Segment Information

3 Months Ended

Mar. 31, 2013

Segment Information

Segment Information

15.   Segment Information

        Management has assessed and determined that the Company operates in three business segments representing the Company's three principal distribution channels: Institutional, Mutual Fund and High Net Worth, each of which has different client relationships.

        Revenue in the Institutional distribution channel is earned from relationships with public and private client entities, including pension plans, foundations, endowments and sovereign wealth funds. Revenue in the Mutual Fund distribution channel is earned from advisory and sub-advisory relationships with all domestically-registered investment products as well as non-institutional investment products that are registered abroad. Revenue in the High Net Worth distribution channel is earned from relationships with ultra-high net worth individuals, families and charitable foundations.

        Revenue earned from client relationships managed by Affiliates accounted for under the equity method is not consolidated with the Company's reported Revenue but instead is included (net of operating expenses, including amortization) in Income from equity method investments, and reported in the distribution channel in which the Affiliate operates. Income tax attributable to the profits of the Company's equity method Affiliates is reported within the Company's consolidated income tax provision.

        In firms with revenue sharing arrangements, a certain percentage of revenue is allocated for use by management of an Affiliate in paying operating expenses of that Affiliate, including salaries and bonuses, and is called an "Operating Allocation." In reporting segment operating expenses, Affiliate expenses are allocated to a particular segment on a pro rata basis with respect to the revenue generated by that Affiliate in such segment. Generally, as revenue increases, additional compensation is typically paid to Affiliate management partners from the Operating Allocation. As a result, the contractual expense allocation pursuant to a revenue sharing arrangement may result in the characterization of any growth in profit margin beyond the Company's Owners' Allocation as an operating expense. All other operating expenses (excluding intangible amortization) and interest expense have been allocated to segments based on the proportion of cash flow distributions reported by Affiliates in each segment.

Statements of Income

	Three Months Ended March 31, 2012
	Institutional			Mutual Fund			High Net Worth			Total
Revenue	$	206.8		$	175.7		$	35.2		$	417.7
Operating expenses:
Depreciation, intangible amortization and impairments		19.9			12.0			1.9			33.8
Other operating expenses		129.7			123.0			22.4			275.1
		149.6			135.0			24.3			308.9
Operating income		57.2			40.7			10.9			108.8
Income from equity method investments		10.5			2.6			1.4			14.5
Other non-operating (income) and expenses:
Investment and other income		(5.1	)		(4.0	)		(1.3	)		(10.4	)
Interest expense		10.9			6.0			1.7			18.6
Imputed interest and contingent payment arrangements		2.3			(5.1	)		0.3			(2.5	)
		8.1			(3.1	)		0.7			5.7
Income before income taxes		59.6			46.4			11.6			117.6
Income taxes		11.8			10.6			2.2			24.6
Net income		47.8			35.8			9.4			93.0
Net income (non-controlling interests)		(28.9	)		(21.1	)		(5.6	)		(55.6	)
Net income (controlling interest)	$	18.9		$	14.7		$	3.8		$	37.4

	Three Months Ended March 31, 2013
	Institutional			Mutual Fund			High Net Worth			Total
Revenue	$	223.8		$	227.6		$	50.8		$	502.2
Operating expenses:
Depreciation, intangible amortization and impairments		19.6			13.6			3.2			36.4
Other operating expenses		140.6			145.3			29.4			315.3
		160.2			158.9			32.6			351.7
Operating income		63.6			68.7			18.2			150.5
Income from equity method investments		44.4			3.8			2.4			50.6
Other non-operating (income) and expenses:
Investment and other income		(2.4	)		(1.9	)		(0.2	)		(4.5	)
Interest expense		14.4			7.6			2.2			24.2
Imputed interest and contingent payment arrangements		4.4			9.2			0.6			14.2
		16.4			14.9			2.6			33.9
Income before income taxes		91.6			57.6			18.0			167.2
Income taxes		22.1			11.7			3.7			37.5
Net income		69.5			45.9			14.3			129.7
Net income (non-controlling interests)		(30.8	)		(28.7	)		(7.8	)		(67.3	)
Net income (controlling interest)	$	38.7		$	17.2		$	6.5		$	62.4
Total assets as of December 31, 2012	$	3,176.5		$	2,354.8		$	655.8		$	6,187.1
Total assets as of March 31, 2013	$	2,953.3		$	2,644.7		$	627.1		$	6,225.1