1 unchanged sentence
Evaluation of Disclosure Controls and Procedures
−Removed: We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is
−Removed: accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
+Added: We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
9 unchanged sentences
Based on this evaluation, management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our internal control over financial reporting was effective as of December 31, 2020.
−Removed: The effectiveness of our internal control over financial reporting as of December 31, 2019 has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their report, which is included in Item 15 "Exhibits, Financial Statement Schedules" of this Annual Report on Form 10-K.
+Added: The effectiveness of our internal control over financial reporting as of December 31, 2020 has been audited by Deloitte & Touche LLP, our independent registered public accounting firm, as stated in their report, which is included in Item 15 "Exhibits and Financial Statement Schedules" of this Annual Report on Form 10-K.
Other Information.
7 unchanged sentences
EQUITY COMPENSATION PLAN INFORMATION
−Removed: Plan Category
+Added: Plan Category Number of
securities to be
upon exercise of
−Removed: Weighted-average
+Added: and rights Weighted-average
exercise price of
options, warrants
−Removed: and rights (1)
+Added: and rights (1) Number of
securities remaining
6 unchanged sentences
Equity compensation plans not approved by security holders — — —
+Added: Total 534,378 $ 55.18 343,165
(1) The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit awards ("RSUs") since recipients of such awards are not required to pay an exercise price to receive the shares subject to these awards.
5 unchanged sentences
Information required by this Item 14 is incorporated herein by reference to our definitive proxy statement for our 2021 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.
−Removed: Exhibits, Financial Statement Schedules.
−Removed: Financial Statements:
+Added: Exhibits and Financial Statement Schedules.
+Added: (a)(1) Financial Statements:
The following Report of Independent Registered Public Accounting Firm and Consolidated Financial Statements of Virtus are included in this Annual Report:
Report of Independent Registered Public Accounting Firm
−Removed: Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2020 and 2019
4 unchanged sentences
Notes to Consolidated Financial Statements
−Removed: Financial Statement Schedules:
+Added: (a)(2) Financial Statement Schedules:
All financial statement schedules have been omitted because the required information is either presented in the consolidated financial statements or the notes thereto or is not applicable or required.
+Added: (a)(3) Exhibits:
The following exhibits are filed herewith or incorporated herein by reference:
−Removed: Exhibit Description
+Added: Number Exhibit Description
(2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
5 unchanged sentences
and each of the management partners of SGA named therein, dated as of February 1, 2018 (incorporated by reference to Exhibit 2.3 of the Registrant's Annual Report on Form 10-K, filed February 27, 2018).
+Added: 2.4 Membership Interest Purchase Agreement by and among the Registrant, Westchester Capital Management, LLC, Westchester Capital Partners, LLC, LPC Westchester, LP, MTSWCM Holdings, LLC, RDBWCM Holdings, LLC, and the Individual Equityholders (as defined therein), dated February 1, 2021.
(3) Articles of Incorporation and Bylaws
8 unchanged sentences
(4) Instruments Defining the Rights of Security Holders including Indentures
−Removed: Specimen 7.25% Series D Mandatory Convertible Preferred Stock Share Certificate (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K, filed on February 1, 2017)
−Removed: Description of the Registrant's 7.25% Series D Mandatory Convertible Preferred Stock
−Removed: Description of the Registrant's Common Stock
+Added: 4.1 Description of the Registrant's Common Stock (Incorporated by reference to Exhibit 4.3 of the Registrant's Annual Report on Form 10-K, filed February 27, 2020)
(10) Material Contracts
29 unchanged sentences
10.13* Form of Indemnity Agreement (incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q, filed November 4, 2009).
−Removed: Offer Letter from the Registrant to Mark S.
−Removed: Flynn dated December 9, 2010 (incorporated by reference to Exhibit 10.31 of the Registrant’s Annual Report on Form 10-K, filed March 1, 2012).
−Removed: Confidential Executive Separation Agreement and General Release of All Claims, dated January 25, 2019, by and between Mark S.
−Removed: Flynn and Virtus Investment Partners, Inc.
10.14* Offer Letter from the Registrant to Barry M.
Mandinach dated April 4, 2014 (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q, filed May 7, 2014).
+Added: 10.15* Offer Letter from the Registrant to Wendy J.
+Added: Hills dated July 26, 2019.
10.16 Stock Purchase Agreement, dated October 27, 2016, between Bank of Montreal Holding Inc.
18 unchanged sentences
Consent of Independent Registered Public Accounting Firm.
−Removed: Consent of Independent Registered Public Accounting Firm.
Certifications of Registrant's Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
2 unchanged sentences
101 The following information formatted in iXBRL (Inline Extensible Business Reporting Language):
−Removed: (a) Consolidated Balance Sheets as of December 31, 2019 and December 31, 2018, (b) Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017, (c) Consolidated Statements of Comprehensive Income for the years ended December 31, 2019, 2018 and 2017, (d) Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017, (e) Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2019, 2018 and 2017 and (f) Notes to Consolidated Financial Statements.
+Added: (i) Consolidated Balance Sheets as of December 31, 2020 and December 31, 2019, (ii) Consolidated Statements of Operations for the years ended December 31, 2020, 2019 and 2018, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2020, 2019 and 2018, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018, (v) Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2020, 2019 and 2018 and (vi) Notes to Consolidated Financial Statements.
104 Cover page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101)
10 unchanged sentences
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated as of February 26, 2021.
−Removed: /S/ GEORGE R.
−Removed: Director and Non-Executive Chairman
+Added: /S/ TIMOTHY A.
+Added: HOLT /S/ GEORGE R.
+Added: Director and Non-Executive Chairman George R.
President, Chief Executive Officer and Director
(Principal Executive Officer)
−Removed: /S/ TIMOTHY A.
−Removed: /S/ SHEILA HOODA
−Removed: /S/ MELODY L.
−Removed: /S/ STEPHEN T.
+Added: BAIN /S/ SUSAN S.
+Added: Director Susan S.
+Added: Fleming, Ph.D.
+Added: GREIG /S/ MELODY L.
+Added: Director Melody L.
+Added: TREANOR /S/ STEPHEN T.
+Added: Director Stephen T.
/S/ MICHAEL A.
2 unchanged sentences
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
−Removed: Report of Independent Registered Public Accounting Firms
+Added: Report of Independent Registered Public Accounting Firm F- 2
Audited Consolidated Financial Statements
9 unchanged sentences
We have audited the accompanying consolidated balance sheets of Virtus Investment Partners, Inc.
−Removed: and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows, for the years ended December 31, 2019 and 2018, and the related notes (collectively referred to as the "financial statements").
+Added: and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows, for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements").
We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
−Removed: In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years ended December 31, 2019 and 2018, in conformity with accounting principles generally accepted in the United States of America (GAAP).
+Added: In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.
Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
Basis for Opinions
−Removed: The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
−Removed: Report on Internal Control over Financial Reporting appearing under Item 9A.
+Added: The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting appearing under Item 9A.
Our responsibility is to express an opinion on these financial statements and an opinion on the Company's internal control over financial reporting based on our audits.
36 unchanged sentences
▪ The Company's assessment effectively identifies the primary beneficiary of those investment products considered to be VIEs through an analysis of the power to direct activities of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE.
−Removed: We involved specialists from our consolidation subject matter expert team to assist us in analyzing the appropriate application of GAAP where the accounting considerations were complex.
/s/ DELOITTE & TOUCHE LLP
2 unchanged sentences
We have served as the Company's auditor since 2018.
−Removed: Report of Independent Registered Public Accounting Firm
−Removed: To the Board of Directors and Stockholders of Virtus Investment Partners, Inc.
−Removed: Opinion on the Financial Statements
−Removed: We have audited the consolidated statements of operations, of comprehensive income, of changes in stockholders’ equity and of cash flow of Virtus Investment Partners, Inc.
−Removed: and its subsidiaries (the “Company”) for the year ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”).
−Removed: In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2017 in conformity with accounting principles generally accepted in the United States of America.
−Removed: Basis for Opinion
−Removed: These consolidated financial statements are the responsibility of the Company's management.
−Removed: Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.
−Removed: We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.
−Removed: federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
−Removed: We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.
−Removed: Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
−Removed: Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
−Removed: Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
−Removed: Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
−Removed: We believe that our audit provides a reasonable basis for our opinion.
−Removed: /s/ PricewaterhouseCoopers LLP
−Removed: Hartford, Connecticut
−Removed: February 26, 2018, except for the change in the manner in which the Company accounts for restricted cash in the statement of cash flow discussed in Note 2 (not presented herein) to the consolidated financial statements appearing under Item 15 of the Company’s 2018 annual report on Form 10-K, as to which the date is February 27, 2019
−Removed: We served as the Company's auditor from at least 1995 to 2018.
−Removed: We have not been able to determine the specific year we began serving as the auditor of the Company.
Virtus Investment Partners, Inc.
1 unchanged sentence
(in thousands, except share data)
−Removed: December 31, 2019
−Removed: December 31, 2018
+Added: December 31, 2020 December 31, 2019
Cash and cash equivalents $ 246,511 $ 221,781
+Added: Investments 64,944 83,206
Accounts receivable, net 84,499 74,132
6 unchanged sentences
Intangible assets, net 280,264 310,391
+Added: Goodwill 290,366 290,366
Deferred taxes, net 9,538 15,879
+Added: Other assets 36,288 36,849
+Added: Total assets $ 3,466,943 $ 3,204,634
Liabilities and Equity
2 unchanged sentences
Dividends payable 9,013 8,915
+Added: Debt 201,212 277,839
Other liabilities 36,120 40,507
6 unchanged sentences
Equity attributable to stockholders:
−Removed: Series D mandatory convertible preferred stock, $0.01 par value, 1,150,000 shares authorized, issued and outstanding at December 31, 2019 and December 31, 2018
+Added: Series D mandatory convertible preferred stock, $ 0.01 par value, 0 and 1,150,000 shares authorized, issued and outstanding at December 31, 2020 and December 31, 2019
Common stock, $ 0.01 par value, 1,000,000,000 shares authorized;
4 unchanged sentences
Treasury stock, at cost, 4,207,403 and 3,927,607 shares at December 31, 2020 and December 31, 2019, respectively
+Added: ( 451,749 ) ( 419,249 )
Total equity attributable to stockholders 711,141 675,699
Noncontrolling interests 9,799 10,558
+Added: Total equity 720,940 686,257
Total liabilities and equity $ 3,466,943 $ 3,204,634
49 unchanged sentences
Foreign currency translation adjustment, net of tax of $( 7 ), $( 5 ) and $ 6 for the years ended December 31, 2020, 2019 and 2018
−Removed: Unrealized gain (loss) on available-for-sale securities, net of tax of $111 and $100 for the years ended December 31, 2018 and 2017, respectively
+Added: Unrealized gain (loss) on available-for-sale securities, net of tax of $ 111 for the year ended December 31, 2018
Other comprehensive income (loss) 20 14 ( 309 )
5 unchanged sentences
Consolidated Statements of Changes in Stockholders' Equity
−Removed: Permanent Equity
−Removed: Temporary Equity
−Removed: Preferred Stock
−Removed: Retained Earnings (Accumulated
+Added: Permanent Equity Temporary Equity
+Added: Common Stock Preferred Stock Additional
+Added: Capital Retained Earnings (Accumulated
+Added: Deficit) Accumulated
Comprehensive
−Removed: Income (Loss)
−Removed: Treasury Stock
−Removed: (in thousands, except share data)
+Added: Income (Loss) Treasury Stock Total
+Added: Shareholders Non-
+Added: Interests Total
+Added: Equity Redeemable
+Added: (in thousands, except share data) Shares Par Value Shares Amount Shares Amount
Balances at December 31, 2017 7,159,645 $ 105 1,150,000 $ 110,843 $ 1,216,173 $ ( 386,216 ) $ ( 600 ) 3,296,289 $ ( 351,748 ) $ 588,557 $ 16,667 $ 605,224 $ 4,178
−Removed: Cumulative effect adjustment for adoption of ASU 2016-09
+Added: Adjustment for adoption of ASU 2016-01 — — — — — ( 178 ) 178 — — — — — —
+Added: Acquisition of business — — — — — — — — — — — — 55,500
Net income (loss) — — — — — 75,529 — — — 75,529 36 75,565 515
2 unchanged sentences
Net subscriptions (redemptions) and other — — — — — — — — — — ( 2,745 ) ( 2,745 ) ( 2,712 )
−Removed: Issuance of mandatory convertible preferred stock, net of offering costs
Cash dividends declared ($ 7.25 per preferred share)
−Removed: Issuance of common stock for acquisition of business
−Removed: Issuance of common stock, net of offering costs
+Added: — — — — ( 8,337 ) — — — — ( 8,337 ) — ( 8,337 ) —
Cash dividends declared ($ 2.00 per common share)
+Added: — — — — ( 15,267 ) — — — — ( 15,267 ) — ( 15,267 ) —
Repurchase of common shares ( 258,953 ) — — — — — — 258,953 ( 27,501 ) ( 27,501 ) — ( 27,501 ) —
3 unchanged sentences
Balances at December 31, 2018 6,997,382 $ 106 1,150,000 $ 110,843 $ 1,209,805 $ ( 310,865 ) $ ( 731 ) 3,555,242 $ ( 379,249 ) $ 629,909 $ 13,958 $ 643,867 $ 57,481
−Removed: Adjustment for adoption of ASU 2016-01
−Removed: Acquisition of business
Net income (loss) — — — — — 95,649 — — — 95,649 ( 1,027 ) 94,622 10,886
−Removed: Net unrealized gain (loss) on securities available-for-sale
Foreign currency translation adjustment — — — — — — 14 — — 14 — 14 —
Net subscriptions (redemptions) and other — — — — 838 — — — — 838 ( 2,373 ) ( 1,535 ) ( 4,522 )
+Added: Reclassification from other comprehensive (income) loss — — — — — — 726 — — 726 — 726 —
Cash dividends declared ($ 7.25 per preferred share)
+Added: — — — — ( 8,337 ) — — — — ( 8,337 ) — ( 8,337 ) —
Cash dividends declared ($ 2.44 per common share)
+Added: — — — — ( 18,130 ) — — — — ( 18,130 ) — ( 18,130 ) —
Repurchase of common shares ( 372,365 ) — — — — — — 372,365 ( 40,000 ) ( 40,000 ) — ( 40,000 ) —
3 unchanged sentences
Balances at December 31, 2019 6,809,280 $ 107 1,150,000 $ 110,843 $ 1,199,205 $ ( 215,216 ) $ 9 3,927,607 $ ( 419,249 ) $ 675,699 $ 10,558 $ 686,257 $ 63,845
−Removed: Permanent Equity
−Removed: Temporary Equity
−Removed: Preferred Stock
−Removed: Retained Earnings (Accumulated
+Added: Permanent Equity Temporary Equity
+Added: Common Stock Preferred Stock Additional
+Added: Capital Retained Earnings (Accumulated
+Added: Deficit) Accumulated
Comprehensive
−Removed: Income (Loss)
−Removed: Treasury Stock
−Removed: (in thousands, except share data)
+Added: Income (Loss) Treasury Stock Total
+Added: Shareholders Non-
+Added: Interests Total
+Added: Equity Redeemable
+Added: (in thousands, except share data) Shares Par Value Shares Amount Shares Amount
Net income (loss) — $ — — $ — $ — $ 79,957 $ — — $ — $ 79,957 $ 1,298 $ 81,255 $ 38,708
1 unchanged sentence
Net subscriptions (redemptions) and other — — — — ( 167 ) — — — — ( 167 ) ( 2,057 ) ( 2,224 ) 12,960
−Removed: Reclassification from other comprehensive (income) loss
−Removed: Cash dividends declared ($7.25 per preferred share)
+Added: Conversion of preferred stock 912,806 9 ( 1,150,000 ) ( 110,843 ) 110,834 — — — — — — — —
Cash dividends declared ($ 2.98 per common share)
+Added: — — — — ( 24,998 ) — — — — ( 24,998 ) — ( 24,998 ) —
Repurchase of common shares ( 279,796 ) — — — — — — 279,796 ( 32,500 ) ( 32,500 ) — ( 32,500 ) —
19 unchanged sentences
Sales (purchases) of investments, net 12,296 9,057 4,995
−Removed: Other non-cash items, net
+Added: (Gain) loss on extinguishment of debt ( 705 ) — —
Deferred taxes, net 6,332 5,982 10,429
22 unchanged sentences
Payment of long term debt ( 79,086 ) ( 54,851 ) ( 23,776 )
−Removed: Payment of contingent consideration
Payment of deferred financing costs — — ( 3,810 )
−Removed: Borrowings (repayments) on credit facility and other debt
Repurchase of common shares ( 32,500 ) ( 40,000 ) ( 27,501 )
3 unchanged sentences
Taxes paid related to net share settlement of restricted stock units ( 6,608 ) ( 7,696 ) ( 6,591 )
−Removed: Proceeds from issuance of mandatory convertible preferred stock, net of issuance costs
−Removed: Proceeds from issuance of common stock, net of issuance costs
Net subscriptions received from (redemptions/distributions paid to) noncontrolling interests ( 7,263 ) 7,786 ( 5,512 )
+Added: Years Ended December 31,
+Added: 2020 2019 2018
Financing activities of CIP
−Removed: Contributions (redemptions) of CIP
Borrowings by CIP 779,982 414,605 857,404
9 unchanged sentences
Capital expenditures $ 55 $ ( 1,791 ) $ 2,165
+Added: Conversion of preferred stock to common stock 115,000 — —
Preferred stock dividends payable — 2,084 2,084
1 unchanged sentence
Increase (Decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net 17,137 ( 13,926 ) 56
−Removed: Stock issued for acquisition of business
−Removed: Accrued stock issuance costs
(in thousands) 2020 2019
18 unchanged sentences
Principles of Consolidation and Basis of Presentation
−Removed: The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
+Added: The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP").
The consolidated financial statements include the accounts of the Company, its subsidiaries and investment products that are consolidated.
Voting interest entities ("VOEs") are consolidated when the Company is considered to have a controlling financial interest, which is typically present when the Company owns a majority of the voting interest in an entity or otherwise has the power to govern the financial and operating policies of the entity.
−Removed: The Company evaluates the appropriateness of consolidation of any variable interest entity ("VIEs") in which the Company has a variable interest.
−Removed: A VIE is an entity in which either (a) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (b) where as a group, the holders of the equity investment at risk do not possess:
−Removed: (i) the power through voting or similar rights to direct the activities that most significantly impact the entity’s economic performance;
−Removed: (ii) the obligation to absorb expected losses or the right to receive expected residual returns of the entity;
−Removed: or (iii) proportionate voting and economic interests and where substantially all of the entity’s activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.
+Added: The Company evaluates any variable interest entity ("VIEs") in which the Company has a variable interest for consolidation.
+Added: A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (ii) where as a group, the holders of the equity investment at risk do not possess:
+Added: (x) the power through voting or similar rights to direct the activities that most significantly impact the entity's economic performance;
+Added: (y) the obligation to absorb expected losses or the right to receive expected residual returns of the entity;
+Added: or (z) proportionate voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.
If an entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary.
3 unchanged sentences
Noncontrolling Interests
−Removed: Noncontrolling interests include third-party investments in consolidated investment products ("CIP") and minority interests held in an affiliate.
Noncontrolling interests - CIP
−Removed: Noncontrolling interests - CIP represent third-party investments in the Company's CIP and are classified as redeemable noncontrolling interests if investors in those products may request withdrawal at any time.
+Added: Noncontrolling interests - CIP represent third-party investments in the Company's CIP and are classified as redeemable noncontrolling interests in the Consolidated Balance Sheets because investors in those products are able request withdrawal at any time.
Noncontrolling interests - affiliate
−Removed: Noncontrolling interests - affiliate represents minority interests held in a consolidated affiliate.
+Added: Noncontrolling interests - affiliate represent minority interests held in a consolidated affiliate.
These interests are subject to holder put rights and Company call rights at established multiples of earnings before interest, taxes, depreciation and amortization and, as such, are considered redeemable at other than fair value.
1 unchanged sentence
The put and call rights are not legally detachable or separately exercisable and are deemed to be embedded in the related noncontrolling interests.
−Removed: The Company, in purchasing affiliate equity, has the option to settle in cash or shares of the Company's common stock
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: and is entitled to the cash flow associated with any purchased equity.
+Added: The Company, in purchasing affiliate equity, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any purchased equity.
Minority interests in an affiliate are recorded at estimated redemption value within redeemable noncontrolling interests in the Consolidated Balance Sheets and any changes in the estimated redemption value are recorded in the Consolidated Statements of Operations within noncontrolling interests.
+Added: Notes to Consolidated Financial Statements—(Continued)
Use of Estimates
17 unchanged sentences
These securities transactions are recorded on a trade date basis.
−Removed: Any unrealized appreciation or depreciation on investment securities is reported as realized and unrealized gain (loss) on investments in the Consolidated Statement of Operations.
−Removed: Investment securities - available for sale
−Removed: Investment securities - available for sale consist of investments in collateralized loan obligations ("CLOs") for which the Company provides investment management services and does not consolidate.
−Removed: These investments are carried at fair value in accordance with ASC 320.
−Removed: Any unrealized appreciation or depreciation on available-for-sale securities, net of income taxes, is reported as a component of accumulated other comprehensive income in equity attributable to stockholders in the Consolidated Statement of Comprehensive Income.
−Removed: On a quarterly basis, the Company conducts a review to assess whether other-than-temporary impairments exist on its available-for-sale investment securities.
−Removed: Other-than-temporary declines in value may exist if the fair value of an investment security has been below the carrying value for an extended period of time.
−Removed: If an other-than-temporary decline in value is
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: determined to exist, the unrealized investment loss, net of tax, is recognized in the Consolidated Statements of Operations in the period in which the decline occurs, and an accompanying permanent adjustment is made to accumulated other comprehensive income.
+Added: Any unrealized appreciation or depreciation on investment securities is reported in the Consolidated Statement of Operations within realized and unrealized gain (loss) on investments.
Equity Method Investments
7 unchanged sentences
The Company has a non-qualified retirement plan (the "Excess Incentive Plan") that allows certain employees to voluntarily defer compensation.
−Removed: Assets held in trust, which are considered investment securities, are included in investments at fair value in accordance with ASC 820, Fair Value Measurement ("ASC 820");
+Added: Assets held in trust, which are considered investment securities, are included in investments at
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: fair value in accordance with ASC 820, Fair Value Measurement ("ASC 820");
the associated obligations to participants, which approximate the fair value of the associated assets, are included in other liabilities in the Consolidated Balance Sheets .
12 unchanged sentences
The Company leases office space and equipment under various leasing arrangements.
−Removed: In accordance with ASU 2016-02, Leases, the Company's leases are evaluated and classified as either financing leases or operating leases, as appropriate.
+Added: In accordance with Accounting Standards Update ("ASU") 2016-02, Leases, the Company's leases are evaluated and classified as either financing leases or operating leases, as appropriate.
The Company recognizes a lease liability and a corresponding right of use ("ROU") asset on the commencement date of any lease arrangement.
3 unchanged sentences
Lease expense is recognized on a straight-line basis over the lease term and is recorded within other operating expenses in the Consolidated Statement of Operations.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Goodwill and Intangible Assets
3 unchanged sentences
An impairment analysis of goodwill is performed annually or more frequently, if warranted by events or changes in circumstances affecting the Company's business.
−Removed: The Company follows the Financial Accounting Standards Board (the "FASB") Accounting Standards Update ("ASU") 2011-08, Testing Goodwill for Impairment, which provides the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
+Added: The Company follows the Financial Accounting Standards Board's (the "FASB") ASU 2011-08, Testing Goodwill for Impairment, which provides the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.
If, after assessing the totality of events or circumstances, it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary.
1 unchanged sentence
Definite-lived intangible assets are comprised of certain fund investment advisory contracts, trade names and non-competition agreements.
−Removed: These assets are amortized on a straight-line basis over the estimated useful lives of such assets, which range from five to sixteen years.
+Added: These assets are amortized on a straight-line basis over the estimated useful lives of such assets, which range from zero to five years .
Definite-lived intangible assets are evaluated for impairment on an ongoing basis whenever events or circumstances indicate that the carrying value of the definite-lived intangible asset may not be recoverable.
2 unchanged sentences
Indefinite-lived intangible assets are comprised of certain trade names and fund investment advisory contracts.
−Removed: These assets are tested for impairment annually or when events or changes in circumstances indicate the assets might be impaired.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: assets are tested for impairment annually or when events or changes in circumstances indicate the assets might be impaired.
The Company follows ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment , which provides the option to perform a qualitative assessment of indefinite-lived intangible assets other than goodwill for impairment to determine if additional impairment testing is necessary.
14 unchanged sentences
Amounts paid to unaffiliated subadvisers for the years ended December 31, 2020, 2019 and 2018 were $ 38.6 million, $ 40.5 million and $ 46.7 million, respectively.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Retail separate account fees are generally based on the end of the preceding or current quarter's asset values or on an average of month-end balances.
+Added: Retail separate account fees are generally based on the end of the preceding or current quarter's asset values.
Institutional account fees are generally based on an average of daily or month-end balances or the current quarter's asset values.
1 unchanged sentence
Senior and subordinated management fees are calculated at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed with subordinated fees being recognized only after certain portfolio criteria are met.
−Removed: Incentive fees on certain of the Company's CLOs are typically a percentage of the excess cash flows available to holders of the subordinated notes, above a threshold level internal rate of return.
+Added: Incentive fees on certain of the Company's collateralized loan obligations ("CLOs") are typically a percentage of the excess cash flows available to holders of the subordinated notes, above a threshold level internal rate of return.
Distribution and Service Fees
−Removed: Distribution and service fees are primarily sales- and asset-based fees earned from open-end funds for marketing and distribution services.
+Added: Distribution and service fees are sales- and asset-based fees earned from open-end funds, for marketing and distribution services.
Depending on the fund type or share class, these fees primarily consist of an asset-based fee that is paid by the fund over a period of years to cover allowable sales and marketing expenses, or front-end sales charges that are based on a percentage of the offering price.
4 unchanged sentences
The Company distributes its open-end funds through unaffiliated financial intermediaries that comprise national and regional broker-dealers.
−Removed: These unaffiliated financial intermediaries provide distribution and shareholder service activities on behalf of the Company.
+Added: These unaffiliated financial intermediaries provide distribution and shareholder service activities on
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: behalf of the Company.
The Company passes related distribution and service fees to these unaffiliated financial intermediaries for these services and considers itself the principal in these arrangements since it has control of the services prior to the services being transferred to the customer.
1 unchanged sentence
Administration & Shareholder Service Fees
−Removed: The Company provides administrative fund services to its open-end funds and certain of its closed-end funds and shareholder services to its open-end funds.
+Added: The Company provides administrative fund services to its open-end mutual funds, ETFs and certain of its closed-end funds and shareholder services to its open-end funds.
Administration and shareholder services are performed over time.
4 unchanged sentences
Shareholder services include maintaining shareholder accounts, processing shareholder transactions, preparing filings and performing necessary reporting.
+Added: Other Income & Fees
Other income and fees consist primarily of redemption income on the early redemption of certain share classes of mutual funds.
6 unchanged sentences
The fair value of each RSU award is based on the fair market value price on the date of grant unless it contains a performance metric that is considered a "market condition." Compensation expense for RSU awards is recognized ratably over the vesting period on a straight-line basis.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: RSUs that contain a performance metric ("PSUs") is determined based on (a) the fair market value price on the date of grant, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718 or (b) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.
+Added: The value of RSUs that contain a performance metric ("PSUs") is determined based on (i) the fair market value price on the date of grant, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718 or (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.
Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and is not adjusted in future periods based upon the achievement of the market condition.
4 unchanged sentences
These estimates are projected through the life of the related deferred tax assets based on assumptions that the Company believes to be reasonable and consistent with demonstrated operating results.
−Removed: Unanticipated changes in future operating results may have a significant impact on the realization of deferred tax assets.
+Added: Unanticipated changes in future operating results may have
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: a significant impact on the realization of deferred tax assets.
Valuation allowances are provided when it is determined that it is more likely than not that the benefit of deferred tax assets will not be realized.
1 unchanged sentence
The Company reports all changes in comprehensive income in the Consolidated Statements of Changes in Stockholders' Equity and the Consolidated Statements of Comprehensive Income.
−Removed: Comprehensive income includes net income (loss), foreign currency translation adjustments (net of tax) and unrealized gains and losses on investments classified as available-for-sale (net of tax).
−Removed: Earnings per Share
−Removed: Earnings per share ("EPS") is calculated in accordance with ASC 260, Earnings per Share .
−Removed: Basic EPS excludes dilution for potential common stock issuances and is computed by dividing basic net income available to common stockholders by the weighted-average number of common shares outstanding for the period.
−Removed: Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including (a) shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method and (b) shares issuable upon the conversion of the Company's mandatory convertible preferred stock, as determined under the if-converted method.
−Removed: For purposes of calculating diluted EPS, preferred stock dividends are subtracted from net income (loss) in periods in which utilizing the if-converted method would be anti-dilutive.
+Added: Comprehensive income includes net income (loss) and foreign currency translation adjustments (net of tax).
+Added: Earnings (Loss) per Share
+Added: Earnings (loss) per share ("EPS") is calculated in accordance with ASC 260, Earnings per Share .
+Added: Basic EPS is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances.
+Added: Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including (i) shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method and (ii) shares issuable upon the conversion of the Company's mandatory convertible preferred stock ("MCPS"), as determined under the if-converted method.
+Added: For purposes of calculating diluted EPS, preferred stock dividends have been subtracted from net income (loss) in periods in which utilizing the if-converted method would be anti-dilutive.
Fair Value Measurements and Fair Value of Financial Instruments
8 unchanged sentences
and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.
−Removed: Level 2 inputs may include observable market data such as closing market prices provided by
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: independent pricing services after considering factors such as the yields or prices of comparable investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions.
+Added: Level 2 inputs may include observable market data such as closing market prices provided by independent pricing services after considering factors such as the yields or prices of comparable investments of comparable quality, coupon, maturity, call rights and other potential prepayments, terms and type, reported transactions, indications as to values from dealers and general market conditions.
In addition, pricing services may determine the fair value of equity securities traded principally in foreign markets when it has been determined that there has been a significant trend in the U.S.
4 unchanged sentences
New Accounting Standards Implemented
−Removed: In July 2018, the FASB issued ASU 2018-09, Codification Improvements .
−Removed: This standard, which does not prescribe any new accounting guidance, clarifies several different FASB ASC areas based on comments and suggestions made by various stakeholders.
−Removed: On January 1, 2019, the Company adopted this standard.
−Removed: The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
−Removed: In February 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income .
−Removed: This standard provides financial statement preparers with the option to reclassify tax effects within other comprehensive income (referred to as stranded tax effects) to retained earnings in each period in which the effect of the change in the U.S.
−Removed: federal corporate income tax rate in the Tax Cuts and Jobs Act (or portion thereof) is recorded.
−Removed: On January 1, 2019, the Company adopted this standard.
−Removed: The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
−Removed: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , with several amendments (collectively, "ASU 2016-02").
−Removed: This standard requires a lessee to recognize assets and liabilities on the balance sheet arising from operating leases.
−Removed: For both finance leases and operating leases, the lease liability is initially measured at the present value of the future lease payments.
−Removed: In addition to the lease liability, companies are required to recognize a corresponding ROU asset initially measured as the value of the lease liability plus initial direct costs and prepaid lease payments, and less lease incentives received.
−Removed: ASU 2016-02 allows the option to apply its provisions at the effective date without adjusting comparative periods presented.
−Removed: The Company elected this optional transition method along with the package of practical expedients permitted under the standard, which allowed the Company to forgo (a) reassessing whether expired or existing non-lease contracts that commenced before January 1, 2019 contained an embedded lease, (b) reevaluating the accounting classification of our existing operating leases, and (c) determining whether initial direct costs related to existing leases should be capitalized.
−Removed: The Company also elected to combine lease and non-lease components in calculating the lease liability and ROU asset for operating leases.
−Removed: On January 1, 2019, the Company adopted this standard, which resulted in the recording of a ROU asset of $ 20.5 million and lease liability of $ 28.6 million representing a non-cash activity in the Consolidated Statements of Cash Flows.
−Removed: See Note 9 for further discussion.
−Removed: New Accounting Standards Not Yet Implemented
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) ("ASU 2018-15").
This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, including an internal-use software license.
−Removed: ASU 2018-15 is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.
−Removed: Early adoption is permitted.
−Removed: The Company does not expect that the adoption of this standard will have a material impact on the Company's consolidated financial statements.
+Added: The Company adopted this standard on January 1, 2020.
+Added: The adoption of this standard did not have a material impact on the Company's consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) .
−Removed: This standard modifies the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.
−Removed: Early adoption is permitted.
−Removed: The Company does not expect that the adoption of this standard will have a material impact on the Company's consolidated financial statements.
+Added: This standard modifies the disclosure requirements on fair value measurements.
+Added: The Company adopted this standard on January 1, 2020.
+Added: The adoption of
Notes to Consolidated Financial Statements—(Continued)
+Added: this standard did not have a material impact on the Company's consolidated financial statements.
+Added: New Accounting Standards Not Yet Implemented
+Added: In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321) , Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815).
+Added: This standard clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323 and the accounting for certain forward contracts and purchased options in Topic 815.
+Added: This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.
+Added: Early adoption is permitted, with the amendments to be applied on a prospective basis.
+Added: The Company has evaluated the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements.
+Added: In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes.
+Added: This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, Income Taxes , and also improves consistent application by clarifying and amending existing guidance.
+Added: This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.
+Added: Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment.
+Added: The Company has evaluated the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements.
Revenue Disaggregated by Source
14 unchanged sentences
Total revenues $ 603,896 $ 563,246 $ 552,235
−Removed: Prior period amounts have not been adjusted and are reported in accordance with historical accounting under ASC 605, Revenue Recognition .
−Removed: Business Combinations
−Removed: Sustainable Growth Advisers, LP ("SGA")
−Removed: On July 1, 2018, the Company completed the acquisition of 70 % of the outstanding limited partnership interests of SGA and 100 % of the membership interests in its general partner, SGIA, LLC (the "Acquisition").
−Removed: SGA is an investment manager specializing in growth equity investing in U.S.
−Removed: and global equity portfolios.
−Removed: The Acquisition expanded the Company's offerings of investment strategies and diversified the Company's client base, particularly with regard to institutional investors and international clients.
−Removed: The Company accounted for the acquisition in accordance with ASC 805, Business Combinations .
−Removed: The total purchase price of $ 129.5 million was allocated to the assets acquired, liabilities assumed and redeemable noncontrolling interests based upon their estimated fair values at the date of the Acquisition.
−Removed: Goodwill of $ 120.2 million and other intangible assets of $ 62.0 million were recorded as a result of the Acquisition.
−Removed: The Company expects $ 127.5 million of the purchase price to be tax deductible over 15 years.
−Removed: The Company completed its final assessment of the fair value of purchased receivables and acquired contracts as of June 30, 2019, with no incremental measurement period adjustments recorded.
Notes to Consolidated Financial Statements—(Continued)
−Removed: The following table summarizes the identified acquired assets, liabilities assumed and redeemable noncontrolling interests as of the acquisition date:
−Removed: (in thousands)
−Removed: Cash and cash equivalents
−Removed: Accounts receivable
−Removed: Furniture, equipment and leasehold improvements
−Removed: Intangible assets
−Removed: Accrued compensation and benefits
−Removed: Accounts payable and accrued liabilities
−Removed: Total liabilities
−Removed: Redeemable noncontrolling interests
−Removed: Total Net Assets Acquired
−Removed: Identifiable Intangible Assets Acquired
−Removed: In connection with the allocation of the purchase price, the Company identified the following intangible assets:
−Removed: Approximate Fair Value
−Removed: Weighted Average of Useful Life
−Removed: (in thousands)
−Removed: Definite-lived intangible assets:
−Removed: Institutional and retail separate account investment contracts
−Removed: Non-competition agreements
−Removed: Total definite-lived intangible assets
−Removed: The following unaudited proforma condensed consolidated results of operations are provided for illustrative purposes only and assume that the Acquisition, including adjustments for transaction and integration expenses, occurred on January 1, 2017.
−Removed: This unaudited information should not be relied upon as indicative of historical results that would have been obtained if the Acquisition had occurred on that date, nor of the results that may be obtained in the future.
−Removed: Years Ended December 31,
−Removed: (in thousands)
−Removed: Total Revenues
−Removed: Net Income (Loss) Attributable to Common Stockholders
−Removed: Notes to Consolidated Financial Statements—(Continued)
Goodwill and Other Intangible Assets
−Removed: Below is a summary of i ntangible assets, net:
+Added: Below is a summary of intangible assets, net:
(in thousands) 2020 2019
10 unchanged sentences
Balance, beginning of period $ 310,391 $ 338,812 $ 301,954
+Added: Acquisitions — 1,823 62,000
Amortization expense ( 30,127 ) ( 30,244 ) ( 25,142 )
1 unchanged sentence
Balance, beginning of period $ 290,366 $ 290,366 $ 170,153
+Added: Acquisitions — — 120,213
Balance, end of period $ 290,366 $ 290,366 $ 290,366
Definite-lived intangible asset amortization for the next five years and thereafter is estimated as follows (in thousands):
+Added: Fiscal Year Amount
+Added: 2021 $ 30,116
2026 and Thereafter 104,700
−Removed: At December 31, 2019 , the weighted average estimated remaining amortization period for definite-lived intangible assets is 10.7 years .
+Added: At December 31, 2020, the weighted average estimated remaining amortization period for definite-lived intangible assets was 9.9 years.
Notes to Consolidated Financial Statements—(Continued)
3 unchanged sentences
Investment securities - fair value $ 39,990 $ 60,990
−Removed: Investment securities - available for sale
Equity method investments (1) 12,676 12,030
2 unchanged sentences
Total investments $ 64,944 $ 83,206
+Added: (1) The Company's equity method investments are valued on a three-month lag based upon the availability of financial information.
Investment Securities - fair value
2 unchanged sentences
December 31, 2020
−Removed: (in thousands)
+Added: (in thousands) Cost Fair
Investment Securities - fair value:
4 unchanged sentences
December 31, 2019
−Removed: (in thousands)
+Added: (in thousands) Cost Fair
Investment Securities - fair value:
3 unchanged sentences
Total investment securities - fair value $ 55,882 $ 60,990
−Removed: For the years ended December 31, 2019 and December 31, 2018 , the Company recognized a net realized gain of $ 0.8 million and $ 1.8 million , respectively, on the sale of its investment securities - fair value.
−Removed: For the year ended December 31, 2017 , the Company recognized a net realized loss of $ 1.5 million on the sale of its investment securities - fair value.
−Removed: Investments Securities - available for sale
−Removed: The investment securities - available for sale consists of investments in CLOs for which the Company provides investment management services and does not consolidate.
−Removed: The Company had no investment securities - available for sale as of December 31, 2019.
−Removed: The composition of the Company’s investment securities - available for sale at December 31, 2018 were as follows:
−Removed: December 31, 2018
−Removed: (in thousands)
−Removed: Investments in CLOs
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: For the years ended December 31, 2020, 2019 and 2018, the Company recognized a net realized gain of $ 4.7 million, $ 0.8 million and $ 1.8 million, respectively, on the sale of its investment securities - fair value.
Equity Method Investments
6 unchanged sentences
Each participant is responsible for designating investment options for their contributions, and the ultimate distribution paid to each participant reflects any gains or losses on the assets realized while in the trust.
−Removed: Assets held in trust are included in investments and are carried at fair value utilizing Level 1 valuation techniques in accordance with ASC 320;
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: held in trust are included in investments and are carried at fair value utilizing Level 1 valuation techniques in accordance with ASC 320;
the associated obligations to participants are included in other liabilities in the Consolidated Balance Sheets .
Other Investments
−Removed: Other investments represent interests in entities not accounted for under the equity method such as the cost method.
+Added: Other investments represent interests in entities not accounted for under the equity method such as those accounted for under the cost method.
Fair Value Measurements
1 unchanged sentence
December 31, 2020
−Removed: (in thousands)
+Added: (in thousands) Level 1 Level 2 Level 3 Total
Cash equivalents $ 207,101 $ — $ — $ 207,101
6 unchanged sentences
December 31, 2019
−Removed: (in thousands)
+Added: (in thousands) Level 1 Level 2 Level 3 Total
Cash equivalents $ 187,255 $ — $ — $ 187,255
3 unchanged sentences
Debt securities — 16 — 16
−Removed: Investment securities - available for sale
Nonqualified retirement plan assets 8,724 — — 8,724
Total assets measured at fair value $ 256,953 $ 16 $ — $ 256,969
−Removed: Notes to Consolidated Financial Statements—(Continued)
The following is a discussion of the valuation methodologies used for the Company's assets measured at fair value.
Cash equivalents represent investments in money market funds.
−Removed: Cash investments in actively traded money market funds are valued using published net asset values and are categorized as Level 1.
+Added: Cash investments in money market funds are valued using published net asset values and are classified as Level 1.
Sponsored funds represent investments in open-end funds, closed-end funds and ETFs for which the Company acts as the investment manager.
1 unchanged sentence
The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded on and are categorized as Level 1.
−Removed: Equity securities represent securities traded on active markets and are valued at the official closing price (typically last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.
−Removed: Debt securities and Investments - available for sale primarily represent investments in CLOs for which the Company provides investment management services.
−Removed: The investments in CLOs are measured at fair value based on independent third- party valuations and are categorized as Level 2 and Level 3.
−Removed: The independent third-party valuations are based on discounted cash flow models and comparable trade data.
+Added: Equity securities represent securities traded on active markets and are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.
+Added: Debt securities represent investments in senior secured bank loans and are based on evaluated quotations received from independent pricing services and are categorized as Level 2.
+Added: Notes to Consolidated Financial Statements—(Continued)
Nonqualified retirement plan assets represent mutual funds within a nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.
1 unchanged sentence
Transfers into and out of levels are reflected when significant inputs used for the fair value measurement, including market inputs or performance attributes, become observable or unobservable or when the Company determines it has the ability, or no longer has the ability, to redeem, in the near term, certain investments that the Company values using a net asset value, or if the book value no longer represents fair value.
−Removed: The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value:
+Added: The Company had no Level 3 investments for the twelve months ended December 31, 2020.
+Added: The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value for the twelve months ended December 31, 2019:
Twelve Months Ended December 31,
5 unchanged sentences
Balance at end of period $ —
−Removed: Investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: (1) The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.
Furniture, Equipment and Leasehold Improvements, Net
4 unchanged sentences
Computer equipment and software 5,593 5,434
+Added: Subtotal 37,446 37,332
Accumulated depreciation and amortization ( 22,958 ) ( 19,182 )
7 unchanged sentences
Cash payments relating to operating leases during 2020 were $ 5.9 million.
+Added: Notes to Consolidated Financial Statements—(Continued)
Lease liability maturities as of December 31, 2020 were as follows:
(in thousands)
+Added: Thereafter 7,213
Total lease payments 29,069
1 unchanged sentence
Present value of lease liabilities $ 24,805
−Removed: Minimum aggregate rental payments required under operating leases that had initial or remaining non-cancellable lease terms in excess of one year as of December 31, 2018 were as follows:
−Removed: $ 6.1 million in 2019;
−Removed: $ 6.5 million in 2020;
−Removed: $ 5.1 million in 2021;
−Removed: $ 3.9 million in 2022;
−Removed: $ 3.5 million in 2023;
−Removed: and $ 12.9 million thereafter.
−Removed: Notes to Consolidated Financial Statements—(Continued)
The components of the provision for income taxes were as follows:
1 unchanged sentence
(in thousands) 2020 2019 2018
+Added: Federal $ 27,852 $ 23,066 $ 18,864
+Added: State 9,751 6,129 3,668
Total current tax expense (benefit) 37,603 29,195 22,532
+Added: Federal 3,899 3,535 5,901
+Added: State 2,433 2,447 4,528
Total deferred tax expense (benefit) 6,332 5,982 10,429
5 unchanged sentences
State taxes, net of federal benefit 9,775 6 6,859 5 6,450 6
−Removed: Effect of U.S.
−Removed: tax reform (the Tax Act)
+Added: Nondeductible compensation 2,686 2 2,080 2 2,182 2
Effect of net (income) loss attributable to noncontrolling interests ( 1,939 ) ( 1 ) ( 968 ) ( 1 ) ( 171 ) —
Change in valuation allowance ( 1,383 ) ( 1 ) ( 1,330 ) ( 1 ) 4,508 4
+Added: Other, net 377 — ( 1,008 ) ( 1 ) ( 2,907 ) ( 3 )
Income tax expense (benefit) $ 43,935 27 % $ 35,177 25 % $ 32,961 30 %
11 unchanged sentences
Lease liability 5,835 6,897
+Added: Investments 3,758 5,561
Capital losses 1,255 773
+Added: Other 984 581
Gross deferred tax assets 41,530 45,584
4 unchanged sentences
Right of use asset ( 4,328 ) ( 5,263 )
+Added: Fixed assets ( 1,900 ) ( 1,372 )
Other investments ( 1,487 ) ( 975 )
18 unchanged sentences
Notes to Consolidated Financial Statements—(Continued)
−Removed: If recognized, $ 0.9 million of the $ 1.2 million gross unrecognized tax benefit balance would favorably impact the Company’s effective income tax rate.
+Added: If recognized, $ 0.8 million of the $ 1.0 million gross unrecognized tax benefit balance at December 31, 2020 would favorably impact the Company's effective income tax rate.
The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months.
4 unchanged sentences
Credit Agreement
−Removed: The Company's credit agreement, as amended (the "Credit Agreement"), comprises (a) $ 365.0 million of seven -year term debt (the "Term Loan") expiring in June 2024 , and (b) a $ 100.0 million five -year revolving credit facility (the "Credit Facility") expiring in June 2022 .
−Removed: During the year ended December 31, 2019 , the Company made principal loan payments of $ 54.9 million .
−Removed: At December 31, 2019 , $ 285.7 million was outstanding under the Term Loan, and the Company had no borrowings under its Credit Facility.
−Removed: In accordance with ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented in the Consolidated Balance Sheets net of related debt issuance costs that were $ 7.9 million as of December 31, 2019 .
−Removed: Amounts outstanding under the Credit Agreement for the Term Loan and the Credit Facility bear interest at an annual rate equal to, at the option of the Company, either (a) LIBOR (adjusted for reserves) for interest periods of one, two, three or six months (or, solely in the case of the Credit Facility, if agreed to by each relevant lender, twelve months or periods less than one month), subject to a “floor” of 0 % for the Credit Facility and 0.75 % for the Term Loan, or (b) an alternate base rate, in either case plus an applicable margin.
+Added: The Company's credit agreement, as amended (the "Credit Agreement"), is comprised of (i) $ 365.0 million of seven-year term debt (the "Term Loan") expiring in June 2024, and (ii) a $ 100.0 million five-year revolving credit facility (the "Credit Facility") expiring in June 2022.
+Added: During the year ended December 31, 2020, the Company reduced its Term Loan by $ 80.1 million, including the retirement of $ 10.0 million of principal for $ 8.9 million from certain debt holders in accordance with the prepayment provisions in the Credit Agreement.
+Added: At December 31, 2020, $ 205.7 million was outstanding under the Term Loan, and the Company had no outstanding borrowings under its Credit Facility.
+Added: In accordance with ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented in the Consolidated Balance Sheet net of related debt issuance costs, which were $ 4.5 million as of December 31, 2020.
+Added: Amounts outstanding under the Credit Agreement for the Term Loan and the Credit Facility bear interest at an annual rate equal to, at the option of the Company, either (i) LIBOR (adjusted for reserves) for interest periods of one, two, three or six months (or, solely in the case of the Credit Facility, if agreed to by each relevant lender, twelve months or periods less than one month), subject to a "floor" of 0 % for the Credit Facility and 0.75 % for the Term Loan, or (ii) an alternate base rate, in either case plus an applicable margin.
The applicable margin on amounts outstanding under the Credit Agreement is 2.50 %, in the case of LIBOR-based loans, and 1.50 % in the case of alternate base rate loans.
4 unchanged sentences
The Term Loan amortizes at the rate of 1.00 % per annum payable in equal quarterly installments and is mandatorily repaid with:
−Removed: (a) 50 % of the Company’s excess cash flow (as defined in the Credit Agreement) on an annual basis, declining to 25 % if the Company’s secured net leverage ratio declines below 1.0 and further declining to 0 % if the Company’s secured net leverage ratio declines below 0.5 ;
−Removed: (b) the net proceeds of certain asset sales, casualty or condemnation events, subject to customary reinvestment rights;
−Removed: and (c) the proceeds of any indebtedness incurred other than indebtedness permitted to be incurred by the Credit Agreement.
−Removed: At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce the commitment under the Credit Facility in minimum specified increments or prepay the Term Loan in whole or in part, subject to the payment of breakage fees with respect to LIBOR-based loans and, in the case of any Term Loans that are prepaid in connection with a "repricing transaction" occurring within the six-month period following the closing date, a 1.00 % premium.
+Added: (i) 50 % of the Company's excess cash flow (as defined in the Credit Agreement) on an annual basis, declining to 25 % if the Company's secured net leverage ratio declines below 1.0 and further declining to 0 % if the Company's secured net leverage ratio declines below 0.5;
+Added: (ii) the net proceeds of certain asset sales, casualty or condemnation events, subject to customary reinvestment rights;
+Added: and (iii) the proceeds of any indebtedness incurred other than indebtedness permitted to be incurred by the Credit Agreement.
+Added: At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce the commitment under the Credit Facility in minimum specified increments or prepay the Term Loan in whole or in part, subject to the payment of
Notes to Consolidated Financial Statements—(Continued)
+Added: breakage fees with respect to LIBOR-based loans and, in the case of any Term Loans that are prepaid in connection with a "repricing transaction" occurring within the six-month period following the closing date, a 1.00 % premium.
Future minimum Term Loan payments (exclusive of any mandatory excess cash flow repayments) as of December 31, 2020 were as follows:
6 unchanged sentences
These matters could result in censures, fines, penalties or other sanctions.
−Removed: The Company accrues for a liability when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated.
+Added: The Company records a liability when it is both probable that a liability has been incurred and the amount of the liability can be reasonably estimated.
Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable.
3 unchanged sentences
However, in the event of unexpected subsequent developments and given the inherent unpredictability of these legal and regulatory matters, the Company can provide no assurance that its assessment of any claim, dispute, regulatory examination or investigation or other legal matter will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods.
−Removed: Common Stock Repurchases
−Removed: As of December 31, 2019 , 4.2 million shares of the Company's common stock have been authorized to be repurchased under the Board of Directors approved share repurchase program and 252,438 shares remain available for repurchase.
−Removed: Under the terms of the program, the Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions.
−Removed: The program, which has no specified term, may be suspended or terminated at any time.
+Added: Preferred Stock Conversion
+Added: On February 3, 2020, 1,150,000 shares of MCPS converted to 912,870 shares of the Company's common stock.
+Added: Each share of MCPS converted to 0.7938 shares of common stock at a conversion price of $ 125.97 per share, subject to customary anti-dilution adjustments.
+Added: The number of shares of common stock issued upon conversion was determined based on the volume-weighted average price per share of the Company's common stock over the 20 consecutive trading day period beginning on, and including, the 22nd scheduled trading day immediately preceding the mandatory conversion date.
Notes to Consolidated Financial Statements—(Continued)
−Removed: During the year ended December 31, 2019, the Company repurchased a total of 372,365 common shares for approximately $ 40.0 million .
−Removed: As of December 31, 2019 , the Company had repurchased a total of 3,927,607 shares of common stock at a weighted average price of $ 106.72 per share plus transaction costs for a total cost of $ 419.2 million .
During the first and second quarters of the year ended December 31, 2020, the Board of Directors declared quarterly cash dividends on the Company's common stock of $ 0.67 each.
1 unchanged sentence
Total dividends declared on the Company's common stock were $ 25.0 million for the year ended December 31, 2020.
−Removed: During each quarter of the year ended December 31, 2019 , the Board of Directors declared quarterly cash dividends on the Company's preferred stock of $ 1.8125 each.
−Removed: Total dividends declared on the Company's preferred stock were $ 8.3 million for the year ended December 31, 2019 .
−Removed: At December 31, 2019 , $ 8.9 million was included as dividends payable in liabilities in the Consolidated Balance Sheet.
−Removed: This balance represents the fourth quarter dividends of $ 2.1 million to be paid on February 15, 2020 for the Company's preferred stock shareholders of record as of January 31, 2020 and $ 6.8 million to be paid on February 15, 2020 for the Company's common stock shareholders of record as of January 31, 2020 .
+Added: At December 31, 2020, $ 9.0 million was included as dividends payable in liabilities in the Consolidated Balance Sheet representing the fourth quarter dividends to be paid on February 12, 2021 for the Company's common stock shareholders of record as of January 29, 2021.
+Added: Common Stock Repurchases
+Added: In May 2020, the Company's Board of Directors authorized an additional 750,000 shares to be repurchased under the Company's share repurchase program, bringing the total number of shares authorized to be repurchased under the program since its inception to 4,930,045 shares.
+Added: During the year ended December 31, 2020, the Company repurchased a total of 279,796 common shares at a weighted average price of $ 116.13 per share, for a total cost, including fees and expenses, of $ 32.5 million under its share repurchase program.
+Added: As of December 31, 2020, 722,642 shares remain available for repurchase.
+Added: Under the terms of the program, the Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions.
+Added: The program, which has no specified term, may be suspended or terminated at any time.
Accumulated Other Comprehensive Income (Loss)
The changes in accumulated other comprehensive income (loss), by component, were as follows:
−Removed: (in thousands)
−Removed: Unrealized Gains
−Removed: Available-for-Sale
+Added: (in thousands) Unrealized Gains
+Added: Available-for-Sale Foreign
Balance at December 31, 2019 $ — $ 9
Foreign currency translation adjustments, net of tax of $( 7 )
−Removed: Amounts reclassified from accumulated other comprehensive income (loss), net of tax of ($254)
Net current-period other comprehensive income (loss) — 20
Balance at December 31, 2020 $ — $ 29
−Removed: (in thousands)
−Removed: Unrealized Gains
−Removed: Available-for-Sale
+Added: (in thousands) Unrealized Gains
+Added: Available-for-Sale Foreign
Balance at December 31, 2018 $ ( 726 ) $ ( 5 )
−Removed: Unrealized net gain (loss) on available-for-sale securities, net of tax of $111
Foreign currency translation adjustments, net of tax of $( 5 )
2 unchanged sentences
Balance at December 31, 2019 $ — $ 9
−Removed: (1) On January 1, 2018, t he Company adopted amendments to ASC 825 pursuant to ASU 2016-01 .
−Removed: This standard requires all equity investments (other than those accounted for under the equity method) to be measured at fair value with changes in the fair value recognized through net income.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Retirement Savings Plan
3 unchanged sentences
The Company's matching contributions were $ 5.3 million, $ 5.1 million and $ 5.2 million in 2020, 2019 and 2018, respectively.
+Added: Notes to Consolidated Financial Statements—(Continued)
Stock-Based Compensation
7 unchanged sentences
Each RSU entitles the holder to one share of common stock when the restriction expires.
−Removed: RSUs generally have a term of one to three years and may be time-vested or performance-contingent (PSUs).
+Added: RSUs may be time-vested or performance-contingent (PSUs) that convert into RSUs after performance measurement is complete and generally vest in one to three years .
Shares that are issued upon vesting are newly issued shares from the Plan and are not issued from treasury stock.
−Removed: RSU activity for the year ended December 31, 2019 is summarized as follows:
−Removed: Weighted Average
+Added: RSU activity, inclusive of PSUs, for the year ended December 31, 2020 is summarized as follows:
+Added: of shares Weighted Average
Outstanding at December 31, 2019 528,376 $ 115.74
+Added: Granted 211,660 $ 86.73
+Added: Forfeited ( 10,734 ) $ 106.28
+Added: Settled ( 196,117 ) $ 110.93
Outstanding at December 31, 2020 533,185 $ 106.19
4 unchanged sentences
Fair value of RSUs vested $ 21.8 $ 17.8 $ 12.5
−Removed: For the years ended December 31, 2019, 2018 and 2017, a total of 66,441 , 41,101 and 32,716 RSUs, respectively, were withheld through net share settlement by the Company to settle minimum employee tax withholding obligations.
−Removed: The Company paid $ 6.9 million , $ 5.3 million and $ 3.5 million for the years ended December 31, 2019, 2018 and 2017, respectively, in minimum employee tax withholding obligations related to RSUs withheld.
+Added: For the years ended December 31, 2020, 2019 and 2018, a total of 68,625 , 66,441 and 41,101 RSUs, respectively, were withheld by the Company as a result of net share settlements to settle minimum employee tax withholding obligations.
+Added: The Company paid $ 6.5 million, $ 6.9 million and $ 5.3 million for the years ended December 31, 2020, 2019 and 2018, respectively, in minimum employee tax withholding obligations related to RSUs withheld for net share settlements.
These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have been otherwise issued as a result of the vesting.
−Removed: As of December 31, 2019 and 2018 , unamortized stock-based compensation expense for outstanding RSUs was $ 27.8 million and $ 32.2 million , respectively, with a weighted average remaining contractual life of 1.3 years and 1.5 years, respectively.
−Removed: The Company did no t capitalize any stock-based compensation expenses during the years ended December 31, 2019 , 2018 and 2017 .
+Added: During the years ended December 31, 2020 and 2019, the Company granted 68,371 and 52,960 PSUs that contain performance-based metrics in addition to a service condition.
+Added: Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.
+Added: Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and will not be adjusted in future periods based upon the achievement of the market condition.
+Added: Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the performance period.
+Added: As of December 31, 2020 and 2019, unamortized stock-based compensation expense for unvested RSUs and PSUs was $ 22.3 million and $ 27.8 million, respectively, with a weighted average remaining contractual life of 1.2 years and 1.3 years, respectively.
+Added: The Company did no t capitalize any stock-based compensation expenses during the years ended December 31,
Notes to Consolidated Financial Statements—(Continued)
−Removed: During the years ended December 31, 2019 and 2018 , the Company granted 52,960 and 68,803 PSUs included in the table above that contain performance-based metrics in addition to a service condition.
−Removed: Compensation expense for these PSUs is generally recognized over a three -year service period.
−Removed: For the years ended December 31, 2019 and 2018 , total stock-based compensation expense included $ 7.5 million and $ 8.2 million , respectively, for PSUs.
−Removed: As of December 31, 2019 and 2018 , unamortized stock-based compensation expense related to PSUs was $ 10.7 million and $ 11.4 million , respectively.
+Added: 2020, 2019 and 2018.
Stock Options
Stock option activity for the year ended December 31, 2020 is summarized as follows:
+Added: of shares Weighted
Exercise Price
Outstanding at December 31, 2019 6,654 $ 39.35
+Added: Exercised ( 5,461 ) $ 35.89
Outstanding at December 31, 2020 1,193 $ 55.18
1 unchanged sentence
Stock options generally cliff vest after three years and have a contractual life of ten years .
−Removed: The weighted-average remaining contractual term for stock options outstanding at December 31, 2019 and December 31, 2018 was 0.8 and 0.5 years, respectively.
−Removed: The weighted-average remaining contractual term for stock options vested and exercisable at December 31, 2019 was 0.8 years.
+Added: The weighted-average remaining contractual term for stock options outstanding, vested and exercisable at December 31, 2020 and December 31, 2019 was 0.2 and 0.8 years, respectively.
At December 31, 2020, the aggregate intrinsic value of stock options outstanding and vested and exercisable was $ 0.2 million.
−Removed: There were no unvested stock options at December 31, 2019 .
The total intrinsic value of stock options exercised for the years ended December 31, 2020, 2019 and 2018 was $ 0.4 million, $ 6.4 million and $ 3.0 million, respectively.
5 unchanged sentences
Earnings (Loss) Per Share
−Removed: The computation of basic and diluted earnings (loss) per share was as follows:
+Added: The computation of basic and diluted EPS is as follows:
Years Ended December 31,
12 unchanged sentences
The following table details the securities that have been excluded from the above computation of weighted-average number of shares for diluted EPS, because the effect would be anti-dilutive.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Years Ended Years Ended December 31,
1 unchanged sentence
Restricted stock units and stock options 1 22 12
−Removed: Preferred stock
Total anti-dilutive securities 1 22 12
+Added: Notes to Consolidated Financial Statements—(Continued)
Concentration of Credit Risk
The concentration of credit risk with respect to advisory fees receivable is generally limited due to the short payment terms extended to clients by the Company.
−Removed: No funds provided 10 percent or more of the total revenues of the Company in the year ended December 31, 2019.
−Removed: The following funds provided 10 percent or more of the total revenues of the Company in fiscal 2018 and 2017:
−Removed: (in thousands)
+Added: The following client including the Company's sponsored funds provided 10 percent or more of the Company's investment management, administration and shareholder service fee revenues:
+Added: 2020 2019 2018
+Added: Virtus KAR Small Cap Growth Fund 10 % * *
Virtus Newfleet Multi-Sector Short Term Bond Fund * * 10 %
−Removed: Investment management, administration and shareholder service fees
−Removed: Percent of total revenues
Virtus Vontobel Emerging Markets Opportunities Fund * * 10 %
−Removed: Investment management, administration and shareholder service fees
−Removed: Percent of total revenues
+Added: * Less than 10 percent of total revenues of the Company
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests for the year ended December 31, 2020 included the following amounts:
−Removed: (in thousands)
−Removed: Affiliate Noncontrolling Interests
+Added: (in thousands) CIP Affiliate Noncontrolling Interests Total
Balance at December 31, 2019 $ 5,429 $ 58,416 $ 63,845
9 unchanged sentences
The Company evaluates any VIEs in which the Company has a variable interest for consolidation.
−Removed: A VIE is an entity in which either (a) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support, or (b) where as a group, the holders of the equity investment at risk do not possess (i) the power through voting or similar rights to direct the activities that most significantly impact the entity’s economic performance;
−Removed: (ii) the obligation to absorb expected losses or the right to receive expected residual returns of the entity;
−Removed: or (iii) proportionate voting and economic interests and where substantially all of the entity’s activities either involve or are conducted on behalf of an
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: investor with disproportionately fewer voting rights.
+Added: A VIE is an entity in which either (i) the equity investment at risk is not sufficient to permit the entity to finance its own activities without additional financial support or (ii) where as a group, the holders of the equity investment at risk do not possess (x) the power through voting or similar rights to direct the activities that most significantly impact the entity's economic performance;
+Added: (y) the obligation to absorb expected losses or the right to receive expected residual returns of the entity;
+Added: or (z) proportionate voting and economic interests and where substantially all of the entity's activities either involve or are conducted on behalf of an investor with disproportionately fewer voting rights.
If an entity has any of these characteristics, it is considered a VIE and is required to be consolidated by its primary beneficiary.
5 unchanged sentences
The Company has no right to the benefits from, and does not bear the risks associated with, these investment products beyond the Company's investments in, and fees generated from, these products.
+Added: Notes to Consolidated Financial Statements—(Continued)
The following table presents the balances of CIP that, after intercompany eliminations, were reflected in the Consolidated Balance Sheets as of December 31, 2020 and 2019:
As of December 31,
−Removed: (in thousands)
+Added: VOEs VIEs VOEs VIEs
+Added: (in thousands) CLOs Other CLOs Other
Cash and cash equivalents $ 9,837 $ 82,295 $ 1,206 $ 2,665 $ 97,130 $ 363
+Added: Investments 57,256 2,217,055 58,966 22,223 1,976,148 31,739
+Added: Other assets 1,989 10,484 957 1,563 21,450 599
Notes payable — ( 2,190,445 ) — — ( 1,834,535 ) —
4 unchanged sentences
The majority of the Company's CIP that are VIEs are CLOs.
−Removed: At December 31, 2019 , the Company consolidated five CLOs and one CLO in the warehouse stage.
−Removed: The financial information of certain CLOs is included in the Company's consolidated financial statements on a one-month lag based upon the availability of financial information.
−Removed: Majority-owned consolidated private funds, whose primary purpose is to invest in CLOs for which the Company serves as the collateral manager, are also included.
+Added: At December 31, 2020, the Company consolidated six CLOs.
+Added: The financial information of certain CLOs is included in the Company's consolidated financial statements on a one-month lag based upon the availability of the fund's financial information.
+Added: A majority-owned consolidated private fund, whose primary purpose is to invest in CLOs for which the Company serves as the collateral manager, is also included.
Investments of CLOs
−Removed: The CLOs' investments of $ 2.0 billion at December 31, 2019 represent bank loan investments, which comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries.
+Added: The CLOs held investments of $ 2.2 billion at December 31, 2020 consisting of bank loan investments, which comprise the majority of the CLOs' portfolio asset collateral and are senior secured corporate loans across a variety of industries.
These bank loan investments mature at various dates between 2021 and 2029 and pay interest at LIBOR plus a spread of up to 12.0 %.
−Removed: The CLOs may elect to reinvest any prepayments received on bank loan investments between April 2020 and October 2021, depending on the CLO.
+Added: The CLOs may elect to reinvest any prepayments received on bank loan investments up until the periods between October 2019 and March 2025, depending on the CLO.
Generally, subsequent prepayments received after the reinvestment period must be used to pay down the note obligations.
−Removed: At December 31, 2019 , the unpaid principal balance of the bank loan investments exceeded the fair value by approximately $ 59.5 million .
+Added: At December 31, 2020, the fair value of the senior bank loans was less than the unpaid principal balance by $ 79.3 million.
At December 31, 2020, there were no material collateral assets in default.
Notes Payable of CLOs
−Removed: The CLOs hold notes payable with a total value, at par, of $ 2.0 billion , consisting of senior secured floating rate notes payable with a par value of $ 1.8 billion , warehouse facility debt of $ 8.3 million and subordinated notes with a par value of $ 193.0 million .
+Added: The CLOs held notes payable with a total value, at par, of $ 2.4 billion at December 31, 2020, consisting of senior secured floating rate notes payable with a par value of $ 2.2 billion and subordinated notes with a par value of $ 225.9 million.
These note obligations bear interest at variable rates based on LIBOR plus a pre-defined spread ranging from 0.8 % to 8.7 %.
−Removed: The principal amounts outstanding of the note obligations issued by the CLOs mature on dates ranging from October 2027 to April 2029.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The Company’s beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (a) ownership in the subordinated notes and (b) accrued management fees.
+Added: The principal amounts outstanding of these note obligations mature on dates ranging from October 2027 to April 2033.
+Added: The Company's beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (i) ownership in the subordinated notes and (ii) accrued management fees.
The secured notes of the consolidated CLOs have contractual recourse only to the related assets of the CLO and are classified as financial liabilities.
−Removed: Although these beneficial interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at December 31, 2019, as shown in the table below:
+Added: Although these beneficial interests are eliminated upon consolidation, the application of the measurement alternative prescribed by ASU 2014-13, Consolidation (Topic 810) ("ASU 2014-13") results in the net assets of the consolidated CLOs shown above to be equivalent to the beneficial interests retained by the Company at December 31, 2020, as shown in the table below:
(in thousands)
2 unchanged sentences
Total Beneficial Interests $ 66,650
−Removed: The following table represents income and expenses of the consolidated CLOs included in the Consolidated Statements of Operations for the period indicated:
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: The following table represents income and expenses of the consolidated CLOs included in the Company's Consolidated Statements of Operations for the period indicated:
December 31, 2020
2 unchanged sentences
Interest income 106,536
+Added: Total Income $ 100,017
Other operating expenses $ 9,991
10 unchanged sentences
Fair Value Measurements of CIP
−Removed: The assets and liabilities of the CIP measured at fair value on a recurring basis by fair value hierarchy level were as follows:
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: The assets and liabilities of CIP measured at fair value on a recurring basis as of December 31, 2020 and 2019 by fair value hierarchy level were as follows:
As of December 31, 2020
−Removed: (in thousands)
+Added: (in thousands) Level 1 Level 2 Level 3 Total
Cash equivalents $ 82,295 $ — $ — $ 82,295
1 unchanged sentence
Equity investments 38,468 3,856 814 43,138
+Added: Derivatives 858 1,227 — 2,085
Total assets measured at fair value $ 138,480 $ 2,224,282 $ 54,182 $ 2,416,944
Notes payable $ — $ 2,190,445 $ — $ 2,190,445
+Added: Derivatives 714 757 — 1,471
+Added: Short sales 520 — — 520
Total liabilities measured at fair value $ 1,234 $ 2,191,202 $ — $ 2,192,436
+Added: Notes to Consolidated Financial Statements—(Continued)
As of December 31, 2019
−Removed: (in thousands)
+Added: (in thousands) Level 1 Level 2 Level 3 Total
Cash equivalents $ 97,130 $ — $ — $ 97,130
3 unchanged sentences
Notes payable $ — $ 1,834,535 $ — $ 1,834,535
+Added: Short sales 430 — — 430
Total liabilities measured at fair value $ 430 $ 1,834,535 $ — $ 1,834,965
1 unchanged sentence
Cash equivalents represent investments in money market funds.
−Removed: Cash investments in actively traded money market funds are valued using published net asset values and are classified as Level 1.
+Added: Cash investments in money market funds are valued using published net asset values and are classified as Level 1.
Debt and equity investments represent the underlying debt, equity and other securities held in CIP.
8 unchanged sentences
Level 3 investments include debt and equity securities that are not widely traded, are illiquid or are priced by dealers based on pricing models used by market makers in the security.
+Added: Derivative assets and liabilities represent futures contracts, swaps contracts, option contracts and forward contracts held in CIP.
+Added: Derivative instruments in an asset position are classified as other assets of CIP on the Consolidated Balance Sheets.
+Added: Derivative instruments in a liability position are classified as liabilities of CIP within the Consolidated Balance Sheets.
+Added: The change in fair value of such derivatives is recorded in realized and unrealized gain (loss) on investments of CIP, net, on the Consolidated Statements of Operations.
+Added: Depending on the nature of the inputs, these derivative assets and liabilities are classified as Level 1, 2 or 3 within the fair value measurement hierarchy.
+Added: In connection with entering into these derivative contracts, these CIP may be required to pledge an amount of cash equal to the appropriate "initial margin" requirements.
+Added: The cash pledged or on deposit is recorded on the Consolidated Balance Sheets of the Company as cash pledged or on deposit of CIP.
+Added: The fair value of such derivatives at December 31, 2020 was immaterial.
Notes payable represent notes issued by CIP CLOs and are measured using the measurement alternative in ASU 2014-13.
−Removed: Accordingly, the fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of the beneficial interests held by the Company, and (b) the carrying value of any beneficial interests that represent compensation for services.
+Added: Accordingly, the fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (i) the fair value of the beneficial interests held by the Company, and (ii) the carrying value of any beneficial interests that represent compensation for services.
The fair value of the beneficial interests held by the Company is based on third-party pricing information without adjustment.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Short sales are transactions in which a security is sold that is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline.
1 unchanged sentence
The securities purchase payable at December 31, 2020 and 2019 approximated fair value due to the short term nature of the instruments.
−Removed: The following table is a reconciliation of assets and liabilities of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value.
Year Ended December 31,
2 unchanged sentences
Balance at beginning of period $ 40,422 $ 6,848
+Added: Purchases 2,197 2,466
+Added: Sales ( 1,843 ) ( 7,310 )
+Added: Amortization 31 ( 13 )
Change in unrealized gains (losses), net ( 1,245 ) 235
4 unchanged sentences
(1) The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.
−Removed: All transfers are deemed to occur at the end of period.
−Removed: Transfers between Level 2 and Level 3 were due to a decrease in trading activities at period end.
+Added: Transfers between Level 2 and Level 3 were due to trading activities at period end.
Nonconsolidated VIEs
1 unchanged sentence
The assets and liabilities of these CDOs reside in bankruptcy remote, special purpose entities in which the Company has no ownership of, nor holds any notes issued by, the CDOs, and provides neither recourse nor guarantees.
−Removed: The Company has determined that the investment management fees it receives for serving as collateral manager for these CDOs did not represent a variable interest since (a) the fees the Company earns are compensation for services provided and are commensurate with the level of effort required to provide the investment management services, (b) the Company does not hold other interests in the CDOs that individually, or in the aggregate, would absorb more than an insignificant amount of the CDOs' expected losses or receive more than an insignificant amount of the CDOs' expected residual return, and (c) the investment management arrangement only includes terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length.
−Removed: The Company has interests in certain other entities that are VIEs that the Company does not consolidate as it is not the primary beneficiary of those entities.
−Removed: The Company is not the primary beneficiary as its interest in these entities does not provide the Company with the power to direct the activities that most significantly impact the entities' economic performance.
+Added: The Company has determined that the investment management fees it receives for serving as collateral manager for these CDOs did not represent a variable interest since (i) the fees the Company earns are compensation for services provided and are commensurate with the level of effort required to provide the investment management services, (ii) the Company does not hold other interests in the CDOs that individually, or in the aggregate, would absorb more than an insignificant amount of the CDOs' expected losses or receive more than an insignificant amount of the CDOs' expected residual return, and (iii) the investment management arrangement only includes terms, conditions and amounts that are customarily present in arrangements for similar services negotiated at arm's length.
+Added: The Company has interests in certain other VIEs that the Company does not consolidate as it is not the primary beneficiary since its interest in these entities does not provide the Company with the power to direct the activities that most significantly impact the entities' economic performance.
At December 31, 2020, the carrying value and maximum risk of loss related to the Company's interest in these VIEs was $ 28.7 million.
Subsequent Events
−Removed: Preferred Stock Conversion
−Removed: On February 3, 2020, 1,150,000 shares of mandatory convertible preferred stock ("MCPS") converted to 912,870 shares of the Company's common stock.
−Removed: Each share of MCPS converted to 0.7938 shares of common stock at a conversion price of $ 125.97 per share, subject to customary anti-dilution adjustments.
−Removed: The number of shares of common stock issuable upon conversion was determined based on the volume-weighted average price per share of the Company's common stock over the 20 consecutive trading day period beginning on, and including, the 22nd scheduled trading day immediately preceding the
+Added: AllianzGI Strategic Partnership
+Added: On February 1, 2021, the Company completed actions necessary to finalize its agreement from July 2020 with Allianz Global Investors U.S.
+Added: LLC and Allianz Global Investors Distributors LLC (collectively, "AllianzGI") pursuant to which the company became the investment adviser, distributor and/or administrator of certain AllianzGI's open-end, closed-end and retail separate account assets.
+Added: Agreement with Westchester Capital Management
+Added: On February 1, 2021, the Company entered into an agreement to acquire all of the equity of Westchester Capital Management.
+Added: The transaction is expected to close in the second half of the 2021, subject to customary closing conditions and approvals by Westchester Capital Management Funds Board and shareholders.
Notes to Consolidated Financial Statements—(Continued)
−Removed: mandatory conversion date.
Dividends Declared
1 unchanged sentence
Selected Quarterly Data (Unaudited)
−Removed: ($ in thousands, except per share data)
+Added: (in thousands, except per share data) Fourth
+Added: Quarter Third
+Added: Quarter Second
+Added: Quarter First
+Added: Revenues $ 171,646 $ 154,790 $ 132,894 $ 144,566
Operating Income (Loss) 50,931 41,009 26,622 24,602
3 unchanged sentences
Earnings (loss) per share—Diluted $ 5.40 $ 3.71 $ 1.43 $ ( 0.58 )
−Removed: ($ in thousands, except per share data)
+Added: (in thousands, except per share data) Fourth
+Added: Quarter Third
+Added: Quarter Second
+Added: Quarter First
+Added: Revenues $ 146,084 $ 145,955 $ 140,489 $ 130,718
Operating Income (Loss) 37,796 35,787 30,128 20,999
4 unchanged sentences
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.