Good morning ladies and gentlemen. Thank you for standing by. Welcome to Artisan Partners Asset Management’s Fourth Quarter 2013 Earnings Conference Call. My name is Emily and I will be your conference operator today. At this time all participants are in a listen only mode. After the prepared remarks management will conduct a question-and-answer session and conference participants will be given instructions at that time. As a reminder this conference call is being recorded. At this time I will turn the call over to Makela Taphorn with Artisan Partners. Please go ahead.

Thank you, good morning everyone. Before we begin I would like to remind you that our fourth quarter earnings release and the related presentation materials are available on our Investor Relations section of our web site. I would also like to remind you that comments made on today’s call and some of the responses to your questions may deal with forward-looking statements and are subject to risks and uncertainties. Factors that may cause our actual results to differ from expectations are presented in the earnings release and are detailed in our filings with the SEC. We undertake no obligation to revise these statements following the date of this conference call. In addition some of their remarks this morning include references to non-GAAP financial measures. You can find reconciliations of those measures to the most comparable GAAP measures in the earnings release and exhibits. And finally as you may have seen we have filed an initial registration statement for the follow on offer and we agree to conduct on behalf of our limited partners on or about the first anniversary of our initial public offering. We cannot discuss the offering on this call so please refer to the documents on file with the SEC if you would like more information. And with that I will now turn the call over to our Chief Executive Officer, Eric Colson.

Thank you Makela. Welcome to the Artisan Partners Asset Management business update and quarterly earnings call. I am Eric Colson, CEO and I am joined today by C.J. Daley, CFO. Thank you for your time today. I hope you find this discussion useful. Like our first three updates, I want to spend time reinforcing our business strategy. So, given that this quarter concludes our first calendar year as a public company, I also want to spend some time framing the year in the context of our strategy. Key areas of emphasis for me will be the integrity of our investment results, the quality of our investment franchises and development of investment teams, the alignment of interest with our clients and professional talent and the help of our asset base. Once I am done C.J. will take the lead walking through our financials before I conclude with some thoughts about the outlook for our business. Let's start with a quick review of some of our static pages to give you a sense of how our year closed out. On the first slide, there are two points we're touching on. First AUM has increased to over a $105 billion from $97 billion last quarter and $74 billion last year. The growth in those numbers has been influenced by strength in the stock market, additional client cash flows and most importantly alpha generation from our investment teams. We always make sure to put years like 2013 into perspective. In the past 189 years, the stock market has lost more than 30% in a calendar year only three times. And one of those years was 2008. The market has returned over 30% just 26 times and one of those years was 2013. More than two-thirds of the time, the stock market returns between plus…

Thanks Eric. Welcome everyone. I will begin with slide 13, which is a review of our fourth quarter and full calendar year December 2013 results. In summary, we ended the year with another solid quarter. AUM increased to $105.5 billion and net client cash inflows were $1.5 billion. Revenues were $197.6 million, up 11% over revenues in the preceding September 2013 quarter and up 44% over the December 2012 quarter. Our adjusted operating margin declined slightly to 42.9% after factoring in strong AUM growth offset by the [fourth] quarter of expense related to our first public company employee equity grant in July and cost associated regarding our sixth investment team. Net income per share on an adjusted basis was $0.77 per share compared to $0.67 per share in the September 2013 quarter. Yesterday, our Board of Directors declared an increased quarterly dividend of $0.55 per share, up from $0.43 per share, as well as a special annual dividend of a $1.63 per share. Combined Class A common shareholders will receive $2.18 per share as a dividend. On a GAAP basis, as a result of IPO-related charges, which we have previous discussed, as well as the GAAP effects on our EPS calculation of the follow-on offering conducted in November, we recorded a GAAP loss per share of $1.42 for the quarter and a GAAP loss of $0.63 per share for the year. This GAAP loss per share occurred because the market price per share of the common stocks sold in our November follow-on offering exceeded the per share carrying value of the convertible preferred shares we repurchased with the portion of the operating proceeds. On an adjusted basis, we reported earnings per share of $0.77 for the quarter and $2.54 for the year. The adjusted earnings measures reported in our earnings…

C.J. thank you for your time and patience. This is important to understand our business before evaluating the outcomes. To provide additional clarity we’ll open the call for questions.

Thank you. We will now begin the question-and-answer session. (Operator Instructions). And our first question comes from Bill Katz with Citigroup. Please go ahead.

Okay, thank you. Good morning I appreciate the thorough updates. Could you talk a little bit about your policy for a dividend payout for 2014, I think the fourth quarter’s extra payment this year or an extra payment I should say was significant above everyone’s expectations, a little bit higher than your earnings run rate. Could you maybe just update how are you thinking about sort of cash flow this year?

Yeah, sure. Hey Bill this is C.J. Our expectation is we increased the quarterly dividend to $0.55 we’ll pay that through the October quarter and then consider revision to the quarterly in next January or early February. And then we expect through that quarterly that we would distribute more than half of our earnings and then distribute the remaining with the special annual. Approximately half of the special annual this year was the result if earnings and half was the result of excess cash, which is probably what you’re trying to get to.

Right. So we should be thinking a 100% of free cash flow goes for dividend this year?

Between the quarterly and the special annual, yes, we are anticipating most if not all of the annual earnings.

Okay, that is very helpful. And then, as I look to the stock mix, I spent a moment on the breakdown between U.S. and non-U.S. sales, and Eric you mentioned those some rebalancing during the year. Could you talk little bit about, what kind of demand you are seeing outside the United States as it relates in that sales?

Certainly, the demand outside the U.S. has been primarily institutional for us. So you see a lumpier pattern there, with regards to specific strategies we see interest in our global equity strategy or global opportunities. We saw last year the global value strategy pick up assets as well. We have been much, I think more consistent in the U.S. then the intermediary channel over the last four quarters. But when we look at our opportunities set and demand, there is clearly a higher demand outside the U.S. although it will just be I think lumpy which it’s pretty consistent with the institutional channel.

Okay. Just one last one. Thanks for taking all my questions. As you think about the new team, you bring it on board for high yield. In the past, what’s been sort of the up flow for asset gathering some of the other groups, just trying sort of frame with the flow opportunity might be for there. And then against, C.J., you mentioned, you gave some guidance for expenses this year. Would that be subject to an increase to the extent that you would beat those AUM expectations?

Yeah, Bill, I will take the first part of your question. And I will turn over to C.J. there. New teams that we have brought on or even new strategies that we have launched, we have had fairly low expectations with regards to asset build up. Our primary focus is on making sure that we find the right people to put on the team with Bryan and also have the proper infrastructure, so that over the short run, we can build the right foundation to the high yield strategy and then hopefully over the next three to five years, really turn it into a key franchise into the firm. In past years, the assets really ranged from a hundred million to a few hundred million. And flows, they are very hard to predict. So we’re being [obviously] conservative on it. And having all expectations on asset flows, we are more focused on the team and the build out of the strategies. So, on this cost, so we would not expect to see a material increase in costs depending on the asset raise. We think we have sort of a fully baked initial startup cost going in. I did mention that we also experienced some costs in the fourth quarter as we began, the on-boarding of the team and building it out and that impacted margin negatively by little less than 1%.

Okay. It’s very helpful. Thanks for taking all my questions.

No problem.

Our next question is from Robert Lee of KBW. Please go ahead.

Greetings, thanks, good morning guys. On the global value strategy, [counsel advice], how much of that or your business comes from platforms where existing investors can still contribute money, I know that, I guess that mainly [become] these kind of platform as fast, as significant, and being a full contribute to new sales with that strategy?

Yeah, Rob, I think your question around -- you have broke up a little bit on there but the question around the global value strategy and one close what type of reoccurring dollars could blow into the strategy. The strategy has a pretty balanced mix of assets between institutional and the intermediary channel. The intermediary channel will be a source of ongoing flows but we’ve managed those relationships so that we wouldn’t expect any large or unexpected flow. So that lower expectations around dollars coming in that close strategy.

Okay, great. And C.J. and I apologize I think I probably have missed some of these comments but the little modeling question, but the gain in the quarter, did you suggest that came from some investment gains related to deferred comps so there is some other expense offset it, I just want to make sure I understood that correct.

Yeah, the net impact was the 1.3 million, we had the $5 million gain with the realized gain because we actually liquidated the investment security that we had funded to fund that deferred comp plan in the quarter because that ended -- that arrangement ended December 31, 2013.

Okay, great. One last question on the emerging market strategy, if I remember correctly, outside of the one large redemption about a year ago I guess it was, I guess that business has been relatively stable from a flow perspective. But I think recently you had suggested that you've been seeing some at least prior to last month or so, you have been seeing some continued interest in that strategy. So, I was just trying to get a feel for how you see investors, institutional investors kind of reacting to some of the recent slow off and turmoil. Do you get a sense, is there a kind of reassessing, their allocations to emerging markets one way or another or is that at all impacting kind of the dialogues you're having around emerging markets or other strategies.

Certainly, we've seen a lot of flows over the last three years going to the emerging markets category. You've seen it both in the active and the passive categories. So, there has been a strong interest in the space. I think the fall off and returns compared to the developed market certainly slowed the flow there. And people are reassessing their mix of style as well as active and passive. So there has been I think a slowdown in that category and with our strategy specifically. We've been challenged on performance over the last few years. So, you've seen a loss which you mentioned a year ago. Over the last year, we've been fairly stable on close but overall, we haven't seen much interest in the strategy. It’s been primarily in our global equity strategies which has the ability to invest in emerging markets. And that's where we keep some our clients getting exposure is allowing us to make those allocations within broader and higher degrees of freedom in those strategies.

Okay. Thanks for taking my questions.

Our next question is from Michael Kim with Sandler O'Neill. Please go ahead.

Hey guys. Good morning. First, up until at least more recently, it did seem like retail investors were getting more comfortable taking on more risk in terms of their asset allocation. So, assuming that dynamic continues to play out, just curious to get your thoughts on where you see opportunities to continue to gain market share and how that might influence flow trends across the different investment teams?

Yes. Hey Michael, it’s Eric. As you know, our retail assets under management is under 10%, so it’s not a meaningful part when you look at our other channels with regards to the intermediary and institutional. But we are seeing interests in the intermediary; we saw that last year and it flows off the intermediary channels, specifically the broker dealer channel. Our preference is clearly looking for an institutionally oriented process embedded into intermediary because we think that extends the duration of assets. And within the high net worth broker dealer intermediary, whatever you define it there, which it does -- I think it does pick up that retail trend. We are seeing a definite flow into active equity strategies. And the strategies have been pretty broad-based when you look few last quarter when we look at the assets that came into Artisan it was a very healthy diversification across multiple teams.

Okay. And then maybe just focusing on the institutional side of business, now that some pension plans are closer to being fully funded, following the rally in equities, it sounds like some of them maybe adopting a bit more of a defensive stands to immunize liabilities to a greater degree. You mentioned that some ongoing rebalancing that impacted your separate accounts flows in the fourth quarter. So just wondering to what extend that might -- that trend might further narrow growth opportunities for institutional equities more broadly?

We have definitely, as you highlighted the trend towards immunizing plans or some type of liability matching within the institutional channel has been in existing over the last three, four years. Certainly with the strong equity returns last year, a lot of plans have become close to fully funded. And if you layer on top our performance for the year on top of a robust equity market. I mean we were at least 450 basis points as a firm across our weighted index. So, a lot of our clients for rebalancing in the strength, so we saw muted result in the institutional marketplace. Fortunately, there is a large asset base there in that institutional marketplace and there is always opportunities for growth depending our competitors and how they perform and how the index performs. So while the growth is probably somewhere around 2% to 3% and that traditional institutional defined benefit, probably a little bit better in the endowment channel. And we could still see good growth rates given the size of assets there for our strategies. But there is clearly headwind out there.

Okay. That's it from me, thanks.

Our next question is from Marc Irizarry of Goldman Sachs. Please go ahead.

Great, thanks. Eric, can we -- just staying on the topic of rebalancing and the headwind that you face, if you think about your business and your strategy to bring new teams, I mean where are these assets going and there is a sort of imperative over time that suggests that you need to sort of build out teams that can help you maybe capture more of the asset allocation, if so, where, what will be some of the strategies that may have, that maybe able to sort of help you, as investors think about rebalancing or moving across asset allocations that might help you sort of capture some of that share?

Hey sure, Marc. In the institutional face, that rebalancing, I think we saw dollars flow out into the alternative space and we saw rebalancing within the fixed income face into more specialized higher degree freedom strategies. And we clearly have picked up a great opportunity with Bryan Krug with the credit team to be able to pick-up assets to get rebalanced in the fixed income. And we have a very strong interest looking at the alternative space, various hedged on strategies that could fit into the Artisan model. So, those are two areas that we would look to for growth.

Okay, great. And then just on the closing of your strategy, the global value, I guess if we look at the fourth quarter trends, did some of the activities sort of pulled forward meaning to sort of anticipated at those strategies where these channels sort of now it’s going to close and therefore was there some activity that was pulled forward perhaps?

There is no anticipation on the strategy closing. You do have a little bit of a tail to closing because you announce your closing; you have to work with intermediary channel on actually closing this ticket within each of those platforms. And then secondly we also create a grandfather list for the institutional and separate accounts so that we are not pulling out midstream of finals or some other RFP process there. So the front-end, there is no anticipation of it but the backend has a little bit of a tail to it. So it does take a little while in the closing process.

Okay. And then just in terms of first quarter I know it’s somewhat early but obviously it’s been -- there has been some volatility; could you give some perspective on maybe the pipeline of institutional money, what you are seeing -- what you are currently seeing and how we should sort of expect the -- what we should sort of expect in terms of institutional wins and maybe you are in the pipeline or sort of maybe redemptions that we can expect going forward?

Yeah. Our pipeline has been fairly consistent, remains skewed outside the U.S. which I think C.J. alluded to in his comments earlier. But overall, the pipelines are always difficult to get too specific on or be that accurate. So I think the best thing is that it seems fairly consistent quarter-over-quarter and it’s been that way probably bulk of last year and going into this year seems healthy.

Okay. And then first quarter, the flows, I mean there is some I guess some seasonality that we should expect in 1Q for you guys?

I don’t think with financing abnormal quarter over -- this quarter relative to the first quarter of last year.

Okay, great. Thanks.

Our next question is from Cynthia Mayer of Bank of America. Please go ahead.

Hi, thanks a lot. Just to clarify maybe on $6 million to $7 million that you expect associated with the new team. How much of that I guess -- what was the cost of the new team exactly in 4Q and is it $6 million to $7 million on top of that or should we think of it as sort of the entire cost?

Yeah. So, in the fourth quarter we did incur some expenses as we started to bring on the new team and started the process of building out the infrastructure. And so, we would expect to see typically about the same amount levels of expenses and the $6 million to $7 million was really related to next year or so. Obviously that's, if it occurred evenly over the year that's about $1.5 million to $2 million a quarter.

Okay. I see. So, it's not on top of the 4Q and maybe the 4Q…

No, it's on top of…

That's right. Okay. And then with the new franchise that you guys are building out, so it's credit, which typically has lower fees. So, what kind of fee rate are you anticipating and are you little -- does it matter to you particularly if the fee rate was as to those assets fill if the fee rate was a little bit lower and had an impact on the overall fee rate?

Yeah Cynthia, it’s Eric. Certainly we’ve analyzed the high yield base and we think that the fee rates are in-line to some of our other strategies more specifically some of the large cap value or global equity strategies there. But with the -- starting off with the credit strategy and the high yield base there will be capacity constraints and we’ll manage those flows and we’ll manage our fee rate. So, I think you’ll see a slightly lower fee than our weighted average in the firm, which is 77 basis points, but we’re not expecting a meaningful impact on lowering the overall fee within the firm. And then also it’s going to be skewed towards and emphasis on using pool vehicles for the new strategy.

You mean you want to emphasize funds as you begin to [sell] it?

Yes.

Okay. And I guess last thing is you mentioned strategies [overall], so overtime, am I right you sort of expect this team to develop a few different credit strategies?

Yeah. We expect -- when we bring a team on overtime that we would have multiple strategies and hopefully develop multiple decision makers and match our definition of a true franchise. We’ll stay focused on the one strategy we have in mind right now, which we hope to launch in the next few months. And then where appropriate we’ll lay in other strategies. We have no definitive strategy; it would be the number two strategy within this franchise. But over the long-term we [peer] with the more than one strategy.

Great, all right. That’s it from me. Thanks a lot.

Thanks.

(Operator Instructions). And our next question is from Chris Shutler of William Blair. Please go ahead.

Hey, guys. Good morning. C.J., as you mentioned good momentum in the non-U.S. growth and global opportunity strategies, which makes sense. So, on non-U.S. growth you are at $25 billion AUM as of ‘12 31, obviously that strategy has been over $30 billion in the past. So, as you think about capacity there assuming velocity new money remains reasonable and you are finding opportunities to invest. And is it fair to think that strategy could get materially over $30 billion at some point in time?

Hey Chris, it’s Eric. I (inaudible) jump in here on this one. The strategy overall is a growth-orient strategy that tend to be into larger capital [chip] names. We have been over $30 billion in a strategy with room for growth there on top of it. I don’t know how much meaningfully over that we would be, but certainly when we look at the $24 billion, $25 billion exactly, I’m not sure the exact number on that that non-U.S. growth strategy we have good room for growth there. But we don’t have a definitive number in mind. And at this point as we experience some velocity or experience any strain on the integrity of the strategy, it will certainly come into discussion.

Okay, makes sense. Thanks Eric. And then in the global equity strategy obviously you’ve had a [PM] change there I think about a year ago, but the performance was terrific you have a three year track record. Just curious what the conversations are like right now with the consultants and what the pipeline looks like, because you would think that guys could start seeing some more meaningful closure at some point in time?

I think overall we’re getting improved traction with the PM change, a well over a year ago now. And the promotion of Charles Hamker and Andrew Euretig on the team, it’s created great depth and created comfort in the marketplace. And then you layer the performance is an exceptional and in overall when you look at the strategy outside of the global equity versus there is an international equity or the international small cap business been great consistency to the overall characteristic. So, we have high expectations for that strategy picking up in the institutional channel, as well as potentially Inter-media or in overseas. But I think we’re very well positioned there.

Okay. Do you feel like you need the five year or is three year plenty?

In the more mature strategies, I got large CapEx, plenty in global equities. A three, four years is starting to get some good interest, at five years is when you would be more of a hockey stick that’s start occurring say versus a small cap strategy, the global small cap strategy will meet a shorter time period. But I think we’re in a really good spot to start building a foundation of consultants following that and clients coming into the strategy. So I wouldn’t expect as high as growth as you might see in the global ops or the international equity, but I think it will get on the radar this year.

All right great. Thanks a lot.

Our next question is a follow-up from Bill Katz with Citigroup. Please go ahead.

Okay. Thank you. Actually I have two follow-ups. C.J., I’m sorry, just multi-tasking a little bit. As I think about the incremental $6 million to $7 million of expenses, you had mentioned before that the fourth quarter had a couple of million already in there. So I guess the question is, is it a step up from here or is it flat all else being equal? And then I have a follow-up.

Pretty much flat all else being equal, we have some initial on-boarding cost and then we started the implementation of the strategy. So, we would expect it to be a similar cost assuming we spend equally over the four quarters.

Right. Okay and then with the closing of the global value fund, is there any sort of surge we should anticipate, surge mean just normal term pickup of volume just in front of high close that might hit in January and/or February?

No I wouldn’t expect a major surge there. We have closed multiple strategies and I think the first time we probably closed the strategy two years ago, you saw surges are running to get in before the door closes. We’ve managed that so that we wouldn’t expect that strong push coming into the strategy. So I wouldn’t expect it.

Okay. Thank you so much for answering the questions.

Sure.

Our next question is a follow-up from Cynthia Mayer, Bank of America. Please go ahead.

Hi, just wanted to circle back once more on expenses. So, just a couple of things; one is the severance expenses was in this last year should no longer be in for 2014, right. Wasn’t that a one year event?

That’s correct.

Okay. And on the G&A a lot of the rise in the fourth quarter was I think the proxy expense, is that right so that would not be in first quarter? So all else equal we go down?

That's correct, we do adjust. Yeah, it was $2.6 million; we do adjust that in our adjusted earnings per adjusted share. We also had a slight uptick in [TNE] as we traveled around the world on a distribution side primarily and then also on technology side, I've been talking about some uptick in expense there and we saw that in the fourth quarter as well.

Okay. And the mid 40s cost of revenues ratio that will eventually yield -- you guys will eventually build up to. Is that inclusive of the $6 million to $7 million cost or is that apart from that?

Yeah, that reflects, including all expenses that we know could add and anticipated.

Okay. So then once your build up is done, in fact your cost of revenues ratio should begin to back off a little bit from that, right?

Well, I mean the major driver there is going to really be layering in of directly based comp expenses. As a public company offsetting that from a margin perspective is growth.

Right. So it would really probably be a function of the revenues in the end after the comp is built in. All right, thanks a lot.

You're welcome.

And this concludes our question-and-answer session. I would like to turn the conference back over to Mr. Colson for any closing remarks.

Great, thank you very much. And that concludes the call. Thanks.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.