AGF Management Limited

Robert J. Bogart - Chief Financial Officer and Executive Vice-President Blake Charles Goldring - Chairman and Chief Executive Officer

John Aiken - Barclays Capital, Research Division Geoffrey Kwan - RBC Capital Markets, LLC, Research Division Stephen Boland - GMP Securities L.P., Research Division Paul Holden - CIBC World Markets Inc., Research Division John Reucassel - BMO Capital Markets Canada Doug Young - TD Securities Equity Research Phil Hardie - Scotiabank Global Banking and Markets, Research Division Scott Chan - Canaccord Genuity, Research Division

Thank you, operator. Good morning, everyone.

I'm Bob Bogart, CFO of AGF Management Limited. Thank you for joining us today for a discussion of our first quarter 2013 financial results.

Please note that the slides supporting today's call and webcast can be found in the Investor Relations section of agf.com. Today, Blake Goldring, Chairman and CEO, and I will discuss our first quarter 2013 financial results.

Turning to Slide 4, the agenda for today's call, we will discuss the highlights of the first quarter, provide a business update, review the financial results, discuss our capital and liquidity position, and finally close with an outlook for the rest of 2013. After the prepared remarks, we'll be happy to take questions from the analysts.

With that, I'll turn the call over to Blake.

Thank you, Bob, and thank you, everyone, for joining today's call. It's only been 60 days since our last conversation, where we witnessed a very exciting time across the global equity markets.

Equity markets come roaring back in the beginning of January, and no doubt hit a new high over the quarter. The United States has led the charge with increasing employment and improving housing market and expanding economic activity in the manufacturing sector for the third consecutive month.

Many economists are revising their GDP expectations slightly higher for the U.S. in 2013.

With that, we believe equity markets will continue to benefit from higher stock prices and lower volatility. No one can rule out future turmoil, of course, particularly since the uncertainty of the U.S.

government scheduled budget cuts will extend through the weeks and months ahead. Even with those potential issues on the horizon, we expect a continued rotation back into equity investing as investors' confidence returns and recognize the current disadvantage of fixed income.

The S&P 500 has returned a positive 10% for the year through March 22, as compared to the negative 2% posted by Barclays Global Aggregate Bond Index. We believe the rotation will happen gradually, as evident by recent data from investor economics that shows that net flows are shifting into equities which posted positive RSP flows of $830 million versus outflows of $2 billion a year earlier.

Balanced products also saw a 50% increase in flows on a year-over-year basis, while bond funds saw a 70% decline. It's important to note that within the equity and balanced flows, there's a shift to global investing.

We see that Canadian equity continues to be in redemptions offset by U.S. and global flows.

Canadian investors have decreased their share of wealth and global equity funds over the last 13 years. As one of our analysts noted this week, that trend may be drastically changing, causing a reverse of up to $5 billion per year over the next decade to bring foreign equity allocation back to prior levels.

As we've mentioned in the past, we feel AGF is positioned to benefit from our term to global equity investing, and believe we have a competitive advantage in global investing capabilities coupled with our distribution footprint. This will play out not just in retail, but will be a theme for our Institutional business as well.

Now with that backdrop, let's review a summary of the first quarter. AUM was flat over the quarter, and we benefited from market action to remain at $39 billion in assets under management.

Our gross retail flows were at par with last year, but better on a percentage of assets under management. Total gross flows were about $1.3 billion for the quarter, which includes our retail sub-advisory and institutional segments.

Overall fund performance dipped slightly relative to last quarter in the Q1 with 38% ranked AUM performing above median. Performance remains our #1 priority.

The Institutional business experienced a few large redemptions in February, which caused AUM to decline over the quarter, but the pipeline is stable and activity level has remained high. The fixed income category remains strong in terms of flows for AGF.

We're seeing early signs of strong momentum in our U.S. and balanced products.

Diluted EPS came in at $0.17 per share. Our free cash flow was good, and our dividend has sustained, very sustained under the current market conditions.

Finally, the Board approved a $0.27 dividend, consistent with previous periods and our commitment to our current shareholders. It's highlighted in our financial statement disclosure, AGF received a proposed assessment from CRA with respect our prior-year's tax return filings.

Bob's going to address this in his comments. Turning to Slide 6.

This slide reflects the performance of our retail funds from February 2012 to the end of February 2013. As of February 28, 2013, 38% of the current AUM performed above median over the 1-year period, which was relatively flat over Q4 2012.

The 3-year investment performance has remained relatively flat as well. However, this is a material improvement over performance when compared to a year ago.

We're focused on the trend on the performance versus short-term movements. As you can see from the graph, the trend from 1 year ago is now moving positively in the right direction.

AGF's fixed income suite continues to demonstrate strength. This fixed income plus, emerging markets bond and inflation plus bond all outperformed the category average.

As a category, our fixed income products are in net positive flows for the year. Our prior performance, as I mentioned earlier, remains a priority.

We will continue to invest resources in the investment management teams and research capabilities, as required in order to improve fund performance. Our goal is to exit 2013 with 50% of the funds above 1 year median.

Our ability to demonstrate this will be a key to increasing gross sales and returning to AUM growth. Turning to Slide 7.

Although the RSP fees was robust from an industry level, it was a bit of a letdown for the majority of independents AGF's include in terms of net flows. Over this quarter, gross sales were generally flat compared to last year on an absolute basis.

But as a percentage of AUM, we improved over 2.6% of AUM in 2013 versus 2.4% in 2012. Net outflows were just under $700 million when adjusted for C money redemptions.

Our sales teams had a very high level of activity during the first quarter, and there was a great level of excitement that matches renewed optimism in the industry as a whole. In particular, our newest product offerings are selling extremely well.

Both AGF Floating Rate Fund, as well as the AGF Focus Funds have met or exceeded our expectations post-launch. AGF launched its Floating Rate Fund last May.

This unique fund provides investors exposure to floating rate loans that can serve to reduce interest rate risk, while not significantly impacting income. We're very pleased by the fund's performance-to-date, and it currently has more than $120 million under management.

The fund also had a terrific RSP season with $30 million in sales during February alone. This is an example of a product that can penetrate the broker and bank channels because of its uniqueness and difficult to replicate in a discretionary basis.

We're pushing harder to deliver product innovation and getting more traction in the IIROC and bank distribution channels, which will continue to be a key area of focus throughout the year. We also launched a marketing and brand awareness campaign.

The AGF brand and target remain strong and relevant across the wealth management industry, and we continue to push our marketing efforts to increase brand awareness, positively impact gross sales and to address redemptions from long-time AGF partners and advisors. We have been changing the trajectory of our net flow -- outflows, and we expect this to improve over the year through our efforts with [indiscernible] combined with [indiscernible] provided a rotation back to equities.

Specifically, with respect to the Emerging Markets Funds, the percentage of redemptions relative to AUM is stable, and we expect year-over-year improvements in over fiscal year '13, which provides more confidence for advisors who remain supporters of the fund. Although EM mandates have trailed, developed markets in general, relative performance remains strong on the fund, and the team is very popular amongst advisors across Canada.

Turning now to Slide 8, I want to get in some detail of our Institutional business and the context behind Q1 activity. Our Institutional business suffered redemptions over the quarter.

We discussed last quarter that there may be some volatility as we entered the back half of a watch period that resulted from the global team disruption last year. Over the quarter, there were $848 million in redemptions, all in February, due to losses in 3 accounts, one of which was an EM mandate.

Additionally, our committed pipeline shows an EM mandate that was redeemed in March. Not to get lost in the outflows is the fact that our Institutional business recorded just under $500 million of gross flows in the first quarter.

Post Q2, we hope to be entering a more business-as-usual mode. We remain excited and continue to view the Institutional business as a growth channel for AGF.

We see the positive leading indicators through our activity levels. After a depth and search activity in mid-2012, search levels have recovered to the same level that we saw in Q1 2012.

Search activities are an important leading indicator because they give us an opportunity to develop our profile with the consulting community, who continue to dominate the Global Institutional business. And as time progresses, we expect to progress further and further in each progressive search.

Chris Boyle, who leads our Institutional business, and his team have been very busy in January and February responding to incoming requests for proposals, which were up 50% year-over-year, almost 70% of which are global mandates. At this point, we're averaged almost 1 qualified search per day.

Further accentuating the demand for EM products is the lack of credible mandates with open capacity. As I mentioned on the Q4 call, capacity constraints in this category exist, and we've seen at least 1 very large competitor close their segregated mandate to new business.

We've made a significant investment in our management and distribution capabilities in the Institutional business, and we're confident that this will be a multibillion-dollar growth business for us over the next 3 to 5 years. Moving then to Slide 9, I'm going to turn the call back over to Bob, who will review the financial results in more detail.

Thank you, Blake. As a reminder, you'll notice that our presentation and our published financials and MD&As have been divided into continuing operations and discontinued operations.

This is consistent with the presentation of results for previous quarters in 2012 post-disposition of our Trust business. There has been no activity within discontinued operations for the current quarter.

Slide 9 reflects a summary of our financial results for Q1 2013 as compared to Q1 2012. Revenue was down 7.2% driven by the reduction in AUM due to redemptions in the institutional retail business lines.

This decrease in revenue is generally in line with the rate of our AUM reduction over the same time period. EBITDA decreased 13.7% to $45.3 million for Q1 2013 relative to a year ago with an operating margin of 37%.

First quarter diluted EPS came in at $0.17 per share, $0.01 less than the corresponding period in 2012. Turning to Slide 10, we show the trended quarterly results.

This chart reflects our EBITDA and revenue over the past 5 quarters. As discussed on the Q4 call, we believe that our current EBITDA reflects more normalized operations.

Throughout 2012, there were one-time items, which made it more challenging to preview our run rate EBITDA. SG&A was slightly higher in Q1 2013 as a result of a change in the way we are required to account for expense reimbursements associated with one of our distribution partners.

Formally, the expenses incurred where netted against revenue received. But beginning in 2013, we will show the expense with SG&A and the revenue separately on a gross basis.

This treatment increases the SG&A cost by approximately $1.5 million per quarter, but also increases revenue by the same amount, so it's a wash on our financials. Relative to Q4 2012, our SG&A is also slightly higher as a result of bonus accruals associated with PM compensation and an increase in stock compensation due to the rise in AGF.B share price.

Turning to Slide 11, I'll walk you through the basis points yield on the business. This is a slide we regularly show on our calls.

It lets you see our performance on a longer trended basis and smoothing out some of the impacts of market volatility. It shows our investment management revenue, operating expense in EBITDA as a percentage of average AUM in the current quarter and the prior year's quarter, as well as trailing-12-month view.

Now the quarters have been annualized and the results excluded the impact of onetime cost. Prior periods have also been adjusted to reflect the SG&A increase relative to the change in the accounting I just mentioned.

With respect to revenue, the operations reflected increase in revenue yield due to a higher mix of retail business per dollar of AUM, as a relatively larger redemptions associated with lower fees, the institutional assets have caused this rate to increase. Our SG&A on a relative basis, as a percentage of AUM, was higher in Q1 2013 as a result of lower AUM levels.

On an absolute basis, SG&A is lower on a year-over-year basis. On a relative basis, our EBITDA was higher as the revenue gains per dollar of AUM and the cost reductions cutting initiatives that we enacted in Q3 and Q4 of 2012 have increased the yield.

The rise in the equity markets over the quarter has created some positive operating leverage versus the trailing-12-month results. Turning to Slide 12, I'll discuss the free cash flow and dividend coverage.

This slide represents the last 5 quarters of free cash flow, shown by the blue bars on the chart. The cash flow represented is consolidated free cash flow in Q1 2013.

It's the second quarter without any free cash flow generated from AGF Trust. Now it's important to note that the free cash flow from quarter-to-quarter can be impacted by a variety of items, including timing of cash taxes and dividends received from minority investments.

Our free cash flow is $28 million in this quarter, and our Q1 dividend payout ratio was 85%. If we were to extrapolate the Q1 cash flow and exercise our NCIB facility in 2013, our expectation for our dividend to free cash flow metric will be in the 80% to 85% range for the year.

Of course, the metric is quite sensitive to equity market movements, and we'll update our expectations quarterly. We continue to maintain a strong cash position with $356 million in cash on hand and a net cash position of $44 million.

We continue to be interested in any new product and investment capabilities, and we'll use our capital prudently to build or buy such capabilities. We have no update on this front for the quarter.

Finally, let me touch on the CRA notice that Blake mentioned at the top of the call and the tax footnote disclosure in the financials. Over the last several years, the international division of the CRA has been reviewing under audit certain transfer pricing between a domestic and foreign subsidiary within the AGF group of companies developing asset management activities.

AGF has received a proposed assessment from the CRA that would increase the tax liability for years 2005, '06 and '07 by approximately $40 million before the assessment of any interest and penalties. The company is in disagreement with the proposed findings by the CRA, and we are in the process of responding to the proposed letter.

And we'll provide a rebuttal and supplementary information supporting management view that the CRA position is incorrect. While the outcome of the audit can't be predicted with certainty, the company is confident that the merits of its trends for pricing methodology, which is supported by annual transfer pricing studies conducted by external experts and the economic substance its of illegal and operating structure supported tax filings.

At this point, based on the information available to the company is our best estimate that all amounts have been provided for on the financial statements. Following the exchange of information and a meeting with the CRA and the receipt of the formal assessment, management will be in a better position to assess the CRA position and any potential impact on the company.

We expect those activities to occur over the next quarter, although full resolution may take several years as the processes follow through to its conclusion. Now moving to Slide 13, I'll turn it back to Blake to wrap up today's call.

Thanks, Bob. For the rest of 2013, I want to outline our priorities and expectations.

Firstly, we want to exit 2013 with 50% of funds above 1 year median. It is important for advisors, clients and our sales team, it will be a catalyst for increasing gross sales in the retail channel.

We will continue with product innovation and will launch new products focused on unmet demand in each categories. We expect retail gross sales to improve year-over-year and significant improvements over the remainder of fiscal year '13.

This will be driven by our sales team leveraging our performing products for increased activity supported a brand and marketing push. For the Institutional business, we need to these RFP and RFIs into the sales funnel, and ultimately AUM for the firm.

We've hired and built out a very strong global distribution team under the leadership of Chris Boyle. And as we move into regular business post, with this watch period, post-watch period, we expect to finish the year flat on our net sales and spend the back half of 2013 in positive sales territory.

We will invest to grow our business. As we mentioned, we see opportunities who have resources and grow the global platform capabilities to take advantage of a multi-year and multibillion-dollar opportunity to distribute through the retail and institutional channels.

The NCIB was renewed, and we will be active. I want to thank everyone on the AGF team for their hard work over the quarter and to our shareholders for their continued support.

With that, we'll now take your calls -- take your questions.

Blake, on your closing commentary, you talked about being active in the Normal Course Issuer Bid, but the slide deck actually shows selective. What's the criteria?

Or are you looking at what your perspective cash flows are going to be? Or are you looking at a certain price point where your shares are trading at?

Yes, I think that we looked clearly at what the stock price is doing. We have a disciplined way in which we can participate certainly at market downturns and what have you, and we can selectively get in, but we have a disciplined process, John, because it's our intent to be active and fulfill our NCIB.

Great. And, Bob, one question on the CRA.

Was there any change in methodology for the years post-2007 or is this an issue that may pop up again depending on how successful the CRA is?

Yes. I think in our footnote disclosure, we mentioned that it's most likely that the CRA will look at post -- subsequent periods post-2007.

The only, to your first part of the question, the only thing that has really changed, methodology has not changed, but certainly the assets under management have dramatically declined. That will be managed by the foreign subsidiary, so the volume would've been impacted.

I just wanted to follow up on John's last question. If the CRA is going to come back with a proposal around 2008 through 2012, now I know you mentioned the AUM has changed with the foreign subsidiary, do you have any ballpark about what that amount that they might seek would be?

Or would you know even based on your own interpretations of what they're going after?

Yes. It's really too early in the process, Geoff, to comment formally.

We haven't really received the formal assessment with respect to the 2005 to 2007 period. So we believe the ultimate resolution of the matter, as I've mentioned to John, could be applied to future years.

That said, we have been accepted into what's called an advanced pricing arrangement program with the CRA that will provide certainty for the transfer of pricing from 2012 to 2016. In addition, the CRA has agreed to open -- to address the open tax years from 2009 through 2011 as part of that program for that process, which really involves the tax jurisdictions, as well as the taxpayer having dialogue and negotiations could take several years of work its way through its natural conclusion as well.

Sorry, just to clarify your comment. So you've got a framework in place that should that the CRA is comfortable with over the next few years, but also would be, have applied to the past few years?

Or did I misunderstand?

Well, no, you got part of it right. We will -- they were beginning that process such that we can get certainty with the CRA in terms of the transfer pricing moving forward.

That agreement will be applied retroactively to 2009, but we are -- we just got notification that we've been accepted into the program, so we haven't even begun to have conversations with the CRA yet.

Okay. And another question related to that is does this development with the CRA impact how you guys plan to be on the NCIB?

And similar to that is, are you -- is the intent is to max out or close to max out on the NCIB as you did last year?

That was the intention that we discussed in Q4, and it remains our intention. And so this is a factor in terms of -- certainly, this is a factor in terms of cash uses, but it won't impact our perspective on the NCIB.

Okay. And then last question I had was in relation to this CRA proposal.

How should we think about the associated legal cost that you guys may have to incur to deal with the CRA?

We don't like them. Yes, so it will impact G&A.

But if you go looking forward. But we'll look to make that up.

And sorry, it will be something, I'm assuming you have to expense, but in terms of the need for legal, the paying the lawyers, is that something where it's just kind of on an ad hoc when you guys receive something from the CRA, you need them to deal with it? Or is there kind of an ongoing legal aspect that needs to be...

Right, it's going to, obviously negatively impact G&A. It will be more of a recurring as opposed to episodic because as part of this program, we'll be utilizing fairly regularly external counsel and external advisors in the process.

Well, I guess I have to ask something on the CRA as well. I don't know the legalities in terms of statute of limitations, but I don't remember ever seeing a company being assessed or reassessed for something that's 7 or 8 years ago.

Is that -- has this been an ongoing audit that, you mentioned that through the audit process of the past several years, that maybe this has been gaining steam with the CRA? Or is this the first time you've actually heard or got something formal from them?

Well, this, yes, I believe this probably started in 2006, 2007. In terms of the actual audit, there was -- we're a large case audit, so we'll be reviewed every 2 years.

Steve, and these things take a while to resolve. So on the domestic front, that audit was successfully completed in the -- with de minimis change.

But on the International side, because it's more complex, involves other aspects of the CRA. They just take longer to process.

We're frustrated with the timing as well, but this is not, in my experience, as a former tax professional, this is not unusual.

But just, it just seems like if it's 2005, that means you've been through several, if it's a 2-year window of audit, it's gone through several of these.

On the domestic side, correct. Yes, and this is something that is -- it's not just a special situation with respect to any kind of cross-border transactions associated with AGF, it's more broadly happening within the Asset Management industry.

We're certainly aware of that as well as other industries including like Suncor and the energy space. I mean, there are other companies that are dealing with this.

Okay. And just, I'm not sure if I'm reading this a little too finely in your note, are you actually starting to reserve for this or is that going to be a material reserve, if you are?

Like any other company, we've got provisioning set aside for uncertain tax situations, Steve, but we feel very strong with our position based on the transfer pricing studies and other comparables that support our position. But these matters are subject to a significant degree of interpretation.

So it's possible that additional tax liability may be due, but we just don't have enough information at this point in time. And we feel very strongly about our position.

Maybe I can ask an operational question now. When I look at your decline in average AUM from, I guess, the retail's down, I think, 11.

The institutional's down 18, but your management fee year-over-year is only down about 9 or 10. I mean, I know there's a shift in retail, but it would, even going a little more finely, is it your highest margin products that are holding up the best because otherwise, we would have seen an average number of management to be declining somewhere in the middle of that.

Is that a fair assessment like your...

Yes, when you reference an AUM decline, your referencing the average or just absolute?

Average, year-over-year.

Average year-over-year? Yes.

So it's a shift into higher-margin products that have less of a redemption rate than let's say, the Canadian equities and/or balance products.

Okay. So that actual basis point number is going to, if you continue to see the similar trends, you're going to keep outperforming, I guess, on that metric right?

Like your revenue decline is not going to be as much as your asset decline, average asset decline if this trend continues?

Right. That's -- if the past is indicative of the future, yes, but we would anticipate that equity in fiscal '13 that we're going to be adding AUM in the Institutional segment.

So we'll see that average rate normalize a bit outside of it.

The first question I had is you made a comment regarding putting a stronger sales push into the IIROC and bank channels, wondering if you can give us more color on how you plan to do that and maybe with what products?

Yes. We have -- Paul, we've got an active -- product development process going on right now, and I don't -- I'm not at liberty right now as to share what our product will be looking like, but it's in addition to the Floating Rate Fund, and that would be very successful through the IIROC channel.

And we'll just continue on innovation, and products that are tough for corner office brokers to replicate.

So the approach, Paul, would be to utilize the floating rate, as well as this new product to gain access to corner-office brokers, where we've had probably less success in recent years. So these products can open those doors, and then we backfill with our other product, which is performing well, the global products and other fixed income products.

Now I know you don't want to provide the specifics on the new product, but is there any kind of color you can provide whether it's an equity product, an income product, if it's going to be managed in-house or sub-advised? Or any kind of color on the nature of the product?

Yes, it will be an equity-oriented product. But again, I'd rather sort of discuss that when we're just at the time.

Fair enough. Within your presentation, you've said you expect the Q2 gross sales and net sales to improve year-over-year, so that would be a bit of a difference than what we saw in Q1.

So is that really just premised on improving demand for equity funds at the industry level and AGF participating in that? Or is there something more going on that leads you to that conclusion?

Well, I'll let Blake answer it as well. I just -- from a Q1 perspective, Paul, there are -- you know that we've got this, a little bit of blending of institutional and retail within the IFIC reported numbers because of our institutional class that will offer the series, O Class, that we offer through our funds.

In addition, we had some substantial seed money repatriation associated with the Floating Rate Fund. So like-for-like, 2013 to 2012, we were actually on a net redemption basis excluding these institutional clients.

So just focused on the brokers and the planner market, we were actually better off in terms of net redemptions year-on-year. So that leads -- so do we -- we take some of that institutional noise aside and we just see that the broker and planner market's becoming stronger on the back of the Focus Funds, as well as the Floating Rate Funds.

Yes. And I just simply add as well is that we look at the outflows sold to advisors, as opposed to the outflows from strat accounts.

And I can just tell you that this is very much improving.

Yes. And just as using March as an example, we haven't seen the fairly significant decline in net sales activity that we did -- or excuse me, growth sales activity that we did last year.

So March is holding up much better as compared to February versus March of last year, compared to last year's February.

Great, that's helpful. Final question, previously, you've put out SG&A guidance of 1.70 to 1.75.

Should we simply bump that up by $6 million to account for the accounting change and then recognizing that, that will be fully offset by higher revenues?

That's correct, Paul.

Bob, just the last question on CRA. This all can be decided by some judge at some point in the next 3 to 5 year -- or 2 to 4 years.

Is that what you expect?

I hope not. So the process would be that you'd go through a, I suppose, I will get to the technical process related, but it's a confident authority where you'd be again, having conversations with the foreign tax jurisdiction, as well as the Canadian tax authorities, and you would seek to support your position and resolve this over the next 2 years.

It's -- we have, there's many hazards of litigation. You don't really want to go to -- you don't want to go to Tax Court because that would not be our proposed approach.

But it may take, but John, it may take 2 years to get this resolved.

Okay. And then, and I apologize if I missed it, what the -- you said there were 3 mandates that redeemed out of institutional in February, and one of them was the emerging markets.

What were the 2 others?

One was a European mandate and one was a Canadian mandate.

And then just on the -- for Bob, just for you, the debt-to-EBITDA is about 1.7x, and does the bank look at net debt or does it look at debt-to-EBITDA? Is that how the covenants are written?

It's the latter.

Net debt-to-EBITDA?

No, that will be the former.

Former? Sorry, so it will be the debt-to-EBITDA.

And not that I want to know the covenant, but this covenant has an impact in your ability to buy back stock, has it?

None, whatsoever.

None? Okay.

And you don't expect it to, okay. So you expect, I think, you've said this, I just want to confirm, that you haven't bought back any stock in the last few months, but you hope, you expect to -- resolve the NCIB this year assuming the pricing's right?

That's correct. We only had opened for 30 days and then we were back in blackout.

So once the NCIB was approved in late January, there just wasn't a lot of time to nag the NCIB so...

Most of my questions have been asked. I guess the, just to not belabor the CRA, but you did mention, Bob, I think that you have done some provisioning for potential adverse outcomes on tax rulings.

Can you quantify? I mean, should we be taking a look at that 3 56 [ph] of cash, and then potentially moving $40 million as the worst plus, I guess, interest and penalties as the worst case?

Or can you quantify how much provisioning you already have?

Well, I won't provide that level of transparency, Doug. It's just I think it's prejudicial to our position and just a lack of clarity within the process itself.

But the provisioning won't have anything to do with the cash. So to the extent that you want to move some cash off the balance sheet, I mean I'll leave that to you for your estimates, but the provisioning won't have anything to do with that.

Okay. And Blake, obviously, you reviewed the dividend on a quarterly basis.

You've got the CRA overhang. You've got your debt covenants, which I guess, I'm not fully sure what they are.

How -- what's the discussion and how do you approach looking at that dividend? Because in your last slide, you're talking about maintaining the dividend, but there seems to be a lot of headwinds here.

Just wanted to get a sense of how you're looking at that and how the board looks at it.

Yes. The board looks at the dividend on a quarterly basis, Doug.

And clearly, you've got a very strong cash flow here and adequate coverage. And so this is, I mean to say, it was a very short discussion in this quarter.

And I apologize for beating the dead horse on the CRA assessment, but I mean is it safe to assume that once, if you do in fact you get the letter of the formal assessment that you feigned [ph] a deposit with the entire estimated liability just to avoid or mitigate penalty charges in interest expense?

Yes. Normally, you would generally put up 50% of the proposed adjustment while the issue is being disputed.

That's correct.

Just a question on the -- if there's any update on the acquisition front. Are you seeing any opportunities and in this market?

We have been seeing a lot of opportunities actually, Scott, none that are really attractive within the framework that we've agreed to with the board. But there's lots of activity, and my clubby [ph] has been quite busy.

Okay. And just on the customer contracts, is that really to the Acuity acquisition?

Which customer contracts you're referencing to?

Just in terms of the decline on the amortization? Because if I did it right, the unamortized version, there is redemptions in the quarter, so you had to expense the unamortized.

And that's why it was a big quarter-over-quarter drop. I'm just trying to get a sense of that going forward.

Yes. So if any amounts of the purchase price that were allocated to the management contract or customer contracts would be written off once the assets left the building.

So that would include all of our acquisition. So Highstreet's included.

Acuity's included.

Highstreet's included as well, okay. I noticed from the December filing that Highstreet won a big easy mandate?

Was that -- is that right? I saw like a $375 million gross inflow?

Was that entirely new or is that kind of -- we didn't see that before.

You said what public notice?

On your institutional site, you had the ending assets for December. I just noticed that Highstreet had an uptick despite the...

Yes, it was -- I'm sorry, Scott, it was a reallocation under elements to Highstreet with the...

Thank you, operator. Thanks, everyone, for joining us on today's call.

The next earnings call will take place on June 26, 2013, when we'll review our second quarter results for fiscal 2013. Details for the call will be posted on our website.

And finally, an archive of the audio webcast of today's call with supporting materials will be available in the Investor Relations section of our website. Thank you, and good day, everybody.