XML 63 R21.htm IDEA: XBRL DOCUMENT
v2.4.1.9

Consolidated Sponsored Investment Products | 3 Months Ended
--- | ---
Mar. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Consolidated Sponsored Investment Products | 12. Consolidated Sponsored Investment Products In the normal course of its business, the Company sponsors various 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 VIE. 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. 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. As of March 31, 2015 and December 31, 2014, the Company consolidated 12 sponsored investment products, respectively. During the three months ended March 31, 2015, the Company consolidated one additional sponsored investment product and deconsolidated one sponsored investment product because it no longer had a majority voting interest. 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, 2015 and December 31, 2014:
|  | As of |
|  | March 31, 2015 |  |  | December 31, 2014 |
($ in thousands) |  |  |  |  |  |
Total cash |  | $ | 11,612 |  |  | $ | 8,687 |
Total investments |  |  | 254,481 |  |  |  | 236,652 |
All other assets |  |  | 8,629 |  |  |  | 6,960 |
Total liabilities |  |  | (16,491 | ) |  |  | (12,556 | )
Redeemable noncontrolling interests |  |  | (34,977 | ) |  |  | (23,071 | )
The Company’s net interests in consolidated sponsored investment products |  | $ | 223,254 |  |  | $ | 216,672 |
Consolidation The following tables reflect the impact of the consolidated sponsored investment products in the Condensed Consolidated Balance Sheets as of March 31, 2015 and December 31, 2014, respectively: As of March 31, 2015
|  | 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 |  | $ | 166,031 |  |  | $ | 11,612 |  |  | $ | — |  |  | $ | 177,643 |
Total investments |  |  | 277,471 |  |  |  | 254,481 |  |  |  | (220,476 | ) |  |  | 311,476 |
All other assets |  |  | 185,404 |  |  |  | 8,629 |  |  |  | (2,778 | ) |  |  | 191,255 |
Total assets |  | $ | 628,906 |  |  | $ | 274,722 |  |  | $ | (223,254 | ) |  | $ | 680,374 |
Total liabilities |  | $ | 63,762 |  |  | $ | 19,269 |  |  | $ | (2,778 | ) |  | $ | 80,253 |
Redeemable noncontrolling interest |  |  | — |  |  |  | — |  |  |  | 34,977 |  |  |  | 34,977 |
Equity attributable to stockholders of the Company |  |  | 565,368 |  |  |  | 255,453 |  |  |  | (255,453 | ) |  |  | 565,368 |
Non-redeemable noncontrolling interest |  |  | (224 | ) |  |  | — |  |  |  | — |  |  |  | (224 | )
Total liabilities and equity |  | $ | 628,906 |  |  | $ | 274,722 |  |  | $ | (223,254 | ) |  | $ | 680,374 |
As of December 31, 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 |  | $ | 202,847 |  |  | $ | 8,687 |  |  | $ | — |  |  | $ | 211,534 |
Total investments |  |  | 279,863 |  |  |  | 236,652 |  |  |  | (216,415 | ) |  |  | 300,100 |
All other assets |  |  | 180,436 |  |  |  | 6,960 |  |  |  | (257 | ) |  |  | 187,139 |
Total assets |  | $ | 663,146 |  |  | $ | 252,299 |  |  | $ | (216,672 | ) |  | $ | 698,773 |
Total liabilities |  | $ | 99,794 |  |  | $ | 12,813 |  |  | $ | (257 | ) |  | $ | 112,350 |
Redeemable noncontrolling interest |  |  | — |  |  |  | — |  |  |  | 23,071 |  |  |  | 23,071 |
Equity attributable to stockholders of the Company |  |  | 563,542 |  |  |  | 239,486 |  |  |  | (239,486 | ) |  |  | 563,542 |
Non-redeemable noncontrolling interest |  |  | (190 | ) |  |  | — |  |  |  | — |  |  |  | (190 | )
Total liabilities and equity |  | $ | 663,146 |  |  | $ | 252,299 |  |  | $ | (216,672 | ) |  | $ | 698,773 |
(a) | Adjustments include the elimination of intercompany transactions between the Company and its consolidated sponsored investment products, primarily the elimination of the investments and consolidated sponsored investment product 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, 2015 and 2014: For the Three Months Ended March 31, 2015
|  | 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 |  | $ | 104,232 |  |  | $ | — |  |  | $ | (401 | ) |  | $ | 103,831 |
Total operating expenses |  |  | 78,471 |  |  |  | 1,219 |  |  |  | (401 | ) |  |  | 79,289 |
Operating income (loss) |  |  | 25,761 |  |  |  | (1,219 | ) |  |  | — |  |  |  | 24,542 |
Total other non-operating income (expense) |  |  | 4,415 |  |  |  | 4,914 |  |  |  | (3,278 | ) |  |  | 6,051 |
Income (loss) before income tax expense |  |  | 30,176 |  |  |  | 3,695 |  |  |  | (3,278 | ) |  |  | 30,593 |
Income tax expense |  |  | 10,868 |  |  |  | — |  |  |  | — |  |  |  | 10,868 |
Net income (loss) |  |  | 19,308 |  |  |  | 3,695 |  |  |  | (3,278 | ) |  |  | 19,725 |
Noncontrolling interests |  |  | 34 |  |  |  | — |  |  |  | (417 | ) |  |  | (383 | )
Net income (loss) attributable to the Company |  | $ | 19,342 |  |  | $ | 3,695 |  |  | $ | (3,695 | ) |  | $ | 19,342 |
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 |
(a) | Adjustments include the elimination of intercompany transactions between the Company and its consolidated sponsored investment products, primarily the elimination of the investments and consolidated sponsored investment product 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, 2015 and December 31, 2014 by fair value hierarchy level were as follows: As of March 31, 2015
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  | $ | — |  |  | $ | 144,391 |  |  | $ | 913 |  |  | $ | 145,304 |
Equity securities |  |  | 108,408 |  |  |  | 769 |  |  |  | — |  |  |  | 109,177 |
Derivatives |  |  | 88 |  |  |  | 179 |  |  |  | — |  |  |  | 267 |
Total Assets Measured at Fair Value |  | $ | 108,496 |  |  | $ | 145,339 |  |  | $ | 913 |  |  | $ | 254,748 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  | $ | 129 |  |  | $ | 43 |  |  | $ | — |  |  | $ | 172 |
Short sales |  |  | 8,975 |  |  |  | 538 |  |  |  | — |  |  |  | 9,513 |
Total Liabilities Measured at Fair Value |  | $ | 9,104 |  |  | $ | 581 |  |  | $ | — |  |  | $ | 9,685 |
As of December 31, 2014
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
($ in thousands) |  |  |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities |  | $ | — |  |  | $ | 135,050 |  |  | $ | 1,065 |  |  | $ | 136,115 |
Equity securities |  |  | 82,417 |  |  |  | 18,120 |  |  |  | — |  |  |  | 100,537 |
Derivatives |  |  | 154 |  |  |  | 227 |  |  |  | — |  |  |  | 381 |
Total Assets Measured at Fair Value |  | $ | 82,571 |  |  | $ | 153,397 |  |  | $ | 1,065 |  |  | $ | 237,033 |
Liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivatives |  | $ | 191 |  |  | $ | — |  |  | $ | — |  |  | $ | 191 |
Short sales |  |  | 7,491 |  |  |  | 674 |  |  |  | — |  |  |  | 8,165 |
Total Liabilities Measured at Fair Value |  | $ | 7,682 |  |  | $ | 674 |  |  | $ | — |  |  | $ | 8,356 |
The following is a discussion of the valuation methodologies used for the assets and liabilities of the Company’s consolidated sponsored investment products measured at fair value. Investments of consolidated sponsored investment products represent the underlying debt, equity and other 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 most debt securities, which are valued based on quotations received from independent pricing services or from dealers who make markets in such securities and certain equity securities, including non-US 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. 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. Level 3 investments include debt securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security. 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.
|  | For the Three Months Ended March 31, 2015 |
Level 3 Debt securities (a) |  |  |  |
Balance at beginning of period |  | $ | 1,065 |
Paydowns |  |  | (1 | )
Transferred to Level 2 |  |  | (152 | )
Change in unrealized gain/loss |  |  | 1 |
Balance at end of period |  | $ | 913 |
(a) | None of the securities in the above table were internally fair valued at March 31, 2015.
For the three months ended March 31, 2015, securities held by consolidated sponsored investment products with an end of period value of less than $0.1 million were transferred from Level 1 to Level 2 because certain non-US securities’ quoted market prices were adjusted based on third-party factors derived from model-based valuation techniques for which the significant assumptions were observable in the market. For the three months ended March 31, 2015, securities held by consolidated sponsored investment products with an end of period value of $15.3 million were transferred from Level 2 to Level 1 because certain non-US securities’ quoted market prices were no longer adjusted. There were no assets or liabilities with a Level 3 fair value at March 31, 2014. There were no transfers between Level 1, Level 2, or Level 3 during the three months ended March 31, 2014. Derivatives Beginning in the second quarter of 2014, the Company consolidated investment products which include derivative instruments as part of their investment strategies. These derivatives may include futures contracts, options contracts and forward contracts. The fair value of such derivatives at March 31, 2015 and December 31, 2014 was immaterial. The change in fair value of such derivatives, which is recorded in realized and unrealized gain (loss) on investments of consolidated sponsored investment products, net, in the Condensed Consolidated Statement of Operations was immaterial for the three months ended March 31, 2015. There were no derivatives held by consolidated sponsored investment products at March 31, 2014. In connection with entering into these derivative contracts, these funds may be required to pledge to the broker an amount of cash equal to the “initial margin” requirements that varies based on the type of derivative. The cash pledged or on deposit is recorded in the Condensed Consolidated Balance Sheet of the Company as Cash pledged or on deposit of consolidated sponsored investment products. Short Sales Some of the Company’s consolidated sponsored investment products may engage in short sales, which are transactions in which a security is sold which is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline. Short sales are recorded in the Condensed Consolidated Balance Sheet within Other liabilities of consolidated sponsored investment products. Borrowings One of the Company’s consolidated sponsored investment products employs leverage in the form of using proceeds from short sales, which allows it to use its long positions as collateral in order to purchase additional securities. The use of these proceeds from short sales is secured by the assets of the consolidated sponsored investment product which are held with the custodian in a separate account. This consolidated sponsored investment product is permitted to borrow up to 33.33% of its total assets.

X
- Details
Name: | us-gaap_OrganizationConsolidationAndPresentationOfFinancialStatementsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition Consolidation Of Sponsored Investment Products [Text Block] + References No definition available. + Details
Name: | vrts_ConsolidationOfSponsoredInvestmentProductsTextBlock
Namespace Prefix: | vrts_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration