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| 8-K - 8-K CURRENT REPORT - Artio Global Investors Inc. | v320186_8k.htm |
News Release
Artio Global Investors Inc.
Artio Global Investors Reports Second Quarter 2012 Results;
Announces Dividend of $0.02 Per Share
NEW YORK, NY, August 3, 2012 – Artio Global Investors Inc. (NYSE: ART) (“Artio Global Investors”, together with its subsidiaries, “Artio Global” or the “Company”) today reported its results for the quarter ended June 30, 2012.
Financial Update
| · | Adjusted1 net income attributable to Artio Global Investors of $3.2 million, or $0.05 per diluted share, for the second quarter of 2012 (GAAP net income attributable to Artio Global Investors of $1.5 million, or $0.03 per diluted share) |
| · | Assets under management of $21.2 billion as of June 30, 2012 |
| · | Investment management fees of $33.3 million for the second quarter of 2012 |
| · | Effective fee rate2 of 56.7 basis points for the second quarter of 2012 |
| · | Adjusted EBITDA of $8.7 million for the second quarter of 2012 |
| · | Quarterly dividend of $0.02 per share on Class A common stock |
| · | Today, the Company announced a reduction of its workforce by 25 employees. This reduction, along with other cost reductions achieved during the first six months of 2012, will result in annualized operating expense savings of approximately $20 million, mostly related to compensation. No portfolio managers or research analysts within its International Equity, High Yield or High Grade Fixed Income strategies were included in the workforce reduction. |
| 1 | See Exhibits 3 - 5 of this news release for a reconciliation of the Company’s U.S. GAAP results to its non-GAAP adjusted results (“adjusted”). |
| 2 | Effective fee rate is defined as annualized investment management fees (based on the number of days in the period) divided by the average assets under management for the period. |
The Company’s adjusted results for all periods exclude the amortization of restricted stock units (“RSUs”) granted at the time of the Company’s initial public offering (“IPO”), and assume for the periods prior to the Principals’3 exchanges on April 24, 20124, that the Principals’ non-controlling interests have been fully exchanged for shares of Class A common stock. The Company’s adjusted results for the three and six months ended June 30, 2012, and the three months ended March 31, 2012, exclude certain costs associated with organizational changes. The Company’s adjusted results for the six months ended June 30, 2012, and the three months ended March 31, 2012, also exclude the write-off of unamortized debt issuance costs in connection with the early repayment of the Company’s term debt. Adjusted results are presented to provide more meaningful comparisons between periods.
For the second quarter of 2012, adjusted net income attributable to Artio Global Investors was $3.2 million, or $0.05 per diluted share, a decrease of 50% and 55%, respectively, from adjusted net income attributable to Artio Global Investors of $6.5 million, or $0.11 per diluted share, for the first quarter of 2012, and a decrease of 86% and 87%, respectively, from adjusted net income attributable to Artio Global Investors of $23.3 million, or $0.39 per diluted share, for the second quarter of 2011.
On a GAAP basis, net income attributable to Artio Global Investors for the second quarter of 2012 was $1.5 million, or $0.03 per diluted share, a decrease of 67% and 63%, respectively, from net income attributable to Artio Global Investors of $4.6 million, or $0.08 per diluted share, for the first quarter of 2012, and a decrease of 93% and 92%, respectively, from net income attributable to Artio Global Investors of $21.2 million, or $0.36 per diluted share, for the second quarter of 2011.
For the first six months of 2012, adjusted net income attributable to Artio Global Investors was $9.7 million, or $0.16 per diluted share, a decrease in each case of 80% from adjusted net income attributable to Artio Global Investors of $47.5 million, or $0.80 per diluted share, for the first six months of 2011.
On a GAAP basis, net income attributable to Artio Global Investors for the first six months of 2012 was $6.1 million, or $0.10 per diluted share, a decrease in each case of 86% from net income attributable to Artio Global Investors of $43.2 million, or $0.74 per diluted share, for the first six months of 2011.
The following table compares the Company’s GAAP results and adjusted results. See Exhibits 3 – 5 of this news release for a reconciliation of the Company’s GAAP results to adjusted results.
| 3 | Richard Pell, Chairman, Chief Executive Officer and Chief Investment Officer, and Rudolph-Riad Younes, Head of International Equity, are collectively referred to as the “Principals”. |
| 4 | On April 24, 2012, each of the Principals exchanged their remaining 600,000 New Class A Units, held in the intermediate holding company, for an equivalent amount of shares of Class A common stock. |
| - 2 – |
| Three Months Ended | ||||||||||||||||||||
| (unaudited, in millions, except per share amounts) | ||||||||||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | % Change | Mar. 31, 2012 | % Change | ||||||||||||||||
| Revenue5, GAAP | $ | 32.7 | $ | 78.2 | (58 | )% | $ | 43.9 | (26 | )% | ||||||||||
| Operating income, GAAP | $ | 2.5 | $ | 36.8 | (93 | )% | $ | 8.2 | (70 | )% | ||||||||||
| Operating income, adjusted | $ | 5.4 | $ | 39.5 | (86 | )% | $ | 10.8 | (50 | )% | ||||||||||
| Net income attributable to Artio Global Investors, GAAP | $ | 1.5 | $ | 21.2 | (93 | )% | $ | 4.6 | (67 | )% | ||||||||||
| Net income attributable to Artio Global Investors, adjusted | $ | 3.2 | $ | 23.3 | (86 | )% | $ | 6.5 | (50 | )% | ||||||||||
| Diluted EPS, GAAP | $ | 0.03 | $ | 0.36 | (92 | )% | $ | 0.08 | (63 | )% | ||||||||||
| Diluted EPS, adjusted | $ | 0.05 | $ | 0.39 | (87 | )% | $ | 0.11 | (55 | )% | ||||||||||
| Adjusted EBITDA6 | $ | 8.7 | $ | 42.3 | (79 | )% | $ | 13.6 | (36 | )% | ||||||||||
| Six Months Ended (in millions, except per share amounts) | ||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | % Change | ||||||||||
| Revenue5, GAAP | $ | 76.6 | $ | 160.3 | (52 | )% | ||||||
| Operating income, GAAP | $ | 10.7 | $ | 75.9 | (86 | )% | ||||||
| Operating income, adjusted | $ | 16.2 | $ | 81.2 | (80 | )% | ||||||
| Net income attributable to Artio Global Investors, GAAP | $ | 6.1 | $ | 43.2 | (86 | )% | ||||||
| Net income attributable to Artio Global Investors, adjusted | $ | 9.7 | $ | 47.5 | (80 | )% | ||||||
| Diluted EPS, GAAP | $ | 0.10 | $ | 0.74 | (86 | )% | ||||||
| Diluted EPS, adjusted | $ | 0.16 | $ | 0.80 | (80 | )% | ||||||
| Adjusted EBITDA6 | $ | 22.4 | $ | 86.6 | (74 | )% | ||||||
| 5 | Represents total revenues and other operating income. |
| 6 | See Exhibit 6 for a reconciliation of Net Income to Adjusted EBITDA. |
| - 3 – |
Business Update7
| · | Net client cash outflows moderated to $4.5 billion for the second quarter of 2012 |
| · | The Company has decided to refocus on its long-established expertise in cross-border investing and will therefore discontinue its US Equity strategies. This action will enable the Company to better manage its resources for current business conditions. |
Management Commentary
“We are realigning our business in order to focus on the asset classes where we believe active investment management offers the greatest opportunities to benefit clients,” said Richard Pell, Chairman, Chief Executive Officer and Chief Investment Officer. “Accordingly, we are closing our US Equity strategies, which at the end of the second quarter represented less than one percent of the firm’s total assets under management.”
“This action, together with other cost reduction efforts, will result in meaningful operating expense savings. Most importantly, it enables us to concentrate our resources on our long-established expertise in cross-border investing in both equity and fixed income markets, and to continue pursuing growth and diversification opportunities within these core product areas.”
Second Quarter of 2012 Comparison with Second Quarter of 2011
Assets Under Management and Net Client Cash Flows
Assets under management were $21.2 billion as of June 30, 2012, down $25.7 billion, or 55%, from $46.8 billion as of June 30, 2011, due to net client cash outflows and market depreciation.
Net client cash outflows for the second quarter of 2012 were $4.5 billion, driven primarily by net client cash outflows from our International Equity I and II, and High Yield strategies.8
| 7 | See section entitled “Fund Performance and Other Disclaimers” and Exhibit 9 of this news release for further information about Lipper and Morningstar rankings. |
| 8 | See Exhibit 8 for more information on “Assets under Management by Investment Strategy”. |
| - 4 – |
Revenues and Other Operating Income
Revenues and other operating income for the second quarter of 2012 totaled $32.7 million, down 58% from $78.2 million for the second quarter of 2011. The decrease was driven primarily by lower investment management fees of $33.3 million for the second quarter of 2012, down 57% from $78.2 million for the second quarter of 2011, due to lower average assets under management and a decrease in the effective fee rate.
Expenses
Employee Compensation and Benefits
For the second quarter of 2012, adjusted employee compensation and benefits expenses were $16.5 million, down 29% from $23.2 million for the second quarter of 2011. The decrease was due primarily to lower incentive compensation accruals and lower headcount.
GAAP employee compensation and benefits expenses for the second quarter of 2012 were $19.4 million, down 25% from $25.8 million for the second quarter of 2011, due primarily to the reasons noted above.
Shareholder Servicing and Marketing Expenses
Shareholder servicing and marketing expenses for the second quarter of 2012 were $3.0 million, down 41% from $5.2 million for the second quarter of 2011, driven primarily by lower platform costs, reflecting a decrease in average assets under management in proprietary funds.
General and Administrative Expenses
General and administrative expenses for the second quarter of 2012 were $7.7 million, a decrease of 25% from $10.4 million for the second quarter of 2011, due primarily to lower expenses across most categories.
Non-operating Income (Loss)
Adjusted non-operating loss for the second quarter of 2012 was $1.2 million, compared to $0.1 million for the second quarter of 2011, primarily reflecting losses on seed capital investments in the second quarter of 2012.
GAAP non-operating loss for the second quarter of 2012 was $1.4 million, compared to $0.2 million for the second quarter of 2011, due primarily to the reason noted above.
| - 5 – |
Income Taxes
For the second quarter of 2012, the adjusted effective tax rate was 22.0%, 18.9 percentage points lower than the 40.9% adjusted effective tax rate for the second quarter of 2011. The decrease was due primarily to a tax benefit in the second quarter of 2012 resulting from the reversal of a tax liability reserve upon settlement of an uncertain tax position.
GAAP income tax benefit for the second quarter of 2012 was $0.3 million compared to GAAP income tax expense of $14.9 million for the second quarter of 2011, due primarily to a 97% decrease in income before income tax expense and the reason noted above.
Second Quarter of 2012 Comparison with First Quarter of 2012
Assets Under Management
Assets under management were $21.2 billion as of June 30, 2012, a decrease of $5.5 billion, or 21%, from $26.6 billion as of March 31, 2012, due to net client cash outflows and market depreciation.
Revenues and Other Operating Income
Revenues and other operating income for the second quarter of 2012 totaled $32.7 million, down 26% from $43.9 million for the first quarter of 2012, driven primarily by lower investment management fees. Investment management fees were $33.3 million for the second quarter of 2012, down 22% from $42.8 million for the first quarter of 2012, due to a decrease in average assets under management and a decrease in the effective fee rate.
Expenses
Employee Compensation and Benefits
For the second quarter of 2012, adjusted employee compensation and benefits expenses were $16.5 million, a decrease of 17% from $19.9 million for the first quarter of 2012, due primarily to lower incentive compensation accruals.
GAAP employee compensation and benefits expenses for the second quarter of 2012 were $19.4 million, a decrease of 13% from $22.3 million for the first quarter of 2012, due primarily to the reason noted above.
| - 6 – |
Shareholder Servicing and Marketing Expenses
Shareholder servicing and marketing expenses for the second quarter of 2012 were $3.0 million, a decrease of 16% from $3.6 million for the first quarter of 2012, due primarily to lower platform costs, reflecting a decrease in average assets under management in proprietary funds.
General and Administrative Expenses
Adjusted general and administrative expenses were $7.7 million for the second quarter of 2012, a decrease of 19% from $9.6 million for the first quarter of 2012, due primarily to lower expenses across most categories.
GAAP general and administrative expenses were $7.7 million for the second quarter of 2012, a decrease of 20% from $9.7 million for the first quarter of 2012, due primarily to the reason noted above.
Non-operating Income (Loss)
Adjusted non-operating loss for the second quarter of 2012 was $1.2 million, down from adjusted non-operating income of $1.9 million for the first quarter of 2012, primarily reflecting losses on seed capital investments in the second quarter of 2012, as compared to gains in the first quarter of 2012.
GAAP non-operating loss for the second quarter of 2012 was $1.4 million, down from GAAP non-operating income of $2.6 million for the first quarter of 2012 due primarily to the reason noted above.
Income Taxes
For the second quarter of 2012, the adjusted effective tax rate was 22.0%, 27.2 percentage points lower than the 49.2% adjusted effective tax rate for the first quarter of 2012. The decrease was due primarily to a tax benefit in the second quarter of 2012 resulting from the reversal of a tax liability reserve upon settlement of an uncertain tax position and the write-off of a deferred tax asset related to the vesting of RSUs at a price below their grant date price in the first quarter of 2012.
GAAP income tax benefit for the second quarter of 2012 was $0.3 million compared to GAAP income tax expense of $5.3 million for the first quarter of 2012 due primarily to a 90% decrease in income before income tax expense and the reasons noted above.
| - 7 – |
Liquidity and Capital
As of June 30, 2012, the Company had cash (excluding amounts held in the Company’s Consolidated Investment Products) of $59.9 million, seed capital investments in our strategies of $47.3 million and investments held for deferred compensation of $10.1 million.
Total stockholders’ equity on the Statement of Financial Position was $175.7 million as of June 30, 2012, compared to $162.8 million as of December 31, 2011.
Share Repurchase
No shares were repurchased during the second quarter of 2012. As of June 30, 2012, the Company retained authorization from the Board of Directors to repurchase 2,226,061 shares of its Class A common stock through December 31, 2013.
Shares
As of June 30, 2012, there were 59,561,559 total shares of Class A common stock outstanding.
On April 24, 2012, each of the Principals exchanged their remaining 600,000 New Class A Units, held in the intermediate holding company, into an equivalent amount of shares of Class A common stock.
Dividend
On July 23, 2012, the Board of Directors declared a dividend of $0.02 per share on the Class A common stock for the second quarter of 2012, which is payable on August 27, 2012, to stockholders of record as of the close of business on August 13, 2012.
* * * *
Teleconference and Webcast Details
The Company will host a conference call for analysts and investors to review second quarter 2012 results, today, August 3, 2012, beginning at 8:00 a.m. (Eastern Time). The call will be open to the public and can be accessed by dialing +1-888-680-0860 (inside the United States) or +1-617-213-4852 (outside the United States). The number should be dialed at least ten minutes prior to the start of the call. The passcode for the call will be 63549328. A simultaneous webcast of the call (on a listen-only basis), as well as an audio replay, will be available at www.ir.artioglobal.com.
* * * *
| - 8 – |
About Us
Artio Global Investors Inc. is the indirect holding company of Artio Global Management LLC (“Artio Global”), a registered investment adviser that actively invests in global equity and fixed income markets, primarily for institutional and intermediary clients. Headquartered in New York, Artio Global also has offices in Los Angeles, Toronto, London and Sydney.
Artio Global offers a select group of equity and fixed income strategies, including International Equity, Global Equity, High Grade Fixed Income, High Yield and Local Emerging Markets Debt. Access to these strategies is offered through a variety of investment vehicles, including separate accounts, commingled funds and mutual funds.
For more information, please visit www.artioglobal.com.
* * * *
Cautionary Note Regarding Forward-Looking Statements
In addition to historical information, this news release may, and the related remarks do, contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the intrinsic value of our common stock, investor behavior, net client cash flows, our compensation costs and adjusted compensation ratio, future tax rate, use of our free cash flow, potential share repurchases and declaration of dividends. These forward-looking statements are based on the Company’s current assumptions, expectations and projections about future events. Words like “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements discuss matters that necessarily involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.
Among the factors that could cause actual results to differ from those expressed or implied by a forward-looking statement are those described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s report on Form 10-K (File No. 001-34457) filed with the Securities and Exchange Commission on February 29, 2012. Other unknown or unpredictable factors also could have material adverse effects on the Company’s future results, performance, or achievements.
| - 9 – |
Any forward-looking statements in this news release and the related remarks speak only as of the date of this news release. The related remarks may contain information about the Company subsequent to June 30, 2012. The Company is not under any obligation and does not intend to make publicly available any update or other revisions to any forward-looking statements to reflect circumstances existing after the date of this news release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.
* * * *
Contacts
| Investor Relations: | Media Relations: |
| Peter Sands | Adam Grodman |
| Head of Investor Relations | Intermarket Communications |
| +1 212 297 3891 | +1 212 909 4781 |
| ir@artioglobal.com | agrodman@intermarket.com |
* * * *
Fund Performance and Other Disclaimers
Lipper rankings are for Class I mutual fund shares with three- and five-year track records only. Other classes may have different performance characteristics. Lipper, a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds and fund fees and expenses to the asset management and media communities. Lipper ranks the performance of mutual funds within a classification of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested and do not include the effect of loads. If an expense waiver was in effect, it may have had a material effect on the total return or yield for the period.
Morningstar rankings are for Class I mutual fund shares with a minimum three-year track record. For each mutual fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a mutual fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. A fund’s independent Morningstar Rating metric is then compared against the mutual fund universe breakpoints to determine its hypothetical rating. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
| - 10 – |
Data presented reflect past performance, which is no guarantee of future results. © 2012 Morningstar, Inc. All Rights Reserved.
This news release is not sales material, nor is it an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which any such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
| - 11 – |
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 1 |
| Consolidated Statements of Income | |
| (unaudited, in thousands, except share and per share amounts or as noted) |
| Three Months Ended | % Change From | Six Months Ended | % Change From | |||||||||||||||||||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2012 | Jun. 30, 2011 | Jun. 30, 2011 | |||||||||||||||||||||||||
| Revenues and other operating income: | ||||||||||||||||||||||||||||||||
| Investment management fees | $ | 33,320 | $ | 78,209 | $ | 42,771 | (57 | )% | (22 | )% | $ | 76,091 | $ | 159,985 | (52 | )% | ||||||||||||||||
| Net gains (losses) on securities held for deferred compensation | (546 | ) | (56 | ) | 1,160 | NM | (147 | )% | 614 | 363 | 69 | % | ||||||||||||||||||||
| Foreign currency losses | (60 | ) | (2 | ) | (1 | ) | NM | NM | (61 | ) | (20 | ) | NM | |||||||||||||||||||
| Total revenues and other operating income | 32,714 | 78,151 | 43,930 | (58 | )% | (26 | )% | 76,644 | 160,328 | (52 | )% | |||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||
| Employee compensation and benefits | 19,417 | 25,812 | 22,334 | (25 | )% | (13 | )% | 41,751 | 53,830 | (22 | )% | |||||||||||||||||||||
| Shareholder servicing and marketing | 3,043 | 5,163 | 3,624 | (41 | )% | (16 | )% | 6,667 | 10,028 | (34 | )% | |||||||||||||||||||||
| General and administrative | 7,748 | 10,357 | 9,738 | (25 | )% | (20 | )% | 17,486 | 20,529 | (15 | )% | |||||||||||||||||||||
| Total expenses | 30,208 | 41,332 | 35,696 | (27 | )% | (15 | )% | 65,904 | 84,387 | (22 | )% | |||||||||||||||||||||
| Operating income before income tax expense | 2,506 | 36,819 | 8,234 | (93 | )% | (70 | )% | 10,740 | 75,941 | (86 | )% | |||||||||||||||||||||
| Non-operating income (loss) | (1,387 | ) | (156 | ) | 2,556 | NM | (154 | )% | 1,169 | 409 | 186 | % | ||||||||||||||||||||
| Income before income tax expense | 1,119 | 36,663 | 10,790 | (97 | )% | (90 | )% | 11,909 | 76,350 | (84 | )% | |||||||||||||||||||||
| Income taxes | (287 | ) | 14,869 | 5,322 | (102 | )% | (105 | )% | 5,035 | 31,620 | (84 | )% | ||||||||||||||||||||
| Net income | 1,406 | 21,794 | 5,468 | (94 | )% | (74 | )% | 6,874 | 44,730 | (85 | )% | |||||||||||||||||||||
| Net income attributable to non-controlling interests in AGH (1) | 12 | 719 | 190 | (98 | )% | (94 | )% | 202 | 1,488 | (86 | )% | |||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in CIP (2) | (141 | ) | (75 | ) | 678 | (88 | )% | (121 | )% | 537 | 60 | NM | ||||||||||||||||||||
| Net income attributable to Artio Global Investors | $ | 1,535 | $ | 21,150 | $ | 4,600 | (93 | )% | (67 | )% | $ | 6,135 | $ | 43,182 | (86 | )% | ||||||||||||||||
| Net income per share attributable to Artio Global Investors: | ||||||||||||||||||||||||||||||||
| Basic | $ | 0.03 | $ | 0.36 | $ | 0.08 | (92 | )% | (63 | )% | $ | 0.10 | $ | 0.74 | (86 | )% | ||||||||||||||||
| Diluted | $ | 0.03 | $ | 0.36 | $ | 0.08 | (92 | )% | (63 | )% | $ | 0.10 | $ | 0.74 | (86 | )% | ||||||||||||||||
| Weighted average shares used in net income per share attributable to Artio Global Investors: | ||||||||||||||||||||||||||||||||
| Basic | 59,212,847 | 58,392,969 | 58,192,573 | 1 | % | 2 | % | 58,702,710 | 58,373,404 | 1 | % | |||||||||||||||||||||
| Diluted (3) | 59,814,290 | 58,576,859 | 58,474,697 | 2 | % | 2 | % | 58,991,691 | 58,475,249 | 1 | % | |||||||||||||||||||||
| NM - Not Meaningful | ||||||||||||||||||||||||||||||||
| Assets under management ($ in millions) | $ | 21,156 | $ | 46,835 | $ | 26,645 | (55 | )% | (21 | )% | $ | 21,156 | $ | 46,835 | (55 | )% | ||||||||||||||||
| Average assets under management ($ in millions) (4) | $ | 23,616 | $ | 49,783 | $ | 28,551 | (53 | )% | (17 | )% | $ | 26,003 | $ | 51,206 | (49 | )% | ||||||||||||||||
| Effective fee rate (basis points) (5) | 56.7 | 63.0 | 60.3 | 58.8 | 63.0 | |||||||||||||||||||||||||||
| Effective tax rate | NM | 40.6 | % | 49.3 | % | 42.3 | % | 41.4 | % | |||||||||||||||||||||||
| Employee compensation and benefits as a percentage of total revenues and other operating income (6) | 59.4 | % | 33.0 | % | 50.8 | % | 54.5 | % | 33.6 | % | ||||||||||||||||||||||
| Operating margin (7) | 7.7 | % | 47.1 | % | 18.7 | % | 14.0 | % | 47.4 | % | ||||||||||||||||||||||
| 1. | Represents non-controlling interests in Artio Global Holdings LLC. |
| 2. | Represents non-controlling interests in Consolidated Investment Products. |
| 3. | The effect of the assumed conversion of the Principals’ New Class A Units (prior to the Principals’ exchanges on April 24, 2012) was antidilutive for the six months ended Jun. 30, 2011 and 2012, and the three months ended Mar. 31, 2012 and Jun. 30, 2011. |
| 4. | Average assets under management for a period is computed on the beginning-of-first-month balance and all end-of-month balances in the period. |
| 5. | Effective fee rate is defined as annualized investment management fees (based on the number of days in the period) divided by the average assets under management for the period. |
| 6. | Calculated as employee compensation and benefits expense divided by total revenues and other operating income. |
| 7. | Calculated as operating income before income tax expense divided by total revenues and other operating income. |
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 2 |
| Non-GAAP Adjusted Consolidated Statements of Income | |
| (unaudited, in thousands, except share and per share amounts or as noted) |
| Three Months Ended | % Change From | Six Months Ended | % Change From | |||||||||||||||||||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2012 | Jun. 30, 2011 | Jun. 30, 2011 | |||||||||||||||||||||||||
| Revenues and other operating income: | ||||||||||||||||||||||||||||||||
| Investment management fees | $ | 33,320 | $ | 78,209 | $ | 42,771 | (57 | )% | (22 | )% | $ | 76,091 | $ | 159,985 | (52 | )% | ||||||||||||||||
| Net gains (losses) on securities held for deferred compensation | (546 | ) | (56 | ) | 1,160 | NM | (147 | )% | 614 | 363 | 69 | % | ||||||||||||||||||||
| Foreign currency losses | (60 | ) | (2 | ) | (1 | ) | NM | NM | (61 | ) | (20 | ) | NM | |||||||||||||||||||
| Total revenues and other operating income | 32,714 | 78,151 | 43,930 | (58 | )% | (26 | )% | 76,644 | 160,328 | (52 | )% | |||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||
| Employee compensation and benefits | 16,541 | 23,168 | 19,912 | (29 | )% | (17 | )% | 36,453 | 48,562 | (25 | )% | |||||||||||||||||||||
| Shareholder servicing and marketing | 3,043 | 5,163 | 3,624 | (41 | )% | (16 | )% | 6,667 | 10,028 | (34 | )% | |||||||||||||||||||||
| General and administrative | 7,748 | 10,357 | 9,616 | (25 | )% | (19 | )% | 17,364 | 20,529 | (15 | )% | |||||||||||||||||||||
| Total expenses | 27,332 | 38,688 | 33,152 | (29 | )% | (18 | )% | 60,484 | 79,119 | (24 | )% | |||||||||||||||||||||
| Operating income before income tax expense | 5,382 | 39,463 | 10,778 | (86 | )% | (50 | )% | 16,160 | 81,209 | (80 | )% | |||||||||||||||||||||
| Non-operating income (loss) | (1,246 | ) | (81 | ) | 1,949 | NM | (164 | )% | 703 | 349 | 101 | % | ||||||||||||||||||||
| Income before income tax expense | 4,136 | 39,382 | 12,727 | (89 | )% | (68 | )% | 16,863 | 81,558 | (79 | )% | |||||||||||||||||||||
| Income taxes | 908 | 16,109 | 6,266 | (94 | )% | (86 | )% | 7,174 | 34,105 | (79 | )% | |||||||||||||||||||||
| Net income | 3,228 | 23,273 | 6,461 | (86 | )% | (50 | )% | 9,689 | 47,453 | (80 | )% | |||||||||||||||||||||
| Net income attributable to non-controlling interests in AGH (1) | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in CIP (2) | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Net income attributable to Artio Global Investors | $ | 3,228 | $ | 23,273 | $ | 6,461 | (86 | )% | (50 | )% | $ | 9,689 | $ | 47,453 | (80 | )% | ||||||||||||||||
| Net income per diluted share attributable to Artio Global Investors | $ | 0.05 | $ | 0.39 | $ | 0.11 | (87 | )% | (55 | )% | $ | 0.16 | $ | 0.80 | (80 | )% | ||||||||||||||||
| Weighted average diluted shares used in net income per share attributable to Artio Global Investors | 59,814,290 | 59,776,859 | 59,674,697 | 0 | % | 0 | % | 59,743,339 | 59,675,249 | 0 | % | |||||||||||||||||||||
| NM - Not Meaningful | ||||||||||||||||||||||||||||||||
| Assets under management ($ in millions) | $ | 21,156 | $ | 46,835 | $ | 26,645 | (55 | )% | (21 | )% | $ | 21,156 | $ | 46,835 | (55 | )% | ||||||||||||||||
| Average assets under management ($ in millions) (3) | $ | 23,616 | $ | 49,783 | $ | 28,551 | (53 | )% | (17 | )% | $ | 26,003 | $ | 51,206 | (49 | )% | ||||||||||||||||
| Effective fee rate (basis points) (4) | 56.7 | 63.0 | 60.3 | 58.8 | 63.0 | |||||||||||||||||||||||||||
| Effective tax rate | 22.0 | % | 40.9 | % | 49.2 | % | 42.5 | % | 41.8 | % | ||||||||||||||||||||||
| Employee compensation and benefits as a percentage of total revenues and other operating income (5) | 50.6 | % | 29.6 | % | 45.3 | % | 47.6 | % | 30.3 | % | ||||||||||||||||||||||
| Operating margin (6) | 16.5 | % | 50.5 | % | 24.5 | % | 21.1 | % | 50.7 | % | ||||||||||||||||||||||
| 1. | Represents non-controlling interests in Artio Global Holdings LLC. |
| 2. | Represents non-controlling interests in Consolidated Investment Products. |
| 3. | Average assets under management for a period is computed on the beginning-of-first-month balance and all end-of-month balances in the period. |
| 4. | Effective fee rate is defined as annualized investment management fees (based on the number of days in the period) divided by the average assets under management for the period. |
| 5. | Calculated as employee compensation and benefits expense divided by total revenues and other operating income. |
| 6. | Calculated as operating income before income tax expense divided by total revenues and other operating income. |
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 3 |
| Reconciliation of GAAP to Non-GAAP Adjusted Consolidated Statements of Income | |
| (unaudited, in thousands, except share and per share amounts) |
See Exhibit 5 for notes describing adjustments set forth below.
| Three Months Ended Jun. 30, 2012 | Three Months Ended Jun. 30, 2011 | Three Months Ended Mar. 31, 2012 | ||||||||||||||||||||||||||||||||||
| GAAP | Adjustments | Adjusted | GAAP | Adjustments | Adjusted | GAAP | Adjustments | Adjusted | ||||||||||||||||||||||||||||
| Revenues and other operating income: | ||||||||||||||||||||||||||||||||||||
| Investment management fees | $ | 33,320 | $ | - | $ | 33,320 | $ | 78,209 | $ | - | $ | 78,209 | $ | 42,771 | $ | - | $ | 42,771 | ||||||||||||||||||
| Net gains (losses) on securities held for deferred compensation | (546 | ) | - | (546 | ) | (56 | ) | - | (56 | ) | 1,160 | - | 1,160 | |||||||||||||||||||||||
| Foreign currency losses | (60 | ) | - | (60 | ) | (2 | ) | - | (2 | ) | (1 | ) | - | (1 | ) | |||||||||||||||||||||
| Total revenues and other operating income | 32,714 | - | 32,714 | 78,151 | - | 78,151 | 43,930 | - | 43,930 | |||||||||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||||||||||||||
| Employee compensation and benefits | 19,417 | (2,876 | )(a) | 16,541 | 25,812 | (2,644 | )(a) | 23,168 | 22,334 | (2,422 | )(a) | 19,912 | ||||||||||||||||||||||||
| Shareholder servicing and marketing | 3,043 | - | 3,043 | 5,163 | - | 5,163 | 3,624 | - | 3,624 | |||||||||||||||||||||||||||
| General and administrative | 7,748 | - | 7,748 | 10,357 | - | 10,357 | 9,738 | (122 | )(f) | 9,616 | ||||||||||||||||||||||||||
| Total expenses | 30,208 | (2,876 | ) | 27,332 | 41,332 | (2,644 | ) | 38,688 | 35,696 | (2,544 | ) | 33,152 | ||||||||||||||||||||||||
| Operating income before income tax expense | 2,506 | 2,876 | 5,382 | 36,819 | 2,644 | 39,463 | 8,234 | 2,544 | 10,778 | |||||||||||||||||||||||||||
| Non-operating income (loss) | (1,387 | ) | 141 | (e) | (1,246 | ) | (156 | ) | 75 | (e) | (81 | ) | 2,556 | (607 | )(e,f) | 1,949 | ||||||||||||||||||||
| Income before income tax expense | 1,119 | 3,017 | 4,136 | 36,663 | 2,719 | 39,382 | 10,790 | 1,937 | 12,727 | |||||||||||||||||||||||||||
| Income taxes | (287 | ) | 1,195 | (b) | 908 | 14,869 | 1,240 | (b) | 16,109 | 5,322 | 944 | (b) | 6,266 | |||||||||||||||||||||||
| Net income | 1,406 | 1,822 | 3,228 | 21,794 | 1,479 | 23,273 | 5,468 | 993 | 6,461 | |||||||||||||||||||||||||||
| Net income attributable to non-controlling interests in AGH | 12 | (12 | )(c) | - | 719 | (719 | )(c) | - | 190 | (190 | )(c) | - | ||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests in CIP | (141 | ) | 141 | (e) | - | (75 | ) | 75 | (e) | - | 678 | (678 | )(e) | - | ||||||||||||||||||||||
| Net income attributable to Artio Global Investors | $ | 1,535 | $ | 1,693 | $ | 3,228 | $ | 21,150 | $ | 2,123 | $ | 23,273 | $ | 4,600 | $ | 1,861 | $ | 6,461 | ||||||||||||||||||
| Net income per diluted share attributable to Artio Global Investors | $ | 0.03 | $ | 0.05 | $ | 0.36 | $ | 0.39 | $ | 0.08 | $ | 0.11 | ||||||||||||||||||||||||
| Weighted average diluted shares used in net income per share attributable to Artio Global Investors | 59,814,290 | - | 59,814,290 | 58,576,859 | 1,200,000 | (d) | 59,776,859 | 58,474,697 | 1,200,000 | (d) | 59,674,697 | |||||||||||||||||||||||||
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 4 |
| Reconciliation of GAAP to Non-GAAP Adjusted Consolidated Statements of Income | |
| (unaudited, in thousands, except share and per share amounts) |
See Exhibit 5 for notes describing adjustments set forth below.
| Six Months Ended Jun. 30, 2012 | Six Months Ended Jun. 30, 2011 | |||||||||||||||||||||||
| GAAP | Adjustments | Adjusted | GAAP | Adjustments | Adjusted | |||||||||||||||||||
| Revenues and other operating income: | ||||||||||||||||||||||||
| Investment management fees | $ | 76,091 | $ | - | $ | 76,091 | $ | 159,985 | $ | - | $ | 159,985 | ||||||||||||
| Net gains (losses) on securities held for deferred compensation | 614 | - | 614 | 363 | - | 363 | ||||||||||||||||||
| Foreign currency losses | (61 | ) | - | (61 | ) | (20 | ) | - | (20 | ) | ||||||||||||||
| Total revenues and other operating income | 76,644 | - | 76,644 | 160,328 | - | 160,328 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Employee compensation and benefits | 41,751 | (5,298 | )(a) | 36,453 | 53,830 | (5,268 | )(a) | 48,562 | ||||||||||||||||
| Shareholder servicing and marketing | 6,667 | - | 6,667 | 10,028 | - | 10,028 | ||||||||||||||||||
| General and administrative | 17,486 | (122 | )(f) | 17,364 | 20,529 | - | 20,529 | |||||||||||||||||
| Total expenses | 65,904 | (5,420 | ) | 60,484 | 84,387 | (5,268 | ) | 79,119 | ||||||||||||||||
| Operating income before income tax expense | 10,740 | 5,420 | 16,160 | 75,941 | 5,268 | 81,209 | ||||||||||||||||||
| Non-operating income (loss) | 1,169 | (466 | )(e,f) | 703 | 409 | (60 | )(e) | 349 | ||||||||||||||||
| Income before income tax expense | 11,909 | 4,954 | 16,863 | 76,350 | 5,208 | 81,558 | ||||||||||||||||||
| Income taxes | 5,035 | 2,139 | (b) | 7,174 | 31,620 | 2,485 | (b) | 34,105 | ||||||||||||||||
| Net income | 6,874 | 2,815 | 9,689 | 44,730 | 2,723 | 47,453 | ||||||||||||||||||
| Net income attributable to non-controlling interests in AGH | 202 | (202 | )(c) | - | 1,488 | (1,488 | )(c) | - | ||||||||||||||||
| Net income (loss) attributable to non-controlling interests in CIP | 537 | (537 | )(e) | - | 60 | (60 | )(e) | - | ||||||||||||||||
| Net income attributable to Artio Global Investors | $ | 6,135 | $ | 3,554 | $ | 9,689 | $ | 43,182 | $ | 4,271 | $ | 47,453 | ||||||||||||
| Net income per diluted share attributable to Artio Global Investors | $ | 0.10 | $ | 0.16 | $ | 0.74 | $ | 0.80 | ||||||||||||||||
| Weighted average diluted shares used in net income per share attributable to Artio Global Investors | 58,991,691 | 751,648 | (d) | 59,743,339 | 58,475,249 | 1,200,000 | (d) | 59,675,249 | ||||||||||||||||
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 5 |
| Notes to Reconciliation of GAAP to Non-GAAP Adjusted Consolidated Statements of Income |
Management believes the Non-GAAP adjustments set forth below provide more meaningful comparisons between periods. Additional information on the reorganization of the Company’s ownership structure and the related non-recurring items are discussed in the Company’s prospectus dated September 23, 2009.
| (a) | Adjustments to exclude the amortization expense associated with the RSUs awarded at the time of the IPO from all periods presented, as the granting of the awards was one-time in nature. |
| The three months ended Mar. 31, 2012, and the three and six months ended Jun. 30, 2012, also exclude certain costs associated with organizational changes. | |
| (b) | The adjustments to income taxes for all periods presented prior to the Principals’ exchanges on April 24, 2012, reflect the tax effect of the assumed full exchange of the Principals’ non-controlling interests for Class A common stock on the first day of the respective period, since prior to such exchange, income tax expense excludes the U.S. federal and state taxes for the income attributable to the Principals and an adjustment to reflect the tax effects of excluding the amortization expense associated with the RSUs awarded at the time of the IPO. |
| The three months ended Mar. 31, 2012, and the three and six months ended Jun. 30, 2012, also include adjustments to reflect the tax effect of excluding costs associated with organizational changes. | |
| The three months ended Mar. 31, 2012, and the six months ended Jun. 30, 2012, also include an adjustment to reflect the tax effect of excluding the one-time write-off of unamortized debt issuance costs in connection with the early repayment of the Company’s term debt. | |
| (c) | Adjustment to eliminate the Principals’ non-controlling interests, which are assumed to be exchanged for Class A common stock on the first day of the respective period. |
| (d) | Diluted shares outstanding, for periods prior to the Principals’ exchanges on April 24, 2012, assumes the Principals have fully exchanged their New Class A Units in Artio Global Holdings LLC for an equivalent amount of shares of the Company’s Class A common stock. |
| (e) | Adjustments to eliminate third party investors’ economic interests in the Consolidated Investment Products from both Net income attributable to non-controlling interests in the Consolidated Investment Products and Non-operating income. Management believes these adjustments provide a more useful measure for comparing Non-operating income between periods. |
| (f) | Adjustments to eliminate the one-time write-off of unamortized debt issuance costs in connection with the early repayment of the Company’s term debt. |
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 6 |
| Reconciliation of Net Income to Adjusted EBITDA | |
| (unaudited, in thousands) |
| Three Months Ended | % Change From | Six Months Ended | % Change From | |||||||||||||||||||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2012 | Jun. 30, 2011 | Jun. 30, 2011 | |||||||||||||||||||||||||
| Net Income | $ | 1,406 | $ | 21,794 | $ | 5,468 | $ | 6,874 | $ | 44,730 | ||||||||||||||||||||||
| Add: Interest, taxes, depreciation and amortization | 4,544 | 20,149 | 9,889 | 14,433 | 42,029 | |||||||||||||||||||||||||||
| EBITDA | $ | 5,950 | $ | 41,943 | $ | 15,357 | (86 | )% | (61 | )% | $ | 21,307 | $ | 86,759 | (75 | )% | ||||||||||||||||
| Add: Other non-operating (income) loss | 2,142 | 383 | (2,057 | ) | 85 | (141 | ) | |||||||||||||||||||||||||
| Add: Compensation adjustments associated with organizational changes | 652 | - | 213 | 865 | - | |||||||||||||||||||||||||||
| Add: Write-off of unamortized debt issuance costs | - | - | 122 | 122 | - | |||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 8,744 | $ | 42,326 | $ | 13,635 | (79 | )% | (36 | )% | $ | 22,379 | $ | 86,618 | (74 | )% | ||||||||||||||||
| Adjusted EBITDA margin 1 | 26.7 | % | 54.2 | % | 31.0 | % | 29.2 | % | 54.0 | % | ||||||||||||||||||||||
1. Calculated as Adjusted EBITDA divided by total revenues and other operating income.
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 7 | |
| Assets under Management by Investment Vehicle | ||
| (unaudited, in millions) |
| Three Months Ended | % Change From | Six Month Ended | % Change From | |||||||||||||||||||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2012 | Jun. 30, 2011 | Jun. 30, 2011 | |||||||||||||||||||||||||
| Proprietary Funds | ||||||||||||||||||||||||||||||||
| Beginning assets under management | $ | 12,862 | $ | 22,854 | $ | 13,366 | (44 | )% | (4 | )% | $ | 13,366 | $ | 23,013 | (42 | )% | ||||||||||||||||
| Gross client cash inflows | 784 | 1,136 | 1,235 | (31 | )% | (37 | )% | 2,019 | 2,924 | (31 | )% | |||||||||||||||||||||
| Gross client cash outflows | (3,043 | ) | (2,739 | ) | (2,712 | ) | (11 | )% | (12 | )% | (5,755 | ) | (5,212 | ) | (10 | )% | ||||||||||||||||
| Net client cash flows | (2,259 | ) | (1,603 | ) | (1,477 | ) | (41 | )% | (53 | )% | (3,736 | ) | (2,288 | ) | (63 | )% | ||||||||||||||||
| Transfers between investment vehicles | - | - | 52 | NM | (100 | )% | 52 | - | NM | |||||||||||||||||||||||
| Total client cash flows | (2,259 | ) | (1,603 | ) | (1,425 | ) | (41 | )% | (59 | )% | (3,684 | ) | (2,288 | ) | (61 | )% | ||||||||||||||||
| Market appreciation (depreciation) | (516 | ) | (59 | ) | 921 | NM | (156 | )% | 405 | 467 | (13 | )% | ||||||||||||||||||||
| Ending assets under management | 10,087 | 21,192 | 12,862 | (52 | )% | (22 | )% | 10,087 | 21,192 | (52 | )% | |||||||||||||||||||||
| Institutional Commingled Funds | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 4,346 | 9,374 | 4,912 | (54 | )% | (12 | )% | 4,912 | 9,236 | (47 | )% | |||||||||||||||||||||
| Gross client cash inflows | 92 | 104 | 32 | (12 | )% | 188 | % | 124 | 257 | (52 | )% | |||||||||||||||||||||
| Gross client cash outflows | (1,091 | ) | (1,149 | ) | (1,107 | ) | 5 | % | 1 | % | (2,198 | ) | (1,573 | ) | (40 | )% | ||||||||||||||||
| Net client cash flows | (999 | ) | (1,045 | ) | (1,075 | ) | 4 | % | 7 | % | (2,074 | ) | (1,316 | ) | (58 | )% | ||||||||||||||||
| Transfers between investment vehicles | - | (22 | ) | 13 | 100 | % | (100 | )% | 13 | 188 | (93 | )% | ||||||||||||||||||||
| Total client cash flows | (999 | ) | (1,067 | ) | (1,062 | ) | 6 | % | 6 | % | (2,061 | ) | (1,128 | ) | (83 | )% | ||||||||||||||||
| Market appreciation (depreciation) | (212 | ) | (22 | ) | 496 | NM | (143 | )% | 284 | 177 | 60 | % | ||||||||||||||||||||
| Ending assets under management | 3,135 | 8,285 | 4,346 | (62 | )% | (28 | )% | 3,135 | 8,285 | (62 | )% | |||||||||||||||||||||
| Separate Accounts | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 7,858 | 14,768 | 9,799 | (47 | )% | (20 | )% | 9,799 | 16,801 | (42 | )% | |||||||||||||||||||||
| Gross client cash inflows | 53 | 31 | 101 | 71 | % | (48 | )% | 154 | 166 | (7 | )% | |||||||||||||||||||||
| Gross client cash outflows | (1,232 | ) | (677 | ) | (2,694 | ) | (82 | )% | 54 | % | (3,926 | ) | (2,917 | ) | (35 | )% | ||||||||||||||||
| Net client cash flows | (1,179 | ) | (646 | ) | (2,593 | ) | (83 | )% | 55 | % | (3,772 | ) | (2,751 | ) | (37 | )% | ||||||||||||||||
| Transfers between investment vehicles | - | 22 | (65 | ) | (100 | )% | 100 | % | (65 | ) | (188 | ) | 65 | % | ||||||||||||||||||
| Total client cash flows | (1,179 | ) | (624 | ) | (2,658 | ) | (89 | )% | 56 | % | (3,837 | ) | (2,939 | ) | (31 | )% | ||||||||||||||||
| Market appreciation (depreciation) | (214 | ) | 77 | 717 | NM | (130 | )% | 503 | 359 | 40 | % | |||||||||||||||||||||
| Ending assets under management | 6,465 | 14,221 | 7,858 | (55 | )% | (18 | )% | 6,465 | 14,221 | (55 | )% | |||||||||||||||||||||
| Sub-advisory Accounts | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 1,579 | 4,332 | 2,282 | (64 | )% | (31 | )% | 2,282 | 4,357 | (48 | )% | |||||||||||||||||||||
| Gross client cash inflows | 26 | 66 | 39 | (61 | )% | (33 | )% | 65 | 217 | (70 | )% | |||||||||||||||||||||
| Gross client cash outflows | (58 | ) | (1,300 | ) | (889 | ) | 96 | % | 93 | % | (947 | ) | (1,620 | ) | 42 | % | ||||||||||||||||
| Net client cash flows | (32 | ) | (1,234 | ) | (850 | ) | 97 | % | 96 | % | (882 | ) | (1,403 | ) | 37 | % | ||||||||||||||||
| Transfers between investment vehicles | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (32 | ) | (1,234 | ) | (850 | ) | 97 | % | 96 | % | (882 | ) | (1,403 | ) | 37 | % | ||||||||||||||||
| Market appreciation (depreciation) | (78 | ) | 39 | 147 | NM | (153 | )% | 69 | 183 | (62 | )% | |||||||||||||||||||||
| Ending assets under management | 1,469 | 3,137 | 1,579 | (53 | )% | (7 | )% | 1,469 | 3,137 | (53 | )% | |||||||||||||||||||||
| Total Assets under Management | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 26,645 | 51,328 | 30,359 | (48 | )% | (12 | )% | 30,359 | 53,407 | (43 | )% | |||||||||||||||||||||
| Gross client cash inflows | 955 | 1,337 | 1,407 | (29 | )% | (32 | )% | 2,362 | 3,564 | (34 | )% | |||||||||||||||||||||
| Gross client cash outflows | (5,424 | ) | (5,865 | ) | (7,402 | ) | 8 | % | 27 | % | (12,826 | ) | (11,322 | ) | (13 | )% | ||||||||||||||||
| Net client cash flows | (4,469 | ) | (4,528 | ) | (5,995 | ) | 1 | % | 25 | % | (10,464 | ) | (7,758 | ) | (35 | )% | ||||||||||||||||
| Transfers between investment vehicles | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (4,469 | ) | (4,528 | ) | (5,995 | ) | 1 | % | 25 | % | (10,464 | ) | (7,758 | ) | (35 | )% | ||||||||||||||||
| Market appreciation (depreciation) | (1,020 | ) | 35 | 2,281 | NM | (145 | )% | 1,261 | 1,186 | 6 | % | |||||||||||||||||||||
| Ending assets under management | $ | 21,156 | $ | 46,835 | $ | 26,645 | (55 | )% | (21 | )% | $ | 21,156 | $ | 46,835 | (55 | )% | ||||||||||||||||
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 8 | |
| Assets under Management by Investment Strategy | ||
| (unaudited, in millions) |
| Three Months Ended | % Change From | Six Month Ended | % Change From | |||||||||||||||||||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2012 | Jun. 30, 2011 | Jun. 30, 2011 | |||||||||||||||||||||||||
| International Equity I | ||||||||||||||||||||||||||||||||
| Beginning assets under management | $ | 6,470 | $ | 17,298 | $ | 8,680 | (63 | )% | (25 | )% | $ | 8,680 | $ | 18,781 | (54 | )% | ||||||||||||||||
| Gross client cash inflows | 78 | 182 | 131 | (57 | )% | (40 | )% | 209 | 614 | (66 | )% | |||||||||||||||||||||
| Gross client cash outflows | (1,258 | ) | (1,643 | ) | (3,108 | ) | 23 | % | 60 | % | (4,366 | ) | (3,905 | ) | (12 | )% | ||||||||||||||||
| Net client cash flows | (1,180 | ) | (1,461 | ) | (2,977 | ) | 19 | % | 60 | % | (4,157 | ) | (3,291 | ) | (26 | )% | ||||||||||||||||
| Transfers between investment strategies | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (1,180 | ) | (1,461 | ) | (2,977 | ) | 19 | % | 60 | % | (4,157 | ) | (3,291 | ) | (26 | )% | ||||||||||||||||
| Market appreciation (depreciation) | (464 | ) | (69 | ) | 767 | NM | (160 | )% | 303 | 278 | 9 | % | ||||||||||||||||||||
| Ending assets under management | 4,826 | 15,768 | 6,470 | (69 | )% | (25 | )% | 4,826 | 15,768 | (69 | )% | |||||||||||||||||||||
| International Equity II | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 8,505 | 22,243 | 10,897 | (62 | )% | (22 | )% | 10,897 | 23,272 | (53 | )% | |||||||||||||||||||||
| Gross client cash inflows | 156 | 384 | 191 | (59 | )% | (18 | )% | 347 | 1,266 | (73 | )% | |||||||||||||||||||||
| Gross client cash outflows | (2,742 | ) | (3,053 | ) | (3,621 | ) | 10 | % | 24 | % | (6,363 | ) | (5,415 | ) | (18 | )% | ||||||||||||||||
| Net client cash flows | (2,586 | ) | (2,669 | ) | (3,430 | ) | 3 | % | 25 | % | (6,016 | ) | (4,149 | ) | (45 | )% | ||||||||||||||||
| Transfers between investment strategies | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (2,586 | ) | (2,669 | ) | (3,430 | ) | 3 | % | 25 | % | (6,016 | ) | (4,149 | ) | (45 | )% | ||||||||||||||||
| Market appreciation (depreciation) | (536 | ) | (28 | ) | 1,038 | NM | (152 | )% | 502 | 423 | 19 | % | ||||||||||||||||||||
| Ending assets under management | 5,383 | 19,546 | 8,505 | (72 | )% | (37 | )% | 5,383 | 19,546 | (72 | )% | |||||||||||||||||||||
| High Grade Fixed Income | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 5,714 | 5,036 | 5,503 | 13 | % | 4 | % | 5,503 | 5,088 | 8 | % | |||||||||||||||||||||
| Gross client cash inflows | 303 | 229 | 332 | 32 | % | (9 | )% | 635 | 377 | 68 | % | |||||||||||||||||||||
| Gross client cash outflows | (290 | ) | (594 | ) | (204 | ) | 51 | % | (42 | )% | (494 | ) | (827 | ) | 40 | % | ||||||||||||||||
| Net client cash flows | 13 | (365 | ) | 128 | 104 | % | (90 | )% | 141 | (450 | ) | 131 | % | |||||||||||||||||||
| Transfers between investment strategies | - | 104 | - | (100 | )% | NM | - | 99 | (100 | )% | ||||||||||||||||||||||
| Total client cash flows | 13 | (261 | ) | 128 | 105 | % | (90 | )% | 141 | (351 | ) | 140 | % | |||||||||||||||||||
| Market appreciation (depreciation) | 96 | 110 | 83 | (13 | )% | 16 | % | 179 | 148 | 21 | % | |||||||||||||||||||||
| Ending assets under management | 5,823 | 4,885 | 5,714 | 19 | % | 2 | % | 5,823 | 4,885 | 19 | % | |||||||||||||||||||||
| High Yield | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 4,967 | 5,304 | 4,295 | (6 | )% | 16 | % | 4,295 | 4,907 | (12 | )% | |||||||||||||||||||||
| Gross client cash inflows | 398 | 502 | 730 | (21 | )% | (45 | )% | 1,128 | 1,211 | (7 | )% | |||||||||||||||||||||
| Gross client cash outflows | (910 | ) | (499 | ) | (317 | ) | (82 | )% | (187 | )% | (1,227 | ) | (1,068 | ) | (15 | )% | ||||||||||||||||
| Net client cash flows | (512 | ) | 3 | 413 | NM | NM | (99 | ) | 143 | (169 | )% | |||||||||||||||||||||
| Transfers between investment strategies | - | (104 | ) | - | 100 | % | NM | - | (99 | ) | 100 | % | ||||||||||||||||||||
| Total client cash flows | (512 | ) | (101 | ) | 413 | NM | NM | (99 | ) | 44 | NM | |||||||||||||||||||||
| Market appreciation (depreciation) | (34 | ) | 43 | 259 | (179 | )% | (113 | )% | 225 | 295 | (24 | )% | ||||||||||||||||||||
| Ending assets under management | 4,421 | 5,246 | 4,967 | (16 | )% | (11 | )% | 4,421 | 5,246 | (16 | )% | |||||||||||||||||||||
| Global Equity | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 678 | 1,066 | 721 | (36 | )% | (6 | )% | 721 | 1,025 | (30 | )% | |||||||||||||||||||||
| Gross client cash inflows | 2 | 8 | 1 | (75 | )% | 100 | % | 3 | 27 | (89 | )% | |||||||||||||||||||||
| Gross client cash outflows | (126 | ) | (20 | ) | (137 | ) | NM | 8 | % | (263 | ) | (34 | ) | NM | ||||||||||||||||||
| Net client cash flows | (124 | ) | (12 | ) | (136 | ) | NM | 9 | % | (260 | ) | (7 | ) | NM | ||||||||||||||||||
| Transfers between investment strategies | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (124 | ) | (12 | ) | (136 | ) | NM | 9 | % | (260 | ) | (7 | ) | NM | ||||||||||||||||||
| Market appreciation (depreciation) | (48 | ) | (17 | ) | 93 | (182 | )% | (152 | )% | 45 | 19 | 137 | % | |||||||||||||||||||
| Ending assets under management | 506 | 1,037 | 678 | (51 | )% | (25 | )% | 506 | 1,037 | (51 | )% | |||||||||||||||||||||
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 8 | |
| Assets under Management by Investment Strategy | ||
| (unaudited, in millions) |
| Three Months Ended | % Change From | Six Month Ended | % Change From | |||||||||||||||||||||||||||||
| Jun. 30, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2011 | Mar. 31, 2012 | Jun. 30, 2012 | Jun. 30, 2011 | Jun. 30, 2011 | |||||||||||||||||||||||||
| US Equity | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 220 | 274 | 178 | (20 | )% | 24 | % | 178 | 227 | (22 | )% | |||||||||||||||||||||
| Gross client cash inflows | 18 | 23 | 21 | (22 | )% | (14 | )% | 39 | 59 | (34 | )% | |||||||||||||||||||||
| Gross client cash outflows | (70 | ) | (56 | ) | (11 | ) | (25 | )% | NM | (81 | ) | (67 | ) | (21 | )% | |||||||||||||||||
| Net client cash flows | (52 | ) | (33 | ) | 10 | (58 | )% | NM | (42 | ) | (8 | ) | NM | |||||||||||||||||||
| Transfers between investment strategies | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (52 | ) | (33 | ) | 10 | (58 | )% | NM | (42 | ) | (8 | ) | NM | |||||||||||||||||||
| Market appreciation (depreciation) | (25 | ) | (6 | ) | 32 | NM | (178 | )% | 7 | 16 | (56 | )% | ||||||||||||||||||||
| Ending assets under management | 143 | 235 | 220 | (39 | )% | (35 | )% | 143 | 235 | (39 | )% | |||||||||||||||||||||
| Other (1) | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 91 | 107 | 85 | (15 | )% | 7 | % | 85 | 107 | (21 | )% | |||||||||||||||||||||
| Gross client cash inflows | - | 9 | 1 | (100 | )% | (100 | )% | 1 | 10 | (90 | )% | |||||||||||||||||||||
| Gross client cash outflows | (28 | ) | - | (4 | ) | NM | NM | (32 | ) | (6 | ) | NM | ||||||||||||||||||||
| Net client cash flows | (28 | ) | 9 | (3 | ) | NM | NM | (31 | ) | 4 | NM | |||||||||||||||||||||
| Transfers between investment strategies | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (28 | ) | 9 | (3 | ) | NM | NM | (31 | ) | 4 | NM | |||||||||||||||||||||
| Market appreciation (depreciation) | (9 | ) | 2 | 9 | NM | (200 | )% | - | 7 | (100 | )% | |||||||||||||||||||||
| Ending assets under management | 54 | 118 | 91 | (54 | )% | (41 | )% | 54 | 118 | (54 | )% | |||||||||||||||||||||
| Total Assets under Management | ||||||||||||||||||||||||||||||||
| Beginning assets under management | 26,645 | 51,328 | 30,359 | (48 | )% | (12 | )% | 30,359 | 53,407 | (43 | )% | |||||||||||||||||||||
| Gross client cash inflows | 955 | 1,337 | 1,407 | (29 | )% | (32 | )% | 2,362 | 3,564 | (34 | )% | |||||||||||||||||||||
| Gross client cash outflows | (5,424 | ) | (5,865 | ) | (7,402 | ) | 8 | % | 27 | % | (12,826 | ) | (11,322 | ) | (13 | )% | ||||||||||||||||
| Net client cash flows | (4,469 | ) | (4,528 | ) | (5,995 | ) | 1 | % | 25 | % | (10,464 | ) | (7,758 | ) | (35 | )% | ||||||||||||||||
| Transfers between investment strategies | - | - | - | NM | NM | - | - | NM | ||||||||||||||||||||||||
| Total client cash flows | (4,469 | ) | (4,528 | ) | (5,995 | ) | 1 | % | 25 | % | (10,464 | ) | (7,758 | ) | (35 | )% | ||||||||||||||||
| Market appreciation (depreciation) | (1,020 | ) | 35 | 2,281 | NM | (145 | )% | 1,261 | 1,186 | 6 | % | |||||||||||||||||||||
| Ending assets under management | 21,156 | 46,835 | 26,645 | (55 | )% | (21 | )% | 21,156 | 46,835 | (55 | )% | |||||||||||||||||||||
1. Other includes the Local Emerging Markets Debt Fund, Global Credit Opportunities Fund, Other International Equity and Other strategies.
| ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES | Exhibit - 9 | |
| Mutual Fund Performance Data (1) |
| Morningstar Ratings / | ||||||||||||||||||||||||||||
| Funds in Total Universe (# of Funds) | Lipper Percentile Rankings (PR) / Funds in Total Universe (# of Funds) | |||||||||||||||||||||||||||
| Year-to-Date | 1-Year | 3-Year | 5-Year | 10-Year | ||||||||||||||||||||||||
| # of | # of | # of | # of | # of | # of | |||||||||||||||||||||||
| Fund | Rating | Funds | Category | PR | Funds | PR | Funds | PR | Funds | PR | Funds | PR | Funds | Classification | ||||||||||||||
| Artio International Equity Fund, Class A (2) | 3 | 798 | Foreign Large Blend | 49 | 326 | 100 | 323 | 98 | 280 | 94 | 232 | 28 | 140 | International Large-Cap Core | ||||||||||||||
| Artio International Equity Fund, Class I (2) | 3 | 798 | Foreign Large Blend | 45 | 326 | 100 | 323 | 97 | 280 | 93 | 232 | 18 | 140 | International Large-Cap Core | ||||||||||||||
| Artio International Equity II Fund, Class A | 2 | 798 | Foreign Large Blend | 37 | 326 | 99 | 323 | 96 | 280 | 81 | 232 | N/A | N/A | International Large-Cap Core | ||||||||||||||
| Artio International Equity II Fund, Class I | 2 | 798 | Foreign Large Blend | 34 | 326 | 98 | 323 | 96 | 280 | 79 | 232 | N/A | N/A | International Large-Cap Core | ||||||||||||||
| Artio Global Equity Fund, Class A | 3 | 983 | World Stock | 92 | 114 | 100 | 110 | 88 | 87 | 73 | 72 | N/A | N/A | Global Large-Cap Growth | ||||||||||||||
| Artio Global Equity Fund, Class I | 3 | 983 | World Stock | 91 | 114 | 99 | 110 | 87 | 87 | 70 | 72 | N/A | N/A | Global Large-Cap Growth | ||||||||||||||
| Artio Microcap Fund, Class A | 2 | 778 | Small Growth | 20 | 680 | 94 | 663 | 12 | 599 | 35 | 505 | N/A | N/A | Small-Cap Core | ||||||||||||||
| Artio Microcap Fund, Class I | 2 | 778 | Small Growth | 16 | 680 | 94 | 663 | 9 | 599 | 30 | 505 | N/A | N/A | Small-Cap Core | ||||||||||||||
| Artio Smallcap Fund, Class A | 3 | 778 | Small Growth | 75 | 680 | 82 | 663 | 66 | 599 | 10 | 505 | N/A | N/A | Small-Cap Core | ||||||||||||||
| Artio Smallcap Fund, Class I | 3 | 778 | Small Growth | 75 | 680 | 80 | 663 | 62 | 599 | 9 | 505 | N/A | N/A | Small-Cap Core | ||||||||||||||
| Artio Midcap Fund, Class A | 3 | 781 | Mid-Cap Growth | 99 | 317 | 77 | 304 | 28 | 278 | 42 | 228 | N/A | N/A | Mid-Cap Core | ||||||||||||||
| Artio Midcap Fund, Class I | 3 | 781 | Mid-Cap Growth | 99 | 317 | 75 | 304 | 22 | 278 | 35 | 228 | N/A | N/A | Mid-Cap Core | ||||||||||||||
| Artio Multicap Fund, Class A | 2 | 1762 | Large Growth | 60 | 721 | 75 | 703 | 32 | 613 | 15 | 528 | N/A | N/A | Multi-Cap Core | ||||||||||||||
| Artio Multicap Fund, Class I | 3 | 1762 | Large Growth | 56 | 721 | 73 | 703 | 28 | 613 | 13 | 528 | N/A | N/A | Multi-Cap Core | ||||||||||||||
| Artio Global High Income Fund, Class A | 3 | 606 | High Yield Bond | 68 | 506 | 94 | 484 | 87 | 417 | 33 | 362 | N/A | N/A | High Current Yield | ||||||||||||||
| Artio Global High Income Fund, Class I | 3 | 606 | High Yield Bond | 62 | 506 | 94 | 484 | 83 | 417 | 27 | 362 | N/A | N/A | High Current Yield | ||||||||||||||
| Artio Total Return Bond Fund, Class A | 4 | 1248 | Intermediate Term Bond | 73 | 592 | 39 | 586 | 47 | 508 | 29 | 433 | 10 | 307 | Intermediate Investment Grade Debt | ||||||||||||||
| Artio Total Return Bond Fund, Class I | 4 | 1248 | Intermediate Term Bond | 67 | 592 | 27 | 586 | 39 | 508 | 24 | 433 | 5 | 307 | Intermediate Investment Grade Debt | ||||||||||||||
| Artio Local Emerging Markets Debt Fund, Class A | NA | NA | Emerging Markets Bond | 99 | 189 | 82 | 163 | N/A | N/A | N/A | N/A | N/A | N/A | Emerging Markets Debt | ||||||||||||||
| Artio Local Emerging Markets Debt Fund, Class I | NA | NA | Emerging Markets Bond | 98 | 189 | 77 | 163 | N/A | N/A | N/A | N/A | N/A | N/A | Emerging Markets Debt | ||||||||||||||
| Note: Data as of June 30, 2012 | ||||||||||||||||||||||||||||
| NA: Not applicable | ||||||||||||||||||||||||||||
| 1. | Lipper, a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds and fund fees and expenses to the asset management and media communities. Lipper ranks the performance of mutual funds within a classification of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested and do not include the effect of loads. If an expense waiver was in effect, it may have had a material effect on the total return or yield for the period. |
| For each mutual fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a mutual fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. A fund's independent Morningstar Rating metric is then compared against the mutual fund universe breakpoints to determine its hypothetical rating. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Data presented reflect past performance, which is no guarantee of future results. © 2012 Morningstar, Inc. All Rights Reserved. This news release is not sales material, nor is it an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of securities in any state or jurisdiction in which any such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. |
| 2. | Closed to new investors. |