10-Q 1 apam-20220331.htm 10-Q apam-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2022
OR
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: 001-35826
Artisan Partners Asset Management Inc.
(Exact name of registrant as specified in its charter)
Delaware45-0969585
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
875 E. Wisconsin Avenue, Suite 800
Milwaukee,WI53202
(Address of principal executive offices)(Zip Code)
(414390-6100
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A common stock, par value $0.01 per shareAPAMNew York Stock Exchange

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 No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

The number of outstanding shares of the registrant’s Class A common stock, par value $0.01 per share, Class B common stock, par value $0.01 per share, and Class C common stock, par value $0.01 per share, as of April 26, 2022 were 67,398,678, 3,111,745 and 9,126,617, respectively.


TABLE OF CONTENTS
Page
Part IFinancial Information
Item 1.Unaudited Consolidated Financial Statements
Item 2.
Item 3.
Item 4.
Part IIOther Information
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Except where the context requires otherwise, in this report, references to the “Company”, “Artisan”, “we”, “us” or “our” refer to Artisan Partners Asset Management Inc. (“APAM”) and its direct and indirect subsidiaries, including Artisan Partners Holdings LP (“Artisan Partners Holdings” or “Holdings”). On March 12, 2013, APAM closed its initial public offering and related corporate reorganization. Prior to that date, APAM was a subsidiary of Artisan Partners Holdings.
Forward-Looking Statements
This report contains, and from time to time our management may make, forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements regarding future events and our future performance, as well as management’s current expectations, beliefs, plans, estimates, or projections relating to the future, are forward-looking statements within the meaning of these laws. In some cases, you can identify these statements by forward-looking words such as “may”, “might”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue”, the negative of these terms and other comparable terminology. Forward-looking statements are only predictions based on current expectations and projections about future events. Forward-looking statements are subject to a number of risks and uncertainties, and there are important factors that could cause actual results, level of activity, performance, actions or achievements to differ materially from the results, level of activity, performance, actions or achievements expressed or implied by the forward-looking statements. These factors include: the loss of key investment professionals or senior management, adverse market or economic conditions, poor performance of our investment strategies, change in the legislative and regulatory environment in which we operate, operational or technical errors or other damage to our reputation, the long-term impact of the COVID-19 pandemic and other factors disclosed in the Company’s filings with the Securities and Exchange Commission, including those factors listed under the caption entitled “Risk Factors” in Item 1A of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 22, 2022, as such factors may be updated from time to time. Our periodic and current reports are accessible on the SEC’s website at www.sec.gov. We undertake no obligation to publicly update any forward-looking statements in order to reflect events or circumstances that may arise after the date of this report, except as required by law.
i

Forward-looking statements include, but are not limited to, statements about:
our anticipated future results of operations;
our potential operating performance and efficiency, including our ability to operate under different and unique circumstances;
our expectations with respect to future business initiatives;
our expectations with respect to the performance of our investment strategies;
our expectations with respect to future levels of assets under management, including the capacity of our strategies and client cash inflows and outflows;
our expectations with respect to industry trends and how those trends may impact our business;
our financing plans, cash needs and liquidity position;
our intention to pay dividends and our expectations about the amount of those dividends;
our expected levels of compensation of our employees, including equity- and cash-based long-term incentive compensation;
our expectations with respect to future expenses and the level of future expenses;
our expected tax rate, and our expectations with respect to deferred tax assets; and
our estimates of future amounts payable pursuant to our tax receivable agreements.
ii


Part I — Financial Information
Item 1. Unaudited Consolidated Financial Statements

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Unaudited Condensed Consolidated Statements of Financial Condition
(U.S. dollars in thousands, except per share amounts)
March 31,
2022
December 31,
2021
ASSETS
Cash and cash equivalents$187,511 $189,226 
Accounts receivable122,494 115,850 
Investment securities105,675 47,878 
Property and equipment, net37,620 35,313 
Deferred tax assets490,244 497,902 
Restricted cash629 629 
Prepaid expenses and other assets17,143 20,282 
Operating lease assets101,004 88,642 
Assets of consolidated investment products
Cash and cash equivalents15,530 10,916 
Accounts receivable and other2,286 6,408 
Investment assets, at fair value177,090 195,001 
Total assets$1,257,226 $1,208,047 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS, AND STOCKHOLDERS’ EQUITY
Accounts payable, accrued expenses, and other$29,848 $28,992 
Accrued incentive compensation97,200 7,521 
Borrowings199,511 199,444 
Operating lease liabilities112,934 100,303 
Amounts payable under tax receivable agreements425,867 425,427 
Liabilities of consolidated investment products
Accounts payable, accrued expenses, and other11,545 20,185 
Investment liabilities, at fair value21,308 19,179 
Total liabilities898,213 801,051 
Commitments and contingencies
Redeemable noncontrolling interests107,139 111,035 
Common stock
Class A common stock ($0.01 par value per share, 500,000,000 shares authorized, 67,398,678 and 66,699,872 shares outstanding at March 31, 2022 and December 31, 2021, respectively)
674 667 
Class B common stock ($0.01 par value per share, 200,000,000 shares authorized, 3,111,745 and 3,206,580 shares outstanding at March 31, 2022 and December 31, 2021, respectively)
31 32 
Class C common stock ($0.01 par value per share, 400,000,000 shares authorized, 9,126,617 and 9,128,617 shares outstanding at March 31, 2022 and December 31, 2021, respectively)
91 91 
Additional paid-in capital146,002 141,835 
Retained earnings82,768 134,889 
Accumulated other comprehensive income (loss)(1,782)(1,310)
Total Artisan Partners Asset Management Inc. stockholders’ equity227,784 276,204 
Noncontrolling interests - Artisan Partners Holdings24,090 19,757 
Total stockholders’ equity$251,874 $295,961 
Total liabilities, redeemable noncontrolling interests, and stockholders’ equity$1,257,226 $1,208,047 

The accompanying notes are an integral part of the consolidated financial statements.
1


ARTISAN PARTNERS ASSET MANAGEMENT INC.
Unaudited Consolidated Statements of Operations
(U.S. dollars in thousands, except per share amounts)
For the Three Months Ended March 31,
20222021
Revenues
Management fees$281,406 $283,965 
Performance fees192 6,712 
Total revenues$281,598 $290,677 
Operating Expenses
Compensation and benefits139,932 139,465 
Distribution, servicing and marketing7,061 7,580 
Occupancy6,582 5,192 
Communication and technology11,758 9,856 
General and administrative9,274 6,775 
Total operating expenses174,607 168,868 
Total operating income106,991 121,809 
Non-operating income (expense)
Interest expense(2,686)(2,685)
Net gain (loss) on the tax receivable agreements482  
Net investment gain (loss) of consolidated investment products1,188 6,916 
Other net investment gain (loss)(4,752)196 
Total non-operating income (expense)(5,768)4,427 
Income before income taxes101,223 126,236 
Provision for income taxes18,786 21,618 
Net income before noncontrolling interests82,437 104,618 
Less: Net income attributable to noncontrolling interests - Artisan Partners Holdings15,615 23,641 
Less: Net income (loss) attributable to noncontrolling interests - consolidated investment products1,389 3,699 
Net income attributable to Artisan Partners Asset Management Inc.$65,433 $77,278 
Basic earnings per share$0.90 $1.19 
Diluted earnings per share$0.90 $1.19 
Basic weighted average number of common shares outstanding62,039,03858,758,284
Diluted weighted average number of common shares outstanding62,070,36058,773,269
Dividends declared per Class A common share$1.75 $1.28 

The accompanying notes are an integral part of the consolidated financial statements.
2


ARTISAN PARTNERS ASSET MANAGEMENT INC.
Unaudited Consolidated Statements of Comprehensive Income
(U.S. dollars in thousands)
For the Three Months Ended March 31,
20222021
Net income before noncontrolling interests$82,437 $104,618 
Other comprehensive income (loss)
Foreign currency translation gain (loss)(553)173 
Total other comprehensive income (loss)(553)173 
Comprehensive income81,884 104,791 
Comprehensive income attributable to noncontrolling interests - Artisan Partners Holdings
15,533 23,691 
Comprehensive income (loss) attributable to noncontrolling interests - consolidated investment products
1,389 3,699 
Comprehensive income attributable to Artisan Partners Asset Management Inc.$64,962 $77,401 

The accompanying notes are an integral part of the consolidated financial statements.
3

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Unaudited Consolidated Statements of Changes in StockholdersEquity
(U.S. dollars in thousands)
Three months ended March 31, 2022Class A Common StockClass B Common StockClass C Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling Interests - Artisan Partners HoldingsTotal Stockholders’ EquityRedeemable Noncontrolling Interests
Balance at January 1, 2022
$667 $32 $91 $141,835 $134,889 $(1,310)$19,757 $295,961 $111,035 
Net income— — — — 65,433 — 15,615 81,048 1,389 
Other comprehensive income - foreign currency translation— — — — — (468)(85)(553)— 
Cumulative impact of changes in ownership of Artisan Partners Holdings LP— — — 373 — (4)(369) — 
Amortization of equity-based compensation— — — 9,775 — — 1,564 11,339 — 
Deferred tax assets, net of amounts payable under tax receivable agreements— — — 264 — — — 264 — 
Issuance of Class A common stock, net of issuance costs — — (1)— — — (1)— 
Forfeitures and employee/partner terminations — —  — — —  — 
Issuance of restricted stock awards8 — — (8)— — — — — 
Employee net share settlement(2)— — (6,236)(25)— (1,157)(7,420)— 
Exchange of subsidiary equity1 (1) — — — —  — 
Capital contributions, net— — — — — — — — 3,989 
Impact of deconsolidation of CIPs— — — — — — —  (9,274)
Distributions— — — — — — (11,168)(11,168)— 
Dividends— — —  (117,529)— (67)(117,596)— 
Balance at March 31, 2022
$674 $31 $91 $146,002 $82,768 $(1,782)$24,090 $251,874 $107,139 
Three months ended March 31, 2021Class A Common StockClass B Common StockClass C Common StockAdditional Paid-in CapitalRetained EarningsAccumulated Other Comprehensive Income (Loss)Noncontrolling Interests - Artisan Partners HoldingsTotal Stockholders’ EquityRedeemable Noncontrolling Interests
Balance at January 1, 2021
$631 $45 $110 $107,738 $72,944 $(991)$10,565 $191,042 $93,753 
Net income— — — — 77,278 — 23,641 100,919 3,699 
Other comprehensive income - foreign currency translation— — — — — 136 37 173 — 
Cumulative impact of changes in ownership of Artisan Partners Holdings LP— — — 1,254 — (13)(1,241) — 
Amortization of equity-based compensation— — — 8,907 — — 1,893 10,800 — 
Deferred tax assets, net of amounts payable under tax receivable agreements— — — 3,444 — — — 3,444 — 
Issuance of Class A common stock, net of issuance costs10 — — 46,658 — — — 46,668 — 
Issuance of restricted stock awards7 — — (7)— — —  — 
Employee net share settlement(1)— — (6,319)— — (1,546)(7,866)— 
Exchange of subsidiary equity1  (1)— — — —  — 
Purchase of equity and subsidiary equity— (7)(3)(46,918)— — — (46,928)— 
Capital contributions, net— — — — — — — — 48,197 
Impact of deconsolidation of CIPs— — — — — — —  (20,734)
Distributions— — — — — — (11,873)(11,873)— 
Dividends— — —  (81,262)— (42)(81,304)— 
Balance at March 31, 2021
$648 $38 $106 $114,757 $68,960 $(868)$21,434 $205,075 $124,915 
The accompanying notes are an integral part of the consolidated financial statements.
4

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Unaudited Consolidated Statements of Cash Flows
(U.S. dollars in thousands)
For the Three Months Ended March 31,
20222021
Cash flows from operating activities
Net income before noncontrolling interests$82,437 $104,618 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization1,710 1,554 
Deferred income taxes8,846 9,777 
Noncash lease expense(150)(272)
Net investment (gain) loss on nonconsolidated investment securities4,599 (372)
Net (gain) loss on the tax receivable agreements(482) 
Amortization of debt issuance costs118 118 
Share-based compensation11,339 10,800 
Net investment (gain) loss of consolidated investment products(1,188)(6,916)
Purchase of investments by consolidated investment products(37,902)(90,733)
Proceeds from sale of investments by consolidated investment products34,765 37,395 
Change in assets and liabilities resulting in an increase (decrease) in cash:
Accounts receivable(6,644)(15,151)
Prepaid expenses and other assets2,871 (8,948)
Accounts payable and accrued expenses90,574 89,328 
Net change in operating assets and liabilities of consolidated investment products604 61,578 
Net cash provided by operating activities191,497 192,776 
Cash flows from investing activities
Acquisition of property and equipment(1,084)(408)
Leasehold improvements(2,893)(1,314)
Proceeds from sale of investment securities3,972 12,813 
Purchase of investment securities(56,398)(33,820)
Net cash used in investing activities(56,403)(22,729)
Cash flows from financing activities
Partnership distributions(11,168)(11,873)
Dividends paid(117,596)(81,304)
Net proceeds from issuance of common stock 46,928 
Payment of costs directly associated with the issuance of Class A common stock (102)
Purchase of equity and subsidiary equity (46,928)
Taxes paid related to employee net share settlement(7,420)(7,866)
Capital contributions to consolidated investment products, net3,989 48,197 
Net cash used in financing activities(132,195)(52,948)
Net increase in cash, cash equivalents, and restricted cash2,899 117,099 
Net cash impact of deconsolidation of CIPs (34,823)
Cash, cash equivalents and restricted cash
Beginning of period200,771 199,450 
End of period$203,670 $281,726 
Cash, cash equivalents and restricted cash as of the end of the period
Cash and cash equivalents$187,511 $215,752 
Restricted cash629 629 
Cash and cash equivalents of consolidated investment products15,530 65,345 
Cash, cash equivalents and restricted cash$203,670 $281,726 
Supplementary information
Noncash activity:
Establishment of deferred tax assets$1,195 $19,246 
Establishment of amounts payable under tax receivable agreements440 15,802 
Increase in investment securities due to deconsolidation of CIPs9,970 11,200 
Operating lease assets obtained in exchange for operating lease liabilities15,874 2,434 

The accompanying notes are an integral part of the consolidated financial statements.
5

ARTISAN PARTNERS ASSET MANAGEMENT INC.
Notes to Unaudited Consolidated Financial Statements
(U.S. currencies in thousands, except share and per share amounts and as otherwise indicated)
Note 1. Nature of Business and Organization
Nature of Business
Artisan Partners Asset Management Inc. (“APAM”), through its subsidiaries, is an investment management firm focused on providing high-value added, active investment strategies to sophisticated clients globally. APAM and its subsidiaries are hereafter referred to collectively as “Artisan” or the “Company.”
Artisan’s autonomous investment teams manage a broad range of U.S., non-U.S. and global investment strategies that are diversified by asset class, market cap and investment style. Strategies are offered through multiple investment vehicles to accommodate a broad range of client mandates. Artisan offers its investment management services primarily to institutions and through intermediaries that operate with institutional-like decision-making processes and have long-term investment horizons.
Organization
On March 12, 2013, APAM completed its initial public offering (the “IPO”). APAM was formed for the purpose of becoming the general partner of Artisan Partners Holdings LP (“Artisan Partners Holdings” or “Holdings”) in connection with the IPO. Holdings is a holding company for the investment management business conducted under the name “Artisan Partners.” The reorganization (“IPO Reorganization”) established the necessary corporate structure to complete the IPO while at the same time preserving the ability of the firm to conduct operations through Holdings and its subsidiaries.
As its sole general partner, APAM controls the business and affairs of Holdings. As a result, APAM consolidates Holdings’ financial statements and records a noncontrolling interest for the equity interests in Holdings held by the limited partners of Holdings. At March 31, 2022, APAM held approximately 85% of the equity ownership interest in Holdings.
Holdings, together with its wholly owned subsidiary, Artisan Investments GP LLC, controls a 100% interest in Artisan Partners Limited Partnership (“APLP”), a multi-product investment management firm that is the principal operating subsidiary of Artisan Partners Holdings. APLP is registered as an investment adviser with the U.S. Securities and Exchange Commission under the Investment Advisers Act of 1940. APLP provides investment advisory services to traditional separate accounts and pooled investment vehicles, including Artisan Partners Funds, Inc. (“Artisan Funds”), Artisan Partners Global Funds plc (“Artisan Global Funds”), and Artisan sponsored private funds (“Artisan Private Funds”). Artisan Funds are a series of open-end mutual funds registered under the Investment Company Act of 1940, as amended. Artisan Global Funds is a family of Ireland-domiciled UCITS funds. Artisan Private Funds consist of a number of Artisan-sponsored unregistered pooled investment vehicles.

Note 2. Summary of Significant Accounting Policies
Basis of presentation
The accompanying financial statements are unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of such consolidated financial statements have been included. Such interim results are not necessarily indicative of full year results.
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial reporting and accordingly they do not include all of the information and footnotes required in the annual consolidated financial statements and accompanying footnotes.
The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. As a result, the interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in APAM’s latest annual report on Form 10-K.
The accompanying financial statements were prepared in accordance with U.S. GAAP and related rules and regulations of the SEC. The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates or assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from these estimates or assumptions.

6

Principles of consolidation
Artisan’s policy is to consolidate all subsidiaries or other entities in which it has a controlling financial interest. The consolidation guidance requires an analysis to determine if an entity should be evaluated for consolidation using the voting interest entity (“VOE”) model or the variable interest entity (“VIE”) model. Under the VOE model, controlling financial interest is generally defined as a majority ownership of voting interests. Under the VIE model, controlling financial interest is defined as (i) the power to direct activities that most significantly impact the economic performance of the entity and (ii) the right to receive potentially significant benefits or the obligation to absorb potentially significant losses.
Artisan generally consolidates VIEs in which it meets the power criteria and holds an equity ownership interest of greater than 10%. The consolidated financial statements include the accounts of APAM and all subsidiaries or other entities in which APAM has a direct or indirect controlling financial interest. All material intercompany balances have been eliminated in consolidation.
Artisan serves as the investment adviser to Artisan Funds, Artisan Global Funds and Artisan Private Funds. Artisan Funds and Artisan Global Funds are corporate entities the business and affairs of which are managed by their respective boards of directors. The shareholders of the funds retain voting rights, including rights to elect and reelect members of their respective boards of directors. Each series of Artisan Funds is a VOE and is separately evaluated for consolidation under the VOE model. The shareholders of Artisan Global Funds lack simple majority liquidation rights, and as a result, each sub-fund of Artisan Global Funds is evaluated for consolidation under the VIE model. Artisan Private Funds are also evaluated for consolidation under the VIE model because third-party equity holders of the funds generally lack the ability to divest Artisan of its control of the funds.
From time to time, the Company makes investments in Artisan Funds, Artisan Global Funds, and Artisan Private Funds. If the investment results in a controlling financial interest, APAM consolidates the fund, and the underlying activity of the entire fund is included in Artisan’s unaudited consolidated financial statements. As of March 31, 2022, Artisan had a controlling financial interest in three sub-funds of Artisan Global Funds and two Artisan Private Funds and, as a result, these funds are included in Artisan’s unaudited consolidated financial statements. Because these consolidated investment products meet the definition of investment companies under U.S. GAAP, Artisan has retained the specialized industry accounting principles for investment companies in the consolidated financial statements. See Note 6, “Variable Interest Entities and Consolidated Investment Products” for additional details.
Recent accounting pronouncements
None.
Note 3. Investment Securities
The disclosures below include details of Artisan’s investments, excluding money market funds and consolidated investment products. Investments held by consolidated investment products are described in Note 6, Variable Interest Entities and Consolidated Investment Products.”
As of March 31, 2022As of December 31, 2021
Investments in equity securities$95,557 $37,179 
Investments in equity securities accounted for under the equity method10,118 10,699 
Total investment securities$105,675 $47,878 
Artisan’s investments in equity securities consist of investments in shares of Artisan Funds, Artisan Global Funds and Artisan Private Funds. As of March 31, 2022, $74.0 million of Artisan's investment securities were related to funded long-term incentive compensation plans. Unrealized gains (losses) related to investment securities held at the end of the periods indicated below were as follows:
For the Three Months Ended March 31,
20222021
Unrealized gain (loss) on investment securities held at the end of the period$(3,928)$19 

7

Other net investment gain (loss) is presented within the non-operating income (expense) section of the Consolidated Statements of Operations. The components of other net investment gain (loss) are as follows:
For the Three Months Ended March 31,
20222021
Net investment gain (loss) on seed investments$(1,638)$477 
Net investment gain (loss) on franchise capital investments$(2,961)$(105)
Other$(153)$(176)
Other net investment gain (loss)$(4,752)$196 

Note 4. Fair Value Measurements
The table below presents information about Artisan’s assets and liabilities that are measured at fair value and the valuation techniques Artisan utilized to determine such fair value. The financial instruments held by consolidated investment products are excluded from the table below and are presented in Note 6, Variable Interest Entities and Consolidated Investment Products.”
In accordance with ASC 820, fair value is defined as the price that Artisan would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market for the investment. The following three-tier fair value hierarchy prioritizes the inputs used in measuring fair value:
Level 1 – Observable inputs such as quoted (unadjusted) market prices in active markets for identical securities.
Level 2 – Other significant observable inputs (including but not limited to quoted prices for similar instruments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 – Significant unobservable inputs (including Artisan’s own assumptions in determining fair value).
The following provides the hierarchy of inputs used to derive fair value of Artisan’s assets and liabilities that are financial instruments as of March 31, 2022 and December 31, 2021:
Assets and Liabilities at Fair Value
TotalNAV Practical Expedient (No Fair Value Level)Level 1Level 2Level 3
March 31, 2022
Assets
Money market funds$37,862 $ $37,862 $ $ 
Equity securities105,675 9,533 96,142   
December 31, 2021
Assets
Money market funds$37,861 $ $37,861 $ $ 
Equity securities47,878 9,975 37,903   
Fair values determined based on Level 1 inputs utilize quoted market prices for identical assets. Level 1 assets generally consist of money market funds, open-end mutual funds and UCITS funds. Equity securities without a fair value level consist of the Company’s investments in Artisan Private Funds, which are measured at the underlying fund’s net asset value (“NAV”), using the ASC 820 practical expedient. The NAV is provided by the fund and is derived from the fair values of the underlying investments as of the reporting date. Cash maintained in demand deposit accounts is excluded from the table above.
8

Note 5. Borrowings
Artisan’s borrowings consist of the following as of March 31, 2022 and December 31, 2021:
MaturityOutstanding BalanceInterest Rate Per Annum
Revolving credit agreement August 2022$ NA
Senior notes
Series CAugust 202290,000 5.82 %
Series DAugust 202560,000 4.29 %
Series EAugust 202750,000 4.53 %
Total borrowings$200,000 
The fair value of borrowings was approximately $202.8 million as of March 31, 2022. Fair value was determined based on future cash flows, discounted to present value using current market interest rates. The inputs are categorized as Level 2 in the fair value hierarchy, as defined in Note 4, Fair Value Measurements.”
Senior notes - On December 7, 2021, Holdings entered into a Note Purchase Agreement to issue $90.0 million of Series F senior notes in a private placement transaction on August 16, 2022, subject to the satisfaction of certain customary closing conditions. The Company will use the proceeds from the Series F senior notes to repay the $90.0 million of Series C senior notes that mature on August 16, 2022. The Series F senior notes will bear interest at a rate of 3.10% and will mature on August 16, 2032.
The fixed interest rate on each series of unsecured notes is subject to a one percentage point increase in the event Holdings receives a below-investment grade rating and any such increase will continue to apply until an investment grade rating is received.
Interest expense incurred on the unsecured notes and revolving credit agreement was $2.6 million for the three months ended March 31, 2022 and 2021.
As of March 31, 2022, the aggregate maturities of debt obligations, based on their contractual terms, are as follows:
2022$90,000 
2023 
2024 
202560,000 
2026 
Thereafter50,000 
Total$200,000 

Note 6. Variable Interest Entities and Consolidated Investment Products
Artisan serves as the investment adviser for various types of investment products, consisting of both VIEs and VOEs. Artisan consolidates an investment product if it has a controlling financial interest in the entity. See Note 2, ”Summary of Significant Accounting Policies.” Any such entities are collectively referred to herein as consolidated investment products or CIPs.
As of March 31, 2022, Artisan is considered to have a controlling financial interest in three sub-funds of Artisan Global Funds and two Artisan Private Funds, with an aggregate direct equity investment in the consolidated investment products of $54.9 million.
Artisan’s maximum exposure to loss in connection with the assets and liabilities of CIPs is limited to its direct equity investment, while the potential benefit is limited to the management and performance fees received and the return on its equity investment. With the exception of Artisan’s direct equity investment, the assets of CIPs are not available to Artisan’s creditors, nor are they available to Artisan for general corporate purposes. In addition, third-party investors in the CIPs have no recourse to the general credit of the Company.
Management and performance fees earned from CIPs are eliminated from revenue upon consolidation. See Note 15, “Related Party Transactions” for additional information on management and performance fees earned from CIPs.

9

Third-party investors’ ownership interest in CIPs is presented as redeemable noncontrolling interests in the unaudited condensed consolidated statements of financial condition as third-party investors have the right to withdraw their capital, subject to certain conditions. Net income attributable to third-party investors is reported as net income (loss) attributable to noncontrolling interests - consolidated investment products in the unaudited consolidated statements of operations.
During the three months ended March 31, 2022, the Company determined that it no longer had a controlling financial interest in one series fund of Artisan Funds as a result of third party capital contributions. Upon loss of control, the fund was deconsolidated and the related assets, liabilities, and equity of the fund were derecognized from the Company’s unaudited condensed consolidated statements of financial condition. There was no net impact to the unaudited consolidated statements of operations for the three months ended March 31, 2022. Artisan generally does not recognize a gain or loss upon deconsolidation of investment products as the assets and liabilities of CIPs are carried at fair value. Artisan’s $10.0 million direct equity investment was reclassified from investment assets of consolidated investment products to investment securities.
As of March 31, 2022, Artisan held direct equity investments of $10.1 million in VIEs for which the Company does not hold a controlling financial interest. These direct equity investments consisted of seed investments in sub-funds of Artisan Global Funds and Artisan Private Funds, both of which are accounted for under the equity method of accounting because Artisan has significant influence over the funds.
Fair Value Measurements - Consolidated Investment Products
Investments held by CIPs are reflected at fair value. Short and long positions on equity securities are valued based upon closing prices of the security on the exchange or market designated by the accounting agent or pricing vendor as the principal exchange. The closing price may represent last sale price, official closing price, a closing auction or other information depending on market convention. Short and long positions on fixed income instruments are valued at market value. Market values are generally evaluations based on the judgment of pricing vendors, which may consider, among other factors, the prices at which securities actually trade, broker-dealer quotations, pricing formulas, estimates of market values obtained from yield data relating to investments or securities with similar characteristics and/or discounted cash flow models that might be applicable. The following tables present the fair value hierarchy levels of assets and liabilities held by CIPs measured at fair value as of March 31, 2022 and December 31, 2021:
Assets and Liabilities at Fair Value
TotalLevel 1Level 2Level 3
March 31, 2022
Assets
Money market funds$12,499 $12,499 $ $ 
Equity securities - long position33,672 31,581 2,091  
Fixed income instruments - long position143,105  138,168 4,937 
Derivative assets313 59 254  
Liabilities
Equity securities - short position$3,633 $3,633 $ $ 
Fixed income instruments - short position17,542  17,542  
Derivative liabilities133  133  
10

Assets and Liabilities at Fair Value
TotalLevel 1Level 2Level 3
December 31, 2021
Assets
Money market funds$7,908 $7,908 $ $ 
Equity securities - long position33,583 31,838 1,745  
Fixed income instruments - long position161,177  156,240 4,937 
Derivative assets241  241  
Liabilities
Equity securities - short position$3,427 $3,427 $ $ 
Fixed income instruments - short position$15,570 $ $15,570 $ 
Derivative liabilities182 4 178  

CIP balances included in the Company’s unaudited condensed consolidated statements of financial condition were as follows:
As of March 31, 2022As of December 31, 2021
Net CIP assets included in the table above$168,281 $183,730 
Net CIP assets/(liabilities) not included in the table above(6,228)(10,769)
Total Net CIP assets162,053 172,961 
Less: redeemable noncontrolling interests107,139 111,035 
Artisan’s direct equity investment in CIPs$54,914 $61,926 
Note 7. Noncontrolling Interests - Holdings
Net income attributable to noncontrolling interests - Artisan Partners Holdings in the unaudited consolidated statements of operations represents the portion of earnings or loss attributable to the equity ownership interests in Holdings held by the limited partners of Holdings. As of March 31, 2022, APAM held approximately 85% of the equity ownership interests in Holdings.
Limited partners of Artisan Partners Holdings are entitled to exchange partnership units (along with a corresponding number of shares of Class B or C common stock of APAM) for shares of Class A common stock from time to time (the “Holdings Common Unit Exchanges”). The Holdings Common Unit Exchanges increase APAM’s equity ownership interest in Holdings and result in an increase to deferred tax assets and amounts payable under the tax receivable agreements. See Note 11, Income Taxes and Related Payments.”
In order to maintain the one-to-one correspondence of the number of Holdings partnership units and APAM common shares, Holdings will issue one general partner (“GP”) unit to APAM for each share of Class A common stock issued by APAM. For the three months ended March 31, 2022, APAM’s equity ownership interest in Holdings increased as a result of the following transactions:
Holdings GP UnitsLimited Partnership UnitsTotalAPAM Ownership %
Balance at December 31, 202166,699,872 12,335,197 79,035,069 84 %
Holdings Common Unit Exchanges (1)
96,835 (96,835)  %
Issuance of APAM Restricted Shares787,372  787,372 1 %
Delivery of Shares Underlying RSUs (1)
1,060  1,060  %
Restricted Share Award Net Share Settlement (1)
(185,243) (185,243) %
Forfeitures from Employee Terminations (1)
(1,218) (1,218) %
Balance at March 31, 2022
67,398,678 12,238,362 79,637,040 85 %
(1) The impact of the transaction on APAM’s ownership percentage was less than 1%.
11

Changes in ownership of Holdings are accounted for as equity transactions because APAM continues to have a controlling interest in Holdings. Additional paid-in capital and noncontrolling interests - Artisan Partners Holdings in the unaudited condensed consolidated statements of financial condition are adjusted to reallocate Holdings’ historical equity to reflect the change in APAM’s ownership of Holdings.
The reallocation of equity had the following impact on the unaudited condensed consolidated statements of financial condition:
Statements of Financial ConditionFor the Three Months Ended March 31,
20222021
Additional paid-in capital$373 $1,254 
Noncontrolling interests - Artisan Partners Holdings(369)(1,241)
Accumulated other comprehensive income (loss)(4)(13)
Net impact to financial condition$ $ 
In addition to the reallocation of historical equity, the change in ownership resulted in an increase to deferred tax assets and additional paid-in capital of $0.1 million and $0.7 million for the three months ended March 31, 2022 and 2021, respectively.

Note 8. Stockholders’ Equity
APAM - Stockholders’ Equity
APAM had the following authorized and outstanding equity as of March 31, 2022 and December 31, 2021, respectively:
Outstanding
AuthorizedAs of March 31, 2022As of December 31, 2021
Voting Rights (1)
Economic Rights
Common shares
Class A, par value $0.01 per share
500,000,000 67,398,678 66,699,872