detailed below:
Summary of net flows (in billions) Q2-14 Q1-14 Q2-13
---------------------------------- ----- ----- -----
Active ($8.0) $3.2 $0.1
Passive 1.1 3.3 1.3
--- --- ---
Long-term net flows (6.9) 6.5 1.4
Invesco PowerShares QQQ (3.0) (1.3) 0.7
Money market 1.1 (6.1) (0.7)
Total net flows ($8.8) ($0.9) $1.4
===== ===== ====
As previously disclosed, U.K. AUM experienced a single client withdrawal of $13.1 billion during the second quarter, which included $6.2 billion of U.K. equity income AUM. Excluding this single client withdrawal, U.K. equity income AUM net flows would have improved relative to the prior quarter, and total long-term net inflows for the company would have been $6.2 billion in the second quarter.
Net market gains led to a $19.9 billion increase in AUM during the second quarter, compared to a $9.4 billion increase in the first quarter 2014. Foreign exchange rate movements led to a $4.0 billion increase in AUM during the second quarter, compared to a $0.1 billion increase in the first quarter 2014. Average AUM during the second quarter were $790.1 billion, compared to $779.6 billion for the first quarter 2014, an increase of 1.3%. 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 information provides further transparency into the business on an ongoing operations basis 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. These measures are described more fully in the the company's Forms 10-K.
Non-GAAP Earnings
This section discusses the company's second quarter 2014 non-GAAP financial information, as compared to the first quarter 2014. 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 10 through 12 of this release.
Net revenues increased by $13.2 million (1.5%) to $901.0 million in the second quarter, from $887.8 million in the first quarter 2014. The change was principally due to increases in management fees, offset by lower performance fees in the second quarter compared to the first quarter. Foreign exchange rate changes increased second quarter net revenues by $6.6 million compared to the first quarter 2014.
Investment management fees, as adjusted, increased $65.5 million (6.6%) to $1,054.5 million in the second quarter, from $989.0 million in the first quarter 2014. In April 2014, our U.K. Invesco Perpetual business introduced a single Fund Management Fee (FMF) for their retail funds to replace the separate annual management fee and registration fee. The single FMF removes the complexity of having separate elements to the fee structure and is a proactive response to the regulatory promotion of providing a clear disclosure of product fees charged to investors. This resulted in an increase in investment management fees of $29.6 million and a corresponding decrease in service and distribution fees. After allowing for this change, the remaining increase reflects the higher average AUM, increasing revenue yields as the average AUM weighting moved towards higher fee-earning asset classes, and the additional day in the second quarter compared to the first quarter 2014. Foreign exchange rate changes increased second quarter management fees by $8.6 million when compared to first quarter 2014.
Service and distribution fees, as adjusted, decreased $23.9 million (10.0%) to $214.7 million in the second quarter, from $238.6 million in the first quarter 2014. The decrease is due to the introduction of a single FMF for U.K. funds as noted above. After allowing for this, service and distribution fees have increased in line with average AUM and the additional day in the second quarter compared to the first quarter. Foreign exchange rate changes increased second quarter service and distribution fees by $0.2 million when compared to first quarter 2014.
Performance fees, as adjusted, were $7.3 million in the second quarter, compared to $33.6 million in the first quarter 2014. The first quarter performance fees included $27.6 million generated by the U.K. investment teams. Foreign exchange rate changes had no net impact on second quarter performance fees when compared to the first quarter 2014.
Other revenues, as adjusted, increased by $3.2 million (9.0%) to $38.9 million in the second quarter, compared to $35.7 million in the first quarter 2014, due to increased transaction fees from real estate fund activities. Foreign exchange rate changes increased other revenues by $0.7 million in the second quarter when compared to the first quarter 2014.
Third-party distribution, service and advisory expenses, as adjusted, increased by $5.3 million (1.3%) to $414.4 million in the second quarter from $409.1 million in the first quarter 2014, the increase is consistent with the revenues derived from the related retail AUM. Foreign exchange rate changes increased third-party distribution, service and advisory expenses by $2.9 million in the second quarter when compared to the first quarter 2014.
Total operating expenses, as adjusted, decreased by $0.8 million (0.2%) to $524.0 million in the second quarter from $524.8 million in the first quarter 2014. Foreign exchange rate changes increased second quarter operating expenses, as adjusted, by $3.1 million when compared to the first quarter 2014.
Employee compensation expenses, as adjusted, decreased by $8.5 million (2.4%) to $344.6 million in the second quarter, from $353.1 million in the first quarter 2014. The first quarter included seasonally higher payroll tax costs that decreased in the second quarter. This expense reduction was partially offset by an increase in incentive compensation together with a full quarter of higher base salaries effective from March 1. Foreign exchange rate changes increased second quarter employee compensation expenses by $2.1 million when compared to the first quarter 2014.
Marketing expenses, as adjusted, increased by $6.7 million (27.7%) to $30.9 million in the second quarter, from $24.2 million in the first quarter 2014 due to increased advertising and other client related marketing expenditure in EMEA. Foreign exchange rate changes increased second quarter marketing expenses by $0.2 million when compared to the first quarter 2014.
Property, office and technology expenses, as adjusted, decreased $1.6 million (2.1%) to $76.1 million in the second quarter, from $77.7 million in the first quarter 2014. The decrease reflects lower rent and related costs due to the vacating of leased properties associated with our business optimization initiative in the first quarter. Foreign exchange rate changes increased second quarter property, office and technology expenses by $0.4 million when compared to the first quarter 2014.
General and administrative expenses, as adjusted, increased $2.6 million (3.7%) to $72.4 million in the second quarter, from $69.8 million in the first quarter 2014, due to increased legal, training and professional service costs. Foreign exchange rate changes increased second quarter general and administrative expenses by $0.4 million when compared to the first quarter 2014.
Non-operating other income and expenses, as adjusted, included equity in earnings from investments of $4.1 million in the second quarter, compared to $3.2 million in the first quarter 2014. Other gains and losses, net in the second quarter were a gain of $14.8 million compared to a first quarter 2014 gain of $2.5 million. The gain in the second quarter includes $4.7 million realized from the sale and liquidation of CLO products and $5.7 million realized on the sale of other seed investments. Separately, other income of consolidated sponsored investment products (CSIP) was a gain of $7.7 million in the second quarter, of which $3.6 million is attributable to noncontrolling interests. The first quarter 2014 included a CSIP gain of $8.2 million with $2.9 million attributable to noncontrolling interests.
The adjusted effective tax rate decreased to 26.5% for the second quarter, from 27.0% for the first quarter 2014. The first quarter included a 0.8% rate increase reflecting the impact of New York State tax legislation enacted during the quarter.
U.S. GAAP Earnings
This section comments on several significant items that have impacted the company's second and first quarter results as presented in accordance with U.S. GAAP.
Operating revenues increased 1.6% to $1,289.9 million in the second quarter, from $1,269.5 million in the first quarter 2014. Operating expenses decreased by 8.8% to $935.1 million in the second quarter, from $1,025.2 million in the first quarter 2014.
Operating expenses for first quarter 2014 included a charge of £18.6 million ($31.1 million) in respect of the penalty under a settlement of an enforcement proceeding reached with the U.K. Financial Conduct Authority (FCA) pertaining to the company's compliance with certain FCA rules and regulations for the period from May 2008 to November 2012. This charge, together with settlement-related legal costs of $0.5 million, was recorded in general and administrative expenses and reduced diluted EPS by $0.07 for the first quarter.
Also in the first quarter 2014, the company recorded business optimization initiative charges of $43.0 million in operating expenses that include $35.8 million associated with vacating leased properties and $7.2 million of staff severance. Separately, general and administrative expenses for the first quarter included a $5.3 million fund reimbursement settlement cost associated with historical management fees. After allowing for taxation, these items reduced first quarter diluted earnings per share by $0.09.
The effective tax rate on continuing operations decreased to 25.3% for the second quarter, from 29.9% for the first quarter 2014. See note 10 on page 22 for further details.
Balance Sheet and Cash Flow Statement Presentation
The company is presenting in this release both a U.S. GAAP balance sheet and balance sheet information excluding CIP, along with a U.S. GAAP statement of cash flows and cash flow statement information excluding CIP. The information presented excluding CIP is a non-GAAP presentation. Balance sheet and cash flow statement information before and after the consolidation of investment products are reconciled on pages 15 and 18, respectively.
The company believes that, by excluding the consolidation of investment products, the non-GAAP balance sheet and cash flow statement information provides 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 CIP within liquidity measures, such as debt-to-equity ratios, causes the company to appear to be significantly more indebted than is actually the case.
Balance Sheets and Capital Management
Selected balance sheet information is reflected in the table below:
Excluding CIP (Non-GAAP)(1) Including CIP (U.S. GAAP)
June 30, 2014 December 31, June 30, 2014 December 31,
2013 2013
---- ----
in millions
Cash and cash
equivalents $1,196.0 $1,331.2 $1,196.0 $1,331.2
Investments of
CIP - - 4,971.4 4,734.7
Total assets(1) $14,580.4 $13,952.6 $19,899.5 $19,270.5
========= ========= ========= =========
Long-term debt 1,588.9 1,588.6 1,588.9 1,588.6
Debt of CIP - - 4,301.5 4,181.7
--- --- ------- -------
Long-term debt
/Long-term
debt plus CIP
debt 1,588.9 1,588.6 5,890.4 5,770.3
Total
liabilities(1) $5,919.1 $5,649.7 $10,421.6 $10,293.2
======== ======== ========= =========
Total permanent
equity(1) $8,506.3 $8,302.9 $9,322.9 $8,977.3
======== ======== ======== ========
Debt/Equity %
(1) (2) 18.7% 19.1% 63.2% 64.3%
------------- ---- ---- ---- ----
(1) The balance sheet line items
excluding CIP are non-GAAP
financial measures. See the
reconciliation information on
page 15 for balance sheet
information 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 long-term debt
divided by total permanent
equity for the balance sheet
information excluding CIP and
long-term debt plus debt of CIP
divided by total permanent
equity for the balance sheet
including CIP.
As of June 30, 2014, the company's cash and cash equivalents were $1,196.0 million, with long-term debt of $1,588.9 million. The credit facility balance was zero at June 30, 2014, March 31, 2014 and December 31, 2013.
During the second quarter the company received cash proceeds of $60.8 million representing final settlement from the 2013 sale of the Atlantic Trust Private Wealth Management business ("Atlantic Trust").
Dividends paid in the second quarter were $109.1 million, bringing year-to-date dividends paid to $207.1 million. Today the company is announcing a second-quarter cash dividend of 25.0 cents per share to holders of common shares. The dividend is payable on September 5, 2014, to shareholders of record at the close of business on August 21, 2014, with an ex-dividend date of August 19, 2014.
During the second quarter the company repurchased $50.0 million of its common shares on the open market, representing 1.3 million shares at a weighted average share price of $36.74. This brings year-to-date repurchases to $169.6 million representing 4.9 million shares.
Headcount
As of June 30, 2014, the company had 6,070 employees, compared to 6,005 employees as of March 31, 2014.
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 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, July 31, 2014, at 9:00 a.m. ET by dialing one of the following numbers: 1-866-617-1526 for U.S. and Canadian callers or 1-210-795-0624 for international callers. An audio replay of the conference call will be available until Friday, August 15, 2014 at 5:00 p.m. ET by calling 1-888-562-4433 for U.S. and Canadian callers or 1-402-280-9926 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, assets under management, acquisitions and divestitures, 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. Although we make such statements based on assumptions that we believe to be reasonable, 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 website 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.
Logo - http://photos.prnewswire.com/prnh/20110131/MM39469LOGO-a
Invesco Ltd.
Non-GAAP Condensed Consolidated Income Statement Information
(Unaudited, in millions, other than per share amounts, headcount and AUM)
Q2-14 Q1-14 % Change Q2-13 % Change
----- ----- -------- ----- --------
Adjusted revenues:
Investment management fees $1,054.5 $989.0 6.6% $905.2 16.5%
Service and distribution fees 214.7 238.6 (10.0)% 215.7 (0.5)%
Performance fees 7.3 33.6 (78.3)% 9.0 (18.9)%
Other 38.9 35.7 9.0% 28.9 34.6%
Third-party distribution, service
and advisory (414.4) (409.1) 1.3% (368.5) 12.5%
Net revenues 901.0 887.8 1.5% 790.3 14.0%
----- ----- --- ----- ----
Adjusted operating expenses:
Employee compensation 344.6 353.1 (2.4)% 322.7 6.8%
Marketing 30.9 24.2 27.7% 24.3 27.2%
Property, office and technology 76.1 77.7 (2.1)% 68.4 11.3%
General and administrative 72.4 69.8 3.7% 64.3 12.6%
Total adjusted operating expenses 524.0 524.8 (0.2)% 479.7 9.2%
----- ----- ----- ----- ---
Adjusted operating income 377.0 363.0 3.9% 310.6 21.4%
Adjusted other income/(expense):
Equity in earnings of
unconsolidated affiliates 4.1 3.2 28.1% 3.6 13.9%
Interest and dividend income 3.9 4.2 (7.1)% 3.4 14.7%
Interest expense (18.2) (18.7) (2.7)% (10.0) 82.0%
Other gains and losses, net 14.8 2.5 492.0% (0.7) N/A
Other income/(loss) of CSIP, net 7.7 8.2 (6.1)% - N/A
Adjusted income before income
taxes 389.3 362.4 7.4% 306.9 26.8%
Adjusted income tax provision (103.3) (97.9) 5.5% (83.2) 24.2%
------ ----- --- ----- ----
Adjusted net income 286.0 264.5 8.1% 223.7 27.8%
Adjusted net (income)/loss
attributable to noncontrolling
interests in consolidated
entities (3.6) (2.9) 24.1% - N/A
---- ---- --- ---
Adjusted net income attributable
to common shareholders $282.4 $261.6 8.0% $223.7 26.2%
====== ====== === ====== ====
Adjusted diluted EPS $0.65 $0.60 8.3% $0.50 30.0%
Average diluted shares outstanding 436.4 437.4 (0.2)% 450.1 (3.0)%
Ending headcount 6,070 6,005 1.1% 5,818 4.3%
Ending AUM (in billions) $802.4 $787.3 1.9% $705.6 13.7%
Average AUM (in billions) $790.1 $779.6 1.3% $719.8 9.8%
Invesco Ltd.
U.S. GAAP Condensed Consolidated Income Statements
(Unaudited, in millions, other than per share amounts)
Q2-14 Q1-14 % Change Q2-13 % Change
----- ----- -------- ----- --------
Operating revenues:
Investment management fees $1,031.9 $965.4 6.9% $885.5 16.5%
Service and distribution fees 214.7 238.6 (10.0)% 215.7 (0.5)%
Performance fees 5.0 31.1 (83.9)% 6.0 (16.7)%
Other 38.3 34.4 11.3% 28.3 35.3%
---- ---- ----
Total operating revenues 1,289.9 1,269.5 1.6% 1,135.5 13.6%
------- ------- --- ------- ----
Operating expenses:
Employee compensation 342.9 362.1 (5.3)% 324.1 5.8%
Third-party distribution,
service and advisory 410.6 405.4 1.3% 366.0 12.2%
Marketing 30.2 23.4 29.1% 23.8 26.9%
Property, office and technology 75.3 112.7 (33.2)% 68.6 9.8%
General and administrative 76.1 121.6 (37.4)% 77.3 (1.6)%
Transaction and integration - - N/A 1.8 N/A
--- ---
Total operating expenses 935.1 1,025.2 (8.8)% 861.6 8.5%
----- ------- ----- ----- ---
Operating income 354.8 244.3 45.2% 273.9 29.5%
Other income/(expense):
Equity in earnings of
unconsolidated affiliates 5.5 10.0 (45.0)% 6.9 (20.3)%
Interest and dividend income 3.1 2.9 6.9% 2.1 47.6%
Interest expense (18.2) (18.7) (2.7) (10.0) 82.0%
Other gains and losses, net 16.2 6.6 145.5% 0.4 N/A
Other income/(loss) of CSIP, net 7.7 8.2 (6.1)% - N/A
Consolidated investment products (CIP):
Interest income of CIP 48.0 48.3 (0.6)% 50.7 (5.3)%
Interest expense of CIP (30.3) (30.3) - % (30.6) (1.0)%
Other gains/(losses) of CIP, net 36.8 26.5 38.9% (1.6) N/A
---- ---- ---- ---- ---
Income from continuing operations
before income taxes 423.6 297.8 42.2% 291.8 45.2%
Income tax provision (107.0) (89.0) 20.2% (83.5) 28.1%
------ ----- ---- ----- ----
Income from continuing
operations, net of income taxes 316.6 208.8 51.6% 208.3 52.0%
Income/(loss) from discontinued
operations, net of taxes 0.2 (2.0) N/A (4.6) N/A
--- ---- --- ---- ---
Net income 316.8 206.8 53.2% 203.7 55.5%
Net (income)/loss attributable to
noncontrolling interests in
consolidated entities (42.3) (19.0) 122.6% (1.1) N/A
----- ----- ---- ---
Net income attributable to common
shareholders $274.5 $187.8 46.2% $202.6 35.5%
====== ====== ==== ====== ====
Earnings per share:
---Basic EPS from continuing
operations $0.63 $0.43 46.5% $0.46 37.0%
---Basic EPS from discontinued
operations $- $- N/A ($0.01) N/A
---Total basic $0.63 $0.43 46.5% $0.45 40.0%
---Diluted EPS from continuing
operations $0.63 $0.43 46.5% $0.46 37.0%
---Diluted EPS from discontinued
operations $- $- N/A ($0.01) N/A
---Total diluted $0.63 $0.43 46.5% $0.45 40.0%
Average shares outstanding:
---basic 435.7 436.8 (0.3)% 449.1 (3.0)%
---diluted 436.4 437.4 (0.2)% 450.1 (3.0)%
Invesco Ltd.
U.S. GAAP Condensed Consolidated Income Statements
(Unaudited, in millions, other than per share amounts)
Six months ended June 30,
-------------------------
2014 2013 % Change
---- ---- --------
Operating revenues:
Investment
management
fees $1,997.3 $1,730.1 15.4%
Service
and
distribution
fees 453.3 422.0 7.4%
Performance
fees 36.1 42.1 (14.3)%
Other 72.7 53.5 35.9%
---- ----
Total
operating
revenues 2,559.4 2,247.7 13.9%
------- ------- ----
Operating expenses:
Employee
compensation 705.0 665.6 5.9%
Third-
party
distribution,
service
and
advisory 816.0 712.1 14.6%
Marketing 53.6 46.0 16.5%
Property,
office
and
technology 188.0 135.1 39.2%
General
and
administrative 197.7 144.8 36.5%
Transaction
and
integration - 3.2 N/A
--- ---
Total
operating
expenses 1,960.3 1,706.8 14.9%
------- ------- ----
Operating
income 599.1 540.9 10.8%
Other income/(expense):
Equity in
earnings
of
unconsolidated
affiliates 15.5 15.0 3.3%
Interest
and
dividend
income 6.0 4.3 39.5%
Interest
expense (36.9) (19.7) 87.3%
Other
gains
and
losses,
net 22.8 18.1 26.0%
Other
income/
(loss)
of CSIP,
net 15.9 - N/A
Consolidated investment products
(CIP):
Interest
income
of CIP 96.3 101.0 (4.7)%
Interest
expense
of CIP (60.6) (63.3) (4.3)%
Other
gains/
(losses)
of CIP,
net 63.3 (22.7) N/A
---- ----- ---
Income
from
continuing
operations
before
income
taxes 721.4 573.6 25.8%
Income
tax
provision (196.0) (169.8) 15.4%
------ ------ ----
Income
from
continuing
operations,
net of
income
taxes 525.4 403.8 30.1%
Income/
(loss)
from
discontinued
operations,
net of
taxes (1.8) (0.5) 260.0%
---- ---- -----
Net
income 523.6 403.3 29.8%
Net
(income)/loss
attributable
to
noncontrolling
interests
in
consolidated
entities (61.3) 21.5 N/A
----- ----
Net
income
attributable
to
common
shareholders $462.3 $424.8 8.8%
====== ====== ===
Earnings per share:
---Basic
EPS from
continuing
operations $1.06 $0.95 11.6%
---Basic
EPS from
discontinued
operations $- $- N/A
---Total
basic $1.06 $0.95 11.6%
---Diluted
EPS from
continuing
operations $1.06 $0.95 11.6%
---Diluted
EPS from
discontinued
operations $- $- N/A
---Total
diluted $1.06 $0.94 12.8%
Average shares outstanding:
---basic 436.2 448.5 (2.7)%
---diluted 436.9 449.6 (2.8)%
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 June 30, 2014
U.S. Proportional Third party Acquisition / Market CIP Non-GAAP
GAAP consolidation distribution, Disposition appreciation / basis
basis of joint service and related depreciation
of
ventures advisory deferred
expenses compensation
awards
---
Operating revenues:
Investment management fees $1,031.9 $16.2 $- $- $- $6.4 $1,054.5
Service and distribution fees 214.7 - - - - - 214.7
Performance fees 5.0 - - - - 2.3 7.3
Other 38.3 0.7 - - - (0.1) 38.9
Third-party distribution, service and
advisory - (3.8) (410.6) - - - (414.4)
Total operating revenues reconciled to net
revenues 1,289.9 13.1 (410.6) - - 8.6 901.0
------- ---- ------ --- --- --- -----
Operating expenses:
Employee compensation 342.9 5.4 - - (3.7) - 344.6
Third-party distribution, service and
advisory 410.6 - (410.6) - - - -
Marketing 30.2 0.7 - - - - 30.9
Property, office and technology 75.3 0.8 - - - - 76.1
General and administrative 76.1 1.4 - (3.4) - (1.7) 72.4
Total operating expenses 935.1 8.3 (410.6) (3.4) (3.7) (1.7) 524.0
----- --- ------ ---- ---- ---- -----
Operating income reconciled to adjusted
operating income 354.8 4.8 - 3.4 3.7 10.3 377.0
Other income/(expense):
Equity in earnings of unconsolidated
affiliates 5.5 (3.6) - - - 2.2 4.1
Interest and dividend income 3.1 1.1 - - (0.9) 0.6 3.9
Interest expense (18.2) - - - - - (18.2)
Other gains and losses, net 16.2 - - - (6.1) 4.7 14.8
Other income/(loss) of CSIP, net 7.7 - - - - - 7.7
CIP:
Interest income of CIP 48.0 - - - - (48.0) -
Interest expense of CIP (30.3) - - - - 30.3 -
Other gains/(losses) of CIP, net 36.8 - - - - (36.8) -
---- --- --- --- --- ----- ---
Income from continuing operations before
income taxes 423.6 2.3 - 3.4 (3.3) (36.7) 389.3
Income tax provision (107.0) (2.3) - 5.0 1.0 - (103.3)
------ ---- --- --- --- --- ------
Income from continuing operations, net of
income taxes 316.6 - - 8.4 (2.3) (36.7) 286.0
Income from discontinued operations, net
of taxes 0.2 - - (0.2) - - -
--- --- --- ---- --- --- ---
Net income 316.8 - - 8.2 (2.3) (36.7) 286.0
Net (income)/loss attributable to
noncontrolling interests in consolidated
entities (42.3) - - - - 38.7 (3.6)
----- --- --- --- --- ---- ----
Net income attributable to common
shareholders reconciled to adjusted net
income attributable to common
shareholders $274.5 $- $- $8.2 ($2.3) $2.0 $282.4
====== === === ==== ===== ==== ======
Operating margin 27.5% Adjusted operating margin 41.8%
Average diluted shares outstanding 436.4 Average diluted shares outstanding 436.4
Diluted EPS from continuing operations $0.63 Adjusted diluted EPS $0.65
Diluted EPS from discontinued operations $-
Diluted EPS $0.63
See pages 19 through 22 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 March 31, 2014
U.S. Proportional Third party Acquisition / Market CIP Other Non-GAAP
GAAP consolidation distribution, Disposition appreciation / reconciling basis
basis of joint service and related depreciation
of items
ventures advisory deferred
expenses compensation
awards
---
Operating revenues:
Investment management fees $965.4 $17.7 $- $- $- $5.9 $- $989.0
Service and distribution fees 238.6 - - - - - - 238.6
Performance fees 31.1 - - - - 2.5 - 33.6
Other 34.4 1.3 - - - - - 35.7
Third-party distribution, service and
advisory - (3.7) (405.4) - - - - (409.1)
Total operating revenues reconciled to
net revenues 1,269.5 15.3 (405.4) - - 8.4 - 887.8
------- ---- ------ --- --- --- --- -----
Operating expenses:
Employee compensation 362.1 2.6 - - (4.4) - (7.2) 353.1
Third-party distribution, service and
advisory 405.4 - (405.4) - - - - -
Marketing 23.4 0.8 - - - - - 24.2
Property, office and technology 112.7 0.8 - - - - (35.8) 77.7
General and administrative 121.6 1.5 - (3.8) - (12.6) (36.9) 69.8
Total operating expenses 1,025.2 5.7 (405.4) (3.8) (4.4) (12.6) (79.9) 524.8
------- --- ------ ---- ---- ----- ----- -----
Operating income reconciled to adjusted
operating income 244.3 9.6 - 3.8 4.4 21.0 79.9 363.0
Other income/(expense):
Equity in earnings of unconsolidated
affiliates 10.0 (8.0) - - - 1.2 - 3.2
Interest and dividend income 2.9 1.2 - - (0.8) 0.9 - 4.2
Interest expense (18.7) - - - - - - (18.7)
Other gains and losses, net 6.6 - - - (3.9) - (0.2) 2.5
Other income/(loss) of CSIP, net 8.2 - - - - - - 8.2
CIP:
Interest income of CIP 48.3 - - - - (48.3) - -
Interest expense of CIP (30.3) - - - - 30.3 - -
Other gains/(losses) of CIP, net 26.5 - - - - (26.5) - -
---- --- --- --- --- ----- --- ---
Income from continuing operations before
income taxes 297.8 2.8 - 3.8 (0.3) (21.4) 79.7 362.4
Income tax provision (89.0) (2.8) - 5.1 - - (11.2) (97.9)
----- ---- --- --- --- --- ----- -----
Income from continuing operations, net
of income taxes 208.8 - - 8.9 (0.3) (21.4) 68.5 264.5
Loss from discontinued operations, net
of taxes (2.0) - - 2.0 - - - -
---- --- --- --- --- --- --- ---
Net income 206.8 - - 10.9 (0.3) (21.4) 68.5 264.5
Net (income)/loss attributable to
noncontrolling interests in
consolidated entities (19.0) - - - - 16.1 - (2.9)
----- --- --- --- --- ---- --- ----
Net income attributable to common
shareholders reconciled to adjusted net
income attributable to common
shareholders $187.8 $- $- $10.9 ($0.3) ($5.3) $68.5 $261.6
====== === === ===== ===== ===== ===== ======
Operating margin 19.2% Adjusted operating margin 40.9%
Average diluted shares outstanding 437.4 Average diluted shares outstanding 437.4
Diluted EPS form continuing operations $0.43 Adjusted diluted EPS $0.60
Diluted EPS from discontinued operations $-
Diluted EPS $0.43
See pages 19 through 22 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 June 30, 2013
U.S. Proportional Third party Acquisition / Market CIP Other Non-GAAP
GAAP consolidation distribution, Disposition appreciation / reconciling basis
basis of joint service and related depreciation
of items
ventures advisory deferred
expenses compensation
awards
---
Operating revenues:
Investment management fees $885.5 $13.3 $- $- $- $6.4 $- $905.2
Service and distribution fees 215.7 - - - - - - 215.7
Performance fees 6.0 - - - - 3.0 - 9.0
Other 28.3 1.0 - - - (0.4) - 28.9
Third-party distribution, service and
advisory - (2.5) (366.0) - - - - (368.5)
Total operating revenues reconciled to
net revenues 1,135.5 11.8 (366.0) - - 9.0 - 790.3
------- ---- ------ --- --- --- --- -----
Operating expenses:
Employee compensation 324.1 2.5 - - (3.0) - (0.9) 322.7
Third-party distribution, service and
advisory 366.0 - (366.0) - - - - -
Marketing 23.8 0.6 - - - - (0.1) 24.3
Property, office and technology 68.6 0.9 - - - - (1.1) 68.4
General and administrative 77.3 1.3 - (3.8) - (9.3) (1.2) 64.3
Transaction and integration 1.8 - - (1.8) - - - -
--- --- --- ---- --- --- ---
Total operating expenses 861.6 5.3 (366.0) (5.6) (3.0) (9.3) (3.3) 479.7
----- --- ------ ---- ---- ---- ---- -----
Operating income reconciled to adjusted
operating income 273.9 6.5 - 5.6 3.0 18.3 3.3 310.6
Other income/(expense):
Equity in earnings of unconsolidated
affiliates 6.9 (4.1) - - - 0.8 - 3.6
Interest and dividend income 2.1 0.6 - - (1.1) 1.8 - 3.4
Interest expense (10.0) - - - - - - (10.0)
Other gains and losses, net 0.4 - - - (0.5) - (0.6) (0.7)
CIP:
Interest income of CIP 50.7 - - - - (50.7) - -
Interest expense of CIP (30.6) - - - - 30.6 - -
Other gains/(losses) of CIP, net (1.6) - - - - 1.6 - -
---- --- --- --- --- --- --- ---
Income from continuing operations before
income taxes 291.8 3.0 - 5.6 1.4 2.4 2.7 306.9
Income tax provision (83.5) (3.0) - 4.2 (0.4) - (0.5) (83.2)
----- ---- --- --- ---- --- ---- -----
Income from continuing operations, net
of income taxes 208.3 - - 9.8 1.0 2.4 2.2 223.7
Income from discontinued operations, net
of taxes (4.6) - - 4.6 - - - -
---- --- --- --- --- --- --- ---
Net income 203.7 - - 14.4 1.0 2.4 2.2 223.7
Net (income)/loss attributable to
noncontrolling interests in
consolidated entities (1.1) - - - - 1.1 - -
---- --- --- --- --- --- ---
Net income attributable to common
shareholders reconciled to adjusted net
income attributable to common
shareholders $202.6 $- $- $14.4 $1.0 $3.5 $2.2 $223.7
====== === === ===== ==== ==== ==== ======
Operating margin 24.1% Adjusted operating margin 39.3%
Average diluted shares outstanding 450.1 Average diluted shares outstanding 450.1
Diluted EPS form continuing operations $0.46 Adjusted diluted EPS $0.50
Diluted EPS from discontinued operations ($0.01)
Diluted EPS $0.45
See pages 19 through 22 for notes to the reconciliation.
Invesco Ltd.
Condensed Consolidated Balance Sheet Information Excluding CIP
(a non-GAAP presentation, unaudited, in millions)
June 30, 2014 December 31, 2013
------------- -----------------
ADJUSTED ASSETS
Cash and cash equivalents $1,196.0 $1,331.2
Unsettled fund
receivables 1,228.8 932.4
Accounts receivable 520.6 504.2
Investments 982.7 895.0
Assets of consolidated
sponsored investment
products (CSIP) 326.8 108.5
Assets held for
policyholders 1,539.9 1,416.0
Prepaid assets 108.2 101.4
Other assets 144.2 182.1
Property and equipment,
net 354.8 350.8
Intangible assets, net 1,258.3 1,263.7
Goodwill 6,920.1 6,867.3
------- -------
Total adjusted assets $14,580.4 $13,952.6
========= =========
ADJUSTED LIABILITIES
Accrued compensation and
benefits $463.2 $676.4
Accounts payable and
accrued expenses 755.6 763.1
Policyholder payables 1,539.9 1,416.0
Unsettled fund payables 1,219.6 882.0
Long-term debt 1,588.9 1,588.6
Deferred tax liabilities,
net 351.9 323.6
Total adjusted
liabilities 5,919.1 5,649.7
------- -------
ADJUSTED TEMPORARY EQUITY
Redeemable noncontrolling
interests in CSIP 155.0 -
ADJUSTED PERMANENT EQUITY
Equity attributable to common shareholders:
Common shares 98.1 98.1
Additional paid-in-
capital 6,068.8 6,100.8
Treasury shares (1,807.5) (1,700.4)
Retained earnings 3,601.3 3,349.4
Accumulated other
comprehensive income,
net of tax 525.6 440.6
----- -----
Total adjusted equity
attributable to common
shareholders 8,486.3 8,288.5
Adjusted equity
attributable to
nonredeemable
noncontrolling interests
in consolidated entities 20.0 14.4
---- ----
Total adjusted permanent
equity 8,506.3 8,302.9
Total adjusted
liabilities, temporary
and permanent equity $14,580.4 $13,952.6
========= =========
Invesco Ltd.
U.S. GAAP Condensed Consolidated Balance Sheets
(Unaudited, in millions)
June 30, 2014 December 31, 2013
------------- -----------------
ASSETS
Cash and cash equivalents $1,196.0 $1,331.2
Unsettled fund receivables 1,228.8 932.4
Accounts receivable 517.8 500.8
Investments 919.1 839.7
Assets of consolidated
sponsored investment
products (CSIP) 326.8 108.5
Assets of consolidated investment products (CIP):
Cash and cash equivalents
of CIP 292.4 583.6
Accounts receivable of CIP 121.7 58.3
Investments of CIP 4,971.4 4,734.7
Assets held for
policyholders 1,539.9 1,416.0
Prepaid assets 108.2 101.4
Other assets 144.2 182.1
Property and equipment,
net 354.8 350.8
Intangible assets, net 1,258.3 1,263.7
Goodwill 6,920.1 6,867.3
Total assets $19,899.5 $19,270.5
========= =========
LIABILITIES
Accrued compensation and
benefits $463.2 $676.4
Accounts payable and
accrued expenses 755.6 763.1
Liabilities of CIP:
Debt of CIP 4,301.5 4,181.7
Other liabilities of CIP 201.0 461.8
Policyholder payables 1,539.9 1,416.0
Unsettled fund payables 1,219.6 882.0
Long-term debt 1,588.9 1,588.6
Deferred tax liabilities,
net 351.9 323.6
Total liabilities 10,421.6 10,293.2
-------- --------
TEMPORARY EQUITY
Redeemable noncontrolling
interests in CSIP 155.0 -
PERMANENT EQUITY
Equity attributable to common shareholders:
Common shares 98.1 98.1
Additional paid-in-capital 6,068.8 6,100.8
Treasury shares (1,807.5) (1,700.4)
Retained earnings 3,617.1 3,361.9
Retained earnings
appropriated for
investors in CIP 63.3 104.3
Accumulated other
comprehensive income, net
of tax 509.9 427.9
----- -----
Total equity attributable
to common shareholders 8,549.7 8,392.6
Equity attributable to
nonredeemable
noncontrolling interests
in consolidated entities 773.2 584.7
----- -----
Total permanent equity 9,322.9 8,977.3
Total liabilities,
temporary and permanent
equity $19,899.5 $19,270.5
========= =========
Invesco Ltd.
Reconciliations of Condensed Consolidated Balance Sheet Information Excluding CIP to
U.S. GAAP Condensed Consolidated Balance Sheets (unaudited, in millions)
June 30, 2014 December 31, 2013
------------- -----------------
Before Impact of Total Before Impact of Total
Consolidation Consolidation (U.S. GAAP) Consolidation Consolidation (U.S. GAAP)
(non-GAAP) (non-GAAP)
--------- ---------
ASSETS
Cash and cash equivalents $1,196.0 $- $1,196.0 $1,331.2 $- $1,331.2
Unsettled fund receivables 1,228.8 - 1,228.8 932.4 - 932.4
Accounts receivable 520.6 (2.8) 517.8 504.2 (3.4) 500.8
Investments 982.7 (63.6) 919.1 895.0 (55.3) 839.7
Assets of CSIP 326.8 - 326.8 108.5 - 108.5
Assets of CIP:
Cash and cash equivalents of CIP - 292.4 292.4 - 583.6 583.6
Accounts receivable of CIP - 121.7 121.7 - 58.3 58.3
Investments of CIP - 4,971.4 4,971.4 - 4,734.7 4,734.7
Assets held for policyholders 1,539.9 - 1,539.9 1,416.0 - 1,416.0
Prepaid assets 108.2 - 108.2 101.4 - 101.4
Other assets 144.2 - 144.2 182.1 - 182.1
Property and equipment, net 354.8 - 354.8 350.8 - 350.8
Intangible assets, net 1,258.3 - 1,258.3 1,263.7 - 1,263.7
Goodwill 6,920.1 - 6,920.1 6,867.3 - 6,867.3
Total assets $14,580.4 $5,319.1 $19,899.5 $13,952.6 $5,317.9 $19,270.5
========= ======== ========= ========= ======== =========
LIABILITIES
Accrued compensation and benefits $463.2 $- $463.2 $676.4 $- $676.4
Accounts payable and accrued expenses 755.6 - 755.6 763.1 - 763.1
Liabilities of CIP:
Debt of CIP - 4,301.5 4,301.5 - 4,181.7 4,181.7
Other liabilities of CIP - 201.0 201.0 - 461.8 461.8
Policyholder payables 1,539.9 - 1,539.9 1,416.0 - 1,416.0
Unsettled fund payables 1,219.6 - 1,219.6 882.0 - 882.0
Long-term debt 1,588.9 - 1,588.9 1,588.6 - 1,588.6
Deferred tax liabilities, net 351.9 - 351.9 323.6 - 323.6
Total liabilities 5,919.1 4,502.5 10,421.6 5,649.7 4,643.5 10,293.2
------- ------- -------- ------- ------- --------
TEMPORARY EQUITY
Redeemable noncontrolling interests in CSIP 155.0 - 155.0 - - -
PERMANENT EQUITY
Equity attributable to common shareholders:
Common shares 98.1 - 98.1 98.1 - 98.1
Additional paid-in-capital 6,068.8 - 6,068.8 6,100.8 - 6,100.8
Treasury shares (1,807.5) - (1,807.5) (1,700.4) - (1,700.4)
Retained earnings 3,601.3 15.8 3,617.1 3,349.4 12.5 3,361.9
Retained earnings appropriated for investors in
CIP - 63.3 63.3 - 104.3 104.3
Accumulated other comprehensive income, net of
tax 525.6 (15.7) 509.9 440.6 (12.7) 427.9
----- ----- ----- ----- ----- -----
Total equity attributable to common
shareholders 8,486.3 63.4 8,549.7 8,288.5 104.1 8,392.6
Equity attributable to nonredeemable
noncontrolling interests in consolidated
entities 20.0 753.2 773.2 14.4 570.3 584.7
---- ----- ----- ---- ----- -----
Total permanent equity 8,506.3 816.6 9,322.9 8,302.9 674.4 8,977.3
------- ----- -------
Total liabilities, temporary and permanent
equity $14,580.4 $5,319.1 $19,899.5 $13,952.6 $5,317.9 $19,270.5
========= ======== ========= ========= ======== =========
See pages 19 through 22 for notes to the reconciliation.
Invesco Ltd.
Condensed Consolidated Cash Flow Statement Information Excluding CIP
(a non-GAAP presentation, unaudited, in millions)
Six months ended June
30,
2014 2013
---- ----
Adjusted operating activities:
U.S. GAAP net income $523.6 $403.3
Consolidated investment product (CIP) net
(income)/loss (58.1) 19.5
----- ----
Net income adjusted to remove impact of
CIP 465.5 422.8
Adjustments to reconcile net income to net cash provided by/(used in)
operating activities:
Amortization and depreciation 45.8 44.2
Share-based compensation expense 70.0 69.4
(Gain)/loss on disposal of business,
property and equipment, net - 0.5
Other (gains)/losses, net (27.5) (18.1)
Other (gains)/losses of CSIP, net (11.5) -
Equity in earnings of unconsolidated
affiliates (18.9) (16.3)
Dividends from unconsolidated affiliates 15.4 1.9
Changes in operating assets and liabilities:
(Increase)/decrease in cash held by CSIP (1.0) -
(Purchase)/sale of trading investments,
net (10.4) 0.6
(Increase)/decrease in receivables (385.7) (716.8)
Increase/(decrease) in payables 172.0 500.5
Adjusted net cash provided by/(used in)
operating activities 313.7 288.7
----- -----
Adjusted investing activities:
Purchase of property and equipment (49.8) (40.3)
Purchase of available-for-sale investments (146.2) (31.8)
Sale of available-for-sale investments 112.6 26.1
Purchase of investments by CSIP (476.1) -
Sale of investments by CSIP 274.3 -
Purchase of other investments (69.7) (164.6)
Sale of other investments 40.3 39.7
Returns of capital and distributions from
unconsolidated partnership investments 27.9 11.7
Acquisition earn-out payments - (1.2)
Sale of business 60.8 -
---- ---
Adjusted net cash provided by/(used in)
investing activities (225.9) (160.4)
------ ------
Adjusted financing activities:
Proceeds from exercises of share options 5.2 10.8
Purchases of treasury shares (169.6) (120.5)
Dividends paid (207.1) (178.4)
Excess tax benefits from share-based
compensation 17.6 16.7
Repayment on unsettled fund account (35.7) -
Third-party capital invested into CSIP 152.5 -
Third-party capital distributed by CSIP (1.4) -
Net borrowings/(repayments) under credit
facility - 259.5
Adjusted net cash provided by/(used in)
financing activities (238.5) (11.9)
------ -----
Increase /(decrease) in cash and cash
equivalents (150.7) 116.4
Foreign exchange movement on cash and cash
equivalents 15.5 (35.7)
Cash and cash equivalents, beginning of
period 1,331.2 835.5
Cash and cash equivalents, end of period $1,196.0 $916.2
======== ======
Invesco Ltd.
U.S. GAAP Condensed Consolidated Statements of Cash Flows
(Unaudited, in millions)
Six months ended June 30,
2014 2013
---- ----
Operating activities:
Net income $523.6 $403.3
Adjustments to reconcile net income to net cash provided by/(used
in) operating activities:
Amortization and depreciation 45.8 44.2
Share-based compensation expense 70.0 69.4
(Gain)/loss on disposal of business,
property and equipment, net - 0.5
Other (gains)/losses, net (22.8) (18.1)
Other (gains)/losses of CSIP, net (11.5) -
Other (gains)/losses of CIP, net (63.3) 22.7
Equity in earnings of unconsolidated
affiliates (15.5) (15.0)
Dividends from unconsolidated
affiliates 15.4 1.9
Changes in operating assets and liabilities:
(Increase)/decrease in cash held by
CIP 260.1 (76.0)
(Increase)/decrease in cash held by
CSIP (1.0) -
(Purchase)/sale of trading
investments, net (10.4) 0.6
(Increase)/decrease in receivables (402.7) (711.9)
Increase/(decrease) in payables 162.6 534.0
Net cash provided by/(used in)
operating activities 550.3 255.6
----- -----
Investing activities:
Purchase of property and equipment (49.8) (40.3)
Purchase of available-for-sale
investments (112.5) (25.2)
Sale of available-for-sale investments 75.1 23.0
Purchase of investments by CIP (2,848.8) (2,504.3)
Sale of investments by CIP 2,108.5 2,584.6
Purchase of investments by CSIP (476.1) -
Sale of investments by CSIP 274.3 -
Purchase of other investments (67.5) (164.6)
Sale of other investments 40.3 39.7
Returns of capital and distributions
from unconsolidated partnership
investments 25.9 9.9
Acquisition earn-out payments - (1.2)
Sale of business 60.8 -
Net cash provided by/(used in)
investing activities (969.8) (78.4)
------ -----
Financing activities:
Proceeds from exercises of share
options 5.2 10.8
Purchases of treasury shares (169.6) (120.5)
Dividends paid (207.1) (178.4)
Excess tax benefits from share-based
compensation 17.6 16.7
Repayment on unsettled fund account (35.7) -
Third-party capital invested into CIP 155.8 34.5
Third-party capital distributed by CIP (68.0) (128.1)
Third-party capital invested into CSIP 152.5 -
Third-party capital distributed by
CSIP (1.4) -
Borrowings of debt by CIP 715.0 409.4
Repayments of debt by CIP (295.5) (364.7)
Net borrowings/(repayments) under
credit facility - 259.5
Net cash provided by/(used in)
financing activities 268.8 (60.8)
----- -----
Increase/(decrease) in cash and cash
equivalents (150.7) 116.4
Foreign exchange movement on cash and
cash equivalents 15.5 (35.7)
Cash and cash equivalents, beginning
of period 1,331.2 835.5
Cash and cash equivalents, end of
period $1,196.0 $916.2
======== ======
Invesco Ltd.
Reconciliations of Condensed Consolidated Cash Flow Information Excluding CIP to U.S. GAAP Condensed Consolidated Statements of Cash Flows
(unaudited, in millions)
Six months ended June 30, 2014 Six months ended June 30, 2013
------------------------------ ------------------------------
Before Impact of Total Before Impact of Total
Consolidation Consolidation Consolidation Consolidation
(non-GAAP) (U.S. (non-GAAP) (U.S.
GAAP) GAAP)
-----
Operating activities:
Net income $465.5 $58.1 $523.6 $422.8 ($19.5) $403.3
Amortization and depreciation 45.8 - 45.8 44.2 - 44.2
Share-based compensation expense 70.0 - 70.0 69.4 - 69.4
(Gain)/loss on disposal of business,
property and equipment, net - - - 0.5 - 0.5
Other (gains)/losses, net (27.5) 4.7 (22.8) (18.1) - (18.1)
Other (gains)/losses of CSIP, net (11.5) - (11.5) - - -
Other (gains)/losses of CIP, net - (63.3) (63.3) - 22.7 22.7
Equity in earnings of unconsolidated
affiliates (18.9) 3.4 (15.5) (16.3) 1.3 (15.0)
Dividends from unconsolidated
affiliates 15.4 - 15.4 1.9 - 1.9
Changes in operating assets and liabilities:
(Increase)/decrease in cash held by
CIP - 260.1 260.1 - (76.0) (76.0)
(Increase)/decrease in cash held by
CSIP (1.0) - (1.0) - - -
(Purchase)/sale of trading
investments, net (10.4) - (10.4) 0.6 - 0.6
(Increase)/decrease in receivables (385.7) (17.0) (402.7) (716.8) 4.9 (711.9)
Increase/(decrease) in payables 172.0 (9.4) 162.6 500.5 33.5 534.0
Net cash provided by/(used in)
operating activities 313.7 236.6 550.3 288.7 (33.1) 255.6
----- ----- ----- ----- ----- -----
Investing activities:
Purchase of property and equipment (49.8) - (49.8) (40.3) - (40.3)
Purchase of available-for-sale
investments (146.2) 33.7 (112.5) (31.8) 6.6 (25.2)
Sale of available-for-sale
investments 112.6 (37.5) 75.1 26.1 (3.1) 23.0
Purchase of investments by CIP - (2,848.8) (2,848.8) - (2,504.3) (2,504.3)
Sale of investments by CIP - 2,108.5 2,108.5 - 2,584.6 2,584.6
Purchase of investments by CSIP (476.1) - (476.1) - - -
Sale of investments by CSIP 274.3 - 274.3 - - -
Purchase of other investments (69.7) 2.2 (67.5) (164.6) - (164.6)
Sale of other investments 40.3 - 40.3 39.7 - 39.7
Returns of capital and distributions
from unconsolidated partnership
investments 27.9 (2.0) 25.9 11.7 (1.8) 9.9
Acquisition earn-out payments - - - (1.2) - (1.2)
Sale of business 60.8 - 60.8 - - -
---- --- ---- --- --- ---
Net cash provided by/(used in)
investing activities (225.9) (743.9) (969.8) (160.4) 82.0 (78.4)
------ ------ ------ ------ ---- -----
Financing activities:
Proceeds from exercises of share
options 5.2 - 5.2 10.8 - 10.8
Purchases of treasury shares (169.6) - (169.6) (120.5) - (120.5)
Dividends paid (207.1) - (207.1) (178.4) - (178.4)
Excess tax benefits from share-based
compensation 17.6 - 17.6 16.7 - 16.7
Repayment on unsettled fund account (35.7) - (35.7) - - -
Third-party capital invested into CIP - 155.8 155.8 - 34.5 34.5
Third-party capital distributed by
CIP - (68.0) (68.0) - (128.1) (128.1)
Third-party capital invested into
CSIP 152.5 - 152.5 - - -
Third-party capital distributed by
CSIP (1.4) - (1.4) - - -
Borrowings of debt by CIP - 715.0 715.0 - 409.4 409.4
Repayments of debt by CIP - (295.5) (295.5) - (364.7) (364.7)
Net borrowings/(repayments) under
credit facility - - - 259.5 - 259.5
Net cash provided by/(used in)
financing activities (238.5) 507.3 268.8 (11.9) (48.9) (60.8)
------ ----- ----- ----- ----- -----
Increase/(decrease) in cash and cash
equivalents (150.7) - (150.7) 116.4 - 116.4
Foreign exchange movement on cash and
cash equivalents 15.5 - 15.5 (35.7) - (35.7)
Cash and cash equivalents, beginning
of period 1,331.2 - 1,331.2 835.5 - 835.5
Cash and cash equivalents, end of
period $1,196.0 $- $1,196.0 $916.2 $- $916.2
======== === ======== ====== === ======
See pages 19 through 22 for notes to the reconciliation.
Invesco Ltd.
Notes
We are presenting the following non-GAAP performance measures: net revenues (and by calculation, net revenue yield on AUM), adjusted operating income (and by calculation, adjusted operating margin), and adjusted net income attributable to common shareholders (and by calculation, adjusted diluted earnings per share (EPS)). We believe these non-GAAP measures provide greater transparency into our business on an ongoing operations basis and allow more appropriate comparisons with industry peers. Management uses these performance measures to evaluate the business, and they are consistent with internal management reporting. The most directly comparable U.S. GAAP measures are operating revenues (and by calculation, gross revenue yield on AUM), operating income (and by calculation, operating margin), and net income attributable to common shareholders (and by calculation, diluted EPS). 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.
Notes 1 through 8 relate to the income statement reconciliations presented on pages 10 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 company's Form 10-K.
Note 9 relates to the balance sheet and cash flow statement reconciliations on pages 15 and 18, respectively.
Note 10 relates to the U.S. GAAP effective tax rate and the impact of non-controlling interests in consolidated investment products (CIP) and consolidated sponsored investment products (CSIP) on the rate.
1. Acquisition/disposition related adjustments
Acquisition/disposition related adjustments are comprised of amounts incurred by the company in connection with business combinations, including transaction and integration expenses, intangible asset amortization, gains and losses related to dispositions, and all related tax effects. In addition, the net (income)/loss from discontinued operations associated with the sale of the Atlantic Trust business has been excluded from the non-GAAP income statement information. Exclusion of this line item assists in evaluating the continuing business performance and comparability with our results period to period, and aids comparability with peer companies that may not have similar discontinued operations.
Adjustment amounts related to acquisition and disposition activities are as follows:
in millions Q2-14 Q1-14 Q2-13
Intangible amortization $3.4 $3.8 $3.8
Taxation on amortization (0.4) (0.4) (0.4)
Deferred taxation 5.4 5.5 5.4
Transaction and integration - - 1.8
Taxation on transaction and
integration - - (0.8)
(Income)/loss from discontinued
operations, net of taxes (0.2) 2.0 4.6
---
$8.2 $10.9 $14.4
==== ===== =====
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, and other service and administrative fees paid to third parties, 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 joint venture net 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 the CIPs, were $8.7 million in the second quarter (first quarter 2014: $8.4 million; second quarter 2013: $9.4 million) while other revenues of $0.1 million (first quarter 2014:none, second quarter 2013: $0.4 million) were recorded by CIP in the second quarter. By deconsolidating these products in the non-GAAP information, the management and performance fees are added back while the other revenues are excluded. Similarly, the operating expenses of the CIPs 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 decrease of $2.0 million in net income attributable to common shareholders in the second quarter U.S. GAAP earnings (first quarter 2014: $5.3 million increase; second quarter 2013: $3.5 million decrease). 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 $3.7 million in the second quarter (first quarter 2014: $4.4 million appreciation; second quarter 2013: $3.0 million appreciation) with an investment gain, inclusive of interest and dividend income, of $7.0 million in the second quarter (first quarter 2014: $4.7 million gain; second quarter 2013: $1.6 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 tax credit of $1.0 million in the second quarter (first quarter 2014: none; second quarter 2013: $0.4 million charge), result in a net income deduction of $2.3 million for the second quarter (first quarter 2014: $0.3 million deduction; second quarter 2013: $1.0 million addition).
6. Other reconciling items
in millions Q2-14 Q1-14 Q2-13
Business optimization charges: (a)
Employee compensation $- $7.2 $-
Property, office and technology - 35.8 -
Taxation on business optimization
charges - (9.0) -
Regulatory charge (b) - 31.1 -
Legal fees for regulatory charge (b) - 0.5 -
Taxation on legal fees (b) - (0.1) -
Fund reimbursement settlement cost (c) - 5.3 -
Taxation fund reimbursement settlement
cost (c) - (2.1) -
Foreign exchange hedge amortization (d) - (0.2) (0.6)
Taxation on foreign exchange hedge
amortization (d) - - 0.1
European infrastructure initiative (e) - - 3.3
Taxation on European infrastructure
initiative (e) - - (0.6)
$- $68.5 $2.2
=== ===== ====
a. Business optimization: Operating expenses for first quarter 2014 include property related charges of $35.8 million associated with vacating leased properties as part of a business optimization initiative. Employee compensation expenses also includes severance costs of $7.2 million related to the initiative.
b. Operating expenses for first quarter 2014 include a charge of £18.6 million ($31.1 million) in respect of the penalty under a settlement of an enforcement proceeding reached with the U.K. Financial Conduct Authority (FCA) pertaining to the company's compliance with certain FCA rules and regulations for the period from May 2008 to November 2012. This charge, together with settlement-related legal costs of $0.5 million, has been recorded in general and administrative expenses.
c. General and administrative expenses for the first quarter 2014 include a $5.3 million fund reimbursement settlement cost associated with historical management fees.
d. Included within other gains and losses, net for the first quarter 2014 and the second quarter 2013 is the mark-to-market of foreign exchange put option contracts intended to provide protection against the impact of a significant decline in the Pound Sterling/U.S. Dollar foreign exchange rate. These contracts provided coverage through March 25, 2014. The adjustment from U.S. GAAP to non-GAAP earnings 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.
e. European infrastructure transformational initiative: The company outsourced its European transfer agency and made certain structural changes to product and distribution platforms.
Each of these other reconciling items has been adjusted from U.S. GAAP to arrive at the company's non-GAAP financial measures for the reasons either outlined in the paragraphs above, due to the unique character and magnitude of the reconciling item, or because the item represents a continuation of a reconciling item adjusted from U.S. GAAP in a prior period.
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 information excluding CIP
U.S. GAAP condensed consolidating balance sheets and condensed consolidated statements of cash flows reflect the consolidation of CIP. The majority of the company's CIP balances are CLO-related. 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 CIP is not available for general use by Invesco, nor is Invesco cash available for general use by its CIP.
By deconsolidating the CIP in the condensed consolidated balance sheet information excluding CIP, the assets, liabilities and equity of the CIP 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 information excluding CIP present the cash flows of the company separately and before consolidation of CIP, as the cash flows of CIP 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.
10. U.S. GAAP Effective Tax Rate
The effective tax rate on continuing operations decreased to 25.3% for the second quarter, from 29.9% for the first quarter 2014. The first quarter included a 0.9% rate increase as result of tax legislation changes in New York and a 3.2% rate increase as a result of the FCA settlement referenced above. The impact of the inclusion of non-controlling interests in CIP and CSIP reduced our effective tax rate by 2.8 percentage points for the second quarter, compared to a reduction of 2.0 percentage points on our effective tax rate for the first quarter.
Invesco Ltd.
Quarterly Assets Under Management(f)
(in billions) Q2-14 Q1-14 % Change Q2-13
------------ ----- ----- -------- -----
Beginning Assets $787.3 $778.7 1.1% $707.7
Long-term inflows 42.5 50.2 (15.3)% 44.4
Long-term outflows (49.4) (43.7) 13.0% (43.0)
----- ----- -----
Long-term net flows (6.9) 6.5 N/A 1.4
Net flows in Invesco PowerShares QQQ fund (3.0) (1.3) 130.8% 0.7
Net flows in institutional money market funds 1.1 (6.1) N/A (0.7)
--- ---- ----
Total net flows (8.8) (0.9) 877.8% 1.4
Market gains and losses/reinvestment 19.9 9.4 111.7% (1.3)
Foreign currency translation 4.0 0.1 N/A (2.2)
--- --- ----
Ending Assets $802.4 $787.3 1.9% $705.6
====== ====== ======
Average long-term AUM $674.7 $659.7 2.3% $609.1
Average short-term AUM (d) 115.4 119.9 (3.8)% 110.7
----- ----- -----
Average AUM $790.1 $779.6 1.3% $719.8
====== ====== ======
Gross revenue yield on AUM(a) 65.7 bps 65.6 bps 63.4 bps
Gross revenue yield on AUM before performance
fees(a) 65.4 bps 64.0 bps 63.1 bps
Net revenue yield on AUM(b) 45.6 bps 45.6 bps 43.9 bps
Net revenue yield on AUM before performance
fees(b) 45.2 bps 43.8 bps 43.4 bps
------------------------------------------- ---- --- ---- --- ---- ---
(in billions) Total AUM Active(e) Passive(e)
------------ --------- -------- ---------
March 31, 2014 $787.3 $644.4 $142.9
Long-term inflows 42.5 36.1 6.4
Long-term outflows (49.4) (44.1) (5.3)
----- ----- ----
Long-term net flows (6.9) (8.0) 1.1
Net flows in Invesco
PowerShares QQQ fund (3.0) - (3.0)
Net flows in
institutional money
market funds 1.1 1.1 -
--- --- ---
Total net flows (8.8) (6.9) (1.9)
Market gains and
losses/reinvestment 19.9 15.1 4.8
Foreign currency
translation 4.0 4.0 -
--- --- ---
June 30, 2014 $802.4 $656.6 $145.8
====== ====== ======
Average AUM $790.1 $648.2 $141.9
====== ====== ======
Gross revenue yield on
AUM(a) 65.7bps 77.3bps 13.2bps
Net revenue yield on
AUM(b) 45.6bps 52.7bps 13.2bps
By channel: (in
billions) Total Retail Institutional
--------------- ----- ------ -------------
March 31, 2014 $787.3 $534.6 $252.7
Long-term inflows 42.5 36.3 6.2
Long-term outflows (49.4) (44.5) (4.9)
----- ----- ----
Long-term net flows (6.9) (8.2) 1.3
Net flows in Invesco
PowerShares QQQ
fund (3.0) (3.0) -
Net flows in
institutional money
market funds 1.1 - 1.1
--- --- ---
Total net flows (8.8) (11.2) 2.4
Market gains and
losses/
reinvestment 19.9 17.7 2.2
Foreign currency
translation 4.0 3.7 0.3
--- --- ---
June 30, 2014 $802.4 $544.8 $257.6
====== ====== ======
See the footnotes immediately following these tables.
Invesco Ltd.
Quarterly Assets Under Management(f) (continued)
By asset class: (in billions) Total Equity Fixed Balanced Money Alternatives(c)
Income Market (d)
--- ------ ---------
March 31, 2014 $787.3 $388.0 $177.0 $54.6 $76.1 $91.6
Long-term inflows 42.5 21.4 8.4 4.3 0.6 7.8
Long-term outflows (49.4) (29.3) (6.2) (8.4) (0.7) (4.8)
----- ----- ---- ---- ---- ----
Long-term net flows (6.9) (7.9) 2.2 (4.1) (0.1) 3.0
Net flows in Invesco PowerShares QQQ fund (3.0) (3.0) - - - -
Net flows in institutional money market funds 1.1 - - - 1.1 -
--- --- --- --- --- ---
Total net flows (8.8) (10.9) 2.2 (4.1) 1.0 3.0
Market gains and losses/reinvestment 19.9 14.4 2.1 1.5 - 1.9
Foreign currency translation 4.0 2.7 0.6 0.6 - 0.1
--- --- --- --- --- ---
June 30, 2014 $802.4 $394.2 $181.9 $52.6 $77.1 $96.6
====== ====== ====== ===== ===== =====
Average AUM $790.1 $385.9 $179.7 $52.2 $77.3 $95.0
By client domicile: (in billions) Total U.S. Canada U.K. Continental Asia
Europe
---
March 31, 2014 $787.3 $526.1 $27.1 $115.9 $63.4 $54.8
Long-term inflows 42.5 19.7 0.9 6.1 10.4 5.4
Long-term outflows (49.4) (19.5) (1.1) (19.9) (5.3) (3.6)
----- ----- ---- ----- ---- ----
Long-term net flows (6.9) 0.2 (0.2) (13.8) 5.1 1.8
Net flows in Invesco PowerShares QQQ fund (3.0) (3.0) - - - -
Net flows in institutional money market funds 1.1 (0.7) 0.1 1.5 0.1 0.1
--- ---- --- --- --- ---
Total net flows (8.8) (3.5) (0.1) (12.3) 5.2 1.9
Market gains and losses/reinvestment 19.9 14.9 0.7 1.3 1.8 1.2
Foreign currency translation 4.0 - 1.0 2.7 - 0.3
--- --- --- --- --- ---
June 30, 2014 $802.4 $537.5 $28.7 $107.6 $70.4 $58.2
====== ====== ===== ====== ===== =====
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management(f)
(in billions) June 30, 2014 June 30, 2013 % Change
------------ ------------- ------------- --------
Beginning Assets $778.7 $667.4 16.7%
Long-term inflows 92.7 92.0 0.8%
Long-term outflows (93.1) (76.3) 22.0%
----- -----
Long-term net flows (0.4) 15.7 N/A
Net flows in Invesco PowerShares
QQQ fund (4.3) 0.3 N/A
Net flows in institutional money
market funds (5.0) 4.1 N/A
---- ---
Total net flows (9.7) 20.1 N/A
Market gains and losses/
reinvestment 29.3 29.2 0.3%
Foreign currency translation 4.1 (11.1) N/A
--- -----
Ending Assets $802.4 $705.6 13.7%
====== ======
Average long-term AUM $667.2 $597.5 11.7%
Average short-term AUM (d) 117.7 108.2 8.8%
----- -----
Average AUM $784.9 $705.7 11.2%
====== ======
Gross revenue yield on AUM(a) 65.6 bps 64.0 bps
Gross revenue yield on AUM before
performance fees(a) 64.7 bps 62.8 bps
Net revenue yield on AUM(b) 45.6 bps 44.7 bps
Net revenue yield on AUM before
performance fees(b) 44.5 bps 43.4 bps
------------------------------- ---- --- ---- ---
(in billions) Total AUM Active(e) Passive(e)
------------ --------- -------- ---------
December 31, 2013 $778.7 $639.0 $139.7
Long-term inflows 92.7 77.7 15.0
Long-term outflows (93.1) (82.5) (10.6)
----- ----- -----
Long-term net flows (0.4) (4.8) 4.4
Net flows in Invesco
PowerShares QQQ fund (4.3) - (4.3)
Net flows in
institutional money
market funds (5.0) (5.0) -
---- ---- ---
Total net flows (9.7) (9.8) 0.1
Market gains and
losses/reinvestment 29.3 23.3 6.0
Foreign currency
translation 4.1 4.1 -
--- --- ---
June 30, 2014 $802.4 $656.6 $145.8
====== ====== ======
Average AUM $784.9 $643.6 $141.3
====== ====== ======
Gross revenue yield
on AUM(a) 65.6bps 77.3bps 13.0bps
Net revenue yield on
AUM(b) 45.6bps 52.7bps 13.0bps
By channel: (in
billions) Total Retail Institutional
--------------- ----- ------ -------------
December 31, 2013 $778.7 $519.6 $259.1
Long-term inflows 92.7 75.9 16.8
Long-term outflows (93.1) (76.5) (16.6)
----- ----- -----
Long-term net flows (0.4) (0.6) 0.2
Net flows in Invesco
PowerShares QQQ fund (4.3) (4.3) -
Net flows in
institutional money
market funds (5.0) - (5.0)
---- --- ----
Total net flows (9.7) (4.9) (4.8)
Market gains and
losses/reinvestment 29.3 26.5 2.8
Foreign currency
translation 4.1 3.6 0.5
--- --- ---
June 30, 2014 $802.4 $544.8 $257.6
====== ====== ======
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management(f) (continued)
By asset class: (in billions) Total Equity Fixed Income Balanced Money Alternatives(c)
Market (d)
--- ---------
December 31, 2013 $778.7 $383.1 $171.7 $53.3 $82.7 $87.9
Long-term inflows 92.7 48.8 18.0 9.3 1.4 15.2
Long-term outflows (93.1) (55.5) (12.9) (12.8) (1.7) (10.2)
----- ----- ----- ----- ---- -----
Long-term net flows (0.4) (6.7) 5.1 (3.5) (0.3) 5.0
Net flows in Invesco PowerShares QQQ fund (4.3) (4.3) - - - -
Net flows in institutional money market funds (5.0) - - - (5.0) -
---- --- --- --- ---- ---
Total net flows (9.7) (11.0) 5.1 (3.5) (5.3) 5.0
Market gains and losses/reinvestment 29.3 19.4 4.4 2.3 (0.3) 3.5
Foreign currency translation 4.1 2.7 0.7 0.5 - 0.2
--- --- --- --- --- ---
June 30, 2014 $802.4 $394.2 $181.9 $52.6 $77.1 $96.6
====== ====== ====== ===== ===== =====
Average AUM $784.9 $384.5 $177.1 $52.9 $78.2 $92.2
By client domicile: (in billions) Total U.S. Canada U.K. Continental Asia
Europe
---
December 31, 2013 $778.7 $521.3 $27.1 $114.8 $60.9 $54.6
Long-term inflows 92.7 44.4 2.0 11.2 21.7 13.4
Long-term outflows (93.1) (40.6) (2.3) (26.8) (11.8) (11.6)
----- ----- ---- ----- ----- -----
Long-term net flows (0.4) 3.8 (0.3) (15.6) 9.9 1.8
Net flows in Invesco PowerShares QQQ fund (4.3) (4.3) - - - -
Net flows in institutional money market funds (5.0) (4.1) - 2.0 (3.0) 0.1
---- ---- --- --- ---- ---
Total net flows (9.7) (4.6) (0.3) (13.6) 6.9 1.9
Market gains and losses/reinvestment 29.3 20.8 1.9 2.9 2.6 1.1
Foreign currency translation 4.1 - - 3.5 - 0.6
--- --- --- --- --- ---
June 30, 2014 $802.4 $537.5 $28.7 $107.6 $70.4 $58.2
====== ====== ===== ====== ===== =====
See the footnotes immediately following these tables.
Invesco Ltd.
Quarterly Assets Under Management - Passive(e)
(in billions) Q2-14 Q1-14 % Change Q2-13
------------ ----- ----- -------- -----
Beginning Assets $142.9 $139.7 2.3% $123.1
Long-term inflows 6.4 8.6 (25.6)% 11.8
Long-term outflows (5.3) (5.3) - % (10.5)
---- ---- -----
Long-term net flows 1.1 3.3 (66.7)% 1.3
Net flows in Invesco PowerShares
QQQ fund (3.0) (1.3) 130.8% 0.7
Net flows in institutional money
market funds - - N/A -
--- --- ---
Total net flows (1.9) 2.0 N/A 2.0
Market gains and losses/
reinvestment 4.8 1.2 300.0% (1.0)
Foreign currency translation - - N/A (0.4)
--- --- ----
Ending Assets $145.8 $142.9 2.0% $123.7
====== ====== ======
Average long-term AUM 99.8 95.2 4.8% 92.0
Average short-term AUM (d) 42.1 45.4 (7.3)% 33.9
---- ---- ----
Average AUM $141.9 $140.6 0.9% $125.9
====== ====== ======
Gross revenue yield on AUM(a) 13.2 bps 12.7 bps 11.6 bps
Gross revenue yield on AUM before
performance fees(a) 13.2 bps 12.7 bps 11.6 bps
Net revenue yield on AUM(b) 13.2 bps 12.7 bps 11.6 bps
Net revenue yield on AUM before
performance fees(b) 13.2 bps 12.7 bps 11.6 bps
------------------------------- ---- --- ---- --- ---- ---
By channel: (in billions) Total Retail Institutional
------------------------ ----- ------ -------------
March 31, 2014 $142.9 $121.5 $21.4
Long-term inflows 6.4 5.6 0.8
Long-term outflows (5.3) (5.0) (0.3)
---- ---- ----
Long-term net flows 1.1 0.6 0.5
Net flows in Invesco
PowerShares QQQ fund (3.0) (3.0) -
Net flows in institutional
money market funds - - -
--- --- ---
Total net flows (1.9) (2.4) 0.5
Market gains and losses/
reinvestment 4.8 4.8 -
Foreign currency
translation - - -
--- --- ---
June 30, 2014 $145.8 $123.9 $21.9
====== ====== =====
By asset class: (in billions) Total Equity Fixed Balanced Money Alternatives(c)
Income Market
--- ------ ------
March 31, 2014 $142.9 $87.0 $40.9 $- $- $15.0
Long-term inflows 6.4 4.3 1.4 - - 0.7
Long-term outflows (5.3) (3.6) (0.6) - - (1.1)
---- ---- ---- --- --- ----
Long-term net flows 1.1 0.7 0.8 - - (0.4)
Net flows in Invesco PowerShares QQQ fund (3.0) (3.0) - - - -
Net flows in institutional money market funds - - - - - -
--- --- --- --- --- ---
Total net flows (1.9) (2.3) 0.8 - - (0.4)
Market gains and losses/reinvestment 4.8 4.3 0.3 - - 0.2
Foreign currency translation - - - - - -
June 30, 2014 $145.8 $89.0 $42.0 $- $- $14.8
====== ===== ===== === === =====
Average AUM $141.9 $85.4 $41.6 $- $- $14.9
By client domicile: (in billions) Total U.S. Canada U.K. Continental Asia
Europe
---
March 31, 2014 $142.9 $138.5 $0.1 $- $1.8 $2.5
Long-term inflows 6.4 6.3 - - 0.1 -
Long-term outflows (5.3) (4.8) - - (0.2) (0.3)
---- ---- --- --- ---- ----
Long-term net flows 1.1 1.5 - - (0.1) (0.3)
Net flows in Invesco PowerShares QQQ fund (3.0) (3.0) - - - -
Net flows in institutional money market funds - - - - - -
--- --- --- --- --- ---
Total net flows (1.9) (1.5) - - (0.1) (0.3)
Market gains and losses/reinvestment 4.8 4.7 - - 0.1 -
Foreign currency translation - - - - - -
June 30, 2014 $145.8 $141.7 $0.1 $- $1.8 $2.2
====== ====== ==== === ==== ====
See the footnotes immediately following these tables.
Invesco Ltd.
Year-to-Date Assets Under Management - Passive(e)
(in billions) June 30, 2014 June 30, 2013 % Change
------------ ------------- ------------- --------
Beginning Assets $139.7 $114.0 22.5%
Long-term inflows 15.0 25.3 (40.7)%
Long-term outflows (10.6) (17.6) (39.8)%
----- ----- ------
Long-term net flows 4.4 7.7 (42.9)%
Net flows in Invesco PowerShares
QQQ fund (4.3) 0.3 N/A
Net flows in institutional money
market funds - - N/A
--- --- ---
Total net flows 0.1 8.0 (98.8)%
Market gains and losses/
reinvestment 6.0 2.4 150.0%
Foreign currency translation - (0.7) (100.0)%
--- ----
Ending Assets $145.8 $123.7 17.9%
====== ====== ====
Average long-term AUM 97.5 89.8 8.6%
Average short-term AUM (d) 43.8 33.2 31.9%
---- ----
Average AUM $141.3 $123.0 14.9%
====== ====== ====
Gross revenue yield on AUM(a) 13.0 bps 11.1 bps
Gross revenue yield on AUM before
performance fees(a) 13.0 bps 11.1 bps
Net revenue yield on AUM(b) 13.0 bps 11.1 bps
Net revenue yield on AUM before
performance fees(b) 13.0 bps 11.1 bps
------------------------------- ---- --- ---- ---
By channel: (in
billions) Total Retail Institutional
--------------- ----- ------ -------------
December 31, 2013 $139.7 $118.2 $21.5
Long-term inflows 15.0 13.5 1.5
Long-term outflows (10.6) (9.5) (1.1)
----- ---- ----
Long-term net flows 4.4 4.0 0.4
Net flows in Invesco
PowerShares QQQ fund (4.3) (4.3) -
Net flows in
institutional money
market funds - - -
--- --- ---
Total net flows 0.1 (0.3) 0.4
Market gains and losses/
reinvestment 6.0 6.0 -
Foreign currency
translation - - -
--- --- ---
June 30, 2014 $145.8 $123.9 $21.9
====== ====== =====
By asset class: (in billions) Total Equity Fixed Balanced Money Alternatives(c)
Income Market
--- ------ ------
December 31, 2013 $139.7 $85.6 $39.5 $- $- $14.6
Long-term inflows 15.0 9.7 3.6 - - 1.7
Long-term outflows (10.6) (6.8) (1.8) - - (2.0)
----- ---- ---- --- --- ----
Long-term net flows 4.4 2.9 1.8 - - (0.3)
Net flows in Invesco PowerShares QQQ fund (4.3) (4.3) - - - -
Net flows in institutional money market funds - - - - - -
--- --- --- --- --- ---
Total net flows 0.1 (1.4) 1.8 - - (0.3)
Market gains and losses/reinvestment 6.0 4.8 0.7 - - 0.5
Foreign currency translation - - - - - -
June 30, 2014 $145.8 $89.0 $42.0 $- $- $14.8
====== ===== ===== === === =====
Average AUM $141.3 $85.9 $40.9 $- $- $14.5
By client domicile: (in billions) Total U.S. Canada U.K. Continental
Europe Asia
--------------------------------- ----- ---- ------ ---- ----------- ----
December 31, 2013 $139.7 $135.2 $0.1 $- $1.8 $2.6
Long-term inflows 15.0 14.8 - - 0.2 -
Long-term outflows (10.6) (9.9) - - (0.3) (0.4)
----- ---- --- --- ---- ----
Long-term net flows 4.4 4.9 - - (0.1) (0.4)
Net flows in Invesco PowerShares QQQ fund (4.3) (4.3) - - - -
Net flows in institutional money market funds - - - - - -
--- --- --- --- --- ---
Total net flows 0.1 0.6 - - (0.1) (0.4)
Market gains and losses/reinvestment 6.0 5.9 - - 0.1 -
Foreign currency translation - - - - - -
June 30, 2014 $145.8 $141.7 $0.1 $- $1.8 $2.2
====== ====== ==== === ==== ====
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 China joint venture (JV)
AUM. For quarterly AUM, our share of
the average AUM in the second
quarter for our JVs in China was
$4.7 billion (first quarter 2014:
$5.1 billion; second quarter 2013:
$3.6 billion). For year to date, our
share of the average AUM for our JVs
in China in the six months ended
June 30, 2014 was $4.9 billion (six
months ended June 30, 2013: $3.5
billion). It is appropriate to
exclude the average AUM of our China
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 net income 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 CIP;
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 10 through
12 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 10 through 12
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
Parity, U.S. direct real estate, and
U.S. REITS.
(d) Short-term ending AUM as of June 30,
2014 includes $73.1 billion in
institutional money market AUM and
$44.0 billion in PowerShares QQQ
AUM. Ending retail money market AUM
as of June 30, 2014, included in
long-term AUM, were $4.0 billion.
(e) Passive AUM includes ETFs, UITs, non-
fee earning leverage and other
passive mandates. Active AUM are
total AUM less Passive AUM.
(f) On December 31, 2013, the company
completed the sale of Atlantic
Trust. AUM presented for periods
prior to this date exclude total AUM
of Atlantic Trust ($21.7 billion at
June 30, 2013.)
Invesco Ltd.
Investment Capabilities Performance Overview
Benchmark Comparison Peer Group Comparison
-------------------- ---------------------
% of AUM Ahead of Benchmark % of AUM In Top Half of Peer
Group
--------------------------- -----------------------------
Equities 1yr 3yr 5yr 1yr 3yr 5yr
--- --- --- --- --- ---
U.S. Core 34% 40% 24% 30% 42% 39%
--------- --- --- --- --- --- ---
U.S. Growth 95% 24% 24% 95% 24% 73%
----------- --- --- --- --- --- ---
U.S. Value 54% 57% 54% 45% 57% 79%
---------- --- --- --- --- --- ---
Sector 81% 55% 64% 35% 21% 50%
------ --- --- --- --- --- ---
U.K. 94% 100% 98% 98% 98% 98%
---- --- --- --- --- --- ---
Canadian 70% 100% 100% 80% 100% 100%
-------- --- --- --- --- --- ---
Asian 79% 86% 84% 68% 75% 72%
----- --- --- --- --- --- ---
European 95% 100% 100% 65% 99% 92%
-------- --- --- --- --- --- ---
Global 67% 87% 82% 81% 92% 87%
------ --- --- --- --- --- ---
Global Ex U.S. and Emerging
Markets 80% 99% 99% 82% 96% 97%
---------------------------- --- --- --- --- --- ---
Fixed
Income
Money Market 65% 65% 35% 95% 95% 96%
------------ --- --- --- --- --- ---
U.S. Fixed Income 86% 89% 100% 69% 95% 95%
----------------- --- --- --- --- --- ---
Global Fixed Income 89% 87% 98% 86% 87% 84%
Stable Value 100% 100% 100% 100% 100% 100%
------------ --- --- --- --- --- ---
Other
Alternatives 40% 64% 24% 32% 54% 28%
------------ --- --- --- --- --- ---
Balanced 44% 73% 70% 70% 98% 70%
-------- --- --- --- --- --- ---
Note: AUM measured in the one-, three-
, and five-year peer group
rankings represents 61%, 61%, and
60% of total Invesco AUM,
respectively, and AUM measured
versus benchmark on a one-,
three-, and five-year basis
represents 72%, 71%, and 69% of
total Invesco AUM, respectively,
as of 6/30/2014. 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, Value Research)
and are 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. Performance assumes
the reinvestment of dividends.
Past performance is not
indicative of future results and
may not reflect an investor's
experience. Excludes passive
products, closed-end funds,
private equity limited
partnerships, non-discretionary
funds, unit investment trusts,
fund of funds with component
funds managed by Invesco, stable
value building block funds, 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.
SOURCE Invesco Ltd.
