Artio Global Investors Inc. Reports Third Quarter 2009 Results

Fri Nov 13, 7:02 AM

NEW YORK--(BUSINESS WIRE)--Artio Global Investors Inc. (NYSE: ART) (together with its subsidiaries, “Artio Global” or the “Company”) today reported its results for the third quarter ended September 30, 2009.

Third Quarter 2009 Financial Highlights

  • Adjusted1 net income2 of $27.9 million, or $0.47 per diluted share; (GAAP loss of $412.4 million or ($9.81) per diluted share)
  • Assets under management of $55.8 billion as of September 30, 2009
  • Investment management fees of $83.5 million increased 20% over the second quarter of 2009
  • Effective investment management fee rate3 of 64.5 basis points
  • Adjusted operating margin of 50.2%

The Company’s GAAP results include certain non-recurring items and expenses associated with the reorganization of the Company’s ownership structure in connection with its initial public offering (“IPO”), which were disclosed in the Company’s final prospectus dated September 23, 2009. These have been excluded from the adjusted results for all periods included herein in order to provide more meaningful comparisons.

For the third quarter of 2009, Artio Global reported adjusted net income of $27.9 million, or $0.47 per diluted share, an increase of 29% and 31%, respectively, from adjusted net income of $21.6 million, or $0.36 per diluted share, for the second quarter of 2009, and a decrease of 32% from adjusted net income of $41.3 million, or $0.69 per diluted share, for the third quarter of 2008.

On a GAAP basis, net income for the third quarter of 2009 was a loss of $412.4 million, or ($9.81) per diluted share, as compared with net income of $5.4 million, or $0.13 per diluted share, for the second quarter of 2009, and net income of $16.3 million, or $0.39 per diluted share, for the third quarter of 2008.

For the first nine months of 2009, Artio Global reported adjusted net income of $68.8 million, or $1.15 per diluted share, down 41% from adjusted net income of $117.1 million, or $1.95 per diluted share, for the first nine months of 2008.

On a GAAP basis, net income for the first nine months of 2009 was a loss of $404.0 million, or ($9.62) per diluted share, down from net income of $47.9 million, or $1.14 per diluted share, for the first nine months of 2008.

The tables below present a comparison of GAAP results and adjusted results, which exclude certain non-recurring items and expenses. See Exhibits 3 – 5 of this news release for a reconciliation of the Company’s GAAP results to adjusted results.

   
         

Three Months Ended

(in millions, except per share amounts)

Sep. 30, 2009   Sep. 30, 2008   Change Jun. 30, 2009 Change
 

Revenue4, GAAP

$84 .5 $106 .5 (21 %) $70 .8 19 %
 
Operating income (loss), GAAP ($298 .3) $27 .1 NM $10 .6 NM
 
Operating income, adjusted $42 .4 $64 .0 (34 %) $39 .3 8 %
 
Net income (loss), GAAP ($412 .4) $16 .3 NM $5 .4 NM
 

Net income, adjusted

$27 .9 $41 .3 (32 %) $21 .6 29 %
 
Diluted EPS, GAAP ($9 .81) $0 .39 NM $0 .13 NM
 
Diluted EPS, adjusted $0 .47 $0 .69 (32 %) $0 .36 31 %
 
Nine Months Ended

(in millions, except per share amounts)

Sep. 30, 2009 Sep. 30, 2008 Change
 
Revenue, GAAP $217 .8 $349 .4 (38 %)
 
Operating income (loss), GAAP ($281 .7) $89 .3 NM
 
Operating income, adjusted $116 .0 $206 .6 (44 %)
 
Net income (loss), GAAP ($404 .0) $47 .9 NM
 

Net income, adjusted

$68 .8 $117 .1 (41 %)
 
Diluted EPS, GAAP ($9 .62) $1 .14 NM
 
Diluted EPS, adjusted $1 .15 $1 .95 (41 %)
 
NM: Not meaningful                  
 

Business Highlights

  • Artio Global successfully completed its IPO on September 29, 2009
  • All three of the Company’s eligible mutual funds5 were in the top quartile of Lipper6 performance rankings for the five year period ended September 30, 2009
  • Seven of the Company’s nine mutual funds7, representing over 99% of mutual fund assets, were above the median of Lipper6 performance rankings for the three year period ended September 30, 2009
  • Five of the Company’s nine mutual funds8, representing over 99% of mutual fund assets, were rated four or five stars by Morningstar6, as of September 30, 2009
  • Net client cash inflows were $321 million for the third quarter of 2009

Management Commentary

“As an investment centric organization, our recent IPO marked an important milestone for the firm, further aligning the interests of our clients, employees and shareholders,” said Richard Pell, Chairman, Chief Executive Officer and Chief Investment Officer. “For Artio Global and our clients, it’s business as usual. Our goal of delivering superior long-term investment returns, the highest quality client service and maintaining a focus on risk management remains paramount.”

“Looking past certain non-recurring items associated with our IPO and related transactions, we are pleased with third quarter results given strong sequential growth in adjusted net income, revenues and assets under management, amid a more constructive market backdrop.”

Comparison with Third Quarter of 2008

Assets Under Management9 and Net Client Cash Flows

Assets under management were $55.8 billion as of September 30, 2009, down $0.9 billion, or 2%, from $56.6 billion as of September 30, 2008, due primarily to $2.0 billion of net client cash outflows in the fourth quarter of 2008, partly offset by $1.3 billion of net client cash inflows in the nine months ended September 30, 2009. Net client cash inflows for the third quarter of 2009 were $321 million as compared with net client cash outflows of $1.0 billion for the third quarter of 2008. The increase in net client cash flows primarily relates to significantly higher net client cash inflows into the High Yield strategy and reduced net client cash outflows from the International Equity I strategy.

Revenues and Other Operating Income

Revenues and other operating income for the third quarter of 2009 totaled $84.5 million, down 21% from $106.5 million for the third quarter of 2008. The decrease was driven primarily by lower investment management fees, which were $83.5 million for the third quarter of 2009, down 22% from $107.6 million for the third quarter of 2008 due primarily to lower average assets under management. This resulted in an effective investment management fee rate of 64.5 basis points for the third quarter of 2009.

Expenses

Employee Compensation and Benefits

For the third quarter of 2009, adjusted employee compensation and benefits expenses were $22.4 million, down 5% from adjusted employee compensation and benefits expenses of $23.5 million for the third quarter of 2008. The reduction was primarily due to costs related to the acceleration of our Principals’10 deferred compensation agreement included in the third quarter of 2008, partly offset by higher incentive compensation accruals in the third quarter of 2009 reflecting the year-to-date impact of a revised assessment of 2009 full year compensation.

GAAP employee compensation and benefits expenses for the third quarter of 2009 of $363.1 million increased from $60.4 million for the third quarter of 2008. Third quarter 2009 GAAP employee compensation and benefits expenses include certain non-recurring charges relating to the amendment of compensation agreements with our Principals in connection with the Company’s IPO. These non-recurring charges include $215.8 million associated with the modification and acceleration of the vesting of our Principals’ Class B profits interests11 in the Company’s operating subsidiary and $97.9 million in conjunction with the establishment of a tax receivable agreement12 with our Principals. Additionally, GAAP employee compensation and benefits expenses for the third quarter of 2009 include compensation expenses of $12.2 million and $14.8 million for the allocation of Class B profits interests and change in redemption value of Class B profits interests, respectively.

GAAP employee compensation and benefits expenses for the third quarter of 2008 of $60.4 million include compensation expenses of $20.0 million and $16.9 million for the allocation of Class B profits interests and change in redemption value of Class B profits interests, respectively. In the future, the Company will not incur expenses associated with the allocation of Class B profits interests or change in redemption value of the Class B profits interests.

Shareholder Servicing and Marketing Expenses

Shareholder servicing and marketing expenses for the third quarter of 2009 were $4.5 million, down 26% from $6.1 million for the third quarter of 2008 driven primarily by lower shareholder servicing costs resulting from lower average assets under management in proprietary funds.

General and Administrative Expenses

General and administrative expenses for the third quarter of 2009 were $15.2 million, up 17% from $13.0 million for the third quarter of 2008, driven primarily by increased professional fees in connection with the Company’s IPO. Excluding expenses incurred in connection with our IPO from both periods13, general and administrative expenses decreased 5% from the third quarter of 2008.

Non-Operating Income

Non-operating income for the third quarter of 2009 was $0.1 million, down 78% from $0.6 million for the third quarter of 2008, driven primarily by lower interest income due to lower average invested funds and lower interest yields.

Income Taxes

For the third quarter of 2009, the adjusted effective tax rate was 34.3%, 1.6 percentage points lower than the 35.9% adjusted effective tax rate for the third quarter of 2008. The decrease was due primarily to a true-up of 2008’s tax expense and 2009 year-to-date accruals, recorded in the third quarter of 2009, to reflect a lower apportionment of income for state and local tax purposes, which was partially offset by an increase of certain non-deductible professional fees incurred in connection with the IPO.

GAAP income tax expense of $114.0 million for the third quarter of 2009 increased from $11.3 million for the third quarter of 2008 primarily as a result of a non-cash expense of $110.3 million recorded in the third quarter of 2009 related to the de-recognition of a deferred tax asset associated with the reorganization of the Company’s ownership structure in connection with the IPO.

Comparison with Second Quarter of 2009

Assets Under Management and Net Client Cash Flows

Assets under management were $55.8 billion as of September 30, 2009, up $9.0 billion, or 19%, from $46.8 billion as of June 30, 2009, driven primarily by market appreciation. Net client cash inflows for the third quarter of 2009 were $321 million compared with $751 million for the second quarter of 2009. The decrease in net client cash inflows relates to increased net client cash outflows in the International Equity I strategy and reduced net client cash inflows into the International Equity II strategy, partly offset by net client cash inflows into the High Grade strategy as compared to net client cash outflows in the second quarter and increased net client cash inflows into the High Yield strategy.

Revenues and Other Operating Income

Revenues and other operating income for the third quarter of 2009 totaled $84.5 million, up 19% from $70.8 million for the second quarter of 2009. The increase was driven primarily by higher investment management fees, which were $83.5 million for the third quarter of 2009, up 20% from $69.8 million for the second quarter of 2009, due primarily to higher average assets under management.

Expenses

Employee Compensation and Benefits

For the third quarter of 2009 adjusted employee compensation and benefits expenses were $22.4 million, up 25% from adjusted employee compensation and benefits expenses of $18.0 million for the second quarter of 2009, driven primarily by increased incentive compensation accruals as noted above.

GAAP employee compensation and benefits expenses for the third quarter of 2009 of $363.1 million increased from $46.6 million for the second quarter of 2009. Third quarter 2009 GAAP employee compensation and benefits expenses include the non-recurring charges relating to the amendment of our compensation agreements with our Principals in connection with the Company’s IPO as discussed above.

GAAP employee compensation and benefits expenses for the second quarter of 2009 of $46.6 million include compensation expense for the allocation of Class B profits interests of $11.3 million and change in redemption value of Class B profits interests of $17.4 million, both of which will not be incurred as expenses in the future.

Shareholder Servicing and Marketing Expenses

Shareholder servicing and marketing expenses for the third quarter of 2009 were $4.5 million, up 9% from $4.1 million for the second quarter of 2009, driven primarily by higher shareholder servicing costs resulting from an increase in average assets under management in proprietary funds.

General and Administrative Expenses

General and administrative expenses of $15.2 million for the third quarter of 2009 increased 62% from $9.4 million for the second quarter of 2009, driven primarily by increased non-recurring professional fees incurred in connection with our IPO. Excluding expenses incurred in connection with our IPO from both periods14, general and administrative expenses increased 21% from the second quarter of 2009.

Non-Operating Income (Loss)

Non-operating income for the third quarter of 2009 was $0.1 million compared to a non-operating loss of $0.3 million for the second quarter of 2009 as the second quarter included a reversal of mark-to-market gains recorded in earlier periods.

Income Taxes

For the third quarter of 2009, the adjusted effective tax rate was 34.3%, 10.3 percentage points lower than the 44.6% adjusted effective tax rate for the second quarter of 2009. The decrease was due primarily to a true-up recorded in the third quarter of 2009 to reflect a lower apportionment of income for state and local tax purposes.

GAAP income tax expense of $114.0 million for the third quarter of 2009 increased from $5.0 million for the second quarter of 2009 primarily as a result of a non-cash expense of $110.3 million recorded in the third quarter of 2009 related to the de-recognition of a deferred tax asset previously mentioned.

Balance Sheet and Capital

At September 30, 2009, the Company had cash and cash equivalents of $165.2 million, marketable securities of $8.1 million and undrawn credit facilities of $110.0 million - consisting of a $60.0 million term facility and a $50.0 million committed revolving credit facility. Subsequent to September 30, 2009, the Company made distributions to its former parent, GAM Holding Ltd., of $180.7 million and to our Principals of $17.8 million, and, in connection with such distributions, borrowed $60.0 million under its term facility.

Total deficit on the Statement of Financial Position was $33.4 million as of September 30, 2009.

Shares

As of September 30, 2009, shares of Class A and Class C common stock outstanding totaled 44,406,924.

For purposes of calculating adjusted earnings per diluted share, all of the Principals’ New Class A Units, held in the intermediate holding company, are assumed to have been exchanged into shares of Class A common stock. Accordingly, for the third quarter ended September 30, 2009, adjusted total weighted-average diluted shares outstanding were 60,000,994.

Dividend

The Board of Directors did not declare a dividend on the common stock for the third quarter of 2009.

Teleconference and Webcast Details

Artio Global’s management will host a conference call for analysts and investors to review third quarter results, today, November 13, 2009, beginning at 8:00 am (Eastern Time). The call can be accessed by dialing +1 888 680 0860 (inside the United States) or +1 617 213 4852 (outside the United States). The number should be dialed at least ten minutes prior to the start of the call. The passcode for the call will be 80728240. A simultaneous live audio webcast of the call will be available to the public on a listen-only basis on the Investor Relations page of Artio Global’s website at www.ir.ArtioGlobal.com.

For those unable to listen to the live broadcast a replay will be available by dialing +1 888 286 8010 (inside the United States) or +1 617 801 6888 (outside the United States), and using the passcode 56503393, beginning approximately two hours after the event for a period of two weeks. A webcast replay of the event will also be available on the Investor Relations section of the Company’s website at www.ir.ArtioGlobal.com.

About Artio Global Investors Inc.

Artio Global Investors Inc. is the indirect holding company of Artio Global Management LLC (“Artio Global Management”), a registered investment adviser headquartered in New York City that actively invests in global equity and fixed income markets, primarily for institutional and intermediary clients.

Best known for International Equities, Artio Global Management also offers a broad range of other investment strategies, including High Grade Fixed Income, High Yield and Global Equity, as well as a series of US Equity strategies. Access to these strategies is offered through a variety of investment vehicles, including separate accounts, commingled funds and SEC-registered mutual funds.

Since 1995, Artio Global Management has built a successful long-term track record by taking an unconventional approach to investment. Based on a philosophy of style-agnostic investing across a broad range of opportunities, we have consistently pursued a global approach that we believe provides critical insights in adding value for clients over the long-term.

For more information, please visit www.artioglobal.com.

Cautionary Note Regarding Forward-Looking Statements

This news release may contain, in addition to historical information, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the Company's current assumptions, expectations and projections about future events. Words like “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, and similar expressions are used to identify forward-looking statements, although not all forward-looking statements contain these words. These forward-looking statements discuss matters that necessarily involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements.

Among the factors that could cause actual results to differ from those expressed or implied by a forward-looking statement are those described in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s registration statement on Form S-1 (File No. 333-149178), filed with the Securities and Exchange Commission on February 12, 2008, as amended. Other unknown or unpredictable factors also could have material adverse effects on the Company's future results, performance, or achievements.

Any forward-looking statements in this news release speak only as of the date of this news release. The Company is not under any obligation and does not intend to make publicly available any update or other revisions to any forward-looking statements to reflect circumstances existing after the date of this release or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized.

Fund Performance Disclaimers

Lipper rankings are for Class I mutual fund shares with a five-year track record only. Other classes may have different performance characteristics. Lipper, a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds, fund fees and expenses to the asset management and media communities. Lipper ranks the performance of mutual funds within a classification of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested and do not include the effect of loads. If an expense waiver was in effect, it may have had a material effect on the total return or yield for the period.

Morningstar rankings are for Class I mutual fund shares with a minimum three-year track record. For each mutual fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a mutual fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. This investment's independent Morningstar Rating metric is then compared against the mutual fund universe breakpoints to determine its hypothetical rating. Data presented reflects past performance, which is no guarantee of future results. © 2009 Morningstar, Inc. All Rights Reserved.

_____________________________

1 See Exhibits 3-5 of this news release for a reconciliation of the Company’s U.S. GAAP results to its Non-GAAP adjusted results (“adjusted”).

2 Net income (loss) represents net income (loss) attributable to Artio Global Investors.

3 Effective investment management fee rate is defined as annualized investment management fees divided by the average assets under management for the period.

4 Represents total revenues and other operating income.

5 Class I mutual fund shares with a five-year track record; other classes may have different performance characteristics.

6 See section entitled “Fund Performance Disclaimers” of this news release for further information about Lipper and Morningstar rankings.

7 Class I mutual fund shares with a three-year track record; other classes may have different performance characteristics.

8 Class I mutual fund shares with a minimum three-year track record; other classes may have different performance characteristics.

9 Assets Under Management information excludes legacy activities.

10 Richard Pell, Chairman, CEO and CIO, and Rudolph-Riad Younes, Head of International Equity, are collectively referred to as our “Principals”.

11 The $215.8 million non-cash expense is reflected within change in redemption value of Class B profits interests.

12 The establishment of a tax receivable agreement with our Principals represents a non-cash expense.

13 The Company incurred expenses in connection with the IPO of $4.8 million and $2.0 million in the third quarters of 2009 and 2008, respectively.

14 The Company incurred expenses in connection with the IPO of $4.8 million in the third quarter of 2009 and $0.8 million in the second quarter of 2009.

         
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 1
Consolidated Statements of Income
(unaudited, in thousands, except share and per share amounts or as noted)
 
Three Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Jun. 30, 2009 Sep. 30, 2008 Jun. 30, 2009
Revenues and other operating income:
Investment management fees $ 83,477 $ 107,552 $ 69,760 (22 %) 20 %
Net gains (losses) on securities held for deferred compensation 977 (1,018 ) 986 196 % (1 %)
Foreign currency gains (losses)   34     (6 )   47   NM (28 %)
Total revenues and other operating income   84,488     106,528     70,793   (21 %) 19 %
 
Expenses:
Employee compensation and benefits:
Salaries, incentive compensation and benefits 22,390 23,461 17,977 (5 %) 25 %
Allocation of Class B profits interests 12,191 19,992 11,257 (39 %) 8 %
Change in redemption value of Class B profits interests 230,572 16,920 17,412 NM NM
Tax receivable agreement   97,909     -     -   NM NM
Total employee compensation and benefits 363,062 60,373 46,646 NM NM
Shareholder servicing and marketing 4,502 6,108 4,139 (26 %) 9 %
General and administrative   15,228     12,993     9,404   17 % 62 %
Total expenses   382,792     79,474     60,189   NM NM
 
Operating income (loss) before income tax expense (298,304 ) 27,054 10,604 NM NM
 
Non-operating income (loss)   122     556     (252 ) (78 %) 148 %
Income (loss) before income tax expense (298,182 ) 27,610 10,352 NM NM
 
Income taxes   113,980     11,330     4,998   NM NM
Net income (loss) (412,162 ) 16,280 5,354 NM NM
 
Net income attributable to non-controlling interests   261     -     -   NM NM
Net income (loss) attributable to Artio Global Investors $ (412,423 ) $ 16,280   $ 5,354   NM NM
 
Net income (loss) per share attributable to Artio Global Investors:
Basic $ (9.81 ) $ 0.39 $ 0.13 NM NM
Diluted $ (9.81 ) $ 0.39 $ 0.13 NM NM
 
Weighted average shares used in net income (loss) per share
attributable to Artio Global Investors (6):
Basic 42,052,324 42,000,000 42,000,000 0 % 0 %
Diluted 42,052,324 42,000,000 42,000,000 0 % 0 %
 
NM - Not Meaningful
                     
 
Assets Under Management ($ in millions) (1) $ 55,798 $ 56,648 $ 46,826 (2 %) 19 %
 
Average Assets Under Management ($ in millions) (1) (2) $ 51,793 $ 66,525 $ 44,067 (22 %) 18 %
 
Effective investment management fee rate (basis points) (3) 64.5 64.7 63.3
 
Effective tax rate NM 41.0 % 48.3 %
 
Employee compensation and benefits as a percentage of total
revenues and other operating income (4) NM 54.6 % 65.9 %
 
Operating margin (5) NM 27.5 % 15.0 %
   
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 1
Consolidated Statements of Income
(unaudited, in thousands, except share and per share amounts or as noted)
 
Nine Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Sep. 30, 2008
Revenues and other operating income:
Investment management fees $ 216,053 $ 351,059 (38 %)
Net gains (losses) on securities held for deferred compensation 1,689 (1,619 ) NM
Foreign currency gains (losses)   66     (27 ) NM
Total revenues and other operating income   217,808     349,413   (38 %)
 
Expenses:
Employee compensation and benefits:
Salaries, incentive compensation and benefits 57,307 76,315 (25 %)
Allocation of Class B profits interests 33,663 63,983 (47 %)
Change in redemption value of Class B profits interests 266,110 53,353 NM
Tax receivable agreement   97,909     -   NM
Total employee compensation and benefits 454,989 193,651 135 %
Shareholder servicing and marketing 11,710 18,833 (38 %)
General and administrative   32,806     47,658   (31 %)
Total expenses   499,505     260,142   92 %
 
Operating income (loss) before income tax expense (281,697 ) 89,271 NM
 
Non-operating income (loss)   (211 )   1,953   (111 %)
Income (loss) before income tax expense (281,908 ) 91,224 NM
 
Income taxes   121,854     43,322   181 %
Net income (loss) (403,762 ) 47,902 NM
 
Net income attributable to non-controlling interests   261     -   NM
Net income (loss) attributable to Artio Global Investors $ (404,023 ) $ 47,902   NM
 
Net income (loss) per share attributable to Artio Global Investors:
Basic $ (9.62 ) $ 1.14 NM
Diluted $ (9.62 ) $ 1.14 NM
 
Weighted average shares used in net income (loss) per share
attributable to Artio Global Investors (6):
Basic 42,017,441 42,000,000 0 %
Diluted 42,017,441 42,000,000 0 %
 
NM - Not Meaningful
             
 
Assets Under Management ($ in millions) (1) $ 55,798 $ 56,648 (2 %)
 
Average Assets Under Management ($ in millions) (1) (2) $ 46,051 $ 70,806 (35 %)
 
Effective investment management fee rate (basis points) (3) 62.6 66.1
 
Effective tax rate NM 47.5 %
 
Employee compensation and benefits as a percentage of total
revenues and other operating income (4) NM 53.5 %
 
Operating margin (5) NM 27.5 %
 

ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES

Notes to Exhibit 1
 
1. Excludes Legacy Activities
 
2. Average assets under management for a period is computed on the beginning-of-month balance and all
end-of-month balances in the period.
 
3. Effective investment management fee rate is defined as annualized investment management fees
divided by the average assets under management for the period.
 
4. Employee compensation and benefits expense, excluding amortization expense associated with the
restricted stock units, and deferred compensation relating to the Principals of $- million for three months
ended Sep. 30, 2009, $2.2 million for the three months ended Sep. 30, 2008, $- million for the three
months ended Jun. 30, 2009, $- million for the nine months ended Sep. 30, 2009 and $6.7 million for
the nine months ended Sep. 30, 2008, divided by total revenues and other operating income.
 
5. Operating income before income tax expense, excluding amortization expense associated with the
restricted stock units, and deferred compensation relating to the Principals of $- million for three months
ended Sep. 30, 2009, $2.2 million for the three months ended Sep. 30, 2008, $- million for the three
months ended Jun. 30, 2009, $- million for the nine months ended Sep. 30, 2009 and $6.7 million
for the nine months ended Sep. 30, 2008, divided by total revenues and other operating income.
 
6. As a result of the losses reported for the three and nine months ended Sep. 30, 2009, basic and diluted
shares outstanding for these periods are equal. Basic and diluted shares outstanding for the three
months ended Jun. 30, 2009 and the three and nine months ended Sep. 30, 2008 are equal to the

Company's outstanding shares prior to IPO.

         
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 2

Non-GAAP Adjusted Consolidated Statements of Income

(unaudited, in thousands, except share and per share amounts or as noted)
 
Three Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Jun. 30, 2009 Sep. 30, 2008 Jun. 30, 2009
Revenues and other operating income:
Investment management fees $ 83,477 $ 107,552 $ 69,760 (22 %) 20 %
Net gains (losses) on securities held for deferred compensation 977 (1,018 ) 986 196 % (1 %)
Foreign currency gains (losses)   34     (6 )   47   NM (28 %)

Total revenues and other operating income

  84,488     106,528     70,793   (21 %) 19 %
 
Expenses:
Employee compensation and benefits:
Salaries, incentive compensation and benefits 22,390 23,461 17,977 (5 %) 25 %
Allocation of Class B profits interests - - - NM NM
Change in redemption value of Class B profits interests - - - NM NM
Tax receivable agreement   -     -     -   NM NM
Total employee compensation and benefits 22,390 23,461 17,977 (5 %) 25 %
Shareholder servicing and marketing 4,502 6,108 4,139 (26 %) 9 %
General and administrative   15,228     12,993     9,404   17 % 62 %
Total expenses   42,120     42,562     31,520   (1 %) 34 %
 
Operating income before income tax expense 42,368 63,966 39,273 (34 %) 8 %
 
Non-operating income (loss)   122     556     (252 ) (78 %) 148 %
Income before income tax expense 42,490 64,522 39,021 (34 %) 9 %
 
Income taxes   14,564     23,195     17,407   (37 %) (16 %)
Net income 27,926 41,327 21,614 (32 %) 29 %
 
Net income attributable to non-controlling interests   -     -     -   NM NM
Net income attributable to Artio Global Investors $ 27,926   $ 41,327   $ 21,614   (32 %) 29 %
 
Net income per diluted share attributable to Artio Global Investors $ 0.47 $ 0.69 $ 0.36 (32 %) 31 %
 
Weighted average diluted shares used in net income per share
attributable to Artio Global Investors 60,000,994 60,000,000 60,000,000 0 % 0 %
 
NM - Not Meaningful
                     
 
Assets Under Management ($ in millions) (1) $ 55,798 $ 56,648 $ 46,826 (2 %) 19 %
 
Average Assets Under Management ($ in millions) (1) (2) $ 51,793 $ 66,525 $ 44,067 (22 %) 18 %
 
Effective investment management fee rate (basis points) (3) 64.5 64.7 63.3
 
Effective tax rate 34.3 % 35.9 % 44.6 %
 
Employee compensation and benefits as a percentage of total
revenues and other operating income (4) 26.4 % 19.9 % 25.4 %
 
Operating margin (5) 50.2 % 62.1 % 55.5 %
     
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 2

Non-GAAP Adjusted Consolidated Statements of Income

(unaudited, in thousands, except share and per share amounts or as noted)
 
Nine Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Sep. 30, 2008
Revenues and other operating income:
Investment management fees $ 216,053 $ 351,059 (38 %)
Net gains (losses) on securities held for deferred compensation 1,689 (1,619 ) NM
Foreign currency gains (losses)   66     (27 ) NM
Total revenues and other operating income   217,808     349,413   (38 %)
 
Expenses:
Employee compensation and benefits:
Salaries, incentive compensation and benefits 57,307 76,315 (25 %)
Allocation of Class B profits interests - - NM
Change in redemption value of Class B profits interests - - NM
Tax receivable agreement   -     -   NM
Total employee compensation and benefits 57,307 76,315 (25 %)
Shareholder servicing and marketing 11,710 18,833 (38 %)
General and administrative   32,806     47,658   (31 %)
Total expenses   101,823     142,806   (29 %)
 
Operating income before income tax expense 115,985 206,607 (44 %)
 
Non-operating income (loss)   (211 )   1,953   (111 %)
Income before income tax expense 115,774 208,560 (44 %)
 
Income taxes   46,983     91,499   (49 %)
Net income 68,791 117,061 (41 %)
 
Net income attributable to non-controlling interests   -     -   NM
Net income attributable to Artio Global Investors $ 68,791   $ 117,061   (41 %)
 
Net income per diluted share attributable to Artio Global Investors $ 1.15 $ 1.95 (41 %)
 
Weighted average diluted shares used in net income per share
attributable to Artio Global Investors 60,000,331 60,000,000 0 %
 
NM - Not Meaningful
             
 
Assets Under Management ($ in millions) (1) $ 55,798 $ 56,648 (2 %)
 
Average Assets Under Management ($ in millions) (1) (2) $ 46,051 $ 70,806 (35 %)
 
Effective investment management fee rate (basis points) (3) 62.6 66.1
 
Effective tax rate 40.6 % 43.9 %
 
Employee compensation and benefits as a percentage of total
revenues and other operating income (4) 26.3 % 19.9 %
 
Operating margin (5) 53.3 % 61.0 %
 

ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES

Notes to Exhibit 2
 
1. Excludes Legacy Activities
 
2. Average assets under management for a period is computed on the beginning-of-month balance and all
end-of-month balances in the period.
 
3. Effective investment management fee rate is defined as annualized investment management fees
divided by the average assets under management for the period.
 
4. Employee compensation and benefits expense, excluding amortization expense associated with the
restricted stock units, and deferred compensation relating to the Principals of $- million for three months
ended Sep. 30, 2009, $2.2 million for the three months ended Sep. 30, 2008, $- million for the three
months ended Jun. 30, 2009, $- million for the nine months ended Sep. 30, 2009 and $6.7 million
for the nine months ended Sep. 30, 2008, divided by total revenues and other operating income.
 
5. Operating income before income tax expense, excluding amortization expense associated with the
restricted stock units, and deferred compensation relating to the Principals of $- million for three months
ended Sep. 30, 2009, $2.2 million for the three months ended Sep. 30, 2008, $- million for the three
months ended Jun. 30, 2009, $- million for the nine months ended Sep. 30, 2009 and $6.7 million
for the nine months ended Sep. 30, 2008, divided by total revenues and other operating income.
                 
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES

Exhibit 3

Reconciliation of GAAP to Non-GAAP Adjusted Consolidated Statements of Income

(unaudited, in thousands, except share and per share amounts)
 
 
See Exhibit 5 for notes describing adjustments set forth below.
 
 
Three Months Ended Sep. 30, 2009 Nine Months Ended Sep. 30, 2009
GAAP Adjustments Adjusted GAAP Adjustments Adjusted
Revenues and other operating income:
Investment management fees $ 83,477 $ - $ 83,477 $ 216,053 $ - $ 216,053
Net gains on securities held for deferred compensation 977 - 977 1,689 - 1,689
Foreign currency gains   34     -     34   66     -     66  
Total revenues and other operating income   84,488     -     84,488   217,808     -     217,808  
 
Expenses:
Employee compensation and benefits:
Salaries, incentive compensation and benefits 22,390 - 22,390 57,307 - 57,307
Allocation of Class B profits interests 12,191 (12,191 ) (a) - 33,663 (33,663 ) (a) -
Change in redemption value of Class B profits interests 230,572 (230,572 ) (a) - 266,110 (266,110 ) (a) -
Tax receivable agreement   97,909     (97,909 ) (b)   -   97,909     (97,909 ) (b)   -  
Total employee compensation and benefits 363,062 (340,672 ) 22,390 454,989 (397,682 ) 57,307
Shareholder servicing and marketing 4,502 - 4,502 11,710 - 11,710
General and administrative   15,228     -     15,228   32,806     -     32,806  
Total expenses   382,792     (340,672 )   42,120   499,505     (397,682 )   101,823  
 
Operating income (loss) before income tax expense (298,304 ) 340,672 42,368 (281,697 ) 397,682 115,985
 
Non-operating income (loss)   122     -     122   (211 )   -     (211 )
Income (loss) before income tax expense (298,182 ) 340,672 42,490 (281,908 ) 397,682 115,774
 
Income taxes   113,980     (99,416 ) (c)   14,564   121,854     (74,871 ) (c)   46,983  
Net income (loss) (412,162 ) 440,088 27,926 (403,762 ) 472,553 68,791
 
Net income attributable to non-controlling interests   261     (261 ) (d)   -   261     (261 ) (d)   -  
Net income (loss) attributable to Artio Global Investors $ (412,423 ) $ 440,349   $ 27,926 $ (404,023 ) $ 472,814   $ 68,791  
 
 

Net income (loss) per diluted share attributable to Artio Global Investors

$ (9.81 ) $ 0.47 $ (9.62 ) $ 1.15
 
Weighted average diluted shares used in net income (loss) per
share attributable to Artio Global Investors 42,052,324 17,948,670 (e) 60,000,994 42,017,441 17,982,890 (e) 60,000,331
                   
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES

Exhibit 4

Reconciliation of GAAP to Non-GAAP Adjusted Consolidated Statements of Income

(unaudited, in thousands, except share and per share amounts)
 
 
See Exhibit 5 for notes describing adjustments set forth below.
 
 
Three Months Ended Sep. 30, 2008 Nine Months Ended Sep. 30, 2008
GAAP Adjustments Adjusted GAAP Adjustments Adjusted
Revenues and other operating income:
Investment management fees $ 107,552 $ - $ 107,552 $ 351,059 $ - $ 351,059
Net gains (losses) on securities held for deferred compensation (1,018 ) - (1,018 ) (1,619 ) - (1,619 )
Foreign currency gains (losses)   (6 )   -     (6 )   (27 )   -     (27 )
Total revenues and other operating income   106,528     -     106,528     349,413     -     349,413  
 
Expenses:
Employee compensation and benefits:
Salaries, incentive compensation and benefits 23,461 - 23,461 76,315 - 76,315
Allocation of Class B profits interests 19,992 (19,992 ) (a) - 63,983 (63,983 ) (a) -
Change in redemption value of Class B profits interests 16,920 (16,920 ) (a) - 53,353 (53,353 ) (a) -
Tax receivable agreement   -     -     -     -     -     -  
Total employee compensation and benefits 60,373 (36,912 ) 23,461 193,651 (117,336 ) 76,315
Shareholder servicing and marketing 6,108 - 6,108 18,833 - 18,833
General and administrative   12,993     -     12,993     47,658     -     47,658  

Total expenses

  79,474     (36,912 )   42,562     260,142     (117,336 )   142,806  
 
Operating income before income tax expense 27,054 36,912 63,966 89,271 117,336 206,607
 
Non-operating income (loss)   556     -     556     1,953     -     1,953  
Income before income tax expense 27,610 36,912 64,522 91,224 117,336 208,560
 
Income taxes   11,330     11,865   (c)   23,195     43,322     48,177   (c)   91,499  
Net income 16,280 25,047 41,327 47,902 69,159 117,061
 
Net income attributable to non-controlling interests   -     -     -     -     -     -  
Net income attributable to Artio Global Investors $ 16,280   $ 25,047   $ 41,327   $ 47,902   $ 69,159   $ 117,061  
 
 

Net income (loss) per diluted share attributable to Artio Global Investors

$ 0.39 $ 0.69 $ 1.14 $ 1.95
 
Weighted average diluted shares used in net income per share
attributable to Artio Global Investors 42,000,000 18,000,000 (e) 60,000,000 42,000,000 18,000,000 (e) 60,000,000
       
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES

Exhibit 4

Reconciliation of GAAP to Non-GAAP Adjusted Consolidated Statements of Income

(unaudited, in thousands, except share and per share amounts)
 
 
See Exhibit 5 for notes describing adjustments set forth below.
 
 
Three Months Ended Jun. 30, 2009
GAAP Adjustments Adjusted
Revenues and other operating income:
Investment management fees $ 69,760 $ - $ 69,760
Net gains (losses) on securities held for deferred compensation 986 - 986
Foreign currency gains (losses)   47     -     47  
Total revenues and other operating income   70,793     -     70,793  
 
Expenses:
Employee compensation and benefits:
Salaries, incentive compensation and benefits 17,977 - 17,977
Allocation of Class B profits interests 11,257 (11,257 ) (a) -
Change in redemption value of Class B profits interests 17,412 (17,412 ) (a) -
Tax receivable agreement   -     -     -  
Total employee compensation and benefits 46,646 (28,669 ) 17,977
Shareholder servicing and marketing 4,139 - 4,139
General and administrative   9,404     -     9,404  
Total expenses   60,189     (28,669 )   31,520  
 
Operating income before income tax expense 10,604 28,669 39,273
 
Non-operating income (loss)   (252 )   -     (252 )
Income before income tax expense 10,352 28,669 39,021
 
Income taxes   4,998     12,409   (c)   17,407  
Net income 5,354 16,260 21,614
 
Net income attributable to non-controlling interests   -     -     -  
Net income attributable to Artio Global Investors $ 5,354   $ 16,260   $ 21,614  
 
 

Net income (loss) per diluted share attributable to Artio Global Investors

$ 0.13 $ 0.36
 
Weighted average diluted shares used in net income per share
attributable to Artio Global Investors 42,000,000 18,000,000 (e) 60,000,000
                           

ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES

Exhibit 5

Notes to Reconciliation of GAAP to Non-GAAP Adjusted Consolidated Statements of Income

 

Management believes the Non-GAAP adjustments set forth below provide the reader the ability to compare current period results with prior period results. Additional information on the reorganization of the Company's ownership structure and the relating non-recurring items are discussed in the Company's final prospectus September 23, 2009.

The Company's GAAP results for the three and nine months ended September 30, 2009, include certain ongoing expenses on a pro-rata basis for the two day stub period following the IPO including, but not limited to, the accrual for the Principals' annual bonus, amortization of restricted stock units and commitment fees on our credit facilities. Management has not included a full-period's expense for purposes of the adjusted results for all periods presented.

 

(a)

 

Adjustments to exclude the Allocation of Class B profits interests and the change in redemption value of Class B profits interests, from all periods presented, as the Company will no longer incur these expenses following the reorganization of the Company's ownership structure in connection with the IPO.

 

(b)

Adjustment to exclude the $97.9 million non-cash compensation expense associated with the establishment of a tax receivable agreement with our Principals, as this is a non-recurring charge.

 

(c)

The $99.4 million adjustment to income taxes for the three months ended Sep. 30, 2009 primarily reflects the following:

 

       
i.  

Income tax expense impact of ($110.3) million resulting from excluding the de-recognition of the deferred tax asset as this will not have a continuing impact on our results following the reorganization of the Company's ownership structure in connection with the IPO.

 

ii.

Income tax expense of $11.5 million relating to the impact of excluding the allocation of Class B profits interests of $12.2 million and change in redemption value of Class B profits interests of $14.8 million. There is no income tax expense effect on the $215.8 million compensation expense for the acceleration and vesting of our Principals' membership interest and the $97.9 million expense for the establishment of a tax receivable agreement with our Principals, both of which were incurred as a result of the reorganization of the Company's ownership structure in connection with the IPO, and therefore no adjustment is necessary.

 

The adjustments to income taxes for the three months ended Jun. 30, 2009 and the three and nine months ended Sep. 30, 2008 primarily reflect the income tax expense impact of excluding the allocation of Class B profits interests and change in redemption value of Class B profits interests, for each period.

 

The adjustment to income taxes for the nine months ended Sep. 30, 2009 primarily reflects the income tax expense impact of excluding the allocation of Class B profits interests and the change in redemption value of Class B profits interests for the six months ended Jun. 30, 2009, plus the adjustment to income taxes for the three months ended Sep. 30, 2009 noted above.

 

(d)

Adjustment to eliminate the Principals' non-controlling interests which are assumed to be exchanged to Class A common stock.

 

(e)

Basic and diluted shares outstanding assumes the Company's ownership structure following the IPO was in effect at the beginning of each period presented and the Principals have exchanged their Class A Units in the intermediate holding company for Class A common stock in the public company.

       
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 6
Assets under Management by Investment Vehicle

(unaudited, in millions)

 
 
Three Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Jun. 30, 2009 Sep. 30, 2008 Jun. 30, 2009
 
Proprietary Funds
Beginning assets under management $ 20,153 $ 33,974 $ 16,367 (41 %) 23 %
Gross client cash inflows 1,821 1,806 1,915 1 % (5 %)
Gross client cash outflows   (1,730 )   (3,044 )   (1,371 ) 43 % (26 %)
Net client cash flows 91 (1,238 ) 544 107 % (83 %)
Transfers between investment vehicles   -     (109 )   -   100 % NM
Total client cash flows 91 (1,347 ) 544 107 % (83 %)
Market appreciation (depreciation)   3,819     (6,911 )   3,242   155 % 18 %
Ending assets under management   24,063     25,716     20,153   (6 %) 19 %
 
 
Institutional Commingled Funds
Beginning assets under management 7,324 10,288 5,943 (29 %) 23 %
Gross client cash inflows 481 661 441 (27 %) 9 %
Gross client cash outflows   (326 )   (218 )   (262 ) (50 %) (24 %)
Net client cash flows 155 443 179 (65 %) (13 %)
Transfers between investment vehicles   (10 )   62     5   (116 %) NM
Total client cash flows 145 505 184 (71 %) (21 %)
Market appreciation (depreciation)   1,447     (2,408 )   1,197   160 % 21 %
Ending assets under management   8,916     8,385     7,324   6 % 22 %
 
 
Separate Accounts
Beginning assets under management 14,778 21,270 12,757 (31 %) 16 %
Gross client cash inflows 634 129 600 NM 6 %
Gross client cash outflows   (624 )   (416 )   (648 ) (50 %) 4 %
Net client cash flows 10 (287 ) (48 ) 103 % 121 %
Transfers between investment vehicles   10     -     (5 ) NM NM
Total client cash flows 20 (287 ) (53 ) 107 % 138 %
Market appreciation (depreciation)   2,598     (4,296 )   2,074   160 % 25 %
Ending assets under management   17,396     16,687     14,778   4 % 18 %
 
 
Sub-advisory Accounts
Beginning assets under management 4,571 7,072 3,874 (35 %) 18 %
Gross client cash inflows 234 316 222 (26 %) 5 %
Gross client cash outflows   (169 )   (272 )   (146 ) 38 % (16 %)
Net client cash flows 65 44 76 48 % (14 %)
Transfers between investment vehicles   -     47     -   (100 %) NM
Total client cash flows 65 91 76 (29 %) (14 %)
Market appreciation (depreciation)   787     (1,303 )   621   160 % 27 %
Ending assets under management   5,423     5,860     4,571   (7 %) 19 %
 
 
Total Assets under Management (1)
Beginning assets under management 46,826 72,604 38,941 (36 %) 20 %
Gross client cash inflows 3,170 2,912 3,178 9 % (0 %)
Gross client cash outflows   (2,849 )   (3,950 )   (2,427 ) 28 % (17 %)
Net client cash flows 321 (1,038 ) 751 131 % (57 %)
Transfers between investment vehicles   -     -     -   NM NM
Total client cash flows 321 (1,038 ) 751 131 % (57 %)
Market appreciation (depreciation)   8,651     (14,918 )   7,134   158 % 21 %
Ending assets under management $ 55,798   $ 56,648   $ 46,826   (2 %) 19 %
 
1. Total Assets under Management excludes Legacy Activities
   
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 6
Assets under Management by Investment Vehicle

(unaudited, in millions)

 
 
Nine Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Sep. 30, 2008
 
Proprietary Funds
Beginning assets under management $ 19,466 $ 37,117 (48 %)
Gross client cash inflows 5,644 6,608 (15 %)
Gross client cash outflows   (5,071 )   (6,924 ) 27 %
Net client cash flows 573 (316 ) NM
Transfers between investment vehicles   -     (189 ) 100 %
Total client cash flows 573 (505 ) NM
Market appreciation (depreciation)   4,024     (10,896 ) 137 %
Ending assets under management   24,063     25,716   (6 %)
 
 
Institutional Commingled Funds
Beginning assets under management 7,056 9,357 (25 %)
Gross client cash inflows 1,192 3,316 (64 %)
Gross client cash outflows   (890 )   (997 ) 11 %
Net client cash flows 302 2,319 (87 %)
Transfers between investment vehicles   (9 )   187   (105 %)
Total client cash flows 293 2,506 (88 %)
Market appreciation (depreciation)   1,567     (3,478 ) 145 %
Ending assets under management   8,916     8,385   6 %
 
 
Separate Accounts
Beginning assets under management 14,342 22,897 (37 %)
Gross client cash inflows 1,797 1,279 41 %
Gross client cash outflows   (1,545 )   (1,078 ) (43 %)
Net client cash flows 252 201 25 %
Transfers between investment vehicles   9     (45 ) 120 %
Total client cash flows 261 156 67 %
Market appreciation (depreciation)   2,793     (6,366 ) 144 %
Ending assets under management   17,396     16,687   4 %
 
 
Sub-advisory Accounts
Beginning assets under management 4,336 5,991 (28 %)
Gross client cash inflows 660 2,491 (74 %)
Gross client cash outflows   (493 )   (742 ) 34 %
Net client cash flows 167 1,749 (90 %)
Transfers between investment vehicles   -     47   (100 %)
Total client cash flows 167 1,796 (91 %)
Market appreciation (depreciation)   920     (1,927 ) 148 %
Ending assets under management   5,423     5,860   (7 %)
 
 
Total Assets under Management (1)
Beginning assets under management 45,200 75,362 (40 %)
Gross client cash inflows 9,293 13,694 (32 %)
Gross client cash outflows   (7,999 )   (9,741 ) 18 %
Net client cash flows 1,294 3,953 (67 %)
Transfers between investment vehicles   -     -   NM
Total client cash flows 1,294 3,953 (67 %)
Market appreciation (depreciation)   9,304     (22,667 ) 141 %
Ending assets under management $ 55,798   $ 56,648   (2 %)
 
1. Total Assets under Management excludes Legacy Activities
       
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 7
Assets under Management by Investment Strategy

(unaudited, in millions)

 
 
Three Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Jun. 30, 2009 Sep. 30, 2008 Jun. 30, 2009
 
International Equity I
Beginning assets under management $ 19,124 $ 37,024 $ 16,197 (48 %) 18 %
Gross client cash inflows 317 537 483 (41 %) (34 %)
Gross client cash outflows   (1,167 )   (1,922 )   (892 ) 39 % (31 %)
Net client cash flows (850 ) (1,385 ) (409 ) 39 % (108 %)
Transfers between investment strategies   -     (155 )   10   100 % (100 %)
Total client cash flows (850 ) (1,540 ) (399 ) 45 % (113 %)
Market appreciation (depreciation)   3,765     (8,375 )   3,326   145 % 13 %
Ending assets under management   22,039     27,109     19,124   (19 %) 15 %
 
International Equity II
Beginning assets under management $ 20,371 $ 28,358 $ 16,250 (28 %) 25 %
Gross client cash inflows 1,748 1,835 1,775 (5 %) (2 %)
Gross client cash outflows   (1,224 )   (1,543 )   (851 ) 21 % (44 %)
Net client cash flows 524 292 924 79 % (43 %)
Transfers between investment strategies   -     109     -   (100 %) NM
Total client cash flows 524 401 924 31 % (43 %)
Market appreciation (depreciation)   4,156     (6,115 )   3,197   168 % 30 %
Ending assets under management   25,051     22,644     20,371   11 % 23 %
 
High Grade Fixed Income
Beginning assets under management $ 4,689 $ 4,843 $ 4,647 (3 %) 1 %
Gross client cash inflows 339 316 301 7 % 13 %
Gross client cash outflows   (240 )   (274 )   (466 ) 12 % 48 %
Net client cash flows 99 42 (165 ) 136 % 160 %
Transfers between investment strategies   -     -     (16 ) NM 100 %
Total client cash flows 99 42 (181 ) 136 % 155 %
Market appreciation (depreciation)   228     (89 )   223   NM 2 %
Ending assets under management   5,016     4,796     4,689   5 % 7 %
 
High Yield
Beginning assets under management $ 2,017 $ 1,267 $ 1,303 59 % 55 %
Gross client cash inflows 719 141 612 NM 17 %
Gross client cash outflows   (188 )   (132 )   (178 ) (42 %) (6 %)
Net client cash flows 531 9 434 NM 22 %
Transfers between investment strategies   -     -     6   NM (100 %)
Total client cash flows 531 9 440 NM 21 %
Market appreciation (depreciation)   386     (138 )   274   NM 41 %
Ending assets under management   2,934     1,138     2,017   158 % 45 %
 
Global Equity
Beginning assets under management $ 476 $ 703 $ 421 (32 %) 13 %
Gross client cash inflows 43 77 7 (44 %) NM
Gross client cash outflows   (28 )   (21 )   (36 ) (33 %) 22 %
Net client cash flows 15 56 (29 ) (73 %) 152 %
Transfers between investment strategies   -     46     -   (100 %) NM
Total client cash flows 15 102 (29 ) (85 %) 152 %
Market appreciation (depreciation)   84     (134 )   84   163 % 0 %
Ending assets under management   575     671     476   (14 %) 21 %
       
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 7
Assets under Management by Investment Strategy

(unaudited, in millions)

 
 
Three Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Jun. 30, 2009 Sep. 30, 2008 Jun. 30, 2009
 
US Equity
Beginning assets under management $ 56 $ 116 $ 44 (52 %) 27 %
Gross client cash inflows 4 5 1 (20 %) NM
Gross client cash outflows   (1 )   (9 )   (4 ) 89 % 75 %
Net client cash flows 3 (4 ) (3 ) 175 % 200 %
Transfers between investment strategies   -     -     -   NM NM
Total client cash flows 3 (4 ) (3 ) 175 % 200 %
Market appreciation (depreciation)   14     (5 )   15   NM (7 %)
Ending assets under management   73     107     56   (32 %) 30 %
 
Other (1)
Beginning assets under management $ 93 $ 293 $ 79 (68 %) 18 %
Gross client cash inflows - 1 (1 ) (100 %) 100 %
Gross client cash outflows   (1 )   (49 )   -   98 % NM
Net client cash flows (1 ) (48 ) (1 ) 98 % 0 %
Transfers between investment strategies   -     -     -   NM NM
Total client cash flows (1 ) (48 ) (1 ) 98 % 0 %
Market appreciation (depreciation)   18     (62 )   15   129 % 20 %
Ending assets under management   110     183     93   (40 %) 18 %
 
Total Assets under Management (2)
Beginning assets under management $ 46,826 $ 72,604 $ 38,941 (36 %) 20 %
Gross client cash inflows 3,170 2,912 3,178 9 % (0 %)
Gross client cash outflows   (2,849 )   (3,950 )   (2,427 ) 28 % (17 %)
Net client cash flows 321 (1,038 ) 751 131 % (57 %)
Transfers between investment strategies   -     -     -   NM NM
Total client cash flows 321 (1,038 ) 751 131 % (57 %)
Market appreciation (depreciation)   8,651     (14,918 )   7,134   158 % 21 %
Ending assets under management   55,798     56,648     46,826   (2 %) 19 %
 
1. Other includes Other International Equity and Other strategies.
2. Total Assets under Management excludes Legacy Activities
   
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 7
Assets under Management by Investment Strategy

(unaudited, in millions)

 
 
Nine Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Sep. 30, 2008
 
International Equity I
Beginning assets under management $ 20,188 $ 42,517 (53 %)
Gross client cash inflows 1,302 2,539 (49 %)
Gross client cash outflows   (3,066 )   (4,746 ) 35 %
Net client cash flows (1,764 ) (2,207 ) 20 %
Transfers between investment strategies   10     (155 ) 106 %
Total client cash flows (1,754 ) (2,362 ) 26 %
Market appreciation (depreciation)   3,605     (13,046 ) 128 %
Ending assets under management   22,039     27,109   (19 %)
 
International Equity II
Beginning assets under management $ 18,697 $ 26,050 (28 %)
Gross client cash inflows 5,191 9,202 (44 %)
Gross client cash outflows   (3,222 )   (3,579 ) 10 %
Net client cash flows 1,969 5,623 (65 %)
Transfers between investment strategies   -     109   (100 %)
Total client cash flows 1,969 5,732 (66 %)
Market appreciation (depreciation)   4,385     (9,138 ) 148 %
Ending assets under management   25,051     22,644   11 %
 
High Grade Fixed Income
Beginning assets under management $ 4,566 $ 4,657 (2 %)
Gross client cash inflows 1,082 1,165 (7 %)
Gross client cash outflows   (1,073 )   (883 ) (22 %)
Net client cash flows 9 282 (97 %)
Transfers between investment strategies   (16 )   (117 ) 86 %
Total client cash flows (7 ) 165 (104 %)
Market appreciation (depreciation)   457     (26 ) NM
Ending assets under management   5,016     4,796   5 %
 
High Yield
Beginning assets under management $ 977 $ 852 15 %
Gross client cash inflows 1,650 604 173 %
Gross client cash outflows   (429 )   (315 ) (36 %)
Net client cash flows 1,221 289 NM
Transfers between investment strategies   6     117   (95 %)
Total client cash flows 1,227 406 NM
Market appreciation (depreciation)   730     (120 ) NM
Ending assets under management   2,934     1,138   158 %
 
Global Equity
Beginning assets under management $ 591 $ 761 (22 %)
Gross client cash inflows 62 156 (60 %)
Gross client cash outflows   (168 )   (79 ) (113 %)
Net client cash flows (106 ) 77 NM
Transfers between investment strategies   -     46   (100 %)
Total client cash flows (106 ) 123 (186 %)
Market appreciation (depreciation)   90     (213 ) 142 %
Ending assets under management   575     671   (14 %)
   
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit 7
Assets under Management by Investment Strategy

(unaudited, in millions)

 
 
Nine Months Ended % Change From
Sep. 30, 2009 Sep. 30, 2008 Sep. 30, 2008
 
US Equity
Beginning assets under management $ 49 $ 133 (63 %)
Gross client cash inflows 6 18 (67 %)
Gross client cash outflows   (7 )   (16 ) 56 %
Net client cash flows (1 ) 2 (150 %)
Transfers between investment strategies   -     -   NM
Total client cash flows (1 ) 2 (150 %)
Market appreciation (depreciation)   25     (28 ) 189 %
Ending assets under management   73     107   (32 %)
 
Other (1)
Beginning assets under management $ 132 $ 392 (66 %)
Gross client cash inflows - 10 (100 %)
Gross client cash outflows   (34 )   (123 ) 72 %
Net client cash flows (34 ) (113 ) 70 %
Transfers between investment strategies   -     -   NM
Total client cash flows (34 ) (113 ) 70 %
Market appreciation (depreciation)   12     (96 ) 113 %
Ending assets under management   110     183   (40 %)
 
Total Assets under Management (2)
Beginning assets under management $ 45,200 $ 75,362 (40 %)
Gross client cash inflows 9,293 13,694 (32 %)
Gross client cash outflows   (7,999 )   (9,741 ) 18 %
Net client cash flows 1,294 3,953 (67 %)
Transfers between investment strategies   -     -   NM
Total client cash flows 1,294 3,953 (67 %)
Market appreciation (depreciation)   9,304     (22,667 ) 141 %
Ending assets under management   55,798     56,648   (2 %)
 
1. Other includes Other International Equity and Other strategies.
2. Total Assets under Management excludes Legacy Activities
           
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit - 8
Mutual Fund Performance Data (1)      
 
 
Morningstar Ratings /
Funds in Total Universe (# of Funds)
 
# of
Fund Rating Funds Category
 
Artio International Equity Fund, Class A (2) 5 600 Foreign Large Blend
Artio International Equity Fund, Class I (2) 4 600 Foreign Large Blend

 

Artio International Equity II Fund, Class A 4 600 Foreign Large Blend
Artio International Equity II Fund, Class I 4 600 Foreign Large Blend
 
Artio Global Equity Fund, Class A 4 536 World Stock
Artio Global Equity Fund, Class I 3 536 World Stock
 
Artio Microcap Fund, Class A 2 670 Small Growth
Artio Microcap Fund, Class I 2 670 Small Growth
 
Artio Smallcap Fund, Class A 5 670 Small Growth
Artio Smallcap Fund, Class I 5 670 Small Growth
 
Artio Midcap Fund, Class A 2 750 Mid-Cap Growth
Artio Midcap Fund, Class I 2 750 Mid-Cap Growth
 
Artio Multicap Fund, Class A 3 1515 Large Growth
Artio Multicap Fund, Class I 3 1515 Large Growth
 
Artio Global High Income Fund, Class A 5 466 High Yield Bond
Artio Global High Income Fund, Class I 5 466 High Yield Bond
 
Artio Total Return Bond Fund, Class A 4 954 Intermediate Term Bond
Artio Total Return Bond Fund, Class I 5 954 Intermediate Term Bond
 
 
Note: Data as of September 30, 2009
                           
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit - 8
Mutual Fund Performance Data (1)
   
 
Lipper Percentile Rankings (PR) /
  Funds in Total Universe (# of Funds)

 

YTD   1-Year   3-Year
# of # of # of
Fund   PR   Funds PR Funds   PR   Funds
 
Artio International Equity Fund, Class A (2) 83 375 61 363 38 302
Artio International Equity Fund, Class I (2) 83 375 60 363 35 302
 
Artio International Equity II Fund, Class A 82 375 44 363 20 302
Artio International Equity II Fund, Class I 81 375 40 363 16 302
 
Artio Global Equity Fund, Class A 50 101 35 99 57 87
Artio Global Equity Fund, Class I 47 101 33 99 52 87
 
Artio Microcap Fund, Class A 1 748 10 733 33 607
Artio Microcap Fund, Class I 1 748 9 733 29 607
 
Artio Smallcap Fund, Class A 1 748 2 733 2 607
Artio Smallcap Fund, Class I 1 748 2 733 1 607
 
Artio Midcap Fund, Class A 21 487 64 484 72 426
Artio Midcap Fund, Class I 20 487 62 484 70 426
 
Artio Multicap Fund, Class A 19 483 27 478 48 384
Artio Multicap Fund, Class I 19 483 25 478 44 384
 
Artio Global High Income Fund, Class A 15 455 11 452 4 376
Artio Global High Income Fund, Class I 14 455 10 452 2 376
 
Artio Total Return Bond Fund, Class A 69 555 56 547 29 435
Artio Total Return Bond Fund, Class I 68 555 53 547 23 435
 
 
Note: Data as of September 30, 2009
                       
ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES Exhibit - 8
Mutual Fund Performance Data (1)      
 
 
Lipper Percentile Rankings (PR) /
  Funds in Total Universe (# of Funds)
  5-Year   10-Year
# of # of
Fund   PR   Funds   PR   Funds Classification
 
Artio International Equity Fund, Class A (2) 15 263 1 142 International Large-Cap Core
Artio International Equity Fund, Class I (2) 14 263 NA NA International Large-Cap Core

 

Artio International Equity II Fund, Class A NA NA NA NA International Large-Cap Core
Artio International Equity II Fund, Class I NA NA NA NA International Large-Cap Core
 
Artio Global Equity Fund, Class A 39 72 NA NA Global Large-Cap Core
Artio Global Equity Fund, Class I NA NA NA NA Global Large-Cap Core
 
Artio Microcap Fund, Class A NA NA NA NA Small-Cap Core
Artio Microcap Fund, Class I NA NA NA NA Small-Cap Core
 
Artio Smallcap Fund, Class A NA NA NA NA Small-Cap Core
Artio Smallcap Fund, Class I NA NA NA NA Small-Cap Core
 
Artio Midcap Fund, Class A NA NA NA NA Mid-Cap Growth
Artio Midcap Fund, Class I NA NA NA NA Mid-Cap Growth
 
Artio Multicap Fund, Class A NA NA NA NA Multi-Cap Growth
Artio Multicap Fund, Class I NA NA NA NA Multi-Cap Growth
 
Artio Global High Income Fund, Class A 4 325 NA NA High Current Yield
Artio Global High Income Fund, Class I 3 325 NA NA High Current Yield
 
Artio Total Return Bond Fund, Class A 10 374 12 207 Intermediate Investment Grade Debt
Artio Total Return Bond Fund, Class I 9 374 NA NA Intermediate Investment Grade Debt
 
 
Note: Data as of September 30, 2009
 
NA: Not applicable
 

ARTIO GLOBAL INVESTORS INC. AND SUBSIDIARIES

Exhibit 8
Mutual Fund Performance Data (1)
 
 
1. Lipper, a wholly-owned subsidiary of Reuters, provides independent insight on global collective investments including mutual funds, retirement funds, hedge funds, fund fees and expenses to the asset management and media communities. Lipper ranks the performance of mutual funds within a classification of funds that have similar investment objectives. Rankings are historical with capital gains and dividends reinvested and do not include the effect of loads. If an expense waiver was in effect, it may have had a material effect on the total return or yield for the period.
 
For each mutual fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a mutual fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. This investment's independent Morningstar Rating metric is then compared against the mutual fund universe breakpoints to determine its hypothetical rating. Data presented reflects past performance, which is no guarantee of future results. © 2009 Morningstar, Inc. All Rights Reserved.
 
2. Closed to new investors.

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Artio Global Investors Inc.
Peter Sands, +1 212-297-3891
Head of Investor Relations
ir@artioglobal.com
or
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Intermarket Communications
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