invesco third quarter 2010 results - s21.q4cdn.com · summary of third quarter 2010 results assets...

Invesco third quarter 2010 results

Martin L. Flanagan

President and Chief Executive Officer

Loren M. Starr

Chief Financial Officer

October 25, 2010

1

Forward-looking statements

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, 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.

2

Continued momentum in our business

Long-term investment performance remains strong despite market volatility

Continued positive trend in net flows

Acquisition integration completed at close – combined business demonstrating solid momentum

Resumed share repurchase program – purchased 6.4 million shares for $127.7 million

Standard & Poor’s increased Invesco’s enterprise risk management (ERM ) rating from “adequate” to “strong” – Invesco now one of four publicly rated asset managers with a “strong” ERM.

Third quarter overview

3

Summary of third quarter 2010 results

Assets under management

September 30, 2010, AUM of $604.5bn versus $557.7bn as of June 30, 2010

3Q10 average AUM was $583.3bn versus $480.5bn for 2Q10

Flows

Overall operating results

Capital management

Net long-term flows were positive $4.9bn for the quarter Net inflows from AUM ex-ETF/UIT/Passive of $1.3bn ETF/UIT/Passive net inflows of $3.6bn for the quarter

Adjusted operating income* in 3Q10 was $245.8mn, an increase of 30.3% versus 2Q10

Adjusted operating margin* was 34.8% in the quarter versus 32.0% in 2Q10

Adjusted EPS for the quarter was $0.39 versus $0.27 in the priorquarter

Corporate cash balance of $664.1mn Repurchased 6.4m shares during the quarter for $127.7 million Third quarter dividend unchanged at $0.11 per share

* See the schedule of Non-GAAP information in the appendix of this presentation for a reconciliation of net revenues, adjusted operating income, and adjusted EPS to the most directly comparable U.S. GAAP financial measure.

4

4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

Gross sales

Gross redemptions

Net long-term sales

9.4 9.0 9.812.2 12.5

26.6

15.2

-7.5

-12.0-11.9-11.6

8.6

-7.8-10.1

-6.7 -7.6

0.5 3.6

14.7

2.3 2.34.6

1.7

-1.5

22.625.5

27.630.4 32.1

45.3

36.8

-28.5 -28.5-31.4-31.9

22.6

-21.1 -23.9-23.6-20.9

4.913.9

3.66.54.04.41.7

-6.0

14.0 13.2

16.517.8 18.2

19.6

-18.4

-13.1

-16.1 -16.5

-19.5

21.6

18.7

-20.3

-16.3-14.4

1.3

-0.8

3.12.11.62.1

-4.4

0.0

4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

Continued positive momentum in long-term flows

Quarterly flows

Gross sales

Gross redemptions

Net long-term sales

Gross sales

Gross redemptions

Net long-term sales

Total AUM AUM ex-ETF/UIT/Passive ETF/UIT/Passive AUM

Quarterly long-term flows ($ billions)

5

(a) Retail quarterly flows include retail products in the U.S., Canada, U.K., Europe, Asia and our offshore product line.(b) Institutional quarterly flows include our institutional business in the U.S., Continental Europe and Asia and exclude institutional money market.(c) PWM quarterly flows include our high-net-worth business in the U.S.

Gross sales

Gross redemptions

Net long-term sales

1.21.5 1.5

1.2

0.7 0.81.1

0.6

-1.2-1.4

-1.1

-0.5 -0.5 -0.5-0.5

-1.5

0.10.6

0.30.20.10.00.10.0

4.83.3

4.2 3.84.8

6.7

-6.6

-3.6

-5.6-4.1

-5.5

-3.3

21.2

7.2

-4.1-4.7

3.9

0.7

-1.8-0.5

2.6

15.7

-1.8

-0.3

Continued momentum in gross sales across retail and institutional channels led to positive net flows

Continued positive trend in private wealth management flows

Distribution channelsQuarterly long-term flows

Gross sales

Gross redemptions

Net long-term sales

Gross sales

Gross redemptions

Net long-term sales

Quarterly long-term flows ($ billions)

Retail(a) Institutional(b) Private Wealth Management(c)

16.5 17.819.8

22.624.9 24.6 23.0

-20.7

-15.9 -16.9

-23.9-25.4-28.1

29.0

-19.3-14.9

0.9

-2.4

0.7

5.65.74.9

1.9

-4.2

4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q104Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

6

Investment performance overviewAsset weighted aggregate performance analysis

Strong overall peer group performance with 65%, 78%, and 78% of assets in the top half of peer groups for the 1-, 3-, 5-year time periods as of September 30, 2010

(a) Includes AUM of $369.3 billion (61% of total IVZ) for 1-year, $365.5 billion (60% of total IVZ) for 3-year, and $351.4 billion (58% 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, Russell, Mercer, eVestment Alliance, SITCA) 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. Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary direct real estate, unit investment trusts 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. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience

22%

78%

22%

78%

35%

65%

% assets top half of peer group

% assets bottom half of peer group % assets bottom half of peer group % assets bottom half of peer group

% assets top half of peer group % assets top half of peer group

Percent of assets in top half of peer group(a)

1-year 3-year 5-year

7

92%, 91% and 92% of UK equity AUM are beating the benchmark and are in the top half of peer groups for 1, 3 and 5 years.

94% and 93% of US value equity AUM are beating benchmarks and are in the top half of peer groups for 3 and 5 years

65% and 81% of Canadian equity AUM are in the top half of peer groups on a 1 and 3 year basis

90%, 79% and 86% of Invesco Global Fixed Income AUM are in the top half of peer groups and beating respective benchmarks for 1, 3 and 5 years

99% and 92% of Invesco Real Estate AUM are above respective benchmarks for 3 and 5 years

Morningstar ratings remain near the highest levels since October2000. 58% of US retail assets rated 4 or 5 stars*

Investment performance highlights

*Load waived basis

8

Discussion topics

Third-quarter overview

Update on the combined business

Financial results

Questions

Appendix

9

New business integrated with minimal transition issues – ready to deliver for clients on Day 1

Intensive outreach effort by retail sales force to bring the value of the combined business to our clients

Increased relevance as a top 10 fund manager in the U.S. is enhancing Invesco’s profile in the marketplace and driving new business

Phase II on schedule with product lineup planning underway

Update on the combination

10

Leadership team and org structure announced and in place at close

Managed properties and premises transitions

Gained understanding of VK/MS Retail investment teams and processes to ensure strong go-forward investment teams

Communicated to all constituents from announcement to close

Completed platform integration at close, allowing full access and exchangeability among the combined VK, MS and Invesco fund line-up

Identified, engaged and retained top talent, including PMs and key management

Sales structure and personnel in place; product training complete at close

Employee engagement

Clients

Operational excellence

Executed brand and fund name strategy at close

Single open-end fund board at close

We achieved our objective of fully integrating the MS retail business at close and continue to make progress

Business at close Progress since close• US Retail asset flows are on-target and growing

• Accelerating our profile on platforms

• Heightened client engagement

• Highly successful client conference conducted

• Product line-up refinement plans on-track

• Achieved targeted expense synergies

• Building and executing marketing campaigns

• Fully integrated business in Japan

• Stable investment teams in place producing strong

investment performance results

• High employee retention across all levels

• Strong legacy MS staff engagement scores based on

an independently conducted employee survey

11

Our US long-term retail business has benefited from a diversified mix of assets

$94.1B

ETF / UIT (31%)

$65.6B

DC /Insurance (25%)

$52.8B

Post-close AUM mix(9/30/2010)

InvescoAUM

MS RetailAUM

Pre-close AUM mix(5/31/2010)

ETF (39%)

$43.8B

DC /Insurance (24%)

$26.4B

$41.4B

UIT (17%)

$13.7B

DC / Insurance (21%)

$17.0B$50.5B

Mutual Funds (37%)

Mutual Funds (62%)

Mutual Funds (44%)

12

-3,353-3,141

-4,498

-3,010-3,085

-2,400-2,575-2,532

-3,301

3,6943,6993,2093,339

2,3652,4522,6962,357

2,587

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

Sep

341

Aug

-174

Jan

-713

557

Jul

-1,288

Jun

329

May

-720

Apr

51

Mar

121

Feb

US Retail (excluding PowerShares QQQQ)*

Our US retail business has seen solid momentum post-close

Pre-close (IVZ only) Post-close (Combined)

36%

$2,491

Pre-Close

24%

$3,485

Post-Close

12% pts.

$991

Change

-

40%

% Change

Average Monthly Redemption Rate

Average Monthly Gross Sales

Measure

* PowerShares QQQQ had net flows of $2.5B for the 9 months ended September 2010

13

Management is in the process of proposing product changes

US fund mergers are being evaluated by the fund board for approval

Shareholder vote required for proposed merger of US funds; will require proxy solicitations

For mergers approved by the mutual fund board in 4Q 2010, SEC filings will occur shortly thereafter

Steady state operations post fund mergers. Confirm ~$10 millionin additional run rate cost savings versus Year 1

Key steps remaining to steady state operationPhase II, 6-9 months from September 30, 2010

14

Discussion topics



Financial results

Questions

Appendix

15

Total assets under management – 3Q10 vs. 2Q10

48.7bps

49.0bps

$480.5

$67.1

$413.4

$489.6

$557.7

(3.4)

114.6

(24.2)

(0.9)

13.9

(31.4)

45.3

$457.7

2Q-10

(98.5)%1.7Net Acquisitions/(Dispositions)

($ billions) 3Q-10 % Change

Beginning Assets $557.7 21.9%

Long-Term Inflows 36.8 (18.8)%

Long-Term Outflows (31.9) 1.6%

Long-Term Net flows 4.9 (64.7)%

Net flows in Inst. Money Market Funds (2.4) 166.7%

Market Gains and Losses/Reinvestment 34.4 N/A

Foreign Currency Translation 8.2 N/A

Ending Assets $604.5 8.4%

Ending Long-Term AUM $538.7 10.0%

Average Long-Term AUM $516.4 24.9%

Average Institutional Money Market AUM $66.9 (0.3)%

Average AUM $583.3 21.4%

Net Revenue Yield (annualized)* 48.5bps (0.5)pts

Net Revenue Yield Before Performance Fees

(annualized)*48.3bps (0.4)pts

* Refer to appendix for net revenue calculation

16

Non-GAAP operating results – 3Q10 vs. 2Q10

5,421

480.5

32.0%

$0.27

125

29.3%

178

(4)

(14)

2

4

189

400

48

56

36

260

589

(223)

16

4

139

653

2Q-10

2.8pts34.8%Adjusted Operating Margin

Adjusted Other Income/(Expense)

Adjusted Operating Expenses

Adjusted Revenues

(28.6)%3Performance Fees

103.0%33Other

12.4%54General and Administrative

2.0%

21.4%

44.4%

47.5%

35.6%

N/A

14.2%

14.3%

11.6%

30.3%

15.2%

13.8%

27.0%

14.5%

20.1%

20.5%

37.4%

14.7%

% Change*

4Other Gains and Losses, net

($ millions) 3Q-10

Investment Management Fees 749

Service and Distribution Fees 192

Third-Party Distribution, Service and Advisory Expenses (269)

Net Revenues 707

Employee Compensation 298

Marketing 45

Property, Office and Technology 64

Total Adjusted Operating Expenses 461

Adjusted Operating Income 246

Equity in Earnings of Unconsolidated Affiliates 5

Interest and Dividend Income 2

Interest Expense (16)

Adjusted Income Before Income Taxes, Including Gains and Losses Attributable to Noncontrolling Interests

241

Effective Tax Rate** 23.1%

Adjusted Net Income 185

Adjusted EPS $0.39

Average AUM ($ billions) 583.3

Headcount 5,532

* % change based on unrounded figures** Effective tax rate = Adjusted Tax Expense / (Adjusted income before taxes, including gains and losses attributable to noncontrolling interests +

(gains)/losses attributable to noncontrolling interests in consolidated entities, net)

17

Progress towards cost synergy targets

($45.6)($11.4)$61.1$72.5$8.2$5.5$58.8Total

($51.0)Run rate annualized synergies realized as at 6/30/10

$6.1

$7.8

$9.6

$37.6

Actual Variance

(3Q10 v 2Q10)

D

Total run rate synergies delivered

$11.8

$7.8

$12.1

$40.8

Pro-forma 3Q variance ex-

new synergies

C

(A + B)

($96.6)

F

(E x 4)

E

(D – C)

B

Non-deal related variancesA

($5.7)

-

($2.5)

($3.2)

Est. new VK/MS

synergies in 3Q10

$2.5

$1.0

-

$4.7

Other(2)

($22.8)

-

($10.0)

($12.8)

Annualized new 3Q10 synergies

$3.7$32.4Compensation

$0.7$8.6G&A

$0.8$6.0Prop., office & tech.

$0.3$11.8Marketing

FX

2x June expenses for VK(1)

Adjusted Operating Expenses ($,mm)

(1) Represents 2 times the 1 month June adjusted operating expenses for the VK/MS acquired asset, as reported in the 2Q10 press release(2) Impact on quarter-over-quarter expense variance from activity unrelated to the VK/MS acquired assets and US retail business(3) $51 million in run rate synergies as of June 30, 2010 was previously reported in the 2Q10 earnings presentation. This represents the difference between the target of $80-$85 million less the remaining $29-$34 million synergies as of 2Q10.

Run rate gross cost synergies have now been delivered

~$15 million of reinvestment in marketing will begin late 2010/early 2011 (~$3.7 million per quarter)

18

Invesco’s capital management priorities remain consistent— Reinvestment in the business— Acquisitions that make strategic and financial sense— Moderately increasing annual dividends (~4% - 6% annually)— Share repurchases

A strong balance sheet is expected by clients and consultants and provides Invesco flexibility to take advantage of strategic opportunities

Priority remains to, over time, pay down credit facility and build ~$1 billion of excess cash on the balance sheet. The credit facility balance as of the end of 3Q is $648.5 million down $1.5million since the end of the second quarter

Share repurchases during the quarter are consistent with our opportunistic approach. Repurchased 6.4 million shares utilizing $127.7 million for an average price of $19.82

Invesco will continue to buy stock to offset dilution associatedwith deferred equity grants and option exercise activity

Capital management update

19

Continued momentum in our business

Long-term investment performance remains strong despite market volatility

Continued positive trend in net flows

Acquisition integration completed at close – combined business demonstrating solid momentum

Resumed share repurchase program – purchased 6.4 million shares for $127.7 million

Standard & Poor’s increased Invesco’s enterprise risk management (ERM ) rating from “adequate” to “strong” – Invesco now one of four publicly rated asset managers with a “strong” ERM.

Third quarter overview

20

Discussion topics



Financial results

Questions

Appendix

21

Discussion topics



Financial results

Questions

Appendix

22

Investment performanceBy investment objective*

24%

79%

95%

1-yr 3-yr 5-yr

6%

28% 27%11%

50% 49%

1-yr 3-yr 5-yr

45%

57%52%

1-yr 3-yr 5-yr

24%

7%

22%45%

29%

23%

1-yr 3-yr 5-yr

10% 4% 1%

51%

90% 92%

1-yr 3-yr 5-yr

53%

73% 71%

1-yr 3-yr 5-yr

15%

33% 30%

24% 26%

1%

1-yr 3-yr 5-yr

57%

95%95%

1-yr 3-yr 5-yr

100%

% of AUMabovebenchmark

1st quartile

2nd quartile

U.S. Core U.S. Growth U.S. Value Sector

U.K.

100% 100% 100%

Canadian Asian European

Equities

92% 95%94%

1-yr 3-yr 5-yr

90%

2%

91% 90%

1%1%

1-yr 3-yr 5-yr

3%

44%

64%

1-yr 3-yr 5-yr

65%

25%

81%

0%

0%

0%

1-yr 3-yr 5-yr

100%

74%

94%

68%

1-yr 3-yr 5-yr

40%31% 28%

17% 38% 47%

1-yr 3-yr 5-yr

100%100%

98%

81%

94%

1-yr 3-yr 5-yr

40% 46% 41%

39% 34%36%

1-yr 3-yr 5-yr

*AUM measured in the one, three, and five year quartile rankings represents 61%, 60%, and 58% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one, three, and five year basis represents 73%, 71, and 66% of total Invesco AUM, respectively, as of 9/30/10. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, Russell, Mercer, eVestment Alliance, SITCA) 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. Excludes passive Products, closed end funds, private equity limited partnerships, non-discretionary direct real estate unit investment trusts and CDOs. Certain funds and products were excluded from the analysisbecause of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience

100%

23

Investment performanceBy investment objective*

100%

% of AUMabovebenchmark

1st quartile

2nd quartile

GlobalGlobal ex-U.S. andEmerging markets Balanced

Money market

100% 100%

U.S. fixed income Global fixed income

Equities

100% 100% 100%

Balanced

Fixed income

79%

57%

79%

1-yr 3-yr 5-yr

28% 23%40%

15%16%

14%

1-yr 3-yr 5-yr

87% 84%

94%

1-yr 3-yr 5-yr

2%

80%

3%

59%

13%

59%

1-yr 3-yr 5-yr

38%

76% 76%

1-yr 3-yr 5-yr

9% 4%

48%20%

61%

23%

1-yr 3-yr 5-yr

38%

77% 74%

1-yr 3-yr 5-yr

13% 11% 12%

83% 82% 82%

1-yr 3-yr 5-yr

86%

41%

66%

1-yr 3-yr 5-yr

49% 51%42%

27%14%

20%

1-yr 3-yr 5-yr

93%

79%86%

1-yr 3-yr 5-yr

57%

18% 22%

33%

73% 68%

1-yr 3-yr 5-yr*AUM measured in the one, three, and five year quartile rankings represents 61%, 60%, and 58% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one, three, and five year basis represents 73%, 71, and 66% of total Invesco AUM, respectively, as of 9/30/10. Peer group rankings are sourced from a widely-used third party ranking agency in each fund’s market (Lipper, Morningstar, Russell, Mercer, eVestment Alliance, SITCA) 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. Excludes passive Products, closed end funds, private equity limited partnerships, non-discretionary direct real estate unit investment trusts and CDOs. Certain funds and products were excluded from the analysisbecause of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience

24

Sources: Invesco. All data as of September 30, 2010. The listed centers do not all provide products or services that are available in the U.S. nor are their and services available on all platforms. All entities listed are wholly owned, indirect subsidiaries of Invesco Ltd. Please consult your Invesco representative for more information.

Commitment to investment excellence

25

Retail59.5%

Institutional37.8%

PWM2.7%

Alternative11.3%

Fixed Income21.6%

Money Market11.6%

Balanced6.8%

Equity48.7%

Asia9.0%

Europe5.6%

U.K.14.8%

Canada4.4%

U.S.66.2%

As of September 30, 2010

$400.0$26.7$89.8$33.6$54.4

$604.5Total

U.S.CanadaU.K.Europe Asia

40.7%(6.3)%13.8%17.1%

105.3%

35.3%

1-Yr Change($ billions)

$359.6$228.7$16.2

$604.5Total

RetailInstitutionalPWM

60.8%9.8%8.0%

35.3%


$294.4$41.3$69.9

$130.8$68.1

Total

Equity BalancedMoney MarketFixed IncomeAlternative

62.5% 6.7%

(23.6)%76.5%10.9%

35.3%


$604.5

We are diversified as a firmDelivering a diverse set of solutions to meet client needs

By client domicile By channel By asset class

26

US GAAP operating results – quarterly

52.9%39.8%32.2%29.3%30.3%34.5%N/A47.4%26.1%Effective Tax Rate**

$0.09

41

(197)

275

(9)

(26)

(14)

187

53

2

10

71

716

79

64

56

35

221

261

787

16

4

139

628

2Q-10

$0.21

95

(119)

265

(2)

(21)

(12)

103

53

2

6

137

582

17

50

54

28

196

238

719

12

1

113

594

1Q-10

$0.08

32

61

7

(22)

-

(18)

(57)

-

7

11

85

550

-

62

58

31

163

236

634

31

24

101

479

4Q-08

$0.25

111

(23)

182

(0)

-

(15)

26

-

2

9

161

587

10

50

55

30

195

247

748

18

7

111

612

4Q-09

$0.24

105

1

148

2

-

(17)

2

-

2

8

152

554

1

40

63

28

184

239

706

19

4

112

570

3Q-09

$0.18

76

48

64

10

-

(17)

(48)

-

1

8

110

515

-

47

49

24

166

229

625

15

8

100

502

2Q-09

$0.08

31

89

(38)

(4)

-

(16)

(87)

-

5

3

62

487

-

30

46

27

148

236

549

12

11

89

437

1Q-09

39.1%(36)Interest Expense of Consolidated Investment Products

32.4%70Interest Income of Consolidated Investment Products

0.6%65General and Administrative

N/A15Other Gains and Losses, net

($ millions) 3Q-10 % Change*

Investment Management Fees 726 15.6%

Service and Distribution Fees 192 37.4%

Performance Fees 3 (28.6)%

Other 33 104.9%

Total Operating Revenues 953 21.1%

Employee Compensation 304 16.7%

Third-Party Distribution, Service and Advisory 267 20.8%

Marketing 45 27.3%

Property, Office and Technology 64 13.8%

Transaction & Integration 27 (66.2)%

Total Operating Expenses 770 7.6%

Operating Income 183 156.2%

Equity in Earnings of Unconsolidated Affiliates 11 2.9%

Interest and Dividend Income 3 88.9%

Gains and (Losses) of Consolidated Investment Products, net

(148) N/A

Interest Expense (16) 14.2%

Income Before Income Taxes, Including Gains and Losses Attributable to Noncontrolling Interests

82 (70.2)%

(Gains)/Losses Attributable to Noncontrolling Interests in Consolidated Entities, net

127 N/A

Net Income Attributable to Common Shareholders 155 279.2%

EPS Diluted $0.32 255.6%

* % change based on unrounded figures** Effective tax rate = Tax Expense / (Income before income taxes, including gains and losses attributable to noncontrolling interests + (gains)/losses

attributable to noncontrolling interests in consolidated entities, net)

27

Reconciliation of US GAAP results to non-GAAP results – three months ended September 30, 2010

(6)

-

2

(8)

(11)

-

-

-

-

(1)

-

4

(4)

-

-

-

-

-

(4)

-

-

-

-

-

-

Market appreciation / depreciation of

deferred compensation

awards

Adjusted EPS

Diluted Shares Outstanding

Adjusted Operating Margin

(2)

(128)

-

126

-

36

-

148

(70)

-

-

12

(2)

-

(2)

-

-

-

-

10

-

-

-

-

11

Consolidated Investment

Products

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Other Reconciling

Items

--(267)-267Third-Party Distribution, Service and Advisory

33---33Other

----(36)Interest Expense of Consolidated Investment Products

----70Interest Income of Consolidated Investment Products

-

-

-

-

-

-

-

-

(6)

6

5

-

1

1

-

3

10

(3)

-

-

12

Proportional Consolidation

of Joint Ventures

-

-

-

-

-

-

-

-

-

-

(267)

-

-

-

-

-

(267)

(267)

-

-

-

3rd party distribution, service and

advisory expenses

38

-

(3)

41

-

-

-

-

-

41

(41)

(27)

(9)

-

-

(5)

-

-

-

-

-

Acquisition related

$0.39

479.1

34.8%

185

(0)

(56)

241

4

(16)

-

2

5

246

461

-

54

64

45

298

707

(269)

3

192

749

Non-GAAP basis

65General and Administrative

15Other Gains and Losses, net

($ millions)

Operating Revenues

US GAAP

Basis



Performance Fees 3

Third-Party Distribution, Service and Advisory -

Total Operating Revenues reconciled to net revenues

Operating Expenses

953


Marketing 45


Transaction & Integration 27

Total Operating Expenses 770

Operating Income reconciled to adjusted cash operating income

183




(148)



82

Income Tax Provision (55)


127

Net Income Attributable to Common Shareholders reconciled to adjusted cash net income

155

EPS Diluted


Adjusted Operating margin

$0.32

479.1

19.2%

28

Reconciliation of US GAAP results to non-GAAP results – three months ended June 30, 2010

3

-

(1)

4

6

-

-

-

-

-

-

(2)

2

-

-

-

-

-

2

-

-

-

-

-

-

Market appreciation / depreciation of

deferred compensation

awards

Adjusted EPS


Adjusted Operating Margin

(2)

197

-

(200)

-

26

-

(187)

(53)

-

-

15

(3)

-

(3)

-

-

-

-

12

-

-

-

-

12

Consolidated Investment

Products

6

-

(3)

9

-

-

-

-

-

-

-

9

(9)

-

(9)

-

-

-

-

-

-

-

-

-

-

Other Reconciling

Items

--(221)-221Third-Party Distribution, Service and Advisory

16---16Other

----(26)Interest Expense of Consolidated Investment Products

----53Interest Income of Consolidated Investment Products

-

-

-

-

-

-

-

-

(6)

6

4

-

1

1

-

3

10

(3)

-

-

13

Proportional Consolidation

of Joint Ventures

-

-

-

-

-

-

-

-

-

-

(221)

-

-

-

-

-

(221)

(221)

-

-

-

3rd party distribution, service and

advisory expenses

79

-

(11)

90

-

-

-

-

-

90

(90)

(79)

(5)

-

-

(5)

-

-

-

-

-

Acquisition related

$0.27

457.8

32.0%

125

(0)

(52)

178

(4)

(14)

-

2

4

189

400

-

48

56

36

260

589

(223)

4

139

653

Non-GAAP basis

64General and Administrative

(9)Other Gains and Losses, net

($ millions)

Operating Revenues

US GAAP

Basis



Performance Fees 4

Third-Party Distribution, Service and Advisory -

Total Operating Revenues reconciled to net revenues

Operating Expenses

787


Marketing 35


Transaction & Integration 79

Total Operating Expenses 716

Operating Income reconciled to adjusted cash operating income

71




187



275

Income Tax Provision (37)


(197)

Net Income Attributable to Common Shareholders reconciled to adjusted cash net income

41

EPS Diluted


Adjusted Operating margin

$0.09

457.8

9.1%

29

Total assets under management - quarterly

48.7bps

49.0bps

65.7bps

66.0bps

$480.5

67.1

413.4

489.6

$557.7

(3.4)

114.6

(24.2)

(0.9)

13.9

(31.4)

45.3

$457.7

2Q-10

48.3bps

48.4bps

64.4bps

64.5bps

$449.6

75.3

374.3

388.7

$457.7

(4.5)

-

9.7

(10.6)

3.6

(28.5)

32.1

$459.5

1Q-10

30.312.7N/A34.4Market Gains and Losses/Reinvestment

49.3bps

49.9bps

66.0bps

66.6bps

453.4

89.8

363.6

380.0

$459.5

1.2

-

(7.8)

6.5

(23.9)

30.4

$446.9

4Q-09

48.8bps

49.2bps

64.8bps

65.2bps

437.1

90.6

346.5

359.7

$446.9

0.8

-

(2.6)

4.0

(23.6)

27.6

$414.4

3Q-09($ billions) 3Q-10 % Change

Beginning Assets $557.7 21.8%

Long-Term Inflows 36.8 (18.8)%

Long-Term Outflows (31.9) 1.6%

Long-Term Net flows 4.9 (64.7)%

Net flows in Inst. Money Market Funds (2.4) 166.7%

Net Acquisitions/(Dispositions) 1.7 (98.5)%

Foreign Currency Translation 8.2 N/A

Ending Assets $604.5 8.4%

Ending Long-Term AUM 538.7 10.0%

Average Long-Term AUM 516.4 24.9%

Average Institutional Money Market AUM 66.9 (0.3)%

Average AUM $583.3 21.4%

Gross Revenue Yield (annualized)* 65.7bps (0.3)pts

Gross Revenue Yield Less Performance Fees (annualized)* 65.6bps (0.1)pts

Net Revenue Yield (annualized)** 48.5bps (0.5)pts

Net Revenue Yield Less Performance Fees

(annualized)**

48.3bps (0.4)pts

* Gross revenue yield on AUM is equal to total operating revenues divided by average AUM, excluding JV AUM. Average AUM for 3Q10, for our joint ventures in China were $3.4bn (2Q10: $3.1bn ;1Q10: $3.8bn ;4Q09: $3.9bn ; 3Q09: $3.9bn).

**Net Revenue Yield on AUM is equal to net revenues divided by average AUM including JV AUM. Average AUM for 3Q10, for our JV in China were $3.4bn (2Q10:$3.1bn;1Q10: $3.8bn 4Q09: $3.9bn; 3Q09: $3.9bn; 2Q09: $3.6bn;)

The beginning balances were adjusted to reflect certain asset reclassifications

3030

Total assets under management – by asset class

----1.71.7Net Acquisitions/(Dispositions)

June 30, 2010 $557.7 $263.2 $119.3 $38.2 $72.5 $64.5

Long-Term Inflows 36.8 22.1 9.8 1.8 0.2 2.9

Long-Term Outflows (31.9) (23.3) (3.7) (1.6) (0.5) (2.8)

Long-Term Net flows 4.9 (1.2) 6.1 0.2 (0.3) 0.1

Net flows in Inst. Money Market Fund

(2.4) - - - (2.4) -

Market Gains and Losses/Reinvestment

34.4 25.2 4.3 2.0 0.1 2.8

Foreign Currency Translation 8.2 5.5 1.1 0.9 - 0.7

September 30, 2010 $604.5 $294.4 $130.8 $41.3 $69.9 $68.1

* The beginning balances were adjusted to reflect certain asset reclassifications

Alternative

Money

MarketBalanced

Fixed

IncomeEquityTotal($ billions)

2.20.60.337.873.7114.6Net Acquisitions/(Dispositions)

March 31, 2010 $457.7 $198.5 $79.5 $40.6 $72.6 $66.5



Long-Term Net flows 13.9 14.5 0.7 (0.1) 0.2 (1.4)


(0.9) - - - (0.9) -


(24.2) (21.5) 1.6 (1.9) - (2.4)

Foreign Currency Translation (3.4) (2.0) (0.3) (0.7) - (0.4)

3131


($ billions) Total Equity

Fixed

Income Balanced

Money

Market Alternative

September 30, 2009 $446.9 $181.2 $74.1 $38.7 $91.5 $61.4



Long-Term Net flows 6.5 0.8 1.2 0.0 (0.3) 4.8

Net flows in Inst. Money Market Funds

(7.8) - - - (7.8) -


12.7 9.8 0.8 0.9 0.1 1.1

Foreign Currency Translation 1.2 0.8 0.1 0.3 - -

December 31, 2009 $459.5 $192.6 $76.2 $39.9 $83.5 $67.3



Long-Term Net flows 3.6 2.2 2.4 0.1 (0.3) (0.8)


(10.6) - - - (10.6) -


9.7 6.7 1.7 1.0 - 0.3

Foreign Currency Translation (4.5) (3.0) (0.8) (0.4) - (0.3)

March 31, 2010 $457.7 $198.5 $79.5 $40.6 $72.6 $66.5


3232


($ billions) Total Equity

Fixed

Income Balanced

Money

Market Alternative

March 31, 2009 $369.0 $127.1 $63.2 $29.9 $92.6 $56.2



Long-Term Net flows 4.4 0.7 1.6 0.1 (0.2) 2.2


1.7 - - - 1.7 -


28.2 21.0 2.1 3.4 - 1.7

Foreign Currency Translation 11.1 6.8 1.6 1.6 0.2 0.9

June 30, 2009 $414.4 $155.6 $68.5 $35.0 $94.3 $61.0



Long-Term Net flows 4.0 2.9 2.2 0.2 (0.3) (1.0)


(2.6) - - - (2.6) -


30.3 22.6 3.4 3.0 - 1.3

Foreign Currency Translation 0.8 0.1 - 0.5 0.1 0.1

September 30, 2009 $446.9 $181.2 $74.1 $38.7 $91.5 $61.4


3333

Total assets under management – by channel

$15.6$198.2$243.9$457.7March 31, 2010

($ billions) Total Retail Institutional PWM

Long-Term Inflows 45.3 23.0 21.2 1.1

Long-Term Outflows (31.4) (25.4) (5.5) (0.5)

Long-Term Net flows 13.9 (2.4) 15.7 0.6

Net flows in Inst. Money Market Funds (0.9) - (0.9) -


Net Acquisitions/(Dispositions)

(24.2)

114.6

(18.6)

105.1

(4.8)

9.5

(0.8)

-

Foreign Currency Translation (3.4) (2.4) (1.0) -

June 30, 2010 $557.7 $325.6 $216.7 $15.4

-2.7(1.0)1.7Net Acquisitions/(Dispositions)



Long-Term Net flows 4.9 0.9 3.9 0.1


Market Gains and Losses/Reinvestment 34.4 29.2 4.5 0.7

Foreign Currency Translation 8.2 4.9 3.3 -

September 30, 2010 $604.5 $359.6 $228.7 $16.2


3434


$15.0$208.2$223.7$446.9September 30, 2009






Market Gains and Losses/Reinvestment 12.7 8.7 4.0 -

Foreign Currency Translation 1.2 1.4 (0.2) -

December 31, 2009 $459.5 $239.4 $204.9 $15.2






Foreign Currency Translation (4.5) (3.7) (0.8) -

March 31, 2010 $457.7 $243.9 $198.2 $15.6


3535


$13.8$208.9$191.7$414.4June 30, 2009

$13.0$201.0$155.0$369.0March 31, 2009




Long-Term Net flows 4.4 4.9 (0.5) -

Net flows in Inst. Money Market Funds 1.7 - 1.7 -





Long-Term Net flows 4.0 5.7 (1.8) 0.1




September 30, 2009 $446.9 $223.7 $208.2 $15.0


3636

Total assets under management – by client domicile

$27.2$27.0$83.9$29.2$290.4$457.7March 31, 2010

($ billions) Total U.S. Canada U.K.Continental

Europe Asia



Long-Term Net flows 13.9 (2.4) (1.2) 1.0 0.1 16.4

Net flows in Inst. Money Market Funds (0.9) (1.7) - (0.3) 2.0 (0.9)


Net Acquisitions/(Dispositions)

(24.2)

114.6

(12.9)

103.7

(1.4)

0.6

(5.6)

1.8

(1.4)

2.9

(2.9)

5.6

Foreign Currency Translation (3.4) - (1.2) (1.2) (1.0) 0.0

June 30, 2010 $557.7 $377.1 $26.0 $79.6 $29.6 $45.4


3.1--(0.5)(0.9)1.7Net Acquisition/(Dispositions)



Long-Term Net flows 4.9 3.9 (1.2) 0.9 0.7 0.6

Net flows in Inst. Money Market Funds (2.4) (1.9) - (0.5) (0.1) 0.1

Market Gains and Losses/Reinvestment 34.4 21.8 1.6 5.8 2.2 3.0

Foreign Currency Translation 8.2 - 0.8 4.0 1.2 2.2

September 30, 2010 $604.5 $400.0 $26.7 $89.8 $33.6 $54.4

3737

$26.5$28.7$78.9$28.5$284.3$446.9September 30, 2009


Europe Asia



Long-Term Net flows 6.5 5.4 (1.2) 2.9 (0.3) (0.3)

Net flows in Inst. Money Market Funds (7.8) (2.4) - - (4.6) (0.8)


Foreign Currency Translation 1.2 - 0.8 0.7 (0.2) (0.1)

December 31, 2009 $459.5 $294.1 $29.0 $84.9 $24.4 $27.1




Long-Term Net flows 3.6 2.3 (1.1) 0.2 1.7 0.5

Net flows in Inst. Money Market Funds (10.6) (11.6) - (0.6) 1.7 (0.1)

Market Gains and Losses/Reinvestment 9.7 5.6 0.5 3.9 - (0.3)

Foreign Currency Translation (4.5) - 0.8 (4.5) (0.8) -

March 31, 2010 $457.7 $290.4 $29.2 $83.9 $27.0 $27.2


3838

$20.8$22.4$53.8$21.4$250.6$369.0March 31, 2009


Europe Asia



Long-Term Net flows 4.4 2.7 (0.8) 2.4 0.2 (0.1)

Net flows in Inst. Money Market Funds 1.7 (0.1) - 0.1 1.3 0.4


Foreign Currency Translation 11.1 - 1.9 7.6 1.0 0.6

June 30, 2009 $414.4 $269.4 $25.2 $68.7 $26.6 $24.5




Long-Term Net flows 4.0 2.0 (0.9) 3.2 (0.5) 0.2

Net flows in Inst. Money Market Funds (2.6) (1.1) (0.1) (0.2) (0.1) (1.1)


Foreign Currency Translation 0.8 - 2.0 (2.1) 0.3 0.6

September 30, 2009 $446.9 $284.3 $28.5 $78.9 $28.7 $26.5


3939

Assets under management – ETF, UIT and passive – by asset class

---9.24.513.7Net Acquisitions/(Dispositions)

($ billions)Total Equity

Fixed

Income Balanced

Money

Market Alternative

March 31, 2009 $55.7 $34.3 $4.6 $0.0 $0.0 $16.8

Long-Term Inflows 26.6 24.4 0.8 - - 1.4

Long-Term Outflows (11.9) (9.7) (0.2) - - (2.0)

Long-Term Net flows 14.7 14.7 0.6 - - (0.6)


- - - - - -


(4.8) (4.6) 0.9 - - (1.1)

Foreign Currency Translation (0.1) - - - - (0.1)

------Net Acquisitions/(Dispositions)

June 30, 2010 $79.2 $48.9 $15.3 $0.0 $0.0 $15.0


Long-Term Outflows (11.6) (9.8) (0.3) - - (1.5)



- - - - - -


6.0 4.8 0.4 - - 0.8

Foreign Currency Translation 1.1 0.9 - - - 0.2

September 30, 2010 89.9 57.5 17.2 $0.0 $0.0 15.2


4040

$31.1December 31, 2009 $53.0 $4.0 $0.0 $0.0 $17.9


Long-Term Outflows(12.0) (8.4) (0.3) - - (3.3)



- - - - - -


2.2 1.5 0.4 - - 0.3

Foreign Currency Translation - - -- - - -

March 31, 2010 $55.7 $34.3 $4.6 $0.0 $0.0 $16.8


Fixed

Income Balanced

Money

Market Alternative

September 30,2009 $45.9 $29.4 $3.5 $0.0 $0.0 $13.0


Long-Term Outflows (7.6) (7.0) - - - (0.6)

Long-Term Net flows 4.6 0.3 0.5 - - 3.8


- - - - - -


2.5 1.4 - - - 1.1

Foreign Currency Translation - - - - - -



4141


Fixed

Income Balanced

Money

Market Alternative

March 31, 2009 $31.0 $20.7 $1.2 $0.0 $0.0 $9.1


Long-Term Outflows (6.7) (5.8) - - - (0.9)

Long-Term Net flows 2.3 (0.3) 0.6 - - 2.0


- - - - - -


5.5 4.2 0.1 - - 1.2

Foreign Currency Translation 0.2 - - - - 0.2

June 30, 2009 $39.0 $24.6 $1.9 $0.0 $0.0 $12.5


Long-Term Outflows (7.5) (6.1) 0.0 - - (1.4)



- - - - - -


4.5 3.8 0.6 - - 0.1

Foreign Currency Translation 0.1 - - 0.1

September 30, 2009 $45.9 $29.4 $3.5 $0.0 $0.0 $13.0



4242

--13.713.7Net Acquisitions/(Dispositions)

$0.0$21.9$57.3$79.2June 30, 2010

$0.0$6.2$49.5$55.7March 31, 2010


Long-Term Inflows 26.6 10.6 16.0 -

Long-Term Outflows (11.9) (11.9) - -

Long-Term Net flows 14.7 (1.3) 16.0 -

Net flows in Inst. Money Market Funds - - - -

Market Gains and Losses/Reinvestment (4.8) (4.6) (0.2) -

Foreign Currency Translation (0.1) - (0.1) -

----Net Acquisitions/(Dispositions)

Long-Term Inflows 15.2 15.2 - -


Long-Term Net flows 3.6 3.6 - -



Foreign Currency Translation 1.1 - 1.1 -

September 30, 2010 $89.9 $66.6 $23.3 $0.0


Assets under management – ETF, UIT and passive – by channel

4343

$0.0$4.6$41.3$45.9September 30, 2009




Long-Term Net flows 4.6 4.5 0.1 -



Foreign Currency Translation - - - -

December 31, 2009 $53.0 $47.8 $5.2 $0.0






Foreign Currency Translation - - - -

March 31, 2010 $55.7 $49.5 $6.2 $0.0



4444

$0.0$3.2$27.8$31.0March 31, 2009







Foreign Currency Translation 0.2 - 0.2 -

June 30, 2009 $39.0 $35.1 $3.9 $0.0



Long-Term Net flows 2.3 2.1 0.2 -



Foreign Currency Translation 0.1 0.1 - -

September 30, 2009 $45.9 $41.3 $4.6 $0.0



4545

----13.713.7Net Acquisitions/(Dispositions)


Europe Asia

March 31, 2010 $55.7 $53.1 $0.0 $0.0 $1.0 $1.6

Long-Term Inflows 26.6 10.7 - - 0.1 15.8

Long-Term Outflows (11.9) (11.8) - - (0.1) -

Long-Term Net flows 14.7 (1.1) - - - 15.8

Net flows in Inst. Money Market Funds - - - - - -

Market Gains and Losses/Reinvestment (4.8) (4.0) - - (0.1) (0.7)

Foreign Currency Translation (0.1) - - - - (0.1)

June 30, 2010 $79.2 $61.7 $0.0 $0.0 $0.9 $16.6


------Net Acquisition/(Dispositions)

Long-Term Inflows 15.2 15.2 - - - -


Long-Term Net flows 3.6 3.7 - - (0.1) -


Market Gains and Losses/Reinvestment 6.0 5.3 - - 0.2 0.5


September 30, 2010 89.9 70.7 $0.0 $0.0 1.0 18.2

Assets under management – ETF, UIT and passive – by client domicile

4646


Europe Asia

September 30, 2009 $45.9 $43.4 $0.0 $0.0 $0.9 $1.6

Long-Term Inflows 12.2 12.1 - - 0.1 -

Long-Term Outflows (7.6) (7.6) - - - -

Long-Term Net flows 4.6 4.5 - - 0.1 -


Market Gains and Losses/Reinvestment 2.5 2.5 - - - -


December 31, 2009 $53.0 $50.4 $0.0 $0.0 $1.0 $1.6


Long-Term Inflows 12.5 12.5 - - - -


Long-Term Net flows 0.5 0.5 - - - -


Market Gains and Losses/Reinvestment 2.2 2.2 - - - -


March 31, 2010 $55.7 $53.1 $0.0 $0.0 $1.0 $1.6


4747

$1.4$0.8$0.0$0.0$36.8$39.0June 30, 2009


Europe Asia

March 31, 2009 $31.0 $29.4 $0.0 $0.0 $0.6 $1.0



Long-Term Net flows 2.3 2.2 - - 0.1 -







Long-Term Net flows 2.3 2.3 - - - -




September 30, 2009 $45.9 $43.4 $0.0 $0.0 $0.9 $1.6


invesco third quarter 2010 results - s21.q4cdn.com · summary of third quarter 2010 results assets...

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