SEC Company Response from Invesco Ltd. (IVZ) (CIK 0000914208) (IVZ) — Jul 17, 2012
Invesco Ltd. (IVZ) (CIK 0000914208)
Date: July 17, 2012 · CIK: 0000914208 · Accession: 0000914208-12-000445
AI Filing Summary & Sentiment
Letter
Division of Corporation Finance Securities and Exchange Commission Invesco Ltd. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2011 FORM 10-Q FOR THE PERIODS ENDED MARCH 31, 2012 FILE NUMBER: 1-13908
Dear Mr. Decker:
This letter sets forth the responses of Invesco Ltd. (the “Company”) to your comment letter, dated June 15, 2012, relating to the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (the “Form 10-K”) of the Company, filed with the Securities and Exchange Commission (the “Commission” or the “SEC”) on February 24, 2012, and the Quarterly Report on Form 10-Q for the period ended March 31, 2012 of the Company, filed with the SEC on May 2, 2012.
The Company is filing, via EDGAR, this letter setting forth the Company's responses to the Commission's comments regarding the above filings. Enclosed as well are two hard copies of the Company's response letter. We have included your original questions in italics in addition to providing our responses.
The Company acknowledges that:
•
the Company is responsible for the adequacy and accuracy of the disclosure in its filings;
•
Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and
•
the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
July 17, 2012
Mr. Rufus Decker
Page 2
We note that six of the comments in the Staff's letter (comments 2, 3, 7, 14, 15 and 16) relate to the presentation of the investment products which the company is required to consolidate under ASC 810, "Consolidation." It is imperative that users of our financial statements understand how these investment products are presented in the Company's statements of financial position, results of operations and cash flows and, more importantly, that this presentation is not indicative of the Company's true risk associated with its investment in these products. Beyond the Company's minimal direct investments in and management fees generated from the investment products that we are required to consolidate, the Company has no right to the benefits from, nor does it bear the risks associated with, consolidated investment product assets. Additionally, the investors in the products have no recourse to the general credit of the Company for any debt issued by those products. Our results of operations do not include $47.3 million and $45.3 million in operating revenues for the years ended December 31, 2011 and 2010 (as disclosed on page 131 of our 2011 Form 10-K) due to their elimination upon consolidation of these products. Rating agencies, analysts and our bankers request that we deconsolidate these investment products to give a clear picture of the Company's financial position, results of operations, and cash flows.
The Staff has indicated several instances of disclosure related to the impact of the consolidation of investment products that should be enhanced. In future filings, the Company will include within its Consolidated Investment Products footnote a subtotal column to aggregate the impact of the consolidation of investment products on the balance sheets and income statement periods presented, similar to the format illustrated in Appendix 1. This enhancement, along with other disclosure improvements illustrated in this letter, should serve to clarify the impact of the consolidation of investment products on our financial statements.
Form 10-K for the Year Ended December 31, 2011
General
1.
Where a comment below requests additional disclosures or other revisions to be made, please show us in your supplemental response what the revisions will look like. These revisions should be included in your future filings.
Response to Comment 1
The Company respectfully acknowledges the Staff's comment and will include in the responses below details showing what the proposed revisions or additional disclosures will look like in our future filings. Such disclosures will be noted in italics. The Company will include such revisions in all future filings, including interim filings, where appropriate.
Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, page 24
2.
It appears that foreign pre-tax income represents approximately 46% of your income before income taxes. Given your disclosures on pages 123 and 126, it appears that foreign revenue increased 12% while foreign pre-tax income decreased 36% from December 31, 2010 to December 31, 2011. To further allow an investor to understand your businesses as a whole, please enhance your disclosure in MD&A to discuss the factors that led to a significant decrease in foreign pre-tax income despite an increase in foreign revenue. See Section 501.04 of the Financial Reporting Codification.
July 17, 2012
Mr. Rufus Decker
Page 3
Response to Comment 2
We note that in the disclosure on page 123 within the Taxation footnote, the amounts disclosed as foreign income before taxes of $421.7 million in 2011 and $660 million in 2010 include the income/(losses) before income taxes of our consolidated investment products of ($87.4) million in 2011, and $180.7 million in 2010. Excluding these amounts, foreign pre-tax income increased by 6% from 2010 to 2011. Calculations are presented below, along with proposed revised disclosures for future Form 10-K filings.
Calculation of income/(losses) before taxes of consolidated investment products*:
Year ended December 31,
$ in millions
Income/(losses) before taxes:
CLOs - VIEs
(169.9
)
77.1
Other VIEs
—
5.3
VOEs
62.4
92.5
Adjustments
20.1
5.8
Income/(losses) before taxes of consolidated investment products
(87.4
)
180.7
* Amounts and row descriptions tie directly to the columns in the condensed consolidating income statements presented in the Consolidated Investment Products footnote, page 131 of the Company's 2011 Form 10-K and are defined in that document.
Calculation of % US versus Foreign income before taxes:
Year ended December 31,
$ in millions (except percentages)
Amount
%
Amount
%
Change
US
486.4
%
173.8
%
%
Foreign*
509.1
%
479.3
%
%
Income/(losses) before taxes of consolidated investment products*
(87.4
)
(10
)%
180.7
%
(148
)%
Income before income taxes, per face of income statement
908.1
%
833.8
%
%
(Gains)/losses attributable to noncontrolling interests in consolidated entities (NCI), net
107.7
(171.1
)
Income before taxes, excluding NCI
1,015.8
662.7
* Foreign, as disclosed (sum of * asterisked rows above)
421.7
%
660.0
%
(36
)%
We will revise future Form 10-K disclosures in the taxation footnote to differentiate between US, foreign, and income/(losses) before income taxes of consolidated investment products, similar to the analysis presented in the table below in italics.
July 17, 2012
Mr. Rufus Decker
Page 4
Proposed New Disclosure in Taxation Footnote:
Income Before Taxes
Year ended December 31,
$ in millions (except percentages)
US
486.4
173.8
Foreign
509.1
479.3
Income/(losses) before taxes of consolidated investment products, as disclosed in Note 20, "Consolidated Investment Products"
(87.4
)
180.7
Income before income taxes
908.1
833.8
3.
You disclose on page 26 that the adoption of ASC 810 had a significant impact on the presentation of your financial statements in 2011 and 2010, since you were required to consolidate certain CLOs that were not previously consolidated. We note that the collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs and that you have no right to the benefits from, nor do you bear the risks associated with, the collateral assets held by the CLOs beyond your minimal direct investments in, and management fees generated from, the CLOs. As such, it appears that these assets may be restricted. We also note your disclosure on page 89 that you consolidate, in addition to the CLOs, other VIEs and non-VIE general partnership investments where you are deemed to have control. Please tell us what consideration you gave to the need for parent only financial statements under Rules 5-04 and 12-04 of Regulation S-X. If you do not believe that you meet the requirement to provide the Schedule I parent only financial statements, please provide us with your calculations to support your basis.
Response to Comment 3
We concluded that we do not meet the requirements to provide the Schedule I parent-only financial statements in our filings with the Commission. Rule 5-04 of Regulation S-X indicates that Schedule I should be provided "when the restricted net assets (Rule 4-08(e)(3)) of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year."
Rule 4-08(e)(3) of Regulation S-X instructs that "noncontrolling interests shall be deducted in computing net assets for purposes of this test." We generally invest nominally in these products (for example, a less than 1% investment in partnership structures), as such investments are to demonstrate "skin in the game" to attract other unaffiliated investors in these products. Due to the nominal amount of our investments, upon consolidation, we reflect significant noncontrolling interest and appropriated retained earnings balances attributable to the unaffiliated investors in these products. The net assets of consolidated investment products therefore equals the sum of the noncontrolling interests and appropriated retained earnings attributable to other parties. The guidance regarding Schedule I in Rule 5-04 states that: "For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations)..." If we exclude these balances on this basis, then the percentage of consolidated investment products net assets to the Company's consolidated net asset balances becomes zero as illustrated in the calculation below:
July 17, 2012
Mr. Rufus Decker
Page 5
December 31,
$ in millions (except percentages)
Net assets of consolidated investment products (see table below)
1,349.4
1,587.0
Equity attributable to noncontrolling interests in consolidated investment products*:
Other VIEs
(45.4
)
(62.3
)
VOEs
(968.6
)
(1,029.2
)
Retained earnings appropriated for investors in consolidated investment products*
(334.3
)
(495.5
)
Adjustments*
(1.1
)
—
—
—
Net assets of the Company for purposes of calculation (see table below)
7,784.8
7,769.1
Net assets of consolidated investment products for purposes of calculation
—
—
% Consolidated Investment Products net assets to consolidated net assets
—
%
—
%
* Amounts and row descriptions are included in the columns in the condensed consolidating balance sheets presented in the Consolidated Investment Products footnote, page 130 of the Company's 2011 Form 10-K.
The assets of consolidated investment products are held solely to satisfy the obligations of consolidated investment products. The obligations of consolidated investment products are not the obligations of the Company as the asset manager of the products. A calculation and illustration of the components of the net assets of consolidated investment products balances is presented in the table below:
December 31,
$ in millions (except percentages)
Total assets*:
CLOs - VIEs
6,076.8
6,883.9
Other VIEs
45.9
63.3
VOEs
1,017.5
1,075.1
Adjustments
(122.4
)
(83.3
)
Total assets of consolidated investment products
7,017.8
7,939.0
Total liabilities*:
CLOs - VIEs
5,742.5
6,388.4
Other VIEs
0.4
0.9
VOEs
5.8
7.8
Adjustments
(80.3
)
(45.1
)
Total liabilities of consolidated investment products
5,668.4
6,352.0
Net assets of consolidated investment products
1,349.4
1,587.0
* Amounts and row descriptions tie directly to the columns in the condensed consolidating balance sheets presented in the Consolidated Investment Products footnote, page 130 of the Company's 2011 Form 10-K and are defined in that document.
July 17, 2012
Mr. Rufus Decker
Page 6
For purposes of the calculation, the net assets of the Company are calculated as follows:
December 31,
$ in millions (except percentages)
Total equity, per balance sheet
9,137.6
9,360.9
Less: Equity attributable to noncontrolling interests in consolidated entities
(1,018.5
)
(1,096.3
)
Total equity attributable to common shareholders, per balance sheet
8,119.1
8,264.6
Less: Retained earnings appropriated for investors in consolidated investment products*
(334.3
)
(495.5
)
Net assets of the Company for purposes of calculation
7,784.8
7,769.1
* Retained earnings appropriated for investors in consolidated investment products is completely attributed to other investors in these products and not to the Company's interest in these products. We therefore believe it is appropriate to remove this balance from the calculation, similar to the noncontrolling interests.
We utilize separate primary financial statement presentation of the significant balances related to consolidated investment products. This, combined with the VIE columns provided on pages 130 through 132 of the Company's 2011 Form 10-K, serve to separately present the variable interest entity disclosure requirements of ASC 810, "Consolidation." As discussed above, we believe that it is extremely important to illustrate for readers of our financial statements the impact of the consolidation of all investment products, including variable interest entities. We believe that it is meaningful and useful to readers to include the presentation of condensed consolidating balance sheets and income statements illustrating our group of companies before and after consolidation of investment products.
Item 8 - Financial Statements and Supplementary Data, page 79
General
4.
Rule 4-08(k) of Regulation S-X requires you to identify your related party transactions and amounts on the face of the balance sheet, income statement, and statement of cash flows, as applicable. Please help us understand how you have complied with this requirement.
Response to Comment 4
Certain funds may be deemed to be affiliates of the Company, as the Company's business is to manage the funds. ASC 850-50-3 states: "Sometimes, the effect of the relationship between the parties may be so pervasive that disclosure of the relationship alone will be sufficient." We believe that the transactions between the Company and its managed funds are so pervasive that disclosure in the footnotes of the asset management relationship is sufficient. Specifically, in Note 1 of our 2011 Form 10-K, "Accounting Policies-Basis of Accounting and Consolidation," we disclosed that "the company provides investment management services to, and has transactions with, various private equity funds, real estate funds, fund-of-funds, collateralized loan obligations (CLOs), and other investment products sponsored by the company for investment of client assets in the normal course of its business." Also in the Revenue Recognition policy within Note 1, we disclosed that "investment management fees are derived from providing professional services to manage client accounts and include fees earned from retail mutual funds, unit t
Show Raw Text
CORRESP 1 filename1.htm Round 1 Response July 17, 2012 VIA EXPRESS DELIVERY AND EDGAR Mr. Rufus Decker Division of Corporation Finance Securities and Exchange Commission 100 F Street N.E. Washington, D.C. 20549 Invesco Ltd. FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2011 FORM 10-Q FOR THE PERIODS ENDED MARCH 31, 2012 FILE NUMBER: 1-13908 Dear Mr. Decker: This letter sets forth the responses of Invesco Ltd. (the “Company”) to your comment letter, dated June 15, 2012, relating to the Annual Report on Form 10-K for the fiscal year ended December 31, 2011 (the “Form 10-K”) of the Company, filed with the Securities and Exchange Commission (the “Commission” or the “SEC”) on February 24, 2012, and the Quarterly Report on Form 10-Q for the period ended March 31, 2012 of the Company, filed with the SEC on May 2, 2012. The Company is filing, via EDGAR, this letter setting forth the Company's responses to the Commission's comments regarding the above filings. Enclosed as well are two hard copies of the Company's response letter. We have included your original questions in italics in addition to providing our responses. The Company acknowledges that: • the Company is responsible for the adequacy and accuracy of the disclosure in its filings; • Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and • the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. July 17, 2012 Mr. Rufus Decker Page 2 We note that six of the comments in the Staff's letter (comments 2, 3, 7, 14, 15 and 16) relate to the presentation of the investment products which the company is required to consolidate under ASC 810, "Consolidation." It is imperative that users of our financial statements understand how these investment products are presented in the Company's statements of financial position, results of operations and cash flows and, more importantly, that this presentation is not indicative of the Company's true risk associated with its investment in these products. Beyond the Company's minimal direct investments in and management fees generated from the investment products that we are required to consolidate, the Company has no right to the benefits from, nor does it bear the risks associated with, consolidated investment product assets. Additionally, the investors in the products have no recourse to the general credit of the Company for any debt issued by those products. Our results of operations do not include $47.3 million and $45.3 million in operating revenues for the years ended December 31, 2011 and 2010 (as disclosed on page 131 of our 2011 Form 10-K) due to their elimination upon consolidation of these products. Rating agencies, analysts and our bankers request that we deconsolidate these investment products to give a clear picture of the Company's financial position, results of operations, and cash flows. The Staff has indicated several instances of disclosure related to the impact of the consolidation of investment products that should be enhanced. In future filings, the Company will include within its Consolidated Investment Products footnote a subtotal column to aggregate the impact of the consolidation of investment products on the balance sheets and income statement periods presented, similar to the format illustrated in Appendix 1. This enhancement, along with other disclosure improvements illustrated in this letter, should serve to clarify the impact of the consolidation of investment products on our financial statements. Form 10-K for the Year Ended December 31, 2011 General 1. Where a comment below requests additional disclosures or other revisions to be made, please show us in your supplemental response what the revisions will look like. These revisions should be included in your future filings. Response to Comment 1 The Company respectfully acknowledges the Staff's comment and will include in the responses below details showing what the proposed revisions or additional disclosures will look like in our future filings. Such disclosures will be noted in italics. The Company will include such revisions in all future filings, including interim filings, where appropriate. Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations, page 24 2. It appears that foreign pre-tax income represents approximately 46% of your income before income taxes. Given your disclosures on pages 123 and 126, it appears that foreign revenue increased 12% while foreign pre-tax income decreased 36% from December 31, 2010 to December 31, 2011. To further allow an investor to understand your businesses as a whole, please enhance your disclosure in MD&A to discuss the factors that led to a significant decrease in foreign pre-tax income despite an increase in foreign revenue. See Section 501.04 of the Financial Reporting Codification. July 17, 2012 Mr. Rufus Decker Page 3 Response to Comment 2 We note that in the disclosure on page 123 within the Taxation footnote, the amounts disclosed as foreign income before taxes of $421.7 million in 2011 and $660 million in 2010 include the income/(losses) before income taxes of our consolidated investment products of ($87.4) million in 2011, and $180.7 million in 2010. Excluding these amounts, foreign pre-tax income increased by 6% from 2010 to 2011. Calculations are presented below, along with proposed revised disclosures for future Form 10-K filings. Calculation of income/(losses) before taxes of consolidated investment products*: Year ended December 31, $ in millions 2011 2010 Income/(losses) before taxes: CLOs - VIEs (169.9 ) 77.1 Other VIEs — 5.3 VOEs 62.4 92.5 Adjustments 20.1 5.8 Income/(losses) before taxes of consolidated investment products (87.4 ) 180.7 * Amounts and row descriptions tie directly to the columns in the condensed consolidating income statements presented in the Consolidated Investment Products footnote, page 131 of the Company's 2011 Form 10-K and are defined in that document. Calculation of % US versus Foreign income before taxes: Year ended December 31, 2011 2010 $ in millions (except percentages) Amount % Amount % Change US 486.4 54 % 173.8 21 % 180 % Foreign* 509.1 56 % 479.3 57 % 6 % Income/(losses) before taxes of consolidated investment products* (87.4 ) (10 )% 180.7 22 % (148 )% Income before income taxes, per face of income statement 908.1 100 % 833.8 100 % 9 % (Gains)/losses attributable to noncontrolling interests in consolidated entities (NCI), net 107.7 (171.1 ) Income before taxes, excluding NCI 1,015.8 662.7 * Foreign, as disclosed (sum of * asterisked rows above) 421.7 46 % 660.0 79 % (36 )% We will revise future Form 10-K disclosures in the taxation footnote to differentiate between US, foreign, and income/(losses) before income taxes of consolidated investment products, similar to the analysis presented in the table below in italics. July 17, 2012 Mr. Rufus Decker Page 4 Proposed New Disclosure in Taxation Footnote: Income Before Taxes Year ended December 31, $ in millions (except percentages) 2011 2010 US 486.4 173.8 Foreign 509.1 479.3 Income/(losses) before taxes of consolidated investment products, as disclosed in Note 20, "Consolidated Investment Products" (87.4 ) 180.7 Income before income taxes 908.1 833.8 3. You disclose on page 26 that the adoption of ASC 810 had a significant impact on the presentation of your financial statements in 2011 and 2010, since you were required to consolidate certain CLOs that were not previously consolidated. We note that the collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs and that you have no right to the benefits from, nor do you bear the risks associated with, the collateral assets held by the CLOs beyond your minimal direct investments in, and management fees generated from, the CLOs. As such, it appears that these assets may be restricted. We also note your disclosure on page 89 that you consolidate, in addition to the CLOs, other VIEs and non-VIE general partnership investments where you are deemed to have control. Please tell us what consideration you gave to the need for parent only financial statements under Rules 5-04 and 12-04 of Regulation S-X. If you do not believe that you meet the requirement to provide the Schedule I parent only financial statements, please provide us with your calculations to support your basis. Response to Comment 3 We concluded that we do not meet the requirements to provide the Schedule I parent-only financial statements in our filings with the Commission. Rule 5-04 of Regulation S-X indicates that Schedule I should be provided "when the restricted net assets (Rule 4-08(e)(3)) of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year." Rule 4-08(e)(3) of Regulation S-X instructs that "noncontrolling interests shall be deducted in computing net assets for purposes of this test." We generally invest nominally in these products (for example, a less than 1% investment in partnership structures), as such investments are to demonstrate "skin in the game" to attract other unaffiliated investors in these products. Due to the nominal amount of our investments, upon consolidation, we reflect significant noncontrolling interest and appropriated retained earnings balances attributable to the unaffiliated investors in these products. The net assets of consolidated investment products therefore equals the sum of the noncontrolling interests and appropriated retained earnings attributable to other parties. The guidance regarding Schedule I in Rule 5-04 states that: "For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant's proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations)..." If we exclude these balances on this basis, then the percentage of consolidated investment products net assets to the Company's consolidated net asset balances becomes zero as illustrated in the calculation below: July 17, 2012 Mr. Rufus Decker Page 5 December 31, $ in millions (except percentages) 2011 2010 Net assets of consolidated investment products (see table below) 1,349.4 1,587.0 Equity attributable to noncontrolling interests in consolidated investment products*: Other VIEs (45.4 ) (62.3 ) VOEs (968.6 ) (1,029.2 ) Retained earnings appropriated for investors in consolidated investment products* (334.3 ) (495.5 ) Adjustments* (1.1 ) — — — Net assets of the Company for purposes of calculation (see table below) 7,784.8 7,769.1 Net assets of consolidated investment products for purposes of calculation — — % Consolidated Investment Products net assets to consolidated net assets — % — % * Amounts and row descriptions are included in the columns in the condensed consolidating balance sheets presented in the Consolidated Investment Products footnote, page 130 of the Company's 2011 Form 10-K. The assets of consolidated investment products are held solely to satisfy the obligations of consolidated investment products. The obligations of consolidated investment products are not the obligations of the Company as the asset manager of the products. A calculation and illustration of the components of the net assets of consolidated investment products balances is presented in the table below: December 31, $ in millions (except percentages) 2011 2010 Total assets*: CLOs - VIEs 6,076.8 6,883.9 Other VIEs 45.9 63.3 VOEs 1,017.5 1,075.1 Adjustments (122.4 ) (83.3 ) Total assets of consolidated investment products 7,017.8 7,939.0 Total liabilities*: CLOs - VIEs 5,742.5 6,388.4 Other VIEs 0.4 0.9 VOEs 5.8 7.8 Adjustments (80.3 ) (45.1 ) Total liabilities of consolidated investment products 5,668.4 6,352.0 Net assets of consolidated investment products 1,349.4 1,587.0 * Amounts and row descriptions tie directly to the columns in the condensed consolidating balance sheets presented in the Consolidated Investment Products footnote, page 130 of the Company's 2011 Form 10-K and are defined in that document. July 17, 2012 Mr. Rufus Decker Page 6 For purposes of the calculation, the net assets of the Company are calculated as follows: December 31, $ in millions (except percentages) 2011 2010 Total equity, per balance sheet 9,137.6 9,360.9 Less: Equity attributable to noncontrolling interests in consolidated entities (1,018.5 ) (1,096.3 ) Total equity attributable to common shareholders, per balance sheet 8,119.1 8,264.6 Less: Retained earnings appropriated for investors in consolidated investment products* (334.3 ) (495.5 ) Net assets of the Company for purposes of calculation 7,784.8 7,769.1 * Retained earnings appropriated for investors in consolidated investment products is completely attributed to other investors in these products and not to the Company's interest in these products. We therefore believe it is appropriate to remove this balance from the calculation, similar to the noncontrolling interests. We utilize separate primary financial statement presentation of the significant balances related to consolidated investment products. This, combined with the VIE columns provided on pages 130 through 132 of the Company's 2011 Form 10-K, serve to separately present the variable interest entity disclosure requirements of ASC 810, "Consolidation." As discussed above, we believe that it is extremely important to illustrate for readers of our financial statements the impact of the consolidation of all investment products, including variable interest entities. We believe that it is meaningful and useful to readers to include the presentation of condensed consolidating balance sheets and income statements illustrating our group of companies before and after consolidation of investment products. Item 8 - Financial Statements and Supplementary Data, page 79 General 4. Rule 4-08(k) of Regulation S-X requires you to identify your related party transactions and amounts on the face of the balance sheet, income statement, and statement of cash flows, as applicable. Please help us understand how you have complied with this requirement. Response to Comment 4 Certain funds may be deemed to be affiliates of the Company, as the Company's business is to manage the funds. ASC 850-50-3 states: "Sometimes, the effect of the relationship between the parties may be so pervasive that disclosure of the relationship alone will be sufficient." We believe that the transactions between the Company and its managed funds are so pervasive that disclosure in the footnotes of the asset management relationship is sufficient. Specifically, in Note 1 of our 2011 Form 10-K, "Accounting Policies-Basis of Accounting and Consolidation," we disclosed that "the company provides investment management services to, and has transactions with, various private equity funds, real estate funds, fund-of-funds, collateralized loan obligations (CLOs), and other investment products sponsored by the company for investment of client assets in the normal course of its business." Also in the Revenue Recognition policy within Note 1, we disclosed that "investment management fees are derived from providing professional services to manage client accounts and include fees earned from retail mutual funds, unit t