IVZ.10Q.2Q.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 June 30, 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 June 30, 2015, the most recent practicable date, the number of Common Shares outstanding was 428,719,156.

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
 


2

Table of Contents    
    

                                    

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

 
As of
$ in millions, except per share data
June 30, 2015
 
December 31, 2014
ASSETS
 
 
 
Cash and cash equivalents
1,465.7

 
1,514.2

Unsettled fund receivables
1,119.2

 
732.4

Accounts receivable
527.6

 
545.9

Investments
959.5

 
885.4

Assets of consolidated sponsored investment products (CSIP)
321.5

 
305.8

Assets of consolidated investment products (CIP):
 
 
 
Cash and cash equivalents of CIP
314.8

 
404.0

Accounts receivable and other assets of CIP
109.5

 
161.3

Investments of CIP
6,185.1

 
5,762.8

Assets held for policyholders
3,458.6

 
1,697.9

Prepaid assets
133.7

 
132.1

Other assets
83.2

 
92.0

Property, equipment and software, net
410.3

 
402.6

Intangible assets, net
1,360.5

 
1,246.7

Goodwill
6,449.1

 
6,579.4

Total assets
22,898.3

 
20,462.5

LIABILITIES
 
 
 
Accrued compensation and benefits
474.8

 
667.3

Accounts payable and accrued expenses
881.3

 
757.3

Liabilities of CIP:
 
 
 
Debt of CIP
5,432.1

 
5,149.6

Other liabilities of CIP
326.8

 
280.9

Policyholder payables
3,458.6

 
1,697.9

Unsettled fund payables
1,106.0

 
730.1

Long-term debt
1,597.5

 
1,589.3

Deferred tax liabilities, net
367.0

 
304.8

Total liabilities
13,644.1

 
11,177.2

Commitments and contingencies (See Note 11)


 


TEMPORARY EQUITY
 
 
 
Redeemable noncontrolling interests in CSIP
169.1

 
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 June 30, 2015 and December 31, 2014)
98.1

 
98.1

Additional paid-in-capital
6,131.0

 
6,133.6

Treasury shares
(2,024.3
)
 
(1,898.1
)
Retained earnings
4,218.3

 
3,926.0

Retained earnings appropriated for investors in CIP
—

 
17.6

Accumulated other comprehensive income/(loss), net of tax
(94.8
)
 
48.8

Total equity attributable to Invesco Ltd.
8,328.3

 
8,326.0

Equity attributable to nonredeemable noncontrolling interests in consolidated entities
756.8

 
793.8

Total permanent equity
9,085.1

 
9,119.8

Total liabilities, temporary and permanent equity
22,898.3

 
20,462.5

See accompanying notes.

3

Table of Contents    
    

                                    

Invesco Ltd.
Condensed Consolidated Statements of Income
(Unaudited)

 
Three months ended June 30,
 
Six months ended June 30,
$ in millions, except per share data
2015
 
2014
 
2015
 
2014
Operating revenues:
 
 
 
 
 
 
 
Investment management fees
1,055.7

 
1,031.9

 
2,057.1

 
1,997.3

Service and distribution fees
219.6

 
214.7

 
433.0

 
453.3

Performance fees
6.7

 
5.0

 
53.5

 
36.1

Other
36.1

 
38.3

 
66.1

 
72.7

Total operating revenues
1,318.1

 
1,289.9

 
2,609.7

 
2,559.4

Operating expenses:
 
 
 
 
 
 
 
Employee compensation
347.2

 
342.9

 
708.1

 
705.0

Third-party distribution, service and advisory
413.3

 
410.6

 
812.4

 
816.0

Marketing
29.7

 
30.2

 
56.4

 
53.6

Property, office and technology
74.8

 
75.3

 
151.7

 
188.0

General and administrative
89.1

 
76.1

 
179.0

 
197.7

Total operating expenses
954.1

 
935.1

 
1,907.6

 
1,960.3

Operating income
364.0

 
354.8

 
702.1

 
599.1

Other income/(expense):
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
12.0

 
5.5

 
23.8

 
15.5

Interest and dividend income
2.6

 
3.1

 
5.1

 
6.0

Interest expense
(19.6
)
 
(18.2
)
 
(38.3
)
 
(36.9
)
Other gains and losses, net
(8.8
)
 
16.2

 
(6.1
)
 
22.8

Other income/(expense) of CSIP, net
5.1

 
7.7

 
14.5

 
15.9

CIP:
 
 
 
 
 
 
 
Interest and dividend income of CIP
65.1

 
48.0

 
125.3

 
96.3

Interest expense of CIP
(47.3
)
 
(30.3
)
 
(92.4
)
 
(60.6
)
Other gains/(losses) of CIP, net
(19.7
)
 
36.8

 
4.7

 
63.3

Income from continuing operations before income taxes
353.4

 
423.6

 
738.7

 
721.4

Income tax provision
(109.4
)
 
(107.0
)
 
(210.7
)
 
(196.0
)
Income from continuing operations, net of taxes
244.0

 
316.6

 
528.0

 
525.4

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

 
0.2

 
—

 
(1.8
)
Net income
244.0

 
316.8

 
528.0

 
523.6

Net (income)/loss attributable to noncontrolling interests in consolidated entities
13.3

 
(42.3
)
 
(11.1
)
 
(61.3
)
Net income attributable to Invesco Ltd.
257.3

 
274.5

 
516.9

 
462.3

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

$0.60

 

$0.63

 

$1.20

 

$1.06

Earnings per share from discontinued operations

$—

 

$—

 

$—

 

$—

Basic earnings per share

$0.60

 

$0.63

 

$1.20

 

$1.06

Diluted:
 
 
 
 
 
 
 
Earnings per share from continuing operations

$0.60

 

$0.63

 

$1.20

 

$1.06

Earnings per share from discontinued operations

$—

 

$—

 

$—

 

$—

Diluted earnings per share

$0.60

 

$0.63

 

$1.20

 

$1.06

Dividends declared per share

$0.2700

 

$0.2500

 

$0.5200

 

$0.4750


See accompanying notes.


4

Table of Contents    
    

                                    

Invesco Ltd.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three months ended June 30,
 
Six months ended June 30,
$ in millions
2015
 
2014
 
2015
 
2014
Net income
244.0

 
316.8

 
528.0

 
523.6

Other comprehensive income/(loss), net of tax:
 
 
 
 
 
 
 
Currency translation differences on investments in foreign subsidiaries, net of tax
162.6

 
130.5

 
(140.3
)
 
77.3

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

 
(1.8
)
 
—

 
(2.1
)
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax
(1.2
)
 
(0.3
)
 
(3.0
)
 
(0.7
)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax
0.6

 
0.5

 
1.1

 
1.0

Share of other comprehensive income/(loss) of equity method investments, net of tax
0.2

 
3.2

 
1.3

 
7.2

Unrealized (losses)/gains on available-for-sale investments, net of tax
(3.0
)
 
8.8

 
(1.8
)
 
13.2

Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax
(0.4
)
 
(10.8
)
 
(0.9
)
 
(14.2
)
Other comprehensive income/(loss), net of tax
158.8

 
130.1

 
(143.6
)
 
81.7

Total comprehensive income/(loss)
402.8

 
446.9

 
384.4

 
605.3

Comprehensive loss/(income) attributable to noncontrolling interests in consolidated entities
13.3

 
(42.4
)
 
(11.1
)
 
(61.0
)
Comprehensive income/(loss) attributable to Invesco Ltd.
416.1

 
404.5

 
373.3

 
544.3

See accompanying notes.



5

Table of Contents    
    

                                    

Invesco Ltd.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Six months ended June 30,
$ in millions
2015
 
2014
Operating activities:
 
 
 
Net income
528.0

 
523.6

Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
 
 
 
Amortization and depreciation
46.0

 
45.8

Share-based compensation expense
76.7

 
70.0

Other (gains)/losses, net
6.1

 
(22.8
)
Other (gains)/losses of CSIP, net
(8.2
)
 
(11.5
)
Other (gains)/losses of CIP, net
(4.7
)
 
(63.3
)
Equity in earnings of unconsolidated affiliates
(23.8
)
 
(15.5
)
Dividends from unconsolidated affiliates
1.4

 
15.4

Changes in operating assets and liabilities:
 
 
 
(Increase)/decrease in cash held by CIP
88.3

 
260.1

(Increase)/decrease in cash held by CSIP
(4.9
)
 
(1.0
)
(Purchase)/sale of trading investments, net
(55.1
)
 
(10.4
)
(Increase)/decrease in receivables
(2,049.9
)
 
(402.7
)
Increase/(decrease) in payables
1,858.6

 
162.6

Net cash provided by/(used in) operating activities
458.5

 
550.3

Investing activities:
 
 
 
Purchase of property, equipment and software
(50.4
)
 
(49.8
)
Purchase of available-for-sale investments
(35.6
)
 
(112.5
)
Sale of available-for-sale investments
18.0

 
75.1

Purchase of investments by CIP
(1,927.1
)
 
(2,848.8
)
Sale of investments by CIP
1,591.1

 
2,108.5

Purchase of investments by CSIP
(273.2
)
 
(476.1
)
Sale of investments by CSIP
274.7

 
274.3

Purchase of other investments
(89.4
)
 
(67.5
)
Sale of other investments
59.7

 
40.3

Returns of capital and distributions from unconsolidated partnership investments
34.4

 
25.9

Sale of business
—

 
60.8

Net cash provided by/(used in) investing activities
(397.8
)
 
(969.8
)
Financing activities:
 
 
 
Proceeds from exercises of share options
1.2

 
5.2

Purchases of treasury shares
(158.1
)
 
(169.6
)
Dividends paid
(224.6
)
 
(207.1
)
Excess tax benefits from share-based compensation
18.3

 
17.6

Repayment of unsettled fund account
—

 
(35.7
)
Third-party capital invested into CIP
17.9

 
155.8

Third-party capital distributed by CIP
(64.1
)
 
(68.0
)
Third-party capital invested into CSIP
1.7

 
152.5

Third-party capital distributed by CSIP
—

 
(1.4
)
Borrowings of debt by CIP
945.9

 
715.0

Repayments of debt by CIP
(650.1
)
 
(295.5
)
Net borrowings/(repayments) under credit facility
7.9

 
—

Net cash provided by/(used in) financing activities
(104.0
)
 
268.8

Increase/(decrease) in cash and cash equivalents
(43.3
)
 
(150.7
)
Foreign exchange movement on cash and cash equivalents
(5.2
)
 
15.5

Cash and cash equivalents, beginning of period
1,514.2

 
1,331.2

Cash and cash equivalents, end of period
1,465.7

 
1,196.0

Supplemental Cash Flow Information:
 
 
 
Interest paid
(33.8
)
 
(23.6
)
Interest received
4.4

 
3.2

Taxes paid
(140.1
)
 
(155.1
)
See accompanying notes.

6

Table of Contents    
    

                                    

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
—

 
—

 
—

 
516.9

 
—

 
—

 
516.9

 
7.5

 
524.4

 
3.6

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

 
—

 
—

 
—

 
—

 
(143.6
)
 
(143.6
)
 
—

 
(143.6
)
 
—

Change in noncontrolling interests in consolidated entities, net
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(44.5
)
 
(44.5
)
 
—

Dividends
—

 
—

 
—

 
(224.6
)
 
—

 
—

 
(224.6
)
 
—

 
(224.6
)
 
—

Employee share plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
76.7

 
—

 
—

 
—

 
—

 
76.7

 
—

 
76.7

 
—

Vested shares
—

 
(97.5
)
 
97.5

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Exercise of options
—

 
(0.1
)
 
1.3

 
—

 
—

 
—

 
1.2

 
—

 
1.2

 
—

Settlement of ESPP purchases
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Tax impact of share-based payment
—

 
18.3

 
—

 
—

 
—

 
—

 
18.3

 
—

 
18.3

 
—

Purchase of shares
—

 
—

 
(225.0
)
 
—

 
—

 
—

 
(225.0
)
 
—

 
(225.0
)
 
—

June 30, 2015
98.1

 
6,131.0

 
(2,024.3
)
 
4,218.3

 
—

 
(94.8
)
 
8,328.3

 
756.8

 
9,085.1

 
169.1


See accompanying notes.

7

Table of Contents    
    

                                    

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
—

 
—

 
—

 
462.3

 
—

 
—

 
462.3

 
56.3

 
518.6

5.0

Other comprehensive income/(loss)
—

 
—

 
—

 
—

 
—

 
82.0

 
82.0

 
(0.3
)
 
81.7

—

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

 
—

 
—

 
—

 
(40.0
)
 
—

 
(40.0
)
 
40.0

 
—

—

Deconsolidation of CIP
—

 
—

 
—

 
—

 
(1.0
)
 
—

 
(1.0
)
 
—

 
(1.0
)
—

Change in noncontrolling interests in consolidated entities, net
—

 
—

 
—

 
—

 
—

 
—

 
—

 
92.5

 
92.5

150.0

Dividends
—

 
—

 
—

 
(207.1
)
 
—

 
—

 
(207.1
)
 
—

 
(207.1
)
—

Employee share plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
—

 
70.0

 
—

 
—

 
—

 
—

 
70.0

 
—

 
70.0

—

Vested shares
—

 
(115.7
)
 
115.7

 
—

 
—

 
—

 
—

 
—

 
—

—

Exercise of options
—

 
(3.9
)
 
9.1

 
—

 
—

 
—

 
5.2

 
—

 
5.2

—

Tax impact of share-based payment
—

 
17.6

 
—

 
—

 
—

 
—

 
17.6

 
—

 
17.6

—

Purchase of shares
—

 
—

 
(231.9
)
 
—

 
—

 
—

 
(231.9
)
 
—

 
(231.9
)
—

June 30, 2014
98.1

 
6,068.8

 
(1,807.5
)
 
3,617.1

 
63.3

 
509.9

 
8,549.7

 
773.2

 
9,322.9

155.0


See accompanying notes.


8

Table of Contents    
    

                                    

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 was originally effective for fiscal years and interim periods within those years beginning after December 15, 2016. In July 2015, the FASB voted to defer ASU 2014-09 by one year making it effective for fiscal years and interim periods within those years beginning after December 15, 2017. Early adoption is permitted as of the original effective date and requires either a retrospective or a modified retrospective approach to adoption. 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

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

In May 2015, the FASB issued Accounting Standards Update 2015-07, "Fair Value Measurement - Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)" (ASU 2015-07). ASU 2015-07 removes the requirement to categorize investments within the fair value hierarchy for which fair value is measured using the net asset value practical expedient. ASU 2015-07 is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2015, and requires retrospective application for each prior period presented. Early adoption is permitted. While the company is still evaluating the impact of ASU 2015-07, adoption will not impact the company's financial condition, results of operations or cash flows, as the update relates to financial statement disclosures.



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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.
 
 
 
June 30, 2015
 
December 31, 2014
$ in millions
Footnote Reference
 
Carrying Value
 
Fair Value
 
Carrying Value
 
Fair Value
Cash and cash equivalents
 
 
1,465.7

 
1,465.7

 
1,514.2

 
1,514.2

Available-for-sale investments
3
 
270.2

 
270.2

 
255.9

 
255.9

Trading investments
3
 
316.6

 
316.6

 
263.2

 
263.2

Foreign time deposits *
3
 
29.0

 
29.0

 
29.6

 
29.6

Assets held for policyholders
 
 
3,458.6

 
3,458.6

 
1,697.9

 
1,697.9

Policyholder payables *
 
 
(3,458.6
)
 
(3,458.6
)
 
(1,697.9
)
 
(1,697.9
)
Put option contracts

 
1.4

 
1.4

 
—

 
—

UIT-related financial instruments sold, not yet purchased
 
 
(1.4
)
 
(1.4
)
 
(1.4
)
 
(1.4
)
Contingent consideration liability
 
 
(117.8
)
 
(117.8
)
 
—

 
—

Long-term debt *
4
 
(1,597.5
)
 
(1,642.4
)
 
(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.






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Available-for-sale investments
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 June 30, 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
•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
These securities are valued under the market approach through the use of quoted prices in an active market. 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 equities, UITs, and municipal 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 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.

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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 $2.4 million and $9.2 million in the three and six months ended June 30, 2015, respectively). These were the only contracts entered into during the period to hedge economically foreign currency risk and provide coverage through March 31, 2016. 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 losses of $8.4 million and $7.8 million in the three and six months ended June 30, 2015, respectively (three and six months ended June 30, 2014: none) related to the change in market value of these put option contracts.
Assets held for policyholders
Assets held for policyholders 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 June 30, 2015 there were 23 futures contracts with a notional value of $3.2 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.
Contingent Consideration Liability
During the six months ended June 30, 2015, the company acquired certain investment management contracts from a third party.  Indefinite-lived intangible assets were valued at $119.3 million. This transaction was a non-cash investing activity during the period. The purchase price was comprised solely of contingent consideration payable in future periods, and is linked to future revenues generated from the contracts.  The contingent consideration liability was recorded at fair value as of the date of acquisition using a discounted cash flow model, and is categorized within level 3 of the valuation hierarchy. Anticipated future cash flows were determined using forecast AUM levels and discounted back to the valuation date using a discount rate of 3.4%. Assumed growth rates in AUM ranged from 0% to 5% (weighted average growth rate of 2.89%). The company reassesses significant unobservable inputs during each reporting period. Changes in fair value are recorded in Other gains and losses, net in the Condensed Consolidated Statements of Income in the period incurred. An increase in AUM levels and a decrease in the discount rate would increase the fair value of the contingent consideration liability while a decrease in forecasted AUM and an increase in the discount rate would decrease the liability.

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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 June 30, 2015:
 
As of June 30, 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
253.5

 
253.5

 
—

 
—

Investments:*
 
 
 
 
 
 
 
Available-for-sale:
 
 
 
 
 
 
 
Seed money
262.6

 
262.6

 
—

 
—

CLOs
1.3

 
—

 
—

 
1.3

Other debt securities
6.3

 
—

 
—

 
6.3

Trading investments:
 
 
 
 
 
 
 
Investments related to deferred compensation plans
176.3

 
176.3

 
—

 
—

Seed money
97.1

 
97.1

 
—

 
—

Other equity securities
36.2

 
36.2

 
—

 
—

UIT-related equity and debt securities:
 
 
 
 
 
 
 
Corporate equities
1.4

 
1.4

 
—

 
—

Corporate bonds
0.5

 
—

 
0.5

 
—

UITs
2.4

 
2.4

 
—

 
—

Municipal securities
2.7

 
—

 
2.7

 
—

Assets held for policyholders
3,458.6

 
3,458.6

 
—

 
—

Put option contracts
1.4

 
—

 
1.4

 
—

Total
4,300.3

 
4,288.1

 
4.6

 
7.6

Liabilities:
 
 
 
 
 
 
 
UIT-related financial instruments sold, not yet purchased:
 
 
 
 
 
 
 
Corporate equities
(1.3
)
 
(1.3
)
 
—

 
—

     UITs
(0.1
)
 
(0.1
)
 
—

 
—

Contingent consideration liability
(117.8
)
 
—

 
—

 
(117.8
)
Total
(119.2
)
 
(1.4
)
 
—

 
(117.8
)
____________
*
Foreign time deposits of $29.0 million are excluded from this table. Equity method and other investments of $335.1 million and $8.6 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 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 and six months ended June 30, 2015 and June 30, 2014, which are valued using significant unobservable inputs:
 
Three months ended June 30, 2015
 
Six months ended June 30, 2015
$ in millions
Contingent Consideration Liability
 
CLOs
 
Other Debt Securities
 
Contingent Consideration Liability
 
CLOs
 
Other Debt Securities
Beginning balance
(119.3
)
 
2.5

 
6.3

 
—

 
3.4

 
6.3

Acquisition
—

 
—

 
—

 
(119.3
)
 
—

 
—

Returns of capital
—

 
—

 
—

 
—

 
(0.1
)
 
—

Net unrealized gains and losses included in other gains and losses
—

 
—

 
—

 
—

 
—

 
—

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

 
—

 
—

 
—

 
—

 
—

Disposition/settlements
1.5

 
(1.2
)
 
—

 
1.5

 
(2.0
)
 
—

Ending balance
(117.8
)
 
1.3

 
6.3

 
(117.8
)
 
1.3

 
6.3


 
Three months ended June 30, 2014
 
Six months ended June 30, 2014
$ in millions
CLOs
 
Other Debt Securities
 
CLOs
 
Other Debt Securities
Beginning balance
4.3

 
6.3

 
4.0

 
6.3

Returns of capital
—

 
—

 
(0.2
)
 
—

Net unrealized gains and losses included in accumulated other comprehensive income/(loss)*
(0.2
)
 
—

 
0.3

 
—

Ending balance
4.1

 
6.3

 
4.1

 
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
June 30, 2015
 
December 31, 2014
Available-for-sale investments:
 
 
 
Seed money
262.6

 
246.2

CLOs
1.3

 
3.4

Other debt securities
6.3

 
6.3

Trading investments:
 
 
 
Investments related to deferred compensation plans
176.3

 
162.6

Seed money
97.1

 
68.2

Other equity securities
36.2

 
29.0

     UIT-related equity and debt securities
7.0

 
3.4

Equity method investments
335.1

 
332.1

Foreign time deposits
29.0

 
29.6

Other
8.6

 
4.6

Total investments
959.5

 
885.4


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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 June 30, 2015
 
For the six months ended June 30, 2015
$ in millions
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
 
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
Seed money
6.8

 
0.4

 
—

 
15.7

 
1.0

 
—

CLOs
1.4

 
0.1

 
—

 
2.3

 
0.2

 
—

 
For the three months ended June 30, 2014
 
For the six months ended June 30, 2014
$ in millions
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
 
Proceeds from Sales
 
Gross Realized Gains
 
Gross Realized Losses
Seed money
64.7

 
8.2

 
(0.1
)
 
74.9

 
11.0

 
(0.2
)
CLOs
—

 
—

 
—

 
0.2

 
—

 
—

Upon the sale of available-for-sale securities, net realized gains of $0.5 million and $1.2 million were transferred from accumulated other comprehensive income into the Condensed Consolidated Statements of Income during the three and six months ended June 30, 2015, respectively (three and six months ended June 30, 2014: $8.1 million and $10.8 million, respectively). The specific identification method is used to determine the realized gain or loss on securities sold or otherwise disposed.
Gross unrealized holding gains and losses recognized in other accumulated comprehensive income from available-for-sale investments are presented in the table below:
 
June 30, 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
258.6

 
10.0

 
(6.0
)
 
262.6

 
237.7

 
12.8

 
(4.3
)
 
246.2

CLOs
1.3

 
—

 
—

 
1.3

 
3.5

 
—

 
(0.1
)
 
3.4

Other debt securities
6.3

 
—

 
—

 
6.3

 
6.3

 
—

 
—

 
6.3

 
266.2

 
10.0

 
(6.0
)
 
270.2

 
247.5

 
12.8

 
(4.4
)
 
255.9

At June 30, 2015, 151 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.
 
June 30, 2015
 
December 31, 2014
$ in millions
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
Less than 12 months
119.8

 
(4.7
)
 
123.9

 
(3.5
)
12 months or greater
4.3

 
(1.3
)
 
3.6

 
(0.8
)
Total
124.1

 
(6.0
)
 
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 six months ended June 30, 2015 (six months ended June 30, 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 six months ended June 30, 2015 and 2014, there were no charges to other comprehensive income from other-than-temporary impairment related to non-credit related factors.
At June 30, 2015, $1.8 million available-for-sale debt securities mature in one year through five years, and $5.8 million after five years through ten years.

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Trading investments
The portion of trading gains and losses for the three and six months ended June 30, 2015, that relates to trading securities still held at June 30, 2015, was a $2.1 million net loss and $1.9 million net loss, respectively (three and six months ended June 30, 2014: $7.9 million net gain and $5.1 million net gain, respectively).
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.”
 
June 30, 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

 
591.4

 
599.6

 
596.8

$600 million 4.000% - due January 30, 2024
596.4

 
610.5

 
596.2

 
625.9

$400 million 5.375% - due November 30, 2043
393.6

 
432.6

 
393.5

 
473.1

  Floating rate credit facility expiring December 17, 2018
7.9

 
7.9

 
—

 
—

Long-term debt
1,597.5

 
1,642.4

 
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.
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 the Parent 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 June 30, 2015, the company's outstanding senior notes of $1,589.6 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 June 30, 2015, the outstanding balance on the $1.25 billion credit facility was $7.9 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 June 30, 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 June 30, 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

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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 $33.4 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:
 
As of
In millions
June 30, 2015
 
December 31, 2014
Common shares issued
490.4

 
490.4

Less: Treasury shares for which dividend and voting rights do not apply
(61.7
)
 
(60.5
)
Common shares outstanding
428.7

 
429.9

Total treasury shares at June 30, 2015 were 70.5 million (December 31, 2014: 69.4 million), including 8.8 million unvested restricted stock awards (December 31, 2014: 8.9 million) for which dividend and voting rights apply. The market price of common shares at June 30, 2015 was $37.49. The total market value of the company's 70.5 million treasury shares was $2.6 billion at June 30, 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 June 30, 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
162.6

 
—

 
—

 
—

 
162.6

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

 
(1.2
)
 
—

 
—

 
(1.2
)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax
—

 
0.6

 
—

 
—

 
0.6

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

 
—

 
0.2

 
—

 
0.2

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

 
—

 
—

 
(3.0
)
 
(3.0
)
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax
—

 
—

 
—

 
(0.4
)
 
(0.4
)
Other comprehensive income/(loss), net of tax
162.6

 
(0.6
)
 
0.2

 
(3.4
)
 
158.8

 
 
 
 
 
 
 
 
 
 
Beginning balance
(174.8
)
 
(93.0
)
 
7.6

 
6.6

 
(253.6
)
Other comprehensive income/(loss), net of tax
162.6

 
(0.6
)
 
0.2

 
(3.4
)
 
158.8

Ending balance
(12.2
)
 
(93.6
)
 
7.8

 
3.2

 
(94.8
)

 
For the six months ended June 30, 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
(140.3
)
 
—

 
—

 
—

 
(140.3
)
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax
—

 
(3.0
)
 
—

 
—

 
(3.0
)
Reclassification of actuarial (gain)/loss into employee compensation expense, net of tax
—

 
1.1

 
—

 
—

 
1.1

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

 
—

 
1.3

 
—

 
1.3

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

 
—

 
—

 
(1.8
)
 
(1.8
)
Reclassification of net (gains)/losses realized on available-for-sale investments included in other gains and losses, net, net of tax
—

 
—

 
—

 
(0.9
)
 
(0.9
)
Other comprehensive income/(loss), net of tax
(140.3
)
 
(1.9
)
 
1.3

 
(2.7
)
 
(143.6
)
 
 
 
 
 
 
 
 
 
 
Beginning balance
128.1

 
(91.7
)
 
6.5

 
5.9

 
48.8

Other comprehensive income/(loss), net of tax
(140.3
)
 
(1.9
)
 
1.3

 
(2.7
)
 
(143.6
)
Ending balance
(12.2
)
 
(93.6
)
 
7.8

 
3.2

 
(94.8
)




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For the three months ended June 30, 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
130.5

 
—

 
—

 
—

 
130.5

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

 
(1.8
)
 
—

 
—

 
(1.8
)
Reclassification of prior service cost/(credit) into employee compensation expense, net of tax
—

 
(0.3
)
 
—

 
—

 
(0.3
)
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
—

 
—

 
3.2

 
—

 
3.2

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

 
—

 
—

 
8.8

 
8.8

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

 
—

 
—

 
(10.8
)
 
(10.8