UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934

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Invesco Ltd.

(Name of Registrant as Specified in Its Charter)

 

 

 

(Name of Person(s) Filing Proxy Statement, if Other Than Registrant)

 

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SUMMARIZED CONSOLIDATED

FINANCIAL STATEMENTS

OF

INVESCO LTD.

 

In accordance with Bermuda law, attached are summarized consolidated financial statements of Invesco Ltd., which include the consolidated balance sheets of Invesco Ltd. at December 31, 2008 and 2007 and the related consolidated statements of income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2008, and the auditor’s report thereon. The attached summarized consolidated financial statements do not contain sufficient information to allow as full an understanding of the financial position, results of operations or changes in financial position or cash flows of Invesco Ltd. as would be provided by Invesco Ltd.’s complete consolidated financial statements for such periods. In the event you would prefer to receive a copy of these complete consolidated financial statements, of which the information contained herein is a summary, and/or those for subsequent periods, you should submit your request to Invesco Ltd.’s Secretary at company.secretary@invesco.com or by writing Invesco Ltd., Attn: Office of the Secretary, 1555 Peachtree Street N.E., Atlanta, Georgia 30309.

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The Board of Directors and Shareholders of Invesco Ltd.

 

We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Invesco Ltd. at December 31, 2008 and 2007, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2008 (not presented separately herein) and in our report dated February 25, 2009, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated financial statements (presented on pages 2 through 5) is fairly stated in all material respects in relation to the consolidated financial statements from which it has been derived.

 

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of Invesco Ltd.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2009 (not presented separately herein) expressed an unqualified opinion thereon.

 

Ernst & Young LLP

Atlanta, GA

February 25, 2009

 

Page 1

 

 


Condensed Consolidated Balance Sheets

 

 

As of

 

$ in millions

December 31,

2008

December 31,

2007

ASSETS

 

 

 

 

 

Current assets:

 

 

Cash and cash equivalents

$585.2

$915.8

Cash and cash equivalents of consolidated investment products

73.0

36.6

Unsettled fund receivables

303.7

605.5

Accounts receivable

239.3

373.0

Investments

123.6

151.4

Prepaid assets

55.6

65.9

Other current assets

72.2

89.9

Deferred tax asset, net

86.1

32.5

Assets held for policyholders

840.2

1,898.0

Total current assets

2,378.9

4,168.6

Non-current assets:

 

 

Investments

121.3

114.1

Investments of consolidated investment products

843.8

1,239.6

Prepaid assets

36.3

55.6

Deferred sales commissions

24.5

31.3

Deferred tax asset, net

37.2

133.8

Property and equipment, net

205.3

180.0

Intangible assets, net

142.8

154.2

Goodwill

5,966.8

6,848.0

Total non-current assets

7,378.0

8,756.6

Total assets

$9,756.9

$12,925.2

 

 

LIABILITIES, MINORITY INTERESTS AND SHAREHOLDERS’ EQUITY

 

 

 

 

Current liabilities:

 

 

Current maturities of long-term debt

$297.2

$—

Unsettled fund payables

288.3

581.2

Income taxes payable

37.9

140.6

Other current liabilities

639.8

1,021.1

Policyholder payables

840.2

1,898.0

Total current liabilities

2,103.4

3,640.9

Non-current liabilities:

 

 

Long-term debt

862.0

1,276.4

Borrowings of consolidated investment products

116.6

Other non-current liabilities

195.3

179.5

Total non-current liabilities

1,057.3

1,572.5

Total liabilities

3,160.7

5,213.4

 

 

 

Minority interests in equity of consolidated entities

906.7

1,121.2

 

 

 

Shareholders’ equity:

 

 

Common shares ($0.20 par value; 1,050.0 million authorized; 426.6 million and 424.7 million shares issued as of December 31, 2008, and 2007, respectively)

 

85.3

 

84.9

Additional paid-in-capital

5,352.6

5,306.3

Treasury shares

(1,128.9)

(954.4)

Retained earnings

1,476.3

1,201.7

Accumulated other comprehensive (loss)/income, net of tax

(95.8)

952.1

Total shareholders’ equity

5,689.5

6,590.6

Total liabilities, minority interests and shareholders’ equity

$9,756.9

$12,925.2

 

 

Page 2

 

 


Condensed Consolidated Statements of Income

 

 

Years Ended December 31,

$ in millions, except per share data

2008

2007

2006

Operating revenues:

 

 

 

Investment management fees

$2,617.8

$3,080.1

$2,508.2

Performance fees

75.1

70.3

82.1

Service and distribution fees

512.5

593.1

534.9

Other

102.2

135.4

121.5

Total operating revenues

3,307.6

3,878.9

3,246.7

 

 

 

 

Operating expenses:

 

 

 

Employee compensation

1,055.8

1,137.6

1,070.5

Third-party distribution, service and advisory

875.5

1,051.1

826.8

Marketing

148.2

157.6

138.8

Property, office and technology

214.3

242.5

230.7

General and administrative

266.0

295.8

207.6

Restructuring charge

13.1

Total operating expenses

2,559.8

2,884.6

2,487.5

 

 

 

 

Operating income

747.8

994.3

759.2

 

 

 

 

Other income/(expense):

 

 

 

Equity in earnings of unconsolidated affiliates

46.8

48.1

4.3

Interest income

37.2

48.5

26.9

Gains and losses of consolidated investment products, net

(58.0)

214.3

294.3

Interest expense

(76.9)

(71.3)

(77.2)

Other gains and losses, net

(39.9)

9.9

26.8

Income before income taxes and minority interest

657.0

1,243.8

1,034.3

Income tax provision

(236.0)

(357.3)

(254.6)

Income before minority interest

421.0

886.5

779.7

Minority interest in (income)/losses of consolidated entities, net of tax

60.7

(212.9)

(297.0)

 

 

 

 

Net income

$481.7

$673.6

$482.7

 

 

 

 

Earnings per share:

 

 

 

— basic

$1.25

$1.69

$1.22

— diluted

$1.21

$1.64

$1.19

Dividends declared per share

$0.520

$0.372

$0.357

 

 

Page 3

 

 


Condensed Consolidated Statements of Cash Flows

 

 

Years Ended December 31,

$ in millions

2008

2007

2006

Operating activities:

 

 

 

Net income

$481.7

$673.6

$482.7

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Amortization and depreciation

47.6

64.1

67.5

Share-based compensation expense

97.7

105.2

140.6

Loss/(gain) on disposal of property, equipment, software, net

(2.0)

(1.1)

4.0

Purchase of trading investments

(22.0)

(24.2)

(51.9)

Sale of trading investments

22.3

24.6

1.5

Other gains and losses, net

39.9

(9.9)

(26.8)

Loss/(gain) of consolidated investment products, net

58.0

(214.3)

(294.3)

Tax benefit from share-based compensation

54.9

38.2

17.9

Excess tax benefits from share-based compensation

(16.8)

(23.1)

(12.3)

Minority interest in earnings of consolidated entities, net of tax

(60.7)

212.9

297.0

Equity in earnings of unconsolidated affiliates

(46.8)

(48.1)

(4.3)

Changes in operating assets and liabilities:

 

 

 

Change in cash held at consolidated investment products

(37.1)

(4.8)

1.3

Decrease/(increase)in receivables

1,138.8

(59.6)

(160.7)

(Decrease)/increase in payables

(1,259.8)

180.2

(6.3)

Net cash provided by operating activities

495.7

913.7

455.9

 

 

 

 

Investing activities:

 

 

 

Purchase of property and equipment

(84.1)

(36.7)

(37.9)

Disposal of property and equipment

0.2

12.1

2.5

Dividends from unconsolidated affiliates

29.8

1.8

0.9

Purchase of available-for-sale investments

(109.4)

(80.3)

(289.4)

Proceeds from sale of available-for-sale investments

84.5

111.8

254.3

Purchase of investments by consolidated investment products

(112.3)

(331.5)

(372.3)

Proceeds from sale of investments by consolidated investment products

188.7

143.6

122.6

Returns of capital in investments of consolidated investment products

99.2

196.0

257.5

Purchase of other investments

(27.1)

(25.9)

(14.5)

Proceeds from sale of other investments

36.2

17.1

15.6

Acquisitions of businesses, net of cash acquired of $8.9 million in 2006

(198.8)

Acquisition earn-out payments

(174.3)

(56.0)

(1.3)

Disposal of businesses

1.6

2.1

Net cash used in investing activities

(68.6)

(46.4)

(258.7)

 

 

 

 

Financing activities:

 

 

 

Proceeds from exercises of share options

79.8

137.4

66.8

Purchases of treasury shares

(313.4)

(716.0)

(155.9)

Dividends paid

(207.1)

(155.0)

(143.6)

Excess tax benefits from share-based compensation

16.8

23.1

12.3

Capital invested into consolidated investment products

96.1

211.0

345.3

Capital distributed by consolidated investment products

(241.0)

(318.2)

(301.2)

Borrowings of consolidated investment products

28.9

112.6

46.3

Repayments of consolidated investment products

(9.3)

(33.1)

(82.1)

Net (repayments)/borrowings under credit facility

(114.4)

(2.6)

59.0

Issuance of senior notes

300.0

Repayments of senior notes

(2.8)

(300.0)

(10.0)

Net cash used in financing activities

(666.4)

(740.8)

(163.1)

 

 

 

 

(Decrease)/increase in cash and cash equivalents

(239.3)

126.5

34.1

Foreign exchange movement on cash and cash equivalents

(91.3)

10.4

35.3

Cash and cash equivalents, beginning of year

915.8

778.9

709.5

Cash and cash equivalents, end of year

$585.2

$915.8

$778.9

 

 

 

 

Supplemental Cash Flow Information:

 

 

 

Interest paid

$(71.2)

$(72.0)

$(73.4)

Interest received

$36.9

$48.2

$26.9

Taxes paid

$(238.4)

$(328.2)

$(213.1)

 

 

Page 4

 

 


Condensed Consolidated Statements of Changes in Shareholders’ Equity and Comprehensive Income

 

 

 

 

$ in millions

 

 

Common

Shares

 

 

Ordinary

Shares

 

 

Exchangeable

Shares

 

Additional

Paid-in-

Capital

 

 

Treasury

Shares

 

 

Retained

Earnings

Accumulated

Other

Comprehensive

(Loss)/Income

 

Total

Shareholders’

Equity

January 1, 2006

$—

$81.8

$431.8

$4,710.0

$(407.1)

$361.6

$351.7

$5,529.8

Net income

482.7

482.7

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences on investments in overseas subsidiaries

268.3

268.3

Change in minimum pension liability

25.3

25.3

Change in net unrealized gains on available-for-sale investments

(6.6)

(6.6)

Tax impacts of changes in accumulated OCI balances

(0.7)

(0.7)

Total comprehensive income

 

 

 

 

 

 

 

769.0

Initial impact of adopting FASB 158, net of tax

(23.5)

(23.5)

Dividends

(143.6)

(143.6)

Employee share plans:

 

 

 

 

 

 

 

 

Share-based compensation

140.6

140.6

Vested shares

(17.4)

17.4

Exercise of options

1.1

65.7

66.8

Tax impact of share-based payment

12.3

12.3

Purchase of shares

(188.2)

(188.2)

Business combinations

0.8

0.8

Conversion of exchangeable shares into ordinary shares

0.3

(54.4)

54.1

December 31, 2006

83.2

377.4

4,966.1

(577.9)

700.7

614.5

6,164.0

Net income

673.6

673.6

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences on investments in overseas subsidiaries

351.1

351.1

Change in accumulated OCI related to employee benefit plans

7.7

7.7

Change in net unrealized gains on available-for-sale investments

(16.8)

(16.8)

Tax impacts of changes in accumulated OCI balances

(4.4)

(4.4)

Total comprehensive income

1,011.2

Adoption of FIN 48

(17.6)

(17.6)

Dividends

(155.0)

(155.0)

Employee share plans:

 

 

 

 

 

 

 

 

Share-based compensation

105.2

105.2

Vested shares

(53.9)

53.9

Exercise of options

1.6

135.8

137.4

Tax impact of share-based payment

23.1

23.1

Purchase of shares

(683.7)

(683.7)

Cancellation of treasury shares

(1.9)

(251.4)

253.3

Business combinations

6.0

 

6.0

Conversion of exchangeable shares into ordinary shares

2.0

(377.4)

375.4

Cancellation of ordinary shares and issuance of common shares

84.9

(84.9)

December 31, 2007

84.9

5,306.3

(954.4)

1,201.7

952.1

6,590.6

Net income

481.7

481.7

Other comprehensive income

 

 

 

 

 

 

 

 

Currency translation differences on investments in overseas subsidiaries

(1,034.2)

(1,034.2)

Change in accumulated OCI related to employee benefit plans

(0.3)

(0.3)

Change in net unrealized gains on available-for-sale investments

(9.3)

(9.3)

Tax impacts of changes in accumulated OCI balances

(4.1)

(4.1)

Total comprehensive income

(566.2)

Dividends

(207.1)

(207.1)

Employee share plans:

 

 

 

 

 

 

 

 

Share-based compensation

97.7

97.7

Vested shares

(55.7)

55.7

Exercise of options

0.4

(12.5)

87.8

75.7

Tax impact of share-based payment

16.8

16.8

Purchase of shares

(318.0)

(318.0)

December 31, 2008

$85.3

$—

$—

$5,352.6

$(1,128.9)

$1,476.3

$(95.8)

$5,689.5

 

 

Page 5