IVZ.10Q.1Q.2015
Table of Contents    
    

                                    

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

(Mark One)
þ
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2015
OR
o
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-13908
Invesco Ltd.
(Exact Name of Registrant as Specified in Its Charter)
Bermuda
(State or Other Jurisdiction of Incorporation or Organization)
 
98-0557567
(I.R.S. Employer Identification No.)
 
 
 
1555 Peachtree Street, N.E., Suite 1800, Atlanta, GA
(Address of Principal Executive Offices)
 
30309
(Zip Code)

(404) 892-0896
(Registrant's telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
 
Accelerated filer o
 
Non-accelerated filer o (Do not check if a smaller reporting company)
 
Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No þ
As of March 31, 2015, the most recent practicable date, the number of Common Shares outstanding was 430,706,116.

Table of Contents    
    

                                    

TABLE OF CONTENTS
We include cross references to captions elsewhere in this Quarterly Report on Form 10-Q, which we refer to as this “Report,” where you can find related additional information. The following table of contents tells you where to find these captions.
 
 
 
Page
TABLE OF CONTENTS
 
 
 
 
 
EX-31.1
 
EX-31.2
 
EX-32.1
 
EX-32.2
 
EX-101 INSTANCE DOCUMENT
 
EX-101 SCHEMA DOCUMENT
 
EX-101 CALCULATION LINKBASE DOCUMENT
 
EX-101 LABELS LINKBASE DOCUMENT
 
EX-101 PRESENTATION LINKBASE DOCUMENT
 
EX-101 DEFINITION LINKBASE DOCUMENT
 


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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Invesco Ltd.
Condensed Consolidated Balance Sheets
(Unaudited)

 
As of
$ in millions, except per share data
March 31, 2015
 
December 31, 2014
ASSETS
 
 
 
Cash and cash equivalents
1,219.7

 
1,514.2

Unsettled fund receivables
1,361.5

 
732.4

Accounts receivable
561.1

 
545.9

Investments
951.6

 
885.4

Assets of consolidated sponsored investment products (CSIP)
314.2

 
305.8

Assets of consolidated investment products (CIP):
 
 
 
Cash and cash equivalents of CIP
393.9

 
404.0

Accounts receivable and other assets of CIP
82.1

 
161.3

Investments of CIP
6,198.0

 
5,762.8

Assets held for policyholders
2,572.7

 
1,697.9

Prepaid assets
126.5

 
132.1

Other assets
90.7

 
92.0

Property, equipment and software, net
393.1

 
402.6

Intangible assets, net
1,362.8

 
1,246.7

Goodwill
6,333.3

 
6,579.4

Total assets
21,961.2

 
20,462.5

LIABILITIES
 
 
 
Accrued compensation and benefits
371.7

 
667.3

Accounts payable and accrued expenses
824.5

 
757.3

Liabilities of CIP:
 
 
 
Debt of CIP
5,479.7

 
5,149.6

Other liabilities of CIP
320.7

 
280.9

Policyholder payables
2,572.7

 
1,697.9

Unsettled fund payables
1,363.2

 
730.1

Long-term debt
1,600.6

 
1,589.3

Deferred tax liabilities, net
387.7

 
304.8

Total liabilities
12,920.8

 
11,177.2

Commitments and contingencies (See Note 11)


 


TEMPORARY EQUITY
 
 
 
Redeemable noncontrolling interests in CSIP
167.6

 
165.5

PERMANENT EQUITY
 
 
 
Equity attributable to Invesco Ltd.:
 
 
 
Common shares ($0.20 par value; 1,050.0 million authorized; 490.4 million shares issued as of March 31, 2015 and December 31, 2014)
98.1

 
98.1

Additional paid-in-capital
6,091.2

 
6,133.6

Treasury shares
(1,936.2
)
 
(1,898.1
)
Retained earnings
4,077.5

 
3,926.0

Retained earnings appropriated for investors in CIP
—

 
17.6

Accumulated other comprehensive income/(loss), net of tax
(253.6
)
 
48.8

Total equity attributable to Invesco Ltd.
8,077.0

 
8,326.0

Equity attributable to nonredeemable noncontrolling interests in consolidated entities
795.8

 
793.8

Total permanent equity
8,872.8

 
9,119.8

Total liabilities, temporary and permanent equity
21,961.2

 
20,462.5

See accompanying notes.

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Invesco Ltd.
Condensed Consolidated Statements of Income
(Unaudited)

 
Three months ended March 31,
$ in millions, except per share data
2015
 
2014
Operating revenues:
 
 
 
Investment management fees
1,001.4

 
965.4

Service and distribution fees
213.4

 
238.6

Performance fees
46.8

 
31.1

Other
30.0

 
34.4

Total operating revenues
1,291.6

 
1,269.5

Operating expenses:
 
 
 
Employee compensation
360.9

 
362.1

Third-party distribution, service and advisory
399.1

 
405.4

Marketing
26.7

 
23.4

Property, office and technology
76.9

 
112.7

General and administrative
89.9

 
121.6

Total operating expenses
953.5

 
1,025.2

Operating income
338.1

 
244.3

Other income/(expense):
 
 
 
Equity in earnings of unconsolidated affiliates
11.8

 
10.0

Interest and dividend income
2.5

 
2.9

Interest expense
(18.7
)
 
(18.7
)
Other gains and losses, net
2.7

 
6.6

Other income/(expense) of CSIP, net
9.4

 
8.2

CIP:
 
 
 
Interest and dividend income of CIP
60.2

 
48.3

Interest expense of CIP
(45.1
)
 
(30.3
)
Other gains/(losses) of CIP, net
24.4

 
26.5

Income from continuing operations before income taxes
385.3

 
297.8

Income tax provision
(101.3
)
 
(89.0
)
Income from continuing operations, net of taxes
284.0

 
208.8

Income/(loss) from discontinued operations, net of taxes
—

 
(2.0
)
Net income
284.0

 
206.8

Net (income)/loss attributable to noncontrolling interests in consolidated entities
(24.4
)
 
(19.0
)
Net income attributable to Invesco Ltd.
259.6

 
187.8

Earnings per share:
 
 
 
Basic:
 
 
 
Earnings per share from continuing operations

$0.60

 

$0.43

Earnings per share from discontinued operations

$—

 

$—

Basic earnings per share

$0.60

 

$0.43

Diluted:
 
 
 
Earnings per share from continuing operations

$0.60

 

$0.43

Earnings per share from discontinued operations

$—

 

$—

Diluted earnings per share

$0.60

 

$0.43

Dividends declared per share

$0.2500

 

$0.2250


See accompanying notes.


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Invesco Ltd.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three months ended March 31,
$ in millions
2015
 
2014
Net income
284.0

 
206.8

Other comprehensive income/(loss), net of tax:
 
 
 
Currency translation differences on investments in foreign subsidiaries, net of tax
(302.9
)
 
(53.2
)
Actuarial (loss)/gain related to employee benefit plans, net of tax
—

 
(0.3
)
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax
(1.8
)
 
(0.4
)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax
0.5

 
0.5

Share of other comprehensive income/(loss) of equity method investments, net of tax
1.1

 
4.0

Unrealized (losses)/gains on available-for-sale investments, net of tax
1.2

 
4.4

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax
(0.5
)
 
(3.4
)
Other comprehensive income/(loss), net of tax
(302.4
)
 
(48.4
)
Total comprehensive income/(loss)
(18.4
)
 
158.4

Comprehensive loss/(income) attributable to noncontrolling interests in consolidated entities
(24.4
)
 
(18.6
)
Comprehensive income/(loss) attributable to Invesco Ltd.
(42.8
)
 
139.8

See accompanying notes.



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Invesco Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Three months ended March 31,
$ in millions
2015
 
2014
Operating activities:
 
 
 
Net income
284.0

 
206.8

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
 
 
 
Amortization and depreciation
22.7

 
23.4

Share-based compensation expense
40.7

 
36.5

Other (gains)/losses, net
(2.7
)
 
(6.6
)
Other (gains)/losses of CSIP, net
(6.4
)
 
(6.5
)
Other (gains)/losses of CIP, net
(24.4
)
 
(26.5
)
Equity in earnings of unconsolidated affiliates
(11.8
)
 
(10.0
)
Dividends from unconsolidated affiliates
0.7

 
0.8

Changes in operating assets and liabilities:
 
 
 
(Increase)/decrease in cash held by CIP
9.4

 
(196.4
)
(Increase)/decrease in cash held by CSIP
(8.8
)
 
0.3

(Purchase)/sale of trading investments, net
(39.5
)
 
7.8

(Increase)/decrease in receivables
(1,632.9
)
 
(520.9
)
Increase/(decrease) in payables
1,312.7

 
272.1

Net cash provided by/(used in) operating activities
(56.3
)
 
(219.2
)
Investing activities:
 
 
 
Purchase of property, equipment and software
(23.0
)
 
(21.4
)
Purchase of available-for-sale investments
(34.3
)
 
(1.8
)
Sale of available-for-sale investments
9.8

 
10.3

Purchase of investments by CIP
(1,286.6
)
 
(1,325.1
)
Sale of investments by CIP
960.6

 
970.1

Purchase of investments by CSIP
(159.1
)
 
(246.9
)
Sale of investments by CSIP
166.7

 
95.3

Purchase of other investments
(51.9
)
 
(44.1
)
Sale of other investments
36.6

 
15.3

Returns of capital and distributions from unconsolidated partnership investments
14.7

 
3.8

Net cash provided by/(used in) investing activities
(366.5
)
 
(544.5
)
Financing activities:
 
 
 
Proceeds from exercises of share options
0.7

 
1.5

Purchases of treasury shares
(76.6
)
 
(119.6
)
Dividends paid
(108.1
)
 
(98.0
)
Excess tax benefits from share-based compensation
13.0

 
13.9

Repayment of unsettled fund account
—

 
(35.7
)
Third-party capital invested into CIP
12.9

 
40.1

Third-party capital distributed by CIP
(33.9
)
 
(48.6
)
Third-party capital invested into CSIP
0.8

 
100.8

Borrowings of debt by CIP
935.9

 
715.0

Repayments of debt by CIP
(577.0
)
 
(161.1
)
Net borrowings/(repayments) under credit facility
11.2

 
—

Net cash provided by/(used in) financing activities
178.9

 
408.3

Increase/(decrease) in cash and cash equivalents
(243.9
)
 
(355.4
)
Foreign exchange movement on cash and cash equivalents
(50.6
)
 
2.9

Cash and cash equivalents, beginning of period
1,514.2

 
1,331.2

Cash and cash equivalents, end of period
1,219.7

 
978.7

Supplemental Cash Flow Information:
 
 
 
Interest paid
(12.7
)
 
(1.4
)
Interest received
1.3

 
1.6

Taxes paid
(89.6
)
 
(90.2
)
See accompanying notes.

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Invesco Ltd.
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 
Equity Attributable to Invesco Ltd.
 
 
 
 
 
 
$ in millions
Common Shares
 
Additional Paid-in-Capital
 
Treasury Shares
 
Retained Earnings
 
Retained Earnings Appropriated for Investors in CIP
 
Accumulated Other Comprehensive Income/(Loss)
 
Total Equity Attributable to Invesco Ltd.
 
Nonredeemable Noncontrolling Interests in Consolidated Entities
 
Total Permanent Equity
 
Redeemable Noncontrolling Interests in CSIP/Temporary Equity
January 1, 2015
98.1

 
6,133.6

 
(1,898.1
)
 
3,926.0

 
17.6

 
48.8

 
8,326.0

 
793.8

 
9,119.8

 
165.5

Adjustment for adoption of ASU 2014-13
—

 
—

 
—

 
—

 
(17.6
)
 
—

 
(17.6
)
 
—

 
(17.6
)
 
—

January 1, 2015, as adjusted

98.1

 
6,133.6

 
(1,898.1
)
 
3,926.0

 
—

 
48.8

 
8,308.4

 
793.8

 
9,102.2

 
165.5

Net income
—

 
—

 
—

 
259.6

 
—

 
—

 
259.6

 
22.3

 
281.9

 
2.1

Other comprehensive income/(loss), net of tax
—

 
—

 
—

 
—

 
—

 
(302.4
)
 
(302.4
)
 
—

 
(302.4
)
 
—

Change in noncontrolling interests in consolidated entities, net
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(20.3
)
 
(20.3
)
 
—

Dividends
—

 
—

 
—

 
(108.1
)
 
—

 
—

 
(108.1
)
 
—

 
(108.1
)
 
—

Employee share plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
40.7

 
—

 
—

 
—

 
—

 
40.7

 
—

 
40.7

 
—

Vested shares
—

 
(95.8
)
 
95.8

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Exercise of options
—

 
(0.3
)
 
1.0

 
—

 
—

 
—

 
0.7

 
—

 
0.7

 
—

Tax impact of share-based payment
—

 
13.0

 
—

 
—

 
—

 
—

 
13.0

 
—

 
13.0

 
—

Purchase of shares
—

 
—

 
(134.9
)
 
—

 
—

 
—

 
(134.9
)
 
—

 
(134.9
)
 
—

March 31, 2015
98.1

 
6,091.2

 
(1,936.2
)
 
4,077.5

 
—

 
(253.6
)
 
8,077.0

 
795.8

 
8,872.8

 
167.6


See accompanying notes.

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Invesco Ltd.
Consolidated Statements of Changes in Equity (continued)
(Unaudited)
 
Equity Attributable to Invesco Ltd.
 
 
 
 
 
$ in millions
Common Shares
 
Additional Paid-in-Capital
 
Treasury Shares
 
Retained Earnings
 
Retained Earnings Appropriated for Investors in CIP
 
Accumulated Other Comprehensive Income
 
Total Equity Attributable to Invesco Ltd.
 
Nonredeemable Noncontrolling Interests in Consolidated Entities
 
Total Permanent Equity
Redeemable Noncontrolling Interests in CSIP/Temporary Equity
January 1, 2014
98.1

 
6,100.8

 
(1,700.4
)
 
3,361.9

 
104.3

 
427.9

 
8,392.6

 
584.7

 
8,977.3

—

Net income
—

 
—

 
—

 
187.8

 
—

 
—

 
187.8

 
17.1

 
204.9

1.9

Other comprehensive income/(loss)
—

 
—

 
—

 
—

 
—

 
(48.0
)
 
(48.0
)
 
(0.4
)
 
(48.4
)
—

Net income/(loss) reclassified to appropriated retained earnings
—

 
—

 
—

 
—

 
(30.3
)
 
—

 
(30.3
)
 
30.3

 
—

—

Change in noncontrolling interests in consolidated entities, net
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(5.9
)
 
(5.9
)
100.0

Dividends
—

 
—

 
—

 
(98.0
)
 
—

 
—

 
(98.0
)
 
—

 
(98.0
)
—

Employee share plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
36.5

 
—

 
—

 
—

 
—

 
36.5

 
—

 
36.5

—

Vested shares
—

 
(105.8
)
 
105.8

 
—

 
—

 
—

 
—

 
—

 
—

—

Exercise of options
—

 
(1.1
)
 
2.6

 
—

 
—

 
—

 
1.5

 
—

 
1.5

—

Tax impact of share-based payment
—

 
13.9

 
—

 
—

 
—

 
—

 
13.9

 
—

 
13.9

—

Purchase of shares
—

 
—

 
(176.3
)
 
—

 
—

 
—

 
(176.3
)
 
—

 
(176.3
)
—

March 31, 2014
98.1

 
6,044.3

 
(1,768.3
)
 
3,451.7

 
74.0

 
379.9

 
8,279.7

 
625.8

 
8,905.5

101.9


See accompanying notes.


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Invesco Ltd.
Notes to the Condensed Consolidated Financial Statements
(Unaudited)
1.  ACCOUNTING POLICIES
Corporate Information
Invesco Ltd. (Parent) and all of its consolidated entities (collectively, the company or Invesco) provide retail and institutional clients with an array of global investment management capabilities. The company operates globally and its sole business is investment management.
Certain disclosures included in the company's annual report are not required to be included on an interim basis in the company's quarterly reports on Forms 10-Q. The company has condensed or omitted the disclosures. Therefore, this Form 10-Q (Report) should be read in conjunction with the company's annual report on Form 10-K for the year ended December 31, 2014.
Basis of Accounting and Consolidation
The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with rules and regulations of the Securities and Exchange Commission. In the opinion of management, the financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair statement of the financial condition and results of operations for the periods presented. All significant intercompany transactions, balances, revenues and expenses are eliminated upon consolidation.
The Condensed Consolidated Financial Statements have been prepared in accordance with U.S. GAAP and consolidate the financial statements of the Parent and all of its controlled subsidiaries.
Accounting Pronouncements Recently Adopted and Pending Accounting Pronouncements
In May 2014, the FASB issued Accounting Standards Update 2014-09, "Revenue from Contracts with Customers" (ASU 2014-09), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is not permitted. The company is currently evaluating the potential impact on its Consolidated Financial Statements, as well as the available transition methods.

In August 2014, the FASB issued Accounting Standard Update 2014-13, "Measuring the Financial Assets and the Financial Liabilities of a Consolidated Collateralized Financing Entity" (ASU 2014-13). ASU 2014-13 provides a measurement alternative for an entity that consolidates a collateralized financing entity (CFE) and has elected the fair value option for the financial assets and financial liabilities of such CFE. The measurement alternative requires that the reporting entity measure both the financial assets and the financial liabilities of the CFE by using the more observable of the fair value of the financial assets and the fair value of the financial liabilities, removing any measurement difference previously recorded as net income (loss) attributable to noncontrolling interests in consolidated entities and as an adjustment to retained earnings appropriated for investors in CIP. On January 1, 2015 the company adopted ASU 2014-13 on a modified retrospective basis and has elected the measurement alternative for the consolidated CLOs. The adoption resulted in a $17.6 million reduction in retained earnings appropriated for investors in CIP, with a corresponding increase in debt of CIP. The company’s subsequent earnings from consolidated CLOs reflect changes in fair value of its own economic interests in the CLOs. Gains or losses on assets and liabilities of the CLOs will no longer be attributed to noncontrolling interests but will offset in other gains/(losses) of CIP.

In February 2015, the FASB issued Accounting Standard Update 2015-02, “Amendments to the Consolidation Analysis” (ASU 2015-02). This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The company is currently evaluating the potential impact of this standard on its Consolidated Financial Statements, as well as the available transition methods.

In April 2015, the FASB issued Accounting Standards Update 2015-03, "Simplifying the Presentation of Debt Issuance Costs" (ASU 2015-03), which changes the presentation of debt issuance costs in the balance sheet. ASU 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability rather than being presented as an asset. Amortization of debt issuance costs will continue to be reported as interest expense. ASU 2015-03 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and

9

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requires retrospective application for each prior period presented. Early adoption is permitted. The company is currently evaluating the potential impact on its Consolidated Financial Statements.



10

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2. FAIR VALUE OF ASSETS AND LIABILITIES
The carrying value and fair value of financial instruments are presented in the below summary table. The fair value of financial instruments held by CSIP and CIP is presented in Note 12, "Consolidated Sponsored Investment Products" and Note 13, "Consolidated Investment Products," respectively.
 
 
 
March 31, 2015
 
December 31, 2014
$ in millions
Footnote Reference
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Cash and cash equivalents
 
 
1,219.7

 
1,219.7

 
1,514.2

 
1,514.2

Available-for-sale investments
3
 
277.5

 
277.5

 
255.9

 
255.9

Trading investments
3
 
300.2

 
300.2

 
263.2

 
263.2

Foreign time deposits *
3
 
30.5

 
30.5

 
29.6

 
29.6

Assets held for policyholders
 
 
2,572.7

 
2,572.7

 
1,697.9

 
1,697.9

Policyholder payables *
 
 
(2,572.7
)
 
(2,572.7
)
 
(1,697.9
)
 
(1,697.9
)
Put option contracts

 
7.4

 
7.4

 
—

 
—

UIT-related financial instruments sold, not yet purchased
 
 
(2.9
)
 
(2.9
)
 
(1.4
)
 
(1.4
)
Long-term debt *
4
 
(1,600.6
)
 
(1,749.6
)
 
(1,589.3
)
 
(1,695.8
)
____________
*
These financial instruments are not measured at fair value on a recurring basis. See the indicated footnotes or most recently filed Form 10-K for additional information about the carrying and fair values of these financial instruments. Foreign time deposits are measured at cost plus accrued interest, which approximates fair value, and are accordingly classified as Level 2 securities.
A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
•
Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•
Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•
Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.
An asset or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
There are three types of valuation approaches: a market approach, which uses observable prices and other relevant information that is generated by market transactions involving identical or comparable assets or liabilities; an income approach, which uses valuation techniques to convert future amounts to a single, discounted present value amount; and a cost approach, which is based on the amount that currently would be required to replace the service capacity of an asset.
The following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.
Cash equivalents
Cash investments in money market funds are valued under the market approach through the use of quoted market prices in an active market, which is the net asset value of the underlying funds, and are classified within level 1 of the valuation hierarchy.
Available-for-sale investments
Available-for-sale investments include seed money, co-investments in affiliated collateralized loan obligations (CLOs), and investments in other debt securities. Available-for-sale investments are measured at fair value. Gains or losses arising from changes in the fair value of available-for-sale investments are recognized in accumulated other comprehensive income, net of tax, until the investment is sold or otherwise disposed of, or if the investment is determined to be other-than-temporarily impaired, at which time the cumulative gain or loss previously reported in equity is included in income. The specific identification method is used to determine the realized gain or loss on securities sold or otherwise disposed.

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Seed money is valued under the market approach through the use of quoted market prices available in an active market and is classified within level 1 of the valuation hierarchy; there is no modeling or additional information needed to arrive at the fair values of these investments. CLO assets are valued based on price quotations provided by an independent third-party pricing source or using an income approach through the use of certain observable and unobservable inputs. At March 31, 2015 and December 31, 2014, investments in CLOs were valued using third-party pricing information. Due to liquidity constraints within the market for CLO products that require the use of unobservable inputs, these investments are classified within level 3 of the valuation hierarchy. Other debt securities are valued using a cost valuation technique due to the lack of available cash flow and market data and are accordingly also classified within level 3 of the valuation hierarchy.
Trading investments
Trading investments include investments held to settle the company’s deferred compensation plan liabilities, certain seed money, as well as trading and investing activities in equity and debt securities entered into in its capacity as sponsor of UITs, and other equity securities. Trading securities are securities bought and held principally for the purpose of selling them in the near term. Trading investments are measured at fair value. Gains or losses arising from changes in the fair value of trading investments are included in income.

•Investments related to deferred compensation plans
Investments related to deferred compensation plans are valued under the market approach through the use of quoted prices in an active market and are classified within level 1 of the valuation hierarchy.
•Seed money
Seed money is valued under the market approach through the use of quoted market prices available in an active market and is classified within level 1 of the valuation hierarchy; there is no modeling or additional information needed to arrive at the fair values of these investments.
•Other equity securities
Other equity securities consist of investments in publicly-traded equity securities. These securities are valued under the market approach through the use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.
•UIT-related equity and debt securities
The company invests in UIT-related equity and debt securities consisting of investments in corporate stock, UITs, and U.S. state and political subdivision securities. Each is discussed more fully below.
Corporate equities
The company temporarily holds investments in corporate equities for purposes of creating a UIT. Corporate equities are valued under the market approach through use of quoted prices on an exchange. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.
UITs
The company may hold units of its sponsored UITs at period-end for sale in the primary market or secondary market. Equity UITs are valued under the market approach through use of quoted prices on an exchange. Fixed income UITs are valued using recently executed transaction prices, market price quotations (where observable), bond spreads, or credit default swap spreads. The spread data used is for the same maturities as the underlying bonds. If the spread data does not reference the issuers, then data that references comparable issuers is used. When observable price quotations are not available, fair value is determined based on cash flow models with yield curves, bond or single name credit default spreads, and recovery rates based on collateral value as key inputs. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.
Municipal securities
Municipal securities are valued using recently executed transaction prices, market price quotations (where observable), bond spreads, or credit default swap spreads. The spread data used is for the same maturities as the underlying bonds. If the spread data does not reference the issuers, then data that references comparable issuers is used. When observable price quotations are not available, fair value is determined based on cash flow models with

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yield curves, bond or single name credit default spreads, and recovery rates based on collateral value as key inputs. Depending on the nature of the inputs, these investments are categorized as level 1, 2, or 3.
Put option contracts
The company has purchased several put option contracts to hedge economically foreign currency risk on the translation of a portion of its pound sterling-denominated earnings into U.S. dollars (purchases of $6.8 million in the three months ended March 31, 2015). These were the only contracts entered into during the period to hedge economically foreign currency risk and provide coverage through December 31, 2015. The economic hedge is predominantly triggered upon the impact of a significant decline in the pound sterling/U.S. dollar foreign exchange rate, which could arise as a result of European economic uncertainty. Open put option contracts are marked-to-market through earnings, which are recorded in the company's Condensed Consolidated Statements of Income in other gains and losses. These derivative contracts are valued using option valuation models and are included in other assets in the company's Condensed Consolidated Balance Sheets. The significant inputs in these models (volatility, forward points and swap curves) are readily available in public markets or can be derived from observable market transactions for substantially the full terms of the contracts and are classified within level 2 of the valuation hierarchy. The company recognized $0.6 million gain in the three months ended March 31, 2015 (March 31, 2014: none) related to the change in market value of these put option contracts.
Assets held for policyholders
Assets held for policyholders represent investments held by one of the company’s subsidiaries, which is an insurance entity that was established to facilitate retirement savings plans in the U.K. The assets held for policyholders are accounted for at fair value pursuant to ASC Topic 944, “Financial Services — Insurance,” and are comprised primarily of affiliated unitized funds. The assets are measured at fair value under the market approach based on the quoted prices of the underlying funds in an active market and are classified within level 1 of the valuation hierarchy. The policyholder payables are indexed to the value of the assets held for policyholders and are therefore not included in the tables below.
UIT-related financial instruments sold, not yet purchased, and derivative instruments
The company uses U.S. Treasury futures, which are types of derivative financial instruments, to hedge economically fixed income UIT inventory and securities in order to mitigate market risk. Open futures contracts are marked-to-market daily through earnings, which are recorded in the company’s Condensed Consolidated Statements of Income in other revenue, along with the mark-to-market on the underlying trading securities held. Fair values of derivative contracts in an asset position are included in other assets in the company’s Condensed Consolidated Balance Sheets. Fair values of derivative contracts in a liability position are included in other liabilities in the company’s Condensed Consolidated Balance Sheets. These derivative contracts are valued under the market approach through use of quoted prices in an active market and are classified within level 1 of the valuation hierarchy. At March 31, 2015 there were 31 futures contracts with a notional value of $4.3 million (December 31, 2014: 6 open futures contracts with a notional value of 0.8 million). Additionally, to hedge economically the market risk associated with equity and debt securities and UITs temporarily held as trading investments, the company will hold short corporate equities, exchange-traded funds, or U.S. treasury security positions. These transactions are recorded as financial instruments sold, not yet purchased and are included in accounts payable and accrued expenses in the company’s Condensed Consolidated Balance Sheets. To the extent these securities are actively traded, valuation adjustments are not applied and they are categorized within level 1 of the valuation hierarchy; otherwise, they are categorized in level 2.

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The following table presents, for each of the hierarchy levels described above, the carrying value of the company's assets and liabilities, including major security type for equity and debt securities, which are measured at fair value on the company's Condensed Consolidated Balance Sheet as of March 31, 2015:
 
As of March 31, 2015
$ in millions
Fair Value Measurements
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
232.4

 
232.4

 
—

 
—

Investments:*
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
Seed money
268.7

 
268.7

 
—

 
—

CLOs
2.5

 
—

 
—

 
2.5

Other debt securities
6.3

 
—

 
—

 
6.3

Trading investments:
 
 
 
 
 
 
 
Investments related to deferred compensation plans
179.2

 
179.2

 
—

 
—

Seed money
77.7

 
77.7

 
—

 
—

Other equity securities
26.3

 
26.3

 
—

 
—

UIT-related equity and debt securities:
 
 
 
 
 
 
 
Corporate equities
1.0

 
1.0

 
—

 
—

Corporate bonds
0.6

 
—

 
0.6

 
—

UITs
5.3

 
5.3

 
—

 
—

Municipal securities
10.1

 
—

 
10.1

 
—

Assets held for policyholders
2,572.7

 
2,572.7

 
—

 
—

Put option contracts
7.4

 
—

 
7.4

 
—

Total
3,390.2

 
3,363.3

 
18.1

 
8.8

Liabilities:
 
 
 
 
 
 
 
UIT-related financial instruments sold, not yet purchased:
 
 
 
 
 
 
 
Corporate equities
(1.2
)
 
(1.2
)
 
—

 
—

U.S. treasury securities
(1.7
)
 
(1.7
)
 
—

 
—

Total
(2.9
)
 
(2.9
)
 
—

 
—

____________
*
Foreign time deposits of $30.5 million are excluded from this table. Equity method and other investments of $335.1 million and $8.3 million, respectively, are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

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The following table presents, for each of the hierarchy levels described above, the carrying value of the company's assets and liabilities, including major security type for equity and debt securities, which are measured at fair value on the company's Condensed Consolidated Balance Sheet as of December 31, 2014:
 
As of December 31, 2014
$ in millions
Fair Value Measurements
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Other Observable Inputs
(Level 2)
 
Significant Unobservable Inputs
(Level 3)
Assets:
 
 
 
 
 
 
 
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
474.9

 
474.9

 
—

 
—

Investments:*
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
Seed money
246.2

 
246.2

 
—

 
—

CLOs
3.4

 
—

 
—

 
3.4

Other debt securities
6.3

 
—

 
—

 
6.3

Trading investments:
 
 
 
 
 
 
 
Investments related to deferred compensation plans
162.6

 
162.6

 
—

 
—

Seed Money
68.2

 
68.2

 
—

 
—

Other equity securities
29.0

 
29.0

 
—

 
—

UIT-related equity and debt securities:
 
 
 
 
 
 
 
Corporate equities
1.4

 
1.4

 
—

 
—

UITs
1.6

 
1.6

 
—

 
—

Municipal securities
0.4

 
—

 
0.4

 
—

Assets held for policyholders
1,697.9

 
1,697.9

 
—

 
—

Total
2,691.9

 
2,681.8

 
0.4

 
9.7

Liabilities:
 
 
 
 
 
 
 
UIT-related financial instruments sold, not yet purchased:
 
 
 
 
 
 
 
Corporate equities
(1.4
)
 
(1.4
)
 
—

 
—

Total
(1.4
)
 
(1.4
)
 
—

 
—

____________
*
Foreign time deposits of $29.6 million are excluded from this table. Equity method and other investments of $332.1 million and $4.6 million, respectively, are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.

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The following table shows a reconciliation of the beginning and ending fair value measurements for level 3 assets and liabilities during the three months ended March 31, 2015 and March 31, 2014, which are valued using significant unobservable inputs:
 
Three months ended March 31, 2015
 
Three months ended March 31, 2014
$ in millions
CLOs
 
Other Debt Securities
 
CLOs
 
Other Debt Securities
Beginning balance
3.4

 
6.3

 
4.0

 
6.3

Returns of capital
(0.1
)
 
—

 
(0.2
)
 
—

Net unrealized gains and losses included in accumulated other comprehensive income/(loss)*
—

 
—

 
0.5

 
—

Disposition
(0.8
)
 
—

 
—

 
—

Ending balance
2.5

 
6.3

 
4.3

 
6.3

_______________
*    These unrealized gains and losses are attributable to balances still held at the respective period ends.
3.  INVESTMENTS
The disclosures below include details of the company's investments. Investments held by CSIP are detailed in Note 12, "Consolidated Sponsored Investment Products." Investments held by CIP are detailed in Note 13, "Consolidated Investment Products."
$ in millions
March 31, 2015
 
December 31, 2014
Available-for-sale investments:
 
 
 
Seed money
268.7

 
246.2

CLOs
2.5

 
3.4

Other debt securities
6.3

 
6.3

Trading investments:
 
 
 
Investments related to deferred compensation plans
179.2

 
162.6

Seed money
77.7

 
68.2

     UIT-related equity and debt securities
17.0

 
3.4

Other equity securities
26.3

 
29.0

Equity method investments
335.1

 
332.1

Foreign time deposits
30.5

 
29.6

Other
8.3

 
4.6

Total investments
951.6

 
885.4

Available for sale investments
Realized gains and losses recognized in the Condensed Consolidated Statements of Income during the period from investments classified as available-for-sale are as follows:
 
For the three months ended March 31, 2015
 
For the three months ended March 31, 2014
$ in millions
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
 
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
Seed money
8.9

 
0.6

 
—

 
10.1

 
2.8

 
(0.1
)
CLOs
0.9

 
0.1

 
—

 
0.2

 
—

 
—

Upon the sale of available-for-sale securities, net realized gains of $0.7 million were transferred from accumulated other comprehensive income into the Condensed Consolidated Statements of Income during the three months ended March 31, 2015 (three months ended March 31, 2014: $2.7 million). The specific identification method is used to determine the realized gain or loss on securities sold or otherwise disposed.

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Gross unrealized holding gains and losses recognized in other accumulated comprehensive income from available-for-sale investments are presented in the table below:
 
March 31, 2015
 
December 31, 2014
$ in millions
Cost
 
Gross Unrealized Holding Gains
 
Gross Unrealized Holding Losses
 
Fair Value
 
Cost
 
Gross Unrealized Holding Gains
 
Gross Unrealized Holding Losses
 
Fair Value
Seed money
260.4

 
11.5

 
(3.2
)
 
268.7

 
237.7

 
12.8

 
(4.3
)
 
246.2

CLOs
2.6

 
—

 
(0.1
)
 
2.5

 
3.5

 
—

 
(0.1
)
 
3.4

Other debt securities
6.3

 
—

 
—

 
6.3

 
6.3

 
—

 
—

 
6.3

 
269.3

 
11.5

 
(3.3
)
 
277.5

 
247.5

 
12.8

 
(4.4
)
 
255.9

At March 31, 2015, 122 seed money funds (December 31, 2014: 146 seed money funds) included gross unrealized holding losses. The following table provides a breakdown of the unrealized losses.
 
March 31, 2015
 
December 31, 2014
$ in millions
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
Less than 12 months
85.5

 
(2.3
)
 
123.9

 
(3.5
)
12 months or greater
3.1

 
(0.9
)
 
3.6

 
(0.8
)
Total
88.6

 
(3.2
)
 
127.5

 
(4.3
)
The company has reviewed investment securities for other-than-temporary impairment (OTTI) in accordance with its accounting policy and has recognized no other-than-temporary impairment charges on available-for-sale investments during the three months ended March 31, 2015 (three months ended March 31, 2014: none). The company reviewed the financial condition and near-term prospects of the underlying securities in the seeded funds as well as the severity and duration of the impairment and concluded that the gross unrealized losses on these securities did not represent other-than-temporary impairments. The securities are expected to recover their value over time and the company has the intent and ability to hold the securities until this recovery occurs. During the three months ended March 31, 2015 and 2014, there were no charges to other comprehensive income from other-than-temporary impairment related to non-credit related factors.
At March 31, 2015, $3.2 million available-for-sale debt securities mature in one year through five years, and $5.6 million after five years through ten years.
Trading investments
The portion of trading gains and losses for the three months ended March 31, 2015, that relates to trading securities still held at March 31, 2015, was a $0.2 million net gain (three months ended March 31, 2014: $2.8 million net loss).
4.  LONG-TERM DEBT
The disclosures below include details of the company's debt. Debt of CIP is detailed in Note 13, “Consolidated Investment Products.”
 
March 31, 2015
 
December 31, 2014
$ in millions
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Unsecured Senior Notes*:
 
 
 
 
 
 
 
$600 million 3.125% - due November 30, 2022
599.6

 
609.4

 
599.6

 
596.8

$600 million 4.000% - due January 30, 2024
596.3

 
639.8

 
596.2

 
625.9

$400 million 5.375% - due November 30, 2043
393.5

 
489.2

 
393.5

 
473.1

  Floating rate credit facility expiring December 17, 2018
11.2

 
11.2

 
—

 
—

Long-term debt
1,600.6

 
1,749.6

 
1,589.3

 
1,695.8

____________
*
The company's senior note indentures contain certain restrictions on mergers or consolidations. Beyond these items, there are no other restrictive covenants in the indentures.

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The issuer of the senior notes is an indirect 100% owned finance subsidiary of Invesco Ltd. (the Parent), and the Parent fully and unconditionally guaranteed the securities. The requirement of certain subsidiaries of ours to maintain minimum levels of capital and other similar provisions of applicable law may have the effect of limiting withdrawals of capital, repayment of intercompany loans and payment of dividends by such entities.
The fair market value of the company's senior notes was determined by market quotes provided by Bloomberg, which is considered a Level 2 valuation input. In the absence of an active market, the company relies upon the average price quoted by brokers for determining the fair market value of the debt.
At March 31, 2015, the company's outstanding senior notes of $1,589.4 million mature in periods greater than five years from the balance sheet date. The floating rate credit facility will expire in less than five years.
At March 31, 2015, the outstanding balance on the $1.25 billion credit facility was $11.2 million (December 31, 2014: zero). The credit facility has a maturity of December 17, 2018. Borrowings under the credit facility will bear interest at (i) LIBOR for specified interest periods or (ii) a floating base rate (based upon the highest of (a) the Bank of America prime rate, (b) the Federal Funds rate plus 0.50% and (c) LIBOR for an interest period of one month plus 1.00%), plus, in either case, an applicable margin determined with reference to the higher of the available credit ratings of the company or its indirect subsidiary Invesco Finance PLC. Based on credit ratings as of March 31, 2015 of the company, the applicable margin for LIBOR-based loans was 1.00% and for base rate loans was 0.00%. In addition, the company is required to pay the lenders a facility fee on the aggregate commitments of the lenders (whether or not used) at a rate per annum which is based on the higher of the available credit ratings of the company or its indirect subsidiary Invesco Finance PLC. Based on credit ratings as of March 31, 2015, the annual facility fee was equal to 0.125%.
The credit agreement governing the credit facility contains customary restrictive covenants on the company and its subsidiaries. Restrictive covenants in the credit agreement include, but are not limited to: prohibitions on creating, incurring or assuming any liens; entering into merger arrangements; selling, leasing, transferring or otherwise disposing of assets; making a material change in the nature of the business; making a significant accounting policy change in certain situations; entering into transactions with affiliates; and incurring indebtedness through the subsidiaries. Many of these restrictions are subject to certain minimum thresholds and exceptions. Financial covenants under the credit agreement include: (i) the quarterly maintenance of a debt/EBITDA leverage ratio, as defined in the credit agreement, of not greater than 3.25:1.00, (ii) a coverage ratio (EBITDA, as defined in the credit agreement/interest payable for the four consecutive fiscal quarters ended before the date of determination) of not less than 4.00:1.00.
The credit agreement governing the credit facility also contains customary provisions regarding events of default which could result in an acceleration or increase in amounts due, including (subject to certain materiality thresholds and grace periods) payment default, failure to comply with covenants, material inaccuracy of representation or warranty, bankruptcy or insolvency proceedings, change of control, certain judgments, ERISA matters, cross-default to other debt agreements, governmental action prohibiting or restricting the company or its subsidiaries in a manner that has a material adverse effect and failure of certain guaranty obligations. The company is in compliance with all regulatory minimum net capital requirements.
The lenders (and their respective affiliates) may have provided, and may in the future provide, investment banking, cash management, underwriting, lending, commercial banking, leasing, foreign exchange, trust or other advisory services to the company and its subsidiaries and affiliates. These parties may have received, and may in the future receive, customary compensation for these services.
The company maintains approximately $40.0 million in letters of credit from a variety of banks. The letters of credit are generally one-year automatically-renewable facilities and are maintained for various commercial reasons.
5.  SHARE CAPITAL
The number of common shares and common share equivalents issued are represented in the table below:
In millions
Three months ended March 31, 2015
 
Three months ended March 31, 2014
Common shares issued
490.4

 
490.4

Less: Treasury shares for which dividend and voting rights do not apply
(59.7
)
 
(57.7
)
Common shares outstanding
430.7

 
432.7

Total treasury shares at March 31, 2015 were 68.6 million (March 31, 2014: 67.1 million), including 8.9 million unvested restricted stock awards (March 31, 2014: 9.4 million) for which dividend and voting rights apply. The market price of common

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shares at March 31, 2015 was $39.69. The total market value of the company's 68.6 million treasury shares was $2.7 billion at March 31, 2015.

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6.  OTHER COMPREHENSIVE INCOME/(LOSS)
The components of accumulated other comprehensive income/(loss) were as follows:
 
For the three months ended March 31, 2015
$ in millions
Foreign currency translation
 
Employee benefit plans
 
Equity method investments
 
Available-for-sale investments
 
Total
Other comprehensive income/(loss) net of tax:
 
 
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries, net of tax
(302.9
)
 
—

 
—

 
—

 
(302.9
)
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax
—

 
(1.8
)
 
—

 
—

 
(1.8
)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax
—

 
0.5

 
—

 
—

 
0.5

Share of other comprehensive income/(loss) of equity method investments, net of tax
—

 
—

 
1.1

 
—

 
1.1

Unrealized (losses)/gains on available-for-sale investments, net of tax
—

 
—

 
—

 
1.2

 
1.2

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax
—

 
—

 
—

 
(0.5
)
 
(0.5
)
Other comprehensive income/(loss), net of tax
(302.9
)
 
(1.3
)
 
1.1

 
0.7

 
(302.4
)
 
 
 
 
 
 
 
 
 
 
Beginning balance
128.1

 
(91.7
)
 
6.5

 
5.9

 
48.8

Other comprehensive income/(loss), net of tax
(302.9
)
 
(1.3
)
 
1.1

 
0.7

 
(302.4
)
Ending balance
(174.8
)
 
(93.0
)
 
7.6

 
6.6

 
(253.6
)
 
For the three months ended March 31, 2014
$ in millions
Foreign currency translation
 
Employee benefit plans
 
Equity method investments
 
Available-for-sale investments
 
Total
Other comprehensive income/(loss) net of tax:
 
 
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries, net of tax
(53.2
)
 
—

 
—

 
—

 
(53.2
)
Actuarial (loss)/gain related to employee benefit plans, net of tax
—

 
(0.3
)
 
—

 
—

 
(0.3
)
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax
—

 
(0.4
)
 
—

 
—

 
(0.4
)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax
—

 
0.5

 
—

 
—

 
0.5

Share of other comprehensive income/(loss) of equity method investments, net of tax
—

 
—

 
4.0

 
—

 
4.0

Unrealized (losses)/gains on available-for-sale investments, net of tax
—

 
—

 
—

 
4.4

 
4.4

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax
—

 
—

 
—

 
(3.4
)
 
(3.4
)
Other comprehensive income/(loss), net of tax
(53.2
)
 
(0.2
)
 
4.0

 
1.0

 
(48.4
)
 
 
 
 
 
 
 
 
 
 
Beginning balance
492.5

 
(77.9
)
 
(1.8
)
 
15.1

 
427.9

Other comprehensive income/(loss), net of tax
(53.2
)
 
(0.2
)
 
4.0

 
1.0

 
(48.4
)
Other comprehensive (income)/loss attributable to noncontrolling interests
0.4

 
—

 
—

 
—

 
0.4

Ending balance
439.7

 
(78.1
)
 
2.2

 
16.1

 
379.9




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7.  SHARE-BASED COMPENSATION
The company recognized total expenses of $40.7 million and $36.5 million related to equity-settled share-based payment transactions in the three months ended March 31, 2015 and March 31, 2014, respectively.
Cash received from exercise of share options granted under share-based compensation arrangements was $0.7 million in the three months ended March 31, 2015 (three months ended March 31, 2014: $1.5 million).
Share Awards
Share awards are broadly classified into two categories: time-vested and performance-vested. Share awards are measured at fair value at the date of grant and are expensed, based on the company's estimate of shares that will eventually vest, on a straight-line or accelerated basis over the vesting period.
Time-vested awards vest ratably over or cliff-vest at the end of a period of continued employee service. Performance-vested awards cliff-vest at the end of or vest ratably over a defined vesting period of continued employee service upon the company's attainment of certain performance criteria. Time-vested and performance-vested share awards are granted in the form of restricted share awards (RSAs) or restricted share units (RSUs). Performance-vested awards are tied to the achievement of specified levels of adjusted diluted earnings per share and adjusted operating margin. In the event that either targeted financial measure is achieved at or above a vesting threshold for a particular performance measurement period, the portion of the performance-vested award subject to targeted financial measures will vest proportionately between 0% and 100% based upon the higher achieved level for that year.
With respect to time-vested awards, dividends accrue directly to the employee holder of RSAs, and cash payments in lieu of dividends are made to employee holders of certain RSUs. With respect to performance-vested awards, dividends and cash payments in lieu of dividends are deferred and are paid at the same rate as on our shares if and to the extent the award vests.
In May 2011, the company's shareholders approved the 2011 Global Equity Incentive Plan, which authorized the issuance of up to 28 million shares under this plan. In May 2010, the board approved the 2010 Global Equity Incentive Plan (ST), which authorized the issuance of up to 3 million shares under this plan. Under the terms of the plan, shares are issued only as employment inducement awards in connection with a strategic transaction and, as a result, do not require shareholder approval under the rules of the New York Stock Exchange or otherwise.
Movements on share awards priced in U.S. dollars during the periods ended March 31, are detailed below:
 
For the three months ended March 31, 2015
 
For the three months ended March 31, 2014
Millions of shares, except fair values
Time- Vested
 
Performance- Vested
 
Weighted Average Grant Date Fair Value ($)
 
Time- Vested
 
Performance- Vested
Unvested at the beginning of period
11.5

 
0.5

 
29.00

 
13.9

 
0.4

Granted during the period
3.9

 
0.3

 
40.26

 
4.1

 
0.2

Forfeited during the period
—

 
—

 
—

 
—

 
—

Vested and distributed during the period
(4.3
)
 
(0.2
)
 
28.11

 
(4.9
)
 
(0.1
)
Unvested at the end of the period
11.1

 
0.6

 
33.39

 
13.1

 
0.5


Share awards outstanding at March 31, 2015, had a weighted average remaining contractual life of 1.89 years. The total fair value of shares that vested during the three months ended March 31, 2015 was $172.1 million (three months ended March 31, 2014: $171.0 million). The weighted average grant date fair value of the U.S. dollar share awards that were granted during the three months ended March 31, 2015 was $40.26 (three months ended March 31, 2014: $34.30).
At March 31, 2015, there was $364.6 million of total unrecognized compensation cost related to non-vested share awards; that cost is expected to be recognized over a weighted average period of 3.04 years .


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8.  RETIREMENT BENEFIT PLANS
Defined Contribution Plans
The company operates defined contribution retirement benefit plans for all qualifying employees. The assets of the plans are held separately from those of the company in funds under the control of trustees. When employees leave the plans prior to vesting fully in the contributions, the contributions payable by the company are reduced by the amount of forfeited contributions.
The total amounts charged to the Condensed Consolidated Statements of Income for the three months ended March 31, 2015 of $15.4 million (three months ended March 31, 2014: $15.4 million) represent contributions paid or payable to these plans by the company at rates specified in the rules of the plans. As of March 31, 2015, accrued contributions of $8.8 million (December 31, 2014: $25.4 million) for the current year will be paid to the plans.
Defined Benefit Plans
The company maintains legacy defined benefit pension plans for qualifying employees of its subsidiaries in the U.K., Ireland, Germany and Taiwan. All defined benefit plans are closed to new participants. The company also maintains a postretirement medical plan in the U.S., which was closed to new participants in 2005. In 2006, the plan was amended to eliminate benefits for all participants who did not meet retirement eligibility by 2008. In November 2014, Invesco further amended the plan, which will result in its termination effective December 31, 2016. The assets of all defined benefit schemes are held in separate trustee-administered funds. Under the plans, the employees are generally entitled to retirement benefits based on final salary at retirement.
The components of net periodic benefit cost in respect of these defined benefit plans are as follows:
 
Retirement Plans
 
Medical Plan
 
For the three months ended March 31,
 
For the three months ended March 31,
$ in millions
2015
 
2014
 
2015
 
2014
Service cost
1.2

 
1.1

 
—

 
0.1

Interest cost
5.3

 
4.8

 
—

 
0.5

Expected return on plan assets
(6.2
)
 
(4.6
)
 
(0.1
)
 
(0.2
)
Amortization of prior service cost/(credit)
—

 
—

 
(2.2
)
 
(0.5
)
Amortization of net actuarial (gain)/loss
0.6

 
0.5

 
—

 
0.1

Net periodic benefit cost/(benefit)
0.9

 
1.8

 
(2.3
)
 
—

The estimated amounts of contributions expected to be paid to the plans during 2015 are $15.2 million for retirement plans and none for the medical plan. Payments made to the plans during the three months ended March 31, 2015 were $3.8 million to the retirement plan and zero to the medical plan.
9.  TAXATION
At March 31, 2015, the total amount of gross unrecognized tax benefits was $5.5 million as compared to the December 31, 2014 total of $6.0 million.

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10.  EARNINGS PER SHARE
Basic and diluted earnings per share are computed using the two-class method. There is no difference between the calculated earnings per share amounts attributable to Invesco Ltd. and the calculated earnings per share amounts under the two-class method.

The calculation of earnings per share is as follows:
 
For the three months ended March 31,
In millions, except per share data
2015
 
2014
Income from continuing operations, net of taxes

$284.0

 

$208.8

Net (income)/loss attributable to noncontrolling interests in consolidated entities
(24.4
)
 
(19.0
)
Income from continuing operations attributable to Invesco Ltd. for basic and diluted EPS calculations
259.6

 
189.8

Income/(loss) from discontinued operations, net of taxes
—

 
(2.0
)
Net income attributable to Invesco Ltd.
259.6

 
187.8

Less: Allocation of earnings to restricted shares
(6.7
)
 
(5.7
)
Net income attributable to common shareholders

$252.9

 

$182.1

 
 
 
 
Invesco Ltd:
 
 
 
Weighted average shares outstanding - basic
432.2

 
436.8

Dilutive effect of non-participating share-based awards
0.3

 
0.6

Weighted average shares outstanding - diluted
432.5

 
437.4

 
 
 
 
Common shareholders:
 
 
 
Weighted average shares outstanding - basic
432.2

 
436.8

Less: Weighted average restricted shares
(11.3
)
 
(13.3
)
Weighted average common shares outstanding - basic
420.9

 
423.5

Dilutive effect of non-participating share-based awards
0.3

 
0.6

Weighted average common shares outstanding - diluted
421.2

 
424.1

 
 
 
 
Basic earnings per share:
 
 
 
Earnings per share from continuing operations

$0.60

 

$0.43

Earnings per share from discontinued operations

$—

 

$—

Basic earnings per share

$0.60

 

$0.43

 
 
 
 
Diluted earnings per share:
 
 
 
Earnings per share from continuing operations

$0.60

 

$0.43

Earnings per share from discontinued operations

$—

 

$—

Diluted earnings per share

$0.60

 

$0.43

See Note 7, “Share-Based Compensation,” for a summary of share awards outstanding under the company's share-based compensation programs. These programs could result in the issuance of common shares from time-to-time that would affect the measurement of basic and diluted earnings per share.
There were no antidilutive options excluded from the computation of diluted earnings per share in the three months ended March 31, 2015 (three months ended March 31, 2014: none). Antidilutive options are those where the options' exercise prices are greater than the average market price of the shares.
There were no time-vested based awards that were excluded from the computation of diluted earnings per share during the three months ended March 31, 2015 and 2014, due to their inclusion being anti-dilutive. There were 0.6 million contingently issuable shares excluded from the diluted earnings per share computation during the three months ended March 31, 2015 (three months ended March 31, 2014: 0.5 million), because the necessary performance conditions for the shares to be issuable had not yet been satisfied at the end of the respective period.

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11.  COMMITMENTS AND CONTINGENCIES
Commitments and contingencies may arise in the ordinary course of business.
Off Balance Sheet Commitments
The company has transactions with various private equity, real estate and other investment entities sponsored by the company for the investment of client assets in the normal course of business. Many of the company's investment products are structured as limited partnerships. The company's investment may take the form of the general partner or a limited partner. The entities are structured such that each partner makes capital commitments that are to be drawn down over the life of the partnership as investment opportunities are identified. At March 31, 2015, the company's undrawn capital commitments were $152.2 million (December 31, 2014: $158.8 million).
The Parent and various company subsidiaries have entered into agreements with financial institutions to guarantee certain obligations of other company subsidiaries. The company would be required to perform under these guarantees in the event of certain defaults. The company has not had prior claims or losses pursuant to these contracts and expects the risk of loss to be remote.
Legal Contingencies
The company is from time to time involved in litigation relating to claims arising in the ordinary course of its business. The nature and progression of litigation can make it difficult to predict the impact a particular lawsuit will have on the company. There are many reasons that the company cannot make these assessments, including, among others, one or more of the following: the proceeding is in its early stages; the damages sought are unspecified, unsupportable, unexplained or uncertain; the claimant is seeking relief other than compensatory damages; the matter presents novel legal claims or other meaningful legal uncertainties; discovery has not started or is not complete; there are significant facts in dispute; and there are other parties who may share in any ultimate liability.
In management’s opinion, adequate accrual has been made as of March 31, 2015 to provide for any such losses that may arise from matters for which the company could reasonably estimate an amount. Management is of the opinion that the ultimate resolution of such claims will not materially affect the company’s business, financial position, results of operation or liquidity. Furthermore, in management’s opinion, it is not possible to estimate a range of reasonably possible losses with respect to other litigation contingencies.
The investment management industry also is subject to extensive levels of ongoing regulatory oversight and examination. In the United States, United Kingdom, and other jurisdictions in which the company operates, governmental authorities regularly make inquiries, hold investigations and administer market conduct examinations with respect to the company's compliance with applicable laws and regulations. Additional lawsuits or regulatory enforcement actions arising out of these inquiries may in the future be filed against the company and related entities and individuals in the United States, United Kingdom, and other jurisdictions in which the company and its affiliates operate. Any material loss of investor and/or client confidence as a result of such inquiries and/or litigation could result in a significant decline in assets under management, which would have an adverse effect on the company’s future financial results and its ability to grow its business.

12. CONSOLIDATED SPONSORED INVESTMENT PRODUCTS
The following table presents the balances related to CSIP that are included on the Condensed Consolidated Balance Sheets as well as Invesco's net interests in CSIP for each period presented.
$ in millions
March 31, 2015
 
December 31, 2014
Investments of CSIP
286.1

 
288.5

Cash and cash equivalents of CSIP
20.2

 
11.4

Accounts receivable and other assets of CSIP
7.9

 
5.9

Assets of CSIP
314.2

 
305.8

Other liabilities of CSIP
(8.0
)
 
(7.9
)
Equity attributable to redeemable noncontrolling interests
(167.6
)
 
(165.5
)
Equity attributable to nonredeemable noncontrolling interests
(13.2
)
 
(10.6
)
Invesco's net interests in CSIP
125.4

 
121.8

Invesco's net economic interests as a percentage of investments of CSIP
43.8
%
 
42.2
%

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The carrying value of investments held by CSIP is also their fair value. The following tables present the fair value hierarchy levels of investments held by CSIP, which are measured at fair value as of March 31, 2015, and December 31, 2014:
 
As of March 31, 2015
$ in millions
Fair
Value
Measurements
 
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Investments:
 
 
 
 
 
 
 
Fixed income securities
198.0

 
—

 
198.0

 
—

Equity securities
1.2

 
1.2

 
—

 
—

Investments in fixed income funds*
48.9

 
48.9

 
—

 
—

Investments in other private equity funds*
38.0

 
—

 
—

 
38.0

Total investments at fair value
286.1

 
50.1

 
198.0

 
38.0

 
As of December 31, 2014
$ in millions
Fair
Value
Measurements
 
Quoted Prices
in Active Markets
for Identical Assets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level2)
 
Significant
Unobservable
Inputs
(Level 3)
Investments:
 
 
 
 
 
 
 
Fixed income securities
200.3

 
—

 
200.3

 
—

Investments in fixed income funds*
58.0

 
58.0

 
—

 
—

Investments in other private equity funds*