QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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(State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
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(Address of principal executive offices) |
(Zip Code) |
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
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The |
Page Number |
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31 |
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46 |
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48 |
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• | the COVID-19 pandemic; |
• | anticipated trends, conditions and investor sentiment in the global markets and exchange traded products, or ETPs; |
• | anticipated levels of inflows into and outflows out of our ETPs; |
• | our ability to deliver favorable rates of return to investors; |
• | competition in our business; |
• | our ability to develop new products and services; |
• | our ability to maintain current vendors or find new vendors to provide services to us at favorable costs; |
• | our ability to successfully operate and expand our business in non-U.S. markets; and |
• | the effect of laws and regulations that apply to our business. |
ITEM 1. |
FINANCIAL STATEMENTS |
March 31, 2020 |
December 31, 2019 |
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(unaudited) |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ | |
$ | |
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Securities owned, at fair value (including $ |
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Accounts receivable (including $ and December 31, 2019, respectively) |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Fixed assets, net |
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Notes receivable, net (Note 8) |
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Indemnification receivable (Note 21) |
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Securities held-to-maturity |
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Deferred tax assets, net |
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Investments (Note 9) |
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Right of use assets – operating leases (Note 14) |
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Goodwill (Note 23) |
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Intangible assets (Note 23) |
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Other noncurrent assets |
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Total assets |
$ | |
$ | |
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Liabilities and stockholders’ equity |
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Liabilities |
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Current liabilities: |
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Fund management and administration payable |
$ | |
$ | |
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Compensation and benefits payable |
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Deferred consideration – gold payments (Note 11) |
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Securities sold, but not yet purchased, at fair value |
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Operating lease liabilities (Note 14) |
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Income taxes payable |
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Accounts payable and other liabilities |
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Total current liabilities |
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Debt (Note 12) |
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Deferred consideration – gold payments (Note 11) |
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Operating lease liabilities (Note 14) |
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Other noncurrent liabilities (Note 21) |
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Total liabilities |
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Preferred stock – Series A Non-Voting Convertible, par value $; redemption value of $ |
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Contingencies (Note 15) |
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Stockholders’ equity |
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Preferred stock, par value $ |
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Common stock, par value $ |
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Additional paid-in capital |
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Accumulated other comprehensive income |
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Accumulated deficit |
( |
) | ( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ | |
$ | |
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Three Months Ended March 31, |
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2020 |
2019 |
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Operating Revenues: |
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Advisory fees |
$ | |
$ | |
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Other income |
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Total revenues |
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Operating Expenses: |
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Compensation and benefits |
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Fund management and administration |
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Marketing and advertising |
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Sales and business development |
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Contractual gold payments (Note 11) |
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Professional and consulting fees |
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Occupancy, communications and equipment |
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Depreciation and amortization |
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Third-party distribution fees |
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Acquisition and disposition-related costs |
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Other |
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Total expenses |
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Operating income |
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Other Income/(Expenses): |
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Interest expense |
( |
) | ( |
) | ||||
(Loss)/gain on revaluation of deferred consideration – gold payments (Note 11) |
( |
) | |
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Interest income |
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Impairments (Notes 7 and 24) |
( |
) | ( |
) | ||||
Other losses, net |
( |
) | ( |
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(Loss)/income before income taxes |
( |
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Income tax benefit |
( |
) | ( |
) | ||||
Net (loss)/income |
$ | ( |
) | $ | |
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(Loss)/earnings per share – basic (Note 20) |
$ | ( |
) | $ | |
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(Loss)/earnings per share – diluted (Note 20) |
$ | ( |
) | $ | |
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Weighted-average common shares – basic (Note 20) |
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Weighted-average common shares – diluted (Note 20) |
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Cash dividends declared per common share |
$ | |
$ | |
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Three Months Ended March 31, |
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2020 |
2019 |
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Net (loss)/income |
$ | ( |
) | $ | |
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Other comprehensive (loss)/income |
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Reclassification of foreign current translation adjustment to other losses, net, upon the sale of WisdomTree Asset Management Canada, Inc. (“WTAMC” or “Canadian ETF business”) (Note 24) |
( |
) | — |
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Foreign currency translation adjustment |
( |
) | |
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Other comprehensive (loss)/income |
( |
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Comprehensive (loss)/income |
$ | ( |
) | $ | |
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For the Three Months Ended March 31, 2020 |
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Common Stock |
Additional Paid-In Capital |
Accumulated Other |
Accumulated Deficit |
Total |
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Shares Issued |
Par Value |
Comprehensive Income |
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Balance |
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$ | |
$ | |
$ | |
$ | ( |
) | $ | |
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Restricted stock issued and vesting of restricted stock units, net |
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( |
) | — |
— |
— |
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Shares repurchased |
( |
) | ( |
) | ( |
) | — |
— |
( |
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Exercise of stock options, net |
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— |
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— |
— |
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Stock-based compensation |
— |
— |
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— |
— |
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Other comprehensive loss |
— |
— |
— |
( |
) | — |
( |
) | ||||||||||||||||
Dividends |
— |
— |
( |
) | — |
— |
( |
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Net loss |
— |
— |
— |
— |
( |
) | ( |
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Balance |
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$ | |
$ | |
$ | |
$ | ( |
) | $ | |
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For the Three Months Ended March 31, 2019 |
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Common Stock |
Additional Paid-In Capital |
Accumulated Other |
Accumulated Deficit |
Total |
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Shares Issued |
Par Value |
Comprehensive Income |
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Balance |
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$ | |
$ | |
$ | |
$ | ( |
) | $ | |
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Restricted stock issued and vesting of restricted stock units, net |
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( |
) | — |
— |
— |
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Shares repurchased |
( |
) | ( |
) | ( |
) | — |
— |
( |
) | ||||||||||||||
Exercise of stock options, net |
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— |
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— |
— |
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Stock-based compensation |
— |
— |
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— |
— |
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Other comprehensive income |
— |
— |
— |
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— |
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Dividends |
— |
— |
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— |
( |
) | ( |
) | ||||||||||||||||
Net income |
— |
— |
— |
— |
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Balance |
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$ | |
$ | |
$ | |
$ | ( |
) | $ | |
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Three Months Ended March 31, |
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2020 |
2019 |
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Cash flows from operating activities: |
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Net (loss)/income |
$ | ( |
) | $ | |
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Adjustments to reconcile net (loss)/ income to net cash (used in)/provided by operating activities: |
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Impairments |
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Advisory fees received in gold and other precious metals |
( |
) | ( |
) | ||||
Deferred income taxes |
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Contractual gold payments |
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Stock-based compensation |
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Gain on sale – Canadian ETF business |
( |
) | |
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(Loss)/gain on revaluation of deferred consideration |
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( |
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Amortization of right of use asset |
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Amortization of credit facility issuance costs |
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Paid-in-kind interest income |
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( |
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Depreciation and amortization |
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Other |
( |
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Changes in operating assets and liabilities: |
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Securities owned, at fair value |
( |
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Accounts receivable |
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( |
) | |||||
Income taxes payable |
( |
) | ( |
) | ||||
Prepaid expenses |
( |
) | |
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Gold and other precious metals |
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Other assets |
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Fund management and administration payable |
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Compensation and benefits payable |
( |
) | ( |
) | ||||
Securities sold, but not yet purchased, at fair value |
( |
) | ( |
) | ||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Accounts payable and other liabilities |
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Net cash (used in)/provided by operating activities |
( |
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Cash flows from investing activities: |
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Purchase of fixed assets |
( |
) | ( |
) | ||||
Proceeds from held-to-maturity securities maturing or called prior to maturity |
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Proceeds from sale of Canadian ETF business, net |
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Net cash provided by investing activities |
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Cash flows from financing activities: |
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Dividends paid |
( |
) | ( |
) | ||||
Repayment of debt |
( |
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Shares repurchased |
( |
) | ( |
) | ||||
Proceeds from exercise of stock options |
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Net cash used in financing activities |
( |
) | ( |
) | ||||
(Decrease)/increase in cash flow due to changes in foreign exchange rate |
( |
) | |
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Net (decrease)/increase in cash and cash equivalents |
( |
) | |
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Cash and cash equivalents |
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Cash and cash equivalents |
$ | |
$ | |
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Supplemental disclosure of cash flow information: |
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Cash paid for taxes |
$ | |
$ | |
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Cash paid for interest |
$ | |
$ | |
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• | WisdomTree Asset Management, Inc. non-consolidated third party, is a Delaware statutory trust registered with the SEC as an open-end management investment company. The Company has licensed to WTT the use of certain of its own indexes on an exclusive basis for the WisdomTree ETFs in the U.S. |
• | WisdomTree Management Jersey Limited leveraged-and-inverse strategies. |
• | WisdomTree Multi Asset Management Limited non-consolidated third party, is a public limited company domiciled in Ireland. |
• | WisdomTree Management Limited non-consolidated third party, is a public limited company domiciled in Ireland. |
• | WisdomTree UK Limited |
• | WisdomTree Europe Limited |
• | WisdomTree Ireland Limited |
• | WisdomTree Commodity Services, LLC |
Equipment |
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Furniture and fixtures |
Level 1 |
– |
Quoted prices for identical instruments in active markets. | ||
Level 2 |
– |
Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. | ||
Level 3 |
– |
Instruments whose significant drivers are unobservable. |
March 31, 2020 |
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Total |
Level 1 |
Level 2 |
Level 3 |
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Assets: |
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Recurring fair value measurements: |
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Cash equivalents |
$ | $ | $ | — |
$ | — |
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Securities owned, at fair value |
— |
— |
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Total |
$ | $ | $ | — |
$ | — |
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Non-recurring fair value measurements: |
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AdvisorEngine , Inc. – Financial interests(1) |
$ | $ | — |
$ | — |
$ | ||||||||||
Total |
$ | $ | — |
$ | — |
$ | ||||||||||
Liabilities: |
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Recurring fair value measurements: |
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Deferred consideration (Note 11) |
$ | $ | — |
$ | — |
$ | ||||||||||
Securities sold, but not yet purchased |
— |
— |
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Total |
$ | $ | $ | — |
$ | |||||||||||
(1) | Fair value determined on March 31, 2020 (Note 7). |
December 31, 2019 |
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Total |
Level 1 |
Level 2 |
Level 3 |
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Assets: |
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Recurring fair value measurements: |
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Cash equivalents |
$ | $ | $ | — |
$ | — |
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Securities owned, at fair value |
— |
— |
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Total |
$ | $ | $ | — |
$ | — |
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Non-recurring fair value measurements: |
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AdvisorEngine , Inc. – Financial interests(2) |
$ | $ | — |
$ | — |
$ | ||||||||||
Total |
$ | $ | — |
$ | — |
$ | ||||||||||
Liabilities: |
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Recurring fair value measurements: |
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Deferred consideration (Note 11) |
$ | $ | — |
$ | — |
$ | ||||||||||
Securities sold, but not yet purchased |
— |
— |
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Total |
$ | $ | $ | — |
$ | |||||||||||
(2) | Fair value determined on December 31, 2019. |
Three Months Ended March 31, |
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2020 |
2019 |
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Deferred consideration (Note 11) |
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Beginning balance |
$ | $ | ||||||
Net realized losses (1) |
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Net unrealized losses/(gains) (2) |
( |
) | ||||||
Settlements |
( |
) | ( |
) | ||||
Ending balance |
$ | $ | ||||||
(1) | Recorded as contractual gold payments expense on the Company’s Consolidated Statements of Operations. |
(2) | Recorded as (loss)/gain on revaluation of deferred consideration – gold payments on the Company’s Consolidated Statements of Operations. |
March 31, 2020 |
December 31, 2019 |
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Securities Owned |
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Trading securities |
$ | $ | ||||||
Securities Sold, but not yet Purchased |
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Trading securities |
$ | $ | ||||||
March 31, 2020 |
December 31, 2019 |
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Debt instruments: Pass-through GSEs (amortized cost) |
$ | $ | ||||||
March 31, 2020 |
December 31, 2019 |
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Cost/amortized cost |
$ | $ | ||||||
Gross unrealized gains |
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Gross unrealized losses |
( |
) | ( |
) | ||||
Fair value |
$ | $ | ||||||
March 31, 2020 |
December 31, 2019 |
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Due within one year |
$ | — |