TIDMTAM
RNS Number : 1696D
Titanium Asset Management Corp
18 March 2011
Titanium Asset Management Corp.
Reports 2010 Fourth Quarter and Annual Results
Milwaukee, WI, March 18, 2011 - Titanium Asset Management Corp.
(AIM - TAM) today reported results for the fourth quarter and year
ended December 31, 2010.
Highlights for the fourth quarter are as follows:
-- Managed and distributed assets decreased by 5.7% from
$9,560.3 million to $9,019.4 million during the fourth quarter of
2010 primarily reflecting negative asset flows and market losses on
fixed income strategies as interest rates increased.
-- Average managed and distributed assets of $9,306.8 million
for the fourth quarter of 2010, an increase of 1.1% over $9,208.2
million for the same period last year.
-- Operating revenues of $6,506,000 for the fourth quarter of
2010, a 4.9% decrease over operating revenues of $6,840,000 for the
same period last year primarily due to lower incentive fees.
-- Adjusted EBITDA(1) of $473,000 for the fourth quarter of 2010
compared to an Adjusted EBITDA deficit of $310,000 for the same
period last year.
-- Net investment income of $257,000 for the fourth quarter of
2010 compared to $269,000 for the same period last year.
-- Net loss of $6,032,000, or $0.29 per diluted common share,
for the fourth quarter of 2010 compared to a net loss of
$12,235,000, or $0.60 per diluted common share, for the fourth
quarter of 2009.
Highlights for the year are as follows:
-- Average managed and distributed assets of $9,325.8 million
for 2010, an increase of 6.9% over $8,726.2 million for the same
period last year.
-- Operating revenues of $23,570,000 for 2010, a 4.9% increase
over operating revenues of $22,471,000 for the same period last
year.
-- Adjusted EBITDA(1) deficit of $592,000 for 2010 compared to
an Adjusted EBITDA deficit of $2,894,000 for the same period last
year. Excluding severance costs, Adjusted EBITDA was $326,000 for
2010.
-- Net investment income of $1,266,000 for 2010 compared to
$398,000 for 2009.
-- Net loss of $13,602,000, or $0.66 per diluted common share,
for 2010 compared to a net loss of $21,169,000, or $1.03 per
diluted common share, for 2009.
(1) See the accompanying table on page 10 for a definition of
Adjusted EBITDA, a non-GAAP financial measure. The table provides a
description of this non-GAAP financial measure and a reconciliation
to the most directly comparable GAAP measure.
Commenting on these results, Robert Brooks, CEO of Titanium
Asset Management Corp. said:
"We are pleased to report positive EBITDA for the fourth quarter
of 2010 and for the full year, excluding severance costs. The
improved operating performance reflects the benefits of the
reorganization and integration activities undertaken throughout
2010. These changes resulted in significant reductions in our
structural administrative expenses, while we continued to grow
revenues."
"Since the acquisition of Boyd Watterson at the end of 2008, we
have reduced headcount from 97 to 82 and have reduced our
annualized administrative expenses from approximately $25.1 million
to $22.8 million. We believe these reductions position us to be
able to achieve significant growth in profitability as we achieve
revenue growth."
"In the fourth quarter, we continued to achieve excellent
investment performance, with 72% of our managed assets
outperforming their benchmarks. In addition, several of our
significant strategies are now in the upper deciles of our peer
group rankings for three year investment performance. We believe
these strong performance rankings should position us for strong
growth over the next year."
"While our investment performance remained strong, we had a
challenging fourth quarter as we lost a significant managed client
that decided to change to an indexing strategy, we had partial
redemptions of TALF assets, and we experienced a reduction in
distributed assets. We are working to overcome these challenges,
and we remain optimistic that 2011 will be a much better year for
new business, as we are already seeing increased
opportunities."
For further information please contact:
Titanium Asset Management Corp.
Robert Brooks, CEO 312-335-8300
Seymour Pierce Ltd
Jonathan Wright +44 20 7107 8000
Assets Under Management
Our managed and distributed assets totaled $9,019.4 million at
December 31, 2010, a decrease of 5.7% from the amount at September
30, 2010, and a decrease of 1.1% from the amount at December 31,
2009. Distributed assets are those managed by a hedge fund advisor
on which we earn referral fees. The changes in managed and
distributed assets over the three months ended December 31, 2010
were as follows:
Distributed
Managed Assets Assets Total
(in millions)
-----------------------------------------
Balance at September 30,
2010 $ 8,562.8 $ 997.5 $ 9,560.3
Net flows (435.0) (127.9) (562.9)
Market value change (2.8) 24.8 22.0
------------ ----------
Balance at December 31,
2010 $ 8,125.0 $ 894.4 $ 9,019.4
=============== ============ ==========
Average assets under management $ 8,343.9 $ 962.9 $ 9,306.8
=============== ============ ==========
Net flows are a combination of new and lost accounts plus
contributions and withdrawals from existing accounts.
For managed assets, the net outflows for the quarter were
primarily the result of the loss of a $170 million multiemployer
pension fund client that decided to change to an indexing strategy,
a partial unwinding of the TALF assets under management, and
continued softness in the retail distribution channel. The market
value change for managed assets reflects the increase in interest
rates during the quarter, which negatively impact the value of
fixed income holdings.
The distributed assets managed by the hedge fund advisor came
under significant pressure in the fourth quarter of 2010 as a
result of several factors, including its overall fee rates, its
investment performance relative to other hedge fund performance,
and certain changes within its management. The combination of these
factors resulted in client asset withdrawals totaling approximately
$125 million (representing approximately $260,000 of annualized
referral fees) during the fourth quarter of 2010. Starting January
1, 2011, the hedge fund advisor has reduced its average fee rates
that we estimate will reduce our annualized referral fees by an
additional $325,000.
Subsequent to our year end, the hedge fund advisor informed us
that it had received further redemption requests that can be
effected at the end of the first and second quarters of 2011. The
redemption requests totaled approximately $90 million (representing
approximately $300,000 of annualized referral fees) for the first
quarter and approximately $60 million (representing approximately
$100,000 of annualized referral fees) for the second quarter.
The hedge fund advisor has been actively communicating with its
clients regarding its investment strategies, the changes in its
management, and the reduction in its fees in efforts to limit the
redemptions. In addition, we continue to monitor the situation and
are assisting the hedge fund advisor in communicating with our
mutual clients. However, there can be no assurances that any of the
hedge fund advisor's activities or our actions will limit
redemptions.
The changes in managed and distributed assets for 2010 were as
follows:
Distributed
Managed Assets Assets Total
(in millions)
-----------------------------------------
Balance at December 31,
2009 $ 8,151.4 $ 974.9 $ 9,126.3
Net flows (561.1) (103.7) (664.8)
Market value change 534.7 23.2 557.9
------------ ----------
Balance at December 31,
2010 $ 8,125.0 $ 894.4 $ 9,019.4
=============== ============ ==========
Average assets under management $ 8,350.6 $ 975.2 $ 9,325.8
=============== ============ ==========
The net outflow of managed assets for the year ended December
31, 2010 was primarily due to the loss of the multiemployer pension
fund client during the fourth quarter, continued withdrawals by
multiemployer pension clients due to generally weak economic
conditions, the partial redemption of TALF assets in the fourth
quarter, and the continued softness in our retail distribution
channel, all of which more than offset new business during 2010.
The net outflows for managed assets also include the elimination of
approximately $100 million of advisory-only accounts whose fees are
not asset-based. The market value change reflects solid performance
for fixed income assets, which comprise approximately 88% of our
assets under management, and strong returns for equity assets.
For the year ended December 31, 2010, 72% of our managed and
distributed assets with defined performance benchmarks outperformed
their respective benchmarks.
Our assets under management by major investment strategy were as
follows:
December 31, 2010 December 31, 2009
--------------------------- ---------------------------
(in millions) % of total (in millions) % of total
-------------- ----------- -------------- -----------
Fixed income $ 7,137.4 87.9% $ 7,242.4 88.8%
Equity 781.3 9.6% 869.2 10.7%
Real estate 206.3 2.5% 39.8 0.5%
Balance at end of
period $ 8,125.0 100.0% $ 8,151.4 100.0%
============== =========== ============== ===========
Our assets under management by broad client type were as
follows:
December 31, 2010 December 31, 2009
(in millions) % of total (in millions) % of total
-------------- ----------- -------------- -----------
Institutional $ 6,902.8 85.0% $ 6,371.8 78.2%
Retail 1,222.2 15.0% 1,779.6 21.8%
Balance at end of
period $ 8,125.0 100.0% $ 8,151.4 100.0%
============== =========== ============== ===========
Operating Results
Three Months Ended Year Ended
December 31, December 31,
--------------------------- ----------------------------
2010 2009 2010 2009
------------ ------------- ------------- -------------
Average assets
under
management (in
millions) $ 8,343.9 $ 8,235.8 $ 8,350.6 $ 7,865.3
Average fee rate
(basis points) 25 25 25 24
Operating revenue $ 6,506,000 $ 6,840,000 $ 23,570,000 $ 22,471,000
Adjusted EBITDA
(deficit)(1) 473,000 (310,000) (592,000) (2,894,000)
Impairment of
goodwill 5,900,000 3,642,000 11,000,000 8,489,000
Operating loss (6,289,000) (6,667,000) (14,868,000) (17,551,000)
Net loss (6,032,000) (12,235,000) (13,602,000) (21,169,000)
Earnings per
share:
Basic $ (0.29) $ (0.60) $ (0.66) $ (1.03)
Diluted $ (0.29) $ (0.60) $ (0.66) $ (1.03)
(1) See the accompanying table on page 10 for a definition of
Adjusted EBITDA, a non-GAAP financial measure. The table provides a
description of this non-GAAP financial measure and a reconciliation
to the most directly comparable GAAP measure.
Our fourth quarter revenues decreased $334,000, or 4.9%,
relative to the fourth quarter of 2009 due to a decrease in
incentive fee revenue. Recurring fee revenue increased to
$5,817,000 in the fourth quarter of 2010, a 4.2% increase over the
recurring fee revenue of $5,584,000 in the fourth quarter of 2009,
largely based on the increase in average assets under management.
The increase in average assets under management reflects asset
gains from our participation in the TALF program and from our real
estate investment advisory business, as well as strong market
returns for fixed income assets. For the year, our 2010 revenues
increased by $1,099,000, or 4.9%, relative to 2009, despite the
decrease in incentive fee revenue. Our recurring fee revenue for
2010 increased to $22,881,000, a 7.9% increase over the recurring
fee revenue of $21,215,000 for 2009, largely based on the increase
in average assets under management.
Our Adjusted EBITDA of $473,000 for the fourth quarter of 2010
reflects an improvement of $783,000 over the prior year amount as a
result of the significant reduction in administrative expenses that
we achieved during 2010. For the fourth quarter of 2010, we reduced
administrative expenses to $6,066,000 from $7,317,000 in the year
earlier period, a 17.1% decrease.
Our Adjusted EBITDA deficit of $592,000 for 2010 includes
$918,000 of severance costs. Excluding severance costs, our
Adjusted EBITDA would have been $326,000, an improvement of
$3,220,000 over the prior year amount. The improvement reflects the
4.9% increase in revenues and a 10.5% decrease in administrative
expenses, excluding severance costs. Our administrative expenses,
excluding severance costs, declined $2,721,000, as a result of the
ongoing integration activities and reduced operating staff.
Since the first quarter of 2009, we have reduced our headcount
from 97 to 82 and we have reduced annualized administrative
expenses of approximately $25.1 million to approximately $22.8
million at December 31, 2010.
Goodwill Impairment
Based on interim results through the third quarter of 2010,
initial work on our 2011 budget, and some trading activity in our
common stock, we determined that we should complete a goodwill
impairment test as of September 30, 2010. As a result of that
testing, we concluded that our goodwill was impaired and recorded
an impairment charge of $5,100,000.
During the fourth quarter of 2010, we recognized an additional
$8,000,000 of goodwill from the resolution of the contingent
consideration for the acquisition of Boyd Watterson. In completing
our annual assessment test for impairment, we concluded that the
adjusted goodwill balance was impaired and recorded an additional
impairment charge of $5,900,000, bringing the total impairment
charge for 2010 to $11,000,000.
During 2009, we incurred impairment charges of $8,489,000, of
which $4,847,000 was recognized in the third quarter of 2009 and
$3,642,000 was recognized in the fourth quarter of 2009.
Forward-looking Statements
Statements in this press release which are not historical facts
may be "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. These statements
are subject to a number of assumptions, risks, and uncertainties,
many of which are beyond our control.
Any forward-looking statements made in this press release speak
as of the date made and are not guarantees of future performance.
Actual results or developments may differ materially from the
expectations expressed or implied in the forward-looking
statements, and we undertake no obligation to update any such
statements. Results may differ significantly due to market
fluctuations that alter our assets under management; a further
decline in our distributed assets; termination of investment
advisory agreements; impairment of goodwill and other intangible
assets; our inability to compete; market pressure on investment
advisory fees; ineffective management of risk; changes in interest
rates, equity prices, liquidity of global markets and international
and regional political conditions; or actions taken by Clal Finance
Ltd., as our significant stockholder. Additional factors that could
influence Titanium's financial results are included in its
Securities and Exchange Commission filings, including its Annual
Report on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K.
The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2010, is expected to be filed with the
Securities and Exchange Commission on or before March 31, 2011. The
report will be available on the SEC's website at www.sec.gov and on
the Company's website at www.ti-am.com.
Titanium Asset Management Corp.
Condensed Consolidated Balance Sheets
December
31, December
2010 31, 2009
------------- -------------
(unaudited)
Assets
Current assets
Cash and cash equivalents $ 4,698,000 $ 4,773,000
Investments 3,354,000 12,549,000
Accounts receivable 4,783,000 5,030,000
Other current assets 1,179,000 1,162,000
------------- -------------
Total current assets 14,014,000 23,514,000
Investments in affiliates 5,898,000 2,179,000
Property and equipment, net 455,000 427,000
Goodwill 25,147,000 28,147,000
Intangible assets, net 21,605,000 24,920,000
Total assets $ 67,119,000 $ 79,187,000
============= =============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 42,000 $ 237,000
Acquisition payments due 4,000,000 1,746,000
Other current liabilities 3,539,000 3,504,000
------------- -------------
Total current liabilities 7,581,000 5,487,000
Acquisition payments due - 960,000
------------- -------------
Total liabilities 7,581,000 6,447,000
Commitments and contingencies
Stockholders' equity
Common stock, $0.0001 par value;
54,000,000 shares authorized;
20,442,232 and 20,689,478 shares
issued and outstanding at December 31,
2010 and 2009, respectively 2,000 2,000
Restricted common stock, $0.0001 par
value; 720,000 shares authorized;
612,716 issued and outstanding at
December 31, 2010 and 2009 - -
Preferred stock, $0.0001 par value;
1,000,000 shares authorized; none
issued - -
Additional paid-in capital 100,971,000 100,332,000
Accumulated deficit (41,368,000) (27,766,000)
Other comprehensive income (67,000) 172,000
Total stockholders' equity 59,538,000 72,740,000
------------- -------------
Total liabilities and
stockholders' equity $ 67,119,000 $ 79,187,000
============= =============
Titanium Asset Management Corp.
Condensed Consolidated Statements of Operations
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------------- --------------------------------
2010 2009 2010 2009
-------------- --------------- --------------- ---------------
Operating revenues $ 6,506,000 $ 6,840,000 $ 23,570,000 $ 22,471,000
Operating
expenses:
Administrative 6,066,000 7,317,000 24,123,000 25,926,000
Amortization of
intangible
assets 829,000 1,019,000 3,315,000 4,078,000
Impairment of
goodwill 5,900,000 3,642,000 11,000,000 8,489,000
Impairment of
intangible
assets - 1,529,000 - 1,529,000
Total
operating
expenses 12,795,000 13,507,000 38,438,000 40,022,000
Operating loss (6,289,000) (6,667,000) (14,868,000) (17,551,000)
Other income
Interest income 43,000 96,000 276,000 429,000
Net realized
gain (loss) on
investments 39,000 9,000 220,000 (151,000)
Income from
equity
investees 175,000 179,000 786,000 179,000
Interest
expense - (15,000) (16,000) (59,000)
Loss before taxes (6,032,000) (6,398,000) (13,602,000) (17,153,000)
Income tax expense - 5,837,000 - 4,016,000
Net loss $ (6,032,000) $ (12,235,000) $ (13,602,000) $ (21,169,000)
============== =============== =============== ===============
Earnings (loss)
per share
Basic $ (0.29) $ (0.60) $ (0.66) $ (1.03)
Diluted $ (0.29) $ (0.60) $ (0.66) $ (1.03)
Weighted average
number of common
shares
outstanding:
Basic 20,660,913 20,506,389 20,680,157 20,536,382
Diluted 20,660,913 20,506,389 20,680,157 20,536,382
Titanium Asset Management Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited)
Year Ended
December 31,
--------------------------------
2010 2009
--------------- ---------------
Cash flows from operating activities
Net loss $ (13,602,000) $ (21,169,000)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Amortization of intangible assets 3,315,000 4,078,000
Impairment of intangible assets - 1,529,000
Impairment of goodwill 11,000,000 8,489,000
Depreciation 100,000 141,000
Share compensation expense (credit) (139,000) 420,000
Loss (gain) on investments (220,000) 151,000
Income from equity investees (786,000) (179,000)
Income distributions from equity
investees 552,000 -
Accretion of acquisition payments 16,000 55,000
Deferred income taxes - 4,016,000
Changes in assets and liabilities:
Decrease (increase) in
accounts receivable 247,000 (900,000)
Increase in other current
assets (17,000) (257,000)
Decrease in accounts
payable (195,000) (432,000)
Increase (decrease) in
other current
liabilities (165,000) 1,633,000
--------------- ---------------
Net cash provided by (used in) operating
activities 106,000 (2,425,000)
--------------- ---------------
Cash flows from investing activities
Purchases of investments (13,294,000) (20,139,000)
Sales and redemptions of
investments 22,470,000 19,315,000
Investments in equity investees (5,000,000) (2,000,000)
Capital distributions from equity
investees 1,515,000 -
Purchases of property and equipment (128,000) (130,000)
Acquisitions of subsidiaries, net
of cash acquired (5,744,000) (8,601,000)
--------------- ---------------
Net cash used in investing activities (181,000) (11,555,000)
--------------- ---------------
Net decrease in cash and cash equivalents (75,000) (13,980,000)
Cash and cash equivalents:
Beginning 4,773,000 18,753,000
--------------- ---------------
Ending $ 4,698,000 $ 4,773,000
=============== ===============
Titanium Asset Management Corp.
Reconciliation of Adjusted EBITDA
(unaudited)
Three Months Ended Year Ended
December 31, December 31,
------------------------------ --------------------------------
2010 2009 2010 2009
-------------- -------------- --------------- ---------------
Operating loss $ (6,289,000) $ (6,667,000) $ (14,868,000) $ (17,551,000)
Amortization of
intangible assets 829,000 1,019,000 3,315,000 4,078,000
Impairment of
intangible assets - 1,529,000 - 1,529,000
Impairment of
goodwill 5,900,000 3,642,000 11,000,000 8,489,000
Depreciation expense 33,000 61,000 100,000 141,000
Share compensation
expense (credit) - 106,000 (139,000) 420,000
Adjusted EBITDA
(EBITDA
deficit)(1) $ 473,000 $ (310,000) $ (592,000) $ (2,894,000)
============== ============== =============== ===============
Notes:
(1) Adjusted EBITDA is defined as operating income or loss
before non-cash charges for amortization and impairment of
intangible assets and goodwill, depreciation, and share
compensation expense. We believe Adjusted EBITDA is useful as an
indicator of our ongoing performance and our ability to service
debt, make new investments, and meet working capital obligations.
Adjusted EBITDA, as we calculate it may not be consistent with
computations made by other companies. We believe that many
investors use this information when analyzing the operating
performance, liquidity, and financial position of companies in the
investment management industry.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UBANRAAAOAAR
Tatton Asset Management (LSE:TAM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Tatton Asset Management (LSE:TAM)
Historical Stock Chart
From Jul 2023 to Jul 2024
