|
|
December 31, 2018
|
|
|
|
Quoted Prices in Active
Markets for Identical
Assets (Level 1)
|
|
|
Significant Other
Observable
Inputs (Level 2)
|
|
|
Significant
Unobservable
Inputs (Level 3)
|
|
|
Investments
Using NAV as
Fair Value (a)
|
|
|
Other Assets
Not Held at
Fair Value (b)
|
|
|
Total
|
|
Cash equivalents
|
|
$
|
407,239
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
407,239
|
|
Investments in partnerships
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
114,449
|
|
|
|
4,280
|
|
|
|
118,729
|
|
Investments in securities (including GBL stock):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gov’t obligations
|
|
|
11,707
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
11,707
|
|
Common stocks
|
|
|
205,978
|
|
|
|
7,161
|
|
|
|
12
|
|
|
|
-
|
|
|
|
-
|
|
|
|
213,151
|
|
Mutual funds
|
|
|
1,161
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,161
|
|
Other
|
|
|
19
|
|
|
|
464
|
|
|
|
3,458
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,941
|
|
Total investments in securities
|
|
|
218,865
|
|
|
|
7,625
|
|
|
|
3,470
|
|
|
|
-
|
|
|
|
-
|
|
|
|
229,960
|
|
Investments in affiliated registered investment companies:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Closed-end funds
|
|
|
85,090
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,090
|
|
Mutual funds
|
|
|
57,045
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
57,045
|
|
Total investments in affiliated registered investment companies
|
|
|
142,135
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
142,135
|
|
Total investments
|
|
|
361,000
|
|
|
|
7,625
|
|
|
|
3,470
|
|
|
|
114,449
|
|
|
|
4,280
|
|
|
|
490,824
|
|
Total assets at fair value
|
|
$
|
768,239
|
|
|
$
|
7,625
|
|
|
$
|
3,470
|
|
|
$
|
114,449
|
|
|
$
|
4,280
|
|
|
$
|
898,063
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stocks
|
|
$
|
9,485
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
9,485
|
|
Other
|
|
|
-
|
|
|
|
89
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
89
|
|
Securities sold, not yet purchased
|
|
$
|
9,485
|
|
|
$
|
89
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
9,574
|
|
|
(a)
|
Amounts include certain equity method investments in Investment Partnerships which qualify for investment company specialized accounting. These Investment Partnerships account for their financial assets and liabilities using fair
value measures and, therefore, the Company’s investment approximates fair value. At June 30, 2019 and December 31, 2018, investments in these Investment Partnerships were $124,445 and $105,020, respectively. In addition, certain
investments in Investment Partnerships were held by a consolidated entity. At June 30, 2019 and December 31, 2018, these amounts were $8,300 and $9,429, respectively. None of these investments have been classified in the fair value
hierarchy.
|
|
(b)
|
Amounts include certain equity method investments which are not accounted for under a fair value measure. In accordance with GAAP, certain equity method investees do not account for both their financial assets and liabilities under
fair value measures; therefore, the Company’s investment in such equity method investees may not represent fair value.
|
Investments using NAV as fair value shown in the above tables include investments in Affiliated and Unaffiliated Entities. Capital may generally be redeemed from Affiliated Entities on a monthly basis upon adequate
notice as determined in the sole discretion of each entity’s investment manager. Capital invested in Unaffiliated Entities may generally be redeemed at various intervals ranging from monthly to annually upon notice of 30 to 95 days. Certain
Unaffiliated Entities may require a minimum investment period before capital can be voluntarily redeemed (a “Lockup Period”). No investment in an Unaffiliated Entity has an unexpired Lockup Period. The Company has no outstanding capital commitments
to any Affiliated or Unaffiliated Entity.
The following table presents additional information about assets by major category measured at fair value on a recurring basis and for which the Company has utilized Level 3 inputs to determine fair value:
|
|
Three months ended June 30, 2019
|
|
|
Three months ended June 30, 2018
|
|
|
|
Common
Stocks
|
|
|
Other
|
|
|
Total
|
|
|
Common
Stocks
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
33
|
|
|
$
|
3,311
|
|
|
$
|
3,344
|
|
|
$
|
607
|
|
|
$
|
2,140
|
|
|
$
|
2,747
|
|
Total gains/(losses)
|
|
|
158
|
|
|
|
944
|
|
|
|
1,102
|
|
|
|
8
|
|
|
|
(2,422
|
)
|
|
|
(2,414
|
)
|
Purchases
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,758
|
|
|
|
4,758
|
|
Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(11
|
)
|
|
|
(11
|
)
|
Transfers
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
(25
|
)
|
Ending balance
|
|
$
|
191
|
|
|
$
|
4,255
|
|
|
$
|
4,446
|
|
|
$
|
590
|
|
|
$
|
4,465
|
|
|
$
|
5,055
|
|
Changes in net unrealized gain/(loss) included in Net gain/(loss) from investments related to level 3 assets still held as of the reporting
date
|
|
$
|
158
|
|
|
$
|
944
|
|
|
$
|
1,102
|
|
|
$
|
8
|
|
|
$
|
(2,430
|
)
|
|
$
|
(2,422
|
)
|
Total realized and unrealized gains and losses for level 3 assets are reported in net gain/(loss) from investments in the condensed consolidated statements of income.
During the three months ended June 30, 2018, the Company transferred an investment with a value of approximately $25,000 from Level 3 to Level 1. The reclassification was due to increased availability of market price
quotations and was based on the value at the beginning of the period in which the transfer occurred.
|
|
Six months ended June 30, 2019
|
|
|
Six months ended June 30, 2018
|
|
|
|
Common
Stocks
|
|
|
Other
|
|
|
Total
|
|
|
Common
Stocks
|
|
|
Other
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning balance
|
|
$
|
12
|
|
|
$
|
3,458
|
|
|
$
|
3,470
|
|
|
$
|
618
|
|
|
$
|
1,169
|
|
|
$
|
1,787
|
|
Consolidated fund
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
984
|
|
|
|
984
|
|
Total gains/(losses)
|
|
|
116
|
|
|
|
797
|
|
|
|
913
|
|
|
|
(3
|
)
|
|
|
(2,415
|
)
|
|
|
(2,418
|
)
|
Purchases
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,758
|
|
|
|
4,758
|
|
Sales
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(31
|
)
|
|
|
(31
|
)
|
Transfers
|
|
|
63
|
|
|
|
-
|
|
|
|
63
|
|
|
|
(25
|
)
|
|
|
-
|
|
|
|
(25
|
)
|
Ending balance
|
|
$
|
191
|
|
|
$
|
4,255
|
|
|
$
|
4,446
|
|
|
$
|
590
|
|
|
$
|
4,465
|
|
|
$
|
5,055
|
|
Changes in net unrealized gain/(loss) included in Net gain/(loss) from investments related to level 3 assets still held as of the reporting
date
|
|
$
|
116
|
|
|
$
|
797
|
|
|
$
|
913
|
|
|
$
|
9
|
|
|
$
|
(2,430
|
)
|
|
$
|
(2,421
|
)
|
During the six months ended June 30, 2019, the Company transferred an investment with a value of approximately $63,000 from Level 1 to Level 3 due to the unavailability of observable inputs.
F. Income Taxes
The effective tax rate (“ETR”) for the three months ended June 30, 2019 and June 30, 2018 was 232.4% and 20.8%, respectively. The ETR in the second quarter of 2019 differs from the standard corporate tax rate of 21%
primarily due to state and local taxes (net of federal benefit), the benefit of (a) the donation of appreciated securities and (b) the dividends received deduction and (c) noncontrolling interest in consolidated partnerships and a true up of the
tax expense from the first quarter of 2019 for the same items. The ETR in the second quarter of 2018 differs from the standard corporate tax rate of 21% primarily due to state and local taxes (net of federal benefit).
The ETR for the six months ended June 30, 2019 and June 30, 2018 was 19.3% and 26.0%, respectively. The 2019 year-to-date ETR differs from the standard corporate tax rate of 21% primarily due to (a) state and local
taxes (net of federal benefit), (b) the donation of appreciated securities and (c) noncontrolling interest consolidated partnerships.
G. Earnings Per Share
Basic earnings per share is computed by dividing net income/(loss) per share attributable to our shareholders by the weighted average number of shares outstanding during the period. Diluted earnings per share is
computed by dividing net income/(loss) per share attributable to our shareholders by the weighted average number of shares outstanding during the period, adjusted for the dilutive effect of outstanding RSAs. There were no outstanding AC RSAs during
the six months ended June 30, 2019 and 2018.
The computations of basic and diluted net income/(loss) per share are as follows:
|
|
Three Months Ended June 30,
|
|
(amounts in thousands, except per share amounts)
|
|
2019
|
|
|
2018
|
|
Basic:
|
|
|
|
|
|
|
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
|
|
$
|
(932
|
)
|
|
$
|
11,824
|
|
Weighted average shares outstanding
|
|
|
22,552
|
|
|
|
23,080
|
|
Basic net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders per share
|
|
$
|
(0.04
|
)
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
|
|
$
|
(932
|
)
|
|
$
|
11,824
|
|
|
|
|
|
|
|
|
|
|
Weighted average share outstanding
|
|
|
22,552
|
|
|
|
23,080
|
|
Dilutive restricted stock awards
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
22,552
|
|
|
|
23,080
|
|
Diluted net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders per share
|
|
$
|
(0.04
|
)
|
|
$
|
0.51
|
|
|
|
Six Months Ended June 30,
|
|
(amounts in thousands, except per share amounts)
|
|
2019
|
|
|
2018
|
|
Basic:
|
|
|
|
|
|
|
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
|
|
$
|
22,215
|
|
|
$
|
(10,405
|
)
|
Weighted average shares outstanding
|
|
|
22,568
|
|
|
|
23,293
|
|
Basic net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders per share
|
|
$
|
0.98
|
|
|
$
|
(0.45
|
)
|
|
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
|
|
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
|
|
$
|
22,215
|
|
|
$
|
(10,405
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average share outstanding
|
|
|
22,568
|
|
|
|
23,293
|
|
Dilutive restricted stock awards
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
|
22,568
|
|
|
|
23,293
|
|
Diluted net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders per share
|
|
$
|
0.98
|
|
|
$
|
(0.45
|
)
|
H. Stockholders’ Equity
Shares outstanding were 22.5 million and 22.6 million at June 30, 2019 and December 31, 2018, respectively.
Dividends
During the three months ended June 30, 2019 and 2018, the Company declared dividends of $0.10 per share to class A and class B shareholders.
Stock Repurchase Program
During first and second quarters of 2019, the Company repurchased approximately 10 thousand and 43 thousand shares at an average price of $40.03 per share and $38.23 per share for a total investment of $0.4 million
and $1.6 million, respectively. During first and second quarters of 2018, the Company repurchased approximately 507 thousand and 141 thousand shares at an average price of $35.91 and $38.07 per share for a total investment of $18.2 million and
$5.4 million, respectively.
Exchange Offers
In February 2018, AC completed an exchange offer with respect to its Class A shares. Tendering shareholders received 1.35 GAMCO Class A shares for each AC Class A share, together with cash in lieu of any fractional
share. Upon completion of the offer, shareholders tendered 493,954 Class A shares in exchange for 666,805 GAMCO Class A shares with a value of $17.7 million.
In October 2018, the Company completed an exchange offer with respect to its Class A shares. Tendering shareholders received 1.9 GAMCO Class A shares for each AC Class A share, together with cash in lieu of any
fractional share. Upon completion of the offer, shareholders tendered 373,581 shares in exchange for 709,749 GAMCO shares with a value of approximately $14.6 million.
Voting Rights
The holders of Class A Common stock (“Class A Stock”) and Class B Common stock (“Class B Stock”) have identical rights except that (a) holders of Class A Stock are entitled to one vote per share, while holders of
Class B Stock are entitled to ten votes per share on all matters to be voted on by shareholders in general, and (b) holders of each share class are not eligible to vote on matters relating exclusively to the other share class.
Stock Award and Incentive Plan
On November 30, 2015, in connection with the Spin-off, the Company issued 554,100 AC RSA shares to GAMCO employees (including GAMCO employees who became AC employees) who held 554,100 GAMCO RSA shares at that date.
The purpose of the issuance was to ensure that any employee who had GAMCO RSAs were granted an equal number of AC RSAs so that the total value of the RSAs post-spin-off was equivalent to the total value pre-spin-off. In accordance with GAAP, we
have allocated the stock compensation costs of both the AC RSAs and the GAMCO RSAs between GAMCO and AC based upon the allocation of each employee’s responsibilities between the companies. The vesting of the GAMCO RSAs outstanding was accelerated
in the first quarter of 2018. There were no AC RSAs outstanding at June 30, 2019 and 2018.
There were no RSAs issued by AC during the three and six months ended June 30, 2019 or 2018.
In August and December 2018, the Company’s Board of Directors approved the grant of 172,800 shares of Phantom Restricted Stock awards (“Phantom RSAs”). Under the terms of the grants, which were
effective August 8 and December 31, the Phantom RSAs vest 30% and 70% after three and five years, respectively. The Phantom RSAs will be settled by a cash payment, net of applicable withholding tax, on the vesting dates. In addition, an amount
equivalent to the cumulative dividends declared on shares of the Company’s Class A common stock during the vesting period will be paid to participants on vesting. Based on the price of the Company’s stock, the total value of the Phantom RSAs was
$6.1 million as of the grant dates.
Pursuant to ASC 718, the Phantom RSAs will be treated as a liability because cash settlement is required and compensation will be recognized over the vesting period. In determining the compensation
expense to be recognized each period, the Company will remeasure the fair value of the liability at each reporting date taking into account the remaining vesting period attributable to each award and the current market value of the Company’s Class
A stock. In making these determinations, the Company will consider the impact of Phantom RSAs that have been forfeited prior to vesting (e.g., due to an employee termination). The Company has elected to consider forfeitures as they occur.
As of June 30, 2019, there were 157,300 Phantom RSAs outstanding. The unrecognized compensation cost related to these was $5.0 million which is expected to be recognized over a weighted-average period
of 2.4 years.
For the six and three months ended June 30, 2019 the Company recorded approximately $0.7 million and $0.3 million in stock-based compensation expense, respectively. For the six months ended June 30,
2018 the Company recorded approximately $0.1 million in stock-based compensation expense. No stock-based compensation was recorded for the three months ended June 30, 2018.
I. Goodwill and Identifiable Intangible Assets
At June 30, 2019, goodwill and intangible assets on the condensed consolidated statements of financial condition includes $3.4 million of goodwill related to GCIA. The Company assesses the recoverability of goodwill
at least annually, or more often should events warrant, using a qualitative assessment of whether it is more likely than not that an impairment has occurred to determine if a quantitative analysis is required. There were no indicators of impairment
for the three months ended June 30, 2019 or June 30, 2018, and as such there was no impairment analysis performed or charge recorded.
J. Commitments and Contingencies
From time to time, the Company may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. We are also subject to
governmental or regulatory examinations or investigations. The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the condensed consolidated
financial statements include the necessary provisions for losses that the Company believes are probable and estimable. Furthermore, the Company evaluates whether losses exist which may be reasonably possible and will, if material, make the
necessary disclosures. Management believes, however, that such amounts, both those that are probable and those that are reasonably possible, are not material to the Company’s financial condition, results of operations or cash flows at June 30,
2019.
G.research has agreed to indemnify clearing brokers for losses they may sustain from customer accounts introduced by G.research that trade on margin. At each of June 30, 2019 and December 31, 2018, the total amount
of customer balances subject to indemnification (i.e., unsecured margin debits) was immaterial.
The Company has also entered into arrangements with various other third parties, many of which provide for indemnification of the third parties against losses, costs, claims and liabilities arising from the
performance of obligations under the agreements. The Company has had no claims or payments pursuant to these or prior agreements and believes the likelihood of a claim being made is remote, and, therefore, no accrual has been made on the condensed
consolidated financial statements.
K. Related Party Transactions
On April 23, 2019, the Company issued a promissory note for $2.1 million to our Executive Chairman. The promissory note was re-paid with interest at 1% per annum on May 28, 2019.
L. Subsequent Events
From July 1, 2019 to August 8, 2019, the Company repurchased 21,465 shares at an average price of $37.71 per share.
ITEM 2:
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (INCLUDING QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK) (“MD&A”)
|
Introduction
MD&A is provided as a supplement to, and should be read in conjunction with, the Company’s unaudited interim consolidated financial statements and accompanying notes thereto included in this Quarterly Report on
Form 10-Q, as well as the Company’s audited annual financial statements included in our Form 10-K filed with the SEC on March 8, 2019 to help provide an understanding of our financial condition, changes in financial condition and results of
operations. Unless the context otherwise requires, all references to “we,” “us,” “our,” “AC Group” or the “Company” refer collectively to Associated Capital Group, Inc., a holding company, and its subsidiaries through which our operations are
actually conducted.
Overview
We are a Delaware corporation that provides alternative investment management, institutional research and underwriting services. In addition, we derive investment income/(loss) from proprietary trading of cash and
other assets awaiting deployment in our operating business.
On November 30, 2015, GAMCO Investors, Inc. (“GAMCO” or “GBL”) distributed all the outstanding shares of each class of AC common stock on a pro rata one-for-one basis to the holders of each class of GAMCO’s common
stock (the “Spin-off”).
In connection with the Spin-off, GAMCO issued a promissory note (the “GAMCO Note”) to AC Group in the original principal amount of $250 million used to partially capitalize the Company. During the year ended December
31, 2018, AC received principal repayments totaling $50 million on the GAMCO Note which fully satisfied the outstanding principal balance. The GAMCO Note bore interest at 4% per annum and had an original maturity date of November 30, 2020. In
addition, Gabelli & Company Investment Advisers, Inc. (“GCIA” f/k/a Gabelli Securities, Inc.) acquired 4,393,055 shares of GAMCO Class A common stock for $150 million in connection with the Spin-off.
We conduct our investment management activities through our wholly-owned subsidiary Gabelli & Company Investment Advisers, Inc. (“GCIA” f/k/a Gabelli Securities, Inc.). GCIA and its wholly-owned subsidiary,
Gabelli & Partners, LLC (“Gabelli & Partners”), collectively serve as general partners or investment managers to investment funds including limited partnerships and offshore companies (collectively, “Investment Partnerships”), and separate
accounts. We primarily manage assets in equity event-driven value strategies, across a range of risk and event arbitrage portfolios. The business earns management and incentive fees from its advisory activities. Management fees are largely based on
a percentage of assets under management. Incentive fees are based on the percentage of the investment returns of certain clients’ portfolios. GCIA is an investment adviser registered with the Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended.
Event-Driven Asset Management
The event driven asset management business approaches its 35th anniversary in February 2020. The division strategies focus on fundamental, active, event driven special situations and arbitrage. It is led by merger
arbitrage portfolios, the “Associates Funds” which returned an unleveraged +2.2% net of fees (+3.26% gross) for the first half of 2019. This strategy benefits from corporate merger and acquisitions (“M&A”) activity which reached $2.0 trillion
globally in the first half of 2019. Healthcare, E&P and technology were the most active sectors for deals. Our arbitrage team expects dealmaking to remain vibrant as the drivers for M&A remain unchanged. The strategy is offered
domestically through partnerships and separately managed accounts. Internationally, the strategy is offered through corporations and EU regulated UCITS structures. The team continues to build new channel partnerships including managing the
Gabelli Merger Plus Trust (“GMP”) an LSE-listed investment company. While these initiatives serve to deepen and lengthen the franchise, they also broaden the client base globally.
Institutional Research Services
On June 17, 2019 AC’s board of directors approved a proposed transaction between G.research and Morgan Group Holding, Co. (“Morgan Group”), an affiliated entity, which would take the form of a merger. Pursuant to
the proposed transaction Morgan Group would acquire G.research in exchange for a specified number of shares of its stock. The transaction is subject to the execution of definitive documents and the satisfaction of customary closing conditions and
regulatory approvals.
Accordingly, no assurance can be given that a binding agreement will be entered into, that the proposed transaction will be consummated or the timing thereof.
We provide our institutional research and underwriting services through G.research, LLC (“G.research”), an indirect wholly-owned subsidiary of the Company. G.research is a broker-dealer registered under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and is regulated by the Financial Industry Regulatory Authority (“FINRA”). G.research’s revenues are derived primarily from institutional research services.
During the past quarter, G.research, in coordination with Gabelli Funds, Co. hosted the 13
th
annual Omaha Research Symposium on May 3-4 and the 11
th
annual Entertainment & Broadcasting Conference on June 6, 2019. On
July 11, we co-hosted a conference on Rule 852(b)(6), the Dynamics and Implications for the Fund Industry. Industry participants and members from the academic community covered a number of topics including "heartbeat trades" and innovations in
the active ETF market.
|
-
|
the 25th Aerospace and Defense Conference in New York on September 5th
|
|
-
|
the 43rd Annual Gabelli Automotive Aftermarket Conference on November 4th – 6
th
|
|
-
|
The Gabelli – Columbia Business School Healthcare Symposium on November 22nd
|
In addition, G.research continues to sponsor non-deal roadshows providing corporate management access to our institutional clients.
For frequent, real-time updates from our research team on social media platforms, we invite you to visit GabelliTV, our online portal, at YouTube (www.youtube.com/GabelliTV) or Facebook (www.facebook.com/GabelliTV).
Direct Investing Business
The Gabelli direct investment business was re-launched after the spin-off of Associated Capital in 2015. Our objective is to partner with management to identify and surface value through strategic direction,
operational improvements and financial structuring. The compounded, accumulated knowledge of our team in sectors across our core competencies provides advantages to value creation. The steps taken since formation are expected to grow long term
value. In this effort, we seek to collaborate with the management of target companies, establish common goals, support the restructuring and growth process, and more importantly, add value by bringing in creative capital solutions and extensive
industry insights. This effort follows the framework we established with Gabelli-Rosenthal, a private equity fund launched in 1985.
Our direct investment business is developing along three core pillars; Gabelli Private Equity Partners, LLC (“GPEP”), formed in August 2017 with $150 million of authorized capital as a “fund-less” sponsor; the
formation of Gabelli special purpose acquisition vehicles, the SPAC business (“SPAC”), launched in April 2018; and, the formation of Gabelli Principal Strategies Group, LLC (“GPS”) to pursue strategic operating initiatives. These businesses are
organized to directly invest with a focus on leveraged buyouts and restructurings of small and mid-sized companies. GPEP has the flexibility to form partnerships with former executives of global industrial conglomerates to create long term value
with no pre-determined exit timetable. The Gabelli SPAC business allows us to leverage our capital markets expertise through a direct investing vehicle. We invite you to visit our activities on the corporate website:
https://www.associated-capital-group.com/DirectInvesting
Condensed Consolidated Statements of Income
Investment advisory and incentive fees, which are based on the amount and composition of assets under management (“AUM”) in our funds and accounts, represent our largest source of revenues. Growth in revenues depends
on good investment performance, which influences the value of existing AUM as well as contributes to higher investment and lower redemption rates and facilitates the ability to attract additional investors while maintaining current fee levels.
Growth in AUM is also dependent on being able to access various distribution channels, which is usually based on several factors, including performance and service.
Incentive fees generally consist of an incentive allocation on the absolute gain in a portfolio or a fee of 20% of the economic profit, as defined in the agreements governing the investment vehicle or account. We
recognize such revenue only when the uncertainty surrounding the amount of variable consideration has ended or at the time of an investor redemption.
Institutional research services revenues consist of brokerage commissions derived from securities transactions executed on an agency basis or direct payments from institutional clients. Commission revenues vary
directly with the perceived value of the research provided, as well as account execution activity and new account generation.
Compensation costs include variable and fixed compensation and related expenses paid to officers, portfolio managers, sales, trading, research and all other professional staff. Variable compensation paid to sales
personnel and portfolio management and may represent up to 55% of certain revenue streams.
Management fee is incentive-based and entirely variable compensation in the amount of 10% of the aggregate pre-tax profits which is paid to Mario J. Gabelli or his designee for acting as Executive Chairman pursuant
to his Employment Agreement so long as he is with the Company.
Other operating expenses include general and administrative operating costs and clearing charges and fees incurred by our brokerage operations.
Other income and expense includes net gains and losses from investments (which include both realized and unrealized gains and losses from securities and equity in earnings of investments in partnerships), interest
and dividend income, and interest expense. Net gains and losses from investments are derived from our proprietary investment portfolio consisting of various public and private investments and from consolidated investment funds.
Net income/(loss) attributable to noncontrolling interests represents the share of net income attributable to third-party limited partners of certain partnerships and offshore funds we consolidate. Please refer to
Notes A and D in our condensed consolidated financial statements included elsewhere in this report.
Condensed Consolidated Statements of Financial Condition
We ended the second quarter of 2019 with approximately $918 million in cash and investments, net of securities sold, not yet purchased of $46 million. This includes $362 million of cash and cash equivalents; $34
million of short-term U.S. Treasury obligations; $238 million of securities, net of securities sold, not yet purchased, including shares of GAMCO and Gabelli Value for Italy S.p.a. with market values of $58 million and $9 million, respectively; and
$284 million invested in affiliated and third-party funds and partnerships, including investments in affiliated closed end funds which have a value of $90 million and more limited liquidity. Our financial resources provide flexibility to pursue
strategic objectives that may include acquisitions, lift-outs, seeding new investment strategies, and co-investing, as well as shareholder compensation in the form of share repurchases and dividends.
Total shareholders’ equity was $884 million or $39.21 per share at June 30, 2019 compared to $866 million or $38.36 per share on December 31, 2018. The increase in equity from the end of 2018 is driven primarily by
our net income of $22 million.
RESULTS OF OPERATIONS
(in thousands, except per share data)
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory and incentive fees
|
|
$
|
2,713
|
|
|
$
|
2,615
|
|
|
$
|
5,446
|
|
|
$
|
5,144
|
|
Institutional research services
|
|
|
2,076
|
|
|
|
2,172
|
|
|
|
3,989
|
|
|
|
4,324
|
|
Other
|
|
|
32
|
|
|
|
9
|
|
|
|
38
|
|
|
|
31
|
|
Total revenues
|
|
|
4,821
|
|
|
|
4,796
|
|
|
|
9,473
|
|
|
|
9,499
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
|
|
|
5,584
|
|
|
|
5,870
|
|
|
|
11,480
|
|
|
|
12,194
|
|
Stock-based compensation
|
|
|
284
|
|
|
|
-
|
|
|
|
699
|
|
|
|
72
|
|
Other operating expenses
|
|
|
2,104
|
|
|
|
2,372
|
|
|
|
8,321
|
|
|
|
4,929
|
|
Total expenses
|
|
|
7,972
|
|
|
|
8,242
|
|
|
|
20,500
|
|
|
|
17,195
|
|
Operating loss
|
|
|
(3,151
|
)
|
|
|
(3,446
|
)
|
|
|
(11,027
|
)
|
|
|
(7,696
|
)
|
Other income/(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain/(loss) from investments
|
|
|
(234
|
)
|
|
|
16,571
|
|
|
|
34,745
|
|
|
|
(10,959
|
)
|
Interest and dividend income
|
|
|
3,295
|
|
|
|
3,165
|
|
|
|
7,081
|
|
|
|
5,872
|
|
Interest expense
|
|
|
(35
|
)
|
|
|
(39
|
)
|
|
|
(79
|
)
|
|
|
(72
|
)
|
Total other income/(expense), net
|
|
|
3,026
|
|
|
|
19,697
|
|
|
|
41,747
|
|
|
|
(5,159
|
)
|
Income/(loss) before income taxes
|
|
|
(125
|
)
|
|
|
16,251
|
|
|
|
30,720
|
|
|
|
(12,855
|
)
|
Income tax expense/(benefit)
|
|
|
(277
|
)
|
|
|
3,388
|
|
|
|
5,914
|
|
|
|
(3,346
|
)
|
Net income/(loss)
|
|
|
152
|
|
|
|
12,863
|
|
|
|
24,806
|
|
|
|
(9,509
|
)
|
Net income attributable to noncontrolling interests
|
|
|
1,084
|
|
|
|
1,039
|
|
|
|
2,591
|
|
|
|
896
|
|
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders
|
|
$
|
(932
|
)
|
|
$
|
11,824
|
|
|
$
|
22,215
|
|
|
$
|
(10,405
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss) attributable to Associated Capital Group, Inc.’s shareholders per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.04
|
)
|
|
$
|
0.51
|
|
|
$
|
0.98
|
|
|
$
|
(0.45
|
)
|
Diluted
|
|
|
(0.04
|
)
|
|
|
0.51
|
|
|
|
0.98
|
|
|
|
(0.45
|
)
|
See accompanying notes.
Three Months Ended June 30, 2019 Compared To Three Months Ended June 30, 2018
Overview
Our operating loss for the quarter was $3.2 million compared to $3.5 million for the comparable quarter of 2018. The decrease in operating loss was driven by lower operating expenses, primarily management fee. Other
income was a gain of $3.0 million in the 2019 quarter compared to a gain of $19.7 million in the prior year’s quarter primarily due to mark-to-market changes in the value of our investment portfolio. The Company recorded an income tax benefit in
the current quarter of $0.3 million compared to an expense of $3.4 million in the year ago quarter. Consequently, our current quarter net loss was $0.9 million, or $(0.04) per diluted share, compared to net income of $11.8 million, or $0.51 per
diluted share, in the prior year’s comparable quarter.
Revenues
Total revenues were $4.8 million for the quarter ended June 30, 2019, in line with the prior year period.
We earn advisory fees based on the average level of AUM in our products. Advisory fees were $2.7 million for the 2019 quarter compared to $2.6 million for the prior year quarter, an increase of $0.1 million. This
increase is due to the increase in AUM to $1.6 billion in the second quarter of 2019. Incentive fees are not recognized until the uncertainty surrounding the amount of variable consideration ends and the fee is crystalized, typically annually on
December 31. If the uncertainty surrounding the amount of variable consideration had ended on June 30, we would have recognized $(0.5) million and $2.3 million of incentive fees for the quarter ended June 30, 2019 and 2018, respectively.
Institutional research services revenues in the current year’s second quarter decreased to $2.1 million, from the prior year’s period of $2.2 million.
Expenses
Compensation, which includes variable compensation, salaries, bonuses and benefits, was $5.9 million for the quarter ended June 30, 2019, compared to $5.9 million for the quarter ended June 30, 2018. Fixed
compensation, which includes salaries and benefits, increased to $4.1 million for the second quarter 2019 from $3.2 million in the 2018 period. Discretionary bonus accruals were $0.9 million and $1.0 million in the first quarter of 2019 and 2018,
respectively. The remainder of compensation expense represents variable compensation that fluctuates with management and incentive fee revenues as well as the investment results of certain proprietary accounts. Variable payouts are also impacted by
the mix of products upon which performance fees are earned and the extent to which they may exceed their allocated costs. For 2019, these variable payouts were $1.8 million, up $0.2 million from $1.6 million in 2018.
For the three months ended June 30, 2019, stock-based compensation was $0.3 million with none incurred in the prior year quarter.
Management fee expense is incentive-based and entirely variable compensation equal to 10% of the aggregate adjusted pre-tax profits, which is paid to the Executive Chairman or his designees pursuant to his employment
agreement with AC. In 2019, AC recorded a management fee credit of $(0.1) million due to the pre-tax operating loss incurred. There was no management fee expense in the second quarter of 2018 due to the year-to-date pre-tax loss.
Other operating expenses were $2.1 million during the second quarter of 2019 compared to $2.4 million in the prior year quarter.
Other
Net gain/(loss) from investments is primarily related to the performance of our securities portfolio and investments in partnerships. Investment losses were $(0.2) million in the 2019 quarter versus $16.6 million in
the comparable 2018 quarter reflecting mark-to-market changes in the value of our investments.
Interest and dividend income increased to $3.3 million in the 2019 quarter from $3.1 million in the 2018 quarter primarily due to higher interest rates on our cash balances and US Treasuries and increased dividend
income offset by interest earned on the GAMCO Note in the prior year’s quarter due to principal payments received.
Six Months Ended June 30, 2019 Compared To Six Months Ended June 30, 2018
Overview
Our operating loss for the year-to-date period was $11.0 million compared to $7.7 million for the comparable period of 2018. Revenues were in line with the prior year amount. Investment income increased to $41.7
million in the 2019 period from a loss of $5.2 million in the prior year’s period primarily due to mark-to-market gains on our investment portfolio and the adoption of ASU 2016-01 on January 1, 2018. Stock-based compensation fell by $0.6 million
year-over-year. The Company recorded an income tax expense of $5.9 million in the current year compared to a benefit of $3.3 million in the year ago period. Consequently, our 2019 period net income increased to $22.2 million, or $0.98 per diluted
share, from $(10.4) million, or $(0.45) per diluted share, in the prior year’s comparable period.
Revenues
Total revenues were $9.5 million for the six month periods ended June 30, 2019 and 2018.
Advisory fees, excluding incentive fees, were $5.5 million for the 2019 six months compared to $5.1 million for the prior year six months, an increase of $0.4 million. This increase is due to the increase in AUM over
the period. Incentive fees are generally not recognized until the measurement period ends, typically annually on December 31. If the measurement period had instead ended on June 30, we would have recognized $3.2 million and $2.3 million for each of
the six months ended June 30, 2019 and 2018, respectively.
Institutional research services revenues in the current year’s first six months decreased to $3.9 million, from the prior year’s period of $4.3 million due to a reduction in commissions generated by our institutional
research operations.
Expenses
Compensation, which include variable compensation, salaries, bonuses and benefits, was $12.2 million for the six months ended June 30, 2019, compared to $12.3 million for the six months ended June 30, 2018. Fixed
compensation, which include salaries and benefits, declined to $8.6 million for the 2019 period from $9.4 million in the prior year. Discretionary bonus accruals were $1.8 million and $2.1 million in the 2019 and 2018 periods, respectively. The
remainder of the compensation expense represents variable compensation that fluctuates with management fee and incentive allocation revenues and gains on investment portfolios. Variable payouts as a percent of revenues are impacted by the mix of
products upon which performance fees are earned and the extent to which they may exceed their allocated costs.
For the six months ended June 30, 2019 and 2018, stock-based compensation was $0.7 million and $0.1 million, respectively.
Management fee expense represents incentive-based and entirely variable compensation in the amount of 10% of the aggregate pre-tax profits which is payable to Mario J. Gabelli pursuant to his employment agreement. AC
recorded management fee expense of $3.2 million for the six month periods ended June 30, 2019. No management fee expense was recorded for the six month period ended June 30, 2018 due to the year to date pre-tax loss.
Other operating expenses were $8.3 million during the first six months of 2019 compared to $4.9 million in the prior year, an increase of $3.4 million primarily due to expenses relating to a consolidated fund the
Company launched in a prior year.
Other
Investment gains were $34.7 million in the 2019 six month period compared to a $11.0 million loss in the comparable 2018 period reflecting mark-to-market changes in the value of our investments.
Interest and dividend income increased to $7.0 million in the 2019 period from $5.8 million in 2018 primarily due to higher interest rates on our cash balances offset by reduced interest earned on the GAMCO Note due
to principal payments received.
ASSETS UNDER MANAGEMENT
Our revenues are highly correlated to the level of assets under management and fees associated with our various investment products, rather than our own corporate assets. Assets under management, which are directly
influenced by the level and changes of the overall equity markets, can also fluctuate through acquisitions, the creation of new products, and the addition of new accounts or the loss of existing accounts. Since various equity products have
different fees, changes in our business mix may also affect revenues. At times, the performance of our equity products may differ markedly from popular market indices, and this can also impact our revenues.
Assets under management were $1.6 billion as of June 30, 2019, an increase of 5.7% and decrease of (1.6%) over the December 31, 2018 and June 30, 2018 periods, respectively. The changes were attributable to market
appreciation/(depreciation) and additional investor contributions, net of redemptions.
Assets Under Management (in millions)
|
|
|
|
|
|
|
|
|
|
|
% Change From
|
|
|
|
June 30,
2019
|
|
|
December 31,
2018
|
|
|
June 30,
2018
|
|
|
December 31,
2018
|
|
|
June 30,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Event Merger Arbitrage
|
|
$
|
1,422
|
|
|
$
|
1,342
|
|
|
$
|
1,480
|
|
|
|
6.0
|
|
|
|
(3.9
|
)
|
Event-Driven Value
|
|
|
127
|
|
|
|
118
|
|
|
|
87
|
|
|
|
7.6
|
|
|
|
46.0
|
|
Other
|
|
|
58
|
|
|
|
60
|
|
|
|
66
|
|
|
|
(3.3
|
)
|
|
|
(12.1
|
)
|
Total AUM
|
|
$
|
1,607
|
|
|
$
|
1,520
|
|
|
$
|
1,633
|
|
|
|
5.7
|
|
|
|
(1.6
|
)
|
Fund flows for the three months ended June 30, 2019 (in millions):
|
|
March 31,
2019
|
|
|
Market
appreciation/
(depreciation)
|
|
|
Net cash
flows
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Event Merger Arbitrage
|
|
$
|
1,401
|
|
|
$
|
11
|
|
|
$
|
10
|
|
|
$
|
1,422
|
|
Event-Driven Value
|
|
|
127
|
|
|
|
2
|
|
|
|
(2
|
)
|
|
|
127
|
|
Other
|
|
|
63
|
|
|
|
2
|
|
|
|
(7
|
)
|
|
|
58
|
|
Total AUM
|
|
$
|
1,591
|
|
|
$
|
15
|
|
|
$
|
1
|
|
|
$
|
1,607
|
|
Fund flows for the six months ended June 30, 2019 (in millions):
|
|
December 31,
2018
|
|
|
Market
appreciation/
(depreciation)
|
|
|
Net cash
flows
|
|
|
June 30,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Event Merger Arbitrage
|
|
$
|
1,342
|
|
|
$
|
39
|
|
|
$
|
41
|
|
|
$
|
1,422
|
|
Event-Driven Value
|
|
|
118
|
|
|
|
7
|
|
|
|
2
|
|
|
|
127
|
|
Other
|
|
|
60
|
|
|
|
6
|
|
|
|
(8
|
)
|
|
|
58
|
|
Total AUM
|
|
$
|
1,520
|
|
|
$
|
52
|
|
|
$
|
35
|
|
|
$
|
1,607
|
|
LIQUIDITY AND CAPITAL RESOURCES
Our principal assets are highly liquid in nature and consist of cash and cash equivalents, short-term investments, marketable securities and investments in funds and investment partnerships. Cash and cash equivalents
are comprised primarily of U.S. Treasury money market funds. Although investments in partnerships and offshore funds are subject to restrictions as to the timing of redemptions, the underlying investments of such partnerships or funds are, for the
most part, liquid, and the valuations of these products reflect that underlying liquidity.
Summary cash flow data is as follows (in thousands):
|
|
Six months ended June 30,
|
|
|
|
2019
|
|
|
2018
|
|
Cash flows provided by (used in):
|
|
|
|
Operating activities
|
|
$
|
(36,080
|
)
|
|
$
|
(51,568
|
)
|
Investing activities
|
|
|
(3,856
|
)
|
|
|
15,000
|
|
Financing activities
|
|
|
(8,126
|
)
|
|
|
17,179
|
|
Net increase (decrease)
|
|
|
(48,062
|
)
|
|
|
(19,389
|
)
|
Cash and cash equivalents at beginning of period
|
|
|
409,564
|
|
|
|
293,112
|
|
Increase in cash from consolidation
|
|
|
62
|
|
|
|
47
|
|
Cash and cash equivalents at end of period
|
|
$
|
361,564
|
|
|
$
|
273,770
|
|
We require relatively low levels of capital expenditures and have a highly variable cost structure which fluctuates based on the level of revenues we receive. We anticipate that our available liquid assets should be
more than sufficient to meet our cash requirements. At June 30, 2019, we had total cash and cash equivalents of $362 million and $556 million in net investments. Of these amounts, $14 million and $58 million, respectively, were held by consolidated
investment funds and may not be readily available for the Company to access.
Net cash used in operating activities was $36.1 million for the six months ended June 30, 2019 primarily due to our net income adjusted for non-cash items of $20.8 million and $76.7 million of net gains on sale of
securities and net contributions to partnerships partially offset by net increases of $19.8 million to receivables and accrued expenses. Net cash used by investing activities was $3.9 million due to net proceeds from sales of available for sale
securities and return of capital distributions of $2.4 million offset by the purchase of a building for $6.3 million. Net cash used in financing activities was $8.1 million largely resulting from dividends and stock buyback payments of $6.5 million
and redemptions from consolidated funds of $1.6 million.
Net cash used in operating activities was $51.6 million for the six months ended June 30, 2018 primarily due to our net loss adjusted for non-cash items of $0.7 million and $57.4 million of net increases of trading
securities and net contributions to investment partnerships offset partially by net changes of $16.1 million to accrued expenses and receivables. Net cash provided by investing activities was $15.0 million due to the repayment of a short-term note.
Net cash provided by financing activities was $17.2 million largely resulting from the $30 million prepayment of the GAMCO Note offset by dividends and stock buyback payments of $10.5 million and redemptions from consolidated funds of $2.3 million.
G.research is a registered broker-dealer, and is subject to the SEC Uniform Net Capital Rule 15c3-1 (the “Rule”), which specifies, among other requirements, minimum net capital requirements for registered
broker-dealers. G.research computes its net capital under the alternative method as permitted by the Rule, which requires that minimum net capital be the greater of $250,000 or 2% of the aggregate debit items in the reserve formula for those
broker-dealers subject to Rule 15c3-3. G.research had net capital, as defined, of $4.3 million, exceeding the required amount of $250,000 by $4.1 million at June 30, 2019. G.research’s net capital requirements may increase to the extent it engages
in other business activities in accordance with applicable rules and regulations.
Critical Accounting Policies and Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ significantly from those
estimates. See Note A and the Company’s Critical Accounting Policies in Management’s Discussion and Analysis of Financial Condition and Results of Operations in AC’s 2018 Annual Report on Form 10-K filed with the SEC on March 8, 2019 for details on
Critical Accounting Policies.
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
As a smaller reporting company, this information is not required to be provided.
Management conducted an assessment of the effectiveness of our disclosure controls and procedures as of June 30, 2019, as defined under the Exchange Act Rule 13a-15(e).
As a result of this assessment, management identified a material weakness in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness for the period ended June 30, 2019 resulted from turnover in the role that oversees the day-to-day accounting and financial reporting functions for
the Company. Particularly, there was not sufficient accounting personnel to separate interim financial statement preparation from senior management review of those statements. This resulted in increased risk of a material misstatement in the
financial statements for the period presented.
In light of the material weakness in our internal controls, we performed additional procedures to ensure that our consolidated financial statements included in this Form
10-Q were prepared in accordance with US GAAP. Following such procedures, our management, including our principal executive officer and principal financial officer, have concluded that our consolidated financial statements present fairly, in all
material respects, our financial position, results of our operations and our cash flows for the periods presented in this Form 10-Q, in conformity with GAAP.
However, as a result of the material weakness in internal control over financial reporting described above, management concluded that, as of June 30, 2019, our internal
control over financial reporting was not effective in accordance with the Exchange Act Rule 13a-15(e).
There have been no changes in our internal control over financial reporting, as defined by Rule 13a-15(f), that occurred during our most recently completed fiscal quarter
that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Forward-Looking Information
Our disclosure and analysis in this report contain some forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. You can identify these statements because
they do not relate strictly to historical or current facts. They use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” and other words and terms of similar meaning. They also appear in any discussion of
future operating or financial performance. In particular, these include statements relating to future actions, future performance of our products, expenses, the outcome of any legal proceedings, and financial results. Although we believe that we
are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know about our business and operations, there can be no assurance that our actual results will not differ materially from what we expect or
believe. Some of the factors that could cause our actual results to differ from our expectations or beliefs include, without limitation:
|
•
|
the adverse effect from a decline in the securities markets
|
|
•
|
a decline in the performance of our products
|
|
•
|
a general downturn in the economy
|
|
•
|
changes in government policy or regulation
|
|
•
|
changes in our ability to attract or retain key employees
|
|
•
|
unforeseen costs and other effects related to legal proceedings or investigations of governmental and self-regulatory organizations
|
We also direct your attention to any more specific discussions of risk contained in our Form 10 and other public filings. We are providing these statements as permitted by the Private Litigation Reform Act of 1995.
We do not undertake to update publicly any forward-looking statements if we subsequently learn that we are unlikely to achieve our expectations or if we receive any additional information relating to the subject matters of our forward-looking
statements.
Part II: Other Information
From time to time, the Company may be named in legal actions and proceedings. These actions may seek substantial or indeterminate compensatory as well as punitive damages or injunctive relief. The Company is also
subject to governmental or regulatory examinations or investigations. The examinations or investigations could result in adverse judgments, settlements, fines, injunctions, restitutions or other relief. For any such matters, the condensed
consolidated financial statements include the necessary provisions for losses that the Company believes are probable and estimable. Furthermore, the Company evaluates whether there exist losses which may be reasonably possible and will, if
material, make the necessary disclosures. However, management believes such amounts, both those that would be probable and those that would be reasonably possible, are not material to the Company’s financial condition, results of operations or cash
flows at June 30, 2019.
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
The following table provides information with respect to the repurchase of Class A Common Stock of AC during the three months ended June 30, 2019:
Period
|
|
Total
Number of
Shares
Repurchased
|
|
|
Average
Price Paid Per
Share, net of
Commissions
|
|
|
Total Number of
Shares Repurchased as
Part of Publicly
Announced Plans
or Programs
|
|
|
Maximum
Number of Shares
That May Yet Be
Purchased Under
the Plans or Programs
|
|
04/01/19 - 4/30/19
|
|
|
21,428
|
|
|
$
|
39.57
|
|
|
|
21,428
|
|
|
|
1,173,009
|
|
05/01/19 - 05/31/19
|
|
|
5,693
|
|
|
|
38.86
|
|
|
|
5,693
|
|
|
|
1,167,316
|
|
06/01/19 - 06/30/19
|
|
|
15,492
|
|
|
|
36.11
|
|
|
|
15,492
|
|
|
|
1,151,824
|
|
Totals
|
|
|
42,613
|
|
|
$
|
38.15
|
|
|
|
42,613
|
|
|
|
|
|
|
|
Certification of CEO pursuant to Rule 13a-14(a).
|
|
|
|
|
|
Certification of CAO pursuant to Rule 13a-14(a).
|
|
|
|
|
|
Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
Certification of CAO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002.
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.