AMVESCAP Reports Results for Year Ended December 31, 2006.LONDON -- AMVESCAP (NYSE NYSE See: New York Stock Exchange :AVZ) (LSE LSE - Language Sensitive Editor :AVZ) (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :AVZ) reported operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. for 2006 of $785.4 million (2005: $424.6 million). Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $0.60 for 2006 (2005: $0.26). The results for the year ended December 31, 2005 included a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $75.7 million ($58.3 million after tax, or $0.072 per share). Operating profit for 2006 increased 57.0% over 2005 before the restructuring charge. Assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. at December 31, 2006, were $462.6 billion, an increase of 19.8% (December 31, 2005: $386.3 billion). "The growing financial strength of our company during 2006 is demonstrated by record assets under management of $462.6 billion and a 57% increase in operating profits over the previous year," said AMVESCAP President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Martin L. Flanagan. "Clients responding to AMVESCAP's investment quality and the depth and breadth of our investment capabilities has increased business momentum." "The addition during 2006 of PowerShares's distinctive line of exchange traded funds Exchange Traded Funds (ETF) Also known as ETF. A basket of stocks similar to an index mutual fund. However, there are a number of important differences between ETFs and mutual funds. (ETFs) and the recognized financial restructuring expertise of WL Ross & Co. to our broad line of established investment solutions provides our clients with one of the industry's most comprehensive ranges of investment capabilities," added Mr. Flanagan. "During 2007 we will continue to focus on the successful execution of our multiyear strategic plan and the continuous improvement of our products and services for our diverse global clients." [TABLE OMITTED] (a) Net revenues represent total revenues less third-party distribution, service and advisory fees. (b) Net operating margin Net operating margin The ratio of net operating income to net sales. is equal to operating profit divided by net revenues. (c) The restructuring charge was $75.7 million ($58.3 million after tax, or $0.072 per share). [TABLE OMITTED] (a) Net revenues represent total revenues less third-party distribution, service and advisory fees. (b) Net operating margin is equal to operating profit divided by net revenues. (c) The restructuring charge was $75.7 million ($58.3 million after tax, or $0.072 per share). Quarterly Earnings Summary Net revenues for the three months ended December 31, 2006 included performance fees of $25.9 million (three months ended September 30, 2006: $10.4 million; three months ended December 31, 2005: $16.4 million). Operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. for the three months ended December 31, 2006 included the benefit of $21.8 million of insurance recoveries. Operating expenses for the three months ended September 30, 2006 included a charge of $41.1 million, representing the cumulative previously unrecognized cost of performance-based options awarded to AMVESCAP employees in 2003. The remaining cost amortization for these options of $3.6 million is included in the operating expenses for the three months ended December 31, 2006. Annual Earnings Summary Net Revenues for 2006 were $2,414.6 million (2005: $2,173.2 million) and included performance fees of $82.2 million (2005: $33.5 million). Operating expenses for 2006 were $1,629.2 million (2005: $1,672.9 million before the restructuring charge). The 2005 restructuring charge of $75.7 million ($58.3 million after tax, or $0.072 per share) included staff termination, property, and fund rationalization costs associated with the multiyear strategic plan. Operating expenses for 2006 included a non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $44.7 million ($0.04 per share, net of tax) relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the performance options granted in 2003. No expense for these options was recorded in 2004 or 2005 as it was not considered probable at that time that the required performance targets for the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: of these options would be attained. These options have now vested. Net non-operating income increased $33.7 million as a result of increased interest income, gains from investments and net foreign exchange gains. In 2005, a gain of $32.6 million was recognized from the sale of the Retirement business. Net Debt and Cash Flow Net debt (total debt of $1,272.7 million, less cash and cash equivalents of $786.7 million, which excludes client cash of $2.9 million) as of December 31, 2006 was $486.0 million compared to $608.5 million as of September 30, 2006, and $733.6 million as of December 31, 2005. Client cash for 2006 decreased $224.3 million since December 31, 2005. The decrease in client cash, which contributed to the movement in our operating cashflows, was primarily due to one depository The place where a deposit is placed and kept, e.g., a bank, savings and loan institution, credit union, or trust company. A place where something is deposited or stored as for safekeeping or convenience, e.g., a safety deposit box. account previously sponsored by one of our banking subsidiaries being replaced by an unaffiliated investment fund. Dividends The Board has recommended a final dividend for 2006 of $0.104 per share, approximately $85.9 million (2005: $0.098 per share, $80.3 million), resulting in a total dividend of $0.181 per share, approximately $149.2 million for 2006 (2005: $0.172 per share, or $139.4 million). The final dividend, if approved by shareholders at the Annual General Meeting on May 23, 2007, will be paid on May 30, 2007, to shareholders on the register as of April 27, 2007. The ex-dividend date Ex-dividend date The first day of trading when the buyer of a stock is no longer entitled to the most recently announced dividend payment ( i.e. the trade will settle the day after the record date, too late for the buyer to appear on the shareholder record and receive the dividend. will be April 25, 2007. Assets Under Management Assets under management (AUM Aum (ä·ōōmˑ), n.pr 1. in Ayurveda, the subtle, noiseless cosmic vibration in which consciousness existed in the beginning, before the elements appeared. ) at December 31, 2006, were $462.6 billion (2005: $386.3 billion). Average AUM during the fourth quarter of 2006 were $452.7 billion, compared to $426.4 billion for the third quarter of 2006 and $380.9 billion for the fourth quarter of 2005. Average AUM for 2006 were $424.2 billion, compared to $377.6 billion in 2005. Long-term net outflows for 2006 were $1.4 billion, with inflows of $85.8 billion and outflows of $87.2 billion. Long-term net outflows for the three months ended December 31, 2006 were $4.5 billion, largely due to outflows in the institutional channel. Money market assets grew during the year with net inflows (not included in long-term flows above) of $12.8 billion for the 2006 year. There were money market net outflows of $1.5 billion in the fourth quarter of 2006. Further analysis of AUM is included in the supplemental schedules to this release. Business Developments The acquisition of PowerShares Capital Management was completed on September 18, 2006. Exchange-traded funds offered by PowerShares complement the fund lineup and expand the breadth of products available to AMVESCAP clients. PowerShares's assets under management at September 18, 2006 were $6.3 billion and had grown to $8.5 billion at December 31, 2006. Net inflows since acquisition were $1.1 billion. Toward the end of 2006, PowerShares entered into an agreement to assume sponsorship of the NASDAQ-100 Index Tracking Stock "QQQQ" and other NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on sponsored products, pending regulatory approval. On October 3, 2006, the company completed the acquisition of WL Ross & Co. LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a recognized leader in financial restructuring. WL Ross & Co.'s assets under management at October 3, 2006 were $2.6 billion and $2.8 billion as of December 31, 2006. The WL Ross team has assumed responsibility for the direct private equity business of AMVESCAP and will serve the company's institutional and high net worth clients. AMVESCAP is a leading independent global investment manager, dedicated to helping people worldwide build their financial security. Operating under the AIM, INVESCO, AIM Trimark, Invesco Perpetual Invesco Perpetual is an investment company based in Henley-on-Thames, Oxfordshire, England. It was originally founded as by Sir Martyn Arbib and before it merged with Invesco it was known first as Perpetual Mutual then as Perpetual plc. , Atlantic Trust, PowerShares and WL Ross brands, AMVESCAP strives to deliver outstanding products and services through a comprehensive array of enduring investment solutions for our retail, institutional and private wealth management clients around the world. The company is listed on the London, New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of and Toronto stock exchanges Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. with the symbol "AVZ." Additional information is available at www.amvescap.com. Members of the investment community and general public are invited to listen to the conference call today, Tuesday, February 13, 2007, at 2:00 p.m. GMT (Greenwich Mean Time) See UTC. GMT - Universal Time 1 (9:00 a.m. EST EST electroshock therapy. EST abbr. electroshock therapy ), by dialing one of the following numbers: 1-517-268-4676 or 1-888-455-2053 for U.S. callers. An audio replay of the conference call will be available until Tuesday, February 20, 2007, at 10:00 p.m. GMT (5:00pm EST) by calling 1-402-220-9768 or 1-800-294-3089 for U.S. callers. The presentation slides that will be reviewed during the conference call will be available on AMVESCAP's Web site at www.amvescap.com. # # # This release may include statements that constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " under the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. securities laws. Forward-looking statements include information concerning possible or assumed future results of our operations, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, assets under management, acquisition activities and the effect of completed acquisitions, debt levels and the ability to obtain additional financing or make payments on our debt, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, when used in this release, words such as "believes," "expects," "anticipates," "intends," "plans," "estimates," "projects" and future or conditional verbs such as "will," "may," "could," "should," and "would" and any other statement that necessarily depends on future events, are intended to identify forward-looking statements. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although we make such statements based on assumptions that we believe to be reasonable, there can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, you should carefully consider the areas of risk described in our most recent Annual Report on Form 20-F, as filed with the United States Securities and Exchange Commission ("SEC"). You may obtain these reports from the SEC's Web site at www.sec.gov. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] Notes 1. Accounting policies The accounting policies applied to the information in the earnings release follow International Financial Reporting Standards International Financial Reporting Standards (IFRS) are standards and interpretations adopted by the International Accounting Standards Board (IASB). Many of the standards forming part of IFRS are known by the older name of International Accounting Standards (IAS). in effect as of the date of this release and are consistent with those applied in the 2005 Annual Report. Refer to the 2005 Annual Report, available at www.amvescap.com, for a more detailed discussion of these policies. The accounting policies applied to the information in this earnings release are also consistent with those that are expected to be applied in the 2006 Annual Report. Certain prior year balance sheet amounts have been reclassified to conform to Verb 1. conform to - satisfy a condition or restriction; "Does this paper meet the requirements for the degree?" fit, meet coordinate - be co-ordinated; "These activities coordinate well" the current year presentation of those amounts. 2. Taxation A significant proportion of the tax charge arose from U.S., U.K., and Canadian operations. The effective tax rate was 35.0% for 2006 (2005: 40.7%; 37.7% before the restructuring charge). 3. Earnings per share Basic earnings per share is based on the weighted average number of ordinary and exchangeable shares outstanding during the respective periods, excluding shares purchased and held by employee share ownership trusts. Diluted earnings per share takes into account the effect of the potential issuance of ordinary shares. [TABLE OMITTED] [TABLE OMITTED] 4. Legal costs Included in general and administrative expenses are $24.0 million in 2006 (2005: $20.8 million) of amounts recovered from insurers relating primarily to legal and other related costs associated with the mutual fund market timing investigations and private litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. involving the AIM Funds. The related legal costs were incurred over the period from 2003 as follows: 2006 > $10.3 million 2005 > $8.7 million Prior periods > $50.0 million 5. Acquisition of PowerShares Capital Management LLC On September 18, 2006, the company acquired 100% of the limited liability company interests of PowerShares Capital Management LLC ("PowerShares"). Consideration for the transaction was $399.1 million, which includes estimates of future earn-out provisions of $291.6 million, payable in the future depending on the achievement of various management fee growth targets and transaction costs Transaction Costs Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). of $6.3 million. Goodwill and management contract intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. of $398.7 million have been recorded on this acquisition. Net cash paid at closing was $99.1 million. The book and fair values of net assets Net assets The difference between total assets on the one hand and current liabilities and noncapitalized long-term liabilities on the other hand. net assets See owners' equity. acquired were determined as follows: [TABLE OMITTED] The book value of net assets acquired is approximately equal to the fair value of these assets and liabilities. No accounting policy alignment adjustments have been made because PowerShares's financial results maintained under U.S. Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting are materially the same as they would be under International Financial Reporting Standards followed by the company. 6. Acquisition of WL Ross & Co. LLC On October 3, 2006, the company acquired 100% of the limited liability company interests of WL Ross & Co. LLC ("WL Ross"). Consideration for the transaction was $294.7 million, which includes earn-out provisions of $190.6 million, payable in the future depending on the achievement of annual fund launch targets over the five years following the completion of the transaction and transaction costs of $4.1 million. WL Ross is an investment management company sponsoring alternative investments including private equity funds, co-investment vehicles and hedge funds hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" in the steel, textile, coal, automotive and financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries in the U.S., U.K., France, China, India, Japan and Korea. At the time of acquisition, WL Ross managed assets of approximately $2.6 billion. Goodwill and management contract intangible assets of $288.0 million have been recorded on this acquisition. Net cash paid at closing was $93.2 million. The book and fair values of net assets acquired were determined as follows: [TABLE OMITTED] The book value of net assets acquired is approximately equal to the fair value of these assets and liabilities. No accounting policy alignment adjustments have been made because WL Ross financial results maintained under U. S. Generally Accepted Accounting Principles are materially the same as they would be under International Financial Reporting Standards followed by the company. 7. 2005 Restructuring charge The consolidated income statement consolidated income statement An income statement that combines the income statements of two or more organizations. As with other consolidated statements, a consolidated income statement eliminates any funds owed to or due from firms within the same group. for 2005 included a restructuring charge of $75.7 million. The charge related to operational and structural changes made in 2005 as a result of a review of the business. The charge comprised of the following: (in millions) > Staff termination costs > $45.1 Property costs > 20.4 Fund rationalization costs > 6.9 Other > 3.3 Total restructuring charge > 75.7 Taxation > (17.4) Net income charge > 58.3 Per share impact > $0.072 8. Dividends A final dividend in respect of 2006 of $0.104 per share ($85.9 million: $83.8 million for ordinary shares and $2.1 million for exchangeable shares) has been proposed by the Board and will be paid, subject to shareholder approval, on May 30, 2007. The dividend will be accrued when approved by shareholders. A final dividend in respect of 2005 of $0.098 per share ($80.3 million: $78.1 million for ordinary shares and $2.2 million for exchangeable shares) was approved at the Annual General Meeting of Shareholders on April 27, 2006, and charged to retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. at that time. This dividend was paid on May 4, 2006, to shareholders on the register on March 31, 2006. An interim 2006 dividend of $0.077 per share ($63.3 million: $61.7 million for ordinary shares and $1.6 million for exchangeable shares) was declared by the Board of Directors on July 26, 2006, and was paid on October 11, 2006 to shareholders on the register on September 8, 2006. 9. Post-balance sheet event On January 15, 2007, $300.0 million in senior notes matured. The company utilized its credit facility to satisfy the maturity but expects to issue additional debt in 2007. 10. Statutory financial statements The financial information shown in this earnings release, which was approved by the Board of Directors on February 12, 2007, is unaudited and does not constitute statutory financial statements. The 2005 Annual Report, which was filed with the Registrar of Companies The introduction to this article provides insufficient context for those unfamiliar with the subject matter. Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. on May 31, 2006, includes an unqualified audit report in accordance with Section 235 of the Companies Act 1985. This audit report does not contain a statement under section 237(2) or section 237(3) of the Companies Act 1985. AMVESCAP PLC Quarterly Assets Under Management [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (a) Net revenue yield on AUM is equal to net revenue divided by average AUM. (b) The asset class beginning balances were adjusted to reflect certain asset reclassifications. (c) Includes PowerShares's ETF ETF See Exchange Traded Fund. ETF See exchange-traded fund (ETF). AUM which are primarily invested in equity securities. AMVESCAP PLC Year-to-Date Assets Under Management [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] (a) Net revenue yield on AUM is equal to net revenue divided by average AUM. (b) The asset class beginning balances were adjusted to reflect certain asset reclassifications. (c) Includes PowerShares's ETF AUM which are primarily invested in equity securities. [TABLE OMITTED] |
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