Third Quarter 2012 Financial Review
Manning & Napier reported third quarter 2012 revenue of $85.4 million, a decrease of less than 1% from revenue of $85.8 million reported in the third quarter of 2011, and an increase of 5% from revenue of $81.5 million reported in the second quarter of 2012. The changes in revenue were primarily resulting from increases in average assets under management (“AUM”). Average assets under management for the quarter was $43.2 billion, which was an approximate 1% increase over average assets for both the third quarter of 2011 and the second quarter of 2012, when average assets were $42.7 billion and $42.8 billion, respectively. Revenue as a percentage of average AUM was 0.79% for the third quarter of 2012, compared with 0.80% for the third quarter of 2011 and 0.76% for the previous quarter.
Operating expenses were $63.7 million, or $46.4 million excluding non-cash reorganization-related share-based compensation of $17.3 million. The $46.4 million represents a $3.7 million increase in expenses, compared with the third quarter of 2011, and a $2.1 million increase in expenses compared with the second quarter of 2012, excluding reorganization-related share-based compensation. The increases in expenses in the current quarter compared with the third quarter of 2011 and the second quarter of 2012, were due primarily to higher incentive compensation costs resulting from the strong absolute and relative investment performance during the third quarter of 2012 compared to the third quarter of 2011 and second quarter of 2012.
Generally Accepted Accounting Principles (“GAAP”) based operating income was $21.7 million. Operating income, excluding non-cash reorganization-related share-based compensation, was $39.0 million for the quarter, a $4.1 million decrease over the third quarter of 2011 and a $1.7 million increase from the second quarter of 2012. Operating margin, excluding non-cash reorganization-related share-based compensation expense, was 46% for the third quarter of 2012, compared with 50% for the third quarter of 2011 and 46% for the second quarter of 2012.
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