Invesco Reports Results for Three Months Ended September 30, 2012 Total net inflows of $11.7 billion

Strong, long-term investment performance

Total shareholder return of capital of $117.8 million

ATLANTA, Nov. 1, 2012 /PRNewswire/ -- Invesco Ltd. (NYSE: IVZ) today reported financial results for the three months ended September 30, 2012.

(Logo:  http://photos.prnewswire.com/prnh/20110131/MM39469LOGO-a)

"Invesco's continued focus on providing strong, long-term investment performance to our clients contributed to total net inflows of $11.7 billion for the quarter, one of the strongest quarterly net flows results in our history," said Martin L. Flanagan, president and CEO.  "Net revenues increased by 3.2% to $735 million in the third quarter as net revenue yield improved and assets under management rose, ending the quarter at $683 billion."

 

Q3-12

 

Q2-12

 

Q3-12 vs. Q2-12

 

Q3-11

 

Q3-12 vs. Q3-11

 

Adjusted Financial Measures(1)

                   

Net revenues

$734.7m

 

$712.1m

 

3.2%

   

$706.1m

 

4.1%

   

Operating income

$250.4m

 

$249.0m

 

0.6%

   

$255.7m

 

(2.1)%

   

Operating margin

34.1%

   

35.0%

       

36.2%

       

Net income attributable to common shareholders

$188.4m

 

$184.7m

 

2.0%

   

$192.3m

 

(2.0)%

   

Diluted EPS

$0.42

   

$0.41

   

2.4%

   

$0.42

   

— %

   
                     

U.S. GAAP Financial Measures

                   

Operating revenues

$1,041.4m

 

$1,009.0m

 

3.2%

   

$997.8m

 

4.4%

   

Operating income

$216.0m

 

$202.9m

 

6.5%

   

$227.8m

 

(5.2)%

   

Operating margin

20.7%

   

20.1%

       

22.8%

       

Net income attributable to common shareholders

$170.6m

 

$153.9m

 

10.9%

   

$166.9m

 

2.2%

   

Diluted EPS

$0.38

   

$0.34

   

11.8%

   

$0.36

   

5.6%

   
                     

Assets Under Management

                   

Ending AUM

$683.0bn

 

$646.6bn

 

5.6%

   

$598.4bn

 

14.1%

   

Average AUM

$667.9bn

 

$651.2bn

 

2.6%

   

$632.7bn

 

5.6%

   
                                         

(1)   The adjusted financial measures are all non-GAAP financial measures. See the information on pages 7 through 12 for a reconciliation to their most directly comparable U.S. GAAP measures and the notes beginning on page 19 for other important disclosures.

Assets Under Management

Total assets under management (AUM) at September 30, 2012, were $683.0 billion (June 30, 2012: $646.6 billion), an increase of $36.4 billion during the third quarter. Total net inflows were $11.7 billion for the third quarter as detailed below:

Summary of net flows (in billions)

 

Q3-12

 

Q2-12

 

Q3-11

Active

 

$3.6

   

($3.2)

   

$0.6

 

Passive

 

5.8

   

(1.7)

   

2.7

 

Long-term net flows

 

9.4

   

(4.9)

   

3.3

 

Money market

 

2.3

   

(3.4)

   

(1.1)

 

Total net flows

 

$11.7

   

($8.3)

   

$2.2

 
             
                         

Net market gains led to a $22.1 billion increase in AUM during the third quarter, compared to a $15.5 billion decrease in the second quarter 2012. The third quarter included a previously disclosed disposition of $1.7 billion of AUM related to certain European collateralized loan obligation products (CLOs). Foreign exchange rate movements led to a $4.3 billion increase in AUM during the third quarter, compared to a $2.4 billion decrease in the second quarter 2012.

Average AUM during the third quarter were $667.9 billion, compared to $651.2 billion for the second quarter 2012, a 2.6% increase. Further analysis is included in the supplementary schedules to this release.

Earnings Summary

The company is presenting both U.S. GAAP earnings information and non-GAAP earnings information in this release. The company believes that the additional disclosure of non-GAAP earnings, as described more fully in the Form 10-K for the year ended December 31, 2011, provides further transparency into the business and allows more appropriate comparisons with our industry peers. Management uses these non-GAAP performance measures to evaluate the business, and they are consistent with internal management reporting.

Non-GAAP Earnings

This section discusses the company's third quarter 2012 compared to the second quarter 2012 non-GAAP financial results. The phrase "as adjusted" is used in the following earnings discussion to identify non-GAAP information, together with the non-GAAP financial measures of net revenues, adjusted operating margin, adjusted net income attributable to common shareholders and adjusted diluted EPS. The most directly comparable U.S. GAAP items are reconciled to these non-GAAP items on pages 7 through 12 of this release.

Net revenues increased by $22.6 million (3.2%) to $734.7 million in the third quarter from $712.1 million in the second quarter 2012. The change was principally due to increases in investment management fees and service and distribution fees as a result of higher average AUM and an improved net revenue yield. These increases were partly offset by reduced performance fee revenues. Foreign exchange rate changes increased third quarter net revenues by $3.2 million when compared to the second quarter 2012.

Investment management fees, as adjusted, increased $37.8 million (4.7%) to $839.9 million in the third quarter from $802.1 million in the second quarter 2012. The increase is in line with the higher average AUM.  Foreign exchange rate changes increased third quarter management fees by $4.3 million when compared to second quarter 2012.

Service and distribution fees, as adjusted, increased $9.0 million (4.8%) to $196.1 million in the third quarter from $187.1 million in the second quarter 2012, also reflecting the higher average AUM. Foreign exchange rate changes increased third quarter service and distribution fees by $0.4 million when compared to second quarter 2012.

Performance fees, as adjusted, were $3.4 million in the third quarter compared to $15.5 million in the second quarter 2012.  Other revenues, as adjusted, decreased by $1.6 million (6.2%) in the third quarter to $24.4 million, compared to $26.0 million in the second quarter 2012, principally due to lower transaction fees from real estate fund activities.

Third-party distribution, service and advisory expenses, as adjusted, were $329.1 million in the third quarter compared to $318.6 million in the second quarter 2012, increasing in line with higher management fees and service and distribution fees.  Foreign exchange rate changes increased the third quarter third-party distribution, services and advisory expenses by $1.7 million.

Total operating expenses, as adjusted, increased by $21.2 million (4.6%) to $484.3 million in the third quarter from $463.1 million in the second quarter 2012 primarily due to increased employee compensation expenses. Foreign exchange rate changes increased operating expenses, as adjusted, by $1.8 million when compared to the second quarter 2012.

Employee compensation expenses, as adjusted, increased by $21.2 million (6.9%) to $327.7 million in the third quarter from $306.5 million in the second quarter 2012.  The increase in the third quarter includes $12.0 million of additional variable compensation stemming from strong investment performance.  This adjustment to year end award estimates includes $8.0 million that can be attributed to the first half of 2012, and $4.0 million attributable to the third quarter.  In addition, compensation expenses in the third quarter included increased commissions driven by strong sales and flows, and increases in medical insurance and relocation costs.  Foreign exchange rate changes increased third quarter employee compensation expenses by $1.5 million when compared to the second quarter 2012.

Marketing expenses, as adjusted, decreased by $0.3 million (1.1%) to $26.5 million in the third quarter from $26.8 million in the second quarter 2012 . Foreign exchange rate changes increased third quarter marketing expenses by $0.1 million when compared to the second quarter 2012.

Property, office and technology expenses, as adjusted, increased $1.5 million (2.2%) to $69.3 million in the third quarter from $67.8 million in the second quarter 2012.  The third quarter included increases in technology expenses associated with continued investment in fixed income trading, portfolio management and risk reporting systems.  These increases were partly offset by reduced rent; the second quarter included a $1.7 million rent exit charge on leased space. Foreign exchange rate changes increased third quarter property, office and technology expenses by $0.2 million when compared to the second quarter 2012.

General and administrative expenses, as adjusted, decreased $1.2 million (1.9%) to $60.8 million in the third quarter from $62.0 million in the second quarter 2012.  Foreign exchange rate changes had no significant impact on third quarter general and administrative expenses when compared to the second quarter 2012.

Non-operating other income and expenses, as adjusted, included equity in earnings from partnership investments of $1.6 million in the third quarter compared to $5.5 million in the second quarter 2012.   Other gains and losses, net in the third quarter were $9.5 million reflecting realized gains on a variety of equity interests, compared to a second quarter loss of $1.7 million. The effective tax rate increased to 25.8% for the third quarter from 24.5% for the second quarter 2012. 

U.S. GAAP Earnings

Operating revenues increased 3.2% to $1,041.4 million in the third quarter from $1,009.0 million in the second quarter 2012. Operating expenses increased by 2.4% to $825.4 million in the third quarter from $806.1 million in the second quarter 2012.

Operating expenses included $3.0 million of transaction and integration charges incurred in the third quarter relating to the remaining closed-end fund merger expenses associated with the 2010 acquisition of Morgan Stanley's retail asset management business, including Van Kampen Investments.  Transaction and integration charges were $1.1 million in the second quarter 2012.  Operating expenses also included $4.0 million of European infrastructure transformational initiative expenses for the third quarter compared to $5.8 million for the second quarter.

Other gains and losses, net included a $8.3 million gain on the previously announced sale of certain European CLO management contracts.

The effective tax rate, excluding noncontrolling interests, increased to 30.3% for the third quarter from 28.8% for the second quarter 2012.

Balance Sheet and Cash Flow Statement Presentation

The company is presenting both a U.S. GAAP balance sheet and a balance sheet excluding consolidated investment products, along with a U.S. GAAP statement of cash flows and a statement of cash flows excluding consolidated investment products in this release.  The financial statements excluding consolidated investment products are non-GAAP presentations.  Balance sheet and cash flow statements before and after the consolidation of investment products are reconciled on pages 15 and 18, respectively.

The company believes that, by excluding the consolidation of investment products, the non-GAAP balance sheet and statement of cash flows provide a more representative presentation of our financial risks and the company's cash and debt positions, allowing more appropriate comparisons with our industry peers. Management uses these non-GAAP presentations to evaluate the business and the presentations are consistent with internal management reporting.  As demonstrated by the selected balance sheet data that follows, inclusion of the long-term debt of consolidated investment products within liquidity measures, such as debt-to-equity ratios, causes the company to appear to be far more indebted than is the case. 

Balance Sheets and Capital Management

Selected balance sheet information is reflected in the table below:

                               

 

           

 

   

Excluding Consolidated
Investment Products (CIP)
(Non-GAAP)(1)

   

Including Consolidated
Investment Products (CIP)
(U.S. GAAP)

 
             
   

September 30,
2012

 

December 31,
2011

 

September 30,
2012

 

December 31, 2011

$ in millions

               

Cash and cash equivalents

 

$880.1

   

$727.4

   

$880.1

   

$727.4

 

Investments of CIP

 

   

   

4,717.9

   

6,629.0

 

Total assets(1)

 

$12,647.7

   

$12,329.2

   

$17,861.0

   

$19,347.0

 
                 

Current maturities of total debt

 

$333.5

   

$215.1

   

$333.5

   

$215.1

 

Long-term debt

 

951.6

   

1,069.6

   

951.6

   

1,069.6

 

Long-term debt of CIP

 

   

   

3,855.0

   

5,512.9

 

Total debt / Total debt plus CIP debt

 

$1,285.1

   

$1,284.7

   

$5,140.1

   

$6,797.6

 
                 

Total liabilities(1)

 

$4,487.6

   

$4,541.0

   

$8,663.6

   

$10,209.4

 
                 

Total equity(1)

 

$8,160.1

   

$7,788.2

   

$9,197.4

   

$9,137.6

 
                 

Debt/Equity % (1) (2)

 

15.7%

   

16.5%

   

55.9%

   

74.4

 
                                         

(1)   The balance sheet line items excluding consolidated investment products are non-GAAP financial measures. See the reconciliation information on page 15 for a fully expanded balance sheet before and after the consolidation of investment products.

(2)   The debt/equity ratio excluding CIP is a non-GAAP financial measure.  The debt/equity ratio is calculated as total debt divided by total equity for the balance sheet excluding CIP and total debt plus long-term debt of CIP divided by equity for the balance sheet including CIP.

As of September 30, 2012, the company's cash and cash equivalents were $880.1 million with total debt of $1,285.1 million.  The credit facility balance was $754.5 million at September 30, 2012, compared to $811.0 million at June 30, 2012 and $539.0 million at December 31, 2011.

During the third quarter, the company repurchased $40.0 million of its stock, representing 1.8 million shares at a weighted average share price of $22.16, bringing the total September 30, 2012 year-to-date stock repurchases to $190.0 million.

Dividends paid in the third quarter were $77.8 million bringing the total September 30, 2012 year-to-date cash dividends to $211.5 million.  Today the company is announcing a third-quarter cash dividend of 17.25 cents per share to holders of common shares. The dividend is payable on December 7, 2012, to shareholders of record at the close of business on November 19, 2012.

Headcount

As of September 30, 2012, the company had 6,101 employees, compared to 6,141 employees as of June 30, 2012.

Invesco Ltd. is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our retail, institutional and high net worth clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at www.invesco.com.

Members of the investment community and general public are invited to listen to the conference call today, Thursday, November 1, 2012, at 9:00 a.m. ET by dialing one of the following numbers: 1-866-617-1526 for U.S. and Canadian callers and 0800-279-9630 for U.K. callers or 1-210-795-0624 for international callers. An audio replay of the conference call will be available until Thursday, November 15, 2012 at 5:00 p.m. ET by calling 1-888-562-7628 for U.S. and Canadian callers or 1-402-220-6505 for international callers. A presentation highlighting the company's performance will be available during a live Webcast and on Invesco's Website at www.invesco.com.  

This release, and comments made in the associated conference call today, may include "forward-looking statements." Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as "believes," "expects," "anticipates," "intends," "plans," "estimates," "projects," "forecasts," and future or conditional verbs such as "will," "may," "could," "should," and "would" as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.

Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission. You may obtain these reports from the SEC's Web site at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.

Invesco Ltd.

Non-GAAP Condensed Consolidated Income Statement Information

(Unaudited, in millions, other than per share amounts, headcount and AUM)

                   
 

Q3-12

 

Q2-12

 

% Change

 

Q3-11

 

% Change

Adjusted revenues

                 

Investment management fees

$839.9

   

$802.1

   

4.7%

   

$804.1

   

4.5%

 

Service and distribution fees

196.1

   

187.1

   

4.8%

   

189.1

   

3.7%

 

Performance fees

3.4

   

15.5

   

(78.1)%

   

3.0

   

13.3%

 

Other

24.4

   

26.0

   

(6.2)%

   

26.7

   

(8.6)%

 

Third-party distribution, service and advisory

(329.1)

   

(318.6)

   

3.3%

   

(316.8)

   

3.9%

 

Net revenues

734.7

   

712.1

   

3.2%

   

706.1

   

4.1%

 
                   

Adjusted operating expenses

                 

Employee compensation

327.7

   

306.5

   

6.9%

   

306.3

   

7.0%

 

Marketing

26.5

   

26.8

   

(1.1)%

   

24.4

   

8.6%

 

Property, office and technology

69.3

   

67.8

   

2.2

   

62.8

   

10.4%

 

General and administrative

60.8

   

62.0

   

(1.9)%

   

56.9

   

6.9%

 

Total adjusted operating expenses

484.3

   

463.1

   

4.6%

   

450.4

   

7.5%

 
                   

Adjusted operating income

250.4

   

249.0

   

0.6%

   

255.7

   

(2.1)%

 
                   

Adjusted other income/(expense)

                 

Equity in earnings of unconsolidated affiliates

1.6

   

5.5

   

(70.9)%

   

3.0

   

(46.7)%

 

Interest and dividend income

5.0

   

5.2

   

(3.8)%

   

4.5

   

11.1%

 

Interest expense

(12.6)

   

(13.4)

   

(6.0)%

   

(15.3)

   

(17.6)%

 

Other gains and losses, net

9.5

   

(1.7)

   

N/A

 

0.3

   

N/A

Adjusted income before income taxes

253.9

   

244.6

   

3.8%

   

248.2

   

2.3%

 

Adjusted income tax provision

(65.5)

   

(59.9)

   

9.3%

   

(55.9)

   

17.2%

 

Adjusted net income

188.4

   

184.7

   

2.0%

   

192.3

   

(2.0)%

 

Adjusted net (income)/loss attributable to
noncontrolling interests in consolidated entities

   

   

N/A

 

   

N/A

Adjusted net income attributable to common shareholders

$188.4

   

$184.7

   

2.0%

   

$192.3

   

(2.0)%

 
                   

Adjusted diluted EPS

$0.42

   

$0.41

   

2.4%

   

$0.42

   

— %

 
                   

Average diluted shares outstanding

452.8

   

455.3

   

(0.5)%

   

461.0

   

(1.8)%

 
                   

Ending Headcount

6,101

   

6,141

   

(0.7)%

   

6,192

   

(1.5)%

 
                   

Ending AUM (in billions)

$683.0

   

$646.6

   

5.6%

   

$598.4

   

14.1%

 
                   

Average AUM (in billions)

$667.9

   

$651.2

   

2.6%

   

$632.7

   

5.6%

 
                                       

 

Invesco Ltd.

U.S. GAAP Condensed Consolidated Income Statements

(Unaudited, in millions, other than per share amounts)

 
 

Q3-12

 

Q2-12

 

% Change

 

Q3-11

 

% Change

Operating revenues

                 

Investment management fees

$818.0

   

$780.6

   

4.8%

   

$779.5

   

4.9%

 

Service and distribution fees

196.1

   

187.1

   

4.8%

   

189.1

   

3.7%

 

Performance fees

3.0

   

15.4

   

(80.5)%

   

2.6

   

15.4%

 

Other

24.3

   

25.9

   

(6.2)%

   

26.6

   

(8.6)%

 

Total operating revenues

1,041.4

   

1,009.0

   

3.2%

   

997.8

   

4.4%

 
                   

Operating expenses

                 

Employee compensation

330.9

   

304.6

   

8.6%

   

305.5

   

8.3%

 

Third-party distribution, service and advisory

327.2

   

316.6

   

3.3%

   

314.4

   

4.1%

 

Marketing

26.4

   

26.6

   

(0.8)%

   

13.1

   

101.5%

 

Property, office and technology

69.1

   

68.5

   

0.9%

   

62.7

   

10.2%

 

General and administrative

68.8

   

88.7

   

(22.4)%

   

69.6

   

(1.1)%

 

Transaction and integration

3.0

   

1.1

   

172.7%

   

4.7

   

(36.2)%

 

Total operating expenses

825.4

   

806.1

   

2.4%

   

770.0

   

7.2%

 
                   

Operating income

216.0

   

202.9

   

6.5%

   

227.8

   

(5.2)%

 
                   

Other income/(expense)

                 

Equity in earnings of unconsolidated affiliates

5.2

   

6.9

   

(24.6)%

   

8.1

   

(35.8)%

 

Interest and dividend income

2.5

   

2.2

   

13.6

   

3.8

   

(34.2)%

 

Interest income of consolidated investment products

68.7

   

68.7

   

— %

   

79.6

   

(13.7)%

 

Other gains/(losses) of consolidated investment products, net

(25.2)

   

77.2

   

N/A

 

(93.1)

   

(72.9)%

 

Interest expense

(12.6)

   

(13.4)

   

(6.0)%

   

(15.3)

   

(17.6)%

 

Interest expense of consolidated investment products

(41.9)

   

(46.9)

   

(10.7)%

   

(48.7)

   

(14.0)%

 

Other gains and losses, net

18.4

   

(7.7)

   

N/A

 

(19.7)

   

N/A

Income before income taxes

231.1

   

289.9

   

(20.3)%

   

142.5

   

62.2%

 

Income tax provision

(74.2)

   

(62.3)

   

19.1%

   

(59.1)

   

25.5%

 

Net income

156.9

   

227.6

   

(31.1)%

   

83.4

   

88.1%

 

Net (income)/loss attributable to
noncontrolling interests in consolidated entities

13.7

   

(73.7)

   

N/A

 

83.5

   

(83.6)%

 

Net income attributable to common shareholders

$170.6

   

$153.9

   

10.9%

   

$166.9

   

2.2%

 
                   

Earnings per share:

                 

---basic

$0.38

   

$0.34

   

11.8%

   

$0.36

   

5.6%

 

---diluted

$0.38

   

$0.34

   

11.8%

   

$0.36

   

5.6%

 
                   

Average shares outstanding:

                 

---basic

451.3

   

453.8

   

(0.6)%

   

459.5

   

(1.8)%

 

---diluted

452.8

   

455.3

   

(0.5)%

   

461.0

   

(1.8)%

 
                                       

 

 

 

Invesco Ltd.

U.S. GAAP Condensed Consolidated Income Statements

(Unaudited, in millions, other than per share amounts)

 
 

Nine months ended September 30,

     
 

2012

 

2011

 

% Change

Operating revenues

         

Investment management fees

$2,390.0

   

$2,390.9

   

— %

 

Service and distribution fees

572.2

   

599.2

   

(4.5)%

 

Performance fees

38.9

   

14.0

   

177.9%

 

Other

83.0

   

91.0

   

(8.8)%

 

Total operating revenues

3,084.1

   

3,095.1

   

(0.4)%

 
           

Operating expenses

         

Employee compensation

954.0

   

929.7

   

2.6%

 

Third-party distribution, service and advisory

960.9

   

980.7

   

(2.0)%

 

Marketing

79.7

   

64.9

   

22.8%

 

Property, office and technology

204.4

   

188.6

   

8.4%

 

General and administrative

230.8

   

220.8

   

4.5%

 

Transaction and integration

5.6

   

23.9

   

(76.6)%

 

Total operating expenses

2,435.4

   

2,408.6

   

1.1%

 
           

Operating income

648.7

   

686.5

   

(5.5)%

 
           

Other income/(expense)

         

Equity in earnings of unconsolidated affiliates

21.8

   

25.6

   

(14.8)%

 

Interest and dividend income

7.1

   

8.3

   

(14.5)%

 

Interest income of consolidated investment products

206.4

   

233.6

   

(11.6)%

 

Other gains/(losses) of consolidated investment products, net

(69.9)

   

(243.3)

   

(71.3)%

 

Interest expense

(39.6)

   

(47.5)

   

(16.6)%

 

Interest expense of consolidated investment products

(134.4)

   

(135.2)

   

(0.6)%

 

Other gains and losses, net

29.3

   

(5.8)

   

N/A

Income before income taxes

669.4

   

522.2

   

28.2%

 

Income tax provision

(210.1)

   

(210.1)

   

— %

 

Net income

459.3

   

312.1

   

47.2%

 

Net (income)/loss attributable to noncontrolling interests in consolidated entities

59.1

   

215.3

   

(72.5)%

 

Net income attributable to common shareholders

$518.4

   

$527.4

   

(1.7)%

 
           

Earnings per share:

         

---basic

$1.14

   

$1.13

   

0.9%

 

---diluted

$1.14

   

$1.13

   

0.9%

 
           

Average shares outstanding:

         

---basic

453.1

   

464.9

   

(2.5)%

 

---diluted

454.6

   

466.8

   

(2.6)%

 
                           

 

 

 

 

 

 

 

Invesco Ltd.

Reconciliation of U.S. GAAP Condensed Consolidated Income Statement to Non-GAAP Condensed

Consolidated Income Statement Information

(Unaudited, in millions, other than per share amounts)

Three months ended September 30, 2012

 
   

U.S. GAAP basis

 

Proportional consolidation of joint ventures

 

Third party distribution, service and advisory expenses

 

Acquisition / Disposition related

 

Market  appreciation / depreciation of deferred compensation awards

 

Consolidated investment products

 

Other reconciling items

 

Non-GAAP basis

                                 

Operating revenues

                               

Investment management fees

 

$818.0

   

$10.8

   

$—

   

$—

   

$—

   

$11.1

   

$—

   

$839.9

 

Service and distribution fees

 

196.1

   

   

   

   

   

   

   

196.1

 

Performance fees

 

3.0

   

   

   

   

   

0.4

   

   

3.4

 

Other

 

24.3

   

0.1

   

   

   

   

   

   

24.4

 

Third-party distribution, service and advisory

 

   

(1.9)

   

(327.2)

   

   

   

   

   

(329.1)

 

Total operating revenues reconciled to net revenues

 

1,041.4

   

9.0

   

(327.2)

   

   

   

11.5

   

   

734.7

 
                                 

Operating expenses

                               

Employee compensation

 

330.9

   

2.8

   

   

   

(4.7)

   

   

(1.3)

   

327.7

 

Third-party distribution, service and advisory

 

327.2

   

   

(327.2)

   

   

   

   

   

 

Marketing

 

26.4

   

0.7

   

   

   

   

   

(0.6)

   

26.5

 

Property, office and technology

 

69.1

   

0.9

   

   

   

   

   

(0.7)

   

69.3

 

General and administrative

 

68.8

   

1.0

   

   

(5.3)

   

   

(2.3)

   

(1.4)

   

60.8

 

Transaction and integration

 

3.0

   

   

   

(3.0)

   

   

   

   

 

Total operating expenses

 

825.4

   

5.4

   

(327.2)

   

(8.3)

   

(4.7)

   

(2.3

   

(4.0)

   

484.3

 
                                 

Operating income reconciled to adjusted operating income

 

216.0

   

3.6

   

   

8.3

   

4.7

   

13.8

   

4.0

   

250.4

 
                                 

Other income/(expense)

                               

Equity in earnings of unconsolidated affiliates

 

5.2

   

(4.1)

   

   

   

   

0.5

   

   

1.6

 

Interest and dividend income

 

2.5

   

0.5

   

   

   

(1.4)

   

3.4

   

   

5.0

 

Interest income of consolidated investment products

 

68.7

   

   

   

   

   

(68.7)

   

   

 

Other gains/(losses) of consolidated investment products, net

 

(25.2)

   

   

   

   

   

25.2

   

   

 

Interest expense

 

(12.6)

   

   

   

   

   

   

   

(12.6)

 

Interest expense of consolidated investment products

 

(41.9)

   

   

   

   

   

41.9

   

   

 

Other gains and losses, net

 

18.4

   

   

   

(8.3)

   

(9.7)

   

8.7

   

0.4

   

9.5

 

Income before income taxes

 

231.1

   

   

   

   

(6.4)

   

24.8

   

4.4

   

253.9

 

Income tax provision

 

(74.2)

   

   

   

7.6

   

1.9

   

   

(0.8)

   

(65.5)

 

Net income

 

156.9

   

   

   

7.6

   

(4.5)

   

24.8

   

3.6

   

188.4

 

Net (income)/loss attributable to noncontrolling interests in consolidated entities

 

13.7

   

   

   

   

   

(13.7)

   

   

 

Net income attributable to common shareholders reconciled to adjusted net income attributable to common shareholders

 

$170.6

   

$—

   

$—

   

$7.6

   

($4.5)

   

$11.1

   

$3.6

   

$188.4

 
                                 

Operating margin

 

20.7%

                 

Adjusted operating margin

   

34.1%

 
                                 

Average diluted shares outstanding

 

452.8

                 

Average diluted shares outstanding

   

452.8

 
                                 

Diluted EPS

 

$0.38

                 

Adjusted diluted EPS

   

$0.42

 
                                                                         

See pages 19 through 21 for notes to the reconciliation.

 

 

 

 

 

 

Invesco Ltd.

Reconciliation of U.S. GAAP Condensed Consolidated Income Statement to Non-GAAP Condensed

Consolidated Income Statement Information

(Unaudited, in millions, other than per share amounts)

Three months ended June 30, 2012

 
   

U.S. GAAP basis

 

Proportional consolidation of joint ventures

 

Third party distribution, service and advisory expenses

 

Acquisition / Disposition related

 

Market  appreciation / depreciation of deferred compensation awards

 

Consolidated investment products

 

Other reconciling items

 

Non-GAAP basis

                                 

Operating revenues

                               

Investment management fees

 

$780.6

   

$11.1

   

$—

   

$—

   

$—

   

$10.4

   

$—

   

$802.1

 

Service and distribution fees

 

187.1

   

   

   

   

   

   

   

187.1

 

Performance fees

 

15.4

   

   

   

   

   

0.1

   

   

15.5

 

Other

 

25.9

   

0.1

   

   

   

   

   

   

26.0

 

Third-party distribution, service and advisory

 

   

(2.0)

   

(316.6)

   

   

   

   

   

(318.6)

 

Total operating revenues reconciled to net revenues

 

1,009.0

   

9.2

   

(316.6)

   

   

   

10.5

   

   

712.1

 
                                 

Operating expenses

                               

Employee compensation

 

304.6

   

2.9

   

   

   

0.2

   

   

(1.2)

   

306.5

 

Third-party distribution, service and advisory

 

316.6

   

   

(316.6)

   

   

   

   

   

 

Marketing

 

26.6

   

0.8

   

   

   

   

   

(0.6)

   

26.8

 

Property, office and technology

 

68.5

   

0.8

   

   

   

   

   

(1.5)

   

67.8

 

General and administrative

 

88.7

   

1.2

   

   

(10.7)

   

   

(14.7)

   

(2.5)

   

62.0

 

Transaction and integration

 

1.1

   

   

   

(1.1)

   

   

   

   

 

Total operating expenses

 

806.1

   

5.7

   

(316.6)

   

(11.8)

   

0.2

   

(14.7)

   

(5.8)

   

463.1

 
                                 

Operating income reconciled to adjusted operating income

 

202.9

   

3.5

   

   

11.8

   

(0.2)

   

25.2

   

5.8

   

249.0

 
                                 

Other income/(expense)

                               

Equity in earnings of unconsolidated affiliates

 

6.9

   

(4.2)

   

   

   

   

2.8

   

   

5.5

 

Interest and dividend income

 

2.2

   

0.7

   

   

   

(1.2)

   

3.5

   

   

5.2

 

Interest income of consolidated investment products

 

68.7

   

   

   

   

   

(68.7)

   

   

 

Other gains/(losses) of consolidated investment products, net

 

77.2

   

   

   

   

   

(77.2)

   

   

 

Interest expense

 

(13.4)

   

   

   

   

   

   

   

(13.4)

 

Interest expense of consolidated investment products

 

(46.9)

   

   

   

   

   

46.9

   

   

 

Other gains and losses, net

 

(7.7)

   

   

   

   

5.0

   

   

1.0

   

(1.7)

 

Income before income taxes

 

289.9

   

   

   

11.8

   

3.6

   

(67.5)

   

6.8

   

244.6

 

Income tax provision

 

(62.3)

   

   

   

5.3

   

(1.2)

   

   

(1.7)

   

(59.9)

 

Net income

 

227.6

   

   

   

17.1

   

2.4

   

(67.5)

   

5.1

   

184.7

 

Net (income)/loss attributable to noncontrolling interests in consolidated entities

 

(73.7)

   

   

   

   

   

73.7

   

   

 

Net income attributable to common shareholders reconciled to adjusted net income attributable to common shareholders

 

$153.9

   

$—

   

$—

   

$17.1

   

$2.4

   

$6.2

   

$5.1

   

$184.7

 
                                 

Operating margin

 

20.1%

                 

Adjusted operating margin

   

35.0%

 
                                 

Average diluted shares outstanding

 

455.3

                 

Average diluted shares outstanding

   

455.3

 
                                 

Diluted EPS

 

$0.34

                 

Adjusted diluted EPS

   

$0.41

 
                                                                         

See pages 19 through 21 for notes to the reconciliation.