On a GAAP basis, net income attributable to the controlling and noncontrolling interests for the second quarter was $9.5 million, compared with net income of $19.9 million in the second quarter of 2011 and $34.4 million in the first quarter of 2012. The decrease in net income is primarily attributed to non-cash reorganization-related share-based compensation expense of $24.0 million in the second quarter of 2012. GAAP net loss attributable to the common shareholders for the second quarter of $1.8 million, or $0.14 per basic and diluted share, reflects the public ownership of the Company’s subsidiary, Manning & Napier Group, LLC. The remaining ownership interest is attributed to the other members of Manning & Napier Group, LLC.
Six-months ended June 30, 2012 Financial Review
Manning & Napier reported 2012 year-to-date revenue of $166.5 million, an increase of 2% over year-to-date revenue of $163.8 million reported in 2011. The increase in 2012 was generally consistent with changes in average assets under management, which increased by 1% over the prior year. Revenue as a percentage of average AUM was 0.78% for the six-months ended June 30, 2012, slightly higher from 0.77% for the prior year.
Operating expenses were $117.3 million, or $89.5 million excluding non-cash reorganization-related share-based compensation of $27.7 million. The $89.5 million represents a 1% decrease from 2011, resulting from lower incentive compensation costs, offset by an investment in distribution efforts, new hires, and operating expenses related to the Company’s initial public offering in November 2011. GAAP-based operating income was $49.2 million for the six-months ended June 30, 2012, and $77.0 million of operating income after excluding non-cash reorganization-related share-based compensation charges. The $77.0 million represents a $3.4 million increase over 2011. Operating margin for 2012 year-to-date, excluding non-cash reorganization-related share-based compensation expense, was 46.2%, compared with 44.9% in 2011.Manning & Napier reported 2012 year-to-date economic income of $76.8 million, compared with $73.5 million in 2011. Also for the six-months ended June 30, 2012, economic net income was $47.4 million, or $0.53 per adjusted share, compared with $45.4 million in 2011.