false--12-31Q2202000008832370.551.100.671.340.010.0110000000001000000000107368871177773268092807664272P5YP7YP3Y1000900040001000090001.81253.6250.010.01115000001150000011500000254000P1Y39276074113460P4Y 0000883237 2020-01-01 2020-06-30 0000883237 2020-07-20 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember 2019-12-31 0000883237 2019-12-31 0000883237 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember 2020-06-30 0000883237 vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember 2019-12-31 0000883237 vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember 2020-06-30 0000883237 us-gaap:SeriesDPreferredStockMember 2019-12-31 0000883237 us-gaap:SeriesDPreferredStockMember 2020-06-30 0000883237 2020-04-01 2020-06-30 0000883237 2019-04-01 2019-06-30 0000883237 2019-01-01 2019-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember 2019-04-01 2019-06-30 0000883237 vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember 2020-04-01 2020-06-30 0000883237 vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember 2019-04-01 2019-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember 2020-01-01 2020-06-30 0000883237 vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember 2020-01-01 2020-06-30 0000883237 vrts:AdministrationAndShareholderServiceFeesMember 2019-04-01 2019-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember 2019-01-01 2019-06-30 0000883237 vrts:OtherIncomeAndfeesMember 2019-01-01 2019-06-30 0000883237 vrts:AdministrationAndShareholderServiceFeesMember 2020-04-01 2020-06-30 0000883237 vrts:InvestmentManagementFeesMember 2020-01-01 2020-06-30 0000883237 vrts:DistributionAndServiceFeesMember 2019-04-01 2019-06-30 0000883237 vrts:InvestmentManagementFeesMember 2020-04-01 2020-06-30 0000883237 vrts:AdministrationAndShareholderServiceFeesMember 2020-01-01 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember 2020-04-01 2020-06-30 0000883237 vrts:DistributionAndServiceFeesMember 2020-01-01 2020-06-30 0000883237 vrts:ConsolidatedEntityExcludingVariableInterestEntitiesVIEandVotingInterestEntitiesVOEMember 2019-01-01 2019-06-30 0000883237 vrts:OtherIncomeAndfeesMember 2019-04-01 2019-06-30 0000883237 vrts:OtherIncomeAndfeesMember 2020-04-01 2020-06-30 0000883237 vrts:AdministrationAndShareholderServiceFeesMember 2019-01-01 2019-06-30 0000883237 vrts:DistributionAndServiceFeesMember 2019-01-01 2019-06-30 0000883237 vrts:InvestmentManagementFeesMember 2019-04-01 2019-06-30 0000883237 vrts:OtherIncomeAndfeesMember 2020-01-01 2020-06-30 0000883237 vrts:DistributionAndServiceFeesMember 2020-04-01 2020-06-30 0000883237 vrts:InvestmentManagementFeesMember 2019-01-01 2019-06-30 0000883237 2019-06-30 0000883237 2018-12-31 0000883237 us-gaap:ParentMember 2019-01-01 2019-06-30 0000883237 us-gaap:SeriesDPreferredStockMember us-gaap:PreferredStockMember 2019-12-31 0000883237 us-gaap:CommonStockMember 2020-01-01 2020-06-30 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2018-12-31 0000883237 us-gaap:CommonStockMember 2020-06-30 0000883237 us-gaap:TreasuryStockMember 2019-06-30 0000883237 us-gaap:TreasuryStockMember 2019-12-31 0000883237 us-gaap:ParentMember 2020-01-01 2020-06-30 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-06-30 0000883237 us-gaap:ParentMember 2019-12-31 0000883237 us-gaap:ParentMember 2019-06-30 0000883237 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-06-30 0000883237 us-gaap:NoncontrollingInterestMember 2020-01-01 2020-06-30 0000883237 us-gaap:TreasuryStockMember 2020-06-30 0000883237 us-gaap:CommonStockMember 2019-12-31 0000883237 us-gaap:NoncontrollingInterestMember 2018-12-31 0000883237 us-gaap:ParentMember 2020-06-30 0000883237 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-06-30 0000883237 us-gaap:TreasuryStockMember 2019-01-01 2019-06-30 0000883237 us-gaap:TreasuryStockMember 2018-12-31 0000883237 us-gaap:TreasuryStockMember 2020-01-01 2020-06-30 0000883237 us-gaap:NoncontrollingInterestMember 2019-01-01 2019-06-30 0000883237 us-gaap:SeriesDPreferredStockMember us-gaap:PreferredStockMember 2019-06-30 0000883237 us-gaap:ParentMember 2018-12-31 0000883237 us-gaap:CommonStockMember 2019-06-30 0000883237 us-gaap:RetainedEarningsMember 2020-01-01 2020-06-30 0000883237 us-gaap:SeriesDPreferredStockMember us-gaap:PreferredStockMember 2018-12-31 0000883237 us-gaap:CommonStockMember 2019-01-01 2019-06-30 0000883237 us-gaap:RetainedEarningsMember 2019-01-01 2019-06-30 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-01-01 2019-06-30 0000883237 us-gaap:SeriesDPreferredStockMember us-gaap:PreferredStockMember 2020-01-01 2020-06-30 0000883237 us-gaap:SeriesDPreferredStockMember us-gaap:PreferredStockMember 2020-06-30 0000883237 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0000883237 us-gaap:RetainedEarningsMember 2019-06-30 0000883237 us-gaap:NoncontrollingInterestMember 2019-06-30 0000883237 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0000883237 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0000883237 us-gaap:RetainedEarningsMember 2019-12-31 0000883237 us-gaap:CommonStockMember 2018-12-31 0000883237 us-gaap:RetainedEarningsMember 2020-06-30 0000883237 us-gaap:NoncontrollingInterestMember 2019-12-31 0000883237 us-gaap:RetainedEarningsMember 2018-12-31 0000883237 us-gaap:NoncontrollingInterestMember 2020-06-30 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-06-30 0000883237 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0000883237 us-gaap:NoncontrollingInterestMember 2019-04-01 2019-06-30 0000883237 us-gaap:ParentMember 2020-03-31 0000883237 us-gaap:CommonStockMember 2020-03-31 0000883237 us-gaap:AdditionalPaidInCapitalMember 2020-04-01 2020-06-30 0000883237 2019-03-31 0000883237 us-gaap:ParentMember 2019-04-01 2019-06-30 0000883237 2020-03-31 0000883237 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0000883237 us-gaap:NoncontrollingInterestMember 2020-04-01 2020-06-30 0000883237 us-gaap:CommonStockMember 2020-04-01 2020-06-30 0000883237 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-03-31 0000883237 us-gaap:NoncontrollingInterestMember 2019-03-31 0000883237 us-gaap:AdditionalPaidInCapitalMember 2020-03-31 0000883237 us-gaap:ParentMember 2020-04-01 2020-06-30 0000883237 us-gaap:TreasuryStockMember 2019-04-01 2019-06-30 0000883237 us-gaap:SeriesDPreferredStockMember us-gaap:PreferredStockMember 2020-03-31 0000883237 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-04-01 2019-06-30 0000883237 us-gaap:RetainedEarningsMember 2020-04-01 2020-06-30 0000883237 us-gaap:TreasuryStockMember 2020-03-31 0000883237 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0000883237 us-gaap:RetainedEarningsMember 2020-03-31 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-03-31 0000883237 us-gaap:CommonStockMember 2019-03-31 0000883237 us-gaap:TreasuryStockMember 2019-03-31 0000883237 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-04-01 2020-06-30 0000883237 us-gaap:NoncontrollingInterestMember 2020-03-31 0000883237 us-gaap:RetainedEarningsMember 2019-03-31 0000883237 us-gaap:ParentMember 2019-03-31 0000883237 us-gaap:SeriesDPreferredStockMember us-gaap:PreferredStockMember 2019-03-31 0000883237 us-gaap:TreasuryStockMember 2020-04-01 2020-06-30 0000883237 vrts:OpenEndFundsMember 2019-04-01 2019-06-30 0000883237 vrts:OpenEndFundsMember 2020-04-01 2020-06-30 0000883237 vrts:StructuredProductsMember 2020-01-01 2020-06-30 0000883237 vrts:OtherProductsMember 2020-04-01 2020-06-30 0000883237 vrts:OpenEndFundsMember 2020-01-01 2020-06-30 0000883237 vrts:StructuredProductsMember 2019-04-01 2019-06-30 0000883237 vrts:ClosedEndFundsMember 2020-01-01 2020-06-30 0000883237 vrts:OtherProductsMember 2019-04-01 2019-06-30 0000883237 vrts:RetailSeparateAccountsMember 2019-01-01 2019-06-30 0000883237 vrts:StructuredProductsMember 2019-01-01 2019-06-30 0000883237 vrts:ClosedEndFundsMember 2020-04-01 2020-06-30 0000883237 vrts:StructuredProductsMember 2020-04-01 2020-06-30 0000883237 vrts:ClosedEndFundsMember 2019-01-01 2019-06-30 0000883237 vrts:RetailSeparateAccountsMember 2020-04-01 2020-06-30 0000883237 vrts:RetailSeparateAccountsMember 2020-01-01 2020-06-30 0000883237 vrts:OpenEndFundsMember 2019-01-01 2019-06-30 0000883237 vrts:InstitutionalAccountsMember 2019-04-01 2019-06-30 0000883237 vrts:InstitutionalAccountsMember 2019-01-01 2019-06-30 0000883237 vrts:InstitutionalAccountsMember 2020-04-01 2020-06-30 0000883237 vrts:OtherProductsMember 2020-01-01 2020-06-30 0000883237 vrts:ClosedEndFundsMember 2019-04-01 2019-06-30 0000883237 vrts:RetailSeparateAccountsMember 2019-04-01 2019-06-30 0000883237 vrts:OtherProductsMember 2019-01-01 2019-06-30 0000883237 vrts:InstitutionalAccountsMember 2020-01-01 2020-06-30 0000883237 srt:ParentCompanyMember 2019-12-31 0000883237 srt:ParentCompanyMember 2020-06-30 0000883237 vrts:SponsoredFundsMember 2020-06-30 0000883237 vrts:TradingDebtSecuritiesMember 2020-06-30 0000883237 us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 vrts:TradingDebtSecuritiesMember 2019-12-31 0000883237 us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 vrts:SponsoredFundsMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel3Member 2020-06-30 0000883237 us-gaap:FairValueInputsLevel3Member vrts:SponsoredFundsMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel1Member us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel3Member us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel2Member us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel2Member vrts:SponsoredFundsMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel1Member vrts:NonqualifiedRetirementPlanAssetsMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel1Member 2020-06-30 0000883237 us-gaap:FairValueInputsLevel1Member vrts:SponsoredFundsMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel2Member 2020-06-30 0000883237 us-gaap:FairValueInputsLevel2Member vrts:NonqualifiedRetirementPlanAssetsMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel1Member vrts:TradingDebtSecuritiesMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel3Member vrts:NonqualifiedRetirementPlanAssetsMember 2020-06-30 0000883237 vrts:NonqualifiedRetirementPlanAssetsMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel2Member vrts:TradingDebtSecuritiesMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel3Member vrts:TradingDebtSecuritiesMember 2020-06-30 0000883237 us-gaap:FairValueInputsLevel1Member vrts:SponsoredFundsMember 2019-12-31 0000883237 vrts:NonqualifiedRetirementPlanAssetsMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel2Member vrts:NonqualifiedRetirementPlanAssetsMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel3Member vrts:SponsoredFundsMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel1Member vrts:NonqualifiedRetirementPlanAssetsMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel3Member us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel3Member vrts:NonqualifiedRetirementPlanAssetsMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel2Member 2019-12-31 0000883237 us-gaap:FairValueInputsLevel3Member vrts:TradingDebtSecuritiesMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel1Member vrts:TradingDebtSecuritiesMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel1Member 2019-12-31 0000883237 us-gaap:FairValueInputsLevel2Member us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel2Member vrts:TradingDebtSecuritiesMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel1Member us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 us-gaap:FairValueInputsLevel3Member 2019-12-31 0000883237 us-gaap:FairValueInputsLevel2Member vrts:SponsoredFundsMember 2019-12-31 0000883237 us-gaap:InvestmentsMember us-gaap:FairValueInputsLevel3Member 2019-04-01 2019-06-30 0000883237 us-gaap:InvestmentsMember us-gaap:FairValueInputsLevel3Member 2019-03-31 0000883237 us-gaap:InvestmentsMember us-gaap:FairValueInputsLevel3Member 2019-01-01 2019-06-30 0000883237 us-gaap:InvestmentsMember us-gaap:FairValueInputsLevel3Member 2018-12-31 0000883237 us-gaap:InvestmentsMember us-gaap:FairValueInputsLevel3Member 2019-06-30 0000883237 2020-05-13 2020-05-13 0000883237 us-gaap:CommonStockMember 2020-02-03 2020-02-03 0000883237 2020-02-03 2020-02-03 0000883237 2020-05-31 0000883237 us-gaap:ConvertiblePreferredStockMember 2020-02-03 0000883237 us-gaap:ConvertiblePreferredStockMember 2020-02-03 2020-02-03 0000883237 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-06-30 0000883237 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2020-01-01 2020-06-30 0000883237 us-gaap:AccumulatedTranslationAdjustmentMember 2019-06-30 0000883237 us-gaap:AccumulatedTranslationAdjustmentMember 2019-01-01 2019-06-30 0000883237 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-06-30 0000883237 us-gaap:AccumulatedTranslationAdjustmentMember 2018-12-31 0000883237 us-gaap:AccumulatedTranslationAdjustmentMember 2020-01-01 2020-06-30 0000883237 us-gaap:AccumulatedTranslationAdjustmentMember 2019-12-31 0000883237 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2018-12-31 0000883237 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-12-31 0000883237 us-gaap:AccumulatedNetUnrealizedInvestmentGainLossMember 2019-01-01 2019-06-30 0000883237 us-gaap:AccumulatedTranslationAdjustmentMember 2020-06-30 0000883237 vrts:RestrictedStockUnitsandPerformanceSharesUnitsMember 2020-06-30 0000883237 vrts:RestrictedStockUnitsandPerformanceSharesUnitsMember 2020-01-01 2020-06-30 0000883237 us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-06-30 0000883237 us-gaap:RestrictedStockUnitsRSUMember 2019-01-01 2019-06-30 0000883237 vrts:PerformanceStockUnitsIncentiveMember 2020-01-01 2020-06-30 0000883237 srt:MaximumMember us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-06-30 0000883237 vrts:RestrictedStockUnitsMember 2020-01-01 2020-06-30 0000883237 vrts:RestrictedStockUnitsMember 2019-12-31 0000883237 vrts:RestrictedStockUnitsMember 2020-06-30 0000883237 srt:MinimumMember us-gaap:RestrictedStockUnitsRSUMember 2020-01-01 2020-06-30 0000883237 vrts:RestrictedStockUnitsRSUsandStockOptionsMember 2019-04-01 2019-06-30 0000883237 vrts:RestrictedStockUnitsRSUsandStockOptionsMember 2020-01-01 2020-06-30 0000883237 vrts:RestrictedStockUnitsRSUsandStockOptionsMember 2019-01-01 2019-06-30 0000883237 vrts:RestrictedStockUnitsRSUsandStockOptionsMember 2020-04-01 2020-06-30 0000883237 vrts:TermLoanMember vrts:CreditAgreementMember 2020-01-01 2020-06-30 0000883237 vrts:TermLoanMember vrts:CreditAgreementMember 2020-06-30 0000883237 us-gaap:RevolvingCreditFacilityMember vrts:CreditAgreementMember 2020-06-30 0000883237 us-gaap:RevolvingCreditFacilityMember vrts:CreditAgreementMember 2020-01-01 2020-06-30 0000883237 srt:AffiliatedEntityMember 2020-06-30 0000883237 srt:AffiliatedEntityMember 2019-12-31 0000883237 srt:AffiliatedEntityMember 2020-01-01 2020-06-30 0000883237 us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember 2020-01-01 2020-06-30 0000883237 srt:AffiliatedEntityMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember 2020-01-01 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:PortionAtOtherThanFairValueFairValueDisclosureMember 2020-01-01 2020-06-30 0000883237 srt:MaximumMember 2020-01-01 2020-06-30 0000883237 srt:MinimumMember 2020-01-01 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember 2020-01-01 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryOtherMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryOtherMember 2020-06-30 0000883237 vrts:VotingInterestEntityVOEMember 2020-06-30 0000883237 vrts:VotingInterestEntityVOEMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:DebtSecuritiesMember 2020-01-01 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:DebtSecuritiesMember 2019-01-01 2019-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:DebtSecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:DebtSecuritiesMember 2019-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:DebtSecuritiesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:DebtSecuritiesMember 2018-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel1Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel2Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueInputsLevel3Member us-gaap:FairValueMeasurementsRecurringMember us-gaap:EquitySecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryandVotingInterestEntityMember us-gaap:FairValueMeasurementsRecurringMember us-gaap:DebtSecuritiesMember 2019-12-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember vrts:SubordinatedNotesNewfleetCLO20161Member 2020-03-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember us-gaap:SeniorNotesMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember srt:MinimumMember vrts:SeniorSecuredFloatingRateNotesNewfleetCLO20161Member us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-06-30 0000883237 us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember srt:MaximumMember vrts:SeniorSecuredFloatingRateNotesNewfleetCLO20161Member us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember vrts:SubordinatedNotesNewfleetCLO20161Member us-gaap:SubordinatedDebtMember 2020-03-31 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember us-gaap:LondonInterbankOfferedRateLIBORMember 2020-01-01 2020-06-30 0000883237 vrts:VariableInterestEntityPrimaryBeneficiaryCollateralizedLoanObligationMember vrts:SeniorSecuredFloatingRateNotesNewfleetCLO20161Member us-gaap:SeniorNotesMember 2020-03-31 0000883237 us-gaap:SubsequentEventMember 2020-07-04 iso4217:USD xbrli:shares iso4217:USD xbrli:shares vrts:day xbrli:pure vrts:collateralized_loan_obligation vrts:subsidiary

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
 
 
 
 
FORM 10-Q
 
 
 
 
 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 001-10994
 
 
 
 
 
 
VRTSLOGO2019A02.JPG
VIRTUS INVESTMENT PARTNERS, INC.
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
 
Delaware
 
26-3962811
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
One Financial Plaza, Hartford, CT 06103
(Address of principal executive offices, including Zip Code)
(800) 248-7971
(Registrant’s telephone number, including area code)
 
 
 
 
 

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
 
 
 
 
 
Common Stock, $0.01 par value
 
VRTS
 
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
 
  
Accelerated filer
 
 
 
 
 
Non-accelerated filer
 
  
Smaller reporting company
 
 
 
 
 
 
 
 
 
 
 
 
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
The number of shares outstanding of the registrant’s common stock was 7,664,272 as of July 20, 2020.
 
 
 
 
 



VIRTUS INVESTMENT PARTNERS, INC.
INDEX
 
 
 
Page
Item 1.
 
 
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 2.
Item 6.
 
"We," "us," "our," the "Company," and "Virtus" as used in this Quarterly Report on Form 10-Q refer to Virtus Investment Partners, Inc., a Delaware corporation, and its subsidiaries.




PART I – FINANCIAL INFORMATION
 
Item 1.    Financial Statements
Virtus Investment Partners, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
June 30,
2020
 
December 31,
2019
Assets:
 
 
 
Cash and cash equivalents
$
168,268

 
$
221,781

Investments
61,301

 
83,206

Accounts receivable, net
72,435

 
74,132

Assets of consolidated investment products ("CIP")
 
 
 
Cash and cash equivalents of CIP
77,321

 
99,691

Cash pledged or on deposit of CIP
6,464

 
467

Investments of CIP
2,273,820

 
2,030,110

Other assets of CIP
29,787

 
23,612

Furniture, equipment and leasehold improvements, net
16,068

 
18,150

Intangible assets, net
295,325

 
310,391

Goodwill
290,366

 
290,366

Deferred taxes, net
10,874

 
15,879

Other assets
38,058

 
36,849

Total assets
$
3,340,087

 
$
3,204,634

Liabilities and Equity
 
 
 
Liabilities:
 
 
 
Accrued compensation and benefits
$
56,228

 
$
101,377

Accounts payable and accrued liabilities
19,528

 
23,308

Dividends payable
7,196

 
8,915

Debt
234,765

 
277,839

Other liabilities
36,272

 
40,507

Liabilities of CIP
 
 
 
Notes payable of CIP
2,156,587

 
1,834,535

Securities purchased payable and other liabilities of CIP
72,313

 
168,051

Total liabilities
2,582,889

 
2,454,532

Commitments and Contingencies (Note 13)

 

Redeemable noncontrolling interests
90,687

 
63,845

Equity:
 
 
 
Equity attributable to stockholders:
 
 
 
Series D mandatory convertible preferred stock, $0.01 par value, 0 and 1,150,000 shares authorized, issued and outstanding at June 30, 2020 and December 31, 2019, respectively

 
110,843

Common stock, $0.01 par value, 1,000,000,000 shares authorized; 11,777,732 shares issued and 7,664,272 shares outstanding at June 30, 2020 and 10,736,887 shares issued and 6,809,280 shares outstanding at December 31, 2019, respectively
118

 
107

Additional paid-in capital
1,303,036

 
1,199,205

Retained earnings (accumulated deficit)
(208,222
)
 
(215,216
)
Accumulated other comprehensive income (loss)
(17
)
 
9

Treasury stock, at cost, 4,113,460 and 3,927,607 shares at June 30, 2020 and December 31, 2019, respectively
(436,749
)
 
(419,249
)
Total equity attributable to stockholders
658,166

 
675,699

Noncontrolling interests
8,345

 
10,558

Total equity
666,511

 
686,257

Total liabilities and equity
$
3,340,087

 
$
3,204,634


The accompanying notes are an integral part of these condensed consolidated financial statements.

1


Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(in thousands, except per share data)
2020
 
2019
 
2020
 
2019
Revenues
 
 
 
 
 
 
 
Investment management fees
$
110,550

 
$
114,591

 
$
230,838

 
$
220,509

Distribution and service fees
8,889

 
10,617

 
18,349

 
20,680

Administration and shareholder service fees
13,289

 
15,054

 
27,942

 
29,467

Other income and fees
166

 
227

 
331

 
551

Total revenues
132,894

 
140,489

 
277,460

 
271,207

Operating Expenses
 
 
 
 
 
 
 
Employment expenses
60,163

 
58,123

 
126,293

 
118,974

Distribution and other asset-based expenses
17,345

 
21,322

 
36,754

 
41,086

Other operating expenses
17,436

 
19,174

 
36,321

 
37,897

Operating expenses of consolidated investment products ("CIP")
2,179

 
2,568

 
8,928

 
3,019

Restructuring and severance
420

 
320

 
420

 
1,496

Depreciation expense
1,196

 
1,271

 
2,454

 
2,484

Amortization expense
7,533

 
7,583

 
15,066

 
15,124

Total operating expenses
106,272

 
110,361

 
226,236

 
220,080

Operating Income (Loss)
26,622

 
30,128

 
51,224

 
51,127

Other Income (Expense)
 
 
 
 
 
 
 
Realized and unrealized gain (loss) on investments, net
7,114

 
2,039

 
(430
)
 
5,472

Realized and unrealized gain (loss) of CIP, net
(6,744
)
 
9,720

 
(15,413
)
 
7,799

Other income (expense), net
(805
)
 
696

 
(193
)
 
1,146

Total other income (expense), net
(435
)
 
12,455

 
(16,036
)
 
14,417

Interest Income (Expense)
 
 
 
 
 
 
 
Interest expense
(3,126
)
 
(5,151
)
 
(6,325
)
 
(10,316
)
Interest and dividend income
242

 
964

 
994

 
2,154

Interest and dividend income of investments of CIP
28,634

 
29,368

 
57,863

 
56,770

Interest expense of CIP
(28,150
)
 
(31,077
)
 
(52,636
)
 
(50,778
)
Total interest income (expense), net
(2,400
)
 
(5,896
)
 
(104
)
 
(2,170
)
Income (Loss) Before Income Taxes
23,787

 
36,687

 
35,084

 
63,374

Income tax expense (benefit)
7,578

 
8,788

 
17,869

 
13,007

Net Income (Loss)
16,209

 
27,899

 
17,215

 
50,367

Noncontrolling interests
(4,930
)
 
(973
)
 
(10,221
)
 
(1,695
)
Net Income (Loss) Attributable to Stockholders
11,279

 
26,926

 
6,994

 
48,672

Preferred stockholder dividends

 
(2,084
)
 

 
(4,168
)
Net Income (Loss) Attributable to Common Stockholders
$
11,279

 
$
24,842

 
$
6,994

 
$
44,504

Earnings (Loss) per Share—Basic
$
1.46

 
$
3.55

 
$
0.92

 
$
6.35

Earnings (Loss) per Share—Diluted
$
1.43

 
$
3.26

 
$
0.88

 
$
5.87

Weighted Average Shares Outstanding—Basic
7,720

 
6,999

 
7,572

 
7,010

Weighted Average Shares Outstanding—Diluted
7,895

 
8,252

 
7,936

 
8,290


The accompanying notes are an integral part of these condensed consolidated financial statements.

2


Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(in thousands)
2020
 
2019
 
2020
 
2019
Net Income (Loss)
$
16,209

 
$
27,899

 
$
17,215

 
$
50,367

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustment, net of tax of $0 and $4 for the three months ended June 30, 2020 and 2019, respectively, and $9 and $1 for the six months ended June 30, 2020 and 2019, respectively
(1
)
 
(8
)
 
(26
)
 
(2
)
Other comprehensive income (loss)
(1
)
 
(8
)
 
(26
)
 
(2
)
Comprehensive income (loss)
16,208

 
27,891

 
17,189

 
50,365

Comprehensive (income) loss attributable to noncontrolling interests
(4,930
)
 
(973
)
 
(10,221
)
 
(1,695
)
Comprehensive Income (Loss) Attributable to Stockholders
$
11,278

 
$
26,918

 
$
6,968

 
$
48,670

The accompanying notes are an integral part of these condensed consolidated financial statements.

3


Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Six Months Ended
June 30,
(in thousands)
2020
 
2019
Cash Flows from Operating Activities:
 
 
 
Net income (loss)
$
17,215

 
$
50,367

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 
 
 
Depreciation expense, intangible asset and other amortization
21,557

 
19,810

Stock-based compensation
10,113

 
11,384

Amortization of deferred commissions
1,038

 
1,805

Payments of deferred commissions
(974
)
 
(973
)
Equity in earnings of equity method investments
93

 
(1,209
)
(Gain) loss on extinguishment of debt
(705
)
 

Realized and unrealized (gains) losses on investments, net
431

 
(4,634
)
Distributions from equity method investments
726

 
675

Sales (purchases) of investments, net
4,703

 
13,767

Deferred taxes, net
5,014

 
252

Changes in operating assets and liabilities:
 
 
 
Accounts receivable, net and other assets
(2,032
)
 
(2,394
)
Accrued compensation and benefits, accounts payable, accrued liabilities and other liabilities
(52,788
)
 
(44,325
)
Operating activities of consolidated investment products ("CIP"):
 
 
 
Realized and unrealized (gains) losses on investments of CIP, net
11,603

 
(13,222
)
Purchases of investments by CIP
(920,392
)
 
(532,342
)
Sales of investments by CIP
442,859

 
348,771

Net proceeds (purchases) of short term investments by CIP
68

 
(309
)
(Purchases) sales of securities sold short by CIP, net
250

 
1,193

Change in other assets of CIP
(1,790
)
 
71

Change in liabilities of CIP
2,130

 
3,140

Amortization of discount on notes payable of CIP
11,169

 
4,505

Net cash provided by (used in) operating activities
(449,712
)
 
(143,668
)
Cash Flows from Investing Activities:
 
 
 
Capital expenditures and other asset purchases
(475
)
 
(6,111
)
Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net
9,724

 
(1,571
)
Sale of available-for-sale securities

 
2,044

Net cash provided by (used in) investing activities
9,249

 
(5,638
)
Cash Flows from Financing Activities:
 
 
 
Payment of long term debt
(44,059
)
 
(24,825
)
Common stock dividends paid
(11,320
)
 
(8,392
)
Preferred stock dividends paid
(2,084
)
 
(4,168
)
Repurchases of common shares
(17,500
)
 
(22,499
)
Proceeds from exercise of stock options
114

 
643

Taxes paid related to net share settlement of restricted stock units
(5,569
)
 
(6,509
)
Net subscriptions received from (redemptions/distributions paid to) noncontrolling interests
(3,951
)
 
6,599

Financing activities of CIP:
 
 
 
Payments on borrowings by CIP
(326,201
)
 
(195,697
)
Borrowings by CIP
781,147

 
400,782

Net cash provided by (used in) financing activities
370,577

 
145,934

Net increase (decrease) in cash, cash equivalents and restricted cash
(69,886
)
 
(3,372
)
Cash, cash equivalents and restricted cash, beginning of period
321,939

 
254,656

Cash, cash equivalents and restricted cash, end of period
$
252,053

 
$
251,284

Non-Cash Investing Activities:
 
 
 
Change in accrual for capital expenditures
$
(21
)
 
$
(1,813
)
Non-Cash Financing Activities:
 
 
 
Increase (decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net
$
17,137

 
$
(6,423
)
Common stock dividends payable
$
5,169

 
$
3,849

Preferred stock dividends payable
$

 
$
2,084

Conversion of preferred stock to common stock
$
115,000

 
$


(in thousands)
June 30,
2020
 
December 31, 2019
Reconciliation of cash, cash equivalents and restricted cash
 
 
 
Cash and cash equivalents
$
168,268

 
$
221,781

Cash of CIP
77,321

 
99,691

Cash pledged or on deposit of CIP
6,464

 
467

Cash, cash equivalents and restricted cash at end of period
$
252,053

 
$
321,939


The accompanying notes are an integral part of these condensed consolidated financial statements.

4


Virtus Investment Partners, Inc.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 
Permanent Equity
 
Temporary Equity
 
Common Stock
 
Preferred Stock
 
Additional
Paid-in
Capital
 
Retained Earnings (Accumulated
Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury Stock
 
Total
Attributed To
Stockholders
 
Non-
controlling
Interests
 
Total
Equity
 
Redeemable
Non-
controlling
Interests
(in thousands, except per share data)
Shares
 
Par Value
 
Shares
 
Amount
 
Shares
 
Amount
 
Balances at March 31, 2019
6,978,925

 
$
107

 
1,150,000

 
$
110,843

 
$
1,205,926

 
$
(289,119
)
 
$
1

 
3,703,204

 
$
(394,248
)
 
$
633,510

 
$
12,948

 
$
646,458

 
$
59,003

Net income (loss)

 

 

 

 

 
26,926

 

 

 

 
26,926

 
224

 
27,150

 
749

Foreign currency translation adjustments

 

 

 

 

 

 
(8
)
 

 

 
(8
)
 

 
(8
)
 

Net subscriptions (redemptions) and other

 

 

 

 
290

 

 

 

 

 
290

 
(535
)
 
(245
)
 
750

Cash dividends declared ($1.8125 per preferred share)

 

 

 

 
(2,084
)
 

 

 

 

 
(2,084
)
 

 
(2,084
)
 

Cash dividends declared ($0.55 per common share)

 

 

 

 
(4,104
)
 

 

 

 

 
(4,104
)
 

 
(4,104
)
 

Repurchases of common shares
(67,709
)
 

 

 

 

 

 

 
67,709

 
(7,500
)
 
(7,500
)
 

 
(7,500
)
 

Issuance of common shares related to employee stock transactions
33,676

 

 

 

 
565

 

 

 

 

 
565

 

 
565

 

Taxes paid on stock-based compensation

 

 

 

 
(1,294
)
 

 

 

 

 
(1,294
)
 

 
(1,294
)
 

Stock-based compensation

 

 

 

 
4,734

 

 

 

 

 
4,734

 

 
4,734

 

Balances at June 30, 2019
6,944,892

 
$
107

 
1,150,000

 
$
110,843

 
$
1,204,033

 
$
(262,193
)
 
$
(7
)
 
3,770,913

 
$
(401,748
)
 
$
651,035

 
$
12,637

 
$
663,672

 
$
60,502

Balances at March 31, 2020
7,695,413

 
$
117

 

 
$

 
$
1,304,868

 
$
(219,501
)
 
$
(16
)
 
4,038,563

 
$
(429,249
)
 
$
656,219

 
$
10,247

 
$
666,466

 
$
87,115

Net income (loss)

 

 

 

 

 
11,279

 

 

 

 
11,279

 
(1,378
)
 
9,901

 
6,308

Foreign currency translation adjustments

 

 

 

 

 

 
(1
)
 

 

 
(1
)
 

 
(1
)
 

Net subscriptions (redemptions) and other

 

 

 

 
(167
)
 

 

 

 

 
(167
)
 
(524
)
 
(691
)
 
(2,736
)
Cash dividends declared ($0.67 per common share)

 

 

 

 
(5,496
)
 

 

 

 

 
(5,496
)
 

 
(5,496
)
 

Repurchases of common shares
(74,897
)
 

 

 

 

 

 

 
74,897

 
(7,500
)
 
(7,500
)
 

 
(7,500
)
 

Issuance of common shares related to employee stock transactions
43,756

 
1

 

 

 
12

 

 

 

 

 
13

 

 
13

 

Taxes paid on stock-based compensation

 

 

 

 
(2,019
)
 

 

 

 

 
(2,019
)
 
 
 
(2,019
)
 

Stock-based compensation

 

 

 

 
5,838

 

 

 

 

 
5,838

 

 
5,838

 

Balances at June 30, 2020
7,664,272

 
$
118

 

 
$

 
$
1,303,036

 
$
(208,222
)
 
$
(17
)
 
4,113,460

 
$
(436,749
)
 
$
658,166

 
$
8,345

 
$
666,511

 
$
90,687






 
Permanent Equity
 
Temporary Equity
 
Common Stock
 
Preferred Stock
 
Additional
Paid-in
Capital
 
Retained Earnings (Accumulated
Deficit)
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Treasury Stock
 
Total
Attributed To
Stockholders
 
Non-
controlling
Interests
 
Total
Equity
 
Redeemable
Non-
controlling
Interests
(in thousands, except per share data)
Shares
 
Par Value
 
Shares
 
Amount
 
Shares
 
Amount
 
Balances at December 31, 2018
6,997,382

 
$
106

 
1,150,000

 
$
110,843

 
$
1,209,805

 
$
(310,865
)
 
$
(731
)
 
3,555,242

 
$
(379,249
)
 
$
629,909

 
$
13,958

 
$
643,867

 
$
57,481

Net income (loss)

 

 

 

 

 
48,672

 

 

 

 
48,672

 
(229
)
 
48,443

 
1,924

Reclassification from other comprehensive (income) loss

 

 

 

 

 

 
726

 

 

 
726

 

 
726

 

Foreign currency translation adjustments

 

 

 

 

 

 
(2
)
 

 

 
(2
)
 

 
(2
)
 

Net subscriptions (redemptions) and other

 

 

 

 
290

 

 

 

 

 
290

 
(1,092
)
 
(802
)
 
1,097

Cash dividends declared ($3.625 per preferred share)

 

 

 

 
(4,168
)
 

 

 

 

 
(4,168
)
 

 
(4,168
)
 

Cash dividends declared ($1.10 per common share)

 

 

 

 
(8,256
)
 

 

 

 

 
(8,256
)
 

 
(8,256
)
 

Repurchases of common shares
(215,671
)
 

 

 

 

 

 

 
215,671

 
(22,499
)
 
(22,499
)
 

 
(22,499
)
 

Issuance of common shares related to employee stock transactions
163,181

 
1

 

 

 
1,013

 

 

 

 

 
1,014

 

 
1,014

 

Taxes paid on stock-based compensation

 

 

 

 
(6,098
)
 

 

 

 

 
(6,098
)
 

 
(6,098
)
 

Stock-based compensation

 

 

 

 
11,447

 

 

 

 

 
11,447

 

 
11,447

 

Balances at June 30, 2019
6,944,892

 
$
107

 
1,150,000

 
$
110,843

 
$
1,204,033

 
$
(262,193
)
 
$
(7
)
 
3,770,913

 
$
(401,748
)
 
$
651,035

 
$
12,637

 
$
663,672

 
$
60,502

Balances at December 31, 2019
6,809,280

 
$
107

 
1,150,000

 
$
110,843

 
$
1,199,205

 
$
(215,216
)
 
$
9

 
3,927,607

 
$
(419,249
)
 
$
675,699

 
$
10,558

 
$
686,257

 
$
63,845

Net income (loss)

 

 

 

 

 
6,994

 

 

 

 
6,994

 
(1,123
)
 
5,871

 
11,344

Foreign currency translation adjustments

 

 

 

 

 

 
(26
)
 

 

 
(26
)
 

 
(26
)
 

Net subscriptions (redemptions) and other

 

 

 

 
(167
)
 

 

 

 

 
(167
)
 
(1,090
)
 
(1,257
)
 
15,498

Conversion of preferred stock
912,806

 
9

 
(1,150,000
)
 
(110,843
)
 
110,834

 

 

 

 

 

 

 

 

Cash dividends declared ($1.34 per common share)

 

 

 

 
(11,676
)
 

 

 

 

 
(11,676
)
 

 
(11,676
)
 

Repurchases of common shares
(185,853
)
 

 

 

 

 

 

 
185,853

 
(17,500
)
 
(17,500
)
 

 
(17,500
)
 

Issuance of common shares related to employee stock transactions
128,039

 
2

 

 

 
112

 

 

 

 

 
114

 

 
114

 

Taxes paid on stock-based compensation

 

 

 

 
(5,569
)
 

 

 

 

 
(5,569
)
 
 
 
(5,569
)
 

Stock-based compensation

 

 

 

 
10,297

 

 

 

 

 
10,297

 

 
10,297

 

Balances at June 30, 2020
7,664,272

 
$
118

 

 
$

 
$
1,303,036

 
$
(208,222
)
 
$
(17
)
 
4,113,460

 
$
(436,749
)
 
$
658,166

 
$
8,345

 
$
666,511

 
$
90,687





The accompanying notes are an integral part of these condensed consolidated financial statements.


5


Virtus Investment Partners, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Organization and Business

Virtus Investment Partners, Inc. (the "Company," "we," "us," "our" or "Virtus"), a Delaware corporation, operates in the investment management industry through its subsidiaries.

The Company provides investment management and related services to individuals and institutions. The Company’s retail investment management services are provided to individuals through products consisting of U.S. 1940 Act mutual funds and Undertaking for Collective Investment in Transferable Securities ("UCITS" or "offshore funds" and collectively, with U.S. 1940 Act mutual funds, "open-end funds"), exchange traded funds ("ETFs"), closed-end funds (collectively, with open-end funds and ETFs, "funds") and retail separate accounts. Institutional investment management services are offered through separate accounts and pooled or commingled structures to a variety of institutional clients. The Company also provides subadvisory services to other investment advisers and serves as the collateral manager for structured products.


2. Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, these financial statements contain all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the Company’s financial condition and results of operations. Operating results for the six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.
These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Annual Report on Form 10-K") filed with the Securities and Exchange Commission (the "SEC"). The Company’s significant accounting policies, which have been consistently applied, are summarized in its 2019 Annual Report on Form 10-K.

New Accounting Standards Implemented

In August 2018, the Financial Accounting Standards Board (the "FASB") issued Accounting Standards Update ("ASU") 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40). This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, including an internal-use software license. The Company adopted this standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). This standard modifies the disclosure requirements on fair value measurements. The Company adopted this standard on January 1, 2020. The adoption of this standard did not have a material impact on the Company's condensed consolidated financial statements.

New Accounting Standards Not Yet Implemented

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). This standard clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, with the amendments to be applied on a prospective basis. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements.


6


In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, Income Taxes, and also improves consistent application by clarifying and amending existing guidance. This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment. The Company is currently evaluating the impact of adopting this standard on its condensed consolidated financial statements.


3. Revenues

The Company's revenues are recognized when a performance obligation is satisfied, which occurs when control of the services is transferred to customers. Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed. The net asset values from which investment management, distribution and service, and administration and shareholder service fees are calculated are variable in nature and subject to factors outside of the Company's control such as additional investments, withdrawals and market performance. Because of this, these fees are considered constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset values are generally determinable.

Revenue Disaggregated by Source
    
The following table summarizes revenue by source:
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
(in thousands)
2020
 
2019
 
2020
 
2019
Investment management fees
 
 
 
 
 
 
 
Open-end funds
$
54,018

 
$
56,973

 
$
113,126

 
$
110,266

Closed-end funds
8,557

 
10,620

 
18,736

 
20,639

Retail separate accounts
22,398

 
20,664

 
48,112

 
38,669

Institutional accounts
24,606

 
23,656

 
47,523

 
45,833

Structured products
417

 
1,585

 
1,991

 
3,232

Other products
554

 
1,093

 
1,350

 
1,870

Total investment management fees
110,550

 
114,591

 
230,838

 
220,509

Distribution and service fees
8,889

 
10,617

 
18,349

 
20,680

Administration and shareholder service fees
13,289

 
15,054

 
27,942

 
29,467

Other income and fees
166

 
227

 
331

 
551

Total revenues
$
132,894

 
$
140,489

 
$
277,460

 
$
271,207


    

4. Intangible Assets, Net

Below is a summary of intangible assets, net:
(in thousands)
June 30, 2020
 
December 31, 2019
Definite-lived intangible assets:
 
 
 
Investment contracts and other
$
489,570

 
$
489,570

Accumulated amortization
(237,761
)
 
(222,695
)
Definite-lived intangible assets, net
251,809

 
266,875

Indefinite-lived intangible assets
43,516

 
43,516

Total intangible assets, net
$
295,325

 
$
310,391


    

7


Activity in intangible assets, net was as follows: 
 
Six Months Ended June 30,
(in thousands)
2020
 
2019
Intangible assets, net
 
 
 
Balance, beginning of period
$
310,391

 
$
338,812

Additions

 
1,696

Amortization
(15,066
)
 
(15,124
)
Balance, end of period
$
295,325

 
$
325,384



Definite-lived intangible asset amortization for the remainder of fiscal year 2020 and succeeding fiscal years is estimated as follows:
Fiscal Year
 
Amount
(in thousands)
Remainder of 2020
 
$
15,061

2021
 
30,116

2022
 
29,992

2023
 
29,330

2024
 
23,689

2025 and thereafter
 
123,621

 
 
$
251,809




5. Investments
Investments consist primarily of investments in the Company's sponsored products. The Company's investments, excluding the assets of consolidated investment products ("CIP") discussed in Note 15, at June 30, 2020 and December 31, 2019 were as follows:
(in thousands)
June 30, 2020
 
December 31, 2019
Investment securities - fair value
$
40,024

 
$
60,990

Equity method investments (1)
11,461

 
12,030

Nonqualified retirement plan assets
8,526

 
8,724

Other investments
1,290

 
1,462

Total investments
$
61,301

 
$
83,206



(1)
The Company's equity method investments are valued on a three-month lag based upon the availability of financial information. 
Investment Securities - fair value
Investment securities - fair value consist of investments in the Company's sponsored funds, separately managed accounts and trading debt securities. The composition of the Company’s investment securities - fair value was as follows:
 
June 30, 2020
 
December 31, 2019
(in thousands)
Cost
 
Fair Value
 
Cost
 
Fair Value
Investment Securities - fair value
 
 
 
 
 
 
 
Sponsored funds
$
23,735

 
$
27,341

 
$
44,588

 
$
47,654

Equity securities
10,818

 
12,679

 
11,250

 
13,320

Debt securities
7

 
4

 
44

 
16

Total investment securities - fair value
$
34,560

 
$
40,024

 
$
55,882

 
$
60,990



For the three and six months ended June 30, 2020, the Company recognized realized gains of less than $0.1 million

8


and realized losses of $0.3 million, respectively, on the sale of its investment securities - fair value. For the three and six months ended June 30, 2019, the Company recognized a realized gain of $0.2 million and a realized loss of $0.6 million, respectively, on the sale of its investment securities - fair value.


6. Fair Value Measurements
The Company’s assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 15, as of June 30, 2020 and December 31, 2019 by fair value hierarchy level were as follows:
June 30, 2020  
(in thousands)
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Cash equivalents
$
138,847

 
$

 
$

 
$
138,847

Investment securities - fair value
 
 
 
 
 
 
 
Sponsored funds
27,341

 

 

 
27,341

Equity securities
12,679

 

 

 
12,679

Debt securities

 
4

 

 
4

Nonqualified retirement plan assets
8,526

 

 

 
8,526

Total assets measured at fair value
$
187,393

 
$
4

 
$

 
$
187,397


December 31, 2019  
(in thousands)
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
Cash equivalents
$
187,255

 
$

 
$

 
$
187,255

Investment securities - fair value
 
 
 
 
 
 
 
Sponsored funds
47,654

 

 

 
47,654

Equity securities
13,320

 

 

 
13,320

Debt securities

 
16

 

 
16

Nonqualified retirement plan assets
8,724

 

 

 
8,724

Total assets measured at fair value
$
256,953

 
$
16

 
$

 
$
256,969



The following is a discussion of the valuation methodologies used for the Company’s assets measured at fair value:

Cash equivalents represent investments in money market funds. Cash investments in money market funds are valued using published net asset values and are classified as Level 1.

Sponsored funds represent investments in open-end funds, closed-end funds and ETFs for which the Company acts as the investment manager. The fair value of open-end funds is determined based on their published net asset values and are categorized as Level 1. The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded and are categorized as Level 1.

Equity securities represent securities traded on active markets and are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Debt securities represent investments in senior secured bank loans and are based on evaluated quotations received from independent pricing services and are categorized as Level 2.

Nonqualified retirement plan assets represent mutual funds within a nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.


9


The Company had no Level 3 investments for the three and six-month periods ended June 30, 2020. The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value for the three and six-months ended June 30, 2019:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 (in thousands)
2019
 
2019
Level 3 Investments (1)
 
 
 
Balance at beginning of period
$
4,417

 
$
4,122

Purchases (sales), net
(4,417
)
 
(4,185
)
Change in realized and unrealized gain (loss), net

 
63

Balance at end of period
$

 
$


(1)
The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.


7. Equity Transactions

Preferred Stock Conversion

On February 3, 2020, 1,150,000 shares of mandatory convertible preferred stock ("MCPS") converted to 912,870 shares of the Company's common stock. Each share of MCPS converted to 0.7938 shares of common stock at a conversion price of $125.97 per share, subject to customary anti-dilution adjustments. The number of shares of common stock issued upon conversion was determined based on the volume-weighted average price per share of the Company's common stock over the 20 consecutive trading day period beginning on, and including, the 22nd scheduled trading day immediately preceding the mandatory conversion date.

Dividends Declared    

On May 13, 2020, the Company declared a quarterly cash dividend of $0.67 per common share to be paid on August 14, 2020 to stockholders of record at the close of business on July 31, 2020.

Common Stock Repurchases    

During the three and six months ended June 30, 2020, the Company repurchased 74,897 and 185,853 common shares, respectively, at a weighted average price of $100.11 and $94.13 per share, respectively, for a total cost, including fees and expenses, of $7.5 million and $17.5 million, respectively, under its share repurchase program. In May 2020, the Company's Board of Directors authorized an additional 750,000 shares to be repurchased under the share repurchase program. As of June 30, 2020, 816,585 shares remained available for repurchase. Under the terms of the program, the Company may repurchase shares of its common stock from time to time at its discretion through open market repurchases, privately negotiated transactions and/or other mechanisms, depending on price and prevailing market and business conditions. The program, which has no specified term, may be suspended or terminated at any time.    


8. Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive income (loss) by component for the six months ended June 30, 2020 and 2019 were as follows:
(in thousands)
Unrealized Gains (Losses) on
Securities
Available-for-Sale
 
Foreign 
Currency
Translation
Adjustments
Balance at December 31, 2019
$

 
$
9

Foreign currency translation adjustments, net of tax of $9

 
(26
)
Net current-period other comprehensive income (loss)

 
(26
)
Balance at June 30, 2020
$

 
$
(17
)
 
 
 
 
 
 
 
 


10


(in thousands)
Unrealized Gains (Losses) on
Securities
Available-for-Sale
 
Foreign 
Currency
Translation
Adjustments
Balance at December 31, 2018
$
(726
)
 
$
(5
)
Foreign currency translation adjustments, net of tax of $1

 
(2
)
Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $(254)
726

 

Net current-period other comprehensive income (loss)
726
<