(Mark One) | |||
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR | |||
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||
FOR THE TRANSITION PERIOD FROM TO |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
(Address of principal executive offices) | (Zip Code) | |
Title of each class | Trading Symbol | Name of each exchange on which registered |
☑ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | |||
Emerging growth company |
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 the performance of our investment strategies |
• | 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, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | $ | |||||
Accounts receivable | |||||||
Investment securities | |||||||
Property and equipment, net | |||||||
Deferred tax assets | |||||||
Restricted cash | |||||||
Prepaid expenses and other assets | |||||||
Operating lease assets | |||||||
Assets of consolidated investment products | |||||||
Cash and cash equivalents | |||||||
Accounts receivable and other | |||||||
Investment assets, at fair value | |||||||
Total assets | $ | $ | |||||
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY | |||||||
Accounts payable, accrued expenses, and other | $ | $ | |||||
Accrued incentive compensation | |||||||
Borrowings | |||||||
Operating lease liabilities | |||||||
Amounts payable under tax receivable agreements | |||||||
Liabilities of consolidated investment products | |||||||
Accounts payable, accrued expenses, and other | |||||||
Investment liabilities, at fair value | |||||||
Total liabilities | |||||||
Commitments and contingencies | |||||||
Redeemable noncontrolling interests | |||||||
Common stock | |||||||
Class A common stock ($0.01 par value per share, 500,000,000 shares authorized, 56,145,554 and 54,071,188 shares outstanding at June 30, 2019 and December 31, 2018, respectively) | |||||||
Class B common stock ($0.01 par value per share, 200,000,000 shares authorized, 7,912,056 and 8,645,249 shares outstanding at June 30, 2019 and December 31, 2018, respectively) | |||||||
Class C common stock ($0.01 par value per share, 400,000,000 shares authorized, 13,757,111 and 14,226,435 shares outstanding at June 30, 2019 and December 31, 2018, respectively) | |||||||
Additional paid-in capital | |||||||
Retained earnings (deficit) | |||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Total Artisan Partners Asset Management Inc. stockholders’ equity | |||||||
Noncontrolling interests - Artisan Partners Holdings | |||||||
Total stockholders’ equity | |||||||
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity | $ | $ |
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, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | |||||||||||||||
Management fees | $ | $ | $ | $ | |||||||||||
Performance fees | |||||||||||||||
Total revenues | $ | $ | $ | $ | |||||||||||
Operating Expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Distribution, servicing and marketing | |||||||||||||||
Occupancy | |||||||||||||||
Communication and technology | |||||||||||||||
General and administrative | |||||||||||||||
Total operating expenses | |||||||||||||||
Total operating income | |||||||||||||||
Non-operating income (expense) | |||||||||||||||
Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Net investment gain (loss) of consolidated investment products | |||||||||||||||
Other investment gain (loss) | |||||||||||||||
Total non-operating income (expense) | |||||||||||||||
Income before income taxes | |||||||||||||||
Provision for income taxes | |||||||||||||||
Net income before noncontrolling interests | |||||||||||||||
Less: Net income attributable to noncontrolling interests - Artisan Partners Holdings | |||||||||||||||
Less: Net income attributable to noncontrolling interests - consolidated investment products | |||||||||||||||
Net income attributable to Artisan Partners Asset Management Inc. | $ | $ | $ | $ | |||||||||||
Basic and diluted earnings per share | $ | $ | $ | $ | |||||||||||
Basic and diluted weighted average number of common shares outstanding | |||||||||||||||
Dividends declared per Class A common share | $ | $ | $ | $ |
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, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income before noncontrolling interests | $ | $ | $ | $ | |||||||||||
Other comprehensive income (loss), net of tax | |||||||||||||||
Foreign currency translation gain (loss) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Total other comprehensive income (loss) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Comprehensive income | |||||||||||||||
Comprehensive income attributable to noncontrolling interests - Artisan Partners Holdings | |||||||||||||||
Comprehensive income attributable to noncontrolling interests - consolidated investment products | |||||||||||||||
Comprehensive income attributable to Artisan Partners Asset Management Inc. | $ | $ | $ | $ |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Consolidated Statements of Changes in Stockholders’ Equity (U.S. dollars in thousands) | |||||||||||||||||||||||||||
Three months ended June 30, 2019 | |||||||||||||||||||||||||||
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 interests - Artisan Partners Holdings | Total stockholders’ equity | Redeemable non-controlling interest | |||||||||||||||||||
Balance at April 1, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Other comprehensive income - foreign currency translation | — | — | — | — | — | ( | ) | ( | ) | ( | ) | — | |||||||||||||||
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax | — | — | — | ( | ) | — | ( | ) | — | ||||||||||||||||||
Amortization of equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||
Deferred tax assets, net of amounts payable under tax receivable agreements | — | — | — | — | — | — | — | ||||||||||||||||||||
Issuance of Class A common stock, net of issuance costs | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Forfeitures and employee/partner terminations | — | — | — | — | — | ||||||||||||||||||||||
Exchange of subsidiary equity | ( | ) | ( | ) | — | — | — | — | — | ||||||||||||||||||
Capital contributions, net | — | — | — | — | — | — | — | — | |||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ) | ( | ) | — | ||||||||||||||||
Dividends | — | — | — | ( | ) | — | ( | ) | ( | ) | — | ||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ |
Three months ended June 30, 2018 | |||||||||||||||||||||||||||
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 interests - Artisan Partners Holdings | Total stockholders’ equity | Redeemable non-controlling interest | |||||||||||||||||||
Balance at April 1, 2018 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Other comprehensive income - foreign currency translation | — | — | — | — | — | ( | ) | ( | ) | ( | ) | — | |||||||||||||||
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax | — | — | — | ( | ) | — | ( | ) | — | ||||||||||||||||||
Amortization of equity-based compensation | — | — | — | — | |||||||||||||||||||||||
Deferred tax assets, net of amounts payable under tax receivable agreements | — | — | — | — | — | — | — | ||||||||||||||||||||
Issuance of Class A common stock, net of issuance costs | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Forfeitures and employee/partner terminations | ( | ) | — | — | — | — | — | ||||||||||||||||||||
Capital Contributions, net | — | — | — | — | — | — | — | — | |||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ) | ( | ) | — | ||||||||||||||||
Dividends | — | — | — | ( | ) | ( | ) | — | ( | ) | ( | ) | — | ||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements. |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Consolidated Statements of Changes in Stockholders’ Equity (U.S. dollars in thousands) | |||||||||||||||||||||||||||
Six months ended June 30, 2019 | |||||||||||||||||||||||||||
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 interests - Artisan Partners Holdings | Total stockholders’ equity | Redeemable non-controlling interest | |||||||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | |||||||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Other comprehensive income - foreign currency translation | — | — | — | — | — | ( | ) | ( | ) | ( | ) | — | |||||||||||||||
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax | — | — | — | ( | ) | — | ( | ) | — | ||||||||||||||||||
Amortization of equity-based compensation | — | — | — | — | — | — | |||||||||||||||||||||
Deferred tax assets, net of amounts payable under tax receivable agreements | — | — | — | — | — | — | — | ||||||||||||||||||||
Issuance of Class A common stock, net of issuance costs | — | — | ( | ) | — | — | — | ( | ) | — | |||||||||||||||||
Forfeitures and employee/partner terminations | — | — | — | — | — | ||||||||||||||||||||||
Issuance of restricted stock awards | — | — | ( | ) | — | — | — | — | |||||||||||||||||||
Employee net share settlement | ( | ) | — | — | ( | ) | — | — | ( | ) | ( | ) | — | ||||||||||||||
Exchange of subsidiary equity | ( | ) | ( | ) | — | — | — | — | — | ||||||||||||||||||
Capital Contributions, net | — | — | — | — | — | — | — | — | |||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ) | ( | ) | — | ||||||||||||||||
Dividends | — | — | — | ( | ) | ( | ) | — | ( | ) | ( | ) | — | ||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ |
Six months ended June 30, 2018 | |||||||||||||||||||||||||||
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 interests - Artisan Partners Holdings | Total stockholders’ equity | Redeemable non-controlling interest | |||||||||||||||||||
Balance at January 1, 2018 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||||||
Net income | — | — | — | — | — | ||||||||||||||||||||||
Other comprehensive income - foreign currency translation | — | — | — | — | — | ( | ) | ( | ) | ( | ) | — | |||||||||||||||
Other comprehensive income - available for sale investments, net of tax | — | — | — | — | ( | ) | — | ||||||||||||||||||||
Cumulative impact of changes in ownership of Artisan Partners Holdings LP, net of tax | — | — | — | ( | ) | — | ( | ) | — | ||||||||||||||||||
Amortization of equity-based compensation | — | — | — | — | |||||||||||||||||||||||
Deferred tax assets, net of amounts payable under tax receivable agreements | — | — | — | — | — | — | — | ||||||||||||||||||||
Issuance of Class A common stock, net of issuance costs | — | — | — | — | — | — | |||||||||||||||||||||
Forfeitures and employee/partner terminations | ( | ) | — | — | — | — | — | ||||||||||||||||||||
Issuance of restricted stock awards | — | — | ( | ) | — | — | — | — | |||||||||||||||||||
Employee net share settlement | ( | ) | — | — | ( | ) | — | — | ( | ) | ( | ) | — | ||||||||||||||
Exchange of subsidiary equity | ( | ) | ( | ) | — | — | — | — | — | ||||||||||||||||||
Purchase of equity and subsidiary equity | — | ( | ) | ( | ) | — | — | — | ( | ) | — | ||||||||||||||||
Capital Contributions, net | — | — | — | — | — | — | — | — | |||||||||||||||||||
Distributions | — | — | — | — | — | — | ( | ) | ( | ) | — | ||||||||||||||||
Dividends | — | — | — | ( | ) | ( | ) | — | ( | ) | ( | ) | — | ||||||||||||||
Balance at June 30, 2018 | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ |
ARTISAN PARTNERS ASSET MANAGEMENT INC. Unaudited Consolidated Statements of Cash Flows (U.S. dollars in thousands) | |||||||
For the Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities | |||||||
Net income before noncontrolling interests | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | |||||||
Deferred income taxes | |||||||
Asset impairment | |||||||
Noncash lease expense | |||||||
Net (gain) loss on unconsolidated seed investment securities | ( | ) | ( | ) | |||
Loss on disposal of property and equipment | |||||||
Amortization of debt issuance costs | |||||||
Share-based compensation | |||||||
Net investment (gain) loss of consolidated investment products | ( | ) | ( | ) | |||
Purchase of investments by consolidated investment products | ( | ) | ( | ) | |||
Proceeds from sale of investments by consolidated investment products | |||||||
Change in assets and liabilities resulting in an increase (decrease) in cash: | |||||||
Accounts receivable | ( | ) | ( | ) | |||
Prepaid expenses and other assets | ( | ) | ( | ) | |||
Accounts payable and accrued expenses | |||||||
Net change in operating assets and liabilities of consolidated investment products | |||||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities | |||||||
Acquisition of property and equipment | ( | ) | ( | ) | |||
Leasehold improvements | ( | ) | ( | ) | |||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities | |||||||
Partnership distributions | ( | ) | ( | ) | |||
Dividends paid | ( | ) | ( | ) | |||
Payment under the tax receivable agreements | ( | ) | ( | ) | |||
Net proceeds from issuance of common stock | |||||||
Payment of costs directly associated with the issuance of Class A common stock | ( | ) | |||||
Purchase of equity and subsidiary equity | ( | ) | |||||
Taxes paid related to employee net share settlement | ( | ) | ( | ) | |||
Capital contributions to consolidated investment products, net | |||||||
Net cash used in financing activities | ( | ) | ( | ) | |||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||
Cash, cash equivalents and restricted cash | |||||||
Beginning of period | |||||||
End of period | $ | $ | |||||
Cash, cash equivalents and restricted cash as of the end of the period | |||||||
Cash and cash equivalents | $ | $ | |||||
Restricted cash | |||||||
Cash and cash equivalents of consolidated investment products | |||||||
Cash, cash equivalents and restricted cash | $ | $ | |||||
Supplementary information | |||||||
Noncash activity: | |||||||
Establishment of deferred tax assets | $ | $ | |||||
Establishment of amounts payable under tax receivable agreements | |||||||
Operating lease assets obtained in exchange for operating lease liabilities |
As of June 30, 2019 | As of December 31, 2018 | ||||||
Investments in equity securities | $ | $ | |||||
Investments in equity securities accounted for under the equity method | |||||||
Total investment securities | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net gains (losses) recognized on investment securities | $ | $ | $ | $ | |||||||||||
Less: Net realized gains (losses) recognized on investment securities sold during the period | $ | $ | $ | $ | |||||||||||
Unrealized gains (losses) recognized on investment securities held as of the end of the period | $ | $ | $ | $ |
• | 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 | NAV Practical Expedient (No Fair Value Level) | Level 1 | Level 2 | Level 3 | |||||||||||||||
June 30, 2019 | |||||||||||||||||||
Assets | |||||||||||||||||||
Money market funds | $ | $ | $ | $ | $ | ||||||||||||||
Equity securities | |||||||||||||||||||
December 31, 2018 | |||||||||||||||||||
Assets | |||||||||||||||||||
Money market funds | $ | $ | $ | $ | $ | ||||||||||||||
Equity securities |
Maturity | Outstanding Balance | Interest Rate Per Annum | ||||||
Revolving credit agreement | August 2022 | $ | NA | |||||
Senior notes | ||||||||
Series B | August 2019 | % | ||||||
Series C | August 2022 | % | ||||||
Series D | August 2025 | % | ||||||
Total borrowings | $ |
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total | $ |
Assets and Liabilities at Fair Value | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
June 30, 2019 | |||||||||||||||
Assets | |||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||
Equity securities - long position | |||||||||||||||
Fixed income instruments - long position | |||||||||||||||
Derivative assets | |||||||||||||||
Liabilities | |||||||||||||||
Fixed income instruments - short position | |||||||||||||||
Derivative liabilities |
Assets and Liabilities at Fair Value | |||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||
December 31, 2018 | |||||||||||||||
Assets | |||||||||||||||
Money market funds | $ | $ | $ | $ | |||||||||||
Equity securities - long position | |||||||||||||||
Fixed income instruments - long position | |||||||||||||||
Derivative assets | |||||||||||||||
Liabilities | |||||||||||||||
Fixed income instruments - short position | |||||||||||||||
Derivative liabilities |
As of June 30, 2019 | As of December 31, 2018 | ||||||
Net CIP assets included in the table above | $ | $ | |||||
Net CIP assets/(liabilities) not included in the table above | ( | ) | |||||
Total Net CIP assets | |||||||
Less: redeemable noncontrolling interest | |||||||
Artisan’s direct equity investment in CIPs | $ | $ |
Holdings GP Units | Limited Partnership Units | Total | APAM Ownership % | |||||
Balance at December 31, 2018 | % | |||||||
Holdings Common Unit Exchanges | ( | ) | % | |||||
Issuance of APAM Restricted Shares | % | |||||||
Restricted Share Award Net Share Settlement (1) | ( | ) | ( | ) | % | |||
Forfeitures of Holdings GP Units from Employee Terminations (1) | ( | ) | ( | ) | % | |||
Balance at June 30, 2019 | % |
Statement of Financial Condition | For the Six Months Ended June 30, | ||||||
2019 | 2018 | ||||||
Additional paid-in capital | $ | ( | ) | $ | ( | ) | |
Noncontrolling interests - Artisan Partners Holdings | |||||||
Accumulated other comprehensive income (loss) | ( | ) | ( | ) | |||
Net impact to financial condition |
Outstanding | ||||||||||||
Authorized | As of June 30, 2019 | As of December 31, 2018 | Voting Rights (1) | Economic Rights | ||||||||
Common shares | ||||||||||||
Class A, par value $0.01 per share | 1 vote per share | Proportionate | ||||||||||
Class B, par value $0.01 per share | 1 vote per share | None | ||||||||||
Class C, par value $0.01 per share | 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, 2019, Artisan’s employees held 5,044,032 restricted shares of Class A common stock and all 7,912,056 outstanding shares of Class B common stock, all of which were subject to the agreement. |
Type of Dividend | Class of Stock | For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
Quarterly | Class A Common | $ | $ | $ | $ | |||||||||||||
Special Annual | Class A Common | $ | $ | $ | $ |
Total Stock Outstanding | Class A Common Stock(1) | Class B Common Stock | Class C Common Stock | |||||
Balance at December 31, 2018 | ||||||||
Holdings Common Unit Exchanges | ( | ) | ( | ) | ||||
Restricted Share Award Grants | ||||||||
Restricted Share Award Net Share Settlement | ( | ) | ( | ) | ||||
Employee-Partner Terminations | ( | ) | ( | ) | ||||
Balance at June 30, 2019 | ||||||||
(1) There were 297,891 and 246,581 restricted stock units outstanding at June 30, 2019 and December 31, 2018, 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, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Holdings Partnership Distributions to Limited Partners | $ | $ | $ | $ | ||||||||||||
Holdings Partnership Distributions to APAM | ||||||||||||||||
Total Holdings Partnership Distributions | $ | $ | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Management fees | |||||||||||||||
Artisan Funds | $ | $ | $ | $ | |||||||||||
Artisan Global Funds | |||||||||||||||
Separate accounts(1) | |||||||||||||||
Performance fees | |||||||||||||||
Separate accounts(1) | |||||||||||||||
Total revenues(2) | $ | $ | $ | $ | |||||||||||
(1) Separate account revenue consists of fees from vehicles other than Artisan Funds or Artisan Global Funds, which includes traditional separate accounts, Artisan-branded collective investment trusts and funds (both public and private) that Artisan advises, including Artisan Private Funds. | |||||||||||||||
(2) All management fees and performance fees from consolidated investment products were eliminated upon consolidation and therefore are omitted from this table. |
As of June 30, 2019 | As of December 31, 2018 | ||||||
Customer | |||||||
Artisan Funds | $ | $ | |||||
Artisan Global Funds | |||||||
Separate accounts | |||||||
Total receivables from contracts with customers | $ | $ | |||||
Non-customer receivables | |||||||
Accounts receivable | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Salaries, incentive compensation and benefits (1) | $ | $ | $ | $ | |||||||||||
Restricted share-based award compensation expense | |||||||||||||||
Total compensation and benefits | $ | $ | $ | $ | |||||||||||
(1) Excluding restricted share-based award compensation expense |
Weighted-Average Grant Date Fair Value | Number of Awards | |||||
Unvested at January 1, 2019 | $ | |||||
Granted | ||||||
Forfeited | ( | ) | ||||
Vested | ( | ) | ||||
Unvested at June 30, 2019 | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Current: | |||||||||||||||
Federal | $ | $ | $ | $ | |||||||||||
State and local | |||||||||||||||
Foreign | |||||||||||||||
Total | |||||||||||||||
Deferred: | |||||||||||||||
Federal | |||||||||||||||
State and local | |||||||||||||||
Total | |||||||||||||||
Income tax expense | $ | $ | $ | $ |
Deferred Tax Asset - Amortizable basis | Amounts payable under tax receivable agreements | ||||||
December 31, 2018 | $ | $ | |||||
2019 Holdings Common Unit Exchanges | |||||||
Amortization | ( | ) | — | ||||
Payments under TRA | — | ( | ) | ||||
June 30, 2019 | $ | $ |
As of June 30, 2019 | As of December 31, 2018 | ||||||
Deferred tax assets: | |||||||
Amortizable basis (1) | $ | $ | |||||
Other (2) | |||||||
Total deferred tax assets | |||||||
Less: valuation allowance (3) | |||||||
Net deferred tax assets | $ | $ | |||||
(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. These future tax benefits are not subject to the TRA agreements. | |||||||
(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. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
Basic and Diluted Earnings Per Share | 2019 | 2018 | 2019 | 2018 | |||||||||||
Numerator: | |||||||||||||||
Net income attributable to APAM | $ | $ | $ | $ | |||||||||||
Less: Allocation to participating securities | |||||||||||||||
Net income available to common stockholders | $ | $ | $ | $ | |||||||||||
Denominator: | |||||||||||||||
Weighted average shares outstanding | |||||||||||||||
Earnings per share | $ | $ | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||
Anti-Dilutive Weighted Average Shares Outstanding | 2019 | 2018 | 2019 | 2018 | |||||||
Holdings limited partnership units | |||||||||||
Unvested restricted share-based awards | |||||||||||
Total |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Compensation and benefits | $ | $ | $ | $ | |||||||||||
Occupancy (1) | |||||||||||||||
Communication and technology | |||||||||||||||
Total operating lease expense | $ | $ | $ | $ | |||||||||||
(1) Occupancy includes a $1.5 million charge related to the abandonment of a leased office space during the six months ended June 30, 2019, as discussed below. |
As of June 30, 2019 | |||
2019 (excluding the six months ended June 30, 2019) | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total undiscounted lease payments | $ | ||
Adjustment to discount to present value | ( | ) | |
Total operating lease liabilities | $ |
For the Six Months Ended June 30, 2019 | |||
Weighted average discount rate | % | ||
Weighted average remaining lease term | |||
Operating cash flows for operating leases | $ |
As of December 31, 2018 | |||
2019 | $ | ||
2020 | |||
2021 | |||
2022 | |||
2023 | |||
Thereafter | |||
Total undiscounted lease payments | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
Artisan Funds | 2019 | 2018 | 2019 | 2018 | |||||||||||
Investment management fees (Gross of fee waivers/expense reimbursements) | $ | $ | $ | $ | |||||||||||
Fee waivers / expense reimbursements | $ | $ | $ | $ |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
Artisan Global Funds | 2019 | 2018 | 2019 | 2018 | |||||||||||
Investment management fees (Gross of fee waivers/expense reimbursements) | $ | $ | $ | $ | |||||||||||
Elimination of management fees from consolidated investment products(1) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Consolidated investment management fees (Gross of fee waivers / expense reimbursements) | |||||||||||||||
Fee waivers / expense reimbursements | $ | $ | $ | $ | |||||||||||
Elimination of fee waivers / expense reimbursements from consolidated investment products(1) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Consolidated fee waivers / expense reimbursements | |||||||||||||||
(1) Investment management fees and expense waivers related to consolidated investment products were eliminated from revenue upon consolidation. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
Artisan Private Funds | 2019 | 2018 | 2019 | 2018 | |||||||||||
Investment management fees (Gross of fee waivers/expense reimbursements) | $ | $ | $ | $ | |||||||||||
Elimination of management fees from consolidated investment products(1) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Consolidated investment management fees (Gross of fee waivers / expense reimbursements) | |||||||||||||||
Fee waivers / expense reimbursements | $ | $ | $ | $ | |||||||||||
Elimination of fee waivers / expense reimbursements from consolidated investment products(1) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Consolidated fee waivers / expense reimbursements | |||||||||||||||
(1) Investment management fees and expense waivers related to consolidated investment products were eliminated from revenue upon consolidation. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
S&P 500 total returns | 4.3 | % | 3.4 | % | 18.5 | % | 2.6 | % | |||
MSCI All Country World total returns | 3.6 | % | 0.5 | % | 16.2 | % | (0.4 | )% | |||
MSCI EAFE total returns | 3.7 | % | (1.2 | )% | 14.0 | % | (2.7 | )% | |||
Russell Midcap® total returns | 4.1 | % | 2.8 | % | 21.3 | % | 2.3 | % | |||
MSCI Emerging Markets Index | 0.6 | % | (8.0 | )% | 10.6 | % | (6.7 | )% | |||
ICE BofA Merrill Lynch U.S. High Yield Master II Total Return Index | 2.6 | % | 1.0 | % | 10.2 | % | 0.1 | % |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(unaudited; dollars in millions) | |||||||||||||||
Assets under management at period end | $ | 113,843 | $ | 114,190 | $ | 113,843 | $ | 114,190 | |||||||
Average assets under management (1) | $ | 110,201 | $ | 115,784 | $ | 107,582 | $ | 117,035 | |||||||
Net client cash flows | $ | (505 | ) | $ | (339 | ) | $ | (1,615 | ) | $ | (942 | ) | |||
Total revenues | $ | 200.7 | $ | 212.3 | $ | 387.7 | $ | 424.3 | |||||||
Weighted average fee (2) | 73.1 | bps | 73.6 | bps | 72.7 | bps | 73.2 | bps | |||||||
Operating margin | 35.3 | % | 37.2 | % | 33.2 | % | 37.4 | % | |||||||
(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 and performance fees by average assets under management for the applicable period. |
• | 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, strategies, vehicles, or services 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 (2) | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Beginning assets under management | $ | 107,803 | $ | 114,816 | $ | (7,013 | ) | (6.1 | )% | |||||
Gross client cash inflows | 4,715 | 4,693 | 22 | 0.5 | % | |||||||||
Gross client cash outflows | (5,220 | ) | (5,032 | ) | (188 | ) | (3.7 | )% | ||||||
Net client cash flows | (505 | ) | (339 | ) | (166 | ) | (49.0 | )% | ||||||
Market appreciation (depreciation) (1) | 6,545 | (287 | ) | 6,832 | NM | |||||||||
Ending assets under management | $ | 113,843 | $ | 114,190 | $ | (347 | ) | (0.3 | )% | |||||
Average assets under management | $ | 110,201 | $ | 115,784 | $ | (5,583 | ) | (4.8 | )% | |||||
(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) "NM" stands for Not Meaningful. | ||||||||||||||
For the Six Months Ended June 30, | Period-to-Period (2) | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Beginning assets under management | $ | 96,224 | $ | 115,494 | $ | (19,270 | ) | (16.7 | )% | |||||
Gross client cash inflows | 9,415 | 10,112 | (697 | ) | (6.9 | )% | ||||||||
Gross client cash outflows | (11,030 | ) | (11,054 | ) | 24 | 0.2 | % | |||||||
Net client cash flows | (1,615 | ) | (942 | ) | (673 | ) | (71.4 | )% | ||||||
Market appreciation (depreciation) (1) | 19,234 | (362 | ) | 19,596 | NM | |||||||||
Ending assets under management | $ | 113,843 | $ | 114,190 | $ | (347 | ) | (0.3 | )% | |||||
Average assets under management | $ | 107,582 | $ | 117,035 | $ | (9,453 | ) | (8.1 | )% | |||||
(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) “NM” stands for Not Meaningful. |
Average Annual Value-Added(1) Since Inception (bps) | |||||||||||||
Composite Inception | Strategy AUM | Average Annual Total Returns (gross) (%) | |||||||||||
Investment Team and Strategy | Date | (in $MM) | 1 YR | 3 YR | 5 YR | 10 YR | Inception | ||||||
Growth Team | |||||||||||||
Global Opportunities Strategy | 2/1/2007 | $ | 17,803 | 9.14% | 16.69% | 11.54% | 16.34% | 10.79% | 579 | ||||
MSCI All Country World Index | 5.74% | 11.62% | 6.16% | 10.14% | 5.00% | ||||||||
Global Discovery Strategy | 9/1/2017 | $ | 705 | 15.78% | 18.09% | 1,094 | |||||||
MSCI All Country World Index | 5.74% | 7.15% | |||||||||||
U.S. Mid-Cap Growth Strategy | 4/1/1997 | $ | 11,461 | 21.12% | 17.74% | 11.49% | 17.12% | 15.38% | 510 | ||||
Russell Midcap® Index | 7.83% | 12.16% | 8.63% | 15.15% | 10.28% | ||||||||
Russell Midcap® Growth Index | 13.94% | 16.49% | 11.10% | 16.01% | 9.53% | ||||||||
U.S. Small-Cap Growth Strategy | 4/1/1995 | $ | 3,049 | 17.43% | 22.30% | 14.66% | 18.69% | 11.30% | 217 | ||||
Russell 2000® Index | (3.31)% | 12.30% | 7.06% | 13.44% | 9.13% | ||||||||
Russell 2000® Growth Index | (0.49)% | 14.69% | 8.62% | 14.40% | 7.86% | ||||||||
Global Equity Team | |||||||||||||
Global Equity Strategy | 4/1/2010 | $ | 1,852 | 13.73% | 17.42% | 10.77% | 13.22% | 506 | |||||
MSCI All Country World Index | 5.74% | 11.62% | 6.16% | 8.16% | |||||||||
Non-U.S. Growth Strategy | 1/1/1996 | $ | 23,185 | 10.03% | 11.30% | 4.23% | 10.14% | 10.21% | 550 | ||||
MSCI EAFE Index | 1.08% | 9.11% | 2.25% | 6.90% | 4.71% | ||||||||
Non-U.S. Small-Mid Growth Strategy | 1/1/2019 | $ | 1,555 | 24.06% | 1,145 | ||||||||
MSCI All Country World Index Ex USA Small Mid Cap | 12.61% | ||||||||||||
U.S. Value Team | |||||||||||||
Value Equity Strategy | 7/1/2005 | $ | 2,560 | 2.05% | 10.68% | 6.55% | 12.46% | 8.17% | (83) | ||||
Russell 1000® Index | 10.02% | 14.15% | 10.44% | 14.76% | 9.00% | ||||||||
Russell 1000® Value Index | 8.46% | 10.19% | 7.46% | 13.19% | 7.40% | ||||||||
U.S. Mid-Cap Value Strategy | 4/1/1999 | $ | 4,620 | 1.60% | 9.71% | 5.33% | 12.75% | 12.64% | 322 | ||||
Russell Midcap® Index | 7.83% | 12.16% | 8.63% | 15.15% | 9.42% | ||||||||
Russell Midcap® Value Index | 3.68% | 8.95% | 6.72% | 14.55% | 9.60% | ||||||||
International Value Team | |||||||||||||
Non-U.S. Value Strategy | 7/1/2002 | $ | 20,178 | 3.46% | 9.78% | 4.19% | 11.60% | 11.69% | 567 | ||||
MSCI EAFE Index | 1.08% | 9.11% | 2.25% | 6.90% | 6.02% | ||||||||
Global Value Team | |||||||||||||
Global Value Strategy | 7/1/2007 | $ | 18,863 | 5.01% | 11.73% | 6.61% | 13.60% | 8.40% | 396 | ||||
MSCI All Country World Index | 5.74% | 11.62% | 6.16% | 10.14% | 4.44% | ||||||||
Sustainable Emerging Markets Team | |||||||||||||
Sustainable Emerging Markets Strategy | 7/1/2006 | $ | 202 | 3.82% | 13.27% | 5.79% | 6.48% | 5.83% | 69 | ||||
MSCI Emerging Markets Index | 1.21% | 10.66% | 2.49% | 5.81% | 5.14% | ||||||||
Credit Team | |||||||||||||
High Income Strategy | 4/1/2014 | $ | 3,672 | 6.41% | 8.68% | 7.09% | 7.26% | 229 | |||||
ICE BofAML US High Yield Master II Total Return Index | 7.58% | 7.54% | 4.69% | 4.97% | |||||||||
Developing World Team | |||||||||||||
Developing World Strategy | 7/1/2015 | $ | 2,839 | 20.05% | 16.97% | 11.31% | 683 | ||||||
MSCI Emerging Markets Index | 1.21% | 10.66% | 4.48% | ||||||||||
Thematic Team | |||||||||||||
Thematic Strategy | 5/1/2017 | $ | 860 | 18.54% | 29.25% | 1,684 | |||||||
S&P 500 Market Index (Total Return) | 10.42% | 12.41% | |||||||||||
Other Assets Under Management 2 | $ | 439 | |||||||||||
Total Assets Under Management | $ | 113,843 | |||||||||||
(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. The Artisan High Income Strategy may hold loans and other security types that may not be included in the ICE BofA Merrill Lynch U.S. High Yield Master II Total Return Index. At times, this causes material differences in relative performance. The Global Equity, Global Discovery, and Thematic strategies’ investments in initial public offerings (IPOs) made a material contribution to performance. IPO investments may contribute significantly to a small portfolio’s return, an effect that will generally decrease as assets grow. IPO investments may be unavailable in the future. (2) Other Assets Under Management includes AUM managed by the Credit Team in the Credit Opportunities strategy and by the Thematic Team in the Thematic Long/Short strategy, respectively. Strategy specific information has been omitted. |
By Investment Team | |||||||||||||||||||||||||||||||
Three Months Ended | Growth | Global Equity | U.S. Value | International Value | Global Value | Sustainable Emerging Markets | Credit | Developing World | Thematic | Total | |||||||||||||||||||||
June 30, 2019 | (unaudited; in millions) | ||||||||||||||||||||||||||||||
Beginning assets under management | $ | 30,832 | $ | 24,727 | $ | 7,170 | $ | 19,871 | $ | 18,449 | $ | 201 | $ | 3,383 | $ | 2,228 | $ | 942 | $ | 107,803 | |||||||||||
Gross client cash inflows | 1,120 | 1,358 | 110 | 603 | 277 | 3 | 409 | 579 | 256 | 4,715 | |||||||||||||||||||||
Gross client cash outflows | (1,282 | ) | (1,535 | ) | (441 | ) | (1,101 | ) | (562 | ) | (5 | ) | (144 | ) | (130 | ) | (20 | ) | (5,220 | ) | |||||||||||
Net client cash flows | (162 | ) | (177 | ) | (331 | ) | (498 | ) | (285 | ) | (2 | ) | 265 | 449 | 236 | (505 | ) | ||||||||||||||
Market appreciation (depreciation) | 2,348 | 2,042 | 341 | 805 | 699 | 3 | 87 | 162 | 58 | 6,545 | |||||||||||||||||||||
Ending assets under management | $ | 33,018 | $ | 26,592 | $ | 7,180 | $ | 20,178 | $ | 18,863 | $ | 202 | $ | 3,735 | $ | 2,839 | $ | 1,236 | $ | 113,843 | |||||||||||
Average assets under management | $ | 31,736 | $ | 25,468 | $ | 7,094 | $ | 19,857 | $ | 18,597 | $ | 198 | $ | 3,582 | $ | 2,529 | $ | 1,140 | $ | 110,201 | |||||||||||
June 30, 2018 | |||||||||||||||||||||||||||||||
Beginning assets under management | $ | 30,871 | $ | 28,611 | $ | 8,195 | $ | 21,363 | $ | 20,195 | $ | 292 | $ | 2,658 | 2,509 | $ | 122 | $ | 114,816 | ||||||||||||
Gross client cash inflows | 1,301 | 1,044 | 285 | 719 | 406 | 10 | 568 | 295 | 65 | 4,693 | |||||||||||||||||||||
Gross client cash outflows | (1,903 | ) | (1,077 | ) | (491 | ) | (578 | ) | (593 | ) | (81 | ) | (188 | ) | (115 | ) | (6 | ) | (5,032 | ) | |||||||||||
Net client cash flows | (602 | ) | (33 | ) | (206 | ) | 141 | (187 | ) | (71 | ) | 380 | 180 | 59 | (339 | ) | |||||||||||||||
Market appreciation (depreciation) | 820 | (514 | ) | 319 | (487 | ) | (258 | ) | (24 | ) | 34 | (183 | ) | 6 | (287 | ) | |||||||||||||||
Ending assets under management | $ | 31,089 | $ | 28,064 | $ | 8,308 | $ | 21,017 | $ | 19,750 | $ | 197 | $ | 3,072 | 2,506 | 187 | $ | 114,190 | |||||||||||||
Average assets under management | $ | 31,217 | $ | 28,792 | $ | 8,288 | $ | 21,537 | $ | 20,172 | $ | 277 | $ | 2,810 | 2,529 | $ | 162 | $ | 115,784 |
By Investment Team | |||||||||||||||||||||||||||||||
Six Months Ended | Growth | Global Equity | U.S. Value | International Value | Global Value | Sustainable Emerging Markets | Credit | Developing World | Thematic | Total | |||||||||||||||||||||
June 30, 2019 | (unaudited; in millions) | ||||||||||||||||||||||||||||||
Beginning assets under management | $ | 26,251 | $ | 22,967 | $ | 6,577 | $ | 17,681 | $ | 17,113 | $ | 179 | $ | 2,860 | $ | 1,993 | $ | 603 | $ | 96,224 | |||||||||||
Gross client cash inflows | 2,237 | 2,073 | 280 | 1,992 | 524 | 7 | 961 | 778 | 563 | 9,415 | |||||||||||||||||||||
Gross client cash outflows | (2,767 | ) | (2,922 | ) | (836 | ) | (2,097 | ) | (1,432 | ) | (7 | ) | (361 | ) | (535 | ) | (73 | ) | (11,030 | ) | |||||||||||
Net client cash flows | (530 | ) | (849 | ) | (556 | ) | (105 | ) | (908 | ) | — | 600 | 243 | 490 | (1,615 | ) | |||||||||||||||
Market appreciation (depreciation) | 7,297 | 4,474 | 1,159 | 2,602 | 2,658 | 23 | 275 | 603 | 143 | 19,234 | |||||||||||||||||||||
Ending assets under management | $ | 33,018 | $ | 26,592 | $ | 7,180 | $ | 20,178 | $ | 18,863 | $ | 202 | $ | 3,735 | $ | 2,839 | $ | 1,236 | $ | 113,843 | |||||||||||
Average assets under management | $ | 30,494 | $ | 24,837 | $ | 7,136 | $ | 19,652 | $ | 18,565 | $ | 197 | $ | 3,372 | $ | 2,341 | $ | 988 | $ | 107,582 | |||||||||||
June 30, 2018 | |||||||||||||||||||||||||||||||
Beginning assets under management | $ | 30,628 | $ | 29,235 | $ | 8,765 | $ | 21,757 | $ | 19,930 | $ | 282 | $ | 2,554 | 2,253 | $ | 90 | $ | 115,494 | ||||||||||||
Gross client cash inflows | 2,583 | 2,090 | 535 | 1,651 | 1,598 | 17 | 920 | 626 | 92 | 10,112 | |||||||||||||||||||||
Gross client cash outflows | (4,089 | ) | (2,875 | ) | (1,075 | ) | (1,167 | ) | (1,122 | ) | (85 | ) | (446 | ) | (187 | ) | (8 | ) | (11,054 | ) | |||||||||||
Net client cash flows | (1,506 | ) | (785 | ) | (540 | ) | 484 | 476 | (68 | ) | 474 | 439 | 84 | (942 | ) | ||||||||||||||||
Market appreciation (depreciation) | 1,967 | (386 | ) | 83 | (1,224 | ) | (656 | ) | (17 | ) | 44 | (186 | ) | 13 | (362 | ) | |||||||||||||||
Ending assets under management | $ | 31,089 | $ | 28,064 | $ | 8,308 | $ | 21,017 | $ | 19,750 | $ | 197 | $ | 3,072 | 2,506 | 187 | $ | 114,190 | |||||||||||||
Average assets under management | $ | 31,541 | $ | 29,236 | $ | 8,451 | $ | 21,750 | $ | 20,422 | $ | 286 | $ | 2,722 | 2,490 | $ | 137 | $ | 117,035 |
As of June 30, 2019 | As of June 30, 2018 | ||||||||||||
$ in millions | % of total | $ in millions | % of total | ||||||||||
(unaudited) | (unaudited) | ||||||||||||
Institutional | $ | 75,959 | 66.7 | % | $ | 73,995 | 64.8 | % | |||||
Intermediary | 32,925 | 28.9 | % | 35,230 | 30.9 | % | |||||||
Retail | 4,959 | 4.4 | % | 4,965 | 4.3 | % | |||||||
Ending Assets Under Management | $ | 113,843 | 100.0 | % | $ | 114,190 | 100.0 | % | |||||
(1) The allocation of assets under management 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, 2019 | (unaudited; in millions) | ||||||||||
Beginning assets under management | $ | 51,951 | $ | 55,852 | $ | 107,803 | |||||
Gross client cash inflows | 3,081 | 1,634 | 4,715 | ||||||||
Gross client cash outflows | (3,736 | ) | (1,484 | ) | (5,220 | ) | |||||
Net client cash flows | (655 | ) | 150 | (505 | ) | ||||||
Market appreciation (depreciation) | 3,037 | 3,508 | 6,545 | ||||||||
Net transfers (1) | (238 | ) | 238 | — | |||||||
Ending assets under management | $ | 54,095 | $ | 59,748 | $ | 113,843 | |||||
Average assets under management | $ | 52,670 | $ | 57,531 | $ | 110,201 | |||||
June 30, 2018 | |||||||||||
Beginning assets under management | $ | 57,950 | $ | 56,866 | $ | 114,816 | |||||
Gross client cash inflows | 3,084 | 1,609 | 4,693 | ||||||||
Gross client cash outflows | (3,290 | ) | (1,742 | ) | (5,032 | ) | |||||
Net client cash flows | (206 | ) | (133 | ) | (339 | ) | |||||
Market appreciation (depreciation) | (317 | ) | 30 | (287 | ) | ||||||
Net transfers (1) | (18 | ) | 18 | — | |||||||
Ending assets under management | $ | 57,409 | $ | 56,781 | $ | 114,190 | |||||
Average assets under management | $ | 58,406 | $ | 57,378 | $ | 115,784 | |||||
(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, 2019 | (unaudited; in millions) | ||||||||||
Beginning assets under management | $ | 46,654 | $ | 49,570 | $ | 96,224 | |||||
Gross client cash inflows | 6,547 | 2,868 | 9,415 | ||||||||
Gross client cash outflows | (7,849 | ) | (3,181 | ) | (11,030 | ) | |||||
Net client cash flows | (1,302 | ) | (313 | ) | (1,615 | ) | |||||
Market appreciation (depreciation) | 8,981 | 10,253 | 19,234 | ||||||||
Net transfers (1) | (238 | ) | 238 | — | |||||||
Ending assets under management | $ | 54,095 | $ | 59,748 | $ | 113,843 | |||||
Average assets under management | $ | 51,635 | $ | 55,947 | $ | 107,582 | |||||
June 30, 2018 | |||||||||||
Beginning assets under management | $ | 57,349 | $ | 58,145 | $ | 115,494 | |||||
Gross client cash inflows | 7,622 | 2,490 | 10,112 | ||||||||
Gross client cash outflows | (6,747 | ) | (4,307 | ) | (11,054 | ) | |||||
Net client cash flows | 875 | (1,817 | ) | (942 | ) | ||||||
Market appreciation (depreciation) | (561 | ) | 199 | (362 | ) | ||||||
Net transfers (1) | (254 | ) | 254 | — | |||||||
Ending assets under management | $ | 57,409 | $ | 56,781 | $ | 114,190 | |||||
Average assets under management | $ | 58,644 | $ | 58,391 | $ | 117,035 | |||||
(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 | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
Statements of operations data: | (unaudited; in millions, except share and per-share data) | |||||||||||||
Revenues | $ | 200.7 | $ | 212.3 | $ | (11.6 | ) | (5 | )% | |||||
Operating Expenses | ||||||||||||||
Total compensation and benefits | 101.5 | 106.8 | (5.3 | ) | (5 | )% | ||||||||
Other operating expenses | 28.3 | 26.6 | 1.7 | 6 | % | |||||||||
Total operating expenses | 129.8 | 133.4 | (3.6 | ) | (3 | )% | ||||||||
Total operating income | 70.9 | 78.9 | (8.0 | ) | (10 | )% | ||||||||
Non-operating income (expense) | ||||||||||||||
Interest expense | (2.8 | ) | (2.8 | ) | — | — | % | |||||||
Other non-operating income | 3.4 | 3.6 | (0.2 | ) | (6 | )% | ||||||||
Total non-operating income (expense) | 0.6 | 0.8 | (0.2 | ) | (25 | )% | ||||||||
Income before income taxes | 71.5 | 79.7 | (8.2 | ) | (10 | )% | ||||||||
Provision for income taxes | 11.5 | 12.1 | (0.6 | ) | (5 | )% | ||||||||
Net income before noncontrolling interests | 60.0 | 67.6 | (7.6 | ) | (11 | )% | ||||||||
Less: Noncontrolling interests - Artisan Partners Holdings | 19.8 | 23.2 | (3.4 | ) | (15 | )% | ||||||||
Less: Noncontrolling interests - consolidated investment products | 1.0 | 2.4 | (1.4 | ) | (58 | )% | ||||||||
Net income attributable to Artisan Partners Asset Management Inc. | $ | 39.2 | $ | 42.0 | $ | (2.8 | ) | (7 | )% | |||||
Share Data | ||||||||||||||
Basic and diluted earnings per share | $ | 0.66 | $ | 0.72 | ||||||||||
Basic and diluted weighted average number of common shares outstanding | 51,242,911 | 49,041,113 |
Separate Accounts | Artisan Funds and Artisan Global Funds | ||||||||||||||
For the Three Months Ended June 30, | 2019 | 2018 | 2019 | 2018 | |||||||||||
(unaudited; dollars in millions) | |||||||||||||||
Investment management fees | $ | 80.6 | $ | 78.3 | $ | 120.1 | $ | 134.0 | |||||||
Weighted average fee | 56.3 basis points | 54.8 basis points | 91.4 basis points | 92.1 basis points | |||||||||||
Percentage of ending AUM | 52 | % | 50 | % | 48 | % | 50 | % |
For the Three Months Ended June 30, | Period-to-Period | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Salaries, incentive compensation and benefits(1) | $ | 89.6 | $ | 91.6 | $ | (2.0 | ) | (2 | )% | |||||
Restricted share-based award compensation expense | 11.9 | 15.2 | $ | (3.3 | ) | (22 | )% | |||||||
Total compensation and benefits | $ | 101.5 | $ | 106.8 | $ | (5.3 | ) | (5 | )% | |||||
(1) Excluding restricted share-based award compensation expense |
For the Three Months Ended June 30, | Period-to-Period | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Interest expense | $ | (2.8 | ) | $ | (2.8 | ) | $ | — | — | % | ||||
Net investment gain (loss) of consolidated investment products | 2.1 | 2.9 | $ | (0.8 | ) | (28 | )% | |||||||
Other investment gain (loss) | 1.3 | 0.7 | $ | 0.6 | 86 | % | ||||||||
Total non-operating income (expense) | $ | 0.6 | $ | 0.8 | $ | (0.2 | ) | (25 | )% |
For the Six Months Ended June 30, | Period-to-Period | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
Statements of operations data: | (unaudited; in millions, except share and per share data) | |||||||||||||
Revenues | $ | 387.7 | $ | 424.3 | $ | (36.6 | ) | (9 | )% | |||||
Operating Expenses | ||||||||||||||
Total compensation and benefits | 200.8 | 212.0 | (11.2 | ) | (5 | )% | ||||||||
Other operating expenses | 58.3 | 53.4 | 4.9 | 9 | % | |||||||||
Total operating expenses | 259.1 | 265.4 | (6.3 | ) | (2 | )% | ||||||||
Total operating income | 128.6 | 158.9 | (30.3 | ) | (19 | )% | ||||||||
Non-operating income (expense) | ||||||||||||||
Interest expense | (5.6 | ) | (5.6 | ) | — | — | % | |||||||
Other non-operating income | 7.7 | 10.3 | (2.6 | ) | (25 | )% | ||||||||
Total non-operating income (expense) | 2.1 | 4.7 | (2.6 | ) | (55 | )% | ||||||||
Income before income taxes | 130.7 | 163.6 | (32.9 | ) | (20 | )% | ||||||||
Provision for income taxes | 20.9 | 24.3 | (3.4 | ) | (14 | )% | ||||||||
Net income before noncontrolling interests | 109.8 | 139.3 | (29.5 | ) | (21 | )% | ||||||||
Less: Noncontrolling interests - Artisan Partners Holdings | 37.1 | 49.3 | (12.2 | ) | (25 | )% | ||||||||
Less: Noncontrolling interests - consolidated investment products | 2.0 | 6.7 | (4.7 | ) | (70 | )% | ||||||||
Net income attributable to Artisan Partners Asset Management Inc. | $ | 70.7 | $ | 83.3 | $ | (12.6 | ) | (15 | )% | |||||
Share Data | ||||||||||||||
Basic and diluted earnings per share | $ | 1.15 | $ | 1.48 | ||||||||||
Basic and diluted weighted average number of common shares outstanding | 50,697,329 | 48,205,418 |
Separate Accounts | Artisan Funds and Artisan Global Funds | ||||||||||||||
For the Six Months Ended June 30, | 2019 | 2018 | 2019 | 2018 | |||||||||||
(unaudited; dollars in millions) | |||||||||||||||
Investment management fees | $ | 153.3 | $ | 156.5 | $ | 234.4 | $ | 267.8 | |||||||
Weighted average fee | 55.3 basis points | 54.2 basis points | 91.5 basis points | 92.1 basis points | |||||||||||
Percentage of ending AUM | 52 | % | 50 | % | 48 | % | 50 | % |
For the Six Months Ended June 30, | Period-to-Period | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Salaries, incentive compensation and benefits (1) | $ | 177.3 | $ | 183.0 | $ | (5.7 | ) | (3 | )% | |||||
Restricted share-based award compensation expense | 23.5 | 29.0 | (5.5 | ) | (19 | )% | ||||||||
Total compensation and benefits | $ | 200.8 | $ | 212.0 | $ | (11.2 | ) | (5 | )% | |||||
(1) Excluding share-based compensation |
For the Six Months Ended June 30, | Period-to-Period | |||||||||||||
2019 | 2018 | $ | % | |||||||||||
(unaudited; in millions) | ||||||||||||||
Interest expense | $ | (5.6 | ) | $ | (5.6 | ) | $ | — | — | % | ||||
Net investment gain (loss) of consolidated investment products | 4.4 | 9.2 | $ | (4.8 | ) | (52 | )% | |||||||
Other investment gain (loss) | 3.3 | 1.1 | $ | 2.2 | 200 | % | ||||||||
Total non-operating income (expense) | $ | 2.1 | $ | 4.7 | $ | (2.6 | ) | (55 | )% |
• | Adjusted net income represents net income excluding the impact of (1) net gain (loss) on the tax receivable agreements (if any) and (2) net investment gain (loss) of investment products. 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 23.5% 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 EBITDA represents adjusted net income before interest expense, income taxes, depreciation and amortization expense. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
(unaudited; in millions, except per share data) | |||||||||||||||
Reconciliation of non-GAAP financial measures: | |||||||||||||||
Net income attributable to Artisan Partners Asset Management Inc. (GAAP) | $ | 39.2 | $ | 42.0 | $ | 70.7 | $ | 83.3 | |||||||
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings | 19.8 | 23.2 | 37.1 | 49.3 | |||||||||||
Add back: Provision for income taxes | 11.5 | 12.1 | 20.9 | 24.3 | |||||||||||
Add back: Net investment (gain) loss of investment products attributable to APAM | (2.0 | ) | (0.8 | ) | (4.9 | ) | (2.8 | ) | |||||||
Less: Adjusted provision for income taxes | 16.1 | 17.9 | 29.1 | 36.2 | |||||||||||
Adjusted net income (Non-GAAP) | $ | 52.4 | $ | 58.6 | $ | 94.7 | $ | 117.9 | |||||||
Average shares outstanding | |||||||||||||||
Class A common shares | 51.2 | 49.0 | 50.7 | 48.2 | |||||||||||
Assumed vesting or exchange of: | |||||||||||||||
Unvested Class A restricted share-based awards | 5.2 | 5.2 | 5.0 | 4.9 | |||||||||||
Artisan Partners Holdings units outstanding (noncontrolling interests) | 21.7 | 23.0 | 22.2 | 23.8 | |||||||||||
Adjusted shares | 78.1 | 77.2 | 77.9 | 76.9 | |||||||||||
Basic and diluted earnings per share (GAAP) | $ | 0.66 | $ | 0.72 | $ | 1.15 | $ | 1.48 | |||||||
Adjusted net income per adjusted share (Non-GAAP) | $ | 0.67 | $ | 0.76 | $ | 1.22 | $ | 1.53 | |||||||
Net income attributable to Artisan Partners Asset Management Inc. (GAAP) | $ | 39.2 | $ | 42.0 | $ | 70.7 | $ | 83.3 | |||||||
Add back: Net income attributable to noncontrolling interests - Artisan Partners Holdings | 19.8 | 23.2 | 37.1 | 49.3 | |||||||||||
Add back: Net investment (gain) loss of investment products attributable to APAM | (2.0 | ) | (0.8 | ) | (4.9 | ) | (2.8 | ) | |||||||
Add back: Interest expense | 2.8 | 2.8 | 5.6 | 5.6 | |||||||||||
Add back: Provision for income taxes | 11.5 | 12.1 | 20.9 | 24.3 | |||||||||||
Add back: Depreciation and amortization | 1.5 | 1.3 | 3.6 | 2.5 | |||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 72.8 | $ | 80.6 | $ | 133.0 | $ | 162.2 |
June 30, 2019 | December 31, 2018 | ||||||
(unaudited; in millions) | |||||||
Cash and cash equivalents | $ | 152.6 | $ | 160.5 | |||
Accounts receivable | $ | 87.2 | $ | 67.7 | |||
Seed investments(1) | $ | 53.2 | $ | 48.3 | |||
Undrawn commitment on revolving credit facility | $ | 100.0 | $ | 100.0 | |||
(1) Seed investments includes equity investments in unconsolidated sponsored investment entities, as well as Artisan’s direct equity investments in consolidated investment products. |
For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(unaudited, in millions) | ||||||||||||||||
Holdings Partnership Distributions to Limited Partners | $ | 25.7 | $ | 33.1 | $ | 48.3 | $ | 55.8 | ||||||||
Holdings Partnership Distributions to APAM | $ | 59.5 | $ | 67.3 | $ | 112.9 | $ | 112.9 | ||||||||
Total Holdings Partnership Distributions | $ | 85.2 | $ | 100.4 | $ | 161.2 | $ | 168.7 |
Type of Dividend | Class of Stock | For the Three Months Ended June 30, | For the Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||||
Quarterly | Class A Common | $ | 0.55 | $ | 0.60 | $ | 1.11 | $ | 1.20 | |||||||||
Special Annual | Class A Common | $ | — | $ | — | $ | 1.03 | $ | 0.79 |
For the Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
(unaudited; in millions) | |||||||
Cash, cash equivalents and restricted cash as of January 1 | $ | 175.5 | $ | 159.8 | |||
Net cash provided by operating activities | 182.6 | 241.0 | |||||
Net cash used in investing activities | (14.3 | ) | (2.8 | ) | |||
Net cash used in financing activities | (184.5 | ) | (160.4 | ) | |||
Cash, cash equivalents and restricted cash as of June 30 | $ | 159.3 | $ | 237.6 |
Exhibit No. | Description | |
10.1 | ||
31.1 | ||
31.2 | ||
32.1 | ||
32.2 | ||
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, 2019 and December 31, 2018; (ii) the Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2019 and 2018; (iii) the Unaudited Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2019 and 2018; (iv) the Unaudited Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2019 and 2018; (v) the Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018 (vi) the Notes to Unaudited Consolidated Financial Statements as of and for the three and six months ended June 30, 2019 and 2018. |
/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, 2019 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, 2019 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) |
Unaudited Condensed Consolidated Statements of Financial Condition (Parenthetical) - $ / shares |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Common Stock, Shares, Outstanding | 77,814,721 | 76,942,872 |
Class A Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common Stock, Shares, Outstanding | 56,145,554 | 54,071,188 |
Class B Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common Stock, Shares, Outstanding | 7,912,056 | 8,645,249 |
Class C Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 400,000,000 | 400,000,000 |
Common Stock, Shares, Outstanding | 13,757,111 | 14,226,435 |
Unaudited Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net income before noncontrolling interests | $ 59,973 | $ 67,645 | $ 109,791 | $ 139,309 |
Other comprehensive income (loss), net of tax | ||||
Foreign currency translation gain (loss) | (460) | (1,042) | (82) | (410) |
Total other comprehensive income (loss) | (460) | (1,042) | (82) | (410) |
Comprehensive income | 59,513 | 66,603 | 109,709 | 138,899 |
Comprehensive income attributable to noncontrolling interests - Artisan Partners Holdings | 19,683 | 23,002 | 37,132 | 49,293 |
Comprehensive income attributable to noncontrolling interests - consolidated investment products | 990 | 2,332 | 1,960 | 6,670 |
Comprehensive income attributable to Artisan Partners Asset Management Inc. | $ 38,840 | $ 41,269 | $ 70,617 | $ 82,936 |
Nature of Business and Organization |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
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, 2019, APAM held approximately 72% 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 traditional separate accounts and pooled investment vehicles, including Artisan Partners Funds, Inc. (“Artisan Funds”), Artisan Partners Global Funds plc (“Artisan Global Funds”), and Artisan sponsored private funds (“Artisan Private 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.
|
Summary of Significant Accounting Policies |
6 Months Ended |
---|---|
Jun. 30, 2019 | |
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. Artisan generally consolidates VIEs in which it meets the power criteria and holds an equity ownership interest of greater than 10%. 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 Artisan Private Funds. 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, each sub-fund of Artisan Global Funds is evaluated for consolidation under the VIE model. Artisan Private Funds are also evaluated for consolidation under the VIE model because third-party equity holders of the funds generally lack the ability to divest Artisan of its control of the funds. From time to time, the Company makes investments in Artisan Funds, Artisan Global Funds, and Artisan Private Funds. If the investment results in a controlling financial interest, APAM consolidates the fund, and the underlying activity of the entire fund is included in Artisan’s Unaudited Consolidated Financial Statements. As of June 30, 2019, Artisan had a controlling financial interest in three sub-funds of Artisan Global Funds and one Artisan Private Fund and, as a result, these funds are included in Artisan’s Unaudited Consolidated Financial Statements. Because these consolidated investment products meet the definition of investment companies under U.S. GAAP, Artisan has retained the specialized industry accounting principles for investment companies in the consolidated financial statements. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details. Recent accounting pronouncements Accounting standards adopted as of January 1, 2019 In February 2016, the FASB issued ASU 2016-02, Leases, which introduces a lessee model that brings most leases on the balance sheet. The Company adopted the new standard on January 1, 2019, using the modified retrospective transition method that does not adjust comparative periods. The adoption had no impact on previously reported results, and did not result in a cumulative-effect adjustment to the opening balance of retained earnings. In accordance with the adoption of the new lease standard, the Company recorded operating lease assets and operating lease liabilities in the Unaudited Condensed Consolidated Statements of Financial Condition. The adoption of ASU 2016-02 had no impact on the Unaudited Consolidated Statements of Operations for the six months ended June 30, 2019, and did not impact operating, financing or investing cash flows in the Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2019. Artisan elected to adopt the short-term lease exemption, which allows companies to exclude contracts that have an initial term of 12 months or less. Artisan also elected the package of practical expedients available for existing contracts which allowed the Company to carry forward historical assessments of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs. Additionally, Artisan elected the practical expedient to account for lease and non-lease components as a single component. See Note 14, “Leases” for additional information. Accounting standards not yet adopted In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The capitalized implementation costs will be expensed over the term of the hosting arrangement. The Company currently expenses implementation costs in hosting arrangements as the costs are incurred. The new guidance will be effective on January 1, 2020. The Company is currently evaluating the impact of adoption on the consolidated financial statements, but expects certain types of costs will be capitalized that would have previously been expensed as incurred.
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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 investment products. Investments held by consolidated investment products are described in Note 6, “Variable Interest Entities and Consolidated Investment Products”.
Artisan’s investments in equity securities consist of investments in shares of Artisan Funds, Artisan Global Funds and Artisan Private Funds. The table below presents the net investment income activity related to the investment securities:
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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 financial instruments held by consolidated investment products are excluded from the table below and are 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, 2019 and December 31, 2018:
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. Equity securities without a fair value level consist of the Company’s investment in one of the Artisan Private Funds, which is measured at the underlying fund’s net asset value (“NAV”), using the ASC 820 practical expedient. The NAV is provided by the fund and is derived from the fair values of the underlying investments as of the reporting date. Cash maintained in demand deposit accounts is excluded from the table above.
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Borrowings |
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Borrowings | Note 5. Borrowings Artisan’s borrowings consist of the following as of June 30, 2019 and December 31, 2018:
The fair value of borrowings was approximately $205.2 million as of June 30, 2019. 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”. On June 6, 2019, Holdings entered into a Note Purchase Agreement to issue $50 million of Series E senior notes in a private placement transaction on August 16, 2019, subject to the satisfaction of certain customary closing conditions. The Company will use the proceeds from the Series E senior notes to repay the $50 million of Series B senior notes that mature on August 16, 2019. The Series E senior notes will bear interest at a rate of 4.53% and will mature on August 16, 2027. Interest expense incurred on the unsecured notes and revolving credit agreement was $2.6 million for the three months ended June 30, 2019 and 2018, and $5.3 million for the six months ended June 30, 2019 and 2018. As of June 30, 2019, 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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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. Any such entities are collectively referred to herein as consolidated investment products or CIPs. As of June 30, 2019, Artisan is considered to have a controlling financial interest in three sub-funds of Artisan Global Funds and one Artisan Private Fund. As of June 30, 2019, the aggregate amount of Artisan’s direct equity investment in the consolidated investment products was $31.4 million. Artisan’s maximum exposure to loss in connection with the assets and liabilities of CIPs 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 CIPs are not available to Artisan’s creditors, nor are they available to Artisan for general corporate purposes. In addition, third-party investors in the CIPs have no recourse to the general credit of the Company. Management fees and incentive allocations earned from CIPs are eliminated from revenue upon consolidation. See Note 15, “Related Party Transactions” for additional information on management fees and incentive allocations earned from CIPs. Third-party investors’ ownership interest in CIPs is presented as redeemable noncontrolling interest in the Unaudited Condensed 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 Statements of Operations. During the six months ended June 30, 2019, the Company determined that it no longer had a controlling financial interest in one sub-fund of Artisan Global Funds as a result of third party capital contributions. Upon loss of control, the VIE was deconsolidated and the related assets, liabilities, and equity of the fund were derecognized from the Company’s Unaudited Condensed Consolidated Statements of Financial Condition. There was no net impact to the Unaudited Consolidated Statements of Operations for the six months ended June 30, 2019. Artisan generally does not recognize a gain or loss upon deconsolidation of investment products because the assets and liabilities of CIPs are carried at fair value. Artisan’s $0.9 million direct equity investment was reclassified from investment assets of consolidated investment products to investment securities. As of June 30, 2019, Artisan held direct equity investments of $14.7 million in VIEs for which the Company does not hold a controlling financial interest. These direct equity investments consisted of seed investments in one sub-fund of Artisan Global Funds and one Artisan Private Fund, both which are accounted for under the equity method of accounting because Artisan has significant influence over the funds. 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 are generally evaluations based on the judgment of pricing vendors, which may consider, among other factors, the prices at which securities actually trade, broker-dealer quotations, pricing formulas, estimates of market values obtained from yield data relating to investments or securities with similar characteristics and/or discounted cash flow models that might be applicable. The following tables present the fair value hierarchy levels of assets and liabilities held by CIPs measured at fair value as of June 30, 2019 and December 31, 2018:
CIP balances included in the Company’s Unaudited Condensed Consolidated Statements of Financial Condition were as follows:
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Noncontrolling interest - Holdings |
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Noncontrolling interest - Holdings | Note 7. Noncontrolling interests - 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, 2019, APAM held approximately 72% of the equity ownership interests in Holdings. 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 from time to time (the “Holdings Common Unit Exchanges”). The Holdings Common Unit Exchanges increase APAM’s equity ownership interest in Holdings and result in an increase to deferred tax assets and amounts payable under the tax receivable agreements. See Note 11, “Income Taxes and Related Payments”. 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, 2019, APAM’s equity ownership interest in Holdings has increased as a result of the following transactions:
Changes in ownership of Holdings are accounted for as equity transactions because APAM continues to have a controlling interest in Holdings. Additional paid-in capital and noncontrolling interests - 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 $0.6 million and $0.8 million for the six months ended June 30, 2019 and 2018, respectively.
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Stockholders' Equity |
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Stockholders' Equity | Note 8. Stockholders’ Equity APAM - Stockholders’ Equity APAM had the following authorized and outstanding equity as of June 30, 2019 and December 31, 2018, respectively:
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, 2019 and 2018:
The following table summarizes APAM’s stock transactions for the six months ended June 30, 2019:
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 Class B common units are exchanged for Class E common units and the corresponding shares of Class B common stock are canceled. 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, 2019 and 2018, 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.
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue From Contracts with Customers | Note 9. Revenue From Contracts with Customers Disaggregated Revenue The following table presents a disaggregation of revenue by type and vehicle for the three and six months ended June 30, 2019 and 2018:
Performance fees are subject to the uncertainty of market volatility, and as a result, the entire amount of the variable consideration related to performance fees is constrained until the end of each measurement period. At the end of the quarterly or annual measurement period, revenue is recorded for the actual amount of performance fees earned during that period because the uncertainty has been resolved. For performance fees with annual measurement periods, revenue recognized in the current quarter relates to performance obligations that were partially satisfied in prior periods. The following table presents the balances of receivables related to contracts with customers: Artisan Funds and Artisan Global Funds are billed on the last day of each month. Artisan Funds and Artisan Global Funds make payments on the same day the invoice is received for the majority of the invoiced amount. The remainder of the invoice is generally paid in the month following receipt of the invoice. Separate account clients are generally billed on a monthly or quarterly basis, with payments due within 30 days of billing. Artisan had no other contract assets or liabilities from contracts with
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Compensation and Benefits |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Benefits | Note 10. 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 is generally paid on an annual basis. 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. Restricted share-based awards have a pro-rata five year vesting requirement. Certain restricted share-based awards will vest or become eligible to vest only upon a combination of both (1) pro-rata annual time vesting and (2) a qualifying retirement (as defined in the award agreements). A portion of the restricted share-based awards granted to portfolio managers contain a Franchise Protection Clause, which provides that the number of awards that ultimately vest depends on achieving performance goals related to client cash flows. If such goals are not met, compensation cost will be reversed for any awards that do not vest. The fair value, requisite service period and expense recognition for these awards are determined in the same manner as the other restricted share-based awards. 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. 5,597,144 shares of Class A common stock were reserved and available for issuance under the Plan as of June 30, 2019. During the six months ended June 30, 2019, Artisan granted 959,000 restricted stock awards and 4,000 restricted stock units of Class A common stock to employees of the Company. Total compensation expense associated with the 2019 grant is expected to be approximately $22.1 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. The following table summarizes the restricted share-based award activity for the six months ended June 30, 2019:
The unrecognized compensation expense for the unvested awards as of June 30, 2019 was $100.7 million with a weighted average recognition period of 3.5 years remaining. During the six months ended June 30, 2019, the Company withheld a total of 74,006 restricted shares as a result of net share settlements to satisfy employee tax withholding obligations. The Company paid $1.8 million in employee tax withholding obligations related to these settlements during the six months ended June 30, 2019. These net share settlements had the effect of shares repurchased and retired by the Company, as they reduced the number of shares outstanding.
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Income Taxes and Related Payments |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes and Related Payments | Note 11. 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 as well as foreign income taxes payable by Holdings’ subsidiaries. APAM’s effective income tax rate was lower than the U.S. federal statutory rate of 21% primarily due to a rate benefit attributable to the fact that, for the six months ended June 30, 2019, approximately 31% 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 than the statutory rate due to dividends paid on unvested share-based awards, net of higher tax expense related to the vesting of restricted share-based awards. APAM’s effective tax rate was 16.0% and 14.8% for the six months ended June 30, 2019 and 2018, respectively. 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”) or its assignees 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 or their assignees 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 from 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 Unaudited 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, 2019 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, 2019 and December 31, 2018. 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, 2019, U.S. federal income tax returns filed for the years 2015 through 2017 are open and therefore subject to examination. State, local, and foreign tax returns filed are generally subject to examination from 2014 to 2017.
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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 (both 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, 2019 and 2018 were as follows:
Allocation to participating securities in the table above primarily represents dividends paid to holders of unvested restricted share-based awards, which reduces net income available to common stockholders. There were no dilutive securities outstanding during the three and six months ended June 30, 2019 and 2018. The Holdings limited partnership units are anti-dilutive primarily due to the impact of public company expenses. 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 |
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Jun. 30, 2019 | |
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.
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Leases |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Note 14. Leases Artisan has lease commitments for office space, parking structures, and equipment, which are all accounted for as operating leases. Artisan records expense for operating leases on a straight-line basis over the lease term. Any lease incentives received by Artisan are also amortized on a straight-line basis over the lease term. Artisan assesses its contractual arrangements for the existence of a lease at inception. Operating leases with an initial term greater than 12 months are recorded as operating lease assets and operating lease liabilities in the Unaudited Condensed Consolidated Statements of Financial Condition. Lease components (e.g. fixed rental payments) and non-lease components (e.g. fixed common-area maintenance costs) are generally accounted for as a single component. Operating lease assets and operating lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Artisan’s lease agreements generally do not provide an implicit interest rate, and therefore the present value calculation uses Artisan’s estimated incremental borrowing rate. A market-based approach was used to estimate the incremental borrowing rate for each individual lease using observable market interest rates and Artisan specific inputs. The lease terms include periods covered by options to extend or exclude periods covered by options to terminate the lease when it is reasonably certain that Artisan will exercise that option. Operating lease expense was as follows:
During the six months ended June 30, 2019, the Company recognized an asset impairment loss of $2.1 million related to the abandonment of a leased office location. The loss is recorded in occupancy expense based on the present value of expected future cash flows and consists of a $1.5 million lease asset impairment and a $0.6 million property impairment. The table below presents the maturity of operating lease liabilities:
As of June 30, 2019, there were not any leases that were signed but not yet commenced, and none of the options to extend lease terms were reasonably certain of being exercised. Other information related to leases was as follows:
At December 31, 2018, the aggregate future minimum payments for leases for each of the following five years and thereafter are as follows:
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Related Party Transactions |
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Related Party Transactions [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions | Note 15. Related Party Transactions Several of the current executive officers and directors of APAM or entities associated with those individuals, 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 1.05%. 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 Artisan 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 1.85%. Artisan reimburses each sub-fund of Artisan Global Funds to the extent that sub-fund’s annual expenses, not including Artisan’s fee, exceed certain levels, which range from 0.09% 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 also employees of Artisan receive no compensation from the funds. Fees for managing Artisan Global Funds and amounts reimbursed to Artisan Global Funds by Artisan are as follows:
Affiliate transactions—Artisan Private Funds Pursuant to written agreements, Artisan serves as the investment manager, and acts as the general partner, for certain Artisan Private Funds. Under the terms of these agreements, Artisan earns a management fee and is entitled to receive either an allocation of profits or a performance-based fee. In addition, for a period of time following the formation of each private fund, Artisan has agreed to reimburse the fund to the extent that expenses, excluding Artisan’s management fee, incentive fee and transaction related costs, exceed 1.00% per annum of the net assets of the fund. Artisan may also voluntarily waive fees or reimburse the funds for other expenses. Artisan and certain related parties, including employees, officers and members of the Company’s board have invested in one or more of the funds and currently do not pay a management fee, incentive fee or incentive allocation. Fees for managing the privately offered funds and amounts reimbursed to the privately offered funds by Artisan are as follows:
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 16. Subsequent Events Distributions and dividends APAM, acting as the general partner of Artisan Partners Holdings, declared, effective July 30, 2019, a distribution by Artisan Partners Holdings of $34.0 million to holders of Artisan Partners Holdings partnership units, including APAM. The board of directors of APAM declared, effective July 30, 2019, a quarterly dividend of $0.60 per share of Class A common stock. The APAM dividend is payable on August 30, 2019, to shareholders of record as of August 16, 2019.
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2019 | |
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.
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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. Artisan generally consolidates VIEs in which it meets the power criteria and holds an equity ownership interest of greater than 10%. 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 Artisan Private Funds. 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, each sub-fund of Artisan Global Funds is evaluated for consolidation under the VIE model. Artisan Private Funds are also evaluated for consolidation under the VIE model because third-party equity holders of the funds generally lack the ability to divest Artisan of its control of the funds. From time to time, the Company makes investments in Artisan Funds, Artisan Global Funds, and Artisan Private Funds. If the investment results in a controlling financial interest, APAM consolidates the fund, and the underlying activity of the entire fund is included in Artisan’s Unaudited Consolidated Financial Statements. As of June 30, 2019, Artisan had a controlling financial interest in three sub-funds of Artisan Global Funds and one Artisan Private Fund and, as a result, these funds are included in Artisan’s Unaudited Consolidated Financial Statements. Because these consolidated investment products meet the definition of investment companies under U.S. GAAP, Artisan has retained the specialized industry accounting principles for investment companies in the consolidated financial statements. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details.
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Recent accounting pronouncements | Recent accounting pronouncements Accounting standards adopted as of January 1, 2019 In February 2016, the FASB issued ASU 2016-02, Leases, which introduces a lessee model that brings most leases on the balance sheet. The Company adopted the new standard on January 1, 2019, using the modified retrospective transition method that does not adjust comparative periods. The adoption had no impact on previously reported results, and did not result in a cumulative-effect adjustment to the opening balance of retained earnings. In accordance with the adoption of the new lease standard, the Company recorded operating lease assets and operating lease liabilities in the Unaudited Condensed Consolidated Statements of Financial Condition. The adoption of ASU 2016-02 had no impact on the Unaudited Consolidated Statements of Operations for the six months ended June 30, 2019, and did not impact operating, financing or investing cash flows in the Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2019. Artisan elected to adopt the short-term lease exemption, which allows companies to exclude contracts that have an initial term of 12 months or less. Artisan also elected the package of practical expedients available for existing contracts which allowed the Company to carry forward historical assessments of (1) whether contracts are or contain leases, (2) lease classification, and (3) initial direct costs. Additionally, Artisan elected the practical expedient to account for lease and non-lease components as a single component. See Note 14, “Leases” for additional information. Accounting standards not yet adopted In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The capitalized implementation costs will be expensed over the term of the hosting arrangement. The Company currently expenses implementation costs in hosting arrangements as the costs are incurred. The new guidance will be effective on January 1, 2020. The Company is currently evaluating the impact of adoption on the consolidated financial statements, but expects certain types of costs will be capitalized that would have previously been expensed as incurred.
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Investment Securities (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | The disclosures below include details of Artisan’s investments, excluding money market funds and consolidated investment products. Investments held by consolidated investment products are described in Note 6, “Variable Interest Entities and Consolidated Investment Products”.
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Gain (Loss) on Investments | The table below presents the net investment income activity related to the investment securities:
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Fair Value Measurements (Tables) |
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2019 and December 31, 2018:
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Borrowings (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of borrowings | Artisan’s borrowings consist of the following as of June 30, 2019 and December 31, 2018:
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Aggregate maturities of debt obligations | As of June 30, 2019, 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 (Tables) |
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Variable Interest Entity, Primary Beneficiary | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities and Consolidated Investment Products | The following tables present the fair value hierarchy levels of assets and liabilities held by CIPs measured at fair value as of June 30, 2019 and December 31, 2018:
CIP balances included in the Company’s Unaudited Condensed Consolidated Statements of Financial Condition were as follows:
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Noncontrolling interest - Holdings (Tables) |
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Jun. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Equity ownership Interests in Holdings | For the six months ended June 30, 2019, APAM’s equity ownership interest in Holdings has increased as a result of the following transactions:
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Change in ownership | The reallocation of equity had the following impact on the Unaudited Condensed Consolidated Statements of Financial Condition:
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Stockholders' Equity (Tables) |
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Authorized and outstanding equity | APAM had the following authorized and outstanding equity as of June 30, 2019 and December 31, 2018, respectively:
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Dividends Declared | APAM declared and paid the following dividends per share during the three and six months ended June 30, 2019 and 2018:
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Issuance (Cancellation) of Shares Disclosure | The following table summarizes APAM’s stock transactions for the six months ended June 30, 2019:
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Distributions Made to Limited Partner, by Distribution | Holdings’ partnership distributions for the three and six months ended June 30, 2019 and 2018, were as follows:
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Revenue from Contracts with Customers (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | Disaggregated Revenue The following table presents a disaggregation of revenue by type and vehicle for the three and six months ended June 30, 2019 and 2018:
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Contract with Customer, Asset and Liability | The following table presents the balances of receivables related to contracts with customers:
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Compensation and Benefits (Tables) |
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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, 2019:
|
Income Taxes and Related Payments (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2019 is summarized as follows:
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Components of deferred tax assets | Net deferred tax assets comprise the following:
|
Earnings Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2019 and 2018 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:
|
Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost | Operating lease expense was as follows:
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Lessee, Operating Lease, Liability, Maturity | The table below presents the maturity of operating lease liabilities:
|
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Lessee, Operating Lease, Disclosure | Other information related to leases was as follows:
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Schedule of Future Minimum Rental Payments for Operating Leases | At December 31, 2018, the aggregate future minimum payments for leases for each of the following five years and thereafter are as follows:
|
Related Party Transactions (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Artisan Funds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions | Fees for managing Artisan 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:
|
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Artisan Private Funds | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transaction [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of related party transactions | Fees for managing the privately offered funds and amounts reimbursed to the privately offered funds by Artisan are as follows:
|
Nature of Business and Organization (Details) |
Jun. 30, 2019 |
---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
APAM economic interest in Artisan Partners Holdings LP (as a percent) | 72.00% |
Ownership interest | 100.00% |
Summary of Significant Accounting Policies Other Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Dec. 31, 2018 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Variable Interest Entity Consolidation Threshold | 10.00% | 10.00% | |||
Operating lease assets | $ 91,458 | $ 91,458 | $ 0 | ||
Other investment gain (loss) | 1,383 | $ 660 | 3,340 | $ 1,114 | |
Investment Income, Nonoperating | 1,108 | $ 304 | 2,723 | $ 625 | |
Total operating lease liabilities | $ 105,429 | $ 105,429 | $ 0 | ||
Artisan Global Funds | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Number of Consolidated Variable Interest Entities | 3 | 3 | |||
Artisan Private Funds | |||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||
Number of Consolidated Variable Interest Entities | 1 | 1 |
Investment Securities - Investments, Debt and Equity Securities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Investments in equity securities | $ 7,111 | $ 5,857 |
Fair Value | 14,667 | 12,252 |
Total investment securities | $ 21,778 | $ 18,109 |
Investment Securities - Other Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Net gains (losses) recognized on investment securities | $ 1,108 | $ 304 | $ 2,723 | $ 625 |
Less: Net realized gains (losses) recognized on investment securities sold during the period | 0 | 0 | 0 | 0 |
Unrealized gain (losses) recognized on investment securities held as of the end of the period | $ 1,108 | $ 304 | $ 2,723 | $ 625 |
Fair Value Measurements - Fair value hierarchy of assets and liabilities (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | $ 40,338 | $ 57,790 |
Equity securities | 21,778 | 18,109 |
Fair Value Measured at Net Asset Value Per Share | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Equity securities | 13,524 | 12,252 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 40,338 | 57,790 |
Equity securities | 8,254 | 5,857 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Equity securities | 0 | 0 |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Money market funds | 0 | 0 |
Equity securities | $ 0 | $ 0 |
Borrowings - Components of Borrowings (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Debt Instrument [Line Items] | |
Outstanding Balance | $ 200,000 |
Senior notes | Series B Senior Notes | |
Debt Instrument [Line Items] | |
Outstanding Balance | $ 50,000 |
Interest Rate Per Annum | 5.32% |
Senior notes | Series C | |
Debt Instrument [Line Items] | |
Outstanding Balance | $ 90,000 |
Interest Rate Per Annum | 5.82% |
Senior notes | Series D | |
Debt Instrument [Line Items] | |
Outstanding Balance | $ 60,000 |
Interest Rate Per Annum | 4.29% |
Revolving credit agreement | |
Debt Instrument [Line Items] | |
Outstanding Balance | $ 0 |
Borrowings - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
Aug. 16, 2019 |
|
Debt Instrument [Line Items] | |||||
Debt and capital lease obligations | $ 200,000 | $ 200,000 | |||
Interest expense | 2,600 | $ 2,600 | 5,300 | $ 5,300 | |
Level 2 | |||||
Debt Instrument [Line Items] | |||||
Borrowings fair value | 205,200 | 205,200 | |||
Series B Senior Notes | Senior notes | |||||
Debt Instrument [Line Items] | |||||
Debt and capital lease obligations | $ 50,000 | $ 50,000 | |||
Interest Rate Per Annum | 5.32% | 5.32% | |||
Subsequent Event | Series E Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Debt and capital lease obligations | $ 50,000 | ||||
Interest Rate Per Annum | 4.53% |
Borrowings - Aggregate Maturities of Debt Obligations (Details) $ in Thousands |
Jun. 30, 2019
USD ($)
|
---|---|
Debt Disclosure [Abstract] | |
2019 | $ 50,000 |
2020 | 0 |
2021 | 0 |
2022 | 90,000 |
2023 | 0 |
Thereafter | 60,000 |
Total | $ 200,000 |
Stockholders' Equity Dividends Declared (Details) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Dividends Declared [Line Items] | ||||
Dividends declared per Class A common share (in dollars per share) | $ 0.55 | $ 0.60 | $ 2.14 | $ 1.99 |
Quarterly | ||||
Dividends Declared [Line Items] | ||||
Dividends declared per Class A common share (in dollars per share) | 0.55 | 0.60 | 1.11 | 1.20 |
Special Annual | ||||
Dividends Declared [Line Items] | ||||
Dividends declared per Class A common share (in dollars per share) | $ 0 | $ 0 | $ 1.03 | $ 0.79 |
Stockholders' Equity - Distributions (Details) - Artisan Partners Holdings LP - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Distribution Made to Limited Partner [Line Items] | ||||
Holdings Partnership Distributions to Limited Partners | $ 25,733 | $ 33,061 | $ 48,324 | $ 55,744 |
Holdings Partnership Distributions to APAM | 59,483 | 67,316 | 112,884 | 112,909 |
Total Holdings Partnership Distributions | $ 85,216 | $ 100,377 | $ 161,208 | $ 168,653 |
Compensation and Benefits - Components of expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Salaries, incentive compensation and benefits | $ 89,521 | $ 91,579 | $ 177,229 | $ 182,960 |
Compensation and benefits | 101,486 | 106,744 | 200,768 | 211,968 |
Restricted Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Restricted share-based award compensation expense | $ 11,965 | $ 15,165 | $ 23,539 | $ 29,008 |
Compensation and Benefits - Additional information (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jan. 01, 2019 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized (in shares) | 14,000,000 | ||
Number of shares available for grant (in shares) | 5,597,144 | ||
Granted - Number of awards (in shares) | 963,000 | ||
Shares paid for tax withholding for share based compensation (in shares) | 74,006 | ||
Taxes paid related to employee net share settlement | $ (1,824) | $ (1,805) | |
Restricted Stock | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Award vesting period | 5 years | ||
Granted - Number of awards (in shares) | 959,000 | ||
Unrecognized compensation expense | $ 100,700 | $ 22,100 | |
Requisite service period | 5 years | ||
Recognition period | 3 years 6 months | ||
Restricted Stock Units RSUs | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Granted - Number of awards (in shares) | 4,000 |
Income Taxes and Related Payments - Components of provision for income taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Current: | ||||
Federal | $ 3,073 | $ 4,589 | $ 4,386 | $ 8,738 |
State and local | 800 | 828 | 1,315 | 1,595 |
Foreign | 107 | 115 | 228 | 232 |
Total | 3,980 | 5,532 | 5,929 | 10,565 |
Deferred: | ||||
Federal | 6,706 | 5,769 | 13,402 | 12,249 |
State and local | 798 | 686 | 1,595 | 1,458 |
Total | 7,504 | 6,455 | 14,997 | 13,707 |
Income tax expense | $ 11,484 | $ 11,987 | $ 20,926 | $ 24,272 |
Income Taxes and Related Payments - Components of deferred tax assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Deferred tax assets: | ||
Amortizable basis | $ 399,699 | $ 404,715 |
Other | 25,485 | 24,413 |
Total deferred tax assets | 425,184 | 429,128 |
Less: valuation allowance | 0 | 0 |
Deferred tax assets | $ 425,184 | $ 429,128 |
Income Taxes and Related Payments Income Tax Uncertainties (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 0 | $ 0 |
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, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Earnings Per Share [Abstract] | ||||
Net income attributable to APAM | $ 39,188 | $ 42,006 | $ 70,727 | $ 83,280 |
Less: Allocation to participating securities | 5,340 | 6,852 | 12,524 | 11,775 |
Net income available to common stockholders | $ 33,848 | $ 35,154 | $ 58,203 | $ 71,505 |
Basic and Diluted Weighted Average Number of Shares Outstanding | 51,242,911 | 49,041,113 | 50,697,329 | 48,205,418 |
Earnings per share (in dollars per share) | $ 0.66 | $ 0.72 | $ 1.15 | $ 1.48 |
Dilutive securities outstanding (in shares) | 0 | 0 | 0 | 0 |
Earnings Per Share - Antidilutive securities excluded from the computation of net income per share (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-Dilutive Weighted Average Shares Outstanding (in shares) | 26,870,069 | 28,189,489 | 27,163,392 | 28,653,290 |
Holdings limited partnership units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-Dilutive Weighted Average Shares Outstanding (in shares) | 21,707,968 | 23,025,899 | 22,143,682 | 23,787,797 |
Unvested restricted share-based awards | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-Dilutive Weighted Average Shares Outstanding (in shares) | 5,162,101 | 5,163,590 | 5,019,710 | 4,865,493 |
Leases - Operating Lease Costs (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Operating Lease Cost | ||||
Operating lease expense | $ 3,875 | $ 3,420 | $ 9,477 | $ 6,449 |
Compensation and benefits | ||||
Operating Lease Cost | ||||
Operating lease expense | 130 | 117 | 260 | 233 |
Occupancy | ||||
Operating Lease Cost | ||||
Operating lease expense | 3,671 | 3,228 | 9,065 | 6,054 |
Communication and technology | ||||
Operating Lease Cost | ||||
Operating lease expense | 74 | $ 75 | $ 152 | $ 162 |
Abandonment of leased office space | Occupancy | ||||
Operating Lease Cost | ||||
Operating lease expense | $ 1,500 |
Leases - Narrative (Details) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2019 |
Jun. 30, 2018 |
|
Lessee, Lease, Description [Line Items] | ||
Asset Impairment | $ 2,107 | $ 0 |
Payments related to options to extend lease terms | 0 | |
Abandonment of leased office space | Occupancy | ||
Lessee, Lease, Description [Line Items] | ||
Asset Impairment | 2,100 | |
Impairment of long-lived assets held-for-use | 1,500 | |
Impairment of long-lived assets to be disposed of | $ 600 |
Leases - Lease Maturities (Details) - USD ($) $ in Thousands |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|
Operating Lease Liabilities, Payments Due (Topic 842) | ||
2019 (excluding the six months ended June 30, 2019) | $ 7,637 | |
2020 | 16,210 | |
2021 | 16,337 | |
2022 | 14,838 | |
2023 | 13,265 | |
Thereafter | 60,495 | |
Total undiscounted lease payments | 128,782 | |
Adjustment to discount to present value | (23,353) | |
Total operating lease liabilities | $ 105,429 | $ 0 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity (Topic 840) | ||
2019 | 14,123 | |
2020 | 15,340 | |
2021 | 15,215 | |
2022 | 13,748 | |
2023 | 12,378 | |
Thereafter | 57,185 | |
Total undiscounted lease payments | $ 127,989 |
Leases - Other Lease Information (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2019
USD ($)
| |
Leases [Abstract] | |
Weighted average discount rate | 4.70% |
Weighted average remaining lease term | 8 years 7 months 6 days |
Operating cash flows for operating leases | $ 6,750 |
Subsequent Events (Details) - Subsequent Event $ / shares in Units, $ in Millions |
Jul. 30, 2019
USD ($)
$ / shares
|
---|---|
Subsequent Event [Line Items] | |
Distribution made to limited partner, Cash distributions declared | $ | $ 34.0 |
Quarterly | Class A Common Stock | |
Subsequent Event [Line Items] | |
Dividends declared (in dollars per share) | $ / shares | $ 0.60 |
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