UNITED STATES
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) October 26, 2005
Affiliated Managers Group, Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
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001-13459 |
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04-3218510 |
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(Commission File Number) |
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(IRS Employer Identification No.) |
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600 Hale Street |
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Prides Crossing, Massachusetts |
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01965 |
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(Address of Principal Executive Offices) |
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(Zip Code) |
(617) 747-3300
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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 Conditions.
On October 26, 2005, Affiliated Managers Group, Inc. (the “Company”) issued a press release setting forth its financial and operating results for the quarter ended September 30, 2005. A copy of this press release is furnished as Exhibit 99.1 hereto and is hereby incorporated by reference herein.
ITEM 9.01 Financial Statements and Exhibits.
(c) Exhibits.
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Exhibit No. |
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Description |
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99.1* |
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Earnings Press Release issued by the Company on October 26, 2005. |
* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
2
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.
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AFFILIATED MANAGERS GROUP, INC. |
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Date: October 26, 2005 |
By: |
/S/ JOHN KINGSTON, III |
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Name: |
John Kingston, III |
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Title: |
General Counsel
and Senior Vice |
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3
EXHIBIT INDEX
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Exhibit No. |
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Description |
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99.1* |
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Earnings Press Release issued by the Company on October 26, 2005. |
* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
4
Exhibit 99.1
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Contact: |
Darrell W. Crate |
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Affiliated Managers Group, Inc. |
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(617) 747-3300 |
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AMG Reports Financial and Operating Results
for Third Quarter and Nine Months Ended September 30, 2005
Company Reports EPS of $0.67; Cash EPS of $1.18
Boston, MA, October 26, 2005 – Affiliated Managers Group, Inc. (NYSE: AMG) today reported its financial and operating results for the quarter and nine months ended September 30, 2005.
Cash earnings per share (“Cash EPS”) for the third quarter of 2005 were $1.18, compared to $0.96 for the third quarter of 2004, while diluted earnings per share for the third quarter of 2005 were $0.67, compared to $0.46 for the same period of 2004. Cash Net Income was $45.8 million for the third quarter of 2005, compared to $29.3 million for the third quarter of 2004. Net Income for the third quarter of 2005 was $28.5 million, compared to $16.8 million for the third quarter of 2004. (Cash EPS and Cash Net Income are defined in the attached tables.)
For the third quarter of 2005, revenue was $234.1 million, compared to $165.8 million for the third quarter of 2004. EBITDA for the third quarter of 2005 was $66.1 million, compared to $42.7 million for the same period of 2004.
For the nine months ended September 30, 2005, Cash Net Income was $129.9 million, while EBITDA was $184.0 million. For the same period, Net Income was $80.3 million, on revenue of $644.0 million. For the nine months ended September 30, 2004, Cash Net Income was $89.0 million, while EBITDA was $132.6 million. For the same period, Net Income was $53.9 million, on revenue of $476.0 million.
Net client cash flows for the third quarter of 2005 were approximately $1.2 billion, with net inflows in the mutual fund, institutional, and high net worth channels of approximately $800 million, $290 million, and $80 million, respectively. These aggregate net client cash flows for the quarter resulted in an increase of approximately $1.0 million to AMG’s annualized EBITDA. The aggregate assets under management of AMG’s affiliated investment management firms at September 30, 2005 were approximately $175 billion.
(more)
“AMG had an outstanding quarter, reporting Cash earnings per share of $1.18, an increase of 23 percent compared to the same quarter of last year,” said Sean M. Healey, President and Chief Executive Officer of AMG. “Our results reflect accretion from investments in new Affiliates, as well as significant organic growth at our existing Affiliates. Investment performance and net client cash flows remain strong across our Affiliate group, with net flows totaling $1.2 billion for the quarter, and $4.4 billion in directly managed assets for the year-to-date.”
“Our earnings growth highlights the diversity of our product offerings and our broad participation in many of the fastest-growing segments of the industry,” said William J. Nutt, Chairman of AMG. “International markets were especially strong in the third quarter, and we were well positioned to participate in this growth with a broad array of high quality global and international products offered through firms such as Tweedy, Browne, Third Avenue, Genesis, and AQR, along with our new Canadian Affiliates, such as Foyston, Gordon & Payne. In addition, we had excellent results in domestic equities, including growth-oriented products managed by Friess, TimesSquare, and Renaissance, and value-oriented products managed by Third Avenue and Systematic.”
“During the quarter, we also completed our acquisition of First Asset Management Inc. and its equity interests in six leading, mid-sized Canadian asset management firms,” Mr. Healey continued. “We are pleased with the results of our integration of First Asset’s holding company operations, as well as the performance of our new Affiliates. In addition, we continue to make excellent progress in cultivating relationships with high quality, mid-sized investment management firms, and, looking ahead, we are confident in our ability to generate growth through accretive investments in new Affiliates.”
AMG is an asset management company with equity investments in a diverse group of mid-sized investment management firms. AMG’s strategy is to generate growth through the internal growth of its existing Affiliates, as well as through investments in new Affiliates. AMG’s innovative transaction structure allows individual members of each Affiliate’s management team to retain or receive significant direct equity ownership in their firm while maintaining operating autonomy. In addition, AMG provides centralized assistance to its Affiliates in strategic matters, marketing, distribution, product development and operations.
Certain matters discussed in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Actual results and the timing of certain events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including changes in the securities or financial markets or in general economic conditions, the availability of equity and debt financing, competition for acquisitions of interests in investment management firms, the investment performance of our Affiliates and their ability to effectively market their investment strategies, and other risks detailed from time to time in AMG’s filings with the Securities and Exchange Commission. Reference is hereby made to the “Cautionary Statements” set forth in the Company’s Form 10-K for the year ended December 31, 2004.
Financial Tables Follow
A teleconference will be held with AMG’s management at 11:00 a.m. Eastern time today. Parties interested in listening to the teleconference should dial 1-800-866-5043 (domestic calls) or 1-303-205-0066 (international calls) starting at 10:45 a.m. Eastern time. Those wishing to listen to the teleconference should dial the appropriate number at least ten minutes before the call begins. The teleconference will be available for replay approximately one hour after the conclusion of the call. To access the replay, please dial 1-800-405-2236 (domestic calls) or 1-303-590-3000 (international calls), pass code 11041920. The live call and the replay of the session, and the additional financial information referenced during the teleconference, may also be accessed via the Web at www.amg.com.
###
For more information on Affiliated
Managers Group, Inc.,
please visit AMG’s Web site at www.amg.com
2
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
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Three Months |
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Three Months |
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Ended |
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Ended |
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9/30/04 |
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9/30/05 |
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Revenue |
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$ |
165,846 |
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$ |
234,126 |
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Net Income |
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$ |
16,799 |
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$ |
28,510 |
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Cash Net Income (A) |
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$ |
29,253 |
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$ |
45,777 |
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EBITDA (B) |
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$ |
42,728 |
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$ |
66,077 |
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Average shares outstanding - diluted (C) |
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38,481,044 |
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44,908,036 |
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Earnings per share - diluted (C)* |
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$ |
0.46 |
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$ |
0.67 |
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Average shares outstanding - adjusted diluted (D) |
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30,570,211 |
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38,884,988 |
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Cash earnings per share - diluted (D) |
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$ |
0.96 |
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$ |
1.18 |
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December 31, |
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September 30, |
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2004 |
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2005 |
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Cash and cash equivalents |
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$ |
140,277 |
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$ |
139,235 |
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Senior debt |
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$ |
126,750 |
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$ |
256,750 |
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Senior convertible debt |
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$ |
423,958 |
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$ |
424,417 |
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Mandatory convertible securities |
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$ |
300,000 |
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$ |
300,000 |
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Stockholders’ equity |
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$ |
707,692 |
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$ |
810,637 |
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*As required by EITF 04-08 (discussed in Note C in greater detail), the calculation of diluted earnings per share includes the addition to Net Income of interest expense related to the Company’s contingently convertible securities, net of tax, of $765 and $1,791 for the three months ended September 30, 2004 and 2005, respectively.
3
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Nine Months |
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Nine Months |
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Ended |
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Ended |
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9/30/04 |
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9/30/05 |
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Revenue |
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$ |
476,042 |
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$ |
643,995 |
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Net Income |
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$ |
53,889 |
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$ |
80,305 |
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Cash Net Income (A) |
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$ |
88,986 |
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$ |
129,887 |
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EBITDA (B) |
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$ |
132,607 |
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$ |
184,041 |
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Average shares outstanding - diluted (C) |
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38,929,062 |
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44,465,513 |
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Earnings per share - diluted (C)* |
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$ |
1.44 |
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$ |
1.91 |
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Average shares outstanding - adjusted diluted (D) |
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31,086,539 |
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37,951,076 |
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Cash earnings per share - diluted (D) |
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$ |
2.86 |
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$ |
3.42 |
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*As required by EITF 04-08 (discussed in Note C in greater detail), the calculation of diluted earnings per share includes the addition to Net Income of interest expense related to the Company’s contingently convertible securities, net of tax, of $2,004 and $4,638 for the nine months ended September 30, 2004 and 2005, respectively.
4
Affiliated Managers Group, Inc.
Reconciliations of Earnings Per Share Calculation
(dollars in thousands, except per share data)
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Three Months |
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Three Months |
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Ended |
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Ended |
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9/30/04 |
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9/30/05 |
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Net Income |
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$ |
16,799 |
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$ |
28,510 |
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Contingent convertible securities interest expense, net |
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765 |
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1,791 |
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Net Income, as adjusted |
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$ |
17,564 |
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$ |
30,301 |
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Average shares outstanding - diluted (C) |
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38,481,044 |
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44,908,036 |
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Earnings per share - diluted (C) |
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$ |
0.46 |
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$ |
0.67 |
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Nine Months |
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Nine Months |
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Ended |
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Ended |
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9/30/04 |
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9/30/05 |
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Net Income |
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$ |
53,889 |
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$ |
80,305 |
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Contingent convertible securities interest expense, net |
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2,004 |
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4,638 |
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Net Income, as adjusted |
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$ |
55,893 |
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$ |
84,943 |
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Average shares outstanding - diluted (C) |
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38,929,062 |
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44,465,513 |
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Earnings per share - diluted (C) |
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$ |
1.44 |
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$ |
1.91 |
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5
Affiliated Managers Group, Inc.
Reconciliations of Average Shares Outstanding
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Three Months |
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Three Months |
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Ended |
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Ended |
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9/30/04 |
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9/30/05 |
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Average shares outstanding - diluted (C) |
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38,481,044 |
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44,908,036 |
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Assumed issuance of COBRA shares |
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(5,566,599 |
) |
(6,355,860 |
) |
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Assumed issuance of LYONS shares |
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(2,344,234 |
) |
(2,344,130 |
) |
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Dilutive impact of COBRA shares |
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— |
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2,061,370 |
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Dilutive impact of LYONS shares |
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— |
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615,572 |
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Average shares outstanding - adjusted diluted (D) |
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30,570,211 |
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38,884,988 |
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Nine Months |
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Nine Months |
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Ended |
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Ended |
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9/30/04 |
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9/30/05 |
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Average shares outstanding - diluted (C) |
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38,929,062 |
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44,465,513 |
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Assumed issuance of COBRA shares |
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(5,593,386 |
) |
(6,210,650 |
) |
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Assumed issuance of LYONS shares |
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(2,344,234 |
) |
(2,344,130 |
) |
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Dilutive impact of COBRA shares |
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65,454 |
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1,567,498 |
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Dilutive impact of LYONS shares |
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29,643 |
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472,845 |
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Average shares outstanding - adjusted diluted (D) |
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31,086,539 |
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37,951,076 |
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6
Affiliated Managers Group, Inc.
Operating Results
(in millions)
Assets Under Management (E)
Statement of Changes - Quarter to Date
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Mutual |
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Institutional |
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High Net |
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Total |
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Assets under management, June 30, 2005 |
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$ |
41,475 |
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$ |
78,996 |
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$ |
17,488 |
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$ |
137,959 |
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Net client cash flows |
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788 |
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289 |
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80 |
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1,157 |
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New investments (F) |
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3,637 |
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13,796 |
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7,523 |
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24,956 |
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First Quadrant Ltd. operations (G) |
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— |
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(1,055 |
) |
— |
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(1,055 |
) |
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Investment performance |
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3,181 |
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7,950 |
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1,163 |
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12,294 |
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Assets under management, September 30, 2005 |
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$ |
49,081 |
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$ |
99,976 |
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$ |
26,254 |
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$ |
175,311 |
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Statement of Changes - Year to Date
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Mutual |
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Institutional |
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High Net |
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Total |
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Assets under management, December 31, 2004 |
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$ |
33,919 |
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$ |
76,127 |
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$ |
19,756 |
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$ |
129,802 |
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Net client cash flows |
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3,916 |
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4,293 |
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(2,116 |
) |
6,093 |
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New investments (F) |
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6,462 |
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13,868 |
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7,611 |
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27,941 |
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First Quadrant Ltd. operations (G) |
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— |
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(3,647 |
) |
— |
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(3,647 |
) |
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Investment performance |
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4,784 |
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9,335 |
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1,003 |
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15,122 |
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Assets under management, September 30, 2005 |
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$ |
49,081 |
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$ |
99,976 |
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$ |
26,254 |
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$ |
175,311 |
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7
Affiliated Managers Group, Inc.
Operating Results
(in thousands)
Financial Results (E)
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Three |
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Three |
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Ended |
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Percent |
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Ended |
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Percent |
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9/30/04 |
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of Total |
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9/30/05 |
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of Total |
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Revenue |
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Mutual Fund |
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$ |
65,196 |
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39% |
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$ |
108,406 |
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46% |
|
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Institutional |
|
67,013 |
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41% |
|
92,195 |
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40% |
|
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High Net Worth |
|
33,637 |
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20% |
|
33,525 |
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14% |
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$ |
165,846 |
|
100% |
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$ |
234,126 |
|
100% |
|
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|
|
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EBITDA (B) |
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|
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Mutual Fund |
|
$ |
18,299 |
|
43% |
|
$ |
30,565 |
|
46% |
|
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Institutional |
|
16,450 |
|
38% |
|
27,141 |
|
41% |
|
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High Net Worth |
|
7,979 |
|
19% |
|
8,371 |
|
13% |
|
||
|
|
|
$ |
42,728 |
|
100% |
|
$ |
66,077 |
|
100% |
|
|
|
|
Nine |
|
|
|
Nine |
|
|
|
||
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|
|
Ended |
|
Percent |
|
Ended |
|
Percent |
|
||
|
|
|
9/30/04 |
|
of Total |
|
9/30/05 |
|
of Total |
|
||
|
Revenue |
|
|
|
|
|
|
|
|
|
||
|
Mutual Fund |
|
$ |
189,219 |
|
40% |
|
$ |
286,956 |
|
45% |
|
|
Institutional |
|
183,612 |
|
38% |
|
263,140 |
|
40% |
|
||
|
High Net Worth |
|
103,211 |
|
22% |
|
93,899 |
|
15% |
|
||
|
|
|
$ |
476,042 |
|
100% |
|
$ |
643,995 |
|
100% |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
EBITDA (B) |
|
|
|
|
|
|
|
|
|
||
|
Mutual Fund |
|
$ |
56,032 |
|
42% |
|
$ |
80,275 |
|
44% |
|
|
Institutional |
|
49,407 |
|
38% |
|
80,178 |
|
43% |
|
||
|
High Net Worth |
|
27,168 |
|
20% |
|
23,588 |
|
13% |
|
||
|
|
|
$ |
132,607 |
|
100% |
|
$ |
184,041 |
|
100% |
|
8
Affiliated Managers Group, Inc.
Reconciliation of Performance and Liquidity Measures
(in thousands)
|
|
|
Three Months |
|
Three Months |
|
||
|
|
|
Ended |
|
Ended |
|
||
|
|
|
9/30/04 |
|
9/30/05 |
|
||
|
|
|
|
|
|
|
||
|
Net Income |
|
$ |
16,799 |
|
$ |
28,510 |
|
|
Intangible amortization |
|
4,950 |
|
6,525 |
|
||
|
Intangible amortization - equity method investments (H) |
|
— |
|
2,192 |
|
||
|
Intangible-related deferred taxes |
|
6,441 |
|
7,058 |
|
||
|
Affiliate depreciation |
|
1,063 |
|
1,492 |
|
||
|
Cash Net Income (A) |
|
$ |
29,253 |
|
$ |
45,777 |
|
|
|
|
|
|
|
|
||
|
Cash flow from operations |
|
$ |
51,133 |
|
$ |
75,279 |
|
|
Interest expense, net of non-cash items |
|
6,829 |
|
8,832 |
|
||
|
Current tax provision |
|
3,240 |
|
8,762 |
|
||
|
Income from equity method investments, net of distributions (H) |
|
— |
|
2,185 |
|
||
|
Changes in assets and liabilities and other adjustments |
|
(18,474 |
) |
(28,981 |
) |
||
|
EBITDA (B) |
|
$ |
42,728 |
|
$ |
66,077 |
|
|
Holding company expenses |
|
7,036 |
|
9,756 |
|
||
|
EBITDA Contribution |
|
$ |
49,764 |
|
$ |
75,833 |
|
|
|
|
Nine Months |
|
Nine Months |
|
||
|
|
|
Ended |
|
Ended |
|
||
|
|
|
9/30/04 |
|
9/30/05 |
|
||
|
|
|
|
|
|
|
||
|
Net Income |
|
$ |
53,889 |
|
$ |
80,305 |
|
|
Intangible amortization |
|
13,214 |
|
17,998 |
|
||
|
Intangible amortization - equity method investments (H) |
|
— |
|
6,187 |
|
||
|
Intangible-related deferred taxes |
|
18,684 |
|
21,918 |
|
||
|
Affiliate depreciation |
|
3,199 |
|
3,479 |
|
||
|
Cash Net Income (A) |
|
$ |
88,986 |
|
$ |
129,887 |
|
|
|
|
|
|
|
|
||
|
Cash flow from operations |
|
$ |
128,535 |
|
$ |
136,582 |
|
|
Interest expense, net of non-cash items |
|
20,641 |
|
22,985 |
|
||
|
Current tax provision |
|
13,413 |
|
23,900 |
|
||
|
Income from equity method investments, net of distributions (H) |
|
— |
|
5,960 |
|
||
|
Changes in assets and liabilities and other adjustments |
|
(29,982 |
) |
(5,386 |
) |
||
|
EBITDA (B) |
|
$ |
132,607 |
|
$ |
184,041 |
|
|
Holding company expenses |
|
20,965 |
|
29,279 |
|
||
|
EBITDA Contribution |
|
$ |
153,572 |
|
$ |
213,320 |
|
9
Affiliated Managers Group, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share data)
|
|
|
Three Months |
|
Nine Months |
|
||||||||
|
|
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenue |
|
$ |
165,846 |
|
$ |
234,126 |
|
$ |
476,042 |
|
$ |
643,995 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
||||
|
Compensation and related expenses |
|
61,296 |
|
95,474 |
|
176,178 |
|
259,545 |
|
||||
|
Selling, general and administrative |
|
28,440 |
|
44,009 |
|
77,086 |
|
115,285 |
|
||||
|
Amortization of intangible assets |
|
4,950 |
|
6,525 |
|
13,214 |
|
17,998 |
|
||||
|
Depreciation and other amortization |
|
1,587 |
|
2,035 |
|
4,746 |
|
5,052 |
|
||||
|
Other operating expenses |
|
5,176 |
|
5,314 |
|
12,349 |
|
15,071 |
|
||||
|
|
|
101,449 |
|
153,357 |
|
283,573 |
|
412,951 |
|
||||
|
Operating income |
|
64,397 |
|
80,769 |
|
192,469 |
|
231,044 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-operating (income) and expenses: |
|
|
|
|
|
|
|
|
|
||||
|
Investment and other (income) loss |
|
1,387 |
|
(7,175 |
) |
(2,195 |
) |
(16,199 |
) |
||||
|
Interest expense |
|
8,193 |
|
10,071 |
|
24,318 |
|
26,682 |
|
||||
|
|
|
9,580 |
|
2,896 |
|
22,123 |
|
10,483 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before minority interest and taxes |
|
54,817 |
|
77,873 |
|
170,346 |
|
220,561 |
|
||||
|
Minority interest (I) |
|
(26,819 |
) |
(32,619 |
) |
(80,017 |
) |
(92,439 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before income taxes |
|
27,998 |
|
45,254 |
|
90,329 |
|
128,122 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income taxes - current |
|
3,240 |
|
8,762 |
|
13,413 |
|
23,900 |
|
||||
|
Income taxes - intangible-related deferred |
|
6,441 |
|
7,058 |
|
18,684 |
|
21,918 |
|
||||
|
Income taxes - other deferred |
|
1,518 |
|
924 |
|
4,343 |
|
1,999 |
|
||||
|
Net Income |
|
$ |
16,799 |
|
$ |
28,510 |
|
$ |
53,889 |
|
$ |
80,305 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Average shares outstanding - basic |
|
29,353,068 |
|
33,926,047 |
|
29,551,383 |
|
33,611,937 |
|
||||
|
Average shares outstanding - diluted (C) |
|
38,481,044 |
|
44,908,036 |
|
38,929,062 |
|
44,465,513 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per share - basic |
|
$ |
0.57 |
|
$ |
0.84 |
|
$ |
1.82 |
|
$ |
2.39 |
|
|
Earnings per share - diluted (C) |
|
$ |
0.46 |
|
$ |
0.67 |
|
$ |
1.44 |
|
$ |
1.91 |
|
10
Affiliated Managers Group, Inc.
Consolidated Balance Sheets
(in thousands)
|
|
|
December 31, |
|
September 30, |
|
||
|
|
|
2004 |
|
2005 |
|
||
|
Assets |
|
|
|
|
|
||
|
Current assets: |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
140,277 |
|
$ |
139,235 |
|
|
Short-term investments |
|
21,173 |
|
— |
|
||
|
Investment advisory fees receivable |
|
91,487 |
|
136,222 |
|
||
|
Prepaid expenses and other current assets |
|
24,795 |
|
30,094 |
|
||
|
Total current assets |
|
277,732 |
|
305,551 |
|
||
|
|
|
|
|
|
|
||
|
Fixed assets, net |
|
40,953 |
|
47,146 |
|
||
|
Equity investments in Affiliates |
|
252,597 |
|
297,887 |
|
||
|
Acquired client relationships, net |
|
440,409 |
|
488,699 |
|
||
|
Goodwill |
|
888,567 |
|
1,082,313 |
|
||
|
Other assets |
|
33,163 |
|
42,424 |
|
||
|
Total assets |
|
$ |
1,933,421 |
|
$ |
2,264,020 |
|
|
|
|
|
|
|
|
||
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
||
|
Current liabilities: |
|
|
|
|
|
||
|
Accounts payable and accrued liabilities |
|
$ |
114,350 |
|
$ |
177,148 |
|
|
Payables to related party |
|
17,728 |
|
12,203 |
|
||
|
Total current liabilities |
|
132,078 |
|
189,351 |
|
||
|
|
|
|
|
|
|
||
|
Senior debt |
|
126,750 |
|
256,750 |
|
||
|
Senior convertible debt |
|
423,958 |
|
424,417 |
|
||
|
Mandatory convertible securities |
|
300,000 |
|
300,000 |
|
||
|
Deferred income taxes |
|
124,168 |
|
173,988 |
|
||
|
Other long-term liabilities |
|
31,397 |
|
21,325 |
|
||
|
Total liabilities |
|
1,138,351 |
|
1,365,831 |
|
||
|
|
|
|
|
|
|
||
|
Minority interest (I) |
|
87,378 |
|
87,552 |
|
||
|
|
|
|
|
|
|
||
|
Stockholders’ equity: |
|
|
|
|
|
||
|
Common stock |
|
387 |
|
390 |
|
||
|
Additional paid-in capital |
|
566,776 |
|
589,818 |
|
||
|
Accumulated other comprehensive income |
|
1,537 |
|
16,388 |
|
||
|
Retained earnings |
|
384,119 |
|
464,424 |
|
||
|
|
|
952,819 |
|
1,071,020 |
|
||
|
Less treasury stock, at cost |
|
(245,127 |
) |
(260,383 |
) |
||
|
Total stockholders’ equity |
|
707,692 |
|
810,637 |
|
||
|
Total liabilities and stockholders’ equity |
|
$ |
1,933,421 |
|
$ |
2,264,020 |
|
11
Affiliated Managers Group, Inc.
Consolidated Statements of Cash Flow
(in thousands)
|
|
|
Three Months |
|
Nine Months |
|
||||||||
|
|
|
2004 |
|
2005 |
|
2004 |
|
2005 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash flow from operating activities: |
|
|
|
|
|
|
|
|
|
||||
|
Net Income |
|
$ |
16,799 |
|
$ |
28,510 |
|
$ |
53,889 |
|
$ |
80,305 |
|
|
Adjustments to reconcile Net Income to net cash flow from operating activities: |
|
|
|
|
|
|
|
|
|
||||
|
Amortization of intangible assets |
|
4,950 |
|
6,525 |
|
13,214 |
|
17,998 |
|
||||
|
Amortization of debt issuance costs |
|
1,020 |
|
765 |
|
2,852 |
|
2,275 |
|
||||
|
Depreciation and other amortization |
|
1,587 |
|
2,035 |
|
4,746 |
|
5,052 |
|
||||
|
Deferred income tax provision |
|
7,959 |
|
7,982 |
|
23,027 |
|
23,917 |
|
||||
|
Accretion of interest |
|
344 |
|
474 |
|
825 |
|
1,422 |
|
||||
|
Income from equity method investments, net of amortization |
|
— |
|
(4,244 |
) |
— |
|
(10,249 |
) |
||||
|
Distributions received from equity method investments |
|
— |
|
4,251 |
|
— |
|
10,476 |
|
||||
|
Tax benefit from exercise of stock options |
|
16 |
|
5,362 |
|
5,525 |
|
11,103 |
|
||||
|
Other investment income |
|
2,493 |
|
(1,384 |
) |
2,493 |
|
(2,253 |
) |
||||
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
|
||||
|
Increase in investment advisory fees receivable |
|
(9,109 |
) |
(11,622 |
) |
(23,716 |
) |
(31,972 |
) |
||||
|
(Increase) decrease in other current assets |
|
(18 |
) |
4,195 |
|
6,847 |
|
4,058 |
|
||||
|
Increase in non-current other receivables |
|
(4,127 |
) |
(2,144 |
) |
(599 |
) |
(1,897 |
) |
||||
|
Increase in accounts payable, accrued expenses and other liabilities |
|
15,121 |
|
21,873 |
|
17,933 |
|
25,699 |
|
||||
|
Increase in minority interest |
|
14,098 |
|
12,701 |
|
21,499 |
|
648 |
|
||||
|
Cash flow from operating activities |
|
51,133 |
|
75,279 |
|
128,535 |
|
136,582 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash flow used in investing activities: |
|
|
|
|
|
|
|
|
|
||||
|
Costs of investments in Affiliates, net of cash acquired |
|
(2,112 |
) |
(62,375 |
) |
(82,178 |
) |
(80,766 |
) |
||||
|
Purchase of fixed assets |
|
(2,966 |
) |
(4,112 |
) |
(6,485 |
) |
(9,101 |
) |
||||
|
Purchase of investment securities |
|
(2,200 |
) |
— |
|
(12,450 |
) |
(6,393 |
) |
||||
|
Sale of investment securities |
|
2,000 |
|
— |
|
2,658 |
|
24,062 |
|
||||
|
Decrease (increase) in other assets |
|
— |
|
— |
|
(57 |
) |
— |
|
||||
|
Cash flow used in investing activities |
|
(5,278 |
) |
(66,487 |
) |
(98,512 |
) |
(72,198 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash flow from (used in) financing activities: |
|
|
|
|
|
|
|
|
|
||||
|
Borrowings of senior bank debt |
|
51,000 |
|
170,000 |
|
51,000 |
|
175,000 |
|
||||
|
Repayments of senior bank debt |
|
— |
|
(30,000 |
) |
— |
|
(35,000 |
) |
||||
|
Repayment of debt assumed from new investment |
|
— |
|
(150,811 |
) |
— |
|
(150,811 |
) |
||||
|
Issuance of convertible securities |
|
— |
|
— |
|
300,000 |
|
— |
|
||||
|
Repurchase of convertible securities |
|
(124,525 |
) |
— |
|
(124,525 |
) |
— |
|
||||
|
Repurchase of senior debt securities |
|
— |
|
— |
|
— |
|
(10,000 |
) |
||||
|
Issuance of common stock |
|
145 |
|
10,232 |
|
11,559 |
|
24,257 |
|
||||
|
Repurchase of common stock |
|
— |
|
(39,521 |
) |
(194,420 |
) |
(39,521 |
) |
||||
|
Settlement of forward equity sale agreement |
|
— |
|
— |
|
— |
|
(14,008 |
) |
||||
|
Issuance costs |
|
(2,521 |
) |
(28 |
) |
(12,365 |
) |
(651 |
) |
||||
|
Repayments of notes payable and other liabilities |
|
— |
|
(2,201 |
) |
(7,041 |
) |
(15,486 |
) |
||||
|
Cash flow from (used in) financing activities |
|
(75,901 |
) |
(42,329 |
) |
24,208 |
|
(66,220 |
) |
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Effect of foreign exchange rate changes on cash flow |
|
41 |
|
1,424 |
|
102 |
|
794 |
|
||||
|
Net increase (decrease) in cash and cash equivalents |
|
(30,005 |
) |
(32,113 |
) |
54,333 |
|
(1,042 |
) |
||||
|
Cash and cash equivalents at beginning of period |
|
308,620 |
|
171,348 |
|
224,282 |
|
140,277 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Cash and cash equivalents at end of period |
|
$ |
278,615 |
|
$ |
139,235 |
|
$ |
278,615 |
|
$ |
139,235 |
|
12
Affiliated Managers Group, Inc.
Notes
|
(A) |
|
Cash Net Income is defined as Net Income plus amortization and
deferred taxes related to intangible assets plus Affiliate depreciation. This
supplemental non-GAAP performance measure is provided in addition to, but not
as a substitute for, Net Income. The
Company considers Cash Net Income an important measure of its financial
performance, as management believes it best represents operating performance
before non-cash expenses relating to the acquisition of interests in its
affiliated investment management firms.
Since acquired assets do not generally depreciate or require
replacement, and since they generate deferred tax expenses that are unlikely
to reverse, the Company adds back these non-cash expenses. Cash Net Income is used by the Company’s
management and Board of Directors as a principal performance benchmark. |
|
|
|
|
|
(B) |
|
EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization. This supplemental non-GAAP liquidity measure is provided in addition to, but not as a substitute for, cash flow from operations. As a measure of liquidity, the Company believes EBITDA is useful as an indicator of its ability to service debt, make new investments and meet working capital requirements. EBITDA, as calculated by the Company, may not be consistent with computations of EBITDA by other companies. In reporting EBITDA by segment, Affiliate expenses are allocated to a particular segment on a pro rata basis with respect to the revenue generated by that Affiliate in such segment. |
|
|
|
|
|
(C) |
|
EITF Issue No. 04-08, “The Effect of Contingently Convertible Debt on Diluted Earnings per Share” (“EITF 04-08”), became effective in the fourth quarter of 2004. EITF 04-08 states that any shares of common stock that may be issued to settle contingently convertible securities (such as the shares that underlie the Company’s zero coupon convertible notes and floating rate senior convertible securities) must be considered issued in the calculation of diluted earnings per share regardless of whether the market price trigger (or other contingent feature) in these securities has been met. This approach is commonly referred to as the “if-converted” method. Under this method, the Company has included the shares of common stock that may be issued to settle its contingently convertible securities in the calculation of its diluted earnings per share for the three and nine months ended September 30, 2005 and has retroactively adjusted earnings per share information for the three and nine months ended September 30, 2004. In this if-converted calculation, while the contingently convertible securities continue to be reflected as liabilities on the Company’s balance sheet, the associated interest expense (net of taxes) has been added back to Net Income (as further illustrated on page 5). |
|
|
|
|
|
(D) |
|
Cash earnings per share represents Cash Net Income divided by adjusted diluted average shares outstanding. In this calculation, the potential share issuance in connection with the Company’s contingently convertible securities measures net shares using a “treasury stock” method. Under this method, only the net number of shares of common stock equal to the value of the contingently convertible securities in excess of par, if any, are deemed to be outstanding. The Company believes the inclusion of net shares under a treasury stock method best reflects the benefit of the increase in available capital resources (which could be used to repurchase shares of common stock) that occurs when these securities are converted and the Company is relieved of its debt obligation. This method does not take into account any increase or decrease in the Company’s cost of capital in an assumed conversion. |
|
|
|
|
|
(E) |
|
In connection with the Company’s July 2005 acquisition of First Asset Management Inc., and the resulting increase in registered products based outside the United States, the Company amended its Mutual Fund distribution channel definition to include non-institutional collective investment vehicle products registered abroad. |
13
|
|
|
As a result, approximately $3.2 billion and $0.7 billion of existing assets under management in the Institutional and High Net Worth distribution channels, respectively, were reclassified to the Mutual Fund distribution channel, and accordingly, financial information for corresponding periods in 2004 and 2005 were revised to conform to this presentation. |
|
|
|
|
|
(F) |
|
The Company completed its acquisition of the mutual fund business of Fremont Investment Advisors through Managers Investment Group LLC in January 2005. In July 2005, the Company completed its acquisition of equity investments in six Canadian asset management firms: Foyston, Gordon & Payne Inc.; Beutel, Goodman & Company Ltd.; Montrusco Bolton Investment Inc.; Deans Knight Capital Management Ltd.; Triax Capital Corporation; and Covington Capital Corporation. The Company acquired these interests and certain other assets through the acquisition of First Asset Management Inc. |
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(G) |
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In the third quarter of 2005, the Company sold its interest in First Quadrant Ltd. |
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(H) |
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The Company is required to use the equity method of accounting for its investments in AQR Capital Management, LLC, Beutel, Goodman & Company Ltd. and Deans Knight Capital Management Ltd. (together, “equity method investments”). Consistent with this method, the Company has not consolidated the operating results (including the revenue) of its equity method investments in its income statement. The Company’s share of its equity method investments’ profits, net of intangible amortization, is reported in “Investment and other income.” Income tax attributable to these profits is reported within the Company’s consolidated income tax provision. The assets under management of equity method investments are included in the Company’s reported assets under management. |
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(I) |
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Minority interest on the Company’s income statement represents the profits allocated to Affiliate management owners for that period. Minority interest on the Company’s balance sheet represents the undistributed profits and capital owned by Affiliate management, who retain a conditional right to sell their interests to the Company. |
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