(Mark One) | |
þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2017 | |
OR | |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM TO |
Delaware | 45-0969585 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
875 E. Wisconsin Avenue, Suite 800 Milwaukee, WI | 53202 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer o | ||
Non-accelerated filer o | (Do not check if a smaller reporting company) | Smaller reporting company o | |
Emerging growth company o |
Page | ||
Part I | Financial Information | |
Item 1. | Unaudited Consolidated Financial Statements | |
Item 2. | ||
Item 3. | ||
Item 4. | ||
Part II | Other Information | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
• | our anticipated future results of operations; |
• | our potential operating performance and efficiency; |
• | our expectations with respect to future levels of assets under management, including the capacity of our strategies and client cash inflows and outflows; |
• | our expectations with respect to industry trends and how those trends may impact our business; |
• | our financing plans, cash needs and liquidity position; |
• | our intention to pay dividends and our expectations about the amount of those dividends; |
• | our expected levels of compensation of our employees, including equity compensation; |
• | our expectations with respect to future expenses and the level of future expenses; |
• | our expected tax rate, and our expectations with respect to deferred tax assets; and |
• | our estimates of future amounts payable pursuant to our tax receivable agreements. |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Condensed Consolidated Statements of Financial Condition (U.S. dollars in thousands, except per share amount) | |||||||
June 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 190,258 | $ | 156,777 | |||
Accounts receivable | 67,757 | 59,739 | |||||
Investment securities | 3,372 | 6,297 | |||||
Property and equipment, net | 20,106 | 20,018 | |||||
Deferred tax assets | 787,653 | 678,518 | |||||
Prepaid expenses and other assets | 15,775 | 14,817 | |||||
Assets of consolidated investment products | |||||||
Cash and cash equivalents | 27,133 | — | |||||
Accounts receivable and other | 207 | — | |||||
Investment assets, at fair value | 23,153 | — | |||||
Total assets | $ | 1,135,414 | $ | 936,166 | |||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable, accrued expenses, and other | $ | 24,336 | $ | 20,087 | |||
Accrued incentive compensation | 69,000 | 12,642 | |||||
Borrowings | 199,558 | 199,477 | |||||
Amounts payable under tax receivable agreements | 669,857 | 586,246 | |||||
Liabilities of consolidated investment products | |||||||
Accounts payable, accrued expenses, and other | 10,975 | — | |||||
Investment liabilities, at fair value | 6,855 | — | |||||
Total liabilities | 980,581 | 818,452 | |||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interests | 12,658 | — | |||||
Common stock | |||||||
Class A common stock ($0.01 par value per share, 500,000,000 shares authorized, 49,689,978 and 42,149,436 shares outstanding at June 30, 2017 and December 31, 2016, respectively) | 497 | 421 | |||||
Class B common stock ($0.01 par value per share, 200,000,000 shares authorized, 12,426,635 and 15,142,049 shares outstanding at June 30, 2017 and December 31, 2016, respectively) | 124 | 151 | |||||
Class C common stock ($0.01 par value per share, 400,000,000 shares authorized, 13,471,384 and 17,063,384 shares outstanding at June 30, 2017 and December 31, 2016, respectively) | 135 | 171 | |||||
Additional paid-in capital | 128,770 | 119,221 | |||||
Retained earnings | 18,536 | 13,395 | |||||
Accumulated other comprehensive income (loss) | (1,385 | ) | (1,648 | ) | |||
Total Artisan Partners Asset Management Inc. stockholders’ equity | 146,677 | 131,711 | |||||
Noncontrolling interest - Artisan Partners Holdings | (4,502 | ) | (13,997 | ) | |||
Total stockholders’ equity | 142,175 | 117,714 | |||||
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity | $ | 1,135,414 | $ | 936,166 |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Consolidated Statements of Operations (U.S. dollars in thousands, except per share amounts) | |||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
Management fees | $ | 195,951 | $ | 180,138 | $ | 380,025 | $ | 354,516 | |||||||
Performance fees | 322 | 630 | 322 | 781 | |||||||||||
Total revenues | $ | 196,273 | $ | 180,768 | $ | 380,347 | $ | 355,297 | |||||||
Operating Expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Salaries, incentive compensation and benefits | 96,426 | 88,011 | 189,675 | 175,491 | |||||||||||
Pre-offering related compensation - share-based awards | 6,339 | 7,136 | 12,678 | 14,955 | |||||||||||
Total compensation and benefits | 102,765 | 95,147 | 202,353 | 190,446 | |||||||||||
Distribution, servicing and marketing | 7,292 | 8,404 | 14,666 | 16,562 | |||||||||||
Occupancy | 3,660 | 3,186 | 7,166 | 6,367 | |||||||||||
Communication and technology | 8,601 | 8,480 | 17,024 | 15,697 | |||||||||||
General and administrative | 7,452 | 6,538 | 14,603 | 12,487 | |||||||||||
Total operating expenses | 129,770 | 121,755 | 255,812 | 241,559 | |||||||||||
Total operating income | 66,503 | 59,013 | 124,535 | 113,738 | |||||||||||
Non-operating income (loss) | |||||||||||||||
Interest expense | (2,920 | ) | (2,934 | ) | (5,801 | ) | (5,839 | ) | |||||||
Net investment gain (loss) of consolidated investment products | 18 | — | 18 | — | |||||||||||
Net investment income and other | 173 | 31 | 326 | 46 | |||||||||||
Total non-operating income (loss) | (2,729 | ) | (2,903 | ) | (5,457 | ) | (5,793 | ) | |||||||
Income before income taxes | 63,774 | 56,110 | 119,078 | 107,945 | |||||||||||
Provision for income taxes | 14,941 | 12,634 | 27,690 | 24,151 | |||||||||||
Net income before noncontrolling interests | 48,833 | 43,476 | 91,388 | 83,794 | |||||||||||
Less: Net income attributable to noncontrolling interests - Artisan Partners Holdings | 22,197 | 25,092 | 44,957 | 49,149 | |||||||||||
Less: Net income attributable to noncontrolling interests - consolidated investment products | 4 | — | 4 | — | |||||||||||
Net income attributable to Artisan Partners Asset Management Inc. | $ | 26,632 | $ | 18,384 | $ | 46,427 | $ | 34,645 | |||||||
Basic and diluted earnings per share | $ | 0.45 | $ | 0.38 | $ | 0.86 | $ | 0.74 | |||||||
Basic and diluted weighted average number of common shares outstanding | 45,241,102 | 38,023,586 | 43,142,011 | 37,497,268 | |||||||||||
Dividends declared per Class A common share | $ | 0.60 | $ | 0.60 | $ | 1.56 | $ | 1.60 |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Consolidated Statements of Comprehensive Income (U.S. dollars in thousands) | |||||||||||||||
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Net income before noncontrolling interests | $ | 48,833 | $ | 43,476 | $ | 91,388 | $ | 83,794 | |||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Unrealized gain (loss) on investment securities: | |||||||||||||||
Unrealized gain (loss) on investment securities, net of tax of $39, $49, $31, and $50, respectively | 120 | 163 | 176 | 137 | |||||||||||
Less: reclassification adjustment for gain (loss) included in net income | — | (18 | ) | 93 | (18 | ) | |||||||||
Net unrealized gain (loss) on investment securities | 120 | 181 | 83 | 155 | |||||||||||
Foreign currency translation gain (loss) | 523 | (922 | ) | 729 | (1,209 | ) | |||||||||
Total other comprehensive income (loss) | 643 | (741 | ) | 812 | (1,054 | ) | |||||||||
Comprehensive income | 49,476 | 42,735 | 92,200 | 82,740 | |||||||||||
Comprehensive income attributable to noncontrolling interests - Artisan Partners Holdings | 22,448 | 24,801 | 45,506 | 48,729 | |||||||||||
Comprehensive income attributable to noncontrolling interests - consolidated investment products | 4 | — | 4 | — | |||||||||||
Comprehensive income attributable to Artisan Partners Asset Management Inc. | $ | 27,024 | $ | 17,934 | $ | 46,690 | $ | 34,011 |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Consolidated Statements of Changes in Stockholders’ Equity (U.S. dollars in thousands) | |||||||||||||||||||||||||||
Class A Common stock | Class B Common stock | Class C Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Non-controlling interest - Artisan Partners Holdings | Total stockholders’ equity | Redeemable non-controlling interest | |||||||||||||||||||
Balance at January 1, 2017 | $ | 421 | $ | 151 | $ | 171 | $ | 119,221 | $ | 13,395 | $ | (1,648 | ) | $ | (13,997 | ) | $ | 117,714 | $ | — | |||||||
Net income | — | — | — | — | 46,427 | — | 44,957 | 91,384 | 4 | ||||||||||||||||||
Other comprehensive income - foreign currency translation | — | — | — | — | — | 467 | 262 | 729 | — | ||||||||||||||||||
Other comprehensive income - available for sale investments, net of tax | — | — | — | — | — | 49 | 36 | 85 | — | ||||||||||||||||||
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax | — | — | — | (4,966 | ) | — | (253 | ) | 5,217 | (2 | ) | — | |||||||||||||||
Amortization of equity-based compensation | — | — | — | 23,385 | — | — | 14,255 | 37,640 | — | ||||||||||||||||||
Deferred tax assets, net of amounts payable under tax receivable agreements | — | — | — | 21,371 | — | — | — | 21,371 | — | ||||||||||||||||||
Issuance of Class A common stock, net of issuance costs | 56 | — | — | 161,991 | — | — | — | 162,047 | — | ||||||||||||||||||
Forfeitures | — | — | — | — | — | — | — | — | |||||||||||||||||||
Issuance of restricted stock awards | 13 | — | — | (13 | ) | — | — | — | — | — | |||||||||||||||||
Employee net share settlement | — | — | — | (530 | ) | — | — | (400 | ) | (930 | ) | — | |||||||||||||||
Exchange of subsidiary equity | 7 | (6 | ) | (1 | ) | — | — | — | — | — | — | ||||||||||||||||
Purchase of equity and subsidiary equity | — | (21 | ) | (35 | ) | (162,438 | ) | — | — | — | (162,494 | ) | — | ||||||||||||||
Capital contributions | — | — | — | — | — | — | — | — | 12,654 | ||||||||||||||||||
Distributions | — | — | — | — | — | — | (54,769 | ) | (54,769 | ) | — | ||||||||||||||||
Dividends | — | — | — | (29,251 | ) | (41,286 | ) | — | (63 | ) | (70,600 | ) | — | ||||||||||||||
Balance at June 30, 2017 | $ | 497 | $ | 124 | $ | 135 | $ | 128,770 | $ | 18,536 | $ | (1,385 | ) | $ | (4,502 | ) | $ | 142,175 | $ | 12,658 |
Class A Common stock | Class B Common stock | Class C Common stock | Additional paid-in capital | Retained earnings | Accumulated other comprehensive income (loss) | Non-controlling interest - Artisan Partners Holdings | Total stockholders’ equity | |||||||||||||||||
Balance at January 1, 2016 | $ | 394 | $ | 183 | $ | 157 | $ | 116,448 | $ | 13,238 | $ | (375 | ) | $ | (13,494 | ) | $ | 116,551 | ||||||
Net income | — | — | — | — | 34,645 | — | 49,149 | 83,794 | ||||||||||||||||
Other comprehensive income - foreign currency translation | — | — | — | — | — | (671 | ) | (538 | ) | (1,209 | ) | |||||||||||||
Other comprehensive income - available for sale investments, net of tax | — | — | — | — | — | 79 | 77 | 156 | ||||||||||||||||
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax | — | — | — | (2,168 | ) | — | (42 | ) | 2,209 | (1 | ) | |||||||||||||
Amortization of equity-based compensation | — | — | — | 21,002 | (409 | ) | — | 16,363 | 36,956 | |||||||||||||||
Deferred tax assets, net of amounts payable under tax receivable agreements | — | — | — | 6,686 | — | — | — | 6,686 | ||||||||||||||||
Issuance of Class A common stock, net of issuance costs | — | — | — | (22 | ) | — | — | — | (22 | ) | ||||||||||||||
Issuance of restricted stock awards | 11 | — | — | (11 | ) | — | — | — | — | |||||||||||||||
Employee net share settlement | — | — | — | (180 | ) | — | — | (154 | ) | (334 | ) | |||||||||||||
Exchange of subsidiary equity | 15 | (14 | ) | (1 | ) | — | — | — | — | — | ||||||||||||||
Distributions | — | — | — | — | — | — | (62,424 | ) | (62,424 | ) | ||||||||||||||
Dividends | — | — | — | (29,811 | ) | (35,030 | ) | — | (63 | ) | (64,904 | ) | ||||||||||||
Balance at June 30, 2016 | $ | 420 | $ | 169 | $ | 156 | $ | 111,944 | $ | 12,444 | $ | (1,009 | ) | $ | (8,875 | ) | $ | 115,249 |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Consolidated Statements of Cash Flows (U.S. dollars in thousands) | |||||||
For the Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities | |||||||
Net income before noncontrolling interests | $ | 91,388 | $ | 83,794 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 2,549 | 2,417 | |||||
Deferred income taxes | 18,604 | 16,847 | |||||
Capital (gains) losses on the sale of investment securities | (93 | ) | 18 | ||||
Loss on disposal of property and equipment | 18 | 34 | |||||
Amortization of debt issuance costs | 224 | 224 | |||||
Share-based compensation | 37,640 | 36,956 | |||||
(Gains) losses of consolidated investment products, net | (18 | ) | — | ||||
Purchase of investment securities by consolidated investment products | (23,194 | ) | — | ||||
Proceeds from sale of investment securities by consolidated investment products | 6,907 | — | |||||
Change in assets and liabilities resulting in an increase (decrease) in cash: | |||||||
Accounts receivable | (8,019 | ) | (2,767 | ) | |||
Prepaid expenses and other assets | (520 | ) | (2,099 | ) | |||
Accounts payable and accrued expenses | 59,234 | 49,198 | |||||
Class B liability awards | (506 | ) | (574 | ) | |||
Deferred lease obligations | 1,512 | 38 | |||||
Net change in operating assets and liabilities of consolidated investment products | (16,359 | ) | — | ||||
Net cash provided by operating activities | 169,367 | 184,086 | |||||
Cash flows from investing activities | |||||||
Acquisition of property and equipment | (823 | ) | (3,442 | ) | |||
Leasehold improvements | (1,468 | ) | (429 | ) | |||
Proceeds from sale of investment securities | 6,382 | 10 | |||||
Purchase of investment securities | (3,250 | ) | (14 | ) | |||
Net cash provided by (used in) investing activities | 841 | (3,875 | ) | ||||
Cash flows from financing activities | |||||||
Partnership distributions | (54,769 | ) | (62,424 | ) | |||
Dividends paid | (70,600 | ) | (64,904 | ) | |||
Payment under the tax receivable agreements | (22,788 | ) | (20,953 | ) | |||
Net proceeds from issuance of common stock | 162,494 | — | |||||
Payment of costs directly associated with the issuance of Class A common stock | (294 | ) | — | ||||
Purchase of equity and subsidiary equity | (162,494 | ) | — | ||||
Taxes paid related to employee net share settlement | (930 | ) | (334 | ) | |||
Capital contributions to consolidated investment products | 12,654 | — | |||||
Net cash used in financing activities | (136,727 | ) | (148,615 | ) | |||
Net increase (decrease) in cash and cash equivalents | 33,481 | 31,596 | |||||
Cash and cash equivalents | |||||||
Beginning of period | 156,777 | 166,193 | |||||
End of period | $ | 190,258 | $ | 197,789 | |||
Supplementary information | |||||||
Noncash activity: | |||||||
Establishment of deferred tax assets | $ | 127,771 | $ | 30,279 | |||
Establishment of amounts payable under tax receivable agreements | 106,399 | 23,593 |
• | APAM received 5,626,517 GP units of Holdings, which increased APAM’s ownership interest in Holdings. See Note 7, “Noncontrolling interest - Holdings” for the financial statement impact of changes in ownership. |
• | APAM’s purchase of common units of Holdings with the proceeds resulted in an increase to deferred tax assets and amounts payable under the tax receivable agreements. See Note 10, “Income Taxes and Related Payments”. |
Total Common Units Exchanged | Class A Common Units | Class B Common Units | Class E Common Units | |||||
Common units exchanged on March 6, 2017 | 206,770 | — | 206,770 | — | ||||
Common units exchanged on May 5, 2017 | 474,127 | 50,000 | 404,127 | 20,000 | ||||
Total Units Exchanged | 680,897 | 50,000 | 610,897 | 20,000 |
Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
June 30, 2017 | |||||||||||||||
Mutual funds | $ | 3,156 | $ | 216 | $ | — | $ | 3,372 | |||||||
December 31, 2016 | |||||||||||||||
Mutual funds | $ | 6,194 | $ | 103 | $ | — | $ | 6,297 |
• | Level 1 – Observable inputs such as quoted (unadjusted) market prices in active markets for identical securities. |
• | Level 2 – Other significant observable inputs (including but not limited to quoted prices for similar instruments, interest rates, prepayment speeds, credit risk, etc.). |
• | Level 3—Significant unobservable inputs (including Artisan’s own assumptions in determining fair value). |
Assets and Liabilities at Fair Value | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
June 30, 2017 | |||||||||||||||
Assets | |||||||||||||||
Cash equivalents | $ | 81,350 | $ | 81,350 | $ | — | $ | — | |||||||
Mutual funds | 3,372 | 3,372 | — | — | |||||||||||
December 31, 2016 | |||||||||||||||
Assets | |||||||||||||||
Cash equivalents | $ | 64,170 | $ | 64,170 | $ | — | $ | — | |||||||
Mutual funds | 6,297 | 6,297 | — | — |
Maturity | Outstanding Balance | Interest Rate Per Annum | ||||||
Revolving credit agreement | August 2017 | $ | — | NA | ||||
Senior notes | ||||||||
Series A | August 2017 | 60,000 | 4.98 | % | ||||
Series B | August 2019 | 50,000 | 5.32 | % | ||||
Series C | August 2022 | 90,000 | 5.82 | % | ||||
Total borrowings | $ | 200,000 |
2017 | $ | 60,000 | |
2018 | — | ||
2019 | 50,000 | ||
2020 | — | ||
2021 | — | ||
Thereafter | 90,000 | ||
Total | $ | 200,000 |
Assets and Liabilities at Fair Value | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
June 30, 2017 | |||||||||||||||
Assets | |||||||||||||||
Cash equivalents | $ | 21,750 | $ | 21,750 | $ | — | $ | — | |||||||
Debt instruments - long position | 23,066 | — | 23,066 | — | |||||||||||
Credit default swaps | 87 | — | 87 | — | |||||||||||
Liabilities | |||||||||||||||
Equity securities - short position | $ | 1,288 | $ | 1,288 | $ | — | $ | — | |||||||
Debt instruments - short position | $ | 5,567 | $ | — | $ | 5,567 | $ | — |
Holdings GP Units | Limited Partnership Units | Total | APAM Ownership % | |||||
Balance at December 31, 2016 | 42,149,436 | 32,205,433 | 74,354,869 | 57 | % | |||
2017 Follow-On Offering | 5,626,517 | (5,626,517 | ) | — | 7 | % | ||
Holdings Common Unit Exchanges | 680,897 | (680,897 | ) | — | 1 | % | ||
Issuance of APAM Restricted Shares | 1,267,250 | — | 1,267,250 | 1 | % | |||
Restricted Share Award Net Share Settlement (1) | (31,014 | ) | — | (31,014 | ) | — | % | |
Forfeitures of Holdings GP Units from Employee Terminations (1) | (3,108 | ) | — | (3,108 | ) | — | % | |
Balance at June 30, 2017 | 49,689,978 | 25,898,019 | 75,587,997 | 66 | % |
Statement of Financial Condition | For the Six Months Ended June 30, | ||||||
2017 | 2016 | ||||||
Additional paid-in capital | $ | (4,966 | ) | $ | (2,168 | ) | |
Noncontrolling interest - Artisan Partners Holdings | 5,217 | 2,209 | |||||
Accumulated other comprehensive income (loss) | (251 | ) | (41 | ) | |||
Net impact to financial condition | — | — |
Outstanding | ||||||||||||
Authorized | June 30, 2017 | December 31, 2016 | Voting Rights (1) | Economic Rights | ||||||||
Common shares | ||||||||||||
Class A, par value $0.01 per share | 500,000,000 | 49,689,978 | 42,149,436 | 1 vote per share | Proportionate | |||||||
Class B, par value $0.01 per share | 200,000,000 | 12,426,635 | 15,142,049 | 5 votes per share | None | |||||||
Class C, par value $0.01 per share | 400,000,000 | 13,471,384 | 17,063,384 | 1 vote per share | None | |||||||
(1) The Company’s employees to whom Artisan has granted equity have entered into a stockholders agreement with respect to all shares of APAM common stock they have acquired from the Company and any shares they may acquire from the Company in the future, pursuant to which they granted an irrevocable voting proxy to a Stockholders Committee. As of June 30, 2017, Artisan’s employees held 4,374,049 restricted shares of Class A common stock subject to the agreement and all 12,426,635 outstanding shares of Class B common stock. |
Type of Dividend | Class of Stock | For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Quarterly | Class A Common | $ | 0.60 | $ | 0.60 | $ | 1.20 | $ | 1.20 | |||||||||
Special Annual | Class A Common | $ | — | $ | — | $ | 0.36 | $ | 0.40 |
Total Stock Outstanding | Class A Common Stock(1) | Class B Common Stock | Class C Common Stock | |||||
Balance at December 31, 2016 | 74,354,869 | 42,149,436 | 15,142,049 | 17,063,384 | ||||
2017 Follow-On Offering | — | 5,626,517 | (2,104,517 | ) | (3,522,000 | ) | ||
Holdings Common Unit Exchanges | — | 680,897 | (610,897 | ) | (70,000 | ) | ||
Restricted Share Award Grants | 1,267,250 | 1,267,250 | — | — | ||||
Restricted Share Award Net Share Settlement | (31,014 | ) | (31,014 | ) | — | — | ||
Employee/Partner Terminations | (3,108 | ) | (3,108 | ) | — | — | ||
Balance at June 30, 2017 | 75,587,997 | 49,689,978 | 12,426,635 | 13,471,384 | ||||
(1) There were 218,089 and 178,401 restricted stock units outstanding at June 30, 2017 and December 31, 2016, respectively. Restricted stock units are not reflected in the table because they are not considered outstanding or issued stock. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Holdings Partnership Distributions to Limited Partners | $ | 38,239 | $ | 43,095 | $ | 54,769 | $ | 62,424 | ||||||||
Holdings Partnership Distributions to APAM | 61,910 | 50,809 | 83,543 | 73,241 | ||||||||||||
Total Holdings Partnership Distributions | $ | 100,149 | $ | 93,904 | $ | 138,312 | $ | 135,665 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Salaries, incentive compensation and benefits (1) | $ | 84,062 | $ | 77,212 | $ | 165,544 | $ | 154,308 | ||||||||
Restricted share-based award compensation expense | 12,364 | 10,799 | 24,131 | 21,183 | ||||||||||||
Total salaries, incentive compensation and benefits | 96,426 | 88,011 | 189,675 | 175,491 | ||||||||||||
Pre-offering related compensation - share-based awards | 6,339 | 7,136 | 12,678 | 14,955 | ||||||||||||
Total compensation and benefits | $ | 102,765 | $ | 95,147 | $ | 202,353 | $ | 190,446 | ||||||||
(1) Excluding restricted share-based award compensation expense |
Weighted-Average Grant Date Fair Value | Number of Awards | ||||||
Unvested at January 1, 2017 | $ | 44.47 | 3,394,910 | ||||
Granted | $ | 28.30 | 1,268,500 | ||||
Forfeited | $ | 41.08 | (3,108 | ) | |||
Vested | $ | 36.48 | (184,378 | ) | |||
Unvested at June 30, 2017 | $ | 40.22 | 4,475,924 |
Weighted-Average Grant Date Fair Value | Number of Class B Awards | |||||
Unvested Class B awards at January 1, 2017 | $ | 30.00 | 845,220 | |||
Granted | — | — | ||||
Forfeited | — | — | ||||
Vested | — | — | ||||
Unvested Class B awards at June 30, 2017 | $ | 30.00 | 845,220 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Current: | |||||||||||||||
Federal | $ | 5,234 | $ | 3,238 | $ | 7,858 | $ | 5,908 | |||||||
State and local | 640 | 506 | 1,001 | 1,050 | |||||||||||
Foreign | 120 | 161 | 227 | 346 | |||||||||||
Total | 5,994 | 3,905 | 9,086 | 7,304 | |||||||||||
Deferred: | |||||||||||||||
Federal | 8,463 | 8,257 | 17,598 | 15,936 | |||||||||||
State and local | 484 | 472 | 1,006 | 911 | |||||||||||
Total | 8,947 | 8,729 | 18,604 | 16,847 | |||||||||||
Income tax expense | $ | 14,941 | $ | 12,634 | $ | 27,690 | $ | 24,151 |
Amounts payable under tax receivable agreements | Deferred Tax Asset - Amortizable basis | ||||||
December 31, 2016 | $ | 586,246 | $ | 653,942 | |||
2017 Follow-On Offering | 96,406 | 113,419 | |||||
2017 Holdings Common Unit Exchanges | 9,993 | 11,756 | |||||
Amortization | — | (20,973 | ) | ||||
Payments under TRA | (22,788 | ) | — | ||||
June 30, 2017 | $ | 669,857 | $ | 758,144 |
As of June 30, 2017 | As of December 31, 2016 | ||||||
Deferred tax assets: | |||||||
Amortizable basis (1) | $ | 758,144 | $ | 653,942 | |||
Other (2) | 29,509 | 24,576 | |||||
Total deferred tax assets | 787,653 | 678,518 | |||||
Less: valuation allowance (3) | — | — | |||||
Net deferred tax assets | $ | 787,653 | $ | 678,518 | |||
(1) Represents the unamortized step-up of tax basis and other tax attributes from the merger and partnership unit sales and exchanges described above. These future tax benefits are subject to the TRA agreements. | |||||||
(2) Represents the net deferred tax assets associated with the merger described above and other miscellaneous deferred tax assets. | |||||||
(3) Artisan assessed whether the deferred tax assets would be realizable and determined based on its history of taxable income that the benefits would more likely than not be realized. Accordingly, no valuation allowance is required. |
As of June 30, 2017 | As of December 31, 2016 | ||||||
Unrealized gain on investments, net of tax | $ | 89 | $ | 37 | |||
Foreign currency translation gain (loss) | (1,474 | ) | (1,685 | ) | |||
Accumulated Other Comprehensive Income (Loss) | $ | (1,385 | ) | $ | (1,648 | ) |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
Basic and Diluted Earnings Per Share | 2017 | 2016 | 2017 | 2016 | |||||||||||
Numerator: | |||||||||||||||
Net income attributable to APAM | $ | 26,632 | $ | 18,384 | $ | 46,427 | $ | 34,645 | |||||||
Less: Allocation to participating securities | 6,339 | 4,121 | 9,198 | 6,878 | |||||||||||
Net income available to common stockholders | $ | 20,293 | $ | 14,263 | $ | 37,229 | $ | 27,767 | |||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding | 45,241,102 | 38,023,586 | 43,142,011 | 37,497,268 | |||||||||||
Earnings per share | $ | 0.45 | $ | 0.38 | $ | 0.86 | $ | 0.74 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||
Anti-Dilutive Weighted Average Shares Outstanding | 2017 | 2016 | 2017 | 2016 | |||||||
Holdings limited partnership units | 26,080,376 | 32,725,890 | 28,133,767 | 33,233,419 | |||||||
Unvested restricted share-based awards | 4,486,196 | 3,904,554 | 4,205,581 | 3,638,178 | |||||||
Total | 30,566,572 | 36,630,444 | 32,339,348 | 36,871,597 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Investment management fees: | |||||||||||||||
Artisan Funds | $ | 116,200 | $ | 115,061 | $ | 226,774 | $ | 226,236 | |||||||
Fee waiver / expense reimbursement: | |||||||||||||||
Artisan Funds | $ | 115 | $ | 222 | $ | 312 | $ | 356 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Investment management fees: | |||||||||||||||
Artisan Global Funds | $ | 7,706 | $ | 3,667 | $ | 14,516 | $ | 7,292 | |||||||
Fee waiver / expense reimbursement: | |||||||||||||||
Artisan Global Funds | $ | 54 | $ | 172 | $ | 70 | $ | 260 |
• | Our investment teams continue to generate strong absolute and relative investment returns for clients and investors. Eight of Artisan’s 11 investment strategies with at least a five-year track record have beaten their broad-based benchmark indexes since inception by an average of between 1.56% and 5.44% per year, after management fees. Those eight strategies represented over 90% of our AUM at the end of the second quarter. |
• | During the quarter, six of our eight investment teams experienced positive net client cash flows. Firm-wide net outflows of $1.5 billion were primarily driven by net outflows from the Non-U.S. Growth and U.S. Mid-Cap Growth strategies. |
• | Our Thematic team launched its first investment strategy, the Artisan Thematic strategy. |
• | Our Credit team launched its second investment strategy, which we are offering to clients and investors through a private fund structure. |
• | We hosted a four-day investment forum, bringing together all of our investment team leaders and representatives of over 100 current and prospective clients, consultants, and intermediary partners. |
• | We declared and paid dividends of $0.60 per share of Class A common stock. |
Amounts payable under tax receivable agreements | Deferred Tax Asset - Amortizable basis | ||||||
(unaudited; in millions) | |||||||
December 31, 2016 | $ | 586.2 | $ | 653.9 | |||
2017 Follow-On Offering and Exchanges | 106.5 | 125.2 | |||||
Amortization | — | (21.0 | ) | ||||
Payments under TRA | (22.8 | ) | — | ||||
June 30, 2017 | $ | 669.9 | $ | 758.1 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||
S&P 500 total returns | 3.1 | % | 2.5 | % | 9.3 | % | 3.8 | % | |||
MSCI All Country World total returns | 4.3 | % | 1.0 | % | 11.5 | % | 1.2 | % | |||
MSCI EAFE total returns | 6.1 | % | (1.5 | )% | 13.8 | % | (4.4 | )% | |||
Russell Midcap® total returns | 2.7 | % | 3.2 | % | 8.0 | % | 5.5 | % |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited; dollars in millions) | |||||||||||||||
Assets under management at period end | $ | 109,405 | $ | 94,959 | $ | 109,405 | $ | 94,959 | |||||||
Average assets under management (1) | $ | 107,250 | $ | 96,623 | $ | 104,210 | $ | 94,747 | |||||||
Net client cash flows | $ | (1,522 | ) | $ | (2,320 | ) | $ | (1,795 | ) | $ | (3,659 | ) | |||
Total revenues | $ | 196.2 | $ | 180.8 | $ | 380.3 | $ | 355.3 | |||||||
Weighted average fee (2) | 73.4 | bps | 75.2 | bps | 73.5 | bps | 75.3 | bps | |||||||
Operating margin | 33.9 | % | 32.6 | % | 32.7 | % | 32.0 | % | |||||||
Adjusted operating margin (3) | 37.1 | % | 36.6 | % | 36.1 | % | 36.2 | % | |||||||
(1) We compute average assets under management by averaging day-end assets under management for the applicable period. | |||||||||||||||
(2) We compute our weighted average fee by dividing annualized investment management fees by average assets under management for the applicable period. | |||||||||||||||
(3) Adjusted measures are non-GAAP measures and are explained and reconciled to the comparable GAAP measures in “Supplemental Non-GAAP Financial Information” below. |
• | investment performance, including fluctuations in both the financial markets and foreign currency exchange rates and the quality of our investment decisions; |
• | flows of client assets into and out of our various strategies and investment vehicles; |
• | our decision to close strategies or limit the growth of assets in a strategy or a vehicle when we believe it is in the best interest of our clients; as well as our decision to re-open strategies, in part or entirely; |
• | our ability to attract and retain qualified investment, management, and marketing and client service professionals; |
• | industry trends towards products or strategies that we do not offer; |
• | competitive conditions in the investment management and broader financial services sectors; and |
• | investor sentiment and confidence. |
For the Three Months Ended June 30, | Period-to-Period | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Beginning assets under management | $ | 103,762 | $ | 97,032 | $ | 6,730 | 6.9 | % | ||||||
Gross client cash inflows | 4,207 | 3,711 | 496 | 13.4 | % | |||||||||
Gross client cash outflows | (5,729 | ) | (6,031 | ) | 302 | 5.0 | % | |||||||
Net client cash flows | (1,522 | ) | (2,320 | ) | 798 | 34.4 | % | |||||||
Market appreciation (depreciation) (1) | 7,165 | 231 | 6,934 | 3,001.7 | % | |||||||||
Net transfers (2) | — | 16 | (16 | ) | (100.0 | )% | ||||||||
Ending assets under management | $ | 109,405 | $ | 94,959 | $ | 14,446 | 15.2 | % | ||||||
Average assets under management | $ | 107,250 | $ | 96,623 | $ | 10,627 | 11.0 | % | ||||||
(1) Includes the impact of translating the value of assets under management denominated in non-USD currencies into U.S. dollars. The impact was immaterial for the periods presented. (2) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy or investment vehicle and into another strategy or vehicle. | ||||||||||||||
For the Six Months Ended June 30, | Period-to-Period | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Beginning assets under management | $ | 96,845 | $ | 99,848 | $ | (3,003 | ) | (3.0 | )% | |||||
Gross client cash inflows | 9,367 | 8,364 | 1,003 | 12.0 | % | |||||||||
Gross client cash outflows | (11,162 | ) | (12,023 | ) | 861 | 7.2 | % | |||||||
Net client cash flows | (1,795 | ) | (3,659 | ) | 1,864 | 50.9 | % | |||||||
Market appreciation (depreciation) (1) | 14,355 | (1,230 | ) | 15,585 | 1,267.1 | % | ||||||||
Net transfers (2) | — | — | — | — | % | |||||||||
Ending assets under management | $ | 109,405 | $ | 94,959 | $ | 14,446 | 15.2 | % | ||||||
Average assets under management | $ | 104,210 | $ | 94,747 | $ | 9,463 | 10.0 | % | ||||||
(1) Includes the impact of translating the value of assets under management denominated in non-USD currencies into U.S. dollars. The impact was immaterial for the periods presented. (2) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy or investment vehicle and into another strategy or vehicle. |
Average Annual Value-Added(1) Since Inception (bps) | |||||||||||||
Inception | Strategy AUM | Average Annual Total Returns (gross) (%) | |||||||||||
Investment Team and Strategy | Date | (in $MM) | 1 YR | 3 YR | 5 YR | 10 YR | Inception | ||||||
Global Equity Team | |||||||||||||
Non-U.S. Growth Strategy | 1/1/1996 | $ | 26,083 | 15.26% | 0.94% | 9.28% | 3.72% | 10.29% | 550 | ||||
MSCI EAFE Index | 20.27% | 1.15% | 8.68% | 1.02% | 4.78% | ||||||||
Non-U.S. Small-Cap Growth Strategy | 1/1/2002 | $ | 795 | 12.50% | 0.39% | 10.60% | 5.05% | 13.25% | 295 | ||||
MSCI EAFE Small Cap Index | 23.18% | 5.59% | 12.93% | 3.40% | 10.29% | ||||||||
Global Equity Strategy | 4/1/2010 | $ | 1,316 | 16.40% | 6.24% | 13.56% | N/A | 11.96% | 381 | ||||
MSCI All Country World Index | 18.78% | 4.82% | 10.54% | N/A | 8.15% | ||||||||
U.S. Value Team | |||||||||||||
U.S. Mid-Cap Value Strategy | 4/1/1999 | $ | 6,701 | 17.62% | 4.92% | 12.66% | 8.23% | 13.40% | 405 | ||||
Russell Midcap® Index | 16.48% | 7.69% | 14.71% | 7.66% | 9.35% | ||||||||
Russell Midcap® Value Index | 15.93% | 7.45% | 15.13% | 7.23% | 10.04% | ||||||||
Value Equity Strategy | 7/1/2005 | $ | 1,991 | 19.72% | 6.64% | 12.65% | 6.43% | 8.46% | (1) | ||||
Russell 1000® Index | 18.03% | 9.25% | 14.66% | 7.28% | 8.47% | ||||||||
Russell 1000® Value Index | 15.53% | 7.35% | 13.93% | 5.56% | 7.37% | ||||||||
Growth Team | |||||||||||||
U.S. Mid-Cap Growth Strategy | 4/1/1997 | $ | 13,879 | 18.30% | 7.68% | 14.00% | 10.01% | 15.18% | 487 | ||||
Russell Midcap® Index | 16.48% | 7.69% | 14.71% | 7.66% | 10.30% | ||||||||
Russell Midcap® Growth Index | 17.05% | 7.82% | 14.18% | 7.87% | 8.89% | ||||||||
U.S. Small-Cap Growth Strategy | 4/1/1995 | $ | 2,202 | 21.35% | 9.55% | 14.29% | 8.76% | 10.32% | 97 | ||||
Russell 2000® Index | 24.60% | 7.35% | 13.69% | 6.91% | 9.36% | ||||||||
Russell 2000® Growth Index | 24.40% | 7.64% | 13.97% | 7.81% | 7.65% | ||||||||
Global Opportunities Strategy | 2/1/2007 | $ | 13,800 | 25.93% | 11.02% | 15.44% | 9.85% | 10.50% | 610 | ||||
MSCI All Country World Index | 18.78% | 4.82% | 10.54% | 3.71% | 4.40% | ||||||||
Global Value Team | |||||||||||||
Non-U.S. Value Strategy | 7/1/2002 | $ | 19,855 | 23.04% | 4.52% | 13.60% | 7.45% | 12.80% | 650 | ||||
MSCI EAFE Index | 20.27% | 1.15% | 8.68% | 1.02% | 6.31% | ||||||||
Global Value Strategy | 7/1/2007 | $ | 18,692 | 23.80% | 6.92% | 14.45% | 8.86% | 8.86% | 515 | ||||
MSCI All Country World Index | 18.78% | 4.82% | 10.54% | 3.71% | 3.71% | ||||||||
Emerging Markets Team | |||||||||||||
Emerging Markets Strategy | 7/1/2006 | $ | 277 | 27.10% | 5.04% | 5.95% | 1.86% | 5.63% | 40 | ||||
MSCI Emerging Markets Index | 23.75% | 1.07% | 3.95% | 1.91% | 5.23% | ||||||||
Credit Team | |||||||||||||
High Income Strategy(2) | 4/1/2014 | $ | 2,273 | 13.98% | 7.74% | N/A | N/A | 7.97% | 303 | ||||
BofA Merrill Lynch High Yield Master II Index | 12.75% | 4.47% | N/A | N/A | 4.94% | ||||||||
Developing World Team | |||||||||||||
Developing World Strategy | 7/1/2015 | $ | 1,496 | 27.40% | N/A | N/A | N/A | 10.54% | 623 | ||||
MSCI Emerging Markets Index | 23.75% | N/A | N/A | N/A | 4.31% | ||||||||
Thematic Team | |||||||||||||
Thematic Strategy | 5/1/2017 | $ | 12 | N/A | N/A | N/A | N/A | 4.14% | 210 | ||||
S&P 500 Market Index | N/A | N/A | N/A | N/A | 2.04% | ||||||||
Total Assets Under Management(3) | $ | 109,405 | |||||||||||
(1) Value-added is the amount in basis points by which the average annual gross composite return of each of our strategies has outperformed the broad-based market index most commonly used by our clients to compare the performance of the relevant strategy. Value-added for periods less than one year is not annualized. (2) The Artisan High Income strategy may hold loans and other security types, including securities with lower credit ratings, that may not be included in the BofA Merrill Lynch High Yield Master II Index. At times, this causes material differences in relative performance. (3) The Total Assets Under Management includes $33 million of AUM managed in a privately offered strategy managed by the Credit Team. |
By Investment Team | ||||||||||||||||||||||||||||
Three Months Ended | Global Equity | U.S. Value | Growth | Global Value | Emerging Markets | Credit | Developing World | Thematic(1) | Total | |||||||||||||||||||
June 30, 2017 | (unaudited; in millions) | |||||||||||||||||||||||||||
Beginning assets under management | $ | 27,272 | $ | 8,927 | $ | 27,737 | $ | 36,126 | $ | 258 | $ | 2,145 | $ | 1,297 | $ | — | $ | 103,762 | ||||||||||
Gross client cash inflows | 655 | 378 | 1,470 | 1,211 | 3 | 298 | 181 | 11 | 4,207 | |||||||||||||||||||
Gross client cash outflows | (2,257 | ) | (732 | ) | (1,393 | ) | (1,058 | ) | (1 | ) | (188 | ) | (100 | ) | — | (5,729 | ) | |||||||||||
Net client cash flows | (1,602 | ) | (354 | ) | 77 | 153 | 2 | 110 | 81 | 11 | (1,522 | ) | ||||||||||||||||
Market appreciation (depreciation) | 2,524 | 119 | 2,067 | 2,268 | 17 | 51 | 118 | 1 | 7,165 | |||||||||||||||||||
Net transfers(2) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Ending assets under management | $ | 28,194 | $ | 8,692 | $ | 29,881 | $ | 38,547 | $ | 277 | $ | 2,306 | $ | 1,496 | $ | 12 | $ | 109,405 | ||||||||||
Average assets under management | $ | 27,874 | $ | 8,755 | $ | 29,017 | $ | 37,694 | $ | 269 | $ | 2,220 | $ | 1,413 | $ | 11 | $ | 107,250 | ||||||||||
June 30, 2016 | ||||||||||||||||||||||||||||
Beginning assets under management | $ | 30,422 | $ | 9,776 | $ | 23,877 | $ | 30,770 | $ | 271 | $ | 1,343 | 573 | $ | — | $ | 97,032 | |||||||||||
Gross client cash inflows | 884 | 573 | 726 | 1,153 | 2 | 231 | 142 | — | 3,711 | |||||||||||||||||||
Gross client cash outflows | (1,549 | ) | (2,386 | ) | (1,183 | ) | (739 | ) | (68 | ) | (93 | ) | (13 | ) | — | (6,031 | ) | |||||||||||
Net client cash flows | (665 | ) | (1,813 | ) | (457 | ) | 414 | (66 | ) | 138 | 129 | — | (2,320 | ) | ||||||||||||||
Market appreciation (depreciation) | (435 | ) | 317 | 740 | (502 | ) | 8 | 82 | 21 | — | 231 | |||||||||||||||||
Net transfers(2) | — | — | — | 16 | — | — | — | — | 16 | |||||||||||||||||||
Ending assets under management | $ | 29,322 | $ | 8,280 | $ | 24,160 | $ | 30,698 | $ | 213 | $ | 1,563 | 723 | — | $ | 94,959 | ||||||||||||
Average assets under management | $ | 30,155 | $ | 8,895 | $ | 24,122 | $ | 31,097 | $ | 215 | $ | 1,472 | 667 | $ | — | $ | 96,623 | |||||||||||
(1) For the Thematic team, average assets under management is for the period between April 24, 2017, when the team’s strategy began investment operations, and June 30, 2017. (2) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy or investment vehicle and into another strategy or vehicle. |
By Investment Team | ||||||||||||||||||||||||||||
Six Months Ended | Global Equity | U.S. Value | Growth | Global Value | Emerging Markets | Credit | Developing World | Thematic(1) | Total | |||||||||||||||||||
June 30, 2017 | (unaudited; in millions) | |||||||||||||||||||||||||||
Beginning assets under management | $ | 25,510 | $ | 8,588 | $ | 25,714 | $ | 33,940 | $ | 228 | $ | 1,878 | $ | 987 | $ | — | $ | 96,845 | ||||||||||
Gross client cash inflows | 1,824 | 1,117 | 2,623 | 2,686 | 7 | 697 | 402 | 11 | 9,367 | |||||||||||||||||||
Gross client cash outflows | (3,916 | ) | (1,389 | ) | (2,866 | ) | (2,481 | ) | (3 | ) | (372 | ) | (135 | ) | — | (11,162 | ) | |||||||||||
Net client cash flows | (2,092 | ) | (272 | ) | (243 | ) | 205 | 4 | 325 | 267 | 11 | (1,795 | ) | |||||||||||||||
Market appreciation (depreciation) | 4,776 | 376 | 4,410 | 4,402 | 45 | 103 | 242 | 1 | 14,355 | |||||||||||||||||||
Net transfers(2) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Ending assets under management | $ | 28,194 | $ | 8,692 | $ | 29,881 | $ | 38,547 | $ | 277 | $ | 2,306 | $ | 1,496 | $ | 12 | $ | 109,405 | ||||||||||
Average assets under management | $ | 27,275 | $ | 8,769 | $ | 28,086 | $ | 36,409 | $ | 258 | $ | 2,125 | $ | 1,285 | $ | 11 | $ | 104,210 | ||||||||||
June 30, 2016 | ||||||||||||||||||||||||||||
Beginning assets under management | $ | 32,434 | $ | 10,369 | $ | 24,929 | $ | 30,182 | $ | 571 | $ | 989 | 374 | $ | — | $ | 99,848 | |||||||||||
Gross client cash inflows | 2,111 | 927 | 1,955 | 2,363 | 3 | 678 | 327 | — | 8,364 | |||||||||||||||||||
Gross client cash outflows | (3,435 | ) | (3,902 | ) | (2,437 | ) | (1,618 | ) | (397 | ) | (206 | ) | (28 | ) | — | (12,023 | ) | |||||||||||
Net client cash flows | (1,324 | ) | (2,975 | ) | (482 | ) | 745 | (394 | ) | 472 | 299 | — | (3,659 | ) | ||||||||||||||
Market appreciation (depreciation) | (1,788 | ) | 886 | (287 | ) | (229 | ) | 36 | 102 | 50 | — | (1,230 | ) | |||||||||||||||
Net transfers(2) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Ending assets under management | $ | 29,322 | $ | 8,280 | $ | 24,160 | $ | 30,698 | $ | 213 | $ | 1,563 | 723 | — | $ | 94,959 | ||||||||||||
Average assets under management | $ | 30,014 | $ | 9,193 | $ | 23,347 | $ | 30,004 | $ | 357 | $ | 1,297 | 535 | $ | — | $ | 94,747 | |||||||||||
(1) For the Thematic team, average assets under management is for the period between April 24, 2017, when the team’s strategy began investment operations, and June 30, 2017. (2) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy or investment vehicle and into another strategy or vehicle. |
As of June 30, 2017(1) | As of June 30, 2016(1) | ||||||||||||
$ in millions | % of total | $ in millions | % of total | ||||||||||
(unaudited) | (unaudited) | ||||||||||||
Institutional | $ | 72,934 | 66.6 | % | $ | 61,557 | 64.8 | % | |||||
Intermediary | 31,472 | 28.8 | % | 28,652 | 30.2 | % | |||||||
Retail | 4,999 | 4.6 | % | 4,750 | 5.0 | % | |||||||
Ending Assets Under Management | $ | 109,405 | 100.0 | % | $ | 94,959 | 100.0 | % | |||||
(1) The allocation of AUM by distribution channel involves the use of estimates and the exercise of judgment. |
Three Months Ended | Artisan Funds & Artisan Global Funds | Separate Accounts | Total | ||||||||
June 30, 2017 | (unaudited; in millions) | ||||||||||
Beginning assets under management | $ | 52,555 | $ | 51,207 | $ | 103,762 | |||||
Gross client cash inflows | 2,828 | 1,379 | 4,207 | ||||||||
Gross client cash outflows | (4,271 | ) | (1,458 | ) | (5,729 | ) | |||||
Net client cash flows | (1,443 | ) | (79 | ) | (1,522 | ) | |||||
Market appreciation (depreciation) | 3,513 | 3,652 | 7,165 | ||||||||
Net transfers (1) | (37 | ) | 37 | — | |||||||
Ending assets under management | $ | 54,588 | $ | 54,817 | $ | 109,405 | |||||
Average assets under management | $ | 53,957 | $ | 53,322 | $ | 107,250 | |||||
June 30, 2016 | |||||||||||
Beginning assets under management | $ | 52,113 | $ | 44,919 | $ | 97,032 | |||||
Gross client cash inflows | 2,763 | 948 | 3,711 | ||||||||
Gross client cash outflows | (4,737 | ) | (1,294 | ) | (6,031 | ) | |||||
Net client cash flows | (1,974 | ) | (346 | ) | (2,320 | ) | |||||
Market appreciation (depreciation) | 162 | 69 | 231 | ||||||||
Net transfers (1) | (95 | ) | 111 | 16 | |||||||
Ending assets under management | $ | 50,206 | $ | 44,753 | $ | 94,959 | |||||
Average assets under management | $ | 51,619 | $ | 45,004 | $ | 96,623 | |||||
(1) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy or investment vehicle and into another strategy or vehicle. |
Six Months Ended | Artisan Funds & Artisan Global Funds | Separate Accounts | Total | ||||||||
June 30, 2017 | (unaudited; in millions) | ||||||||||
Beginning assets under management | $ | 49,367 | $ | 47,478 | $ | 96,845 | |||||
Gross client cash inflows | 6,654 | 2,714 | 9,368 | ||||||||
Gross client cash outflows | (8,417 | ) | (2,745 | ) | (11,162 | ) | |||||
Net client cash flows | (1,763 | ) | (31 | ) | (1,794 | ) | |||||
Market appreciation (depreciation) | 7,068 | 7,286 | 14,354 | ||||||||
Net transfers (1) | (84 | ) | 84 | — | |||||||
Ending assets under management | $ | 54,588 | $ | 54,817 | $ | 109,405 | |||||
Average assets under management | $ | 52,825 | $ | 51,415 | $ | 104,210 | |||||
June 30, 2016 | |||||||||||
Beginning assets under management | $ | 53,526 | $ | 46,322 | $ | 99,848 | |||||
Gross client cash inflows | 6,430 | 1,934 | 8,364 | ||||||||
Gross client cash outflows | (8,958 | ) | (3,065 | ) | (12,023 | ) | |||||
Net client cash flows | (2,528 | ) | (1,131 | ) | (3,659 | ) | |||||
Market appreciation (depreciation) | (746 | ) | (484 | ) | (1,230 | ) | |||||
Net transfers (1) | (46 | ) | 46 | — | |||||||
Ending assets under management | $ | 50,206 | $ | 44,753 | $ | 94,959 | |||||
Average assets under management | $ | 50,752 | $ | 43,995 | $ | 94,747 | |||||
(1) Net transfers represent certain amounts that we have identified as having been transferred out of one investment strategy or investment vehicle and into another strategy or vehicle. |
For the Three Months Ended June 30, | For the Period-to-Period | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
Statements of operations data: | (unaudited; in millions, except per share data) | |||||||||||||
Revenues | $ | 196.2 | $ | 180.8 | $ | 15.4 | 9 | % | ||||||
Operating Expenses | ||||||||||||||
Total compensation and benefits | 102.8 | 95.2 | 7.6 | 8 | % | |||||||||
Other operating expenses | 26.9 | 26.7 | 0.2 | 1 | % | |||||||||
Total operating expenses | 129.7 | 121.9 | 7.8 | 6 | % | |||||||||
Total operating income | 66.5 | 58.9 | 7.6 | 13 | % | |||||||||
Non-operating income (loss) | ||||||||||||||
Interest expense | (2.9 | ) | (2.9 | ) | — | — | % | |||||||
Other non-operating income | 0.2 | — | 0.2 | 100 | % | |||||||||
Total non-operating income (loss) | (2.7 | ) | (2.9 | ) | 0.2 | 7 | % | |||||||
Income before income taxes | 63.8 | 56.0 | 7.8 | 14 | % | |||||||||
Provision for income taxes | 15.0 | 12.7 | 2.3 | 18 | % | |||||||||
Net income before noncontrolling interests | 48.8 | 43.3 | 5.5 | 13 | % | |||||||||
Less: Noncontrolling interests - Artisan Partners Holdings | 22.2 | 25.0 | (2.8 | ) | (11 | )% | ||||||||
Less: Noncontrolling interests - consolidated investment products | — | — | — | |||||||||||
Net income attributable to Artisan Partners Asset Management Inc. | $ | 26.6 | $ | 18.3 | $ | 8.3 | 45 | % | ||||||
Per Share Data | ||||||||||||||
Net income available to Class A common stock per basic and diluted share | $ | 0.45 | $ | 0.38 | ||||||||||
Weighted average basic and diluted shares of Class A common stock outstanding | 45,241,102 | 38,023,586 |
Separate Accounts | Artisan Funds and Artisan Global Funds | ||||||||||||||
For the Three Months Ended June 30, | 2017 | 2016 | 2017 | 2016 | |||||||||||
(unaudited; dollars in millions) | |||||||||||||||
Investment management fees | $ | 72.3 | $ | 62.0 | $ | 123.9 | $ | 118.8 | |||||||
Weighted average fee | 54.4 basis points | 55.3 basis points | 92.1 basis points | 92.5 basis points | |||||||||||
Percentage of ending AUM | 50 | % | 47 | % | 50 | % | 53 | % |
For the Three Months Ended June 30, | Period-to-Period | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Salaries, incentive compensation and benefits (1) | $ | 84.1 | $ | 77.2 | $ | 6.9 | 9 | % | ||||||
Restricted share-based award compensation expense | 12.3 | 10.8 | 1.5 | 14 | % | |||||||||
Total salaries, incentive compensation and benefits | 96.4 | 88.0 | 8.4 | 10 | % | |||||||||
Pre-offering related compensation - share-based awards | 6.4 | 7.2 | (0.8 | ) | (11 | )% | ||||||||
Total compensation and benefits | $ | 102.8 | $ | 95.2 | $ | 7.6 | 8 | % | ||||||
(1) Excluding restricted share-based award compensation expense |
For the Six Months Ended June 30, | Period-to-Period | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
Statements of operations data: | (unaudited; in millions, except per share data) | |||||||||||||
Revenues | $ | 380.3 | $ | 355.3 | $ | 25.0 | 7 | % | ||||||
Operating Expenses | ||||||||||||||
Total compensation and benefits | 202.4 | 190.5 | 11.9 | 6 | % | |||||||||
Other operating expenses | 53.4 | 51.1 | 2.3 | 5 | % | |||||||||
Total operating expenses | 255.8 | 241.6 | 14.2 | 6 | % | |||||||||
Total operating income | 124.5 | 113.7 | 10.8 | 9 | % | |||||||||
Non-operating income (loss) | ||||||||||||||
Interest expense | (5.8 | ) | (5.8 | ) | — | — | % | |||||||
Other non-operating income | 0.4 | — | 0.4 | — | % | |||||||||
Total non-operating income (loss) | (5.4 | ) | (5.8 | ) | 0.4 | 7 | % | |||||||
Income before income taxes | 119.1 | 107.9 | 11.2 | 10 | % | |||||||||
Provision for income taxes | 27.7 | 24.2 | 3.5 | 14 | % | |||||||||
Net income before noncontrolling interests | 91.4 | 83.7 | 7.7 | 9 | % | |||||||||
Less: Noncontrolling interests - Artisan Partners Holdings | 45.0 | 49.1 | (4.1 | ) | (8 | )% | ||||||||
Less: Noncontrolling interests - consolidated investment products | — | — | — | — | % | |||||||||
Net income attributable to Artisan Partners Asset Management Inc. | $ | 46.4 | $ | 34.6 | $ | 11.8 | 34 | % | ||||||
Per Share Data | ||||||||||||||
Basic and diluted earnings per share - Class A common shares | $ | 0.86 | $ | 0.74 | ||||||||||
Weighted average shares of Class A common stock outstanding | 43,142,011 | 37,497,268 |
Separate Accounts | Artisan Funds and Artisan Global Funds | ||||||||||||||
For the Six Months Ended June 30, | 2017 | 2016 | 2017 | 2016 | |||||||||||
(unaudited; dollars in millions) | |||||||||||||||
Investment management fees | $ | 139.0 | $ | 121.8 | $ | 241.3 | $ | 233.5 | |||||||
Weighted average fee | 54.4 basis points | 55.5 basis points | 92.1 basis points | 92.5 basis points | |||||||||||
Percentage of ending AUM | 50 | % | 47 | % | 50 | % | 53 | % |
For the Six Months Ended June 30, | Period-to-Period | |||||||||||||
2017 | 2016 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Salaries, incentive compensation and benefits (1) | $ | 165.6 | $ | 154.3 | $ | 11.3 | 7 | % | ||||||
Restricted share-based award compensation expense | 24.1 | 21.2 | 2.9 | 14 | % | |||||||||
Total salaries, incentive compensation and benefits | 189.7 | 175.5 | 14.2 | 8 | % | |||||||||
Pre-offering related compensation - share-based awards | 12.7 | 15.0 | (2.3 | ) | (15 | )% | ||||||||
Total compensation and benefits | $ | 202.4 | $ | 190.5 | $ | 11.9 | 6 | % | ||||||
(1) Excluding share-based compensation |
• | Adjusted net income represents net income excluding the impact of (1) pre-offering related compensation and (2) net gain (loss) on the tax receivable agreements (if any). Adjusted net income also reflects income taxes assuming the vesting of all unvested Class A share-based awards and as if all outstanding limited partnership units of Artisan Partners Holdings had been exchanged for Class A common stock of APAM on a one-for-one basis. Assuming full vesting and exchange, all income of Artisan Partners Holdings is treated as if it were allocated to APAM, and the adjusted provision for income taxes represents an estimate of income tax expense at an effective rate reflecting assumed federal, state, and local income taxes. The estimated adjusted effective tax rate was 37.0% for the periods presented. |
• | Adjusted net income per adjusted share is calculated by dividing adjusted net income by adjusted shares. The number of adjusted shares is derived by assuming the vesting of all unvested Class A share-based awards and the exchange of all outstanding limited partnership units of Artisan Partners Holdings for Class A common stock of APAM on a one-for-one basis. |
• | Adjusted operating income represents the operating income of the consolidated company excluding pre-offering related compensation. |
• | Adjusted operating margin is calculated by dividing adjusted operating income by total revenues. |
• | Adjusted EBITDA represents adjusted net income before taxes, interest expense and depreciation and amortization, adjusted to exclude the impact of net income attributable to non-controlling interests, pre-offering related compensation and net gain (loss) on the tax receivable agreements (if any). |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
(unaudited; in millions, except per share data) | |||||||||||||||
Reconciliation of non-GAAP financial measures: | |||||||||||||||
Net income attributable to Artisan Partners Asset Management Inc. (GAAP) | $ | 26.6 | $ | 18.3 | $ | 46.4 | $ | 34.6 | |||||||
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings | 22.2 | 25.0 | 45.0 | 49.1 | |||||||||||
Add back: Provision for income taxes | 15.0 | 12.7 | 27.7 | 24.2 | |||||||||||
Add back: Pre-offering related compensation - share-based awards | 6.4 | 7.2 | 12.7 | 15.0 | |||||||||||
Add back: Net (gain) loss on the tax receivable agreements | — | — | — | — | |||||||||||
Less: Adjusted provision for income taxes | 25.9 | 23.4 | 48.7 | 45.5 | |||||||||||
Adjusted net income (Non-GAAP) | $ | 44.3 | $ | 39.8 | $ | 83.1 | $ | 77.4 | |||||||
Average shares outstanding | |||||||||||||||
Class A common shares | 45.2 | 38.0 | 43.1 | 37.5 | |||||||||||
Assumed vesting or exchange of: | |||||||||||||||
Unvested Class A restricted share-based awards | 4.5 | 3.9 | 4.2 | 3.6 | |||||||||||
Artisan Partners Holdings units outstanding (noncontrolling interest) | 26.1 | 32.8 | 28.2 | 33.3 | |||||||||||
Adjusted shares | 75.8 | 74.7 | 75.5 | 74.4 | |||||||||||
Basic and diluted earnings per share (GAAP) | $ | 0.45 | $ | 0.38 | $ | 0.86 | $ | 0.74 | |||||||
Adjusted net income per adjusted share (Non-GAAP) | $ | 0.58 | $ | 0.53 | $ | 1.10 | $ | 1.04 | |||||||
Operating income (GAAP) | $ | 66.5 | $ | 58.9 | $ | 124.5 | $ | 113.7 | |||||||
Add back: Pre-offering related compensation - share-based awards | 6.4 | 7.2 | 12.7 | 15.0 | |||||||||||
Adjusted operating income (Non-GAAP) | $ | 72.9 | $ | 66.1 | $ | 137.2 | $ | 128.7 | |||||||
Operating margin (GAAP) | 33.9 | % | 32.6 | % | 32.7 | % | 32.0 | % | |||||||
Adjusted operating margin (Non-GAAP) | 37.1 | % | 36.6 | % | 36.1 | % | 36.2 | % | |||||||
Net income attributable to Artisan Partners Asset Management Inc. (GAAP) | $ | 26.6 | $ | 18.3 | $ | 46.4 | $ | 34.6 | |||||||
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings | 22.2 | 25.0 | 45.0 | 49.1 | |||||||||||
Add back: Pre-offering related compensation - share-based awards | 6.4 | 7.2 | 12.7 | 15.0 | |||||||||||
Add back: Net (gain) loss on the tax receivable agreements | — | — | — | — | |||||||||||
Add back: Interest expense | 2.9 | 2.9 | 5.8 | 5.8 | |||||||||||
Add back: Provision for income taxes | 15.0 | 12.7 | 27.7 | 24.2 | |||||||||||
Add back: Depreciation and amortization | 1.2 | 1.2 | 2.5 | 2.4 | |||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 74.3 | $ | 67.3 | $ | 140.1 | $ | 131.1 |
June 30, 2017 | December 31, 2016 | ||||||
(unaudited; in millions) | |||||||
Cash and cash equivalents | $ | 190.3 | $ | 156.8 | |||
Accounts receivable | $ | 67.7 | $ | 59.7 | |||
Undrawn commitment on revolving credit facility | $ | 100.0 | $ | 100.0 |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(unaudited, in millions) | ||||||||||||||||
Holdings Partnership Distributions to Limited Partners | $ | 38.2 | $ | 43.1 | $ | 54.8 | $ | 62.4 | ||||||||
Holdings Partnership Distributions to APAM | $ | 61.9 | $ | 50.8 | $ | 83.5 | $ | 73.2 | ||||||||
Total Holdings Partnership Distributions | $ | 100.1 | $ | 93.9 | $ | 138.3 | $ | 135.6 |
Type of Dividend | Class of Stock | For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||
Quarterly | Class A Common | $ | 0.60 | $ | 0.60 | $ | 1.20 | $ | 1.20 | |||||||||
Special Annual | Class A Common | $ | — | $ | — | $ | 0.36 | $ | 0.40 |
For the Six Months Ended June 30, | |||||||
2017 | 2016 | ||||||
(unaudited; in millions) | |||||||
Cash as of January 1 | $ | 156.8 | $ | 166.2 | |||
Net cash provided by operating activities | 169.4 | 184.1 | |||||
Net cash provided by (used in) investing activities | 0.8 | (3.9 | ) | ||||
Net cash used in financing activities | (136.7 | ) | (148.6 | ) | |||
Cash as of June 30 | $ | 190.3 | $ | 197.8 |
Exhibit No. | Description | |
31.1 | Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of the Company’s Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of the Company’s Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101 | The following Extensible Business Reporting Language (XBRL) documents are collectively included herewith as Exhibit 101: (i) the Unaudited Condensed Consolidated Statements of Financial Condition as of June 30, 2017 and December 31, 2016; (ii) the Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2017 and 2016; (iii) the Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2017 and 2016; (iv) the Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2017 and 2016; (v) the Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2017 and 2016 (vi) the Notes to Unaudited Consolidated Financial Statements as of and for the three months ended June 30, 2017 and 2016 |
/s/ Eric R. Colson |
Eric R. Colson President, Chief Executive Officer and Chairman of the Board (principal executive officer) |
/s/ Charles J. Daley, Jr. |
Charles J. Daley, Jr. Executive Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer) |
1. | I have reviewed this report on Form 10-Q of Artisan Partners Asset Management Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ Eric R. Colson |
Eric R. Colson President, Chief Executive Officer and Chairman of the Board (principal executive officer) |
1. | I have reviewed this report on Form 10-Q of Artisan Partners Asset Management Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
/s/ Charles J. Daley, Jr. |
Charles J. Daley, Jr. Executive Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer) |
• | The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
• | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Eric R. Colson |
Eric R. Colson President, Chief Executive Officer and Chairman of the Board (principal executive officer) |
• | The Quarterly Report on Form 10-Q of the Company for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Form 10-Q”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
• | The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Charles J. Daley, Jr. |
Charles J. Daley, Jr. Executive Vice President, Chief Financial Officer and Treasurer (principal financial and accounting officer) |
Document and Entity Information Document - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2017 |
Jul. 28, 2017 |
|
Document Information [Line Items] | ||
Entity Registrant Name | Artisan Partners Asset Management Inc. | |
Entity Central Index Key | 0001517302 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2017 | |
Document Fiscal Year Focus | 2017 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Class A Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 49,689,978 | |
Class B Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 12,360,212 | |
Class C Common Stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 13,537,807 |
Unaudited Consolidated Statements of Financial Condition (Parenthetical) - $ / shares |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Common stock, shares outstanding | 75,587,997 | 74,354,869 |
Class A Common Stock | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares outstanding | 49,689,978 | 42,149,436 |
Class B Common Stock | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares outstanding | 12,426,635 | 15,142,049 |
Class C Common Stock | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares outstanding | 13,471,384 | 17,063,384 |
Unaudited Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Other Comprehensive Income (Loss), Unrealized Gain (Loss) on Securities Arising During Period, Tax | $ 39 | $ 49 | $ 31 | $ 50 |
Nature of Business and Organization |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Nature of Business and Organization | Note 1. Nature of Business and Organization Nature of Business Artisan Partners Asset Management Inc. (“APAM”), through its subsidiaries, is an investment management firm focused on providing high-value added, active investment strategies to sophisticated clients globally. APAM and its subsidiaries are hereafter referred to collectively as “Artisan” or the “Company”. Artisan’s autonomous investment teams manage a broad range of U.S., non-U.S. and global investment strategies that are diversified by asset class, market cap and investment style. Strategies are offered through multiple investment vehicles to accommodate a broad range of client mandates. Artisan offers its investment management services primarily to institutions and through intermediaries that operate with institutional-like decision-making processes and have long-term investment horizons. Organization On March 12, 2013, APAM completed its initial public offering (the “IPO”). APAM was formed for the purpose of becoming the general partner of Artisan Partners Holdings LP (“Artisan Partners Holdings” or “Holdings”) in connection with the IPO. Holdings is a holding company for the investment management business conducted under the name “Artisan Partners”. The reorganization (“IPO Reorganization”) established the necessary corporate structure to complete the IPO while at the same time preserving the ability of the firm to conduct operations through Holdings and its subsidiaries. As the sole general partner, APAM controls the business and affairs of Holdings. As a result, APAM consolidates Holdings’ financial statements and records a noncontrolling interest for the equity interests in Holdings held by the limited partners of Holdings. At June 30, 2017, APAM held approximately 66% of the equity ownership interest in Holdings. Holdings, together with its wholly owned subsidiary, Artisan Investments GP LLC (“AIGP”), controls a 100% interest in Artisan Partners Limited Partnership (“APLP”), a multi-product investment management firm that is the principal operating subsidiary of Artisan Partners Holdings. APLP is registered as an investment adviser with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. APLP provides investment advisory services to separate accounts and pooled investment vehicles, including Artisan Partners Funds, Inc. (“Artisan Funds” or the “Funds”) and Artisan Partners Global Funds plc (“Artisan Global Funds”). Artisan Funds are a series of open-end, diversified mutual funds registered under the Investment Company Act of 1940, as amended. Artisan Global Funds is a family of Ireland-domiciled UCITS. 2017 Follow-On Offering On February 28, 2017, APAM completed a registered offering of 5,626,517 shares of Class A common stock (the “2017 Follow-On Offering”) and utilized all of the proceeds to purchase an aggregate of 5,626,517 common units of Artisan Partners Holdings at a price per unit of $28.88. The offering and subsequent purchase of units had the following impact on the consolidated financial statements:
Holdings Unit Exchanges Limited partners of Artisan Partners Holdings are entitled to exchange partnership units (along with a corresponding number of shares of Class B or C common stock of APAM) for shares of Class A common stock each quarter (the “Holdings Common Unit Exchanges”). The following partnership units were exchanged for APAM Class A common stock during the six months ended June 30, 2017:
The corresponding shares of APAM Class B and C common stock were immediately canceled upon exchange. The Holdings Common Unit Exchanges increased APAM’s equity ownership interest in Holdings and resulted in an increase to deferred tax assets and amounts payable under the tax receivable agreements. See Note 10, “Income Taxes and Related Payments”. |
Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2017 | |
Policy Text Block [Abstract] | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of presentation The accompanying financial statements are unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of such consolidated financial statements have been included. Such interim results are not necessarily indicative of full year results. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and accordingly they do not include all of the information and footnotes required in the annual consolidated financial statements and accompanying footnotes. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. As a result, the interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in APAM’s latest annual report on Form 10-K. The accompanying financial statements were prepared in accordance with U.S. GAAP and related rules and regulations of the SEC. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates or assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates or assumptions. Principles of consolidation Artisan’s policy is to consolidate all subsidiaries or other entities in which it has a controlling financial interest. The consolidation guidance requires an analysis to determine if an entity should be evaluated for consolidation using the voting interest entity (“VOE”) model or the variable interest entity (“VIE”) model. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests. Under the VIE model, controlling financial interest is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. The consolidated financial statements include the accounts of APAM and all subsidiaries or other entities in which APAM has a direct or indirect controlling financial interest. All material intercompany balances have been eliminated in consolidation. Artisan serves as the investment adviser to Artisan Funds, Artisan Global Funds and other investment products. Artisan Funds and Artisan Global Funds are corporate entities the business and affairs of which are managed by their respective boards of directors. The shareholders of the funds retain voting rights, including rights to elect and reelect members of their respective boards of directors. Each series of Artisan Funds is a VOE and is separately evaluated for consolidation under the VOE model. The shareholders of Artisan Global Funds lack simple majority liquidation rights, and as a result, Artisan Global Funds is evaluated for consolidation under the VIE model. Privately offered funds are also evaluated for consolidation under the VIE model. From time to time, the Company makes investments in Artisan Funds and Artisan Global Funds, which are made on the same terms as are available to other investors. If the investment results in a controlling financial interest, APAM consolidates the fund, and the underlying individual securities are accounted for as trading securities. Investments in which the Company does not have a controlling financial interest are classified as available-for-sale investments. As of June 30, 2017, Artisan does not have a controlling financial interest in any series of Artisan Funds or Artisan Global Funds and therefore does not consolidate these entities. Artisan manages the business and affairs of investment funds relating to the firm’s privately offered investment strategy. As of June 30, 2017, Artisan was deemed to have a controlling financial interest in these funds and, as a result, the funds are included in Artisan’s Consolidated Financial Statements. Because the funds are investment companies, Artisan has retained the specialized industry accounting principles for investment companies in its Consolidated Financial Statements. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details. Recent accounting pronouncements Accounting standards not yet adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes existing accounting standards for revenue recognition and creates a single framework. The guidance also changes the accounting for certain costs to obtain or fulfill a contract. The new guidance will be effective on January 1, 2018, and allows for either a full retrospective or modified retrospective transition method. The Company is currently evaluating its transition method and the potential capitalization of certain cash incentive compensation; however, based on current evaluations, the Company does not expect the adoption to have a material impact on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires all equity investments to be measured at fair value with changes in the fair value recognized through net income. ASU 2016-01 will be effective on January 1, 2018 and will result in a cumulative-effect adjustment to the Company’s Consolidated Statements of Financial Condition upon adoption. Upon adoption, the Company’s unrealized gains (losses) on available-for-sale investment securities will be recognized through net income, which will be a change from the current treatment of recognition in other comprehensive income (loss). In February 2016, the FASB issued ASU 2016-02, Leases, which introduces a lessee model that brings most leases on the balance sheet. The new guidance will be effective on January 1, 2019 and will require a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. The standard is expected to result in a significant increase in total assets and liabilities, but will not have a significant impact on the consolidated statement of operations. |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Note 3. Investment Securities The disclosures below include details of Artisan’s investments, excluding money market funds and consolidated funds. Investments held by consolidated investment products are described in Note 6, “Variable Interest Entities and Consolidated Investment Products”.
Artisan’s investments in mutual funds consist of investments in shares of Artisan Funds and Artisan Global Funds and are considered to be available-for-sale securities. As a result, unrealized gains (losses) are recorded to other comprehensive income (loss). As of June 30, 2017 and December 31, 2016, none of the Company’s investment securities were in an unrealized loss position. No impairment losses were recorded on these available-for-sale securities. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Note 4. Fair Value Measurements The table below presents information about Artisan’s assets and liabilities that are measured at fair value and the valuation techniques Artisan utilized to determine such fair value. The fair value of financial instruments held by consolidated investment products is presented in Note 6, “Variable Interest Entities and Consolidated Investment Products”. In accordance with ASC 820, fair value is defined as the price that Artisan would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. The following three-tier fair value hierarchy prioritizes the inputs used in measuring fair value:
The following provides the hierarchy of inputs used to derive fair value of Artisan’s assets and liabilities that are financial instruments as of June 30, 2017 and December 31, 2016:
Fair values determined based on Level 1 inputs utilize quoted market prices for identical assets. Level 1 assets generally consist of money market funds, open-end mutual funds and UCITS funds. There were no Level 2 or Level 3 assets or liabilities recorded at fair value as of June 30, 2017 and December 31, 2016. Artisan’s policy is to recognize transfers in and transfers out of the valuation levels as of the beginning of the reporting period. There were no transfers between Level 1, Level 2 or Level 3 securities during the six months ended June 30, 2017 and 2016. |
Borrowings |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Note 5. Borrowings Artisan’s borrowings consist of the following as of June 30, 2017 and December 31, 2016:
The fair value of borrowings was approximately $206.0 million as of June 30, 2017. Fair value was determined based on future cash flows, discounted to present value using current market interest rates. The inputs are categorized as Level 2 in the fair value hierarchy, as defined in Note 4, “Fair Value Measurements”. Interest expense incurred on the unsecured notes and revolving credit agreement was $2.8 million for the three months ended June 30, 2017 and 2016, and $5.5 million for the six months ended June 30, 2017 and 2016. As of June 30, 2017, the aggregate maturities of debt obligations, based on their contractual terms, are as follows:
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Variable Interest Entities and Consolidated Investment Products |
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Fair Value Measurements, Recurring and Non-recurring [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities and Consolidated Investment Products | Note 6. Variable Interest Entities and Consolidated Investment Products Artisan serves as the investment adviser for various types of investment products, consisting of both VIEs and VOEs. Artisan consolidates an investment product if it has a controlling financial interest in the entity, referred to as a consolidated investment product or CIP. In June 2017, Artisan established a privately offered investment strategy for which Artisan serves as the investment manager. Artisan manages the business and affairs of those privately offered funds. Third-party equity holders of the funds lack the ability to remove Artisan as the general partner, or otherwise divest Artisan of its control of the funds, and as a result the funds are evaluated for consolidation under the VIE model. Artisan made an initial seed investment of $20.0 million in the strategy and is considered to be the primary beneficiary of the funds as of June 30, 2017. Any management fees and incentive allocations earned from the privately offered strategy are eliminated upon consolidation. There were no such management fees or incentive allocations for the six months ended June 30, 2017. Artisan’s maximum exposure to loss in connection with the assets and liabilities of the privately offered strategy is limited to its direct equity investment, while the potential benefit is limited to the management fee and incentive allocation received and the return on its equity investment. With the exception of Artisan’s direct equity investment, the assets of the privately offered strategy are not available to Artisan’s creditors. In addition, third-party investors in the privately offered strategy have no recourse to the general credit of the Company. As of June 30, 2017, Artisan’s direct equity investment in the privately offered strategy was $20.0 million. Third-party investors’ ownership interest in the privately offered strategy is presented as redeemable noncontrolling interest in the Unaudited Consolidated Statements of Financial Condition as third-party investors have the right to withdraw their capital, subject to certain conditions. Net income attributable to third-party investors is reported as net income attributable to noncontrolling interests - consolidated investment products in the Unaudited Consolidated Statement of Operations. Fair Value Measurements - Consolidated Investment Products The carrying value of CIPs’ investments is also their fair value. Short and long positions on equity securities are valued based upon closing prices of the security on the exchange or market designated by the accounting agent or pricing vendor as the principal exchange. The closing price may represent last sale price, official closing price, a closing auction or other information depending on market convention. Short and long positions on fixed income instruments are valued at market value. Market values were generally evaluations based on the judgment of pricing vendors, which may consider the prices at which the instruments trade, broker-dealer quotations, pricing formulas, estimates of market values obtained from yield data relating to instruments with similar characteristics and/or discounted cash flow models that may be applicable. The following tables present the fair value hierarchy levels of assets and liabilities held by CIPs measured at fair value on a recurring basis as of June 30, 2017. There were no CIP assets or liabilities as of December 31, 2016.
Cash equivalents consisted of money market funds. Artisan’s policy is to recognize transfers in and transfers out of the valuation levels as of the beginning of the reporting period. There were no transfers between Level 1, Level 2 or Level 3 securities during the six months ended June 30, 2017. |
Noncontrolling interest - Holdings |
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Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling interest - Holdings | Note 7. Noncontrolling interest - Holdings Net income attributable to noncontrolling interests - Artisan Partners Holdings in the Unaudited Consolidated Statements of Operations represents the portion of earnings or loss attributable to the equity ownership interests in Holdings held by the limited partners of Holdings. As of June 30, 2017, APAM held approximately 66% of the equity ownership interests in Holdings. In order to maintain the one-to-one correspondence of the number of Holdings partnership units and APAM common shares, Holdings will issue one general partner (“GP”) unit to APAM for each share of Class A common stock issued by APAM. For the six months ended June 30, 2017, APAM’s equity ownership interest in Holdings has increased as a result of the following transactions:
(1) The impact of the transaction on APAM’s ownership percentage was less than 1%. Since APAM continues to have a controlling interest in Holdings, changes in ownership of Holdings are accounted for as equity transactions. Additional paid-in capital and noncontrolling interest - Artisan Partners Holdings in the Unaudited Condensed Consolidated Statements of Financial Condition are adjusted to reallocate Holdings’ historical equity to reflect the change in APAM’s ownership of Holdings. The reallocation of equity had the following impact on the Unaudited Condensed Consolidated Statements of Financial Condition:
In addition to the reallocation of historical equity, the change in ownership resulted in an increase to deferred tax assets and additional paid-in capital of $2.6 million for the six months ended June 30, 2017 and $2.5 million for the six months ended June 30, 2016. |
Stockholders' Equity |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Note 8. Stockholders’ Equity APAM - Stockholders’ Equity As of June 30, 2017 and December 31, 2016, APAM had the following authorized and outstanding equity:
APAM is dependent on cash generated by Holdings to fund any dividends. Generally, Holdings will make distributions to all of its partners, including APAM, based on the proportionate ownership each holds in Holdings. APAM will fund dividends to its stockholders from its proportionate share of those distributions after provision for its taxes and other obligations. APAM declared and paid the following dividends per share during the three and six months ended June 30, 2017 and 2016:
The following table summarizes APAM’s stock transactions for the six months ended June 30, 2017:
Each Class A, Class B, Class D and Class E common unit of Holdings (together with the corresponding share of Class B or Class C common stock) is exchangeable for one share of Class A common stock. The corresponding shares of Class B and Class C common stock are immediately canceled upon any such exchange. Upon termination of employment with Artisan, an employee-partner’s unvested Class B common units are forfeited. Generally, the employee-partner’s vested Class B common units are exchanged for Class E common units. The employee-partner’s shares of Class B common stock are canceled; and APAM issues the former employee-partner a number of shares of Class C common stock equal to the former employee-partner’s number of Class E common units. Class E common units are exchangeable for Class A common stock subject to the same restrictions and limitations on exchange applicable to the other common units of Holdings. Artisan Partners Holdings - Partners’ Equity Holdings makes distributions of its net income to the holders of its partnership units for income taxes as required under the terms of the partnership agreement and also makes additional distributions under the terms of the partnership agreement. The distributions are recorded in the financial statements on the declaration date, or on the payment date in lieu of a declaration date. Holdings’ partnership distributions for the three and six months ended June 30, 2017 and 2016, were as follows:
The distributions are recorded as a reduction to consolidated stockholders’ equity, with the exception of distributions made to APAM, which are eliminated upon consolidation. |
Compensation and Benefits |
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Compensation and Benefits | Note 9. Compensation and Benefits Total compensation and benefits consists of the following:
Incentive compensation Cash incentive compensation paid to members of Artisan’s investment teams and members of its distribution teams is generally based on formulas that are tied directly to revenues. These payments are made in the quarter following the quarter in which the incentive was earned with the exception of fourth quarter payments which are paid in the fourth quarter of the year. Cash incentive compensation paid to most other employees is discretionary and subjectively determined based on individual performance and Artisan’s overall results during the applicable year and has historically been paid in the fourth quarter of the year. The cash incentive compensation earned by executive officers for the year ended December 31, 2016, was paid in the three months ended March 31, 2017. Restricted share-based awards Artisan has registered 14,000,000 shares of Class A common stock for issuance under the 2013 Omnibus Incentive Compensation Plan (the “Plan”). Pursuant to the Plan, APAM has granted a combination of restricted stock awards and restricted stock units (collectively referred to as “restricted share-based awards”) of Class A common stock to employees. The restricted share-based awards generally vest on a pro rata basis over five years. Certain share-based awards will vest upon a combination of both (1) pro-rata annual time vesting and (2) qualifying retirement (as defined in the award agreements). Unvested awards are subject to forfeiture upon termination of employment. Grantees receiving the awards are entitled to dividends on unvested and vested shares and units. 7,998,198 shares of Class A common stock were reserved and available for issuance under the Plan as of June 30, 2017. During the six months ended June 30, 2017, Artisan granted 1,267,250 restricted stock awards and 1,250 restricted stock units of Class A common stock to employees of the Company. Total compensation expense associated with the 2017 grants is expected to be approximately $35.9 million. Compensation expense related to the restricted share-based awards is recognized based on the estimated grant date fair value on a straight-line basis over the requisite service period of the award. The initial requisite service period is generally five years for restricted share-based awards. The Company’s accounting policy is to record the impact of forfeitures when they occur. 3,108 restricted share-based awards were forfeited during the six months ended June 30, 2017. The following table summarizes the restricted share-based award activity for the six months ended June 30, 2017:
Compensation expense recognized related to the restricted share-based awards was $12.3 million and $10.8 million for the three months ended June 30, 2017 and 2016, respectively, and $24.1 million and $21.2 million for the six months ended June 30, 2017 and 2016, respectively. The unrecognized compensation expense for the unvested awards as of June 30, 2017 was $122.7 million with a weighted average recognition period of 3.3 years remaining. The initial requisite service period and remaining weighted average recognition period for all types of restricted share-based awards are substantially equivalent. During the six months ended June 30, 2017, the Company withheld a total of 31,014 restricted shares as a result of net share settlements to satisfy employee tax withholding obligations. The Company paid $0.9 million in employee tax withholding obligations related to these settlements during the six months ended June 30, 2017. These net share settlements had the effect of shares repurchased and retired by the Company, as they reduced the number of shares outstanding. Pre-offering related compensation - share-based awards Holdings historically granted Class B share-based awards to certain employees. These awards vested over a period of five years. Prior to the IPO, all vested Class B awards were subject to mandatory redemption on termination of employment for any reason and were reflected as liabilities measured at fair value; unvested Class B awards were forfeited on termination of employment. The vested Class B liability awards of a terminated employee were historically redeemed in cash in annual installments, generally over the five years following termination of employment. The remaining $0.5 million of redemption payments for Class B awards of partners whose services to Holdings terminated prior to the IPO was paid during the six months ended June 30, 2017. As a part of the IPO Reorganization, the Class B grant agreements were amended to eliminate the cash redemption feature. The amendment was considered a modification under ASC 718 and the Class B awards have been classified as equity awards since such modification. Compensation expense is recorded for unvested Class B awards on a straight-line basis over the remaining vesting period. The following table summarizes the activity related to unvested Class B awards for the six months ended June 30, 2017:
Compensation expense recognized related to the unvested Class B awards was $6.4 million and $7.2 million for the three months ended June 30, 2017 and 2016, respectively, and $12.7 million and $15.0 million for the six months ended June 30, 2017 and 2016, respectively. There is no remaining unrecognized compensation expense for the unvested Class B awards as of June 30, 2017, as the Class B awards became fully vested on July 1, 2017. |
Income Taxes and Related Payments |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes and related payments | Note 10. Income Taxes and Related Payments APAM is subject to U.S. federal, state and local income taxation on APAM’s allocable portion of Holdings’ income. APAM’s effective income tax rate was lower than the U.S. federal statutory rate of 35% primarily due to a rate benefit attributable to the fact that, for the six months ended June 30, 2017, approximately 38% of Artisan Partners Holdings’ full year projected taxable earnings were attributable to other partners and not subject to corporate-level taxes. The effective tax rate was also lower due to dividends paid on unvested share-based awards, net of higher tax expense related to the vesting of restricted share-based awards. These favorable items are partially offset by the impact of certain permanent items, primarily attributable to pre-IPO share-based compensation expenses, that are not deductible for tax purposes. Components of the provision for income taxes consist of the following:
In connection with the IPO, APAM entered into two tax receivable agreements (“TRAs”). The first TRA generally provides for the payment by APAM to a private equity fund (the “Pre-H&F Corp Merger Shareholder”) of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) the tax attributes of the preferred units APAM acquired in the merger of a wholly-owned subsidiary of the Pre-H&F Corp Merger Shareholder into APAM in March 2013, (ii) net operating losses available as a result of the merger and (iii) tax benefits related to imputed interest. The second TRA generally provides for the payment by APAM to current or former limited partners of Holdings of 85% of the applicable cash savings, if any, of U.S. federal, state and local income taxes that APAM actually realizes (or is deemed to realize in certain circumstances) as a result of (i) certain tax attributes of their partnership units sold to APAM or exchanged (for shares of Class A common stock, convertible preferred stock or other consideration) and that are created as a result of such sales or exchanges and payments under the TRAs and (ii) tax benefits related to imputed interest. Under both agreements, APAM generally will retain the benefit of the remaining 15% of the applicable tax savings. For purposes of the TRAs, cash savings of income taxes are calculated by comparing APAM’s actual income tax liability to the amount it would have been required to pay had it not been able to utilize any of the tax benefits subject to the TRAs, unless certain assumptions apply. The TRAs will continue in effect until all such tax benefits have been utilized or expired, unless APAM exercises its right to terminate the agreements or payments under the agreements are accelerated in the event that APAM materially breaches any of its material obligations under the agreements. The actual increase in tax basis, as well as the amount and timing of any payments under these agreements, will vary depending upon a number of factors, including the timing of sales or exchanges by the holders of limited partnership units, the price of the Class A common stock at the time of such sales or exchanges, whether such sales or exchanges are taxable, the amount and timing of the taxable income APAM generates in the future and the tax rate then applicable and the portion of APAM’s payments under the TRAs constituting imputed interest or depreciable basis or amortizable basis. Payments under the TRAs, if any, will be made pro rata among all TRA counterparties entitled to payments on an annual basis to the extent APAM has sufficient taxable income to utilize the increased depreciation and amortization charges and imputed interest deductions. Artisan expects to make one or more payments under the TRAs, to the extent they are required, prior to or within 125 days after APAM’s U.S. federal income tax return is filed for each fiscal year. Interest on the TRA payments will accrue at a rate equal to one-year LIBOR plus 100 basis points two days prior to the due date (without extension) of such tax return until such payments are made. Amounts payable under tax receivable agreements are estimates which may be impacted by factors, including but not limited to, expected tax rates, projected taxable income, and projected ownership levels and are subject to change. Changes in the estimates of amounts payable under tax receivable agreements are recorded as non-operating income (loss) in the Consolidated Statements of Operations. The change in the Company’s deferred tax assets related to the tax benefits described above and the change in corresponding amounts payable under the TRAs for the six months ended June 30, 2017 is summarized as follows:
Net deferred tax assets comprise the following:
Accounting standards establish a minimum threshold for recognizing, and a system for measuring, the benefits of income tax return positions in financial statements. There were no uncertain tax positions recorded as of June 30, 2017 and December 31, 2016. In the normal course of business, Artisan is subject to examination by federal and certain state, local and foreign tax regulators. As of June 30, 2017, U.S. federal income tax returns for the years 2014 through 2015 are open and therefore subject to examination. State and local tax returns are generally subject to examination from 2013 to 2015. Foreign tax returns are generally subject to examination from 2013 to 2015. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Note 11. Accumulated Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss), net of tax, in the accompanying Condensed Consolidated Statements of Financial Condition represents the portion of accumulated other comprehensive income attributable to APAM, and consists of the following:
Comprehensive income (loss) attributable to noncontrolling interests - Artisan Partners Holdings in the Consolidated Statements of Comprehensive Income (Loss) represents the portion of comprehensive income (loss) attributable to the equity ownership interests in Holdings held by the limited partners of Holdings. |
Earnings Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Note 12. Earnings Per Share Basic earnings per share is computed under the two-class method by dividing income available to Class A common stockholders by the weighted average number of Class A common shares outstanding during the period. Unvested restricted share-based awards are excluded from the number of Class A common shares outstanding for the basic earnings per share calculation because the shares have not yet been earned by employees. Income available to Class A common stockholders is computed by reducing net income attributable to APAM by earnings (distributed and undistributed) allocated to participating securities, according to their respective rights to participate in those earnings. Unvested share-based awards are participating securities because the awards include non-forfeitable dividend rights during the vesting period. Class B and Class C common shares do not share in profits of APAM and therefore are not reflected in the calculations. The computation of basic and diluted earnings per share under the two-class method for the three and six months ended June 30, 2017 and 2016 were as follows:
Allocation to participating securities in the table above generally represents dividends paid to holders of unvested restricted share-based awards and reduces net income available to common stockholders. There were no dilutive securities outstanding during the three and six months ended June 30, 2017 and 2016. The Holdings limited partnership units are anti-dilutive primarily due to the impact of public company expenses and unrecognized share-based compensation expense. Unvested restricted share-based awards are considered participating securities and are therefore anti-dilutive. The following table summarizes the weighted-average shares outstanding that are excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive:
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Indemnifications |
6 Months Ended |
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Jun. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Indemnifications | Note 13. Indemnifications In the normal course of business, APAM enters into agreements that include indemnities in favor of third parties. Holdings has also agreed to indemnify APAM as its general partner, Artisan Investment Corporation (“AIC”) as its former general partner, the directors and officers of APAM, the directors and officers of AIC as its former general partner, the members of its former Advisory Committee, and its partners, directors, officers, employees and agents. Holdings’ subsidiaries may also have similar agreements to indemnify their respective general partner(s), directors, officers, directors and officers of their general partner(s), partners, members, employees, and agents. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against us that have not yet occurred. APAM maintains insurance policies that may provide coverage against certain claims under these indemnities. |
Related Party Transactions |
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Related Party Transactions | Note 14. Related Party Transactions Several of the current named executive officers of APAM and certain members of APAM’s board (or their affiliates) are limited partners of Holdings. As a result, certain transactions (such as TRA payments) between Artisan and the limited partners of Holdings are considered to be related party transactions with respect to these persons. Affiliate transactions—Artisan Funds Artisan has an agreement to serve as the investment adviser to Artisan Funds, with which certain Artisan employees are affiliated. Under the terms of the agreement, which generally is reviewed and continued by the board of directors of Artisan Funds annually, a fee is paid to Artisan based on an annual percentage of the average daily net assets of each Artisan Fund ranging from 0.625% to 1.25%. Artisan generally collects revenues related to these services on the last business day of each month and records them in Management Fees in the Consolidated Statement of Operations. Artisan has contractually agreed to waive its management fees or reimburse for expenses incurred to the extent necessary to limit annualized ordinary operating expenses incurred by certain of the Artisan Funds to not more than a fixed percentage (ranging from 0.88% to 1.50%) of a Fund’s average daily net assets. In addition, Artisan may voluntarily waive fees or reimburse any of the Artisan Funds for other expenses. The officers and a director of Artisan Funds who are affiliated with Artisan receive no compensation from the funds. Fees for managing the Funds and amounts waived or reimbursed by Artisan for fees and expenses (including management fees) are as follows:
Affiliate transactions—Artisan Global Funds Artisan has an agreement to serve as the investment manager to Artisan Global Funds, with which certain Artisan employees are affiliated. Under the terms of these agreements, a fee is paid based on an annual percentage of the average daily net assets of each fund ranging from 0.75% to 1.75%. Artisan reimburses each sub-fund of Artisan Global Funds to the extent that sub-fund’s expenses, not including Artisan’s fee, exceed certain levels, which range from 0.10% to 0.20%. In addition, Artisan may voluntarily waive fees or reimburse any of the Artisan Global Funds for other expenses. The directors of Artisan Global Funds who are affiliated with Artisan receive no compensation from the funds. Accounts receivable included $2.1 million and $1.8 million due from Artisan Global Funds as of June 30, 2017 and December 31, 2016, respectively. Fees for managing Artisan Global Funds and amounts reimbursed to Artisan Global Funds by Artisan are as follows:
Affiliate transactions—Privately Offered Funds Pursuant to written agreements, Artisan serves as the investment manager of certain privately offered investment funds constituting the firm’s privately offered strategy. Under the terms of these agreements, Artisan earns a management fee and is entitled to receive an allocation of profits. Artisan made an initial seed investment of $20.0 million in the privately offered investment funds. Certain related parties, including employees, officers and members of the Company’s board invested an additional $12.7 million in the funds. These related party investors do not pay a management fee or incentive allocation. In addition, for a period of time following the formation of the privately offered funds, Artisan has agreed to reimburse the funds to the extent that expenses, excluding Artisan’s management fee and transaction related costs, exceed 1.00% per annum of the net assets of the funds. Artisan may also voluntarily waive fees or reimburse the funds for other expenses. Expense reimbursements totaled $33 thousand for the three months ended June 30, 2017. |
Subsequent Events |
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Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 15. Subsequent Events Distributions and dividends On July 27, 2017, APAM, acting as the general partner of Artisan Partners Holdings, declared a distribution by Artisan Partners Holdings of $39.3 million to holders of Artisan Partners Holdings partnership units, including APAM. On the same date, the board of directors of APAM declared a quarterly dividend of $0.60 per share of Class A common stock. The APAM dividend is payable on August 31, 2017, to shareholders of record as of August 17, 2017. |
Summary of Significant Accounting Policies (Policies) |
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Jun. 30, 2017 | |
Policy Text Block [Abstract] | |
Basis of presentation | Basis of presentation The accompanying financial statements are unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of such consolidated financial statements have been included. Such interim results are not necessarily indicative of full year results. The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and accordingly they do not include all of the information and footnotes required in the annual consolidated financial statements and accompanying footnotes. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. As a result, the interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in APAM’s latest annual report on Form 10-K. The accompanying financial statements were prepared in accordance with U.S. GAAP and related rules and regulations of the SEC. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates or assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates or assumptions. |
Principles of consolidation | Principles of consolidation Artisan’s policy is to consolidate all subsidiaries or other entities in which it has a controlling financial interest. The consolidation guidance requires an analysis to determine if an entity should be evaluated for consolidation using the voting interest entity (“VOE”) model or the variable interest entity (“VIE”) model. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests. Under the VIE model, controlling financial interest is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses. The consolidated financial statements include the accounts of APAM and all subsidiaries or other entities in which APAM has a direct or indirect controlling financial interest. All material intercompany balances have been eliminated in consolidation. Artisan serves as the investment adviser to Artisan Funds, Artisan Global Funds and other investment products. Artisan Funds and Artisan Global Funds are corporate entities the business and affairs of which are managed by their respective boards of directors. The shareholders of the funds retain voting rights, including rights to elect and reelect members of their respective boards of directors. Each series of Artisan Funds is a VOE and is separately evaluated for consolidation under the VOE model. The shareholders of Artisan Global Funds lack simple majority liquidation rights, and as a result, Artisan Global Funds is evaluated for consolidation under the VIE model. Privately offered funds are also evaluated for consolidation under the VIE model. From time to time, the Company makes investments in Artisan Funds and Artisan Global Funds, which are made on the same terms as are available to other investors. If the investment results in a controlling financial interest, APAM consolidates the fund, and the underlying individual securities are accounted for as trading securities. Investments in which the Company does not have a controlling financial interest are classified as available-for-sale investments. As of June 30, 2017, Artisan does not have a controlling financial interest in any series of Artisan Funds or Artisan Global Funds and therefore does not consolidate these entities. Artisan manages the business and affairs of investment funds relating to the firm’s privately offered investment strategy. As of June 30, 2017, Artisan was deemed to have a controlling financial interest in these funds and, as a result, the funds are included in Artisan’s Consolidated Financial Statements. Because the funds are investment companies, Artisan has retained the specialized industry accounting principles for investment companies in its Consolidated Financial Statements. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details. |
Recent accounting pronouncements | Recent accounting pronouncements Accounting standards not yet adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which supersedes existing accounting standards for revenue recognition and creates a single framework. The guidance also changes the accounting for certain costs to obtain or fulfill a contract. The new guidance will be effective on January 1, 2018, and allows for either a full retrospective or modified retrospective transition method. The Company is currently evaluating its transition method and the potential capitalization of certain cash incentive compensation; however, based on current evaluations, the Company does not expect the adoption to have a material impact on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires all equity investments to be measured at fair value with changes in the fair value recognized through net income. ASU 2016-01 will be effective on January 1, 2018 and will result in a cumulative-effect adjustment to the Company’s Consolidated Statements of Financial Condition upon adoption. Upon adoption, the Company’s unrealized gains (losses) on available-for-sale investment securities will be recognized through net income, which will be a change from the current treatment of recognition in other comprehensive income (loss). In February 2016, the FASB issued ASU 2016-02, Leases, which introduces a lessee model that brings most leases on the balance sheet. The new guidance will be effective on January 1, 2019 and will require a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the impact of adoption on its consolidated financial statements. The standard is expected to result in a significant increase in total assets and liabilities, but will not have a significant impact on the consolidated statement of operations. |
Nature of Business and Organization (Tables) |
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Schedule of Capital Units | The following partnership units were exchanged for APAM Class A common stock during the six months ended June 30, 2017:
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Investment Securities (Tables) |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of available-for-sale securities | The disclosures below include details of Artisan’s investments, excluding money market funds and consolidated funds. Investments held by consolidated investment products are described in Note 6, “Variable Interest Entities and Consolidated Investment Products”.
|
Fair Value Measurements (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value hierarchy of assets and liabilities | The following provides the hierarchy of inputs used to derive fair value of Artisan’s assets and liabilities that are financial instruments as of June 30, 2017 and December 31, 2016:
|
Borrowings (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of borrowings | Artisan’s borrowings consist of the following as of June 30, 2017 and December 31, 2016:
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Aggregate maturities of debt obligations | As of June 30, 2017, the aggregate maturities of debt obligations, based on their contractual terms, are as follows:
|
Variable Interest Entities and Consolidated Investment Products (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity, Primary Beneficiary | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring | The following tables present the fair value hierarchy levels of assets and liabilities held by CIPs measured at fair value on a recurring basis as of June 30, 2017. There were no CIP assets or liabilities as of December 31, 2016.
|
Noncontrolling interest - Holdings (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity ownership Interests in Holdings | For the six months ended June 30, 2017, APAM’s equity ownership interest in Holdings has increased as a result of the following transactions:
(1) The impact of the transaction on APAM’s ownership percentage was less than 1%. |
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Change in ownership | The reallocation of equity had the following impact on the Unaudited Condensed Consolidated Statements of Financial Condition:
|
Stockholders' Equity (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Authorized and outstanding equity | As of June 30, 2017 and December 31, 2016, APAM had the following authorized and outstanding equity:
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Dividends Declared | APAM declared and paid the following dividends per share during the three and six months ended June 30, 2017 and 2016:
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Issuance (Cancellation) of Shares Disclosure | The following table summarizes APAM’s stock transactions for the six months ended June 30, 2017:
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Distributions Made to Limited Partner, by Distribution | Holdings’ partnership distributions for the three and six months ended June 30, 2017 and 2016, were as follows:
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Compensation and Benefits (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Compensation Expense | Total compensation and benefits consists of the following:
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Restricted Share-Based Award Activity | The following table summarizes the restricted share-based award activity for the six months ended June 30, 2017:
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Class B Award Activity | The following table summarizes the activity related to unvested Class B awards for the six months ended June 30, 2017:
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Income Taxes and Related Payments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of the provision for income taxes | Components of the provision for income taxes consist of the following:
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Schedule of Other Assets and Other Liabilities | The change in the Company’s deferred tax assets related to the tax benefits described above and the change in corresponding amounts payable under the TRAs for the six months ended June 30, 2017 is summarized as follows:
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Components of deferred tax assets | Net deferred tax assets comprise the following:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss), net of tax, in the accompanying Condensed Consolidated Statements of Financial Condition represents the portion of accumulated other comprehensive income attributable to APAM, and consists of the following:
|
Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic, by Common Class, Including Two Class Method | The computation of basic and diluted earnings per share under the two-class method for the three and six months ended June 30, 2017 and 2016 were as follows:
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Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the weighted-average shares outstanding that are excluded from the calculation of diluted earnings per share because their effect would have been anti-dilutive:
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Related Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Artisan Funds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions | Fees for managing the Funds and amounts waived or reimbursed by Artisan for fees and expenses (including management fees) are as follows:
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Artisan Global Funds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions | Fees for managing Artisan Global Funds and amounts reimbursed to Artisan Global Funds by Artisan are as follows:
|
Investment Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Cost | $ 3,156 | $ 6,194 |
Unrealized Gains | 216 | 103 |
Unrealized Losses | 0 | 0 |
Fair Value | $ 3,372 | $ 6,297 |
Investment Securities Other Information (Details) - USD ($) |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ 0 | $ 0 |
Available-for-sale Securities, Unrealized Losses | 0 | 0 |
Available-for-sale Securities, Impairment Losses | $ 0 | $ 0 |
Fair Value Measurements - Fair value hierarchy of assets and liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 81,350 | $ 64,170 |
Mutual funds | 3,372 | 6,297 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 81,350 | 64,170 |
Mutual funds | 3,372 | 6,297 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Mutual funds | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Mutual funds | $ 0 | $ 0 |
Borrowings - Components of Borrowings (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 200,000 | $ 200,000 |
Senior notes | Series A | ||
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 60,000 | $ 60,000 |
Interest rate per annum | 4.98% | 4.98% |
Senior notes | Series B | ||
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 50,000 | $ 50,000 |
Interest rate per annum | 5.32% | 5.32% |
Senior notes | Series C | ||
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 90,000 | $ 90,000 |
Interest rate per annum | 5.82% | 5.82% |
Revolving credit agreement | ||
Debt Instrument [Line Items] | ||
Outstanding Balance | $ 0 | $ 0 |
Borrowings - Aggregate Maturities of Debt Obligations (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Debt Disclosure [Abstract] | ||
2017 | $ 60,000 | |
2018 | 0 | |
2019 | 50,000 | |
2020 | 0 | |
2021 | 0 | |
Thereafter | 90,000 | |
Borrowings | $ 200,000 | $ 200,000 |
Borrowings - Additional Information (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Debt Instrument [Line Items] | ||||
Interest expense incurred on debt and credit facilities | $ 2.8 | $ 2.8 | $ 5.5 | $ 5.5 |
Level 2 | ||||
Debt Instrument [Line Items] | ||||
Borrowings fair value | $ 206.0 | $ 206.0 |
Stockholders' Equity Dividends Declared (Details) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Dividends Payable [Line Items] | ||||
Dividends declared per Class A common share | $ 0.60 | $ 0.60 | $ 1.56 | $ 1.60 |
Quarterly Cash Dividend | ||||
Dividends Payable [Line Items] | ||||
Dividends declared per Class A common share | 0.60 | 0.60 | 1.20 | 1.20 |
Special Annual Dividend | ||||
Dividends Payable [Line Items] | ||||
Dividends declared per Class A common share | $ 0.00 | $ 0.00 | $ 0.36 | $ 0.40 |
Stockholders' Equity - Distributions (Details) - Artisan Partners Holdings LP - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Distribution Made to Limited Partner [Line Items] | ||||
Holdings Partnership Distributions to Limited Partners | $ 38,239 | $ 43,095 | $ 54,769 | $ 62,424 |
Holdings Partnership Distributions to APAM | 61,910 | 50,809 | 83,543 | 73,241 |
Total Holdings Partnership Distributions | $ 100,149 | $ 93,904 | $ 138,312 | $ 135,665 |
Compensation and Benefits - Components of expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Salaries, incentive compensation and benefits | $ 84,062 | $ 77,212 | $ 165,544 | $ 154,308 |
Restricted share-based award compensation expense | 37,640 | 36,956 | ||
Total salaries, incentive compensation and benefits | 96,426 | 88,011 | 189,675 | 175,491 |
Pre-offering related compensation - share-based awards | 6,339 | 7,136 | 12,678 | 14,955 |
Total compensation and benefits | 102,765 | 95,147 | 202,353 | 190,446 |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted share-based award compensation expense | $ 12,364 | $ 10,799 | $ 24,131 | $ 21,183 |
Compensation and Benefits - Pre-Offering Related Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||
Pre-offering related compensation - share-based awards | $ 6,339 | $ 7,136 | $ 12,678 | $ 14,955 |
Income Taxes and Related Payments - Components of provision for income taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Income Tax Disclosure [Abstract] | |||||
Unrecognized tax benefits | $ 0 | $ 0 | $ 0 | ||
Current: | |||||
Federal | 5,234 | $ 3,238 | 7,858 | $ 5,908 | |
State and local | 640 | 506 | 1,001 | 1,050 | |
Foreign | 120 | 161 | 227 | 346 | |
Total | 5,994 | 3,905 | 9,086 | 7,304 | |
Deferred: | |||||
Federal | 8,463 | 8,257 | 17,598 | 15,936 | |
State and local | 484 | 472 | 1,006 | 911 | |
Total | 8,947 | 8,729 | 18,604 | 16,847 | |
Income tax expense | $ 14,941 | $ 12,634 | $ 27,690 | $ 24,151 |
Income Taxes and Related Payments - Components of deferred tax assets (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Dec. 31, 2016 |
|
Unrecognized tax benefits | $ 0 | $ 0 | |
Establishment of amounts payable under tax receivable agreements | 106,399 | $ 23,593 | |
Deferred tax assets, exchanges | 11,756 | ||
Deferred tax assets: | |||
Amortizable basis | 758,144 | 653,942 | |
Other | 29,509 | 24,576 | |
Total deferred tax assets | 787,653 | 678,518 | |
Less: valuation allowance | 0 | 0 | |
Deferred tax assets | 787,653 | $ 678,518 | |
Follow On Offering | |||
Establishment of amounts payable under tax receivable agreements | 96,406 | ||
Deferred tax assets, exchanges | 113,419 | ||
Capital Unit | |||
Establishment of amounts payable under tax receivable agreements | $ 9,993 |
Income Taxes and Related Payments Income Tax Uncertainties (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands |
Jun. 30, 2017 |
Dec. 31, 2016 |
---|---|---|
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||
Unrealized gain on investments, net of tax | $ 89 | $ 37 |
Foreign currency translation gain (loss) | (1,474) | (1,685) |
Accumulated Other Comprehensive Income (Loss) | $ (1,385) | $ (1,648) |
Earnings Per Share - Computation of basic and diluted net income per share (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Earnings Per Share [Abstract] | ||||
Weighted Average Number of Shares Outstanding, Diluted | 0 | 0 | 0 | 0 |
Net income attributable to APAM | $ 26,632 | $ 18,384 | $ 46,427 | $ 34,645 |
Less: Allocation to participating securities | 6,339 | 4,121 | 9,198 | 6,878 |
Net income available to common stockholders | $ 20,293 | $ 14,263 | $ 37,229 | $ 27,767 |
Weighted average shares outstanding | 45,241,102 | 38,023,586 | 43,142,011 | 37,497,268 |
Earnings per share | $ 0.45 | $ 0.38 | $ 0.86 | $ 0.74 |
Earnings Per Share - Antidilutive securities excluded from the computation of net income per share (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2017 |
Jun. 30, 2016 |
Jun. 30, 2017 |
Jun. 30, 2016 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-Dilutive Weighted Average Shares Outstanding | 30,566,572 | 36,630,444 | 32,339,348 | 36,871,597 |
Holdings limited partnership units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-Dilutive Weighted Average Shares Outstanding | 26,080,376 | 32,725,890 | 28,133,767 | 33,233,419 |
Unvested restricted share-based awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-Dilutive Weighted Average Shares Outstanding | 4,486,196 | 3,904,554 | 4,205,581 | 3,638,178 |
Subsequent Events (Details) - Subsequent Event $ / shares in Units, $ in Millions |
Jul. 27, 2017
USD ($)
$ / shares
|
---|---|
Subsequent Event [Line Items] | |
Distribution made to limited partner, Cash distributions declared | $ | $ 39.3 |
Quarterly Cash Dividend | Class A Common Stock | |
Subsequent Event [Line Items] | |
Common stock, Dividends, Per share, Declared | $ / shares | $ 0.60 |
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