# Invesco Ltd. (IVZ) FY 2024 MD&A

Verbatim Item 7 Management's Discussion and Analysis from Invesco Ltd.'s 10-K for fiscal year 2024.

SEC filing source: https://www.sec.gov/Archives/edgar/data/914208/000091420825000114/ivz-20241231.htm
Accession: 0000914208-25-000114
Filing date: 2025-02-25
Report date: 2024-12-31
Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high

Company profile: /company/IVZ/
All MD&A years: /company/IVZ/mda/
Previous year: /company/IVZ/mda/fy2023/ (FY 2023)
Next year: /company/IVZ/mda/fy2025/ (FY 2025)

Item 7.  Management's Discussion and Analysis of Financial Condition and Results of Operations

The discussion and analysis disclosed herein apply to material changes in the Consolidated Financial Statements for 2024 and 2023. For the comparison of 2023 and 2022, see the Management's Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of the company’s 2023 Annual Report on Form 10-K, filed with the SEC on February 21, 2024. The following discussion and analysis of the results of operations and financial condition of Invesco should be read in conjunction with the “Forward-looking Statements” disclosure set forth before Part I and the “Risk Factors” set forth in Item 1A of Part I of this Annual Report on Form 10‑K, each of which describe our risks, uncertainties and other important factors in more detail.

Executive Overview

The following executive overview summarizes the significant trends affecting our results of operations and financial condition for the periods presented. This overview and the remainder of this management's discussion and analysis and supplements should be read in conjunction with the Consolidated Financial Statements of Invesco Ltd. and the notes thereto contained elsewhere in this Annual Report on Form 10-K.

The table below summarizes the year ended December 31 returns based on price appreciation/(depreciation) of several major market indices for 2024 and 2023:

[[GREPCENT_TABLE]]
[["","","","Year ended December 31,"],["Equity Indices - Domestic","","","2024","","2023"],["S&P 500","","","23.3%","","24.2%"],["S&P 500 Equal-Weight","","","10.9%","","11.6%"],["S&P 500 Growth","","","35.2%","","28.4%"],["S&P 500 Values","","","9.8%","","19.8%"],["NASDAQ 100","","","24.9%","","53.8%"],["Equity Indices - Global"],["FTSE 100 (local currency)","","","5.7%","","3.8%"],["MSCI AC Asia Pacific","","","7.2%","","8.8%"],["MSCI China (local currency)","","","15.7%","","(13.2)%"],["MSCI Emerging Markets","","","5.1%","","7.0%"],["MSCI Europe (local currency)","","","5.8%","","12.7%"],["MSCI Japan (local currency)","","","18.5%","","25.9%"],["Fixed Income Indices"],["Bloomberg US Aggregate Bond","","","1.3%","","5.5%"],["Bloomberg Global Aggregated Bond","","","(1.7)%","","5.7%"],["Bloomberg China Aggregated Bond","","","4.9%","","2.7%"]]
[[/GREPCENT_TABLE]]

The company’s financial results are impacted by the fluctuations in exchange rates against the U.S. Dollar, as discussed in the “Results of Operations” section as applicable.

We continued to make progress in executing our strategic priorities and leveraging our competitive advantages to improve operating performance in 2024. Higher operating revenues along with expense discipline contributed to an increase in operating income from the prior year. See additional discussion in the "Results of Operations" section.

We also remain highly focused on our capital priorities, investing in our key capabilities, efficiently allocating resources, and simplifying and streamlining the organization to position the company for greater scale, performance and improved profitability. We are delivering on our commitment to improve our leverage profile and maintain a strong balance sheet. We redeemed our $600 million senior notes, that were due on January 30, 2024, and we ended the year with cash and cash equivalents of $1 billion and a zero balance on our revolving credit facility. We believe the progress we have made to build financial flexibility has Invesco well-positioned to navigate various market conditions and deliver long-term growth. We remain committed to returning capital to shareholders longer term through a combination of share repurchases and modestly increasing

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dividends. During the year, the company repurchased 2.9 million common shares for $49.6 million in the open market, and we expect to continue common share repurchases on a regular basis going forward.

Presentation of Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Consolidated Investment Products (CIP)

The company provides investment management services to, and has transactions with, investment products sponsored by the company in the normal course of business. The company's investment adviser subsidiaries serve as investment managers to these products, making day-to-day investment decisions concerning the assets of the products. The company is required to consolidate certain of these managed funds from time-to-time, as discussed more fully in Part II, Item 8, Financial Statements and Supplementary Data, Note 1, "Accounting Policies -- Basis of Accounting and Consolidation." Investment products that are consolidated are referred to in this Report as CIP. The company's economic risk with respect to each investment in CIP is limited to its equity ownership, unfunded equity commitments and any uncollected management and performance fees.

The majority of the company's CIP balances are CLO-related. The collateral assets of the CLOs are held solely to satisfy the obligations of the CLOs. The company has no right to the benefits from, nor does it bear the risks associated with, the collateral assets held by the CLOs beyond the company's direct investments in, and management and performance fees generated from, the CLOs. If the company were to liquidate, the collateral assets would not be available to the general creditors of the company, and as a result, the company does not consider these assets to be company assets. Likewise, the investors in the CLOs have no recourse to the general credit of the company for the notes issued by the CLOs. The company therefore does not consider this debt to be a company liability.

Due to the significant impact that CIP has on the presentation of the company’s Consolidated Financial Statements, the company has elected to deconsolidate these products in its non-GAAP disclosures (among other adjustments). See "Schedule of Non-GAAP Information" for additional information regarding these adjustments. The following discussion therefore combines the results presented under U.S. Generally Accepted Accounting Principles (U.S. GAAP) with the company’s non-GAAP presentation.

To assess the impact of CIP on the company's Results of Operations and Balance Sheet Discussion, refer to Part II, Item 8, Financial Statements and Supplementary Data, Note 18, "Consolidated Investment Products."

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Summary Operating Information

Wherever a non-GAAP measure is referenced, a disclosure will follow in the narrative or in the note referring the reader to the Schedule of Non-GAAP Information, where additional details regarding the use of the non-GAAP measure by the company are disclosed, along with reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures. To enhance the readability of the Results of Operations section, separate tables for each of the revenue, expense and other income and expenses (non-operating income/expense) sections of the income statement introduce the narrative that follows, providing a section-by-section review of the company’s income statements for the periods presented.

Summary operating information for 2024, 2023 and 2022 is presented in the table below.

[[GREPCENT_TABLE]]
[["(in millions, other than per common share amounts, operating margins and AUM)","Year ended December 31,"],["U.S. GAAP Financial Measures Summary","2024","","2023","","2022"],["Operating revenues","$","6,067.0","","","$","5,716.4","","","$","6,048.9"],["Operating income/(loss)","$","832.1","","","$","(434.8)","","","$","1,317.7"],["Operating margin","13.7","%","","(7.6)","%","","21.8","%"],["Net income/(loss) attributable to Invesco Ltd.","$","538.0","","","$","(333.7)","","","$","683.9"],["Diluted earnings per share (EPS)","$","1.18","","","$","(0.73)","","","$","1.49"],["Non-GAAP Financial Measures Summary(1)"],["Net revenues","$","4,400.5","","","$","4,310.7","","","$","4,645.0"],["Adjusted operating income","$","1,370.7","","","$","1,213.5","","","$","1,614.8"],["Adjusted operating margin","31.1","%","","28.2","%","","34.8","%"],["Adjusted net income attributable to Invesco Ltd.","$","781.7","","","$","689.7","","","$","773.2"],["Adjusted diluted earnings per share (EPS)","$","1.71","","","$","1.51","","","$","1.68"],["Assets Under Management"],["Ending AUM (billions)","$","1,846.0","","","$","1,585.3","","","$","1,409.2"],["Average AUM (billions)","$","1,712.2","","","$","1,500.6","","","$","1,452.5"]]
[[/GREPCENT_TABLE]]

_________

(1)Net revenues, Adjusted Operating Income (and by calculation, adjusted operating margin), and Adjusted Net Income (and by calculation, adjusted diluted EPS) are non-GAAP financial measures, based on methodologies other than U.S. GAAP. See “Schedule of Non-GAAP Information” for a reconciliation of the most directly comparable U.S. GAAP measures to the non-GAAP measures.

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Investment Capabilities Performance Overview

Invesco's first strategic objective is a commitment to deliver the excellence our clients expect, which includes strong investment performance over the long-term for our clients. The table below presents investment performance of our actively managed investment products measured by the percentage of our AUM in the first and second quartile compared to our peers and above benchmark for the investment capabilities for which peer and benchmark data are available.(1)

[[GREPCENT_TABLE]]
[["","1st Quartile","","2nd Quartile","","Above Benchmark"],["","1yr","3yr","5yr","","1yr","3yr","5yr","","1yr","3yr","5yr"],["Overall","48","%","49","%","47","%","","23","%","20","%","23","%","","64","%","62","%","68","%"],["Fundamental Equities","33","%","37","%","35","%","","38","%","27","%","20","%","","46","%","44","%","46","%"],["Fundamental Fixed Income","40","%","40","%","38","%","","26","%","23","%","44","%","","60","%","52","%","60","%"],["Multi-Asset","40","%","34","%","30","%","","23","%","12","%","28","%","","61","%","61","%","72","%"]]
[[/GREPCENT_TABLE]]

____________

(1)    Excludes passive products, closed-end funds, private equity limited partnerships, non-discretionary funds, UITs, fund of funds with component funds managed by Invesco, stable value building block funds and collateralized debt obligations. Certain funds and products were excluded from the analysis because of limited benchmark or peer group data. Had these been available, results may have been different. These results are preliminary and subject to revision.

AUM measured in the one, three and five year quartile rankings represents 37%, 37% and 37% of total Invesco AUM, respectively, and AUM measured versus benchmark on a one, three and five year basis represents 48%, 47%, and 45% of total Invesco AUM as of 12/31/2024. Peer group ranking are sourced from a widely-used third party ranking agency in each fund’s market (Morningstar, IA, Lipper, eVestment, Mercer, Galaxy, SITCA, Value Research) and asset-weighted in USD. Rankings are as of prior quarter-end for most institutional products and prior month-end for Australian retail funds due to their late release by third parties. Rankings are calculated against all funds in each peer group. Rankings for the primary share class of the most representative fund in each composite are applied to all products within each composite. Performance assumes the reinvestment of dividends. Past performance is not indicative of future results and may not reflect an investor’s experience.

Assets Under Management

The following presentation and discussion of AUM includes Passive and Active AUM. Passive AUM include index-based ETFs, UITs, non-management fee earning AUM and other passive mandates. Active AUM are Total AUM less Passive AUM.

Non-management fee earning AUM includes non-management fee earning ETFs, UITs and product leverage. The net flows in non-management fee earning AUM can be relatively short-term in nature and, due to the relatively low revenue yield, these net flows can have a significant impact on overall net revenue yield.

The AUM tables and the discussion below refer to certain AUM as long-term. Long-term inflows and the underlying reasons for the movements in this line item include investments from new clients, existing clients adding new accounts/funds or contributions/subscriptions into existing accounts/funds. Long-term outflows reflect client redemptions from accounts/funds and include the return of invested capital upon maturity. We present net flows into money market funds separately because shareholders of those funds typically use them as short-term funding vehicles and the flows are particularly sensitive to short-term interest rate movements.

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Changes in Active and Passive AUM were as follows:

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(in billions)","Total AUM","","Active","","Passive","","Total AUM","","Active","","Passive","","Total AUM","","Active","","Passive"],["Beginning Assets (January 1)","$","1,585.3","","","$","985.3","","","$","600.0","","","$","1,409.2","","","$","976.2","","","$","433.0","","","$","1,610.9","","","$","1,082.5","","","$","528.4"],["Long-term inflows","419.0","","","194.0","","","225.0","","","299.1","","","164.3","","","134.8","","","330.3","","","197.9","","","132.4"],["Long-term outflows","(353.9)","","","(209.4)","","","(144.5)","","","(288.9)","","","(193.3)","","","(95.6)","","","(330.8)","","","(226.2)","","","(104.6)"],["Net long-term flows","65.1","","","(15.4)","","","80.5","","","10.2","","","(29.0)","","","39.2","","","(0.5)","","","(28.3)","","","27.8"],["Net flows in non-management fee earning AUM","29.8","","","\u2014","","","29.8","","","6.2","","","\u2014","","","6.2","","","(3.2)","","","\u2014","","","(3.2)"],["Net flows in money market funds","23.4","","","23.4","","","\u2014","","","(11.1)","","","(11.1)","","","\u2014","","","56.4","","","56.4","","","\u2014"],["Total net flows","118.3","","","8.0","","","110.3","","","5.3","","","(40.1)","","","45.4","","","52.7","","","28.1","","","24.6"],["Reinvested distributions","16.0","","","16.0","","","\u2014","","","11.5","","","11.5","","\u2014","","","15.2","","","15.2","","","\u2014"],["Market gains and losses","142.7","","","30.0","","","112.7","","","161.1","","","40.0","","","121.1","","","(243.5)","","","(125.6)","","","(117.9)"],["Dispositions","\u2014","","","\u2014","","","\u2014","","","(1.4)","","","(1.4)","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Foreign currency translation","(16.3)","","","(12.8)","","","(3.5)","","","(0.4)","","","(0.9)","","","0.5","","","(26.1)","","","(24.0)","","","(2.1)"],["Ending Assets (December 31)","$","1,846.0","","","$","1,026.5","","","$","819.5","","","$","1,585.3","","","$","985.3","","","$","600.0","","","$","1,409.2","","","$","976.2","","","$","433.0"],["Average AUM"],["Average long-term AUM","$","1,233.0","","","$","808.1","","","$","424.9","","","$","1,091.3","","","$","780.4","","","$","310.9","","","$","1,104.8","","","$","820.8","","","$","284.0"],["Average AUM","$","1,712.2","","","$","1,001.9","","","$","710.3","","","$","1,500.6","","","$","992.3","","","$","508.3","","","$","1,452.5","","","$","988.2","","","$","464.3"],["Average QQQ AUM","$","275.8","","","$","\u2014","","","$","275.8","","","$","187.5","","","$","\u2014","","","$","187.5","","","$","169.1","","","$","\u2014","","","$","169.1"]]
[[/GREPCENT_TABLE]]

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["Revenue yield (bps) (1)"],["U.S. GAAP gross revenue yield","37.4","","40.4","","44.5"],["Net revenue yield ex performance fees ex QQQ (2)","30.2","","32.4","","35.5"],["Active net revenue yield ex performance fees","36.9","","37.7","","40.7"],["Passive net revenue yield ex QQQ (2)","14.9","","16.0","","18.1"]]
[[/GREPCENT_TABLE]]

____________

(1)    U.S. GAAP gross revenue yield on AUM is equal to U.S. GAAP annualized total operating revenues divided by average AUM, excluding IGW AUM. The average AUM for IGW was $88.6 billion in 2024 (2023: $87.2 billion, 2022: $93.5 billion). It is appropriate to exclude the average AUM of IGW as the revenues resulting from these AUM are not presented in our U.S. GAAP operating revenues. Additionally, the U.S. GAAP gross revenue yield is not a good measure because the numerator excludes the management fees earned from CIP; however, the denominator of the measure includes the AUM of these investment products. Net revenue yield metrics include the net revenues and average AUM of IGW and CIP. See “Schedule of Non-GAAP Information” for a reconciliation of operating revenues to net revenues.

(2)    Performance fees are earned when certain performance metrics are achieved; Invesco QQQ Trust does not earn net revenues. Therefore, net revenue yield is calculated excluding performance fees and Invesco QQQ Trust AUM. Passive net revenue yield is calculated excluding Invesco QQQ Trust AUM.

Flows

There are numerous drivers of AUM inflows and outflows, including individual investor decisions to change investment preferences, fiduciaries and other gatekeepers making broad asset allocation decisions on behalf of their clients, and reallocation of investments within portfolios. We are not a party to these asset allocation decisions, as the company does not generally have access to the underlying investor's decision-making process, including their risk appetite or liquidity needs. Therefore, the company is not in a position to provide meaningful information regarding the drivers of inflows and outflows.

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Market Returns

Market gains and losses include the net change in AUM resulting from changes in market values of the underlying securities from period to period. The table in the “Executive Overview” section of this Management's Discussion and Analysis summarizes returns based on price appreciation/(depreciation) of several major market indices for the years ended December 31, 2024 and December 31, 2023.

Foreign Exchange Rates

During the year ended December 31, 2024, we experienced a decrease in AUM of $16.3 billion due to changes in foreign exchange rates (December 31, 2023: AUM decreased $0.4 billion; December 31, 2022: AUM decreased $26.1 billion).

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Total AUM by Channel (1)

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(in billions)","Total","","Retail","","Institutional","","Total","","Retail","","Institutional","","Total","","Retail","","Institutional"],["Beginning Assets (January 1)","$","1,585.3","","","$","1,042.0","","","$","543.3","","","$","1,409.2","","","$","872.3","","","$","536.9","","","$","1,610.9","","","$","1,106.5","","","$","504.4"],["Long-term inflows","419.0","","","319.6","","","99.4","","","299.1","","","219.9","","","79.2","","","330.3","","","243.9","","","86.4"],["Long-term outflows","(353.9)","","","(259.6)","","","(94.3)","","","(288.9)","","","(214.5)","","","(74.4)","","","(330.8)","","","(257.5)","","","(73.3)"],["Net long-term flows","65.1","","","60.0","","","5.1","","","10.2","","","5.4","","","4.8","","","(0.5)","","","(13.6)","","","13.1"],["Net flows in non-management fee earning AUM","29.8","","","28.7","","","1.1","","","6.2","","","5.9","","","0.3","","","(3.2)","","","0.9","","","(4.1)"],["Net flows in money market funds","23.4","","","1.5","","","21.9","","","(11.1)","","","1.4","","","(12.5)","","","56.4","","","1.8","","","54.6"],["Total net flows","118.3","","","90.2","","","28.1","","","5.3","","","12.7","","","(7.4)","","","52.7","","","(10.9)","","","63.6"],["Reinvested distributions","16.0","","","15.8","","","0.2","","","11.5","","","11.0","","","0.5","","","15.2","","","14.8","","","0.4"],["Market gains and losses","142.7","","","123.4","","","19.3","","","161.1","","","145.2","","","15.9","","","(243.5)","","","(227.3)","","","(16.2)"],["Dispositions","\u2014","","","\u2014","","","\u2014","","","(1.4)","","","\u2014","","","(1.4)","","","\u2014","","","\u2014","","","\u2014"],["Foreign currency translation","(16.3)","","","(5.8)","","","(10.5)","","","(0.4)","","","0.8","","","(1.2)","","","(26.1)","","","(10.8)","","","(15.3)"],["Ending Assets (December 31)","$","1,846.0","","","$","1,265.6","","","$","580.4","","","$","1,585.3","","","$","1,042.0","","","$","543.3","","","$","1,409.2","","","$","872.3","","","$","536.9"]]
[[/GREPCENT_TABLE]]

Total AUM by Client Domicile (2)

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(in billions)","Total","","Americas","","APAC","","EMEA","","Total","","Americas","","APAC","","EMEA","","Total","","Americas","","APAC","","EMEA"],["Beginning Assets (January 1)","$","1,585.3","","","$","1,133.9","","","$","235.5","","","$","215.9","","","$","1,409.2","","","$","999.4","","","$","223.5","","","$","186.3","","","$","1,610.9","","","$","1,132.5","","","$","247.3","","","$","231.1"],["Long-term inflows","419.0","","","212.5","","","121.0","","","85.5","","","299.1","","","154.0","","","77.1","","","68.0","","","330.3","","","184.0","","","76.6","","","69.7"],["Long-term outflows","(353.9)","","","(190.7)","","","(94.9)","","","(68.3)","","","(288.9)","","","(156.0)","","","(67.0)","","","(65.9)","","","(330.8)","","","(193.8)","","","(62.5)","","","(74.5)"],["Net long-term flows","65.1","","","21.8","","","26.1","","","17.2","","","10.2","","","(2.0)","","","10.1","","","2.1","","","(0.5)","","","(9.8)","","","14.1","","","(4.8)"],["Net flows in non-management fee earning AUM","29.8","","","23.8","","","0.1","","","5.9","","","6.2","","","7.2","","","(0.3)","","","(0.7)","","","(3.2)","","","(3.6)","","","1.1","","","(0.7)"],["Net flows in money market funds","23.4","","","24.0","","","\u2014","","","(0.6)","","","(11.1)","","","(11.7)","","","1.3","","","(0.7)","","","56.4","","","58.3","","","(0.3)","","","(1.6)"],["Total net flows","118.3","","","69.6","","","26.2","","","22.5","","","5.3","","","(6.5)","","","11.1","","","0.7","","","52.7","","","44.9","","","14.9","","","(7.1)"],["Reinvested distributions","16.0","","","15.8","","","\u2014","","","0.2","","","11.5","","","11.3","","","\u2014","","","0.2","","","15.2","","","14.9","","","\u2014","","","0.3"],["Market gains and losses","142.7","","","101.5","","","16.3","","","24.9","","","161.1","","","130.4","","","6.3","","","24.4","","","(243.5)","","","(191.3)","","","(22.6)","","","(29.6)"],["Transfer","\u2014","","","(3.4)","","","3.6","","","(0.2)","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Dispositions","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(1.4)","","","(1.4)","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Foreign currency translation","(16.3)","","","(1.9)","","","(11.4)","","","(3.0)","","","(0.4)","","","0.7","","","(5.4)","","","4.3","","","(26.1)","","","(1.6)","","","(16.1)","","","(8.4)"],["Ending Assets (December 31)","$","1,846.0","","","$","1,315.5","","","$","270.2","","","$","260.3","","","$","1,585.3","","","$","1,133.9","","","$","235.5","","","$","215.9","","","$","1,409.2","","","$","999.4","","","$","223.5","","","$","186.3"]]
[[/GREPCENT_TABLE]]

____________

See accompanying notes immediately following these AUM tables.

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Total AUM by Investment Capability (3)

[[GREPCENT_TABLE]]
[["","Twelve months ended December 31, 2024"],["(in billions)","Total","","ETFs and Index (4)","","Fundamental Fixed Income (5)","","Fundamental Equities (6)","","Private Markets (7)","","APAC Managed (8)","","Multi-Asset/ Other (9)","","Global Liquidity (10)","","QQQ (11)"],["Beginning Assets (January 1)","$","1,585.3","","","$","362.1","","","$","272.6","","","$","260.5","","","$","129.7","","","$","108.0","","","$","57.4","","","$","165.0","","","$","230.0"],["Long-term inflows","419.0","","","192.7","","","68.5","","","35.7","","","25.0","","","86.7","","","10.4","","","\u2014","","","\u2014"],["Long-term outflows","(353.9)","","","(121.4)","","","(60.7)","","","(59.9)","","","(20.9)","","","(78.1)","","","(12.9)","","","\u2014","","","\u2014"],["Net long-term flows","65.1","","","71.3","","","7.8","","","(24.2)","","","4.1","","","8.6","","","(2.5)","","","\u2014","","","\u2014"],["Net flows in non-management fee earning AUM","29.8","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","0.7","","","\u2014","","","29.1"],["Net flows in money market funds","23.4","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(0.2)","","","\u2014","","","23.6","","","\u2014"],["Total net flows","118.3","","","71.3","","","7.8","","","(24.2)","","","4.1","","","8.4","","","(1.8)","","","23.6","","","29.1"],["Reinvested distributions","16.0","","","0.5","","","2.1","","","11.6","","","0.8","","","\u2014","","","0.6","","","0.4","","","\u2014"],["Market gains and losses","142.7","","","53.2","","","3.2","","","21.2","","","(4.6)","","","5.6","","","3.8","","","0.5","","","59.8"],["Foreign currency translation","(16.3)","","","(3.1)","","","(4.6)","","","(2.6)","","","(1.5)","","","(3.2)","","","(1.2)","","","(0.1)","","","\u2014"],["Ending Assets (December 31)","$","1,846.0","","","$","484.0","","","$","281.1","","","$","266.5","","","$","128.5","","","$","118.8","","","$","58.8","","","$","189.4","","","$","318.9"],["Average AUM","$","1,712.2","","","$","423.8","","","$","276.9","","","$","269.4","","","$","128.5","","","$","112.1","","","$","59.8","","","$","165.9","","","$","275.8"],["","Twelve months ended December 31, 2023"],["Beginning Assets (January 1)","$","1,409.2","","","$","285.6","","","$","261.3","","","$","238.8","","","$","129.9","","","$","113.6","","","$","57.7","","","$","176.4","","","$","145.9"],["Long-term inflows","299.1","","","124.1","","","60.6","","","36.7","","","16.1","","","52.5","","","9.1","","","\u2014","","","\u2014"],["Long-term outflows","(288.9)","","","(90.8)","","","(59.6)","","","(54.3)","","","(15.5)","","","(55.1)","","","(13.6)","","","\u2014","","","\u2014"],["Net long-term flows","10.2","","","33.3","","","1.0","","","(17.6)","","","0.6","","","(2.6)","","","(4.5)","","","\u2014","","","\u2014"],["Net flows in non-management fee earning AUM","6.2","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(0.3)","","","\u2014","","","6.5"],["Net flows in money market funds","(11.1)","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","1.2","","","\u2014","","","(12.3)","","","\u2014"],["Total net flows","5.3","","","33.3","","","1.0","","","(17.6)","","","0.6","","","(1.4)","","","(4.8)","","","(12.3)","","","6.5"],["Reinvested distributions","11.5","","","0.3","","","1.9","","","7.8","","","0.8","","","\u2014","","","0.4","","","0.3","","","\u2014"],["Market gains and losses","161.1","","","42.5","","","9.4","","","29.9","","","(0.9)","","","(1.1)","","","3.2","","","0.5","","","77.6"],["Dispositions","(1.4)","","","\u2014","","","\u2014","","","\u2014","","","(1.4)","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Foreign currency translation","(0.4)","","","0.4","","","(1.0)","","","1.6","","","0.7","","","(3.1)","","","0.9","","","0.1","","","\u2014"],["Ending Assets (December 31)","$","1,585.3","","","$","362.1","","","$","272.6","","","$","260.5","","","$","129.7","","","$","108.0","","","$","57.4","","","$","165.0","","","$","230.0"],["Average AUM","$","1,500.6","","","$","316.7","","","$","264.5","","","$","249.9","","","$","128.2","","","$","111.0","","","$","59.7","","","$","183.1","","","$","187.5"]]
[[/GREPCENT_TABLE]]

___________

See accompanying notes immediately following these AUM tables.

37

Table of Contents    

[[GREPCENT_TABLE]]
[["","Twelve months ended December 31, 2022"],["(in billions)","Total","","ETFs and Index (4)","","Fundamental Fixed Income (5)","","Fundamental Equities (6)","","Private Markets (7)","","APAC Managed (8)","","Multi-Asset/ Other (9)","","Global Liquidity (10)","","QQQ (11)"],["Beginning Assets (January 1)","$","1,610.9","","","$","303.5","","","$","288.5","","","$","343.5","","","$","134.4","","","$","127.9","","","$","78.9","","","$","119.1","","","$","215.1"],["Long-term inflows","330.3","","","131.9","","","70.8","","","40.4","","","25.2","","","53.4","","","8.6","","","\u2014","","","\u2014"],["Long-term outflows","(330.8)","","","(101.2)","","","(68.6)","","","(70.9)","","","(27.7)","","","(46.7)","","","(15.7)","","","\u2014","","","\u2014"],["Net long-term flows","(0.5)","","","30.7","","","2.2","","","(30.5)","","","(2.5)","","","6.7","","","(7.1)","","","\u2014","","","\u2014"],["Net flows in non-management fee earning AUM","(3.2)","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(4.5)","","","\u2014","","","1.3"],["Net flows in money market funds","56.4","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(0.2)","","","\u2014","","","56.6","","","\u2014"],["Total net flows","52.7","","","30.7","","","2.2","","","(30.5)","","","(2.5)","","","6.5","","","(11.6)","","","56.6","","","1.3"],["Reinvested distributions","15.2","","","0.5","","","1.7","","","11.4","","","1.0","","","\u2014","","","0.6","","","\u2014","","","\u2014"],["Market gains and losses","(243.5)","","","(47.3)","","","(25.1)","","","(81.4)","","","(1.3)","","","(11.3)","","","(7.6)","","","1.0","","","(70.5)"],["Foreign currency translation","(26.1)","","","(1.8)","","","(6.0)","","","(4.2)","","","(1.7)","","","(9.5)","","","(2.6)","","","(0.3)","","","\u2014"],["Ending Assets (December 31)","$","1,409.2","","","$","285.6","","","$","261.3","","","$","238.8","","","$","129.9","","","$","113.6","","","$","57.7","","","$","176.4","","","$","145.9"],["Average AUM","$","1,452.5","","","$","293.5","","","$","264.5","","","$","270.5","","","$","134.1","","","$","117.8","","","$","64.9","","","$","138.1","","","$","169.1"]]
[[/GREPCENT_TABLE]]

____________

See accompanying notes immediately following these AUM tables.

38

Table of Contents    

Active AUM by Channel (1)

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(in billions)","Total","","Retail","","Institutional","","Total","","Retail","","Institutional","","Total","","Retail","","Institutional"],["Beginning Assets (January 1)","$","985.3","","","$","501.5","","","$","483.8","","","$","976.2","","","$","482.1","","","$","494.1","","","$","1,082.5","","","$","631.7","","","$","450.8"],["Long-term inflows","194.0","","","109.6","","","84.4","","","164.3","","","98.8","","","65.5","","","197.9","","","117.0","","","80.9"],["Long-term outflows","(209.4)","","","(128.8)","","","(80.6)","","","(193.3)","","","(126.0)","","","(67.3)","","","(226.2)","","","(157.5)","","","(68.7)"],["Net long-term flows","(15.4)","","","(19.2)","","","3.8","","","(29.0)","","","(27.2)","","","(1.8)","","","(28.3)","","","(40.5)","","","12.2"],["Net flows in non-management fee earning AUM","\u2014","","","\u2014","","","\u2014","","","\u2014","","","0.1","","","(0.1)","","","\u2014","","","\u2014","","","\u2014"],["Net flows in money market funds","23.4","","","1.5","","","21.9","","","(11.1)","","","1.4","","","(12.5)","","","56.4","","","1.8","","","54.6"],["Total net flows","8.0","","","(17.7)","","","25.7","","","(40.1)","","","(25.7)","","","(14.4)","","","28.1","","","(38.7)","","","66.8"],["Reinvested distributions","16.0","","","15.8","","","0.2","","","11.5","","","11.0","","","0.5","","","15.2","","","14.8","","","0.4"],["Market gains and losses","30.0","","","22.4","","","7.6","","","40.0","","","33.7","","","6.3","","","(125.6)","","","(115.6)","","","(10.0)"],["Dispositions","\u2014","","","\u2014","","","\u2014","","","(1.4)","","","\u2014","","","(1.4)","","","\u2014","","","\u2014","","","\u2014"],["Foreign currency translation","(12.8)","","","(4.5)","","","(8.3)","","","(0.9)","","","0.4","","","(1.3)","","","(24.0)","","","(10.1)","","","(13.9)"],["Ending Assets (December 31)","$","1,026.5","","","$","517.5","","","$","509.0","","","$","985.3","","","$","501.5","","","$","483.8","","","$","976.2","","","$","482.1","","","$","494.1"]]
[[/GREPCENT_TABLE]]

Active AUM by Client Domicile (2)

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(in billions)","Total","","Americas","","APAC","","EMEA","","Total","","Americas","","APAC","","EMEA","","Total","","Americas","","APAC","","EMEA"],["Beginning Assets (January 1)","$","985.3","","","$","671.4","","","$","192.0","","","$","121.9","","","$","976.2","","","$","670.8","","","$","191.0","","","$","114.4","","","$","1,082.5","","","$","724.5","","","$","208.8","","","$","149.2"],["Long-term inflows","194.0","","","84.1","","","84.7","","","25.2","","","164.3","","","78.0","","","61.1","","","25.2","","","197.9","","","104.0","","","69.3","","","24.6"],["Long-term outflows","(209.4)","","","(111.8)","","","(70.2)","","","(27.4)","","","(193.3)","","","(109.7)","","","(55.0)","","","(28.6)","","","(226.2)","","","(133.4)","","","(56.1)","","","(36.7)"],["Net long-term flows","(15.4)","","","(27.7)","","","14.5","","","(2.2)","","","(29.0)","","","(31.7)","","","6.1","","","(3.4)","","","(28.3)","","","(29.4)","","","13.2","","","(12.1)"],["Net flows in non-management fee earning AUM","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","0.1","","","(0.1)"],["Net flows in money market funds","23.4","","","24.0","","","\u2014","","","(0.6)","","","(11.1)","","","(11.7)","","","1.3","","","(0.7)","","","56.4","","","58.3","","","(0.3)","","","(1.6)"],["Total net flows","8.0","","","(3.7)","","","14.5","","","(2.8)","","","(40.1)","","","(43.4)","","","7.4","","","(4.1)","","","28.1","","","28.9","","","13.0","","","(13.8)"],["Reinvested distributions","16.0","","","15.8","","","\u2014","","","0.2","","","11.5","","","11.3","","","\u2014","","","0.2","","","15.2","","","14.9","","","\u2014","","","0.3"],["Market gains and losses","30.0","","","19.7","","","6.2","","","4.1","","","40.0","","","33.4","","","(1.0)","","","7.6","","","(125.6)","","","(96.0)","","","(16.3)","","","(13.3)"],["Transfer","\u2014","","","(3.4)","","","3.6","","","(0.2)","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Dispositions","\u2014","","","\u2014","","","\u2014","","","\u2014","","","(1.4)","","","(1.4)","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014","","","\u2014"],["Foreign currency translation","(12.8)","","","(1.6)","","","(8.9)","","","(2.3)","","","(0.9)","","","0.7","","","(5.4)","","","3.8","","","(24.0)","","","(1.5)","","","(14.5)","","","(8.0)"],["Ending Assets (December 31)","$","1,026.5","","","$","698.2","","","$","207.4","","","$","120.9","","","$","985.3","","","$","671.4","","","$","192.0","","","$","121.9","","","$","976.2","","","$","670.8","","","$","191.0","","","$","114.4"]]
[[/GREPCENT_TABLE]]

____________

See accompanying notes immediately following these AUM tables.

39

Table of Contents    

Passive AUM by Channel (1)

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(in billions)","Total","","Retail","","Institutional","","Total","","Retail","","Institutional","","Total","","Retail","","Institutional"],["Beginning Assets (January 1)","$","600.0","","","$","540.5","","","$","59.5","","","$","433.0","","","$","390.2","","","$","42.8","","","$","528.4","","","$","474.8","","","$","53.6"],["Long-term inflows","225.0","","","210.0","","","15.0","","","134.8","","","121.1","","","13.7","","","132.4","","","126.9","","","5.5"],["Long-term outflows","(144.5)","","","(130.8)","","","(13.7)","","","(95.6)","","","(88.5)","","","(7.1)","","","(104.6)","","","(100.0)","","","(4.6)"],["Net long-term flows","80.5","","","79.2","","","1.3","","","39.2","","","32.6","","","6.6","","","27.8","","","26.9","","","0.9"],["Net flows in non-management fee earning AUM","29.8","","","28.7","","","1.1","","","6.2","","","5.8","","","0.4","","","(3.2)","","","0.9","","","(4.1)"],["Total net flows","110.3","","","107.9","","","2.4","","","45.4","","","38.4","","","7.0","","","24.6","","","27.8","","","(3.2)"],["Market gains and losses","112.7","","","101.0","","","11.7","","","121.1","","","111.5","","","9.6","","","(117.9)","","","(111.7)","","","(6.2)"],["Foreign currency translation","(3.5)","","","(1.3)","","","(2.2)","","","0.5","","","0.4","","","0.1","","","(2.1)","","","(0.7)","","","(1.4)"],["Ending Assets (December 31)","$","819.5","","","$","748.1","","","$","71.4","","","$","600.0","","","$","540.5","","","$","59.5","","","$","433.0","","","$","390.2","","","$","42.8"]]
[[/GREPCENT_TABLE]]

Passive AUM by Client Domicile (2)

[[GREPCENT_TABLE]]
[["","2024","","2023","","2022"],["(in billions)","Total","","Americas","","APAC","","EMEA","","Total","","Americas","","APAC","","EMEA","","Total","","Americas","","APAC","","EMEA"],["Beginning Assets (January 1)","$","600.0","","","$","462.5","","","$","43.5","","","$","94.0","","","$","433.0","","","$","328.6","","","$","32.5","","","$","71.9","","","$","528.4","","","$","408.0","","","$","38.5","","","$","81.9"],["Long-term inflows","225.0","","","128.4","","","36.3","","","60.3","","","134.8","","","76.0","","","16.0","","","42.8","","","132.4","","","80.0","","","7.3","","","45.1"],["Long-term outflows","(144.5)","","","(78.9)","","","(24.7)","","","(40.9)","","","(95.6)","","","(46.3)","","","(12.0)","","","(37.3)","","","(104.6)","","","(60.4)","","","(6.4)","","","(37.8)"],["Net long-term flows","80.5","","","49.5","","","11.6","","","19.4","","","39.2","","","29.7","","","4.0","","","5.5","","","27.8","","","19.6","","","0.9","","","7.3"],["Net flows in non-management fee earning AUM","29.8","","","23.8","","","0.1","","","5.9","","","6.2","","","7.2","","","(0.3)","","","(0.7)","","","(3.2)","","","(3.6)","","","1.0","","","(0.6)"],["Total net flows","110.3","","","73.3","","","11.7","","","25.3","","","45.4","","","36.9","","","3.7","","","4.8","","","24.6","","","16.0","","","1.9","","","6.7"],["Market gains and losses","112.7","","","81.8","","","10.1","","","20.8","","","121.1","","","97.0","","","7.3","","","16.8","","","(117.9)","","","(95.3)","","","(6.3)","","","(16.3)"],["Foreign currency translation","(3.5)","","","(0.3)","","","(2.5)","","","(0.7)","","","0.5","","","\u2014","","","\u2014","","","0.5","","","(2.1)","","","(0.1)","","","(1.6)","","","(0.4)"],["Ending Assets (December 31)","$","819.5","","","$","617.3","","","$","62.8","","","$","139.4","","","$","600.0","","","$","462.5","","","$","43.5","","","$","94.0","","","$","433.0","","","$","328.6","","","$","32.5","","","$","71.9"]]
[[/GREPCENT_TABLE]]

____________

See accompanying notes immediately following these AUM tables.

40

Table of Contents    

Invesco Ltd.

Footnotes to the Assets Under Management Tables

(1) Channel refers to the internal distribution channel from which the AUM originated. Retail AUM represents AUM distributed by the company’s retail sales teams. Institutional AUM represents AUM distributed by our institutional sales teams. This aggregation is viewed as a proxy for presenting AUM in the retail and institutional markets in which the company operates.

(2) Client domicile groups AUM by the domicile of the underlying clients.

(3) Investment capabilities are descriptive groupings of AUM by investment strategy. The company believes that presenting AUM by investment capability provides a more granular depiction of asset categorization and removed presentation of AUM by asset class in the quarter ending March 31, 2024. The comparative periods reflect the current period presentation.

(4) ETFs and Index includes ETFs and Indexed Strategies and excludes Invesco QQQ Trust.

(5) Fundamental Fixed Income includes Fixed Income products, including certain ETFs managed within this capability.

(6) Fundamental Equities includes Equity products.

(7) Private Markets includes Private Credit and Real Estate investments comprised primarily of Real Estate, CLOs, Private Credit and listed real assets, including certain ETFs managed within this capability.

(8) APAC Managed includes all products managed in the APAC region, including Invesco Great Wall, APAC managed short term, Money Market, passive, and ETFs.

(9) Multi-Asset/Other includes Global Asset Allocation, Invesco Quantitative Strategies, Global Targeted Returns, Solutions, Intelliflo, and UITs, including certain ETFs managed within this capability.

(10) Global Liquidity is comprised mainly of Money Market funds excluding APAC Money Market funds.

(11) QQQ represents assets held within Invesco QQQ Trust.

41

Table of Contents    

Results of Operations for the Year Ended December 31, 2024 compared to December 31, 2023

The discussion below includes the use of non-GAAP financial measures. See “Schedule of Non-GAAP Information” for additional details and reconciliations of the most directly comparable U.S. GAAP measures to the non-GAAP measures.

Operating Revenues and Net Revenues

The main categories of revenues, and the dollar and percentage change between the periods, are as follows:

[[GREPCENT_TABLE]]
[["","Years ended December 31,","","2024 vs 2023","","2023 vs 2022"],["(in millions)","2024","","2023","","2022","","$ Change","","% Change","","$ Change","","% Change"],["Investment management fees","$","4,342.3","","","$","4,106.0","","","$","4,358.4","","","$","236.3","","","5.8","%","","$","(252.4)","","","(5.8)","%"],["Service and distribution fees","1,479.7","","","1,374.6","","","1,405.5","","","105.1","","","7.6","%","","(30.9)","","","(2.2)","%"],["Performance fees","46.4","","","46.7","","","68.2","","","(0.3)","","","(0.6)","%","","(21.5)","","","(31.5)","%"],["Other","198.6","","","189.1","","","216.8","","","9.5","","","5.0","%","","(27.7)","","","(12.8)","%"],["Total operating revenues","$","6,067.0","","","$","5,716.4","","","$","6,048.9","","","$","350.6","","","6.1","%","","$","(332.5)","","","(5.5)","%"],["Revenue Adjustments:"],["Investment management fees","$","(816.6)","","","$","(766.4)","","","$","(764.7)","","","$","(50.2)","","","6.6","%","","$","(1.7)","","","0.2","%"],["Service and distribution fees","(1,048.8)","","","(911.7)","","","(961.1)","","","(137.1)","","","15.0","%","","49.4","","","(5.1)","%"],["Other","(160.2)","","","(147.1)","","","(160.4)","","","(13.1)","","","8.9","%","","13.3","","","(8.3)","%"],["Total Revenue Adjustments (1)","(2,025.6)","","","(1,825.2)","","","(1,886.2)","","","(200.4)","","","11.0","%","","61.0","","","(3.2)","%"],["Invesco Great Wall","318.1","","","368.3","","","432.7","","","(50.2)","","","(13.6)","%","","(64.4)","","","(14.9)","%"],["CIP","41.0","","","51.2","","","49.6","","","(10.2)","","","(19.9)","%","","1.6","","","3.2","%"],["Net revenues (2)","$","4,400.5","","","$","4,310.7","","","$","4,645.0","","","$","89.8","","","2.1","%","","$","(334.3)","","","(7.2)","%"]]
[[/GREPCENT_TABLE]]

_________

(1)    Total Revenue Adjustments remove pass through investment management fees, service and distribution fees, and other revenues and equal the same amount as the Third-party distribution, service and advisory expenses.

(2)    See “Schedule of Non-GAAP Information” for additional important disclosures regarding the use of net revenues.

Our revenues are directly influenced by the level and composition of our AUM. Therefore, movements in global capital market levels, net inflows (or outflows), and changes in the mix of investment products between asset classes and geographies may materially affect our revenues from period to period. See the company’s disclosures regarding the changes in AUM during the year ended December 31, 2024 and December 31, 2023 in the “Assets Under Management” section above for additional information.

Average AUM were $1,712.2 billion for the year ended December 31, 2024 as compared to $1,500.6 billion for the year ended December 31, 2023. As secular shifts in client demand continue, our broad set of investment capabilities have allowed us to capture evolving client product preferences, including products that have lower net revenue yields. Due to this change in the mix of AUM, net revenue yield excluding performance fees and Invesco QQQ Trust declined to 30.2 basis points (bps) for the year ended December 31, 2024 from 32.4 bps for the year ended December 31, 2023.

In addition, as fee rates differ across geographic locations, changes to the mix of AUM between geographies and exchange rates have an impact on operating revenues and net revenue yields.

Investment Management Fees

Investment management fees were $4,342.3 million for the year ended December 31, 2024 as compared to $4,106.0 million for the year ended December 31, 2023 as a result of higher average AUM partially offset by the shift in AUM toward lower yield products. See discussion above on how AUM changes impact our Investment management fees.

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Service and Distribution Fees

For the year ended December 31, 2024, Service and distribution fees were $1,479.7 million as compared to $1,374.6 million for the year ended December 31, 2023. The increase was primarily driven by higher distribution fees of $91.2 million and administrative fees of $12.9 million resulting from higher average AUM to which the fees apply.

Performance Fees

For the years ended December 31, 2024, Performance fees were $46.4 million as compared to $46.7 million for the year ended December 31, 2023. Performance fees for the years ended December 31, 2024 and 2023 were primarily generated from multi-asset/other, private markets real estate and fundamental equities products.

Other Revenues

For the year ended December 31, 2024, Other revenues were $198.6 million as compared to $189.1 million for the year ended December 31, 2023. The increase in Other revenues was primarily driven by higher front end fees of $10.0 million and real estate transaction fees of $4.1 million, partially offset by lower other transaction fees of $4.6 million.

Invesco Great Wall

The company’s most significant joint venture is our investment in IGW. The company reflects 100% of IGW's results in its Net revenues and Adjusted operating expenses because it is important to evaluate the contribution that IGW is making to the business. The company’s non-GAAP operating results reflect the economics of these holdings on a basis consistent with the underlying AUM and flows. Adjusted net income attributable to Invesco Ltd. is reduced by the amount of earnings attributable to the noncontrolling interests. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of Net revenues.

Net revenues from IGW were $318.1 million and average AUM was $88.6 billion for the year ended December 31, 2024 (Net revenues were $368.3 million and average AUM was $87.2 billion, for the year ended December 31, 2023). The decrease in IGW revenues was primarily driven by the shift in AUM toward lower yield products and the introduction of regulatory mandated fee reductions in China in August 2023.

CIP

Management believes that the consolidation of investment products may impact a reader's analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company. Accordingly, management believes that it is appropriate to adjust operating revenues for the impact of CIP in calculating Net revenues. As Management and Performance fees earned by Invesco from the consolidated products are eliminated upon consolidation of the investment products, management believes that it is appropriate to add these Operating revenues back in the calculation of Net revenues. See “Schedule of Non-GAAP Information” for additional disclosures regarding the use of Net revenues.

Management and Performance fees earned from CIP were $41.0 million in the year ended December 31, 2024, as compared to $51.2 million for the year ended December 31, 2023.

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Operating Expenses

The main categories of operating expenses, and the dollar and percentage changes between periods, are as follows:

[[GREPCENT_TABLE]]
[["","Years ended December 31,","","2024 vs 2023","","2023 vs 2022"],["(in millions)","2024","","2023","","2022","","$ Change","","% Change","","$ Change","","% Change"],["Third-party distribution, service and advisory","$","2,025.6","","","$","1,825.2","","","$","1,886.2","","","$","200.4","","","11.0","%","","$","(61.0)","","","(3.2)","%"],["Employee compensation","2,014.2","","","1,885.8","","","1,725.1","","","128.4","","","6.8","%","","160.7","","","9.3","%"],["Marketing (1)","81.3","","","82.1","","","94.6","","","(0.8)","","","(1.0)","%","","(12.5)","","","(13.2)","%"],["Property, office and technology (1)","474.3","","","450.1","","","446.7","","","24.2","","","5.4","%","","3.4","","","0.8","%"],["General and administrative (1)","594.7","","","567.6","","","493.6","","","27.1","","","4.8","%","","74.0","","","15.0","%"],["Transaction, integration and restructuring (2)","\u2014","","","41.6","","","21.2","","","(41.6)","","","N/A","","20.4","","","96.2","%"],["Amortization and impairment of intangibles","44.8","","","1,298.8","","","63.8","","","(1,254.0)","","","(96.6)","%","","1,235.0","","","1,935.7","%"],["Total operating expenses","$","5,234.9","","","$","6,151.2","","","$","4,731.2","","","$","(916.3)","","","(14.9)","%","","$","1,420.0","","","30.0","%"]]
[[/GREPCENT_TABLE]]

The table below sets forth these expense categories as a percentage of total Operating expenses and Operating revenues, which we believe provides useful information as to the relative significance of each type of expense.

[[GREPCENT_TABLE]]
[["(in millions)","2024","","% of Total Operating Expenses","","% of Operating Revenues","","2023","","% of Total Operating Expenses","","% of Operating Revenues","","2022","","% of Total Operating Expenses","","% of Operating Revenues"],["Third-party distribution, service and advisory","$","2,025.6","","","38.7","%","","33.4","%","","$","1,825.2","","","29.7","%","","31.9","%","","$","1,886.2","","","39.9","%","","31.2","%"],["Employee compensation","2,014.2","","","38.5","%","","33.2","%","","1,885.8","","","30.7","%","","33.0","%","","1,725.1","","","36.5","%","","28.5","%"],["Marketing (1)","81.3","","","1.5","%","","1.4","%","","82.1","","","1.3","%","","1.5","%","","94.6","","","2.1","%","","1.5","%"],["Property, office and technology (1)","474.3","","","9.1","%","","7.8","%","","450.1","","","7.3","%","","7.9","%","","446.7","","","9.4","%","","7.4","%"],["General and administrative (1)","594.7","","","11.4","%","","9.8","%","","567.6","","","9.2","%","","9.9","%","","493.6","","","10.4","%","","8.1","%"],["Transaction, integration and restructuring (2)","\u2014","","","\u2014","%","","\u2014","%","","41.6","","","0.7","%","","0.7","%","","21.2","","","0.4","%","","0.4","%"],["Amortization and impairment of intangibles","44.8","","","0.8","%","","0.7","%","","1,298.8","","","21.1","%","","22.7","%","","63.8","","","1.3","%","","1.1","%"],["Total operating expenses","$","5,234.9","","","100.0","%","","86.3","%","","$","6,151.2","","","100.0","%","","107.6","%","","$","4,731.2","","","100.0","%","","78.2","%"]]
[[/GREPCENT_TABLE]]

__________

(1)    Comparative periods presented reflect reclassification of certain operating expenses to align with current period presentation. The reclassification had no impact on our reported Operating revenues, Operating income, Net income, or any internal performance measure on which management is compensated. See Note 1, "Accounting Policies," for additional information.

(2)    Transaction, integration and restructuring charges were primarily restructuring costs relating to our strategic evaluation which we completed in the first quarter of 2023.

Operating expenses decreased $916.3 million for the year ended December 31, 2024 as compared to the year ended December 31, 2023. The year ended December 31, 2023 included a $1,248.9 million non-cash impairment of our indefinite-lived intangible assets related to prior acquisitions of management contracts of U.S. retail mutual funds. The year ended December 31, 2024 included a one-time acceleration of $147.6 million in Employee compensation expense resulting from changes to the retirement criteria for vesting of currently outstanding common share-based awards and other long-term awards (collectively, Long-term awards). Excluding the intangible asset impairment charge for the year ended December 31, 2023 and the acceleration of Employee compensation expense for the year ended December 31, 2024, Operating expenses for the year ended December 31, 2024 increased $185.0 million as compared to the year ended December 31, 2023.

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Third-Party Distribution, Service and Advisory

Third-party distribution, service and advisory expenses include periodic “renewal” commissions which are paid to brokers and independent financial advisors for providing services to their client accounts while they are invested in an Invesco product. Renewal commissions are calculated based upon a percentage of the AUM value and apply to much of the company's non-U.S. retail operations. The revenues from the company’s U.S. retail operations include 12b-1 distribution fees, which are largely passed through to brokers who sell the funds as third-party distribution expenses along with additional marketing support distribution costs. Both the revenues and the costs are dependent on the underlying AUM of the brokers' clients. The upfront distribution commissions are amortized over the redemption period. Also included in Third-party distribution, service and advisory expenses are sub-transfer agency fees that are paid to third parties for processing client common share purchases and redemptions, call center support and client reporting. These costs are reimbursed by the related funds.

Third-party distribution, service and advisory expenses were $2,025.6 million for the year ended December 31, 2024 as compared to $1,825.2 million for the year ended December 31, 2023. The increase was primarily due to increases of $112.9 million in service costs and $86.3 million in administrative and other third-party management fees resulting from higher average AUM and fund related costs. See "Schedule of Non-GAAP Information" for additional disclosures.

Employee Compensation

Employee compensation includes salary, cash bonuses and long-term incentive plans designed to attract and retain the highest caliber employees. Employee staff benefit plan costs and payroll taxes are also included in Employee compensation.

Employee compensation was $2,014.2 million for the year ended December 31, 2024 as compared to $1,885.8 million for the year ended December 31, 2023. The increase was primarily due to the previously noted acceleration of expense for currently outstanding Long-term awards of $147.6 million, higher variable compensation costs of $47.5 million and an increase of $29.2 million in expense related to the mark-to-market on deferred compensation liabilities. The increase was partially offset by lower costs related to executive retirements and organizational changes of $82.5 million.

Headcount at December 31, 2024 was 8,508 (December 31, 2023; 8,489).

Marketing

Marketing expenses include the cost of direct advertising of our products through trade publications, television and other media, and public relations costs, such as the marketing of the company's products through conferences or other sponsorships.

Marketing expenses were $81.3 million for the year ended December 31, 2024 as compared to $82.1 million for the year ended December 31, 2023.

Property, Office and Technology

Property, office and technology expenses include rent and utilities for our various leased facilities, depreciation of company-owned property, equipment and software, and other technology expenses including maintenance and licensing fees.

Property, office and technology expenses were $474.3 million for the year ended December 31, 2024 as compared to $450.1 million for the year ended December 31, 2023. The increase was primarily due to higher software costs of $21.2 million.

General and Administrative

General and administrative expenses include information service subscriptions, irrecoverable indirect taxes, employee travel, professional fees, recruitment and training costs as well as costs for outsourced services such as technology, middle office and back office management services.

General and administrative expenses were $594.7 million for the year ended December 31, 2024 as compared to $567.6 million for the year ended December 31, 2023. The increase was primarily due to a $52.5 million expense related to the settlement of regulatory matters partially offset by lower professional fees of $28.1 million.

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Amortization and impairment of intangible assets

Amortization of intangible assets was $44.8 million for the year ended December 31, 2024 as compared to $49.9 million for the year ended December 31, 2023. The year ended December 31, 2023 included a $1,248.9 million non-cash impairment of our indefinite-lived intangible assets related to management contracts of U.S. retail mutual funds.

Operating Income, Adjusted Operating Income, Operating Margin and Adjusted Operating Margin

Operating income was $832.1 million in the year ended December 31, 2024, as compared to an operating loss of $434.8 million for the year ended December 31, 2023. Operating margin (operating income divided by operating revenues) increased to 13.7% for the year ended December 31, 2024 from (7.6)% in the year ended December 31, 2023. The operating loss for the year ended December 31, 2023 was primarily due to the $1,248.9 million intangible asset impairment as discussed above.

Adjusted operating income increased to $1,370.7 million for the year ended December 31, 2024 from $1,213.5 million for the year ended December 31, 2023. Adjusted operating margin increased to 31.1% for the year ended December 31, 2024 from 28.2% for the year ended December 31, 2023. See “Schedule of Non-GAAP Information” for a reconciliation of Operating revenues to Net revenues, a reconciliation of Operating income to Adjusted operating income and additional important disclosures regarding Net revenues, Adjusted operating income and Adjusted operating margin.

Other Income and Expenses

The main categories of other income and expenses, and the dollar and percentage changes between periods are as follows:

[[GREPCENT_TABLE]]
[["","Years ended December 31,","","2024 vs 2023","","2023 vs 2022"],["(in millions)","2024","","2023","","2022","","$ Change","","% Change","","$ Change","","% Change"],["Equity in earnings of unconsolidated affiliates","$","43.0","","","$","71.3","","","$","106.1","","","$","(28.3)","","","(39.7)","%","","$","(34.8)","","","(32.8)","%"],["Interest and dividend income","58.9","","","47.8","","","24.4","","","11.1","","","23.2","%","","23.4","","","95.9","%"],["Interest expense","(58.0)","","","(70.5)","","","(85.2)","","","12.5","","","(17.7)","%","","14.7","","","(17.3)","%"],["Other gains and losses, net","47.7","","","98.0","","","(139.5)","","","(50.3)","","","(51.3)","%","","237.5","","","N/A"],["Other income/(expense) of CIP, net","81.6","","","50.3","","","24.2","","","31.3","","","62.2","%","","26.1","","","107.9","%"],["Total other income and expenses","$","173.2","","","$","196.9","","","$","(70.0)","","","$","(23.7)","","","(12.0)","%","","$","266.9","","","N/A"]]
[[/GREPCENT_TABLE]]

Equity in earnings of unconsolidated affiliates

Equity in earnings of unconsolidated affiliates decreased to $43.0 million for the year ended December 31, 2024 as compared to $71.3 million for the year ended December 31, 2023. The decrease was primarily driven by a decrease in income of $13.5 million from our joint venture investment in IGW and $9.6 million from our private markets real estate investments.

Interest and dividend income

Interest and dividend income was $58.9 million for the year ended December 31, 2024 as compared to $47.8 million for the year ended December 31, 2023. The increase was primarily due to an increase in dividend income earned on our private markets, deferred compensation and seed capital investments and higher interest income earned from Cash and cash equivalents.

Interest expense

Interest expense was $58.0 million for the year ended December 31, 2024 as compared to $70.5 million for the year ended December 31, 2023 as a result of the decrease in outstanding debt.

Other gains and losses, net

Other gains and losses, net was a gain of $47.7 million for the year ended December 31, 2024 as compared to a net gain of $98.0 million for the year ended December 31, 2023. The net gains for the years ended December 31, 2024 and 2023 included net market gains on deferred compensation related investments, other hedging instruments, and seed capital investments. The net gain for the year ended December 31, 2023 also included a $45 million gain on the sale of certain Hong Kong pension sponsorship rights.

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Other income/(expense) of CIP, net

Other income/(expense) of CIP, net includes interest and dividend income, interest expense, and realized and unrealized gains and losses on the underlying investments and debt owned by CIP. For the year ended December 31, 2024, net interest income of CIP was $139.5 million as compared to $226.6 million for the year ended December 31, 2023. The decrease in net interest income was primarily a result of newly consolidated investment products in the year ended December 31, 2023 which were deconsolidated in the year ended December 31, 2024 as well as lower net interest income earned by the CLOs. For the year ended December 31, 2024, other gains and losses of CIP were a net loss of $57.9 million as compared to a net loss of $176.3 million for the year ended December 31, 2023. The net losses for the years ended December 31, 2024 and 2023 were attributable to market-driven losses on investments held by consolidated funds.

Net impact of CIP and related noncontrolling interests in consolidated entities

The adjustment to Net income for the Net income/(loss) attributable to noncontrolling interests in consolidated entities removes the income/(expense) of CIP which is attributable to third-party investors. Therefore, the consolidation of investment products did not have an impact on Net income attributable to Invesco for the year ended December 31, 2024 and 2023. Also, the net income or loss of CIP is taxed at the investor level, not at the product level; therefore, a tax provision is not reflected in the net impact of CIP.

Income Tax Expense

The income tax provision was an expense of $252.9 million for the year ended December 31, 2024, compared to a benefit of $(69.7) million for the year ended December 31, 2023, resulting in effective tax rates of 25.2% and 29.3% for the years ended December 31, 2024 and 2023, respectively. The higher effective tax rate for the year ended December 31, 2023 was primarily a result of favorable permanent tax adjustments increasing the effective tax due to the pre-tax book loss in 2023. The effective tax rate for the year ended December 31, 2024 was unfavorably impacted by nondeductible regulatory settlements and an increase in the valuation allowance recorded against certain net operating losses. For additional income tax information, please refer to Note 14, “Taxation,” in Part II, Item 8, Financial Statements and Supplementary Data.

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Schedule of Non-GAAP Information

We utilize the following non-GAAP performance measures: Net revenue (and by calculation, Net revenue yield on AUM), Adjusted operating income, Adjusted operating margin, Adjusted net income attributable to Invesco and Adjusted diluted EPS. The company believes the adjusted measures provide valuable insight into the company’s ongoing operational performance and assist in comparisons to its competitors. These measures also assist the company’s management with the establishment of operational budgets and forecasts. The most directly comparable U.S. GAAP measures are Operating revenues (and by calculation, Gross revenue yield on AUM), Operating income, Operating margin, Net income/(loss) attributable to Invesco and Diluted EPS. Each of these measures is discussed more fully below.

The following are reconciliations of the U.S. GAAP measures to the non-GAAP measures. The non-GAAP measures should not be considered as substitutes for any U.S. GAAP measures and may not be comparable to other similarly titled measures of other companies. Additional reconciling items may be added in the future to the non-GAAP measures if deemed appropriate. The tax effects related to the reconciling items have been calculated based on the tax rate attributable to the jurisdiction to which the transaction relates. Notes to the reconciliations follow the tables.

Reconciliation of Operating revenues to Net revenues:

[[GREPCENT_TABLE]]
[["(in millions)","2024","","2023","","2022"],["Operating revenues, U.S. GAAP basis","$","6,067.0","","","$","5,716.4","","","$","6,048.9"],["Revenue adjustments: (1)"],["Investment management fees","(816.6)","","","(766.4)","","","(764.7)"],["Service and distribution fees","(1,048.8)","","","(911.7)","","","(961.1)"],["Other","(160.2)","","","(147.1)","","","(160.4)"],["Total revenue adjustments","(2,025.6)","","","(1,825.2)","","","(1,886.2)"],["Invesco Great Wall (2)","318.1","","","368.3","","","432.7"],["CIP (3)","41.0","","","51.2","","","49.6"],["Net revenues","$","4,400.5","","","$","4,310.7","","","$","4,645.0"]]
[[/GREPCENT_TABLE]]

Reconciliation of Operating income/(loss) to Adjusted operating income:

[[GREPCENT_TABLE]]
[["(in millions)","2024","","2023","","2022"],["Operating income/(loss), U.S. GAAP basis","$","832.1","","$","(434.8)","","$","1,317.7"],["Invesco Great Wall (2)","163.3","","201.9","","262.7"],["CIP (3)","60.2","","84.8","","65.7"],["Transaction, integration and restructuring (4)","\u2014","","41.6","","21.2"],["Amortization and impairment of intangible assets (5)","44.8","","1,298.8","","63.8"],["Compensation expense related to market valuation changes of deferred compensation liabilities (6)","70.2","","41.2","","(46.3)"],["One-time acceleration of compensation expense for currently outstanding Long-term awards (7)","147.6","","\u2014","","\u2014"],["General and administrative (8)","52.5","","(20.0)","","(70.0)"],["Adjusted operating income","$","1,370.7","","$","1,213.5","","$","1,614.8"],["Operating margin (9)","13.7","%","","(7.6)","%","","21.8","%"],["Adjusted operating margin (10)","31.1","%","","28.2","%","","34.8","%"]]
[[/GREPCENT_TABLE]]

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Reconciliation of Net income/(loss) attributable to Invesco to Adjusted net income attributable to Invesco:

[[GREPCENT_TABLE]]
[["(in millions, except per common share data)","2024","","2023","","2022"],["Net income/(loss) attributable to Invesco Ltd., U.S. GAAP basis","$","538.0","","","$","(333.7)","","","$","683.9"],["Adjustments (excluding tax):"],["Transaction, integration and restructuring (4)","\u2014","","","41.6","","","21.2"],["Amortization and impairment of intangible assets (5)","44.8","","","1,298.8","","","63.8"],["Deferred compensation net market valuation changes (6)","17.6","","","(18.6)","","","73.6"],["One-time acceleration of compensation expense for currently outstanding Long-term awards (7)","147.6","","","\u2014","","","\u2014"],["General and administrative (8)","52.5","","","(20.0)","","(70.0)"],["Total adjustments excluding tax","$","262.5","","","$","1,301.8","","","$","88.6"],["Tax adjustment for amortization of intangible assets and goodwill (11)","17.6","","16.7","","14.2"],["Tax adjustment for impairment of intangible assets","\u2014","","","(296.1)","","","\u2014"],["Other tax effects of adjustments above","(36.4)","","","1.0","","","(13.5)"],["Adjusted net income attributable to Invesco Ltd.","$","781.7","","$","689.7","","$","773.2"],["Average common shares outstanding - diluted","457.7","","","456.2","","","459.5"],["Diluted EPS","$","1.18","","","$","(0.73)","","","$","1.49"],["Adjusted diluted EPS (12)","$","1.71","","","$","1.51","","","$","1.68"]]
[[/GREPCENT_TABLE]]

____________

(1) Revenue adjustments: The company calculates Net revenues by reducing Operating revenues to exclude fees that are passed through to external parties who perform functions on behalf of, and distribute, the company’s managed funds. The Net revenue presentation assists in identifying the revenue contribution generated by the company, removing distortions caused by the differing distribution channel fees and allowing for a fair comparison with U.S. peer investment managers and within Invesco’s own investment units. Additionally, management evaluates Net revenue yield on AUM, which is equal to Net revenues divided by Average AUM during the reporting period, as an indicator of the Net revenues we receive for each dollar of AUM we manage.

Investment management fees are adjusted by renewal commissions and certain administrative fees. Service and distributions fees are primarily adjusted by distribution fees passed through to broker dealers for certain share classes and pass through fund-related costs. Other revenues are primarily adjusted by transaction fees passed through to third parties.

(2) Invesco Great Wall: The company reflects 100% of IGW in its Net revenues and Adjusted operating income (and by calculation, Adjusted operating margin). The company’s non-GAAP operating results reflect the economics of these holdings on a basis consistent with the underlying AUM and flows. Adjusted net income is reduced by the amount of earning attributable to the noncontrolling interests.

(3) CIP: See Part II, Item 8, Financial Statements and Supplementary Data, Note 18, “Consolidated Investment Products,” for a detailed analysis of the impact to the company’s Condensed Consolidated Financial Statements from the consolidation of CIP. The company believes that the CIP may impact a reader’s analysis of our underlying results of operations and could result in investor confusion or the production of information about the company by analysts or external credit rating agencies that is not reflective of the underlying results of operations and financial condition of the company. Accordingly, the company believes that it is appropriate to adjust Operating revenues and Operating income for the impact of CIP in calculating the respective Net revenues and Adjusted operating income (and by calculation, Adjusted operating margin).

(4) Transaction, integration and restructuring: The company believes it is useful to adjust for the Transaction, integration and restructuring charges in arriving at Adjusted operating income, Adjusted operating margin, Adjusted net income, and Adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar acquisition and restructuring related charges. Transaction, integration and restructuring charges were primarily restructuring costs relating to our strategic evaluation which we completed in the first quarter of 2023.

(5) Amortization and impairment of intangible assets: The company removes amortization and non-cash impairment expense related to acquired assets in arriving at Adjusted operating income, Adjusted operating margin, Adjusted net income and Adjusted diluted EPS, as this will aid comparability of our results period to period, and aid comparability with peer companies that may not have similar acquisition-related charges.

(6) Market valuation changes related to deferred compensation plan liabilities: Certain deferred compensation plan awards provide a return to the employee linked to the appreciation (depreciation) of specified investments. The company economically hedges the exposure to market movements on these deferred compensation liabilities. Since these liabilities are economically hedged, the company believes it is useful to remove the market movements related to the deferred compensation plan liabilities from the calculation of Adjusted operating income (and by calculation, Adjusted operating margin) and to remove the net impact of the economic hedge from the calculation of Adjusted net income (and by calculation, Adjusted diluted EPS) to produce results that will be more comparable period to period.

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(7) One-time acceleration of compensation expense for currently outstanding Long-term awards: In the third quarter of 2024, the company recorded a one-time non-cash acceleration of Compensation expense of $147.6 million resulting from changes to the retirement criteria for vesting of currently outstanding Long-term awards. Due to the non-recurring nature of this item, the company removed this expense in arriving at Adjusted operating income, Adjusted operating margin, Adjusted net income, and Adjusted diluted EPS as this will aid comparability of our results period to period.

(8) General and administrative: In 2024, the company removed the expense related to the settlement of regulatory matters. In 2023 and 2022, the company removed insurance recoveries related to fund-related losses incurred in prior periods. Due to the non-recurring nature of these items, the company removed these expenses in arriving at Adjusted operating income, Adjusted operating margin, Adjusted net income and Adjusted diluted EPS as this will aid comparability of our results period to period.

(9) Operating margin is equal to Operating income divided by Operating revenues.

(10) Adjusted operating margin is equal to Adjusted operating income divided by Net revenues.

(11) Tax adjustment for amortization of intangible assets and goodwill: The company reflects the tax benefit realized on the tax amortization of goodwill and intangible assets in Adjusted net income. The company believes it is useful to include this tax benefit in arriving at the Adjusted diluted EPS measure.

(12) Adjusted diluted EPS is equal to Adjusted net income attributable to Invesco Ltd. divided by the weighted average number of common and restricted common shares outstanding.

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Balance Sheet Discussion (1)

The following table represents a reconciliation of the balance sheet information presented on a U.S. GAAP basis to the balance sheet information excluding the impact of CIP for the reasons outlined in footnote 1 to the table:

[[GREPCENT_TABLE]]
[["","December 31, 2024","","December 31, 2023"],["Balance sheet information (in millions)","U.S. GAAP","","Impact of CIP","","","","Excluding CIP","","U.S. GAAP","","Impact of CIP","","Excluding CIP"],["ASSETS"],["Cash and cash equivalents","$","986.5","","","$","\u2014","","","","","$","986.5","","","$","1,469.2","","","$","\u2014","","","$","1,469.2"],["Investments","1,240.0","","","401.4","","","","","1,641.4","","","919.1","","","527.4","","","1,446.5"],["Goodwill and intangible assets, net","14,067.4","","","\u2014","","","","","14,067.4","","","14,539.6","","","\u2014","","","14,539.6"],["Other assets (2)","2,340.5","","","11.1","","","","","2,351.6","","","2,527.5","","","18.8","","","2,546.3"],["Investments and other assets of CIP (3)","8,374.5","","","(8,374.5)","","","","","\u2014","","","9,478.4","","","(9,478.4)","","","\u2014"],["Total assets","$","27,008.9","","","$","(7,962.0)","","","","","$","19,046.9","","","$","28,933.8","","","$","(8,932.2)","","","$","20,001.6"],["LIABILITIES"],["Debt","$","890.6","","","$","\u2014","","","","","$","890.6","","","$","1,489.5","","","$","\u2014","","","$","1,489.5"],["Other liabilities (4)","3,596.4","","","\u2014","","","","","3,596.4","","","3,914.4","","","\u2014","","","3,914.4"],["Debt and other liabilities of CIP","6,853.1","","","(6,853.1)","","","","","\u2014","","","7,613.9","","","(7,613.9)","","","\u2014"],["Total liabilities","$","11,340.1","","","$","(6,853.1)","","","","","$","4,487.0","","","$","13,017.8","","","$","(7,613.9)","","","$","5,403.9"],["EQUITY"],["Total equity attributable to Invesco Ltd.","$","14,559.9","","","$","\u2014","","","","","$","14,559.9","","","$","14,597.6","","","$","0.1","","","$","14,597.7"],["Noncontrolling interests (5)","1,108.9","","","(1,108.9)","","","","","\u2014","","","1,318.4","","","(1,318.4)","","","\u2014"],["Total equity","15,668.8","","","(1,108.9)","","","","","14,559.9","","","15,916.0","","","(1,318.3)","","","14,597.7"],["Total liabilities and equity","$","27,008.9","","","$","(7,962.0)","","","","","$","19,046.9","","","$","28,933.8","","","$","(8,932.2)","","","$","20,001.6"]]
[[/GREPCENT_TABLE]]
____________

(1)    This table includes non-GAAP presentations. Assets of CIP are not available for use by Invesco. Additionally, there is no recourse to Invesco for CIP debt. 

(2)    Amounts include Accounts receivable, Property, equipment and software, and Other assets.

(3)    Amounts include Cash and cash equivalents of CIP.

(4)    Amounts include Accrued compensation and benefits, Accounts payable and accrued expenses, and Deferred tax liabilities.

(5)    Amounts include Redeemable noncontrolling interests in consolidated entities and Equity attributable to nonredeemable noncontrolling interests in consolidated entities.

Cash and cash equivalents

Cash and cash equivalents decreased $482.7 million from $1,469.2 million at December 31, 2023 to $986.5 million at December 31, 2024. See “Cash Flows Discussion” below within this Management's Discussion and Analysis for additional discussion regarding the movements in cash flows during the periods. See Part II, Item 8, Financial Statements and Supplementary Data - Note 1, “Accounting Policies - Cash and Cash Equivalents,” regarding capital adequacy requirements in certain jurisdictions.

Investments

Investments are comprised primarily of the equity method investment in IGW, seed capital and co-investments in affiliated funds, and investments related to the company’s deferred compensation plans.

As of December 31, 2024 and December 31, 2023, the company had $1,125.6 million and $956.0 million in seed capital and co-investments, respectively, including direct investments in CIP. Total seed capital and co-investments is presented as a helpful measure for investors and represents our net investment including our net investment in CIP. The following table reconciles the investment balance to the total seed capital and co-investment balance.

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[[GREPCENT_TABLE]]
[["(in millions)","December 31, 2024","","December 31, 2023"],["Investments","$","1,240.0","","","$","919.1"],["Net investment in CIP","401.4","","","527.4"],["Less: Investments related to deferred compensation plans, joint ventures, and other investments","(515.8)","","","(490.5)"],["Total seed capital and co-investments (1)","$","1,125.6","","","$","956.0"]]
[[/GREPCENT_TABLE]]

____________

(1)    Included in the total seed and co-investment balance as of December 31, 2024 is $414.0 million of seed capital and $711.6 million of co-investments (December 31, 2023: $314.1 million of seed capital and $641.9 million of co-investments).

Goodwill and intangible assets, net    

Goodwill and intangible assets, net decreased to $14,067.4 million at December 31, 2024 from $14,539.6 million at December 31, 2023. The decrease was due to amortization expense of $44.8 million, the transfer of $225.9 million of goodwill and intangible assets to held for sale, and foreign exchange impacts of $201.5 million. See "Critical Accounting Policies and Estimates” and Item 8, Financial Statements and Supplementary Data - Note 1, “Accounting Policies,” for additional information.

Liquidity and Capital Resources

Our capital structure, together with available cash balances, cash flows generated from operations, existing capacity under our revolving credit agreement and further capital market activities, if necessary, should provide us with sufficient resources to meet present and future cash needs, including operating expenses, debt and other obligations as they come due and anticipated future capital requirements.

Sources of Liquidity by Type

[[GREPCENT_TABLE]]
[["(in millions)","December 31, 2024","","December 31, 2023"],["Cash and cash equivalents","$","986.5","","","$","1,469.2"],["Available revolving credit agreement","2,000.0","","","2,000.0"],["Total Sources of Liquidity by Type","$","2,986.5","","","$","3,469.2"]]
[[/GREPCENT_TABLE]]

On January 30, 2024, Invesco Finance PLC, a wholly-owned indirect subsidiary of the Parent, paid in full the outstanding balance of the $600.0 million senior notes which were due on January 30, 2024. As of December 31, 2024, the balance on the $2.0 billion revolving credit agreement was zero.

In the ordinary course of business, Invesco enters into contracts or purchase obligations with third parties whereby the third parties provide services to or on behalf of Invesco. Purchase obligations represent fixed-price contracts, which are either non-cancelable or cancellable with a penalty. As of December 31, 2024, the company's purchase obligations totaled $694.4 million (December 31, 2023: $663.5 million) and primarily reflect standard service contracts for portfolio, market data, office-related services and third-party marketing and promotional services. Purchase obligations are recorded as liabilities in the company's Consolidated Financial Statements when services are provided.

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Capital Management

Our capital management priorities have evolved with the growth and success of our business and include, in no particular order of priority: reinvestment in the business, maintaining a strong balance sheet and returning capital to shareholders longer term through a combination of share repurchases and modestly increasing dividends.

During the year ended December 31, 2024, the company repurchased 2.9 million common shares for $49.6 million in the open market. As of December 31, 2024, approximately $332.6 million remained authorized under the company’s common share repurchase authorization approved by the Board on July 22, 2016.

Our capital process is executed in a manner consistent with our desire to maintain strong, investment grade credit ratings. As of the date of our filing, Invesco held credit ratings of BBB+/Stable, A3/Stable and A/Stable from S&P Ratings Service, Moody’s Investor Services and Fitch Ratings, respectively.

Other Items

Certain of our subsidiaries are required to maintain minimum levels of regulatory capital, liquidity, and working capital. Such requirements may change from time-to-time as additional guidance is released based on a variety of factors, including balance sheet composition, assessment of risk exposures and governance, and review from regulators. These and other similar provisions of applicable laws and regulations may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities. Our financial condition or liquidity could be adversely affected if certain of our subsidiaries are unable to distribute funds to us.

We are in compliance with all regulatory minimum net capital requirements. As of December 31, 2024, the company's minimum regulatory capital requirement was $324.9 million (December 31, 2023: $395.8 million).

We meet the regulatory liquidity and working capital requirements by holding cash and cash equivalents in the European sub-group. This retained cash can be used for general business purposes in the European sub-group in the countries where it is located. Due to the liquidity and working capital requirements, the ability to transfer cash between certain jurisdictions may be limited. In addition, transfers of cash between international jurisdictions may have adverse tax consequences.

The consolidation of $8,374.5 million and $6,200.9 million of total assets and debt of CIP as of December 31, 2024, respectively, did not impact the company’s liquidity and capital resources. See Part II, Item 8, Financial Statements and Supplementary Data - Note 18, “Consolidated Investment Products,” for additional details.

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Cash Flows Discussion

The following table represents a reconciliation of the cash flow information presented on a U.S. GAAP basis to the cash flow information, excluding the impact of the cash flows of CIP for the reasons outlined in footnote 1 to the table:

[[GREPCENT_TABLE]]
[["","Years ended December 31,"],["Cash flows information (1)","2024","","2023","","2022"],["(in millions)","U.S. GAAP","","Impact of CIP","","Excluding CIP","","U.S. GAAP","","Impact of CIP","","Excluding CIP","","U.S. GAAP","","Impact of CIP","","Excluding CIP"],["Cash and cash equivalents beginning of the period","$","1,931.6","","","$","(462.4)","","","$","1,469.2","","","$","1,434.1","","","$","(199.4)","","","$","1,234.7","","","$","2,147.1","","","$","(250.7)","","","$","1,896.4"],["Cash flows from operating activities","1,190.0","","","(114.8)","","","1,075.2","","","1,300.8","","","(136.6)","","","1,164.2","","","703.2","","","414.1","","","1,117.3"],["Cash flows from investing activities","68.4","","","(308.4)","","","(240.0)","","","(244.3)","","","72.8","","","(171.5)","","","(375.6)","","","81.5","","","(294.1)"],["Cash flows from financing activities","(1,661.6)","","","374.0","","","(1,287.6)","","","(585.4)","","","(196.8)","","","(782.2)","","","(966.9)","","","(449.4)","","","(1,416.3)"],["Increase/(decrease) in cash and cash equivalents","(403.2)","","","(49.2)","","","(452.4)","","","471.1","","","(260.6)","","","210.5","","","(639.3)","","","46.2","","","(593.1)"],["Foreign exchange movement on cash and cash equivalents","(32.4)","","","2.1","","","(30.3)","","","26.4","","","(2.4)","","","24.0","","","(73.7)","","","5.1","","","(68.6)"],["Cash and cash equivalents, end of the period","$","1,496.0","","","$","(509.5)","","","$","986.5","","","$","1,931.6","","","$","(462.4)","","","$","1,469.2","","","$","1,434.1","","","$","(199.4)","","","$","1,234.7"],["Cash and cash equivalents","$","986.5","","","$","\u2014","","","$","986.5","","","$","1,469.2","","","$","\u2014","","","$","1,469.2","","","$","1,234.7","","","$","\u2014","","","$","1,234.7"],["Cash and cash equivalents of CIP","509.5","","","(509.5)","","","\u2014","","","462.4","","","(462.4)","","","\u2014","","","199.4","","","(199.4)","","","\u2014"],["Total cash and cash equivalents per consolidated statement of cash flows","$","1,496.0","","","$","(509.5)","","","$","986.5","","","$","1,931.6","","","$","(462.4)","","","$","1,469.2","","","$","1,434.1","","","$","(199.4)","","","$","1,234.7"]]
[[/GREPCENT_TABLE]]

____________

(1)    These tables include non-GAAP presentations. Cash held by CIP is not available for use by Invesco. Additionally, there is no recourse to Invesco for CIP debt. The cash flows of CIP do not form part of the company’s cash flow management processes, nor do they form part of the company’s significant liquidity evaluations and decisions.

Operating Activities

Operating cash flows include the receipt of Investment management and other fees generated from AUM, offset by Operating expenses and changes in operating assets and liabilities. After allowing for the change in cash held by CIP, investment activities, non-cash activity, and seasonal payments, such as bonus payments in the first quarter, our operating cash flows generally move in the same direction as our Operating income/(loss).

Cash inflows for the year ended December 31, 2024, excluding the impact of CIP, were primarily driven by operating income and changes in payables and receivables due to the timing of payments and receipts.

Investing Activities

Cash outflows for the year ended December 31, 2024, excluding the impact of CIP, includes purchases of investments of $307.0 million (year ended December 31, 2023: $108.2 million) and property, equipment and software of $69.1 million (year ended December 31, 2023: $164.3 million), partially offset by proceeds of $135.9 million from Capital distributions from equity method investees (year ended December 31, 2023: $28.0 million). The year ended December 31, 2023 also included proceeds of $26.8 million from the Sale of investments and $46.2 million from the sale of certain Hong Kong pension sponsorship rights.

Financing Activities

Financing cash outflows during the year ended December 31, 2024 included $371.5 million of common dividend payments for dividends declared in January, April, July and October 2024 (year ended December 31, 2023: dividends paid of $357.9 million), $236.8 million of preferred dividend payments for dividends declared in January, April, July and October 2024 (year ended December 31, 2023: $236.8 million), $49.6 million for the repurchase of common shares through the open market (year ended December 31, 2023: $150.0 million), and the payment of $29.7 million to meet employees' withholding tax obligations on common share vestings (2023: $37.5 million). Financing cash outflows during the year ended December 31, 2024 also included a $600.0 million redemption of senior notes. Net borrowings under the revolving credit agreement were zero during the years ended December 31, 2024 and December 31, 2023.

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Dividends

When declared, Invesco pays dividends on a quarterly basis in arrears. Holders of our preferred shares are eligible to receive dividends at an annual rate of 5.9% of the liquidation preference of $1,000 per share, or $59 per share per annum. The preferred dividend is payable quarterly on a non-cumulative basis when, if and as declared by our Board. However, if we have not declared and paid or set aside for payment full quarterly dividends on the preferred stock for a particular dividend period, we may not declare or pay dividends on, redeem, purchase or acquire our common stock or other junior securities in the next succeeding dividend period. In addition, if we have not declared and paid or set aside for payment quarterly dividends on the preferred stock for six quarterly periods, whether or not consecutive, the number of directors of the company will be increased by two and the holders of the preferred shares shall have the right to elect such two additional members of the Board.

On January 27, 2025, the company declared a fourth quarter 2024 cash dividend of $0.205 per common share to the holders of common shares. The dividend is payable on March 4, 2025, to common shareholders of record at the close of business on February 14, 2025, with an ex-dividend date of February 14, 2025.

On January 27, 2025, the company declared a preferred dividend of $14.75 per preferred share representing the period from December 1, 2024 through February 28, 2025. The preferred dividend is payable on March 3, 2025.

The declaration, payment and amount of any future dividends will depend upon, among other factors, our earnings, financial condition and capital requirements at the time such declaration and payment are considered. The company has a policy of managing dividends in a prudent fashion, with due consideration given to profit levels, overall debt levels and historical dividend payouts.

Common Share Repurchase Plan

During 2024, the company repurchased 2.9 million shares for $49.6 million in the open market as compared to 9.6 million shares for $150 million during 2023. At December 31, 2024, approximately $332.6 million remained authorized under the company's common share repurchase authorization approved by the Board on July 22, 2016 (December 31, 2023: $382.2 million).

Debt

The carrying value of our debt at December 31, 2024 was $890.6 million (December 31, 2023: $1,489.5 million), See Item 8, Financial Statements and Supplementary Data, Note 8, “Debt,” for additional disclosures.

For the year ended December 31, 2024, the company's weighted average cost of debt was 4.64% (year ended December 31, 2023: 4.28%).

Financial covenants under the revolving credit agreement include: (i) the quarterly maintenance of an Adjusted debt/Earnings before income tax, depreciation, amortization, interest expense, common share-based compensation expense, unrealized (gains)/losses from investments, net, and unusual or otherwise non-recurring gains and losses (Covenant Adjusted EBITDA) leverage ratio, as defined in the revolving credit agreement, of not greater than 3.25:1.00, (ii) an interest coverage ratio (Covenant Adjusted EBITDA/interest expense for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00. As of December 31, 2024, we were in compliance with our financial covenants. At December 31, 2024, our leverage ratio was 0.25:1.00 (December 31, 2023: 0.69:1.00), and our interest coverage ratio was 26.84:1.00 (December 31, 2023: 20.40:1.00).

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The December 31, 2024 and 2023 coverage ratio calculations are as follows:

[[GREPCENT_TABLE]]
[["(in millions)","December 31, 2024","","December 31, 2023"],["Net income/(loss) attributable to Invesco Ltd.","$","538.0","","","$","(333.7)"],["Dividends on preferred shares","236.8","","","236.8"],["Interest expense","58.0","","","70.5"],["Tax expense/(benefit)","252.9","","","(69.7)"],["Amortization/depreciation/impairment (1)","184.1","","","1,431.7"],["Common share-based compensation expense","71.1","","","114.6"],["One-time acceleration of compensation expense for currently outstanding Long-term awards (2)","147.6","","","\u2014"],["Regulatory matters (2)","52.5","","","\u2014"],["Unrealized (gains)/losses from investments, net (3)","16.0","","","(11.9)"],["Covenant Adjusted EBITDA (4)","$","1,557.0","","","$","1,438.3"],["Adjusted debt (4)","$","393.8","","","$","992.4"],["Leverage ratio (Adjusted debt/Covenant Adjusted EBITDA - maximum 3.25:1.00)","0.25","","","0.69"],["Interest coverage (Covenant Adjusted EBITDA/Interest expense - minimum 4.00:1.00)","26.84","","","20.40"]]
[[/GREPCENT_TABLE]]

____________

(1)    Includes amortization of cloud technology implementation costs.

(2)    Unusual or otherwise non-recurring gains and losses, as defined in our revolving credit agreement, are adjusted for in the determination of Covenant Adjusted EBITDA. A one-time acceleration of $147.6 million in expense resulting from changes to the criteria for retirements for currently outstanding Long-term awards and an expense of $52.5 million related to the settlement of regulatory matters in 2024 are non-recurring expenses and have been removed from the determination of Covenant Adjusted EBITDA.

(3)    Adjustments for unrealized gains and losses from investments, as defined in our revolving credit agreement, may also include non-cash gains and losses on investments to the extent that they do not represent anticipated future cash receipts or expenditures.

(4)    Covenant Adjusted EBITDA and Adjusted debt are non-GAAP financial measures that are used by management in connection with certain debt covenant calculations under our revolving credit agreement. The calculation of Covenant Adjusted EBITDA above (a reconciliation from Net income attributable to Invesco Ltd.) is defined by our revolving credit agreement, and therefore Net income attributable to Invesco Ltd. is the most appropriate GAAP measure from which to reconcile to Covenant Adjusted EBITDA. The calculation of 2024 Adjusted debt is defined in our amended revolving credit agreement and equals debt of $890.6 million plus $3.2 million in letters of credit less $500.0 million of excess unrestricted cash (cash and cash equivalents less the minimum regulatory capital requirement, not to exceed $500 million (2023: $500.0 million).

On January 30, 2024, Invesco Finance PLC, a wholly-owned indirect subsidiary of the Parent, paid in full the outstanding balance of the $600.0 million senior notes which were due on January 30, 2024.

The discussion that follows identifies risks associated with the company's liquidity and capital resources. The Item 1. Business - Risk Management section contains a broader discussion of the company's overall approach to risk management.

Credit and Liquidity Risk

The company manages its capital by reviewing annual and projected cash flow forecasts and by monitoring credit, liquidity and market risks, such as interest rate and foreign currency risks (as discussed in Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”), through measurement and analysis.

Credit Risk

Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. The company is primarily exposed to credit risk through its cash and cash equivalent deposits, which are held by external firms. The company invests its cash balances in its own institutional money market products, as well as with external high credit-quality financial institutions. These arrangements create exposure to concentrations of credit risk. As of December 31, 2024, our maximum exposure to credit risk related to our Cash and cash equivalent balances is $986.5 million, of which $479.3 million is invested in affiliated money market funds. See Part II, Item 8, Financial Statements and Supplementary Data - Note 2, "Fair Value of Assets and Liabilities" for information regarding Cash and cash equivalents invested in affiliated money market funds.

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Liquidity Risk

Liquidity risk is the risk that the company will encounter difficulty in meeting obligations associated with its financial liabilities as the same become due. The company is exposed to liquidity risk through its $890.6 million in total debt. The company actively manages liquidity risk by preparing cash flow forecasts for future periods, reviewing them regularly with senior management, maintaining a committed revolving credit agreement, scheduling significant gaps between major debt maturities and engaging external financing sources in regular dialogue.

Effects of Inflation

Inflation can impact our organization primarily in two ways. First, inflationary pressures can result in increases in our cost structure, especially to the extent that large expense components such as compensation are impacted. To the degree that these expense increases are not recoverable or cannot be counterbalanced through pricing increases due to the competitive environment, our net income could be negatively impacted. Secondly, the value of the assets that we manage may be negatively impacted when inflationary expectations result in a rising interest rate environment. A decline in the value of AUM could lead to reduced revenues as management fees are generally calculated based upon the value of AUM.

Off Balance Sheet Commitments

See Part II, Item 8, Financial Statements and Supplementary Data - Note 17, “Commitments and Contingencies,” for more information regarding undrawn capital commitments.

Critical Accounting Policies and Estimates

Our significant accounting policies are disclosed in Part II, Item 8, Financial Statements and Supplementary Data - Note 1, “Accounting Policies." Critical accounting policies and estimates are those that require complex management judgment regarding matters that are highly uncertain at the time policies were applied and estimates were made. Different estimates reasonably could have been used in the current period that would have had a material effect on these Consolidated Financial Statements, and changes in these estimates are likely to occur from period-to-period in the future. The discussion below provides information on the significant judgments and assumptions applied in each area and should be read in conjunction with the significant accounting policies footnote previously referenced.

Intangible Assets

Management has the option to first assess indefinite-lived intangible assets for qualitative factors to determine whether it is necessary to perform a quantitative impairment test. Definite-lived intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable (i.e., the carrying amount exceeds the fair value of the intangible asset). In addition, management's judgment is required to estimate the period over which definite-lived intangible assets will contribute to the company's cash flows and the pattern in which these assets will be consumed. A change in the remaining useful life of any of these assets, or the reclassification of an indefinite-lived intangible asset to a definite-lived intangible asset, could have a significant impact on the company's amortization expense.

Intangible assets not subject to amortization are tested for impairment annually as of October 1 or more frequently if events or changes in circumstances indicate that the asset might be impaired. If a quantitative assessment is required, the impairment test consists of a comparison of the fair value of an intangible asset to its carrying amount. If the carrying amount of the intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. Management used an income approach to value indefinite-lived intangible assets related to acquired management contracts of U.S. retail mutual funds. An income approach includes assumptions for current market conditions, including the asset’s updated forecasts of AUM to take into consideration market gains or losses, net long-term flows and the corresponding changes in revenue and expenses. The most sensitive assumptions used in the income approach are the long-term growth rate and the discount rate applied to the cash flow forecast to determine present value. Taking into consideration the AUM mix of the U.S. retail mutual funds, the long-term growth rate was determined using the historical returns of the S&P 500 index, treasury bonds and treasury bills. The long-term growth rate used by management in the annual impairment test was 2.5% and is consistent with the prior year annual impairment test. The discount rate is an estimate of the weighted average cost of capital for the investment management sector reflecting the overall industry risks associated with future cash flows and considers an applicable size premium for the intangible asset. The discount rate used by management was 12.88%, which declined 17 bps from the prior year primarily due to a decrease in the risk-free rate. We continued to factor an asset-specific risk premium into the discount rate for the U.S. retail mutual fund indefinite-lived intangible assets to account for the uncertainty around future AUM flows given the continued shift

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in investor preferences away from actively managed funds. We assessed the reasonableness of the estimated fair value of the intangible assets by considering applicable market data.

Based on our annual impairment analysis as of October 1, 2024, we determined that the estimated fair value of the indefinite-lived intangible assets related to acquired management contracts of U.S. retail mutual funds exceeded its carrying value of $4,572.1 million by $267.4 million or 6%. Headroom increased from the prior year due to favorable market conditions and a decrease in the discount rate. While the company believes all assumptions utilized in our assessment are reasonable and appropriate, changes in these estimates could produce different fair value amounts which could drive impairment in future periods. For example, assuming all other assumptions remain static, a decrease to the long-term growth rate of 25 bps would decrease headroom to $178.1 million or 3.9%. Also, an increase to the discount rate of 15 bps would decrease headroom to $206.2 million or 4.5%.

Our annual impairment reviews of our other indefinite-lived intangible assets determined that there was not an impairment of these intangibles. The classifications of indefinite-lived and definite-lived intangible assets remain appropriate, and no changes to the expected lives of definite-lived intangible assets were required.

Goodwill

Management has the option to first assess goodwill for qualitative factors to determine whether it is necessary to perform a quantitative impairment test. We performed a quantitative annual impairment test as of October 1, 2023 and determined that the estimated fair value of the reporting unit exceeded its carrying value by 5%. For our annual impairment test in 2024, management performed the optional qualitative approach. Based on our annual impairment analysis of goodwill as of October 1, 2024, we determined that a quantitative assessment of the goodwill impairment test was not necessary. The qualitative impairment analysis indicated that headroom improved from the prior year impairment test due to improved profitability, favorable market conditions and a decrease in the discount rate.

The company cannot predict the occurrence of future events that might adversely affect the reported value of goodwill of $8,318.1 million at December 31, 2024. Such events include, but are not limited to, strategic decisions made in response to economic and competitive conditions or a significant decline in our revenue and operating income due to a change in AUM mix or unfavorable market conditions, including a significant decline in our stock price for an extended period of time. However, an impairment in the future would not impact the company’s liquidity or capital resources.

Income Taxes

The company files U.S. federal, state and numerous foreign income tax returns. The income tax laws are complex and subject to different interpretations by the taxpayer and the relevant taxing authorities. Significant judgment is required in the determination of our annual income tax provision, which includes the assessment of deferred tax assets and uncertain tax positions, as well as the interpretation and application of existing and newly enacted tax laws, regulation changes and new judicial rulings. Therefore, it is possible that actual results will vary from those recognized in our Consolidated Financial Statements due to changes in the interpretation of applicable guidance or as a result of examinations by taxing authorities.

Deferred tax assets, net of any associated valuation allowance, have been recognized based on management's belief that taxable income of the appropriate character, more likely than not, will be sufficient to realize the benefits of these assets over time. In the event that actual results differ from our expectations, or if our historical trends of positive operating income changes, we may be required to record a valuation allowance on some or all of these deferred tax assets, which may have a significant effect on our financial condition and results of operations. In assessing whether a valuation allowance should be established against a deferred income tax asset, the company considers all available evidence, which includes the nature, frequency and severity of recent losses, forecasts of future profitability and the duration of statutory carry back and carry forward periods, among other factors.

In the assessment of uncertain tax positions, significant judgment is required to estimate the range of possible outcomes and determine the probability, on a more likely than not basis, of favorable or unfavorable outcomes upon ultimate settlement of an issue. Changes in the estimate of uncertain tax positions occur periodically due to changes in interpretations of tax laws, the status of examinations by tax authorities and new regulatory or judicial guidance that could impact the relative merits and risk of tax positions. These changes, when they occur, impact tax expense and can materially impact results of operations. The company recognizes any interest and penalties related to unrecognized tax benefits (UTBs) on the Consolidated Statements of Income as components of income tax expense.

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CIP

Assessing if an entity is a variable interest entity (VIE) or voting interest entity (VOE) involves judgment and analysis on a structure-by-structure basis. Factors assessed as part of the analysis include the legal organization of the entity, the company's contractual involvement with the entity and any related party or de facto agent implications of the company's involvement with the entity. If the company is deemed to have the power to direct the activities of the fund that most significantly impact the fund's economic performance and the obligation to absorb losses/right to receive benefits from the fund that could potentially be significant to the fund, then the company is deemed to be the fund's primary beneficiary and is required to consolidate the fund. Assessing if the company has the power to direct the activities that most significantly impact the fund’s economic results may involve significant judgment.

Recent Accounting Standards

See Part II, Item 8, Financial Statements and Supplementary Data - Note 1, “Accounting Policies - Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements.”