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Invesco Reports Results for Three Months Ended March 31, 2012

Adjusted diluted EPS of $0.44

Net inflows of $8.1 billion

Quarterly dividend of 17.25 cents, up 41%

Invesco Ltd. logo. (PRNewsFoto/Invesco, Chris Wilson) (PRNewsFoto/)

News provided by

Invesco Ltd.

Apr 26, 2012, 07:30 ET

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ATLANTA, April 26, 2012 /PRNewswire/ -- Invesco Ltd. (NYSE: IVZ) today reported financial results for three months ended March 31, 2012.

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

"Reflecting our third consecutive year of strong long-term net flows and continued confidence in our business, we are increasing our return to shareholders by raising our quarterly dividend to 17.25 cents per share, an increase of 41%," said Martin L. Flanagan, president and CEO of Invesco.  "During the first quarter, growth was driven by continued strong client interest in our balanced risk allocation and real estate capabilities and ETFs."


Q1-12


Q4-11


Q1-12 vs.

Q4-11


Q1-11


Q1-12 vs.

Q1-11

Adjusted Financial Measures (1)










Net revenues

$736.3m


$716.8m


2.7%


$724.3m


1.7%

Operating income

$269.2m


$256.3m


5.0%


$272.1m


(1.1)%

Operating margin

36.6%


35.8%




37.6%



Net income attributable to common shareholders

$201.0m


$190.5m


5.5

%


$191.7m


4.9%

Diluted EPS

$0.44


$0.42


4.8%


$0.41


7.3%











U.S. GAAP Financial Measures










Operating revenues

$1,033.7m


$997.1m


3.7%


$1,027.3m


0.6%

Operating income

$229.8m


$211.6m


8.6%


$225.7m


1.8%

Operating margin

22.2%


21.2%




22.0%



Net income attributable to common shareholders

$193.9m


$202.3m


(4.2)%


$177.5m


9.2%

Diluted EPS

$0.43


$0.44


(2.3)%


$0.38


13.2%











Assets Under Management










Ending AUM

$672.8bn


$625.3bn


7.6%


$641.9bn


4.8%

Average AUM

$658.2bn


$621.7bn


5.9%


$630.2bn


4.4%











(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.

Assets Under Management

Total assets under management (AUM) at March 31, 2012, were $672.8 billion (December 31, 2011: $625.3 billion), an increase of $47.5 billion during the first quarter. Total net inflows were $8.1 billion for the first quarter as detailed below:

Summary of net flows (in billions)


Quarterly



Q1-12


Q4-11


Q1-11

Active


$

(0.9)



$

(0.2)



$

(1.5)


Passive


7.9



5.8



8.1


Long-term net flows


7.0



5.6



6.6


Money market


1.1



0.4



2.6


Total net flows


$

8.1



$

6.0



$

9.2


Net market gains led to a $37.3 billion increase in AUM during the first quarter, compared to a $20.8 billion increase in the fourth quarter 2011. Foreign exchange rate movements led to a $2.1 billion increase in AUM during the first quarter, compared to a $0.1 billion increase in the fourth quarter 2011.

Average AUM during the first quarter were $658.2 billion, compared to $621.7 billion for the fourth quarter 2011, a 5.9% 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 first quarter 2012 compared to the fourth quarter 2011 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 $19.5 million (2.7%) to $736.3 million in the first quarter from $716.8 million in the fourth quarter 2011. The change was principally due to increases in investment management fees. Foreign exchange rate changes increased first quarter net revenues by $2.0 million when compared to the fourth quarter 2011.

Investment management fees, as adjusted, increased $41.3 million (5.4%) to $812.1 million in the first quarter from $770.8 million in the fourth quarter 2011. The increase correlates with the higher average AUM.  Foreign exchange rate changes increased first quarter management fees by $2.9 million when compared to fourth quarter 2011.

Service and distribution fees, as adjusted, increased $7.9 million (4.4%) to $189.0 million in the first quarter from $181.1 million in the fourth quarter 2011, also reflecting the higher average AUM. Foreign exchange rate changes increased first quarter management fees by $0.4 million when compared to fourth quarter 2011.

Performance fees, as adjusted, were $21.2 million in the first quarter compared to $24.0 million in the fourth quarter 2011.  The first quarter fees were generated from certain investment trusts in the UK and real estate portfolios. Other revenues, as adjusted, decreased by $11.8 million (26.3%) in the first quarter to $33.1 million compared to $44.9 million in the fourth quarter 2011 principally due to lower transaction fees related to private equity and real estate activities.

Third-party distribution, service and advisory expenses, as adjusted, were $319.1 million in the first quarter compared to $304.0 million in the fourth quarter 2011. The increase of $15.1 million (5.0%) primarily reflects the increase in investment management fees and service and distribution fees. Foreign exchange rate changes increased the first quarter third-party distribution, services and advisory expenses by $1.2 million.

Total operating expenses, as adjusted, increased by $6.6 million (1.4%) to $467.1 million in the first quarter from $460.5 million in the fourth quarter 2011. Foreign exchange rate changes increased operating expenses, as adjusted, by $1.4 million when compared to the fourth quarter 2011.

Employee compensation expenses, as adjusted, increased by $0.7 million (0.2%) to $313.0 million in the first quarter from $312.3 million in the fourth quarter 2011.  Seasonally higher payroll tax costs and retirement costs were offset by reduced variable compensation costs when compared to the fourth quarter 2011. Foreign exchange rate changes increased first quarter employee compensation expenses by $0.8 million when compared to the fourth quarter 2011.

Marketing expenses, as adjusted, increased by $4.9 million (22.2%) to $27.0 million in the first quarter from $22.1 million in the fourth quarter 2011 principally due to increased advertising spend in the UK and US. Foreign exchange rate changes increased first quarter marketing expenses by $0.1 million when compared to the fourth quarter 2011.

Property, office and technology expenses, as adjusted, increased $4.4 million (7.1%) to $66.3 million in the first quarter from $61.9 million in the fourth quarter 2011 reflecting higher property lease expenses and continued investment in portfolio management and client engagement technology initiatives. Foreign exchange rate changes increased first quarter property, office and technology expenses by $0.3 million when compared to the fourth quarter 2011.

General and administrative expenses, as adjusted, decreased $3.4 million (5.3%) to $60.8 million in the first quarter from $64.2 million in the fourth quarter 2011. Foreign exchange rate changes increased first quarter general and administrative expenses by $0.2 million when compared to the fourth quarter 2011.

Non-operating other income and expenses, as adjusted, included improved equity in earnings from partnership investments and gains from seed investments in the first quarter when compared to the fourth quarter 2011. The effective tax rate increased to 25.1% for the first quarter from 22.9% for the fourth quarter 2011.  The fourth quarter tax rate was lower than anticipated due to adjustments to tax positions to reflect actual tax returns filed.

U.S. GAAP Earnings

Operating revenues increased 3.7% to $1,033.7 million in the first quarter from $997.1 million in the fourth quarter 2011. Operating expenses increased by 2.3% to $803.9 million in the first quarter from $785.5 million in the fourth quarter 2011.

Operating expenses included $1.5 million of transaction and integration charges relating to the final round of fund mergers incurred in the first quarter compared to $5.5 million in the fourth quarter 2011. Operating expenses also included $4.1 million of European infrastructure transformational initiative expenses for the first quarter compared to $7.7 million for the fourth quarter 2011.  Fourth quarter non-operating other income and expenses included a $45.0 million credit related to a legal settlement.

The effective tax rate, excluding noncontrolling interests, increased to 27.5% for the first quarter from 27.3% for the fourth quarter 2011.

Capital Management

Cash and cash equivalents were $592.3 million at March 31, 2012, compared to $727.4 million at December 31, 2011. Total debt was $1,325.7 million at March 31, 2012, compared to $1,284.7 million at December 31, 2011. The credit facility balance was $580.0 million at March 31, 2012, compared to $539.0 million at December 31, 2011.

During the first quarter, the company repurchased $75.0 million of its shares, representing 3.1 million shares at a weighted average share price of $24.35.  The annual cash bonus payments were also funded during the first quarter and occurred in conjunction with the granting of new share-based awards that will vest over four years.

On April 17, 2012, the company repaid the $215.1 million of outstanding 5.625% Senior Notes that matured on that date.  The repayment was funded from the credit facility and existing cash on hand.

Today the company is announcing a first-quarter cash dividend of 17.25 cents per share to holders of common shares. The dividend is payable on June 8, 2012, to shareholders of record at the close of business on May 18, 2012.

Headcount

As of March 31, 2012, the company had 6,153 employees compared to 6,162 employees as of December 31, 2011.

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, April 26, 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, May 24, 2012 at 5:00 p.m. ET by calling 1-888-296-6948 for U.S. and Canadian callers or 1-203-369-3028 for international callers. The presentation will be made available via a simultaneous Webcast at www.invesco.com. The presentation slides that will be reviewed during the conference call will also be available on Invesco's Web site 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)












Q1-12


Q4-11


% Change


Q1-11


% Change

Adjusted revenues










Investment management fees

$

812.1



$

770.8



5.4

%


$

816.1



(0.5)

%

Service and distribution fees

189.0



181.1



4.4

%


198.7



(4.9)

%

Performance fees

21.2



24.0



(11.7)

%


3.8



457.9

%

Other

33.1



44.9



(26.3)

%


32.7



1.2

%

Third-party distribution, service and advisory

(319.1)



(304.0)



5.0

%


(327.0)



(2.4)

%

Net revenues

736.3



716.8



2.7

%


724.3



1.7

%











Adjusted operating expenses










Employee compensation

313.0



312.3



0.2

%


299.7



4.4

%

Marketing

27.0



22.1



22.2

%


26.3



2.7

%

Property, office and technology

66.3



61.9



7.1

%


64.6



2.6

%

General and administrative

60.8



64.2



(5.3)

%


61.6



(1.3)

%

Total adjusted operating expenses

467.1



460.5



1.4

%


452.2



3.3

%











Adjusted operating income

269.2



256.3



5.0

%


272.1



(1.1)

%











Adjusted other income/(expense)










Equity in earnings of unconsolidated affiliates

4.7



(1.1)



N/A


2.3



104.3

%

Interest and dividend income

5.5



6.2



(11.3)

%


2.7



103.7

%

Interest expense

(13.6)



(14.3)



(4.9)

%


(16.2)



(16.0)

%

Other gains and losses, net

2.4



(0.1)



N/A


3.7



(35.1)

%

Adjusted income before income taxes

268.2



247.0



8.6

%


264.6



1.4

%

Adjusted income tax provision

(67.2)



(56.5)



18.9

%


(73.0)



(7.9)

%

Adjusted net income

201.0



190.5



5.5

%


191.6



4.9

%

Adjusted (gains)/losses attributable to noncontrolling interests in consolidated entities, net

—



—



N/A


0.1



N/A

Adjusted net income attributable to common shareholders

$

201.0



$

190.5



5.5

%


$

191.7



4.9

%











Adjusted diluted EPS

$

0.44



$

0.42



4.8

%


$

0.41



7.3

%











Average diluted shares outstanding

455.9



458.3



(0.5)

%


472.1



(3.4)

%











Ending Headcount

6,153



6,162



(0.1)

%


6,191



(0.6)

%











Ending AUM (in billions)

$

672.8



$

625.3



7.6

%


$

641.9



4.8

%











Average AUM (in billions)

$

658.2



$

621.7



5.9

%


$

630.2



4.4

%

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 March 31, 2012




U.S. GAAP

basis


Proportional consolidation of joint ventures


Third party distribution, service and advisory expenses


Acquisition related


Market  appreciation / depreciation of deferred compensation awards


Consolidated investment products


Other reconciling

items


Non-GAAP

basis


















Operating revenues

















Investment management fees


$

791.4



$

11.0



$

—



$

—



$

—



$

9.7



$

—



$

812.1


Service and distribution fees


189.0



—



—



—



—



—



—



189.0


Performance fees


20.5



—



—



—



—



0.7



—



21.2


Other


32.8



0.3



—



—



—



—



—



33.1


Third-party distribution, service and advisory


—



(2.0)



(317.1)



—



—



—



—



(319.1)


Total operating revenues reconciled to net revenues


1,033.7



9.3



(317.1)



—



—



10.4



—



736.3



















Operating expenses

















Employee compensation


318.5



2.2



—



—



(6.5)



—



(1.2)



313.0


Third-party distribution, service and advisory


317.1



—



(317.1)



—



—



—



—



—


Marketing


26.7



0.6



—



—



—



—



(0.3)



27.0


Property, office and technology


66.8



0.8



—



—



—



—



(1.3)



66.3


General and administrative


73.3



1.2



—



(6.4)



—



(6.0)



(1.3)



60.8


Transaction and integration


1.5



—



—



(1.5)



—



—



—



—


Total operating expenses


803.9



4.8



(317.1)



(7.9)



(6.5)



(6.0)



(4.1)



467.1



















Operating income reconciled to adjusted operating income


229.8



4.5



—



7.9



6.5



16.4



4.1



269.2



















Other income/(expense)

















Equity in earnings of unconsolidated affiliates


9.7



(5.1)



—



3.5



—



(3.4)



—



4.7


Interest and dividend income


2.4



0.6



—



—



(0.9)



3.4



—



5.5


Interest income of consolidated investment products


69.0



—



—



—



—



(69.0)



—



—


Gains/(losses) of consolidated investment products, net


(121.9)



—



—



—



—



121.9



—



—


Interest expense


(13.6)



—



—



—



—



—



—



(13.6)


Interest expense of consolidated investment products


(45.6)



—



—



—



—



45.6



—



—


Other gains and losses, net


18.6



—



—



(3.5)



(12.7)



—



—



2.4


Income before income taxes


148.4



—



—



7.9



(7.1)



114.9



4.1



268.2


Income tax provision


(73.6)



—



—



4.9



2.0



—



(0.5)



(67.2)


Net income


74.8



—



—



12.8



(5.1)



114.9



3.6



201.0


(Gains)/losses attributable to noncontrolling interests in consolidated entities, net


119.1



—



—



—



—



(119.1)



—



—


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


$

193.9



$

—



$

—



$

12.8



$

(5.1)



$

(4.2)



$

3.6



$

201.0



















Operating margin


22.2

%









Adjusted operating margin


36.6

%


















Average diluted shares outstanding


455.9










Average diluted shares outstanding


455.9



















Diluted EPS


$

0.43










Adjusted diluted EPS


$

0.44




















See pages 10 through 12 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 December 31, 2011




U.S. GAAP

basis


Proportional consolidation of joint ventures


Third party distribution, service and advisory expenses


Acquisition related


Market  appreciation / depreciation of deferred compensation awards


Consolidated investment products


Other

reconciling items


Non-GAAP

basis


















Operating revenues

















Investment management fees


$

747.6



$

11.6



$

—



$

—



$

—



$

11.6



$

—



$

770.8


Service and distribution fees


181.1



—



—



—



—



—



—



181.1


Performance fees


23.9



—



—



—



—



0.1



—



24.0


Other


44.5



0.4



—



—



—



—



—



44.9


Third-party distribution, service and advisory


—



(2.2)



(301.8)



—



—



—



—



(304.0)


Total operating revenues reconciled to net revenues


997.1



9.8



(301.8)



—



—



11.7



—



716.8



















Operating expenses

















Employee compensation


316.5



2.5



—



—



(5.5)



—



(1.2)



312.3


Third-party distribution, service and advisory


301.8



—



(301.8)



—



—



—



—



—


Marketing


21.1



1.0



—



—



—



—



—



22.1


Property, office and technology


66.0



0.9



—



—



—



—



(5.0)



61.9


General and administrative


74.6



1.1



—



(3.7)



—



(3.0)



(4.8)



64.2


Transaction and integration


5.5



—



—



(5.5)



—



—



—



—


Total operating expenses


785.5



5.5



(301.8)



(9.2)



(5.5)



(3.0)



(11.0)



460.5



















Operating income reconciled to adjusted operating income


211.6



4.3



—



9.2



5.5



14.7



11.0



256.3



















Other income/(expense)

















Equity in earnings of unconsolidated affiliates


4.9



(5.1)



—



—



—



(0.9)



—



(1.1)


Interest and dividend income


2.7



0.8



—



—



(0.2)



2.9



—



6.2


Interest income of consolidated investment products


73.6



—



—



—



—



(73.6)



—



—


Gains/(losses) of consolidated investment products, net


104.4



—



—



—



—



(104.4)



—



—


Interest expense


(14.3)



—



—



—



—



—



—



(14.3)


Interest expense of consolidated investment products


(51.8)



—



—



—



—



51.8



—



—


Other gains and losses, net


54.8



—



—



—



(9.9)



—



(45.0)



(0.1)


Income before income taxes


385.9



—



—



9.2



(4.6)



(109.5)



(34.0)



247.0


Income tax provision


(76.0)



—



—



3.2



1.4



—



14.9



(56.5)


Net income


309.9



—



—



12.4



(3.2)



(109.5)



(19.1)



190.5


(Gains)/losses attributable to noncontrolling interests in consolidated entities, net


(107.6)



—



—



—



—



107.6



—



—


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


$

202.3



$

—



$

—



$

12.4



$

(3.2)



$

(1.9)



$

(19.1)



$

190.5



















Operating margin


21.2

%









Adjusted operating margin


35.8

%


















Average diluted shares outstanding


458.3










Average diluted shares outstanding


458.3



















Diluted EPS


$

0.44










Adjusted diluted EPS


$

0.42




















See pages 10 through 12 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 March 31, 2011




U.S. GAAP

basis


Proportional consolidation of joint ventures


Third party distribution, service and advisory expenses


Acquisition related


Market  appreciation / depreciation of deferred compensation awards


Consolidated investment products


Other reconciling adjustments


Non-GAAP

basis


















Operating revenues

















Investment management fees


$

792.3



$

12.7



$

—



$

—



$

—



$

11.1



$

—



$

816.1


Service and distribution fees


198.7



—



—



—



—



—



—



198.7


Performance fees


3.8



—



—



—



—



—



—



3.8


Other


32.5



0.2



—



—



—



—



—



32.7


Third-party distribution, service and advisory


—



(2.5)



(324.5)



—



—



—



—



(327.0)


Total operating revenues reconciled to net revenues


1,027.3



10.4



(324.5)



—



—



11.1



—



724.3



















Operating expenses

















Employee compensation


305.9



2.9



—



(5.0)



(4.1)



—



—



299.7


Third-party distribution, service and advisory


324.5



—



(324.5)



—



—



—



—



—


Marketing


25.7



0.6



—



—



—



—



—



26.3


Property, office and technology


64.0



0.6



—



—



—



—



—



64.6


General and administrative


73.6



1.1



—



(9.0)



—



(3.7)



(0.4)



61.6


Transaction and integration


7.9



—



—



(7.9)



—



—



—



—


Total operating expenses


801.6



5.2



(324.5)



(21.9)



(4.1)



(3.7)



(0.4)



452.2



















Operating income reconciled to adjusted operating income


225.7



5.2



—



21.9



4.1



14.8



0.4



272.1



















Other income/(expense)

















Equity in earnings of unconsolidated affiliates


6.7



(5.6)



—



—



—



1.2



—



2.3


Interest and dividend income


2.1



0.4



—



—



(1.0)



1.2



—



2.7


Interest income of consolidated investment products


74.2



—



—



—



—



(74.2)



—



—


Gains/(losses) of consolidated investment products, net


(85.5)



—



—



—



—



85.5



—



—


Interest expense


(16.2)



—



—



—



—



—



—



(16.2)


Interest expense of consolidated investment products


(40.0)



—



—



—



—



40.0



—



—


Other gains and losses, net


7.9



—



—



—



(4.2)



—



—



3.7


Income before income taxes


174.9



—



—



21.9



(1.1)



68.5



0.4



264.6


Income tax provision


(75.6)



—



—



2.3



0.4



—



(0.1)



(73.0)


Net income


99.3



—



—



24.2



(0.7)



68.5



0.3



191.6


(Gains)/losses attributable to noncontrolling interests in consolidated entities, net


78.2



—



—



—



—



(78.1)



—



0.1


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


$

177.5



$

—



$

—



$

24.2



$

(0.7)



$

(9.6)



$

0.3



$

191.7



















Operating margin


22.0

%








Adjusted operating margin




37.6

%


















Average diluted shares outstanding


472.1









Average diluted shares outstanding




472.1



















Diluted EPS


$

0.38









Adjusted diluted EPS




$

0.41





















See pages 10 through 12 for notes to the reconciliation.

Invesco Ltd.
Notes to the Reconciliation of U.S. GAAP Condensed Consolidated Income Statements to Non-GAAP Condensed Consolidated Income Statement Information

The following are notes to the reconciliations presented on pages 7 through 9. Further explanations of the reasons the company considers it appropriate to present these adjustments in arriving at the non-GAAP measures can be found in the Form 10-K for the year ended December 31, 2011. Non-GAAP measures should not be considered as substitutes for any measures derived in accordance with U.S. GAAP and may not be comparable to other similarly titled measures of other companies

1. Acquisition related adjustments

Acquisition related adjustments are comprised of amounts incurred by the company in connection with business combinations, including transaction and integration expenses, intangible asset amortization (including any increased amortization related to the write-off of related management contract intangible assets), changes in estimates of acquisition earn-out liabilities booked from prior acquisitions, and all related tax effects. Additionally, in the first quarter an acquisition related loan note gain of $3.5 million, recorded in other gains and losses, has been reclassified into equity in earnings of unconsolidated affiliates to reflect the hedging purpose of the note.  Adjustment amounts are as follows:

in millions


Q1-12


Q4-11


Q1-11

Equity in earnings of unconsolidated affiliates


3.5



—



—


Other gains and losses, net


(3.5)



—



—


Transaction and integration


1.5



5.5



7.9


Taxation on transaction and integration


(0.6)



(2.1)



(2.9)


Intangible amortization


8.5



6.1



9.0


Taxation on amortization


(1.0)



(1.0)



(1.2)


Prepaid compensation amortization


—



—



5.0


Deferred taxation


6.5



6.3



6.4


Change in contingent consideration estimates


(2.1)



(2.4)



—




$

12.8