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Consolidated Sponsored Investment Products | 3 Months Ended
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Mar. 31, 2014
Organization Consolidation And Presentation Of Financial Statements [Abstract] |
Consolidated Sponsored Investment Products | 10. Consolidated Sponsored Investment Products In the normal course of its business, the Company sponsors and is the manager of various types of investment products. During the three months ended March 31, 2014 and the year ended December 31, 2013, the Company consolidated and deconsolidated several investment products. The Company consolidates an investment product when it owns a majority of the voting interest in the entity or it is the primary beneficiary of an investment product that is a variable interest entity. The consolidation and deconsolidation of these investment products has no impact on net income attributable to stockholders. The Company’s risk with respect to these investments is limited to its investment in these products. The Company has no right to the benefits from, and does not bear the risks associated with, these investment products, beyond the Company’s investments in, and fees generated from these products. If the Company were to liquidate, these investments would not be available to the general creditors of the Company. The Company does not consider cash and investments held by consolidated sponsored investment products to be assets of the Company other than its direct investment in these products. At December 31, 2013, the Company consolidated eight sponsored investment products. During the three months ended March 31, 2014, the Company consolidated one additional sponsored investment product and deconsolidated one sponsored investment product because it no longer had a majority voting interest. As of March 31, 2014, the Company consolidated a total of eight sponsored investment products. The following table presents the balances of the consolidated sponsored investment products that were reflected in the Condensed Consolidated Balance Sheets as of March 31, 2014 and December 31, 2013:
|  | As of |
|  | March 31, 2014 |  |  | December 31, 2013 |
($ in thousands) |  |  |  |  |  |
Total cash |  | $ | 2,543 |  |  | $ | 531 |
Total investments |  |  | 62,086 |  |  |  | 139,054 |
All other assets |  |  | 1,217 |  |  |  | 9,595 |
Total liabilities |  |  | (2,500 | ) |  |  | (8,435 | )
Redeemable noncontrolling interests |  |  | (3,867 | ) |  |  | (42,186 | )
The Company’s net interests in consolidated sponsored investment products |  | $ | 59,479 |  |  | $ | 98,559 |
Consolidation The following tables reflect the impact of the consolidated sponsored investment products in the Condensed Consolidated Balance Sheets as of March, 31, 2014 and December 31, 2013 and the Condensed Consolidated Statements of Income for the three months ended March 31, 2014 and 2013, respectively:
As of March 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |
|  | Balance Before Consolidation of Investment Products |  |  | Consolidated Sponsored Investment Products |  |  | Eliminations and Adjustments (a) |  |  | Balances as Reported in Consolidated Balance Sheet |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Total cash |  | $ | 234,795 |  |  | $ | 2,543 |  |  | $ | — |  |  | $ | 237,338 |
Total investments |  |  | 161,910 |  |  |  | 62,086 |  |  |  | (59,420 | ) |  |  | 164,576 |
All other assets |  |  | 182,755 |  |  |  | 1,217 |  |  |  | (59 | ) |  |  | 183,913 |
Total assets |  | $ | 579,460 |  |  | $ | 65,846 |  |  | $ | (59,479 | ) |  | $ | 585,827 |
Total liabilities |  | $ | 69,364 |  |  | $ | 2,559 |  |  | $ | (59 | ) |  | $ | 71,864 |
Redeemable noncontrolling interests |  |  | — |  |  |  | — |  |  |  | 3,867 |  |  |  | 3,867 |
Equity attributable to stockholders of the Company |  |  | 510,168 |  |  |  | 63,287 |  |  |  | (63,287 | ) |  |  | 510,168 |
Non-redeemable noncontrolling interests |  |  | (72 | ) |  |  | — |  |  |  | — |  |  |  | (72 | )
Total liabilities and equity |  | $ | 579,460 |  |  | $ | 65,846 |  |  | $ | (59,479 | ) |  | $ | 585,827 |
As of December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |
|  | Balance Before Consolidation of Investment Products |  |  | Consolidated Sponsored Investment Products |  |  | Eliminations and Adjustments (a) |  |  | Balances as Reported in Consolidated Balance Sheet |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Total cash |  | $ | 271,014 |  |  | $ | 531 |  |  | $ | — |  |  | $ | 271,545 |
Total investments |  |  | 135,692 |  |  |  | 139,054 |  |  |  | (98,434 | ) |  |  | 176,312 |
All other assets |  |  | 187,627 |  |  |  | 9,595 |  |  |  | (125 | ) |  |  | 197,097 |
Total assets |  | $ | 594,333 |  |  | $ | 149,180 |  |  | $ | (98,559 | ) |  | $ | 644,954 |
Total liabilities |  | $ | 101,465 |  |  | $ | 8,560 |  |  | $ | (125 | ) |  | $ | 109,900 |
Redeemable noncontrolling interests |  |  | — |  |  |  | — |  |  |  | 42,186 |  |  |  | 42,186 |
Equity attributable to stockholders of the Company |  |  | 492,930 |  |  |  | 140,620 |  |  |  | (140,620 | ) |  |  | 492,930 |
Non-redeemable noncontrolling interests |  |  | (62 | ) |  |  | — |  |  |  | — |  |  |  | (62 | )
Total liabilities and equity |  | $ | 594,333 |  |  | $ | 149,180 |  |  | $ | (98,559 | ) |  | $ | 644,954 |
(a) | Adjustments include the elimination of intercompany transactions between the Company and its consolidated sponsored investment products, primarily the elimination of the investments and equity and recording of any noncontrolling interest.
The following table reflects the impact of the consolidated sponsored investment products in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2014 and 2013:
For the Three Months Ended March 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |
|  | Balance Before Consolidation of Investment Products |  |  | Consolidated Sponsored Investment Products |  |  | Eliminations and Adjustments (a) |  |  | Balances as Reported in Condensed Consolidated Statement of Operations |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Total operating revenues |  | $ | 107,855 |  |  | $ | — |  |  | $ | 16 |  |  | $ | 107,871 |
Total operating expenses |  |  | 74,914 |  |  |  | 315 |  |  |  | 16 |  |  |  | 75,245 |
Operating income (loss) |  |  | 32,941 |  |  |  | (315 | ) |  |  | — |  |  |  | 32,626 |
Total other non-operating income (expense) |  |  | 2,997 |  |  |  | 910 |  |  |  | (756 | ) |  |  | 3,151 |
Income (loss) before income tax expense |  |  | 35,938 |  |  |  | 595 |  |  |  | (756 | ) |  |  | 35,777 |
Income tax expense |  |  | 14,010 |  |  |  | — |  |  |  | — |  |  |  | 14,010 |
Net income (loss) |  |  | 21,928 |  |  |  | 595 |  |  |  | (756 | ) |  |  | 21,767 |
Noncontrolling interests |  |  | 10 |  |  |  | — |  |  |  | 161 |  |  |  | 171 |
Net income (loss) attributable to the Company |  | $ | 21,938 |  |  | $ | 595 |  |  | $ | (595 | ) |  | $ | 21,938 |
For the Three Months Ended March 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |
|  | Balance Before Consolidation of Investment Products |  |  | Consolidated Sponsored Investment Products |  |  | Eliminations and Adjustments (a) |  |  | Balances as Reported in Condensed Consolidated Statement of Operations |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Total operating revenues |  | $ | 86,120 |  |  | $ | — |  |  | $ | 48 |  |  | $ | 86,168 |
Total operating expenses |  |  | 64,884 |  |  |  | 136 |  |  |  | 48 |  |  |  | 65,068 |
Operating income (loss) |  |  | 21,236 |  |  |  | (136 | ) |  |  | — |  |  |  | 21,100 |
Total other non-operating income (expense) |  |  | 1,156 |  |  |  | 851 |  |  |  | (472 | ) |  |  | 1,535 |
Income (loss) before income tax expense |  |  | 22,392 |  |  |  | 715 |  |  |  | (472 | ) |  |  | 22,635 |
Income tax expense |  |  | 8,450 |  |  |  | — |  |  |  | — |  |  |  | 8,450 |
Net income (loss) |  |  | 13,942 |  |  |  | 715 |  |  |  | (472 | ) |  |  | 14,185 |
Noncontrolling interests |  |  | 18 |  |  |  | — |  |  |  | (243 | ) |  |  | (225 | )
Net income (loss) attributable to the Company |  | $ | 13,960 |  |  | $ | 715 |  |  | $ | (715 | ) |  | $ | 13,960 |
(a) | Adjustments include the elimination of intercompany transactions between the Company and its consolidated sponsored investment products, primarily the elimination of the investments and equity and recording of any noncontrolling interest.
Fair Value Measurements of Consolidated Sponsored Investment Products The assets of the consolidated sponsored investment products measured at fair value on a recurring basis as of March 31, 2014 and December 31, 2013 by fair value hierarchy level were as follows:
March 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  | $ | — |  |  | $ | 52,925 |  |  | $ | — |  |  | $ | 52,925 |
Equity securities |  |  | 9,161 |  |  |  | — |  |  |  | — |  |  |  | 9,161 |
Total Investments of Consolidated Sponsored Investment Products at Fair Value |  | $ | 9,161 |  |  | $ | 52,925 |  |  | $ | — |  |  | $ | 62,086 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  | $ | — |  |  | $ | 47,114 |  |  | $ | — |  |  | $ | 47,114 |
Equity securities |  |  | 91,940 |  |  |  | — |  |  |  | — |  |  |  | 91,940 |
Total Investments of Consolidated Sponsored Investment Products at Fair Value |  | $ | 91,940 |  |  | $ | 47,114 |  |  | $ | — |  |  | $ | 139,054 |
The following is a discussion of the valuation methodologies used for the assets of the Company’s consolidated sponsored investment products measured at fair value. Investments of consolidated sponsored investment products represent the underlying debt and equity securities held in sponsored products which are consolidated by the Company. Equity securities are valued at the official closing price on the exchange on which the securities are traded and are categorized within Level 1. Level 2 investments include certain non-U.S. securities for which closing prices are not readily available or are deemed to not reflect readily available market prices and are valued using an independent pricing service as well as most debt securities, which are valued based on quotations received from independent pricing services or from dealers who make markets in such securities. Pricing services do not provide pricing for all securities and therefore indicative bids from dealers are utilized, which are based on pricing models used by market makers in the security and are also included within Level 2. There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2014 and 2013, respectively.

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