“This action, together with other cost reduction efforts, will result in meaningful operating expense savings. Most importantly, it enables us to concentrate our resources on our long‐established expertise in cross‐border investing in both equity and fixed income markets, and to continue pursuing growth and diversification opportunities within these core product areas.”

Second Quarter of 2012 Comparison with Second Quarter of 2011

Assets Under Management and Net Client Cash Flows

Assets under management were $21.2 billion as of June 30, 2012, down $25.7 billion, or 55%, from $46.8 billion as of June 30, 2011, due to net client cash outflows and market depreciation.

Net client cash outflows for the second quarter of 2012 were $4.5 billion, driven primarily by net client cash outflows from our International Equity I and II, and High Yield strategies. 8

Revenues and Other Operating Income

Revenues and other operating income for the second quarter of 2012 totaled $32.7 million, down 58% from $78.2 million for the second quarter of 2011. The decrease was driven primarily by lower investment management fees of $33.3 million for the second quarter of 2012, down 57% from $78.2 million for the second quarter of 2011, due to lower average assets under management and a decrease in the effective fee rate.

Expenses

Employee Compensation and Benefits

For the second quarter of 2012, adjusted employee compensation and benefits expenses were $16.5 million, down 29% from $23.2 million for the second quarter of 2011. The decrease was due primarily to lower incentive compensation accruals and lower headcount.

GAAP employee compensation and benefits expenses for the second quarter of 2012 were $19.4 million, down 25% from $25.8 million for the second quarter of 2011, due primarily to the reasons noted above.

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