(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
, | ||||
(Address of principal executive offices) | Zip Code |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act: | ||||
Title of each class | Trading Symbol | Name of each exchange on which registered | ||
Item 2.02 | Results of Operations and Financial Condition. | ||||
On July 27, 2020, Legg Mason, Inc. announced its results of operations for the quarter ended June 30, 2020. A copy of the related press release is attached hereto as Exhibit 99.1. | |||||
The information in this Section 2.02 and Exhibit 99.1 attached hereto shall not be deemed "filed" for purposes of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. | |||||
Item 7.01 | Regulation FD Disclosure | ||||
The fiscal first quarter earnings presentation slides are attached hereto as Exhibit 99.2 to this Form 8-K. | |||||
The information in this Section 7.01 and Exhibit 99.2 attached hereto shall not be deemed "filed" for purposes of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing. | |||||
Item 9.01 | Financial Statements and Exhibits. | ||||
(d) | Exhibits | ||||
Exhibit No. | Subject Matter | ||||
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. |
LEGG MASON, INC. | |||
(Registrant) | |||
Date: July 27, 2020 | By: | /s/ Thomas C. Merchant | |
Thomas C. Merchant | |||
Executive Vice President and General Counsel |
Investor Relations: | Media: | |||
Alan Magleby | Mary Athridge | |||
410-454-5246 | 212-805-6035 | |||
amagleby@leggmason.com | mkathridge@leggmason.com |
-- | First Quarter Net Income of $49.4 Million, or $0.54 per Diluted Share |
• | Includes Strategic Restructuring and Merger Related Charges of $30.9 Million, or $0.24 per Diluted Share |
• | Achieved $104 Million of Annualized Run-Rate Expense Savings |
Quarters Ended | |||||||||||
Financial Results | Jun | Mar | Jun | ||||||||
(Amounts in millions, except per share amounts) | 2020 | 2020 | 2019 | ||||||||
Operating Revenues | $ | 666.2 | $ | 719.6 | $ | 705.4 | |||||
Operating Expenses | 598.5 | 553.3 | 621.4 | ||||||||
Operating Income | 67.7 | 166.3 | 83.9 | ||||||||
Net Income1 | 49.4 | 64.2 | 45.4 | ||||||||
Net Income Per Share - Diluted1 | 0.54 | 0.70 | 0.51 | ||||||||
Adjusted Net Income2 | $ | 65.4 | $ | 93.2 | $ | 67.0 | |||||
Adjusted Earnings Per Share - Diluted2 | 0.71 | 1.02 | 0.75 | ||||||||
(1) Net Income Attributable to Legg Mason, Inc. | |||||||||||
(2) See "Use of Supplemental Non-GAAP Financial Information". |
Quarter Ended June 30, 2020 | |||||||||||
Assets Under Management ($ in billions) | AUM | Flows | Operating Revenue Yield 1 | ||||||||
Equity | $ | 192.4 | $ | (2.0 | ) | 55 bps | |||||
Fixed Income | 447.0 | (3.1 | ) | 25 bps | |||||||
Alternative | 73.7 | 0.5 | 2 | 56 bps | |||||||
Long-Term Assets | 713.1 | (4.6 | ) | ||||||||
Liquidity | 70.3 | (5.2 | ) | 15 bps | |||||||
Total | $ | 783.4 | $ | (9.8 | ) | 34 bps | |||||
(1) Operating revenue yield equals total operating revenues less performance fees divided by average AUM | |||||||||||
(2) Excludes realizations of $0.2 billion |
Quarterly Performance | |||||||||||
1-Year | 3-Year | 5-Year | 10-Year | ||||||||
% of Strategy AUM beating Benchmark3 | 57% | 68% | 67% | 85% | |||||||
% of Long-Term U.S. Fund Assets Beating Lipper Category Average | 59% | 63% | 74% | 69% | |||||||
(3) See “Supplemental Data Regarding Quarterly Performance.” |
• | A decrease in separate account and fund advisory fee revenues of $40.6 million, or 6%, reflecting lower average AUM. |
• | In addition, non-pass through performance fees decreased by $5.0 million and pass through performance fees decreased $1.5 million. |
• | Higher compensation of $48.9 million driven by a gain of $20.0 million in the market value of deferred compensation and seed investments, with an offset in non-operating income, as compared to a loss of $32.5 million in the prior quarter. |
• | An increase in communications and technology expenses of $3.3 million reflecting the printing, filing and mailing costs for the proxy voting related to the Franklin Templeton merger. |
• | An increase in occupancy expenses of $6.5 million which included $6.4 million in strategic restructuring costs. |
• | A decrease in other expenses of $4.7 million reflected lower “business as usual expenses” related to T&E, advertising and conference of $13.0 million, which more than offset an increase in merger related costs of $8.4 million is primarily due to proxy solicitation costs associated with the Franklin Templeton merger. |
• | Gains on corporate investments, not offset in compensation, were $10.6 million compared with losses of $12.6 million in the prior quarter. |
• | Gains on funded deferred compensation and seed investments, as described above. |
• | A $1.7 million loss associated with the consolidation of sponsored investment vehicles compared to a $4.1 million gain in the prior quarter. The consolidation of sponsored investment vehicles has no impact on net income as the effects of consolidation are fully attributable to noncontrolling interests. |
• | A decrease in advisory fee revenues of $33.9 million reflecting lower average long-term AUM. |
• | Partially offset by an increase in performance fees of $4.6 million, including an increase of $5.8 million in pass through performance fees partially offset by a $1.2 million decrease in non-pass through performance fees. |
• | Compensation decreased by $26.6 million, or 7% driven by lower strategic restructuring costs, lower revenues, savings from strategic restructuring, partially offset by an increase of $13.0 million in the market value of deferred compensation and seed investments and higher pass through performance fees. |
• | Communications and technology expenses increased by $7.1 million due to higher technology spend primarily at revenue sharing affiliates and the printing, filing and mailing costs for the proxy voting related to the Franklin Templeton merger. |
• | Occupancy expenses increased by $6.4 million reflecting higher strategic restructuring costs. |
• | Other expenses increased by $1.6 million as increases in merger related costs more than offset lower “business as usual” expenses and savings from the strategic restructuring. |
• | Gains on corporate investments, not offset in compensation, were $10.6 million compared with gains of $3.1 million in the prior year quarter. |
• | Gains on funded deferred compensation and seed investments as described above. |
• | A $1.7 million loss associated with the consolidation of sponsored investment vehicles, as compared to a gain of $10.1 million in the prior year quarter. The consolidation of sponsored investment vehicles has no impact on net income as the effects of consolidation are fully attributable to noncontrolling interests. |
• | On May 28, 2020, ClearBridge launched Legg Mason's first exchange-traded fund (ETF) using the semi-transparent technology of Precidian Investments LLC, ActiveShares®. The ClearBridge Focus Value ETF (CFCV), is a series of Legg Mason's ActiveShares® ETF Trust. |
• | On July 17, 2020, Franklin Templeton and Legg Mason announced that all conditions to the closing of its merger with Franklin Resources, Inc. have been satisfied and is scheduled to close on July 31, 2020. |
At June 30, 2020: | 1-Year | 3-Year | 5-Year | 10-Year | |||||||
% of Strategy AUM beating Benchmark1 | |||||||||||
Fixed Income | 62% | 76% | 78% | 98% | |||||||
Equity | 62% | 62% | 70% | 56% | |||||||
Alternatives | 78% | 90% | 79% | 99% | |||||||
At June 30, 2020: | 1-Year | 3-Year | 5-Year | 10-Year | |||||||
% of Long-Term U.S. Fund Assets Beating Lipper Category Average | |||||||||||
Fixed Income | 75% | 76% | 76% | 80% | |||||||
Equity | 41% | 48% | 72% | 55% | |||||||
Alternatives (performance relates to only 3 funds) | 77% | 77% | n/a | n/a | |||||||
LEGG MASON, INC. AND SUBSIDIARIES | ||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
Quarters Ended | ||||||||||||||
June | March | June | ||||||||||||
2020 | 2020 | 2019 | ||||||||||||
Operating Revenues: | ||||||||||||||
Investment advisory fees: | ||||||||||||||
Separate accounts | $ | 245,459 | $ | 260,477 | $ | 260,441 | ||||||||
Funds | 347,876 | 373,453 | 366,812 | |||||||||||
Performance fees | 11,414 | 17,884 | 6,861 | |||||||||||
Distribution and service fees | 59,859 | 65,763 | 69,937 | |||||||||||
Other | 1,578 | 2,010 | 1,309 | |||||||||||
Total operating revenues | 666,186 | 719,587 | 705,360 | |||||||||||
Operating Expenses: | ||||||||||||||
Compensation and benefits | 353,208 | 304,331 | 379,828 | |||||||||||
Distribution and servicing | 91,349 | 99,828 | 103,906 | |||||||||||
Communications and technology | 62,358 | 59,060 | 55,274 | |||||||||||
Occupancy | 32,007 | 25,504 | 25,624 | |||||||||||
Amortization of intangible assets | 5,505 | 5,636 | 5,457 | |||||||||||
Contingent consideration fair value adjustments | — | 250 | (1,165 | ) | ||||||||||
Other | 54,051 | 58,724 | 52,501 | |||||||||||
Total operating expenses | 598,478 | 553,333 | 621,425 | |||||||||||
Operating Income | 67,708 | 166,254 | 83,935 | |||||||||||
Non-Operating Income (Expense): | ||||||||||||||
Interest income | 915 | 2,755 | 4,005 | |||||||||||
Interest expense | (28,581 | ) | (27,024 | ) | (28,483 | ) | ||||||||
Other income (expense), net | 31,120 | (42,378 | ) | 10,599 | ||||||||||
Non-operating income (expense) of | ||||||||||||||
consolidated investment vehicles, net | (2,158 | ) | 1,358 | 9,561 | ||||||||||
Total non-operating income (expense) | 1,296 | (65,289 | ) | (4,318 | ) | |||||||||
Income Before Income Tax Provision | 69,004 | 100,965 | 79,617 | |||||||||||
Income tax provision | 13,930 | 25,582 | 18,048 | |||||||||||
Net Income | 55,074 | 75,383 | 61,569 | |||||||||||
Less: Net income attributable | ||||||||||||||
to noncontrolling interests | 5,652 | 11,224 | 16,219 | |||||||||||
Net Income Attributable to Legg Mason, Inc. | $ | 49,422 | $ | 64,159 | $ | 45,350 | ||||||||
LEGG MASON, INC. AND SUBSIDIARIES | ||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME, CONTINUED | ||||||||||||||
(Amounts in thousands, except per share amounts) | ||||||||||||||
(Unaudited) | ||||||||||||||
Quarters Ended | ||||||||||||||
June | March | June | ||||||||||||
2020 | 2020 | 2019 | ||||||||||||
Net Income Attributable to Legg Mason, Inc. | $ | 49,422 | $ | 64,159 | $ | 45,350 | ||||||||
Less: Earnings (distributed and undistributed) | ||||||||||||||
allocated to participating securities (1) | 904 | 1,955 | 1,510 | |||||||||||
Net Income (Distributed and Undistributed) | ||||||||||||||
Allocated to Shareholders (Excluding | ||||||||||||||
Participating Securities) | $ | 48,518 | $ | 62,204 | $ | 43,840 | ||||||||
Net Income per Share Attributable to | ||||||||||||||
Legg Mason, Inc. Shareholders: | ||||||||||||||
Basic | $ | 0.54 | $ | 0.71 | $ | 0.51 | ||||||||
Diluted | $ | 0.54 | $ | 0.70 | $ | 0.51 | ||||||||
Weighted-Average Number of Shares | ||||||||||||||
Outstanding: | ||||||||||||||
Basic | 89,823 | 87,329 | 86,297 | |||||||||||
Diluted | 90,199 | 88,534 | 86,494 | |||||||||||
(1) | Participating securities excluded from weighted-average number of shares outstanding were 1,971, 2,779, and 2,852 for the quarters ended June 2020, March 2020, and June 2019, respectively. | |||||||||||||
Quarters Ended | ||||||||||||||
June | March | June | ||||||||||||
Strategic Restructuring | 2020 | 2020 | 2019 | |||||||||||
Strategic restructuring cost savings: | ||||||||||||||
Compensation | $ | 8,377 | $ | 11,516 | $ | 2,850 | ||||||||
Occupancy | 502 | 262 | 240 | |||||||||||
Other | 3,026 | 11,164 | 6,894 | |||||||||||
Total strategic restructuring cost savings | $ | 11,905 | $ | 22,942 | $ | 9,984 | ||||||||
Strategic restructuring costs: | ||||||||||||||
Compensation and benefits | $ | 1,128 | $ | 3,936 | $ | 28,694 | ||||||||
Occupancy | 6,420 | (27 | ) | — | ||||||||||
Other | 474 | (172 | ) | 4,204 | ||||||||||
Total strategic restructuring costs | $ | 8,022 | $ | 3,737 | $ | 32,898 | ||||||||
Merger Related Charges | ||||||||||||||
Compensation and benefits | $ | 71 | $ | 3 | $ | — | ||||||||
Communications and technology | 3,252 | 3 | — | |||||||||||
Other | 19,587 | 13,292 | — | |||||||||||
Total merger related charges | $ | 22,910 | $ | 13,298 | $ | — | ||||||||
LEGG MASON, INC. AND SUBSIDIARIES | |||||||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL INFORMATION | |||||||||||||||||
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO LEGG MASON, INC. TO ADJUSTED NET INCOME AND | |||||||||||||||||
RECONCILIATION OF NET INCOME PER DILUTED SHARE ATTRIBUTABLE TO LEGG MASON, INC. SHAREHOLDERS TO | |||||||||||||||||
ADJUSTED EARNINGS PER DILUTED SHARE(1) | |||||||||||||||||
(Amounts in thousands, except per share amounts) | |||||||||||||||||
(Unaudited) | |||||||||||||||||
Quarters Ended | |||||||||||||||||
June | March | June | |||||||||||||||
2020 | 2020 | 2019 | |||||||||||||||
Net Income Attributable to Legg Mason, Inc. | $ | 49,422 | $ | 64,159 | $ | 45,350 | |||||||||||
Plus (less): | |||||||||||||||||
Restructuring costs: | |||||||||||||||||
Strategic restructuring and merger related | 30,932 | 17,035 | 32,898 | ||||||||||||||
Affiliate charges | 494 | 737 | 1,203 | ||||||||||||||
Amortization of intangible assets | 5,505 | 5,636 | 5,457 | ||||||||||||||
Gains and losses on seed and other investments | |||||||||||||||||
not offset by compensation or hedges | (8,077 | ) | 12,545 | (6,411 | ) | ||||||||||||
Acquisition and transition-related costs | 557 | — | — | ||||||||||||||
Contingent consideration fair value adjustments | — | 250 | (1,165 | ) | |||||||||||||
Income tax adjustments:(2) | |||||||||||||||||
Impacts of non-GAAP adjustments | (8,274 | ) | (9,666 | ) | (8,635 | ) | |||||||||||
Other tax items | (5,173 | ) | 2,477 | (1,700 | ) | ||||||||||||
Adjusted Net Income | $ | 65,386 | $ | 93,173 | $ | 66,997 | |||||||||||
Net Income Per Diluted Share Attributable to | |||||||||||||||||
Legg Mason, Inc. Shareholders | $ | 0.54 | $ | 0.70 | $ | 0.51 | |||||||||||
Plus (less), net of tax impacts: | |||||||||||||||||
Restructuring costs: | |||||||||||||||||
Strategic restructuring and merger related | 0.24 | 0.14 | 0.27 | ||||||||||||||
Affiliate charges | — | — | 0.01 | ||||||||||||||
Amortization of intangible assets | 0.04 | 0.05 | 0.04 | ||||||||||||||
Gains and losses on seed and other investments | |||||||||||||||||
not offset by compensation or hedges | (0.06 | ) | 0.10 | (0.05 | ) | ||||||||||||
Acquisition and transition-related costs | 0.01 | — | — | ||||||||||||||
Contingent consideration fair value adjustments | — | — | (0.01 | ) | |||||||||||||
Other tax items | (0.06 | ) | 0.03 | (0.02 | ) | ||||||||||||
Adjusted Earnings per Diluted Share | $ | 0.71 | $ | 1.02 | $ | 0.75 | |||||||||||
(1) See explanations for "Use of Supplemental Non-GAAP Financial Information." | |||||||||||||||||
(2) The non-GAAP effective tax rates for the quarters ended June 30, 2020, March 31, 2020 and June 30, 2019 | |||||||||||||||||
were 28.0%, 24.6%, and 27.0% respectively. | |||||||||||||||||
LEGG MASON, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL DATA | ||||||||||||||
RECONCILIATION OF GAAP BASIS OPERATING MARGIN TO ADJUSTED OPERATING MARGIN (1) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
Quarters Ended | ||||||||||||||
June | March | June | ||||||||||||
2020 | 2020 | 2019 | ||||||||||||
Operating Revenues, GAAP basis | $ | 666,186 | $ | 719,587 | $ | 705,360 | ||||||||
Plus (less): | ||||||||||||||
Pass through performance fees | (6,809 | ) | (8,306 | ) | (1,030 | ) | ||||||||
Operating revenues eliminated upon | ||||||||||||||
consolidation of investment vehicles | 46 | 52 | 125 | |||||||||||
Distribution and servicing fees | (59,859 | ) | (65,763 | ) | (69,937 | ) | ||||||||
Investment advisory fees | (31,612 | ) | (34,038 | ) | (33,950 | ) | ||||||||
Adjusted Operating Revenues | $ | 567,952 | $ | 611,532 | $ | 600,568 | ||||||||
Operating Income, GAAP basis | $ | 67,708 | $ | 166,254 | $ | 83,935 | ||||||||
Plus (less): | ||||||||||||||
Restructuring costs: | ||||||||||||||
Strategic restructuring and merger related | 30,932 | 17,035 | 32,898 | |||||||||||
Affiliate charges | 633 | 737 | 1,203 | |||||||||||
Amortization of intangible assets | 5,505 | 5,636 | 5,457 | |||||||||||
Gains (losses) on deferred compensation | ||||||||||||||
and seed investments, net | 20,029 | (32,540 | ) | 7,014 | ||||||||||
Acquisition and transition-related costs | 557 | — | — | |||||||||||
Contingent consideration fair value adjustments | — | 250 | (1,165 | ) | ||||||||||
Operating loss of consolidated investment | ||||||||||||||
vehicles, net | (41 | ) | 165 | 259 | ||||||||||
Adjusted Operating Income | $ | 125,323 | $ | 157,537 | $ | 129,601 | ||||||||
Operating Margin, GAAP basis | 10.2 | % | 23.1 | % | 11.9 | |||||||||
Adjusted Operating Margin | 22.1 | 25.8 | 21.6 | |||||||||||
(1) See explanations for "Use of Supplemental Non-GAAP Financial Information." |
LEGG MASON, INC. AND SUBSIDIARIES | ||||||||||||||
SUPPLEMENTAL DATA | ||||||||||||||
RECONCILIATION OF CASH PROVIDED BY OPERATING ACTIVITIES | ||||||||||||||
TO ADJUSTED EBITDA (1) | ||||||||||||||
(Amounts in thousands) | ||||||||||||||
(Unaudited) | ||||||||||||||
Quarters Ended | ||||||||||||||
June | March | June | ||||||||||||
2020 | 2020 | 2019 | ||||||||||||
Cash provided by (used in) operating activities, GAAP basis | $ | (211,492 | ) | $ | 183,472 | $ | (187,577 | ) | ||||||
Plus (less): | ||||||||||||||
Interest expense, net of accretion and amortization | ||||||||||||||
of debt discounts and premiums | 28,154 | 26,601 | 28,375 | |||||||||||
Current tax expense (benefit) | 4,904 | 179 | (4,246 | ) | ||||||||||
Net change in assets and liabilities | 378,185 | (43,414 | ) | 303,077 | ||||||||||
Net change in assets and liabilities | ||||||||||||||
of consolidated investment vehicles | (101,352 | ) | 31,095 | (13,012 | ) | |||||||||
Net income attributable to noncontrolling interests | (5,652 | ) | (11,224 | ) | (16,219 | ) | ||||||||
Net gains (losses) and earnings on investments | (11,830 | ) | 19,551 | 6,748 | ||||||||||
Net gains (losses) on consolidated investment vehicles | (2,158 | ) | 1,358 | 9,561 | ||||||||||
Other | 24 | (95 | ) | (343 | ) | |||||||||
Adjusted EBITDA | $ | 78,783 | $ | 207,523 | $ | 126,364 | ||||||||
(1) | See explanations for "Use of Supplemental Non-GAAP Financial Information." |
LEGG MASON, INC. AND SUBSIDIARIES | |||||||||||||||||||||
(Amounts in billions) | |||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||
Assets Under Management | |||||||||||||||||||||
Quarters Ended | |||||||||||||||||||||
By asset class: | June 2020 | March 2020 | December 2019 | September 2019 | June 2019 | ||||||||||||||||
Equity | $ | 192.4 | $ | 161.2 | $ | 214.0 | $ | 203.3 | $ | 205.6 | |||||||||||
Fixed Income | 447.0 | 420.2 | 451.8 | 442.7 | 438.0 | ||||||||||||||||
Alternative | 73.7 | 74.3 | 74.3 | 72.6 | 70.1 | ||||||||||||||||
Long-Term Assets | 713.1 | 655.7 | 740.1 | 718.6 | 713.7 | ||||||||||||||||
Liquidity | 70.3 | 75.1 | 63.4 | 63.2 | 66.5 | ||||||||||||||||
Total | $ | 783.4 | $ | 730.8 | $ | 803.5 | $ | 781.8 | $ | 780.2 | |||||||||||
Quarters Ended | |||||||||||||||||||||
By asset class (average): | June 2020 | March 2020 | December 2019 | September 2019 | June 2019 | ||||||||||||||||
Equity | $ | 181.3 | $ | 193.9 | $ | 209.3 | $ | 204.2 | $ | 202.7 | |||||||||||
Fixed Income | 435.0 | 447.5 | 447.3 | 440.9 | 427.0 | ||||||||||||||||
Alternative | 73.8 | 75.0 | 73.1 | 71.5 | 69.3 | ||||||||||||||||
Long-Term Assets | 690.1 | 716.4 | 729.7 | 716.6 | 699.0 | ||||||||||||||||
Liquidity | 74.3 | 66.0 | 62.0 | 63.2 | 66.9 | ||||||||||||||||
Total | $ | 764.4 | $ | 782.4 | $ | 791.7 | $ | 779.8 | $ | 765.9 | |||||||||||
Component Changes in Assets Under Management | |||||||||||||||||||||
Quarters Ended | |||||||||||||||||||||
June 2020 | March 2020 | December 2019 | September 2019 | June 2019 | |||||||||||||||||
Beginning of period | $ | 730.8 | $ | 803.5 | $ | 781.8 | $ | 780.2 | $ | 758.0 | |||||||||||
Net client cash flows: | |||||||||||||||||||||
Equity | (2.0 | ) | (6.0 | ) | (4.8 | ) | (2.1 | ) | (3.6 | ) | |||||||||||
Fixed Income | (3.1 | ) | (8.4 | ) | 1.7 | (0.5 | ) | 3.9 | |||||||||||||
Alternative | 0.5 | 2.3 | 1.5 | 2.4 | 0.8 | ||||||||||||||||
Long-Term flows | (4.6 | ) | (12.1 | ) | (1.6 | ) | (0.2 | ) | 1.1 | ||||||||||||
Liquidity | (5.2 | ) | 11.6 | — | (3.5 | ) | (1.6 | ) | |||||||||||||
Total net client cash flows | (9.8 | ) | (0.5 | ) | (1.6 | ) | (3.7 | ) | (0.5 | ) | |||||||||||
Realizations(1) | (0.2 | ) | (0.2 | ) | (0.6 | ) | (0.2 | ) | (0.4 | ) | |||||||||||
Market performance and other | 59.7 | (64.4 | ) | 20.9 | 8.7 | 21.9 | |||||||||||||||
Impact of foreign exchange | 2.9 | (7.8 | ) | 3.0 | (3.2 | ) | 0.6 | ||||||||||||||
Acquisition | — | 0.2 | — | — | 0.6 | ||||||||||||||||
End of period | $ | 783.4 | $ | 730.8 | $ | 803.5 | $ | 781.8 | $ | 780.2 | |||||||||||
(1) Realizations represent investment manager-driven distributions primarily related to the sale of assets. Realizations are specific to our alternative managers and do not include client-driven distributions (e.g. client requested redemptions, liquidations or asset transfers). | |||||||||||||||||||||
• | Restructuring costs, including: |
◦ | Corporate charges related to the ongoing strategic restructuring and merger related costs and other cost saving and business initiatives, including severance, lease and other costs; and |
◦ | Affiliate charges, including affiliate restructuring and severance costs, and certain one-time charges arising from the issuance of management equity plan awards |
• | Amortization of intangible assets |
• | Gains and losses on seed and other investments that are not offset by compensation or hedges |
• | Acquisition expenses and transition-related costs for integration activities, including certain related professional fees and costs associated with the transition and acquisition of acquired businesses |
• | Impairments of intangible assets |
• | Contingent consideration fair value adjustments |
• | Charges (credits) related to significant litigation or regulatory matters |
• | Income tax expense (benefit) adjustments to provide an effective non-GAAP tax rate commensurate with our expected annual pre-tax Adjusted Net Income, including: |
◦ | The impact on income tax expense (benefit) of the above non-GAAP adjustments; and |
◦ | Other tax items, including deferred tax asset and liability adjustments associated with statutory rate changes, the impact of other aspects of recent U.S. tax reform, and shortfalls (and windfalls) associated with stock-based compensation |
• | Include: |
◦ | Net investment advisory fees eliminated upon consolidation of investment vehicles |
• | Exclude: |
◦ | Distribution and service fees and a portion of Investment advisory fees used to pay distribution and servicing costs to third party intermediaries based on contractual relationships the third-party intermediaries have with the ultimate clients. The amount of Distribution and servicing fees and the portion of Investment advisory fees excluded approximate the direct costs of selling and servicing our products that are paid to third-party intermediaries, based on contractual percentages of the value of the related AUM |
◦ | Performance fees that are passed through as compensation expense or net income (loss) attributable to noncontrolling interests |
• | Restructuring costs, including: |
◦ | Corporate charges related to the ongoing strategic restructuring and merger related costs and other cost saving and business initiatives, including severance, lease and other costs; and |
◦ | Affiliate charges, including affiliate restructuring and severance costs, and certain one-time charges arising from the issuance of management equity plan awards |
• | Amortization of intangible assets |
• | The impact on compensation expense of: |
◦ | Gains and losses on investments made to fund deferred compensation plans |
◦ | Gains and losses on seed capital investments by our affiliates under revenue sharing arrangements |
• | Acquisition expenses and transition-related costs for integration activities, including certain related professional fees and costs associated with the transition and acquisition of acquired businesses |
• | Impairments of intangible assets |
• | Contingent consideration fair value adjustments |
• | Charges (credits) related to significant regulatory matters |
• | Income (loss) of consolidated investment vehicles |
• | Interest expense, net of accretion and amortization of debt discounts and premiums |
• | Current income tax expense (benefit) |
• | Net change in assets and liabilities, which aligns with the Consolidated Statements of Cash Flows |
• | Net (income) loss attributable to noncontrolling interests |
• | Net gains (losses) and earnings on investments |
• | Net gains (losses) on consolidated investment vehicles |
• | Other |
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