SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 8, 2017 

WESTWOOD HOLDINGS GROUP, INC.
(Exact name of registrant as specified in charter)

Delaware    001-31234    75-2969997
(State or other jurisdiction    (Commission    (IRS Employer
of incorporation)     File Number)    Identification No.)

200 Crescent Court, Suite 1200
Dallas, Texas 75201
(Address of principal executive offices)

(214) 756-6900
(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see  General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02:    RESULTS OF OPERATIONS AND FINANCIAL CONDITION

In accordance with Securities and Exchange Commission Release No. 34-47583, the following information, which is being furnished pursuant to the requirements of Item 2.02, “Results of Operations and Financial Condition,” is being reported under Item 7.01, “Regulation FD Disclosure.”

On February 8, 2017, Westwood Holdings Group, Inc. issued a press release entitled “Westwood Holdings Group, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results; Launches Tax-Efficient Strategy”, a copy of which is furnished with this Current Report on Form 8-K as Exhibit 99.1.

The information in this Current Report on Form 8-K shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, or otherwise subject to the liabilities of that Section, nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise expressly stated in such filing.

ITEM 7.01:    REGULATION FD DISCLOSURE

Westwood announced today that its Board of Directors has approved the payment of a quarterly cash dividend of $0.62 per common share payable on April 3, 2017 to stockholders of record on March 10, 2017.

ITEM 9.01:    FINANCIAL STATEMENTS AND EXHIBITS

(d)    Exhibits: The following exhibit is furnished with this report:

Exhibit Number                    Description
 	 	
99.1	Press Release dated February 8, 2017, entitled “Westwood Holdings Group, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results; Launches Tax-Efficient Strategy”.	

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: February 8, 2017

WESTWOOD HOLDINGS GROUP, INC.

By:    /s/ Tiffany B. Kice        
Tiffany B. Kice
Chief Financial Officer and Treasurer

EXHIBIT INDEX

Exhibit Number        Description
 	 	
99.1	Press Release dated February 8, 2017, entitled “Westwood Holdings Group, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results; Launches Tax-Efficient Strategy”.	

Westwood Holdings Group, Inc. Reports Fourth Quarter and Fiscal Year 2016 Results
Launches Tax-Efficient Strategy

Dallas, TX, February 8, 2017 – Westwood Holdings Group, Inc. (NYSE: WHG) today reported fourth quarter revenues of $31.1 million, down $0.5 million compared with revenues of $31.6 million in the fourth quarter of 2015, primarily as a result of lower quarter-over-quarter performance-based advisory fees. Assets Under Management ("AUM") totaled $21.2 billion at December 31, 2016 versus $20.8 billion at December 31, 2015.
Fourth quarter net income was $7.6 million compared with $4.7 million for the fourth quarter of 2015, which included a net non-cash charge of $1.0 million related to acceleration of stock-based compensation expense for a particular grant and a $0.8 million tax charge for uncertain tax positions related to prior years. Diluted earnings per share ("Diluted EPS") of $0.92 compared to $0.58 for the fourth quarter of 2015. Non-GAAP Economic Earnings for the quarter increased 16% to $12.0 million, up from $10.4 million in the fourth quarter of 2015. Non-GAAP Economic Earnings per share ("Economic EPS") rose 13% to $1.45 from $1.28 in the fourth quarter of 2015.
Total revenues for fiscal 2016 were $123.0 million, 6% lower than $130.9 million in 2015. The decrease was primarily due to a $7.8 million decline in asset-based advisory fees reflecting lower average AUM in 2016 coupled with a $2.1 million decrease in performance-based advisory fees, partially offset by a $1.5 million increase in Trust fees due to a full year of revenue reported by Woodway.
Net income for 2016 totaled $22.6 million, a 17% decrease from the prior year's $27.1 million, primarily due to the decrease in total revenues. Diluted EPS of $2.77 compared with $3.33 for 2015. Economic EPS of $5.03 decreased 12% from $5.71 in 2015.
Highlights of our fourth quarter include:
 	 	
▪	Launch of a new tax-efficient, high conviction select equity strategy for high-net-worth individuals.	
 	 	
▪	Strong performance of our Emerging Markets and Global Convertible Securities strategies.	
 	 	
▪	Declaration of a 9% increase in the quarterly cash dividend rate to $0.62 per common share.	
Brian Casey, Westwood’s President & CEO, commented, “We were very pleased with the performance of our Emerging Markets products, especially our Emerging Markets SmidCap product, which outperformed its benchmark by over 700 basis points in 2016, and we celebrated the three-year anniversary of our LargeCap concentrated strategy with performance well ahead of its benchmark over the three-year period. We are optimistic about the year ahead as weaker market correlations signal a shift to an environment that favors active management. At the end of the year, we introduced a new strategy for our private wealth clients that includes our highest conviction ideas and is designed to be tax efficient.  We have high expectations for this strategy and remain committed to our time-tested investment philosophy of focusing on quality businesses with strong balance sheets and attractive valuations, which we believe will produce superior risk-adjusted returns over the long term.”

Westwood’s Board of Directors declared a quarterly cash dividend of $0.62 per common share, payable on April 3, 2017 to stockholders of record on March 10, 2017. At year end, Westwood had $90.2 million in cash and investments, stockholders’ equity of $146.1 million, and no debt.

Economic Earnings and Economic EPS are non-GAAP performance measures and are explained and reconciled with the most comparable GAAP numbers in the attached tables.

Westwood will host a conference call to discuss fourth quarter and fiscal year 2016 results and other business matters at 4:30 p.m. Eastern time today. To join the conference call, dial 877-303-6235 (U.S. and Canada) or 631-291-4837 (international). The conference call can also be accessed via our Investor Relations page at westwoodgroup.com and will be available for replay through February 15, 2017 by dialing 855-859-2056 (U.S. and Canada) or 404-537-3406 (international) and entering the passcode 53551712.

About Westwood

Westwood Holdings Group, Inc. provides investment management services to institutional investors, private wealth clients and financial intermediaries. With $21.2 billion in assets under management (as of December 31, 2016), our firm offers a range of investment strategies including U.S. equities, Master Limited Partnerships (MLPs), Multi-Asset, Global and Emerging Markets equities, and Global Convertible securities portfolios. Access to these strategies is available through separate accounts, the Westwood Funds® family of mutual funds, UCITS funds and other pooled vehicles. Westwood benefits from significant, broad-based employee ownership and trades on the New York Stock Exchange under the symbol “WHG.” Based in Dallas, Westwood also maintains offices in Toronto, Boston, Omaha and Houston.

For more information on Westwood, please visit www.westwoodgroup.com.

For more information on the Westwood Funds®, please visit www.westwoodfunds.com.

Forward-looking Statements

Statements in this press release that are not purely historical facts, including, without limitation, statements about our expected future financial position, results of operations or cash flows, as well as other statements including without limitation, words such as “anticipate,” “forecast,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “could,” “goal,” “may,” “target,” “designed,” “on track,” “comfortable with,” “optimistic” and other similar expressions, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results and the timing of some events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation: regulations adversely affecting the financial services industry; the composition and market value of our assets under management; competition in the investment management industry; our investments in foreign companies; our ability to develop and market new investment strategies successfully; our ability to pursue and properly integrate acquired businesses; litigation risks; our ability to retain qualified personnel; our relationships with current and potential customers; our ability to properly address conflicts of interest; our ability to maintain adequate insurance coverage; our ability to maintain effective information systems; our ability to maintain effective cyber security; our ability to maintain an effective system of internal controls; our ability to maintain our fee structure in light of competitive fee pressures; our relationships with investment consulting firms; the significant concentration of our revenues in a small number of customers; and the other risks detailed from time to time in Westwood’s SEC filings, including, but not limited to, its annual report on Form 10-K for the year ended December 31, 2015 and its quarterly reports on Form 10-Q for the quarters ended March 31, 2016, June 30, 2016, and September 30, 2016. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as required by law, Westwood is not obligated to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.

# # # #

SOURCE: Westwood Holdings Group, Inc.

(WHG-G)
CONTACT:
Westwood Holdings Group, Inc.
Tiffany B. Kice
Chief Financial Officer and Treasurer
(214) 756-6900

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share and share amounts)
(unaudited)

 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	Three Months Ended	
 	December 31,
2016	 	September 30,
2016	 	December 31,
2015	
REVENUES:	 	 	 	 	 	
Advisory fees:	 	 	 	 	 	
Asset-based	$	23,564	
 	 	$	23,447	
 	 	$	22,948	
 	
Performance-based	—	
 	 	226	
 	 	492	
 	
Trust fees	7,515	
 	 	7,690	
 	 	7,751	
 	
Other, net	13	
 	 	414	
 	 	375	
 	
Total revenues	31,092	
 	 	31,777	
 	 	31,566	

EXPENSES:	 	 	 	 	 	
Employee compensation and benefits	$	14,270	
 	 	$	15,637	
 	 	$	16,055	
 	
Sales and marketing	496	
 	 	408	
 	 	529	
 	
Westwood mutual funds	873	
 	 	755	
 	 	842	
 	
Information technology	1,696	
 	 	1,874	
 	 	1,647	
 	
Professional services	915	
 	 	1,903	
 	 	1,336	
 	
General and administrative	2,043	
 	 	2,147	
 	 	2,569	
 	
Total expenses	20,293	
 	 	22,724	
 	 	22,978	
 	
Income before income taxes	10,799	
 	 	9,053	
 	 	8,588	
 	
Provision for income taxes	3,222	
 	 	3,166	
 	 	3,901	
 	
Net income	$	7,577	
 	 	$	5,887	
 	 	$	4,687	
 	
Other comprehensive income (loss):	 	 	 	 	 	
   Foreign currency translation adjustments	(606	)	 	(453	)	 	(916	)	
Total comprehensive income	$	6,971	
 	 	$	5,434	
 	 	$	3,771	

Earnings per share:	 	 	 	 	 	
   Basic	$	0.95	
 	 	$	0.74	
 	 	$	0.60	
 	
   Diluted	$	0.92	
 	 	$	0.72	
 	 	$	0.58	

Weighted average shares outstanding:	 	 	 	 	 	
   Basic	7,988,558	
 	 	7,995,680	
 	 	7,813,142	
 	
   Diluted	8,261,274	
 	 	8,179,956	
 	 	8,124,268	

Economic Earnings	$	12,014	
 	 	$	10,615	
 	 	$	10,391	
 	
Economic EPS	$	1.45	
 	 	$	1.30	
 	 	$	1.28	

Dividends declared per share	$	0.62	
 	 	$	0.57	
 	 	$	0.57	

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands, except per share and share amounts)
(unaudited)

 	
 	 	 	 	 	 	 	 	
 	Year Ended December 31,	
 	2016	 	2015	
REVENUES:	 	 	 	
Advisory fees:	 	 	 	
Asset-based	$	91,492	
 	 	$	99,275	
 	
Performance-based	635	
 	 	2,698	
 	
Trust fees	30,313	
 	 	28,795	
 	
Other, net	581	
 	 	168	
 	
Total revenues	123,021	
 	 	130,936	

EXPENSES:	 	 	 	
Employee compensation and benefits	61,509	
 	 	63,562	
 	
Sales and marketing	1,919	
 	 	1,839	
 	
Westwood mutual funds	3,155	
 	 	3,435	
 	
Information technology	7,735	
 	 	5,732	
 	
Professional services	5,622	
 	 	5,617	
 	
General and administrative	9,071	
 	 	8,531	
 	
Total expenses	89,011	
 	 	88,716	
 	
Income before income taxes	34,010	
 	 	42,220	
 	
Provision for income taxes	11,363	
 	 	15,115	
 	
Net income	$	22,647	
 	 	$	27,105	
 	
Other comprehensive income (loss):	 	 	 	
   Foreign currency translation adjustments	401	
 	 	(3,457	)	
Total comprehensive income	$	23,048	
 	 	$	23,648	

Earnings per share:	 	 	 	
   Basic	$	2.84	
 	 	$	3.49	
 	
   Diluted	$	2.77	
 	 	$	3.33	

Weighted average shares outstanding:	 	 	 	
   Basic	7,961,891	
 	 	7,756,647	
 	
   Diluted	8,165,475	
 	 	8,149,399	

Economic Earnings	$	41,108	
 	 	$	46,496	
 	
Economic EPS	$	5.03	
 	 	$	5.71	

Dividends declared per share	$	2.33	
 	 	$	2.07	

 

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share amounts)
(unaudited)

 	 	 	 	 	 	 	 	
 	December 31, 2016	 	December 31, 2015	
ASSETS	 	 	 	
Current Assets:	 	 	 	
   Cash and cash equivalents	$	33,679	
 	 	$	22,740	
 	
   Accounts receivable	23,429	
 	 	19,618	
 	
   Investments, at fair value	56,485	
 	 	72,320	
 	
   Other current assets	2,364	
 	 	2,926	
 	
      Total current assets	115,957	
 	 	117,604	
 	
Goodwill	27,144	
 	 	27,144	
 	
Deferred income taxes	10,903	
 	 	11,042	
 	
Intangible assets, net	21,394	
 	 	23,354	
 	
Property and equipment, net of accumulated depreciation of $4,590 and $3,687	4,280	
 	 	2,192	
 	
      Total assets	$	179,678	
 	 	$	181,336	

LIABILITIES AND STOCKHOLDERS’ EQUITY	 	 	 	
Current Liabilities:	 	 	 	
   Accounts payable and accrued liabilities	$	2,641	
 	 	$	3,549	
 	
   Dividends payable	6,679	
 	 	5,749	
 	
   Compensation and benefits payable	17,200	
 	 	20,264	
 	
   Contingent consideration	—	
 	 	9,023	
 	
   Income taxes payable	3,148	
 	 	6,268	
 	
      Total current liabilities	29,668	
 	 	44,853	
 	
Accrued dividends	1,767	
 	 	1,699	
 	
Deferred rent	2,174	
 	 	817	
 	
      Total liabilities	33,609	
 	 	47,369	

 	
 	 	 	
Stockholders’ Equity:	 	 	 	
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,801,938 and outstanding 8,810,375 shares at December 31, 2016; issued 9,425,309 and outstanding 8,630,687 shares at December 31, 2015	98	
 	 	94	
 	
Additional paid-in capital	162,730	
 	 	143,797	
 	
Treasury stock, at cost – 991,563 shares at December 31, 2016; 794,622 shares at December 31, 2015	(44,353	)	 	(34,910	)	
Accumulated other comprehensive loss	(4,287	)	 	(4,688	)	
Retained earnings	31,881	
 	 	29,674	
 	
      Total stockholders’ equity	146,069	
 	 	133,967	
 	
Total liabilities and stockholders’ equity	$	179,678	
 	 	$	181,336	

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)

 	 	 	 	 	 	 	 	
 	Year ended December 31,	
 	2016	 	2015	
CASH FLOWS FROM OPERATING ACTIVITIES:	 	 	 	
Net income	$	22,647	
 	 	$	27,105	
 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	

Depreciation	969	
 	 	1,050	
 	
Amortization of intangible assets	1,960	
 	 	1,546	
 	
Unrealized losses (gains) on trading investments	(510	)	 	613	
 	
Stock-based compensation expense	15,954	
 	 	17,574	
 	
Deferred income taxes	149	
 	 	(3,285	)	
Excess tax benefits from stock based compensation	(165	)	 	(1,455	)	
Net sales (purchases) of investments – trading securities	16,345	
 	 	6,684	
 	
Other	269	
 	 	(58	)	
Changes in operating assets and liabilities:	 	

Accounts receivable	(3,493	)	 	(5,192	)	
Other current assets	567	
 	 	(375	)	
Accounts payable and accrued liabilities	(926	)	 	1,174	
 	
Compensation and benefits payable	(2,848	)	 	2,912	
 	
Income taxes payable	(3,655	)	 	6,890	
 	
Other liabilities	129	
 	 	25	
 	
Net cash provided by operating activities	47,392	
 	 	55,208	

CASH FLOWS FROM INVESTING ACTIVITIES:	 	 	 	
Acquisition of Woodway, net of cash acquired	—	
 	 	(24,133	)	
Purchases of property, equipment and other	(1,819	)	 	(951	)	
Proceeds on sale of property and equipment	9	
 	 	—	
 	
Net cash used in investing activities	(1,810	)	 	(25,084	)	
 	 	 	 	
CASH FLOWS FROM FINANCING ACTIVITIES:	 	 	 	
Purchases of treasury stock	(5,634	)	 	—	
 	
Purchases of treasury stock for employee stock plans	(614	)	 	(1,327	)	
Restricted stock returned for payment of taxes	(3,857	)	 	(5,648	)	
Excess tax benefits from stock-based compensation	165	
 	 	1,455	
 	
Payment of contingent consideration in acquisition	(5,562	)	 	—	
 	
Cash dividends	(19,442	)	 	(16,619	)	
Net cash used in financing activities	(34,944	)	 	(22,139	)	
Effect of currency rate changes on cash	301	
 	 	(3,376	)	
NET INCREASE IN CASH AND CASH EQUIVALENTS	10,939	
 	 	4,609	
 	
Cash and cash equivalents, beginning of period	22,740	
 	 	18,131	
 	
Cash and cash equivalents, end of period	$	33,679	
 	 	$	22,740	

Supplemental cash flow information:	 	 	 	
Cash paid during the period for income taxes	$	14,860	
 	 	$	11,639	
 	
Common stock issued for acquisition	$	3,734	
 	 	$	5,292	
 	
Non-cash accrued contingent consideration	$	—	
 	 	$	9,023	
 	
Accrued dividends	$	8,446	
 	 	$	7,448	
 	
Tenant allowance included in Property and equipment	$	1,236	
 	 	$	—	

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES
Reconciliation of Net Income to Economic Earnings
(in thousands, except per share and share amounts)
(unaudited)

 	 	 	 	 	 	 	 	 	 	 	 	
 	Three Months Ended	
 	December 31,
2016	 	September 30,
2016	 	December 31,
2015	
Net Income	$	7,577	
 	 	$	5,887	
 	 	$	4,687	
 	
Add: Stock-based compensation expense	3,790	
 	 	4,082	
 	 	5,014	
 	
Add: Intangible amortization	490	
 	 	490	
 	 	595	
 	
Add: Tax benefit from goodwill amortization	157	
 	 	156	
 	 	95	
 	
Economic Earnings	$	12,014	
 	 	$	10,615	
 	 	$	10,391	

Diluted weighted average shares	8,261,274	
 	 	8,179,956	
 	 	8,124,268	
 	
Economic EPS	$	1.45	
 	 	$	1.30	
 	 	$	1.28	

 	
 	 	 	 	 	 	 	 	
 	Year Ended December 31,	
 	2016	 	2015	
Net Income	$	22,647	
 	 	$	27,105	
 	
Add: Stock-based compensation expense	15,954	
 	 	17,574	
 	
Add: Intangible amortization	1,960	
 	 	1,546	
 	
Add: Tax benefit from goodwill amortization	547	
 	 	271	
 	
Economic Earnings	$	41,108	
 	 	$	46,496	

Diluted weighted average shares	8,165,475	
 	 	8,149,399	
 	
Economic EPS	$	5.03	
 	 	$	5.71	

As supplemental information, we are providing non-GAAP performance measures that we refer to as Economic Earnings and Economic Earnings per share ("Economic EPS"). We provide these measures in addition to, not as a substitute for, net income and earnings per share, which are reported on a GAAP basis. Management reviews Economic Earnings and Economic EPS to evaluate Westwood’s ongoing performance, allocate resources, and review our dividend policy. We believe that these non-GAAP performance measures, while not substitutes for GAAP net income or earnings per share, are useful for management and investors when evaluating Westwood’s underlying operating and financial performance and its available resources. We do not advocate that investors consider these non-GAAP measures without also considering financial information prepared in accordance with GAAP.

We define Economic Earnings as net income plus non-cash equity-based compensation expense, amortization of intangible assets and deferred taxes related to goodwill. Although depreciation on fixed assets is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent an allocation of the decline in the value of the related assets that will ultimately require replacement. In addition, we do not adjust Economic Earnings for tax deductions related to restricted stock expense or amortization of intangible assets. Economic EPS represents Economic Earnings divided by diluted weighted average shares outstanding.