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Invesco first quarter 2014 results
Martin L. Flanagan
President and Chief Executive Officer
Loren M. Starr
Chief Financial Officer
May 1, 2014
1
This presentation, and comments made in the associated conference call today, may include “forward-looking statements.” Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions and divestitures, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts,” and future or conditional verbs such as “will,” “may,” “could,” “should,” and “would” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.
Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission.
You may obtain these reports from the SEC’s website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.
Forward-looking statements
Discussion topics
First quarter overview
Investment performance and flows
Update on EMEA
Financial Results
Questions Appendix
2
3
Maintained strong, long-term investment performance – 81% of actively managed assets ahead of peers on a 3-year basis
Net long-term inflows of $6.5 billion driven by strong investment performance and broad demand across a diverse range of capabilities
Adjusted operating income1 up 18.5% over same quarter a year ago
Adjusted operating margin1 improved to 40.9% from 38.9% in same quarter a year ago – an increase of 2 percentage points
Quarterly dividend raised to 25 cents, up 11.1% from quarterly dividend paid last year
First quarter overview Strong investment performance contributed to solid operating results
1. Non-GAAP financial measures - See Appendix to this presentation for a reconciliation of adjusted operating income (and by calculation adjusted operating margin), to the most directly comparable U.S. GAAP financial measure. Past performance is not a guarantee of future results.
4
Summary of first quarter 2014 results
Assets under management
March 31,2014 AUM of $787.3 billion versus $778.7 billion at December 31, 2013
Average AUM was $779.6 billion versus $761.7 billion for the fourth quarter
Flows
Overall operating results*
Capital management
Total net outflows of $0.9 billion Long-term net inflows of $6.5 billion
Adjusted operating income was $363 million versus $347 million in the fourth quarter
Adjusted operating margin was 40.9% in the quarter versus 40.5% in the fourth quarter
Adjusted diluted EPS for the quarter was $0.60 versus $0.58 in the prior quarter
Quarterly dividend of 25 cents per share, an increase of 11% versus the prior year
Repurchased $119.6 million in common stock (3.6 million shares)
* Non-GAAP financial measures - See Appendix to this presentation for a reconciliation of net revenues, adjusted operating income (and by calculation adjusted operating margin), and adjusted net income (and by calculation adjusted diluted EPS) to the most directly comparable U.S. GAAP financial measure.
Discussion topics
First quarter overview
Investment performance and flows
Update on EMEA
Financial results
Questions Appendix
5
1-Year 3-Year
Assets top half of peer group
Assets bottom half of peer group
5-Year
Percent of actively managed assets in top half of peer group*
Investment performance – overview Aggregate performance analysis – asset weighted
73%
27%
81%
19%
68%
32%
6
*Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with
component funds managed by Invesco, stable value building block funds and CDOs. Certain funds and products were excluded from the analysis because
of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.
Data as of 3/31/2014. Includes AUM of $471.5 billion (60% of total IVZ) for 1 year, $469.5 billion (60% of total IVZ) for three year, and $445.1 billion
(57% of total IVZ) for 5 year. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar,
IMA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional
products and prior month-end for Australian retail funds due to their late release by third parties. Rankings for the most representative fund in each GIPS
composite are applied to all products within each GIPS composite. Performance assumes the reinvestment of dividends. Past performance is not indicative
of future results and may not reflect an investor’s experience.
7
Quarterly long-term flows Continued strong gross sales across our global business
Total Active Passive
Quarterly long-term flows ($ billions)
Gross sales
Gross redemptions
Net long-term flows
29.4 34.0 34.4
47.6 44.4
41.8 45.8
50.2
-32.4
-25.5
-31.7 -33.3
-43.0
-36.8
-44.8 -43.7
-3.0
8.5
2.7
14.3
1.4 5.0
1.0
6.5
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
23.8 25.2 27.7
34.1 32.6 33.1
37.2
41.6
-27.1
-21.9 -26.5
-26.2
-32.5 -28.3
-36.9 -38.4
-3.3
3.3 1.2
7.9
0.1
4.8 0.3
3.2
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
5.6
8.8
6.7
13.5
11.8
8.7 8.6 8.6
-5.3
-3.6
-5.2
-7.1
-10.5
-8.5 -7.9
-5.3
0.3
5.2
1.5
6.4
1.3
0.2 0.7
3.3
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
Gross sales
Gross redemptions
Net long-term flows
8
(a) Retail quarterly flows include retail products in the U.S., Canada, U.K., Continental Europe, Asia and our offshore product line. (b) Institutional quarterly flows include our institutional business in the U.S., U.K., Continental Europe and Asia and excludes institutional money
market.
Retail(a) Institutional(b)
Quarterly long-term flows ($ billions)
Quarterly long-term flows Continued strong gross sales in the retail channel
24.3 26.0 26.9
36.2 37.7 35.5 35.8 39.6
-24.6
-20.3
-24.8 -25.9
-32.8
-29.0
-36.1
-32.0
-0.3
5.7
2.1
10.3
4.9 6.5
-0.3
7.6
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
5.1
8.0 7.5
11.4
6.7 6.3
10.0 10.6
-7.8
-5.2 -6.9
-7.4
-10.2
-7.8 -8.7
-11.7
-2.7
2.8
0.6
4.0
-3.5
-1.5
1.3
-1.1
2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14
24% 25%
20%
26% 25%
32%
29% 27% 27%
33% 32%
28%
31% 30%
34% 33%
31% 31%
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
16.4 14.6
17.1 16.1
22.0 21.8 21.6
18.4 19.2
3.5 0.7
5.9
0.6
6.8
1.1 2.9
(0.7)
2.9
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014
(15%) 4%
US Retail gross sales remained strong $19.2 billion for the quarter – up 4% versus the prior quarter
Source: Data underlying the industry redemption rates are sourced from the ICI and calculated by Invesco. Invesco US Retail excludes PowerShares QQQ and money market, and is through February 28, 2014 Industry redemption rates include proprietary, non-proprietary, direct, institutional, VA and ETF channels and reflects Q1 2014 through February 28, 2014.
9
Invesco Industry
Percentage above the bars is change in gross sales from prior quarter
($ billions)
Net sales
Annualized Redemption rate (rolling 3-month average)
Gross and net sales
(11%)
+17% (6%)
+37% (1%) (1%)
Discussion topics
First quarter overview
Investment performance and flows
Update on EMEA
Financial results
Questions Appendix
10
11
We are well-positioned for long-term success in EMEA. Our strong and growing business is supported by:
– A record of delivering strong, long-term investment performance
– An experienced, capable and well-tenured fund management team supported by a robust investment culture
– Tremendous breadth and diversity of investment capabilities
– Strong organic growth
– Highly regarded and well-recognized brand
– Resources of a global firm
Well-positioned in EMEA A strong and growing business
Invesco Perpetual A deep and well-tenured team with strong investment performance
Past performance is not a guide to future returns Source: Invesco Perpetual as at 31 March 2014. Performance data includes all Invesco Perpetual branded UK domiciled ICVC Funds in their representative IMA Sectors. Performance is based in Sterling on a mid-to-mid basis, inclusive of net reinvested income and net of the annual management charge and all other fund expenses. Peer Group rankings are sourced and based upon IMA sectors. Performance data excludes funds within the IMA Specialist Fund sector as there are no peers, and also excludes two Invesco Perpetual fund of fund ICVC’s to avoid double counting the assets. Any reference to a rating, a ranking or an award is not a guarantee of investment performance and is not constant over time. AUM measured in three and five year quartile rankings represents 11%, and 10% of total Invesco AUM, respectively.
Percent of assets in top half of peer group – asset weighted First quarter, 2014
3 year 5 year
Top half of peer group Bottom half of peer group
97% of AUM in the top half of peers over three years
12
Cross Border fund range Well positioned for success in the $1.6T cross-border market
Past performance is not a guide to future returns Source: Morningstar as of March 31, 2014 Data includes asset-weighted performance rankings of all actively-managed Invesco Cross-Border Product Range funds domiciled in Luxembourg and Ireland. PowerShares ETFs are excluded because they are passively-managed. Peer group rankings are based on GIF sectors in Morningstar’s International/Offshore universe and calculated on a bid-to-bid basis, inclusive of gross reinvested income and net of fees. Any reference to a rating, a ranking or an award is not a guarantee of investment performance and is not constant over time. Certain funds and products were excluded from the analysis because of limited peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision. AUM measured in three and five year quartile rankings represents for both periods 6% of total Invesco AUM.
3 year 5 year
Top half of peer group Bottom half of peer group
91% of AUM in the top half of peers over three years
Percent of assets in top half of peer group – asset weighted First quarter, 2014
13
Well-positioned in EMEA Our UK retail fund range is increasingly diversified
14
Source: Chronicle. Please note that UK retail fund range refers to UK-domiciled ICVC range.
Share of gross sales by investment team ($ millions)
Share of gross sales by investment team %
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Q1 13 Q1 14
Multi-Asset
US
GEMs
Europe
Asia
Japan
Global Equity
UK
Fixed Income
0
10
20
30
40
50
60
70
80
90
100
Q1 13 Q1 14
Multi-Asset
US
GEMs
Europe
Asia
Japan
Global Equity
UK
Fixed Income
EM EM
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Equity
Well-positioned in EMEA Strong growth in European Cross Border
15
Source: IMA and SalesWatch, and Chronicle.
Cross Border AUM ($s millions) Cross Border market share
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
Dec
2008
Dec
2009
Dec
2010
Dec
2011
Dec
2012
Dec
2013
16
778.7
125.3
4Q 2013
171.9
Well-positioned in EMEA A strong and growing business
1Q14 LT Net Flows (billions)
4Q13 LT Net Flows (billions)
Change in Ending AUM (1Q14 vs. 4Q13)
Invesco Ltd. +$6.5 +$1.0 +1%
Invesco EMEA (ex-UK Equity Income) +$6.5 +$4.3 +7%
UK Equity Income ($3.4) ($4.8) (5%)
UK Equity Income AUM
EMEA Ex-UK Equity Income AUM
787.3
133.8 Invesco EMEA
Invesco Ltd.
1Q 2014
178.3
46.6 44.5
Ending AUM ($ billions)
17
We are well-positioned for long-term success in EMEA. Our strong and growing business is supported by:
– A record of delivering strong, long-term investment performance
– An experienced, capable and well-tenured fund management team supported by a robust investment culture
– Tremendous breadth and diversity of investment capabilities
– Strong organic growth
– Highly regarded and well-recognized brand
– Resources of a global firm
Well-positioned in EMEA A strong and growing business
Discussion topics
First quarter overview
Investment performance and flows
Update on EMEA
Financial results
Questions Appendix
18
($ billions) 1Q-14 4Q-13 % Change
Beginning Assets $778.7 $745.5 4.5%
Long-Term Inflows 50.2 45.8 9.6%
Long-Term Outflows (43.7) (44.8) (2.5)%
Long-Term Net flows 6.5 1.0 550.0%
Net flows in Invesco PowerShares QQQ (1.3) 2.6 N/A
Net flows in Inst. Money Market Funds (6.1) 1.6 N/A
Total Net Flows (0.9) 5.2 N/A
Market Gains and Losses/Reinvestment 9.4 27.2 (65.4)%
Foreign Currency Translation 0.1 0.8 (87.5)%
Ending Assets $787.3 $778.7 1.1%
Average Long-Term AUM $659.7 $643.5 2.5%
Average Short-Term AUM* $119.9 $118.2 1.4%
Average AUM $779.6 $761.7 2.4%
Net Revenue Yield (annualized)** 45.6bps 45.0bps
Net Revenue Yield Before Performance Fees (annualized)** 43.8bps 44.4bps
* Short-term average AUM includes money market of $74.5 billion and PowerShares QQQ $45.4 billion ** Non-GAAP financial measure - See the Appendix to this presentation for a reconciliation of net revenues, adjusted operating income (and by calculation
adjusted operating margin), and adjusted net income (and by calculation adjusted diluted EPS) to the most directly comparable U.S. GAAP financial measure. 19
Total assets under management – 1Q14 vs. 4Q13
($ millions) 1Q-14 4Q-13 % Change
Adjusted Revenues
Investment Management Fees 989 983 0.6%
Service and Distribution Fees 239 230 3.7%
Performance Fees 34 11 202.7%
Other 36 33 7.2%
Third-Party Distribution, Service and Advisory Expenses (409) (400) 2.3%
Adjusted Net Revenues 888 857 3.6%
Adjusted Operating Expenses
Employee Compensation 353 332 6.3%
Marketing 24 31 (22.2)%
Property, Office and Technology 78 75 3.7%
General and Administrative 70 72 (2.8)%
Total Adjusted Operating Expenses 525 510 2.9%
Adjusted Operating Income 363 347 4.6%
Adjusted Other Income/(Expense)
Equity in Earnings of Unconsolidated Affiliates 3 5 (36.0)%
Interest and Dividend Income 4 4 5.0%
Interest Expense (19) (15) 23.0%
Other Gains and Losses, net 3 2 47.1%
Other income/(loss) of CSIP,net 8 4 134.3%
Adjusted Income from continuing operations before income taxes 362 346 4.7%
Effective Tax Rate 27.0% 25.4% N/A
Adjusted Net Income 265 258 2.4%
Adjusted net (income)/loss attributable to non-controlling interests in consolidated entities
(3) - N/A
Adjusted Net Income attributable to common shareholders 262 258 1.4%
Adjusted diluted EPS $0.60 $0.58 3.4%
Adjusted Operating Margin 40.9% 40.5%
Average AUM ($ billions) 779.6 761.7 2.4%
Headcount 6,005 5,932 1.2%
Non-GAAP financial measures - See the Appendix to this presentation for a reconciliation of net revenues, adjusted operating income (and by calculation adjusted operating margin), and adjusted net income (and by calculation adjusted diluted EPS) to the most directly comparable U.S. GAAP financial measure. 20
Non-GAAP operating results – 1Q14 vs. 4Q13
21
Maintained strong, long-term investment performance – 81% of actively managed assets ahead of peers on a 3-year basis
Net long-term inflows of $6.5 billion driven by strong investment performance and broad demand across a diverse range of capabilities
Adjusted operating income1 up 18.5% over same quarter a year ago
Adjusted operating margin1 improved to 40.9% from 38.9% in same quarter a year ago – an increase of 2 percentage points
Quarterly dividend raised to 25 cents, up 11.1% from quarterly dividend paid last year
First quarter overview Strong investment performance contributed to solid operating results
1. Non-GAAP financial measures - See Appendix to this presentation for a reconciliation of adjusted operating income (and by calculation adjusted operating margin), to the most directly comparable U.S. GAAP financial measure. Past performance is not a guarantee of future results.
Discussion topics
First quarter overview
Investment performance and flows
Update on EMEA
Financial results
Questions
22
Appendix
Discussion topics
23
First quarter overview
Investment performance and flows
Update on EMEA
Financial results
Questions Appendix
% of assets top half of peer group
% of assets bottom half of peer group
Investment performance (5-year) By investment objective (actively managed assets)* Percentages in parentheses represent %AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $445.1 billion)
9
91
13
87
87
13
79
21 15
85
57
43
72
28
100
-
Equities
U.S. Core (5%) U.S. Growth (5%) U.S. Value (12%) Sector (1%)
U.K. (9%) Canadian (1%) Asian (5%) European (4%)
*Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with
component funds managed by Invesco, stable value building block funds and CDOs. Certain funds and products were excluded from the analysis because
of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.
Data as of 3/31/2014. Includes AUM of $445.1 billion (57% of total IVZ) for 5 year. Peer group rankings are sourced from a widely-used third party
ranking agency in each fund’s market (Lipper, Morningstar, IMA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and asset-weighted in USD.
Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third
parties. Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Performance assumes
the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience.24
Equities Other
Fixed income
% of assets top half of peer group
% of assets bottom half of peer group
Investment performance (5-year) By investment objective (actively managed assets)* Percentages in parentheses represent %AUM of each investment objective as a ratio of all objectives (Total ranked AUM of $445.1 billion)
74
26
97
3
96
4
97
3 23
77
86
14
82
18 24
76
Global (4%)Global ex-US and
emerging markets (5%) Balanced (9%)Alternatives (7%)
Money market (16%) U.S. fixed income (5%) Global fixed income (5%) Stable value (6%)
*Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with
component funds managed by Invesco, stable value building block funds and CDOs. Certain funds and products were excluded from the analysis because
of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.
Data as of 3/31/2014. Includes AUM of $445.1 billion (57% of total IVZ) for 5 year. Peer group rankings are sourced from a widely-used third party
ranking agency in each fund’s market (Lipper, Morningstar, IMA, Russell, Mercer, eVestment Alliance, SITCA, Value Research) and asset-weighted in USD.
Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third
parties. Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Performance assumes
the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience.25
Investment performance By investment objective (actively managed assets)*
1-Yr 3-Yr 5-Yr
U.S. Core U.S. Growth U.S. Value Sector
U.K.
100%
Canadian Asian European
Equities
100% 100% 100%
100% 100%
73%
44%
26%
7% 54%
53%
1-Yr 3-Yr 5-Yr
94% 100% 100%
27%
11%
52%
59% 81%
48%
1-Yr 3-Yr 5-Yr
33% 25%
62%
25%
62%
1-Yr 3-Yr 5-Yr
29%
1% 9%
6%
15% 6%
1-Yr 3-Yr 5-Yr
66%
100% 97%
37% 68%
26%
28%
57%
1-Yr 3-Yr 5-Yr 1-Yr 3-Yr 5-Yr
AUM above benchmark 1st quartile 2nd quartile
1-Yr 3-Yr 5-Yr
16% 21% 7%
19% 16%
2%
100%
100%
33%
3%
10%
98%
10%
*Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with component funds managed by Invesco, stable value building block funds and CDOs.
Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.
Data as of 3/31/2014. AUM measured in the one, three, and five year quartile rankings represents 60%, 60%, and 57% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one, three, and five year basis
represents 72%, 71, and 67% of total Invesco AUM, respectively, as of 3/31/14. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, IMA, Russell, Mercer,
eVestment Alliance, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties.
Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and
may not reflect an investor’s experience.
0% 0% 0%
99% 100% 98%
87% 85% 87%
27%
8% 18%
54%
67% 54%
33%
42%
16%
95%
30%
38%
80%
57% 57%
77%
35%
91%
26
27%
53% 62%
71%
44%
1-Yr 3-Yr 5-Yr
79% 75%
76%
1% 22% 20%
1-Yr 3-Yr 5-Yr
9% 2% 20%
87% 94%
77%
1-Yr 3-Yr 5-Yr
61% 73%
58%
11%
20%
28%
1-Yr 3-Yr 5-Yr
5%
51% 47%
71%
33% 35%
1-Yr 3-Yr 5-Yr
44% 33%
22%
23%
1-Yr 3-Yr 5-Yr
Global Global ex-U.S. and Emerging markets Alternatives
Money market U.S. fixed income Global fixed income
Equities Other
Fixed income
Balanced
100%
Stable value
100%
100% 100% 100%
100% 100%
Investment performance By investment objective (actively managed assets)*
AUM above benchmark 1st quartile 2nd quartile
59%
15% 11%
27%
74%
63%
1-Yr 3-Yr 5-Yr
100%
24% 24%
1-Yr 3-Yr 5-Yr
100%
*Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, unit investment trusts, fund of funds with component funds managed by Invesco, stable value building block funds and CDOs.
Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.
Data as of 3/31/2014. AUM measured in the one, three, and five year quartile rankings represents 60%, 60%, and 57% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one, three, and five year basis
represents 72%, 71, and 67% of total Invesco AUM, respectively, as of 3/31/14. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, IMA, Russell, Mercer,
eVestment Alliance, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties.
Rankings for the most representative fund in each GIPS composite are applied to all products within each GIPS composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and
may not reflect an investor’s experience.
85%
94%
84% 78%
99% 99%
69% 71%
47% 50%
72%
61%
65% 65% 60%
70%
87% 90%
79%
94% 97% 100% 100% 100%
27
67%
3%
15%
8%
7%
49%
7%
10%
22%
12%
28
We are diversified as a firm Delivering a diverse set of solutions to meet client needs
As of March 31, 2014
By client domicile By channel By asset class
$526.1 $27.1
$115.9 $63.4 $54.8
$787.3 Total
U.S. Canada U.K. Europe Asia
9.1% 4.2%
10.8% 43.1% 8.7%
11.2%
1-Yr Change ($ billions)
$534.6 $252.7
$787.3 Total
Retail Institutional
17.5% 0%
11.2%
1-Yr Change ($ billions)
$388.0 $54.6 $76.1
$177.0 $91.6
Total
Equity Balanced Money Market Fixed Income Alternative
21.6% 10.8% (2.2)%
0.6% 7.0%
11.2%
1-Yr Change ($ billions)
$787.3
68%
32%
29
Non-GAAP operating results – quarterly
($ millions) 1Q-14 4Q-13 % Change* 3Q-13 2Q-13 1Q-13 4Q-12 3Q-12 2Q-12
Investment Management Fees 989 983 0.6% 938 905 863 836 813 775
Service and Distribution Fees 239 230 3.7% 221 216 206 200 196 187
Performance Fees 34 11 202.7% 9 9 39 4 3 16
Other 36 33 7.2% 33 29 26 27 24 26
Third-party distribution, service and advisory expense (409) (400) 2.3% (384) (369) (346) (336) (328) (318)
Total Operating Revenues 888 857 3.6% 816 790 788 731 708 686
Employee Compensation 353 332 6.3% 328 323 335 320 312 290
Marketing 24 31 (22.2)% 24 24 23 24 26 27
Property, Office and Technology 78 75 3.7% 73 68 66 69 66 65
General and Administrative 70 72 (2.8)% 64 64 58 60 59 60
Adjusted Operating Expenses 525 510 2.9% 488 480 482 472 464 441
Adjusted Operating Income 363 347 4.6% 328 311 306 258 244 245
Equity in Earnings of Unconsolidated Affiliates 3 5 (36.0)% 8 4 4 3 2 6
Interest and Dividend Income 4 4 5.0% 3 3 4 4 5 5
Interest Expense (19) (15) 23.0% (10) (10) (10) (13) (13) (13)
Other Gains and Losses, net 3 2 47.1% 7 (1) (1) - 10 (2)
Other income/(loss) of CSIP, net 8 4 134.3% (1) - - - - -
Adjusted Income from Continuing Operations before income taxes and minority interest
362 346 4.7% 335 307 304 252 248 240
Effective Tax Rate** 27.0% 25.4% N/A 26.6% 27.1% 26.6% 24.8% 26.3% 25.1%
Adjusted Net Income
265 258 2.4% 246 224 223 189 183 180
Adjusted net (income)/loss attributable to
noncontrolling interests in consolidated entities
(3) - N/A - - 2 - - -
Adjusted Net Income Attributable to Common Shareholders
262 258 1.4% 246 224 226 189 183 180
Adjusted Diluted EPS $0.60 $0.58 3.4% $0.55 $0.50 $0.50 $0.42 $0.40 $0.40
* % change based on unrounded figures ** Effective tax rate = Adjusted Tax Expense / (Adjusted income before taxes + (gains)/losses attributable to non-controlling interests in consolidated
entities, net) See Reconciliation of US GAAP results to non-GAAP results in this appendix
30
US GAAP operating results – quarterly
($ millions) 1Q-14 4Q-13 % Change* 3Q-13 2Q-13 1Q-13 4Q-12 3Q-12 2Q-12
Investment Management Fees 965 955 1.1% 914 886 845 818 791 753
Service and Distribution Fees 239 230 3.7% 221 216 206 200 196 187
Performance Fees 31 9 257.5% 5 6 36 2 3 16
Other 34 31 10.3% 32 28 25 27 24 26
Total Operating Revenues 1,270 1,225 3.6% 1,172 1,136 1,112 1,047 1,014 982
Employee Compensation 362 333 8.6% 330 324 342 322 315 288
Third-Party Distribution, Service and Advisory 405 396 2.3% 381 366 346 350 326 316
Marketing 23 30 (22.0)% 23 24 22 23 26 26
Property, Office and Technology 113 86 31.4% 72 69 67 70 66 65
General and Administrative 122 86 40.7% 80 77 68 73 66 85
Transaction & Integration - - N/A - 2 1 3 3 1
Total Operating Expenses 1,025 932 10.0% 886 862 845 841 803 782
Operating Income 244 293 (16.7)% 286 274 267 206 211 200
Equity in Earnings of Unconsolidated Affiliates 10 10 (2.0)% 10 7 8 8 5 7
Interest and Dividend Income 3 3 (12.1)% 2 2 2 3 3 2
Interest Expense (19) (15) 23.0% (10) (10) (10) (13) (13) (13)
Other Gains and Losses, net 7 (19) N/A 3 - 18 (21) 18 (8)
Other income/(loss) of CSIP,net 8 4 134.3% (1) - - - - -
Interest Income of Consolidated Investment Products 48 43 13.6% 47 51 50 52 69 69
Interest Expense of Consolidated Investment Products (30) (27) 14.3% (34) (31) (33) (34) (42) (47)
Other Gains and (Losses) of Consolidated Investment Products, net
27 46 (42.9)% 38 (2) (21) (28) (25) 77
Income from continuing operations before income taxes 298 339 (12.0)% 343 292 282 173 226 287
Effective Tax Rate** 29.9% 21.9% N/A 27.1% 28.7% 28.4% 27.3% 30.2% 28.7%
Income from continuing operations, net of taxes 209 264 (21.0)% 250 208 196 117 154 226
Income/(loss) from discontinued operations, net of taxes (2) 66 N/A (1) (5) 4 11 3 2
Net Income 207 331 (37.5)% 249 204 200 128 157 228
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
(19) (43) (56.2)% (21) (1) 23 31 14 (74)
Net Income Attributable to Common Shareholders 188 287 (34.7)% 228 203 222 159 171 154
Diluted EPS from continuing operations $0.43 $0.50 (14.0)% $0.51 $0.46 $0.49 $0.33 $0.37 $0.33
Diluted EPS from discontinued operations - $0.15 N/A - ($0.01) $0.01 $0.02 $0.01 -
Total diluted $0.43 $0.64 (32.8)% $0.51 $0.45 $0.49 $0.35 $0.38 $0.34
* % change based on unrounded figures ** Effective tax rate = Tax Expense / (Income before income taxes+ (gains)/losses attributable to noncontrolling interests in consolidated entities, net)
31
Total assets under management – quarterly
($ billions) 1Q-14 4Q-13 % Change 3Q-13 2Q-13 1Q-13
Beginning Assets $778.7 $745.5 4.5% $705.6 $707.7 $667.4
Long-Term Inflows 50.2 45.8 9.6% 41.8 44.4 47.6
Long-Term Outflows (43.7) (44.8) (2.5)% (36.8) (43.0) (33.3)
Long-Term Net flows 6.5 1.0 550.0% 5.0 1.4 14.3
Net flows in Invesco PowerShares QQQ (1.3) 2.6 N/A 0.8 0.7 (0.4)
Net flows in Inst. Money Market Funds (6.1) 1.6 N/A 3.3 (0.7) 4.8
Total Net Flows (0.9) 5.2 N/A 9.1 1.4 18.7
Market Gains and Losses/Reinvestment 9.4 27.2 (65.4)% 22.4 (1.3) 30.6
Foreign Currency Translation 0.1 0.8 (87.5)% 8.4 (2.2) (9.0)
Ending Assets $787.3 $778.7 1.1% $745.5 $705.6 $707.7
Average Long-Term AUM $659.7 $643.5 2.5% $616.2 $609.1 $586.0
Average Short-Term AUM $119.9 $118.2 1.4% $113.2 $110.7 $105.6
Average AUM $779.6 $761.7 2.4% $729.4 $719.8 $691.6
Gross Revenue Yield (annualized)* 65.6bps 64.7bps 64.6bps 63.4bps 64.6bps
Gross Revenue Yield Less Performance Fees (annualized)*
64.0bps 64.3bps 64.3bps 63.1bps 62.5bps
Net Revenue Yield (annualized)** 45.6bps 45.0bps 44.8bps 43.9bps 45.6bps
Net Revenue Yield Less Performance Fees
(annualized)**
43.8bps 44.4bps 44.3bps 43.4bps 43.3bps
* Gross revenue yield on AUM is equal to total operating revenues divided by average AUM, excluding JV AUM. Average AUM for 1Q14, for our joint ventures in China were $5.1bn (4Q13:$4.8bn;3Q13:$4.0bn;2Q13:$3.6bn; 1Q13:$3.3bn)
**Net Revenue Yield on AUM is equal to net revenues divided by average AUM including JV AUM. Average AUM for 1Q14, for our JV in China were $5.1bn
(4Q13:$4.8bn;3Q13:$4.0bn;2Q13:$3.6bn; 1Q13:$3.3bn)
32
Total assets under management – by asset class
December 31, 2013 $778.7 $383.1 $171.7 $53.3 $82.7 $87.9
Long-Term Inflows 50.2 27.4 9.6 5.0 0.8 7.4
Long-Term Outflows (43.7) (26.2) (6.7) (4.4) (1.0) (5.4)
Long-Term Net flows 6.5 1.2 2.9 0.6 (0.2) 2.0
Net flows in Invesco PowerShares QQQ
(1.3) (1.3) - - - -
Net flows in Inst. Money Market Fund
(6.1) - - - (6.1) -
Market Gains and Losses/Reinvestment
9.4 5.0 2.3 0.8 (0.3) 1.6
Foreign Currency Translation 0.1 - 0.1 (0.1) - 0.1
March 31, 2014 $787.3 $388.0 $177.0 $54.6 $76.1 $91.6
($ billions) Total
Equity
Fixed
Income
Balanced
Money
Market
Alternative
September 30, 2013 $745.5 $353.2 $172.4 $53.5 $81.1 $85.3
Long-Term Inflows 45.8 26.2 7.2 3.4 0.8 8.2
Long-Term Outflows (44.8) (24.7) (8.9) (4.6) (0.9) (5.7)
Long-Term Net flows 1.0 1.5 (1.7) (1.2) (0.1) 2.5
Net flows in Invesco PowerShares QQQ
2.6 2.6 - - - -
Net flows in Inst. Money Market Fund
1.6 - - - 1.6 -
Market Gains and Losses/Reinvestment
27.2 25.1 0.9 0.8 0.1 0.3
Foreign Currency Translation 0.8 0.7 0.1 0.2 - (0.2)
33
Total assets under management – by asset class
June 30, 2013 $705.6 $321.4 $173.1 $49.7 $77.8 $83.6
Long-Term Inflows 41.8 22.8 8.4 3.7 1.0 5.9
Long-Term Outflows (36.8) (18.2) (9.5) (3.5) (1.1) (4.5)
Long-Term Net flows 5.0 4.6 (1.1) 0.2 (0.1) 1.4
Net flows in Invesco PowerShares QQQ 0.8 0.8 - - - -
Net flows in Inst. Money Market Fund 3.3 - - - 3.3 -
Market Gains and Losses/Reinvestment 22.4 20.7 (0.7) 2.3 0.2 (0.1)
Foreign Currency Translation 8.4 5.7 1.1 1.3 (0.1) 0.4
September 30, 2013 $745.5 $353.2 $172.4 $53.5 $81.1 $85.3
($ billions) Total
Equity
Fixed
Income
Balanced
Money
Market
Alternative
March 31, 2013 $707.7 $319.1 $175.9 $49.3 $77.8 $85.6
Long-Term Inflows 44.4 21.0 9.6 5.6 1.2 7.0
Long-Term Outflows (43.0) (22.4) (9.5) (3.5) (0.7) (6.9)
Long-Term Net flows 1.4 (1.4) 0.1 2.1 0.5 0.1
Net flows in Invesco PowerShares QQQ 0.7 0.7 - - - -
Net flows in Inst. Money Market Fund (0.7) - - - (0.7) -
Market Gains and Losses/Reinvestment (1.3) 4.3 (2.7) (1.5) 0.2 (1.6)
Foreign Currency Translation (2.2) (1.3) (0.2) (0.2) - (0.5)
34
Total assets under management – by channel
($ billions) Total Retail Institutional
September 30, 2013 $745.5 $492.0 $253.5
Long-Term Inflows 45.8 35.8 10.0
Long-Term Outflows (44.8) (36.1) (8.7)
Long-Term Net flows 1.0 (0.3) 1.3
Net flows in Invesco PowerShares QQQ 2.6 2.6 -
Net flows in Inst. Money Market Funds 1.6 - 1.6
Market Gains and Losses/Reinvestment 27.2 24.0 3.2
Foreign Currency Translation 0.8 1.3 (0.5)
December 31, 2013 $778.7 $519.6 $259.1
Long-Term Inflows 50.2 39.6 10.6
Long-Term Outflows (43.7) (32.0) (11.7)
Long-Term Net flows 6.5 7.6 (1.1)
Net flows in Invesco PowerShares QQQ (1.3) (1.3) -
Net flows in Inst. Money Market Funds (6.1) - (6.1)
Market Gains and Losses/Reinvestment 9.4 8.8 0.6
Foreign Currency Translation 0.1 (0.1) 0.2
March 31, 2014 $787.3 $534.6 $252.7
35
Total assets under management – by channel
($ billions) Total Retail Institutional
March 31, 2013 $707.7 $454.9 $252.8
Long-Term Inflows 44.4 37.7 6.7
Long-Term Outflows (43.0) (32.8) (10.2)
Long-Term Net flows 1.4 4.9 (3.5)
Net flows in Invesco PowerShares QQQ 0.7 0.7 -
Net flows in Inst. Money Market Funds (0.7) - (0.7)
Market Gains and Losses/Reinvestment (1.3) (1.6) 0.3
Foreign Currency Translation (2.2) (1.2) (1.0)
June 30, 2013 $705.6 $457.7 $247.9
Long-Term Inflows 41.8 35.5 6.3
Long-Term Outflows (36.8) (29.0) (7.8)
Long-Term Net flows 5.0 6.5 (1.5)
Net flows in Invesco PowerShares QQQ 0.8 0.8 -
Net flows in Inst. Money Market Funds 3.3 - 3.3
Market Gains and Losses/Reinvestment 22.4 19.6 2.8
Foreign Currency Translation 8.4 7.4 1.0
September 30, 2013 $745.5 $492.0 $253.5
36
Total assets under management – by client domicile
($ billions) Total U.S. Canada U.K. Continental
Europe Asia
September 30, 2013 $745.5 $502.5 $26.4 $113.1 $51.6 $51.9
Long-Term Inflows 45.8 23.3 0.9 4.2 9.3 8.1
Long-Term Outflows (44.8) (24.5) (1.1) (8.4) (5.9) (4.9)
Long-Term Net flows 1.0 (1.2) (0.2) (4.2) 3.4 3.2
Net flows in Invesco PowerShares QQQ 2.6 2.6 - - - -
Net flows in Inst. Money Market Funds 1.6 (1.6) 0.1 (0.3) 3.2 0.2
Market Gains and Losses/Reinvestment 27.2 18.9 1.7 3.8 2.5 0.3
Foreign Currency Translation 0.8 0.1 (0.9) 2.4 0.2 (1.0)
December 31, 2013 $778.7 $521.3 $27.1 $114.8 $60.9 $54.6
Long-Term Inflows 50.2 24.7 1.1 5.1 11.3 8.0
Long-Term Outflows (43.7) (21.1) (1.2) (6.9) (6.5) (8.0)
Long-Term Net flows 6.5 3.6 (0.1) (1.8) 4.8 -
Net flows in Invesco PowerShares QQQ (1.3) (1.3) - - - -
Net flows in Inst. Money Market Funds (6.1) (3.4) (0.1) 0.5 (3.1) -
Market Gains and Losses/Reinvestment 9.4 5.9 1.2 1.6 0.8 (0.1)
Foreign Currency Translation 0.1 - (1.0) 0.8 - 0.3
March 31, 2014 $787.3 $526.1 $27.1 $115.9 $63.4 $54.8
37
Total assets under management – by client domicile
($ billions) Total U.S. Canada U.K. Continental
Europe Asia
March 31, 2013 $707.7 $482.4 $26.0 $104.6 $44.3 $50.4
Long-Term Inflows 44.4 25.6 0.9 4.4 7.5 6.0
Long-Term Outflows (43.0) (25.9) (1.3) (5.0) (5.0) (5.8)
Long-Term Net flows 1.4 (0.3) (0.4) (0.6) 2.5 0.2
Net flows in Invesco PowerShares QQQ 0.7 0.7 - - - -
Net flows in Inst. Money Market Funds (0.7) (0.4) - 0.1 (0.1) (0.3)
Market Gains and Losses/Reinvestment (1.3) (0.9) 0.1 0.3 (0.4) (0.4)
Foreign Currency Translation (2.2) - (0.9) (0.1) 0.1 (1.3)
June 30, 2013 $705.6 $481.5 $24.8 $104.3 $46.4 $48.6
Long-Term Inflows 41.8 25.7 0.8 4.0 6.4 4.9
Long-Term Outflows (36.8) (23.7) (1.0) (4.3) (4.2) (3.6)
Long-Term Net flows 5.0 2.0 (0.2) (0.3) 2.2 1.3
Net flows in Invesco PowerShares QQQ 0.8 0.8 - - - -
Net flows in Inst. Money Market Funds 3.3 3.4 0.1 (0.2) - -
Market Gains and Losses/Reinvestment 22.4 14.7 1.1 2.7 2.5 1.4
Foreign Currency Translation 8.4 0.1 0.6 6.6 0.5 0.6
September 30, 2013 $745.5 $502.5 $26.4 $113.1 $51.6 $51.9
38
Passive assets under management – by asset class
December 31, 2013 $139.7 $85.6 $39.5 - - $14.6
Long-Term Inflows 8.6 5.4 2.2 - - 1.0
Long-Term Outflows (5.3) (3.2) (1.2) - - (0.9)
Long-Term Net flows 3.3 2.2 1.0 - - 0.1
Net flows in Invesco PowerShares QQQ
(1.3) (1.3) - -
Net flows in Inst. Money Market Funds
- - - - - -
Market Gains and Losses/Reinvestment
1.2 0.5 0.4 - - 0.3
Foreign Currency Translation - - - - - -
March 31, 2014 $142.9 $87.0 $40.9 - - $15.0
($ billions) Total
Equity
Fixed
Income
Balanced
Money
Market
Alternative
September 30, 2013 $129.6 $74.1 $39.6 - - $15.9
Long-Term Inflows 8.6 6.3 1.7 - - 0.6
Long-Term Outflows (7.9) (4.5) (1.6) - - (1.8)
Long-Term Net flows 0.7 1.8 0.1 - - (1.2)
Net flows in Invesco PowerShares QQQ
2.6 2.6 - -
Net flows in Inst. Money Market Funds
- - - - - -
Market Gains and Losses/Reinvestment
7.0 7.1 (0.2) - - 0.1
Foreign Currency Translation (0.2) - - - - (0.2)
June 30, 2013 $123.7 $65.7 $42.5 - - $15.5
Long-Term Inflows 8.7 6.0 1.6 - - 1.1
Long-Term Outflows (8.5) (3.6) (3.9) - - (1.0)
Long-Term Net flows 0.2 2.4 (2.3) - - 0.1
Net flows in Invesco PowerShares QQQ
0.8 0.8 - -
Net flows in Inst. Money Market Funds
- - - - - -
Market Gains and Losses/Reinvestment
4.9 5.2 (0.6) - - 0.3
Foreign Currency Translation - - - - - -
September 30, 2013 $129.6 $74.1 $39.6 - - $15.9
($ billions) Total
Equity
Fixed
Income
Balanced
Money
Market
Alternative
March 31, 2013 $123.1 $62.0 $41.9 - - $19.2
Long-Term Inflows 11.8 6.8 4.0 - - 1.0
Long-Term Outflows (10.5) (4.8) (2.2) - - (3.5)
Long-Term Net flows 1.3 2.0 1.8 - - (2.5)
Net flows in Invesco PowerShares QQQ
0.7 0.7 - -
Net flows in Inst. Money Market Funds
- - - - - -
Market Gains and Losses/Reinvestment
(1.0) 1.0 (1.2) - - (0.8)
Foreign Currency Translation (0.4) - - - - (0.4)
39
Passive assets under management – by asset class
40
Passive assets under management – by channel
($ billions) Total Retail Institutional
September 30, 2013 $129.6 $108.3 $21.3
Long-Term Inflows 8.6 7.6 1.0
Long-Term Outflows (7.9) (7.1) (0.8)
Long-Term Net flows 0.7 0.5 0.2
Net flows in Invesco PowerShares QQQ 2.6 2.6 -
Net flows in Inst. Money Market Funds - - -
Market Gains and Losses/Reinvestment 7.0 6.8 0.2
Foreign Currency Translation (0.2) - (0.2)
December 31, 2013 $139.7 $118.2 $21.5
Long-Term Inflows 8.6 7.9 0.7
Long-Term Outflows (5.3) (4.5) (0.8)
Long-Term Net flows 3.3 3.4 (0.1)
Net flows in Invesco PowerShares QQQ (1.3) (1.3) -
Net flows in Inst. Money Market Funds - - -
Market Gains and Losses/Reinvestment 1.2 1.2 -
Foreign Currency Translation - - -
March 31, 2014 $142.9 $121.5 $21.4
41
Passive assets under management – by channel
($ billions) Total Retail Institutional
March 31, 2013 $123.1 $98.5 $24.6
Long-Term Inflows 11.8 10.1 1.7
Long-Term Outflows (10.5) (8.2) (2.3)
Long-Term Net flows 1.3 1.9 (0.6)
Net flows in Invesco PowerShares QQQ 0.7 0.7 -
Net flows in Inst. Money Market Funds - - -
Market Gains and Losses/Reinvestment (1.0) (1.1) 0.1
Foreign Currency Translation (0.4) - (0.4)
June 30, 2013 $123.7 $100.0 $23.7
Long-Term Inflows 8.7 8.7 -
Long-Term Outflows (8.5) (6.0) (2.5)
Long-Term Net flows 0.2 2.7 (2.5)
Net flows in Invesco PowerShares QQQ 0.8 0.8 -
Net flows in Inst. Money Market Funds - - -
Market Gains and Losses/Reinvestment 4.9 4.8 0.1
Foreign Currency Translation - - -
September 30, 2013 $129.6 $108.3 $21.3
42
Passive assets under management – by client domicile
($ billions) Total U.S. Canada U.K. Continental
Europe Asia
September 30, 2013 $129.6 $125.4 $0.1 - $1.4 $2.7
Long-Term Inflows 8.6 8.4 - - 0.2 -
Long-Term Outflows (7.9) (7.9) - - - -
Long-Term Net flows 0.7 0.5 - - 0.2 -
Net flows in Invesco PowerShares QQQ 2.6 2.6 - -
Net flows in Inst. Money Market Funds - - - - - -
Market Gains and Losses/Reinvestment 7.0 6.7 - - 0.2 0.1
Foreign Currency Translation (0.2) - - - - (0.2)
December 31, 2013 $139.7 $135.2 $0.1 - $1.8 $2.6
Long-Term Inflows 8.6 8.5 - - 0.1 -
Long-Term Outflows (5.3) (5.1) - - (0.1) (0.1)
Long-Term Net flows 3.3 3.4 - - - (0.1)
Net flows in Invesco PowerShares QQQ (1.3) (1.3) - -
Net flows in Inst. Money Market Funds - - - - - -
Market Gains and Losses/Reinvestment 1.2 1.2 - - - -
Foreign Currency Translation - - - - - -
March 31, 2014 $142.9 $138.5 $0.1 - $1.8 $2.5
($ billions) Total U.S. Canada U.K. Continental
Europe Asia
March 31, 2013 $123.1 $116.9 $0.1 - $1.2 $4.9
Long-Term Inflows 11.8 11.5 - - 0.2 0.1
Long-Term Outflows (10.5) (8.3) - - (0.1) (2.1)
Long-Term Net flows 1.3 3.2 - - 0.1 (2.0)
Net flows in Invesco PowerShares QQQ 0.7 0.7 - -
Net flows in Inst. Money Market Funds - - - - - -
Market Gains and Losses/Reinvestment (1.0) (1.1) - - - 0.1
Foreign Currency Translation (0.4) - - - - (0.4)
June 30, 2013 $123.7 $119.7 $0.1 - $1.3 $2.6
Long-Term Inflows 8.7 8.6 - - 0.1 -
Long-Term Outflows (8.5) (8.4) - - (0.1) -
Long-Term Net flows 0.2 0.2 - - - -
Net flows in Invesco PowerShares QQQ 0.8 0.8 - -
Net flows in Inst. Money Market Funds - - - - - -
Market Gains and Losses/Reinvestment 4.9 4.7 - - 0.1 0.1
Foreign Currency Translation - - - - - -
September 30, 2013 $129.6 $125.4 $0.1 - $1.4 $2.7
43
Passive assets under management – by client domicile
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation of Joint Ventures
3rd party distribution, service and advisory
expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 965 18 - - - 6 - 989
Service and Distribution Fees 239 - - - - - - 239
Performance Fees 31 - - - - 3 - 34
Other 34 1 - - - - - 36
Third-Party Distribution, Service and Advisory - (4) (405) - - - - (409)
Total Operating Revenues reconciled to net revenues
Operating Expenses
1270 15 (405) - - 8 - 888
Employee Compensation 362 3 - - (4) - (7) 353
Third-Party Distribution, Service and Advisory 405 - (405) - - - - -
Marketing 23 1 - - - - - 24
Property, Office and Technology 113 1 - - - - (36) 78
General and Administrative 122 2 - (4) - (13) (37) 70
Transaction & Integration - - - - - - - -
Total Operating Expenses 1025 6 (405) (4) (4) (13) (80) 525
Operating Income reconciled to adjusted operating income 244 10 - 4 4 21 80 363
Equity in Earnings of Unconsolidated Affiliates 10 (8) - - - 1 - 3
Interest and Dividend Income 3 1 - - (1) 1 - 4
Interest Expense (19) - - - - - - (19)
Other Gains and Losses, net 7 - - - (4) - - 3
Other income/(loss) of CSIP, net 8 - - - - - - 8
Interest Income of Consolidated Investment Products 48 - - - - (48) - -
Interest Expense of Consolidated Investment Products (30) - - - - 30 - -
Other Gains and (Losses) of Consolidated Investment Products, net 27 - - - - (27) - -
Income from continuing operations before income taxes 298 3 - 4 - (21) 80 362
Income Tax Provision (89) (3) - 5 - - (11) (98)
Income from continuing operations, net of income taxes 209 - - 9 - (21) 69 265
Income/(loss) from discontinued operations, net of taxes (2) - - 2 - - - -
Net income 207 - - 11 - (21) 69 265
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
(19) - - - - 16 - (3)
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
188 - - 11 - (5) 69 262
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.43
-
$0.43
437.4
19.2%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.60
437.4
40.9%
* Other: Please refer to pages 18-22 in the 1Q 2014 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2014
44
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation of Joint Ventures
3rd party distribution, service and advisory
expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 955 18 - - - 6 4 983
Service and Distribution Fees 230 - - - - - - 230
Performance Fees 9 - - - - 2 - 11
Other 31 2 - - - - - 33
Third-Party Distribution, Service and Advisory - (4) (396) - - - - (400)
Total Operating Revenues reconciled to net revenues
Operating Expenses
1225 16 (396) - - 8 4 857
Employee Compensation 333 8 - - (8) - (1) 332
Third-Party Distribution, Service and Advisory 396 - (396) - - - - -
Marketing 30 1 - - - - - 31
Property, Office and Technology 86 1 - - - - (12) 75
General and Administrative 86 2 - (6) - (10) - 72
Transaction & Integration - - - - - - - -
Total Operating Expenses 932 11 (396) (6) (8) (10) (13) 510
Operating Income reconciled to adjusted operating income 293 5 - 6 8 18 17 347
Equity in Earnings of Unconsolidated Affiliates 10 (4) - - - (1) - 5
Interest and Dividend Income 3 1 - - (1) 1 - 4
Interest Expense (15) - - - - - - (15)
Other Gains and Losses, net (19) - - - (11) - 32 2
Other income/(loss) of CSIP, net 4 - - - - - - 4
Interest Income of Consolidated Investment Products 43 - - - - (43) - -
Interest Expense of Consolidated Investment Products (27) - - - - 27 - -
Other Gains and (Losses) of Consolidated Investment Products, net 46 - - - - (46) - -
Income from continuing operations before income taxes 339 1 - 6 (4) (44) 49 346
Income Tax Provision (74) (1) - 4 1 - (18) (88)
Income from continuing operations, net of income taxes 264 - - 10 (3) (44) 31 258
Income/(loss) from discontinued operations, net of taxes 66 - - (66) - - - -
Net income 331 - - (57) (3) (44) 31 258
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
(43) - - - - 43 - -
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
287 - - (57) (3) (1) 31 258
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.50
$0.15
$0.64
445.9
23.9%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.58
445.9
40.5%
* Other: Please refer to pages 19-21 in the 4Q 2013 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2013
45
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation of Joint Ventures
3rd party distribution, service and advisory
expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 914 15 - - - 9 - 938
Service and Distribution Fees 221 - - - - - - 221
Performance Fees 5 - - - - 3 - 9
Other 32 2 - - - - - 33
Third-Party Distribution, Service and Advisory - (3) (381) - - - - (384)
Total Operating Revenues reconciled to net revenues
Operating Expenses
1,172 14 (381) - - 12 - 816
Employee Compensation 330 4 - - (7) - - 328
Third-Party Distribution, Service and Advisory 381 - (381) - - - - -
Marketing 23 1 - - - - - 24
Property, Office and Technology 72 1 - - - - - 73
General and Administrative 80 1 - (4) - (13) (1) 64
Transaction & Integration - - - - - - - -
Total Operating Expenses 886 7 (381) (4) (7) (13) (1) 488
Operating Income reconciled to adjusted operating income 286 6 - 4 7 25 1 328
Equity in Earnings of Unconsolidated Affiliates 10 (5) - - - 2 - 8
Interest and Dividend Income 2 1 - - (1) 1 - 3
Interest Expense (10) - - - - - - (10)
Other Gains and Losses, net 4 - - - (9) 12 1 7
Other income/(loss) of CSIP, net (1) - - - - - - (1)
Interest Income of Consolidated Investment Products 47 - - - - (47) - -
Interest Expense of Consolidated Investment Products (34) - - - - 34 - -
Other Gains and (Losses) of Consolidated Investment Products, net 38 - - - - (38) - -
Income from continuing operations before income taxes 343 2 - 4 (4) (11) 1 335
Income Tax Provision (93) (2) - 5 1 - - (89)
Income from continuing operations, net of income taxes 250 - - 9 (3) (11) 1 246
Income/(loss) from discontinued operations, net of taxes (1) - - 1 - - - -
Net income 249 - - 10 (3) (11) 1 246
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
(21) - - - - 21 - -
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
228 - - 10 (3) 9 1 246
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.51
-
$0.51
448.8
24.4%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.55
448.8
40.2%
* Other: Please refer to pages 19-21 in the 3Q 2013 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2013
46
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation of Joint Ventures
3rd party distribution, service and advisory
expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 886 13 - - - 6 - 905
Service and Distribution Fees 216 - - - - - - 216
Performance Fees 6 - - - - 3 - 9
Other 28 1 - - - - - 29
Third-Party Distribution, Service and Advisory - (3) (366) - - - - (369)
Total Operating Revenues reconciled to net revenues
Operating Expenses
1136 12 (366) - - 9 - 790
Employee Compensation 324 3 - - (3) - (1) 323
Third-Party Distribution, Service and Advisory 366 - (366) - - - - -
Marketing 24 1 - - - - - 24
Property, Office and Technology 69 1 - - - - (1) 68
General and Administrative 77 1 - (4) - (9) (1) 64
Transaction & Integration 2 - - (2) - - - -
Total Operating Expenses 862 5 (366) (6) (3) (9) (3) 480
Operating Income reconciled to adjusted operating income 274 7 - 6 3 18 3 311
Equity in Earnings of Unconsolidated Affiliates 7 (4) - - - 1 - 4
Interest and Dividend Income 2 1 - - (1) 2 - 3
Interest Expense (10) - - - - - - (10)
Other Gains and Losses, net - - - - (1) - (1) (1)
Interest Income of Consolidated Investment Products 51 - - - - (51) - -
Interest Expense of Consolidated Investment Products (31) - - - - 31 - -
Other Gains and (Losses) of Consolidated Investment Products, net (2) - - - - 2 - -
Income from continuing operations before income taxes 292 3 - 6 1 2 3 307
Income Tax Provision (84) (3) - 4 - - (1) (83)
Income from continuing operations, net of income taxes 208 - - 10 1 2 2 224
Income/(loss) from discontinued operations, net of taxes (5) - - 5 - - - -
Net income 204 - - 14 1 2 2 224
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
(1) - - - - 1 - -
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
203 - - 14 1 4 2 224
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.46
($0.01)
$0.45
450.1
24.1%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.50
450.1
39.3%
* Other: Please refer to pages 19-21 in the 2Q 2013 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2013
47
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation
of Joint Ventures
3rd party distribution, service and
advisory expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 845 12 - - - 6 - 863
Service and Distribution Fees 206 - - - - - - 206
Performance Fees 36 - - - - 3 - 39
Other 25 1 - - - - - 26
Third-Party Distribution, Service and Advisory - (2) (346) - - - 3 (346)
Total Operating Revenues reconciled to net revenues
Operating Expenses
1112 10 (346) - - 9 3 788
Employee Compensation 342 4 - (2) (8) - - 335
Third-Party Distribution, Service and Advisory 346 - (346) - - - - -
Marketing 22 1 - - - - - 23
Property, Office and Technology 67 1 - - - - (1) 66
General and Administrative 68 1 - (4) - (3) (5) 58
Transaction & Integration 1 - - (1) - - - -
Total Operating Expenses 845 7 (346) (8) (8) (3) (6) 482
Operating Income reconciled to adjusted operating income 267 4 - 8 8 11 9 306
Equity in Earnings of Unconsolidated Affiliates 8 (5) - - - - - 4
Interest and Dividend Income 2 1 - - (1) 2 - 4
Interest Expense (10) - - - - - - (10)
Other Gains and Losses, net 18 - - - (18) - - (1)
Interest Income of Consolidated Investment Products 50 - - - - (50) - -
Interest Expense of Consolidated Investment Products (33) - - - - 33 - -
Other Gains and (Losses) of Consolidated Investment Products, net (21) - - - - 21 - -
Income from continuing operations before income taxes 282 - - 8 (11) 17 9 304
Income Tax Provision (86) - - 5 3 - (2) (81)
Income from continuing operations, net of income taxes 196 - - 12 (9) 17 7 223
Income/(loss) from discontinued operations, net of taxes 4 - - (4) - - - -
Net Income 200 - - 8 (9) 17 7 223
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
23 - - - - (20) - 2
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
222 - - 8 (9) (3) 7 226
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.49
$0.01
$0.49
449.0
24.0%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.50
449.0
38.9%
* Other: Please refer to pages 18-20 in the 1Q 2013 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended March 31, 2013
48
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation of Joint Ventures
3rd party distribution, service and advisory
expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 818 11 - - - 7 - 836
Service and Distribution Fees 200 - - - - - - 200
Performance Fees 2 - - - - 1 - 4
Other 27 1 - - - - - 27
Third-Party Distribution, Service and Advisory - (1) (350) - - - 15 (336)
Total Operating Revenues reconciled to net revenues
Operating Expenses
1047 10 (350) - - 9 15 731
Employee Compensation 322 4 - - (3) - (2) 320
Third-Party Distribution, Service and Advisory 350 - (350) - - - - -
Marketing 23 1 - - - - - 24
Property, Office and Technology 70 1 - - - - (2) 69
General and Administrative 73 1 - (4) - (9) (2) 60
Transaction & Integration 3 - - (3) - - - -
Total Operating Expenses 841 6 (350) (7) (3) (9) (6) 472
Operating Income reconciled to adjusted operating income 206 4 - 7 3 17 22 258
Equity in Earnings of Unconsolidated Affiliates 8 (5) - - - - - 3
Interest and Dividend Income 3 1 - - (1) 2 - 4
Interest Expense (13) - - - - - - (13)
Other Gains and Losses, net (21) - - - (2) - 23 -
Interest Income of Consolidated Investment Products 52 - - - - (52) - -
Interest Expense of Consolidated Investment Products (34) - - - - 34 - -
Other Gains and (Losses) of Consolidated Investment Products, net (28) - - - - 28 - -
Income from continuing operations before income taxes 173 - - 7 - 28 45 252
Income Tax Provision (56) - - 4 - - (11) (63)
Income from Continuing Operations, net of tax 117 - - 10 - 28 34 189
Income/(loss) from discontinued operations, net of taxes 11 - - (11) - - -
Net Income 128 - - (1) - 28 34 189
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
31 - - - - (31) - -
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
159 - - (1) - (2) 34 189
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.35
$0.02
$0.35
451.2
19.6%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.42
451.2
35.3%
* Other: Please refer to pages 23-26 in the 4Q 2012 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended December 31, 2012
49
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation
of Joint Ventures
3rd party distribution, service and
advisory expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation
awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 791 11 - - - 11 - 813
Service and Distribution Fees 196 - - - - - - 196
Performance Fees 3 - - - - - - 3
Other 24 - - - - - - 24
Third-Party Distribution, Service and Advisory - (2) (326) - - - - (328)
Total Operating Revenues reconciled to net revenues
Operating Expenses
1014 9 (326) - - 12 - 708
Employee Compensation 315 3 - - (5) - (1) 312
Third-Party Distribution, Service and Advisory 326 - (326) - - - - -
Marketing 26 1 - - - - (1) 26
Property, Office and Technology 66 1 - - - - (1) 66
General and Administrative 66 1 - (4) - (2) (1) 59
Transaction & Integration 3 - - (3) - - - -
Total Operating Expenses 803 5 (326) (7) (5) (2) (4) 464
Operating Income reconciled to adjusted operating income 211 4 - 7 5 14 4 244
Equity in Earnings of Unconsolidated Affiliates 5 (4) - - - 1 - 2
Interest and Dividend Income 3 1 - - (1) 3 - 5
Interest Expense (13) - - - - - - (13)
Other Gains and Losses, net 18 - - (8) (10) 9 - 10
Interest Income of Consolidated Investment Products 69 - - - - (69) - -
Interest Expense of Consolidated Investment Products (42) - - - - 42 - -
Other Gains and (Losses) of Consolidated Investment Products, net (25) - - - - 25 - -
Income from continuing operations before income taxes 226 - - (1) (6) 25 4 248
Income Tax Provision (72) - - 6 2 - (1) (65)
Income from Continuing Operations, net of tax 154 - - 5 (5) 25 4 183
Income/(loss) from discontinued operations, net of taxes 3 - - (3) - - - -
Net Income 157 - - 2 (5) 25 4 183
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
14 - - - - (14) - -
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
171 - - 2 (5) 11 4 183
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.37
$0.01
$0.38
452.8
20.8%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.40
452.8
34.5%
* Other: Please refer to pages 19-21 in the 3Q 2012 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2012
50
($ millions)
Operating Revenues
US GAAP
Basis
Proportional Consolidation
of Joint Ventures
3rd party distribution, service and
advisory expenses
Acquisition related
Market appreciation / depreciation of
deferred compensation
awards
Consolidated Investment
Products
Other* Non-GAAP basis
Investment Management Fees 753 11 - - - 10 - 775
Service and Distribution Fees 187 - - - - - - 187
Performance Fees 16 - - - - - - 16
Other 26 - - - - - - 26
Third-Party Distribution, Service and Advisory - (2) (316) - - - - (318)
Total Operating Revenues reconciled to net revenues
Operating Expenses
982 9 (316) - - 11 - 686
Employee Compensation 288 3 - - - - (1) 290
Third-Party Distribution, Service and Advisory 316 - (316) - - - - -
Marketing 26 1 - - - - (1) 27
Property, Office and Technology 65 1 - - - - (2) 65
General and Administrative 85 1 - (10) - (15) (3) 60
Transaction & Integration 1 - - (1) - - - -
Total Operating Expenses 782 6 (316) (11) - (15) (6) 441
Operating Income reconciled to adjusted operating income 200 4 - 11 - 25 6 245
Equity in Earnings of Unconsolidated Affiliates 7 (4) - - - 3 - 6
Interest and Dividend Income 2 1 - - (1) 4 - 5
Interest Expense (13) - - - - - - (13)
Other Gains and Losses, net (8) - - - 5 - 1 (2)
Interest Income of Consolidated Investment Products 69 - - - - (69) - -
Interest Expense of Consolidated Investment Products (47) - - - - 47 - -
Other Gains and (Losses) of Consolidated Investment Products, net 77 - - - - (77) - -
Income from continuing operations before income taxes 287 - - 11 4 (68) 7 240
Income Tax Provision (61) - - 4 (1) - (2) (60)
Income from continuing operations, net of income taxes 226 - - 15 2 (68) 5 180
Income/(loss) from discontinued operations, net of taxes 2 - - (2) - - - -
Net Income 228 - - 13 2 (68) 5 180
Net (Income)/Loss Attributable to Noncontrolling Interests in Consolidated Entities
(74) - - - - 74 - -
Net Income Attributable to Common Shareholders reconciled to adjusted net income attributable to common shareholders
154 - - 13 2 6 5 180
Diluted EPS from continuing operations
Diluted EPS from discontinued operations
Diluted EPS
Diluted Shares Outstanding
Operating margin
$0.33
-
$0.34
455.3
20.4%
Adjusted diluted EPS
Diluted Shares Outstanding
Adjusted Operating Margin
$0.40
455.3
35.7%
* Other: Please refer to pages 19-21 in the 2Q 2012 earnings press release for a description of the adjustments
Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2012
51