Highbury Financial Inc. Reports Financial and Operating Results
for the Third Quarter and First Nine Months of 2008
Company Reports Basic and Diluted EPS of $0.07 and
Basic and Diluted Cash EPS of $0.10 for the Third Quarter
Company Reports Basic and Diluted EPS of $0.24 and
Basic and Diluted Cash EPS of $0.33 for the First Nine Months
Denver, Colorado, November 6, 2008 — Highbury Financial Inc. (OTCBB: HBRF, HBRFW, HBRFU) today reported its financial and operating results for the three months and nine months ended September 30, 2008.
Net income for the third quarter of 2008 was $641,004 compared to net income of $892,699 for the third quarter of 2007. Cash Net Income was $920,265 for the three months ended September 30, 2008, compared to $1,175,816 for the three months ended September 30, 2007. Basic and diluted Cash Net Income per share (“Cash EPS”) for the third quarter of 2008 were $0.10 and $0.10, respectively, compared to $0.12 and $0.12, respectively, for the third quarter of 2007. (Cash Net Income is defined in the attached tables.) Basic and diluted earnings per share for the third quarter of 2008 were $0.07 and $0.07, respectively, compared to basic and diluted earnings per share of $0.09 and $0.09, respectively, for the third quarter of 2007. Adjusted EBITDA for the three months ended September 30, 2008 was $1,099,742, compared to $1,511,651 for the three months ended September 30, 2007. (Adjusted EBITDA is defined in the attached tables.) For the third quarter of 2008, revenue was $9,595,927, compared to $10,157,568 for the third quarter of 2007.
Net income for the first nine months of 2008 was $2,166,164 compared to net income of $2,794,975 for the first nine months of 2007. Cash Net Income was $3,007,006 for the nine months ended September 30, 2008, compared to $3,631,858 for the nine months ended September 30, 2007. Basic and diluted Cash EPS for the first nine months of 2008 were $0.33 and $0.33, respectively, compared to $0.38 and $0.32, respectively, for the first nine months of 2007. Basic and diluted earnings per share for the first nine months of 2008 were $0.24 and $0.24, respectively, compared to basic and diluted earnings per share of $0.29 and $0.24, respectively, for the first nine months of 2007. Adjusted EBITDA for the nine months ended September 30, 2008 was $3,625,351, compared to $4,710,360 for the nine months ended September 30, 2007. For the first nine months of 2008, revenue was $28,555,443, compared to $31,829,001 for first nine months of 2007.
As of September 30, 2008, Highbury had approximately $4.5 billion of total assets under management, compared to approximately $4.8 billion as of June 30, 2008 and approximately $5.1 billion as of September 30, 2007. As of September 30, 2008, mutual fund assets under management were approximately $4.3 billion, compared to approximately $4.7 billion as of June 30, 2008 and approximately $5.0 billion as of September 30, 2007. The aggregate decline in mutual fund assets under management of $338 million during the third quarter of 2008 resulted from a combination of (i) negative market appreciation and other adjustments, including distributions of income and gain, reinvestments of distributions, and other items, of approximately $488 million and (ii) net client inflows, which represent aggregate contributions from new and existing clients less withdrawals, of approximately $150 million. During the period, separate account assets under management decreased from $167 million as of June 30, 2008 to $159 million as of September 30, 2008.
Richard S. Foote, Highbury’s President and Chief Executive Officer, stated, “In the third quarter of 2008, Highbury’s weighted average assets under management totaled approximately $4.8 billion with a weighted average fee basis of 0.76%.”
Mr. Foote concluded, “As of September 30, 2008, Highbury had cash and cash equivalents and investments of $10.8 million and no debt outstanding.”
Highbury is an investment management holding company providing permanent capital solutions to mid-sized investment management firms. We pursue acquisition opportunities and seek to establish accretive partnerships with high quality investment management firms. Highbury’s strategy is to provide permanent equity capital to fund buyouts from corporate parents, buyouts of founding or departing partners, growth initiatives, or exit strategies for private equity funds. This strategy includes leaving material equity interests with management teams to align the interests of management and Highbury’s shareholders and, in general, does not include integrating future acquisitions, although Highbury may execute add-on acquisitions for its current or future affiliates. We seek to augment and diversify our sources of revenue by asset class, investment style, distribution channel, client type and management team. We intend to fund acquisitions with our revolving credit facility, other external borrowings, retained earnings (if any), additional equity and other sources of capital, including seller financing and contingent payments.
Questions and inquiries for further information may be directed to Richard S. Foote, President and Chief Executive Officer of Highbury Financial Inc. He can be reached via telephone at 212-688-2341. More information is also available at www.highburyfinancial.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to Highbury’s future financial or business performance, strategies and expectations. Forward-looking statements are typically identified by words or phrases such as “trend,” “potential,” “opportunity,” “pipeline,” “believe,” “comfortable,” “expect,” “anticipate,” “current,” “intention,” “estimate,” “position,” “assume,” “outlook,” “continue,” “remain,” “maintain,” “sustain,” “seek,” “achieve,” and similar expressions, or future or conditional verbs such as “will,” “would,” “should,” “could,” “may” and similar expressions.
Highbury cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and Highbury assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to factors previously disclosed in Highbury's SEC filings and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: (1) the impact of legislative and regulatory actions and reforms and regulatory, supervisory or enforcement actions of government actions; (2) changes in political, economic or industry conditions, the interest rate environment or financial and capital markets, which could result in changes in demand for products or services or in the value of assets under management; (3) terrorist activities and international hostilities, which may adversely affect the general economy, financial and capital markets, specific industries, and Highbury; (4) changing conditions in global financial markets generally and in the equity markets particularly, and decline or lack of sustained growth in these markets; (5) Highbury's business strategy and plans; (6) the introduction, withdrawal, success and timing of business initiatives and strategies; (7) the unfavorable resolution of legal proceedings and/or harm to Highbury's reputation; (8) fluctuations in customer demand; (9) management of rapid growth; (10) the impact of fund performance on redemptions; (11) changes in investors' preference of investing styles; (12) changes in or loss of sub-advisers; (13) the impact of increased competition; (14) the results of future financing efforts; (15) the impact of future acquisitions or divestitures; (16) the relative and absolute investment performance of Highbury's investment products; (17) investment advisory agreements subject to termination or non-renewal; (18) a substantial reduction in fees received from third parties; (19) Highbury's success in finding or acquiring additional investment management firms on favorable terms and consummating acquisitions of investment management firms; (20) the ability to retain major clients; (21) the ability to attract and retain highly talented professionals; (22) significant limitations or failure of software applications; (23) expenses subject to significant fluctuations; (24) the impact, extent and timing of technological changes and the adequacy of intellectual property protection; (25) the impact of capital improvement projects; (26) the extent and timing of any share repurchases; and (27) the impact of changes to tax legislation and, generally, the tax position of Highbury.
Highbury's filings with the SEC, accessible on the SEC's website at http://www.sec.gov, discuss these factors in more detail and identify additional factors that can affect forward-looking statements.
Highbury Financial Inc.
Financial Highlights
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Revenue | | $ | 9,595,927 | | $ | 10,157,568 | | $ | 28,555,443 | | $ | 31,829,001 | |
| | | | | | | | | | | | | | |
| Net Income | | $ | 641,004 | | $ | 892,699 | | $ | 2,166,164 | | $ | 2,794,975 | |
| | | | | | | | | | | | | | |
Cash Net Income (1) | | $ | 920,265 | | $ | 1,175,816 | | $ | 3,007,006 | | $ | 3,631,858 | |
| | | | | | | | | | | | | | |
Adjusted EBITDA (2) | | $ | 1,099,742 | | $ | 1,511,651 | | $ | 3,625,351 | | $ | 4,710,360 | |
| | | | | | | | | | | | | | |
| Average shares outstanding - basic | | | 9,126,628 | | | 9,527,000 | | | 9,170,068 | | | 9,527,000 | |
| | | | | | | | | | | | | | |
| Earnings per share - basic | | $ | 0.07 | | $ | 0.09 | | $ | 0.24 | | $ | 0.29 | |
| | | | | | | | | | | | | | |
| Average shares outstanding - diluted | | | 9,126,628 | | | 9,683,634 | | | 9,170,068 | | | 11,420,944 | |
| | | | | | | | | | | | | | |
| Earnings per share - diluted | | $ | 0.07 | | $ | 0.09 | | $ | 0.24 | | $ | 0.24 | |
Highbury Financial Inc.
Financial Highlights
| | | September 30, 2008 | | December 31, 2007 | |
| | | | | | |
| Cash and cash equivalents and investments | | $ | 10,794,312 | | $ | 11,912,052 | |
| | | | | | | | |
| Senior debt | | $ | — | | $ | — | |
| | | | | | | | |
| Senior convertible debt | | $ | — | | $ | — | |
| | | | | | | | |
| Mandatory convertible securities | | $ | — | | $ | — | |
| | | | | | | | |
| Other long term obligations | | $ | 815,725 | | $ | 844,980 | |
| | | | | | | | |
| Stockholders’ equity | | $ | 42,389,141 | | $ | 43,781,671 | |
Highbury Financial Inc.
Average Shares Outstanding
| | | Three Months Ended | | Nine Months Ended | |
| | | September 30, | | September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
| Average shares outstanding - basic | | | 9,126,628 | | | 9,527,000 | | | 9,170,068 | | | 9,527,000 | |
| Effect of dilutive instruments: | | | | | | | | | | | | | |
| Warrants | | | - | | | 156,634 | | | - | | | 1,893,944 | |
| Average shares outstanding - diluted | | | 9,126,628 | | | 9,683,634 | | | 9,170,068 | | | 11,420,944 | |
Highbury Financial Inc.
Reconciliations of Performance and Liquidity Measures
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
Net Income | | $ | 641,004 | | $ | 892,699 | | $ | 2,166,164 | | $ | 2,794,975 | |
| Intangible amortization | | | — | | | — | | | — | | | — | |
| Intangible-related deferred taxes | | | 233,263 | | | 236,772 | | | 699,788 | | | 710,315 | |
| Affiliate depreciation | | | 45,998 | | | 46,345 | | | 141,054 | | | 126,568 | |
| Other non-cash expenses | | | — | | | — | | | — | | | — | |
Cash Net Income | | $ | 920,265 | | $ | 1,175,816 | | $ | 3,007,006 | | $ | 3,631,858 | |
| | | Three Months Ended September 30, | | Nine Months Ended September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
Net Income | | $ | 641,004 | | $ | 892,699 | | $ | 2,166,164 | | $ | 2,794,975 | |
| Income tax expense | | | 412,740 | | | 572,607 | | | 1,318,133 | | | 1,788,817 | |
| Interest expense | | | — | | | — | | | — | | | — | |
| Intangible amortization | | | — | | | — | | | — | | | — | |
| Depreciation and other amortization | | | 45,998 | | | 46,345 | | | 141,054 | | | 126,568 | |
| Other non-cash expenses | | | — | | | — | | | — | | | — | |
Adjusted EBITDA | | $ | 1,099,742 | | $ | 1,511,651 | | $ | 3,625,351 | | $ | 4,710,360 | |
Highbury Financial Inc.
Condensed Consolidated Balance Sheets
| | | September 30, | | December 31, | |
| | | 2008 | | 2007 | |
| | | (unaudited) | | (audited) | |
| ASSETS | | | | | |
Current assets | | | | | |
| Cash and cash equivalents | | $ | 9,251,097 | | $ | 7,276,545 | |
| Investments | | | 1,543,215 | | | 4,635,507 | |
| Accounts receivable | | | 3,283,596 | | | 3,502,142 | |
| Prepaid expenses | | | 183,247 | | | 270,086 | |
| Prepaid taxes | | | 81,027 | | | - | |
Total current assets | | | 14,342,182 | | | 15,684,280 | |
| | | | | | | | |
Other Assets | | | | | | | |
| Fixed assets, net | | | 852,962 | | | 991,260 | |
| Identifiable intangibles | | | 25,270,000 | | | 25,270,000 | |
| Goodwill | | | 7,046,412 | | | 7,046,412 | |
| Deferred tax assets | | | 418,669 | | | 952,209 | |
| Other long-term assets | | | 669,485 | | | 169,464 | |
Total other assets | | | 34,257,528 | | | 34,429,345 | |
| | | | | | | | |
Total assets | | $ | 48,599,710 | | $ | 50,113,625 | |
| | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Current liabilities | | | | | | | |
| Accounts payable and accrued expenses | | $ | 4,524,005 | | $ | 4,549,216 | |
| Income taxes payable | | | 30,839 | | | 97,758 | |
Total current liabilities | | | 4,554,844 | | | 4,646,974 | |
| | | | | | | | |
| Deferred rent | | | 815,725 | | | 844,980 | |
Total liabilities | | | 5,370,569 | | | 5,491,954 | |
| | | | | | | | |
Minority interest(3) | | | 840,000 | | | 840,000 | |
| | | | | | | | |
| Commitments and contingencies | | | | | | | |
| | | | | | | | |
Stockholders’ equity: | | | | | | | |
| Preferred stock, $0.0001 par value, authorized | | | | | | | |
| 1,000,000 shares; none issued | | | - | | | - | |
| Common stock, $0.0001 par value, authorized | | | | | | | |
| 50,000,000 shares; 9,126,628 and 9,527,000 | | | | | | | |
| shares issued and outstanding as of September 30, 2008 | | | | | | | |
| and December 31, 2007, respectively | | | 913 | | | 953 | |
| Additional paid-in capital | | | 51,834,830 | | | 55,393,484 | |
| Accumulated deficit | | | (9,446,602 | ) | | (11,612,766 | ) |
Total stockholders’ equity | | | 42,389,141 | | | 43,781,671 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 48,599,710 | | $ | 50,113,625 | |
Highbury Financial Inc.
Condensed Consolidated Statements of Income
| | | Three Months Ended | | Nine Months Ended | |
| | | September 30, | | September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
Revenue | | $ | 9,595,927 | | $ | 10,157,568 | | $ | 28,555,443 | | $ | 31,829,001 | |
| | | | | | | | | | | | | | |
Operating expenses | | | | | | | | | | | | | |
| Distribution and sub-advisory costs | | | (4,395,372 | ) | | (4,735,347 | ) | | (13,182,141 | ) | | (14,992,086 | ) |
| Compensation and related expenses | | | (1,699,827 | ) | | (1,777,417 | ) | | (4,846,431 | ) | | (5,091,841 | ) |
| Depreciation and amortization | | | (45,998 | ) | | (46,345 | ) | | (141,054 | ) | | (126,568 | ) |
| Other operating expenses | | | (1,183,440 | ) | | (1,320,117 | ) | | (3,845,466 | ) | | (3,891,330 | ) |
Total operating expenses | | | (7,324,637 | ) | | (7,879,226 | ) | | (22,015,092 | ) | | (24,101,825 | ) |
| | | | | | | | | | | | | | |
Operating income | | | 2,271,290 | | | 2,278,342 | | | 6,540,351 | | | 7,727,176 | |
| | | | | | | | | | | | | | |
Other income | | | | | | | | | | | | | |
| Interest income | | | 19,643 | | | 135,146 | | | 90,934 | | | 341,920 | |
| Investment income (loss) | | | (346,085 | ) | | (473 | ) | | (497,946 | ) | | 50,221 | |
Total other income (loss) | | | (326,442 | ) | | 134,673 | | | (407,012 | ) | | 392,141 | |
| | | | | | | | | | | | | | |
Income before minority interest | | | 1,944,848 | | | 2,413,015 | | | 6,133,339 | | | 8,119,317 | |
| | | | | | | | | | | | | | |
Minority interest in net income of subsidiary(3) | | | (891,104 | ) | | (947,709 | ) | | (2,649,042 | ) | | (3,535,525 | ) |
| | | | | | | | | | | | | | |
Income before provision for income taxes | | | 1,053,744 | | | 1,465,306 | | | 3,484,297 | | | 4,583,792 | |
| | | | | | | | | | | | | | |
| Provision for income taxes | | | (412,740 | ) | | (572,607 | ) | | (1,318,133 | ) | | (1,788,817 | ) |
| | | | | | | | | | | | | | |
Net income | | $ | 641,004 | | $ | 892,699 | | $ | 2,166,164 | | $ | 2,794,975 | |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Weighted average shares outstanding, basic | | | 9,126,628 | | | 9,527,000 | | | 9,170,068 | | | 9,527,000 | |
Net income per share, basic | | $ | 0.07 | | $ | 0.09 | | $ | 0.24 | | $ | 0.29 | |
| | | | | | | | | | | | | | |
Weighted average shares outstanding, diluted | | | 9,126,628 | | | 9,683,634 | | | 9,170,068 | | | 11,420,944 | |
Net income per share, diluted | | $ | 0.07 | | $ | 0.09 | | $ | 0.24 | | $ | 0.24 | |
Highbury Financial Inc.
Condensed Consolidated Statements of Cash Flow
| | | Three Months Ended | | Nine Months Ended | |
| | | September 30, | | September 30, | |
| | | 2008 | | 2007 | | 2008 | | 2007 | |
| | | | | | | | | | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | |
| Net income | | $ | 641,004 | | $ | 892,699 | | $ | 2,166,164 | | $ | 2,794,975 | |
| | | | | | | | | | | | | | |
| Adjustments to reconcile net income to | | | | | | | | | | | | | |
| net cash provided by operating activities: | | | | | | | | | | | | | |
| Depreciation and amortization | | | 45,998 | | | 46,345 | | | 141,054 | | | 126,568 | |
| Deferred taxes | | | 99,997 | | | 134,706 | | | 533,540 | | | 613,974 | |
| Unrealized investment (gain) loss | | | 369,556 | | | (41,005 | ) | | 524,261 | | | (76,266 | ) |
| Minority interest in net income of subsidiary | | | 891,104 | | | 947,709 | | | 2,649,042 | | | 3,535,525 | |
| Deferred rent | | | (10,017 | ) | | 88,470 | | | (29,255 | ) | | 244,994 | |
| Changes in operating assets and liabilities | | | | | | | | | | | | | |
| (Increase) decrease in: | | | | | | | | | | | | | |
| Accounts receivable | | | 166,407 | | | 188,163 | | | 218,546 | | | 490,963 | |
| Prepaid taxes | | | (81,027 | ) | | - | | | (81,027 | ) | | - | |
| Prepaid expenses | | | (59,867 | ) | | (121,687 | ) | | 86,839 | | | 25,440 | |
| Other current assets | | | - | | | (1,108 | ) | | - | | | 11,547 | |
| Increase (decrease) in: | | | | | | | | | | | | | |
| Accounts payable and accrued expenses | | | 657,366 | | | (524,334 | ) | | 49,186 | | | 846,909 | |
| Income taxes payable | | | (62,061 | ) | | 265,301 | | | (66,919 | ) | | 413,703 | |
| Net cash provided by operating activities | | | 2,658,460 | | | 1,875,259 | | | 6,191,431 | | | 9,028,332 | |
| | | | | | | | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | | |
| Purchases of investments | | | - | | | - | | | (2,000,000 | ) | | (4,480,946 | ) |
| Proceeds from sales of investments | | | 603,960 | | | 201,332 | | | 4,568,031 | | | 1,253,274 | |
| Increase in other long-term assets | | | (501,369 | ) | | - | | | (500,021 | ) | | - | |
| Purchase of property and equipment | | | - | | | (10,232 | ) | | (2,756 | ) | | (114,722 | ) |
| Net cash provided by (used in) investing activities | | | 102,591 | | | 191,100 | | | 2,065,254 | | | (3,342,394 | ) |
| | | | | | | | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | | |
| Distributions paid to minority interest holders | | | (914,637 | ) | | (991,992 | ) | | (2,723,438 | ) | | (2,374,717 | ) |
| Redemption of common stock | | | - | | | - | | | (1,735,611 | ) | | - | |
| Repurchase of warrants | | | - | | | - | | | (1,823,084 | ) | | - | |
| Repurchase of underwriters’ purchase option | | | - | | | (1,300,000 | ) | | - | | | (1,300,000 | ) |
| Net cash used in financing activities | | | (914,637 | ) | | (2,291,992 | ) | | (6,282,133 | ) | | (3,674,717 | ) |
| | | | | | | | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 1,846,414 | | | (225,633 | ) | | 1,974,552 | | | 2,011,221 | |
Cash and cash equivalents - beginning of period | | | 7,404,683 | | | 8,485,559 | | | 7,276,545 | | | 6,248,705 | |
Cash and cash equivalents - end of period | | $ | 9,251,097 | | $ | 8,259,926 | | $ | 9,251,097 | | $ | 8,259,926 | |
| | | | | | | | | | | | | | |
Supplemental schedule of non-cash financing and investing activities: | | | | | | | | | | | | | |
| Leasehold improvements paid by landlord | | $ | - | | $ | - | | $ | - | | $ | 522,360 | |
| | | | | | | | | | | | | | |
Supplemental disclosure of cash flow information: | | | | | | | | | | | | | |
| Cash paid for income taxes | | $ | 460,000 | | $ | 172,600 | | $ | 936,708 | | $ | 761,139 | |
Highbury Financial Inc.
Quarterly Financial Highlights
| | | As of or For the Three Months Ended, | |
(all data in millions, except per share | | 2007 | | 2008 | |
amounts or as otherwise indicated) | | 3/31 | | 6/30 | | 9/30 | | 12/31 | | 3/31 | | 6/30 | | 9/30 | |
| | | | | | | | | | | | | | | | |
Operating Results | | | | | | | | | | | | | | | |
| Revenue | | $ | 11.1 | | $ | 10.6 | | $ | 10.2 | | $ | 10.2 | | $ | 9.3 | | $ | 9.7 | | $ | 9.6 | |
| Net Income | | | 1.0 | | | 0.9 | | | 0.9 | | | (1.9 | ) | | 0.6 | | | 0.9 | | | 0.6 | |
EBITDA(1) | | | 1.6 | | | 1.6 | | | 1.5 | | | 1.0 | | | 1.1 | | | 1.5 | | | 1.1 | |
Cash Net Income(2) | | | 1.2 | | | 1.2 | | | 1.2 | | | 0.9 | | | 0.9 | | | 1.2 | | | 0.9 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Average shares outstanding - diluted | | | 11.4 | | | 12.8 | | | 9.7 | | | 9.5 | | | 9.3 | | | 9.1 | | | 9.1 | |
| Earnings per share - diluted | | $ | 0.09 | | $ | 0.07 | | $ | 0.09 | | | ($0.20 | ) | $ | 0.07 | | $ | 0.10 | | $ | 0.07 | |
Cash Net Income per share - diluted(4) | | | 0.11 | | | 0.10 | | | 0.12 | | | 0.08 | | | 0.10 | | | 0.13 | | | 0.10 | |
| | | | | | | | | | | | | | | | | | | | | | | |
Balance Sheet Data | | | | | | | | | | | | | | | | | | | | | | |
| Cash and equivalents and investments | | $ | 10.1 | | $ | 11.9 | | $ | 11.6 | | $ | 11.9 | | $ | 8.6 | | $ | 9.9 | | $ | 10.8 | |
| Total assets | | | 51.6 | | | 53.1 | | | 52.8 | | | 50.1 | | | 46.3 | | | 47.4 | | | 48.6 | |
| Total liabilities | | | 5.5 | | | 6.1 | | | 6.3 | | | 5.5 | | | 4.6 | | | 4.8 | | | 5.4 | |
| Total stockholders' equity | | | 45.2 | | | 46.1 | | | 45.7 | | | 43.8 | | | 40.8 | | | 41.7 | | | 42.4 | |
| �� | | | | | | | | | | | | | | | | | | | | | | |
Assets Under Management | | | | | | | | | | | | | | | | | | | | | | |
| Total assets - EOP (in billions) | | $ | 5.4 | | $ | 5.2 | | $ | 5.1 | | $ | 5.1 | | $ | 4.7 | | $ | 4.8 | | $ | 4.5 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Mutual fund assets - BOP (in billions) | | $ | 5.5 | | $ | 5.2 | | $ | 5.1 | | $ | 5.0 | | $ | 5.0 | | $ | 4.5 | | $ | 4.7 | |
| Net client inflows (outflows) | | | (0.3 | ) | | (0.5 | ) | | (0.3 | ) | | 0.1 | | | 0.0 | | | (0.0 | ) | | 0.1 | |
| Market appreciation and other changes | | | 0.1 | | | 0.3 | | | 0.2 | | | (0.1 | ) | | (0.5 | ) | | 0.2 | | | (0.5 | ) |
| Mutual fund assets - EOP | | $ | 5.2 | | $ | 5.1 | | $ | 5.0 | | $ | 5.0 | | $ | 4.5 | | $ | 4.7 | | $ | 4.3 | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Separate account assets - EOP (in millions) | | $ | 206 | | $ | 136 | | $ | 137 | | $ | 145 | | $ | 151 | | $ | 167 | | $ | 159 | |
Highbury Financial Inc.
Notes
| (1) | As supplemental information, we provide a non-GAAP performance measure that we refer to as Cash Net Income. This measure is provided in addition to, but not as a substitute for, GAAP Net Income. Cash Net Income means the sum of (a) net income determined in accordance with GAAP, plus (b) amortization of intangible assets, plus (c) deferred taxes related to intangible assets, plus (d) affiliate depreciation, plus (e) other non-cash expenses. We consider Cash Net Income an important measure of our financial performance, as we believe it best represents operating performance before non-cash expenses relating to the acquisition of our interest in our affiliated investment management firm. Cash Net Income is not a measure of financial performance under GAAP and, as calculated by us, may not be consistent with computations of Cash Net Income by other companies. Cash Net Income is used by our management and board of directors as a performance benchmark. Since our acquired assets do not generally depreciate or require replacement by us, and since they generate deferred tax expenses that are unlikely to reverse, we add back these non-cash expenses to Net Income to measure operating performance. We will add back amortization attributable to acquired client relationships because this expense does not correspond to the changes in value of these assets, which do not diminish predictably over time. The portion of deferred taxes generally attributable to intangible assets (including goodwill) that we do not amortize but which generates tax deductions is added back, because these accruals would be used only in the event of a future sale of Aston or an impairment charge. We will add back the portion of consolidated depreciation expense incurred by Aston because under Aston’s operating agreement we are not required to replenish these depreciating assets. We also add back expenses that we incur for financial reporting purposes for which there is no corresponding cash expense because such expenses cause our Net Income to be understated relative to our ability to generate cash flow to service debt, if any, finance accretive acquisitions, and repurchase securities, if appropriate. |
| (2) | As supplemental information, we provide information regarding Adjusted EBITDA, a non-GAAP liquidity measure. This measure is provided in addition to, but not as a substitute for, cash flow from operations. Adjusted EBITDA means the sum of (a) net income determined in accordance with GAAP, plus (b) amortization of intangible assets, plus (c) interest expense, plus (d) depreciation, plus (e) other non-cash expenses, plus (f) income tax expense. This definition of Adjusted EBITDA is consistent with the definition of EBITDA used in our credit facility. Adjusted EBITDA, as calculated by us, may not be consistent with computations of Adjusted EBITDA by other companies. As a measure of liquidity, we believe that Adjusted EBITDA is useful as an indicator of our ability to service debt, make new investments and meet working capital requirements. We provide this non-GAAP measure because our management uses this information when analyzing the Company’s financial position. |
| (3) | Minority interest on the Company’s income statement represents the profits or losses allocated to the Aston management owners for that period. Minority interest on the Company’s balance sheet represents the undistributed profits and capital owned by the Aston management. |
| (4) | Cash Net Income per share represents Cash Net Income divided by the diluted average shares outstanding. In this calculation, the potential share issuance in connection with our warrants is measured using a treasury stock method. Under this method, only the net number of shares of common stock equal to the value of the warrants in excess of the exercise price, if any, is deemed to be outstanding. We believe the inclusion of net shares under a treasury stock method best reflects the benefit of the increase in available capital resources (which could be used to repurchase shares of common stock) that occurs when these securities are exercised. This method does not take into account any increase or decrease in our cost of capital in an assumed exercise. |
