Consolidated Sponsored Investment Products (Tables)

9 Months Ended

Sep. 30, 2014

Balances of Consolidated 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 September 30, 2014 and December 31, 2013:


	As of
	September 30, 2014			December 31, 2013
*($ in thousands)*
Total cash	$	13,547		$	531
Total investments		241,107			139,054
All other assets		8,756			9,595
Total liabilities		(23,838	)		(8,435	)
Redeemable noncontrolling interests		(22,265	)		(42,186	)

The Company’s net interests in consolidated sponsored investment products	$	217,307		$	98,559

Condensed Consolidated Balance Sheets

The following tables reflect the impact of the consolidated sponsored investment products in the Condensed Consolidated Balance Sheets as of September, 30, 2014 and December 31, 2013, respectively:

As of September 30, 2014


	Balance Before Consolidation of Investment Products			Consolidated Sponsored Investment Products		Eliminations and Adjustments (a)			Balances as Reported in Condensed Consolidated Balance Sheet
*($ in thousands)*
Total cash	$	172,709		$	13,547	$	—		$	186,256
Total investments		280,953			241,107		(217,294	)		304,766
All other assets		196,236			8,756		(13	)		204,979

Total assets	$	649,898		$	263,410	$	(217,307	)	$	696,001

Total liabilities	$	89,468		$	23,851	$	(13	)	$	113,306
Redeemable noncontrolling interests		—			—		22,265			22,265
Equity attributable to stockholders of the Company		560,576			239,559		(239,559	)		560,576
Non-redeemable noncontrolling interests		(146	)		—		—			(146	)

Total liabilities and equity	$	649,898		$	263,410	$	(217,307	)	$	696,001

(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.

As of December 31, 2013


	Balance Before Consolidation of Investment Products			Consolidated Sponsored Investment Products		Eliminations and Adjustments (a)			Balances as Reported in Condensed 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.

Condensed Consolidated Statement of Operations

The following table reflects the impact of the consolidated sponsored investment products in the Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2014 and 2013, respectively:

For the Three Months Ended September 30, 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	$	117,808		$	—		$	33	$	117,841
Total operating expenses		77,668			1,213			33		78,914

Operating income (loss)		40,140			(1,213	)		—		38,927

Total other non-operating (loss) income		(4,649	)		(3,109	)		4,021		(3,737	)

Income (loss) before income tax expense		35,491			(4,322	)		4,021		35,190
Income tax benefit		(1,805	)		—			—		(1,805	)

Net income (loss)		37,296			(4,322	)		4,021		36,995
Noncontrolling interests		44			—			301		345

Net income (loss) attributable to common stockholders	$	37,340		$	(4,322	)	$	4,322	$	37,340

(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.

For the Three Months Ended September 30, 2013


	Balance Before Consolidation of Investment Products		Consolidated Investment Products			Eliminations and Adjustments (a)			Balances as Reported in Condensed Consolidated Statement of Operations
*($ in thousands)*
Total operating revenues	$	100,319	$	—		$	90		$	100,409
Total operating expenses		68,547		142			90			68,779

Operating income (loss)		31,772		(142	)		—			31,630

Total other non-operating income (expense)		1,870		923			(554	)		2,239

Income (loss) before income tax expense		33,642		781			(554	)		33,869
Income tax expense		12,567		—			—			12,567

Net income (loss)		21,075		781			(554	)		21,302
Noncontrolling interests		14		—			(227	)		(213	)

Net income (loss) attributable to common stockholders	$	21,089	$	781		$	(781	)	$	21,089

(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.

For the Nine Months Ended September 30, 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	$	338,534	$	—		$	(73	)	$	338,461
Total operating expenses		242,032		2,447			(73	)		244,406

Operating income (loss)		96,502		(2,447	)		—			94,055

Total other non-operating income (expense)		6,545		5,883			(3,618	)		8,810

Income (loss) before income tax expense		103,047		3,436			(3,618	)		102,865
Income tax expense		24,311		—			—			24,311

Net income (loss)		78,736		3,436			(3,618	)		78,554
Noncontrolling interests		85		—			182			267

Net income (loss) attributable to common stockholders	$	78,821	$	3,436		$	(3,436	)	$	78,821

(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.

For the Nine Months Ended September 30, 2013


	Balance Before Consolidation of Investment Products		Consolidated Investment Products			Eliminations and Adjustments (a)		Balances as Reported in Condensed Consolidated Statement of Operations
*($ in thousands)*
Total operating revenues	$	282,575	$	—		$	142	$	282,717
Total operating expenses		202,557		406			142		203,105

Operating income (loss)		80,018		(406	)		—		79,612

Total other non-operating income (expense)		705		(768	)		1,056		993

Income (loss) before income tax expense		80,723		(1,174	)		1,056		80,605
Income tax expense		30,335		—			—		30,335

Net income (loss)		50,388		(1,174	)		1,056		50,270
Noncontrolling interests		46		—			118		164

Net income (loss) attributable to common stockholders	$	50,434	$	(1,174	)	$	1,174	$	50,434

(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.

Summary of Assets and Liabilities Measured at Fair Value on Recurring Basis

The assets and liabilities of the consolidated sponsored investment products measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013 by fair value hierarchy level were as follows:

September 30, 2014


	Level 1		Level 2		Level 3		Total
*($ in thousands)*
Assets
Debt securities	$	—	$	146,245	$	447	$	146,692
Equity securities		94,219		196		—		94,415
Derivatives		140		148		—		288

Total Assets Measured at Fair Value	$	94,359	$	146,589	$	447	$	241,395

Liabilities
Short sales	$	10,249	$	485	$	—	$	10,734

Total Liabilities Measured at Fair Value	$	10,249	$	485	$	—	$	10,734

December 31, 2013


	Level 1		Level 2		Level 3		Total
*($ in thousands)*
Assets
Debt securities	$	—	$	47,114	$	—	$	47,114
Equity securities		91,940		—		—		91,940

Total Assets Measured at Fair Value	$	91,940	$	47,114	$	—	$	139,054

Consolidated Sponsored Investment Products [Member]

Reconciliation of Assets Related to Consolidated Sponsored Investment Products

The following table is a reconciliation of assets of consolidated sponsored investment products for Level 3 investments for which significant unobservable inputs were used to determine fair value.


	Level 3 Debt securities (a)
Balance at December 31, 2013	$	—
Purchases		450
Sales		—
Paydowns		(2	)
Change in unrealized gain/loss		(1	)

Balance at September 30, 2014	$	447

(a)	None of the securities in the above table are internally fair valued at September 30, 2014.

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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