Exhibit 99.1
Contact: | Darrell W. Crate | |
|
| Affiliated Managers Group, Inc. |
|
| (617) 747-3300 |
AMG Reports Financial and Operating Results for
Third Quarter and Nine Months Ended September 30, 2004
Company Reports EPS of $0.55; Cash EPS of $0.96
Boston, MA, October 27, 2004 — Affiliated Managers Group, Inc. (NYSE: AMG) today reported its financial and operating results for the quarter and nine months ended September 30, 2004.
Cash earnings per share (“Cash EPS”) for the third quarter of 2004 were $0.96, compared to $0.84 for the third quarter of 2003, while diluted earnings per share for the third quarter of 2004 were $0.55, compared to $0.50 for the same period of 2003. Cash Net Income was $29.3 million for the third quarter of 2004, compared to $27.5 million for the third quarter of 2003. Net Income for the third quarter of 2004 was $16.8 million, compared to $16.4 million for the third quarter of 2003. (Cash EPS and Cash Net Income are defined in the attached tables.)
For the third quarter of 2004, revenue was $165.8 million, compared to $128.5 million for the third quarter of 2003. EBITDA for the third quarter of 2004 was $42.7 million, compared to $39.3 million for the same period of 2003.
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. For the nine months ended September 30, 2003, Cash Net Income was $76.5 million, while EBITDA was $106.6 million. For the same period, Net Income was $43.2 million, on revenue of $355.4 million.
Net client cash flows were $(1.1) billion, with outflows of $1.0 billion from directly managed assets, and $99 million from overlay assets. Net inflows in the mutual fund channel were $475 million, while outflows in the institutional and high net worth channels were $308 million and $1.2 billion, respectively. These aggregate net client cash flows for the quarter resulted in a decrease 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, 2004 were $101.0 billion, and pro forma for its pending investment in TimesSquare Capital Management and acquisition of the Fremont Funds, AMG’s assets under management at September 30, 2004 were approximately $109.0 billion.
(more)
“AMG’s Affiliates posted solid results during a challenging quarter in the equity market environment, generating growth in Cash earnings per share of 15% year-over-year,” stated William J. Nutt, Chairman and Chief Executive Officer. “While our net flows in the high net worth and institutional channels reflect continued challenges to the large-cap product at Rorer Asset Management, client cash flows remained strong across the remainder of our Affiliate group, particularly in the mutual fund channel, where our international and value equity funds have generated strong results for both the quarter and the year-to-date.”
“We were very pleased this quarter to announce our pending investment in the equity business of TimesSquare Capital Management, a highly regarded investment manager specializing in small- and mid-cap growth equity investing with approximately $5.0 billion in assets under management. We expect to complete our investment in TimesSquare and our acquisition of the Fremont Funds during the fourth quarter,” stated Sean M. Healey, President and Chief Operating Officer. “In addition to these pending transactions, we continue to make excellent progress in executing additional investments in new Affiliates.”
“AMG significantly expanded the scope of our growth and development initiatives during the third quarter,” stated Nate Dalton, Executive Vice President in charge of Affiliate Development. “With the launch of Managers Investment Group, we have combined several successful distribution and service teams with an industry-leading operational infrastructure to distribute and service more than 75 institutional-quality investment products offered by AMG Affiliates to separate account and mutual fund investors through banks, brokerage firms, and other sponsored platforms. Managers Investment Group brings together the strengths of several complementary businesses to expand our product offerings across segments of the retail marketplace.”
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 ability to close pending investments, 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, 2003.
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 1-800-366-7449 (domestic calls) or 1-303-262-2190 (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
2
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 11009627. 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.
3
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
|
| Three Months |
| Three Months |
| ||
|
|
|
|
|
| ||
Revenue |
| $ | 128,465 |
| $ | 165,846 |
|
|
|
|
|
|
| ||
Net Income |
| $ | 16,395 |
| $ | 16,799 |
|
|
|
|
|
|
| ||
Cash Net Income (A) |
| $ | 27,527 |
| $ | 29,253 |
|
|
|
|
|
|
| ||
EBITDA (B) |
| $ | 39,314 |
| $ | 42,728 |
|
|
|
|
|
|
| ||
Average shares outstanding - diluted (C) |
| 32,951,832 |
| 30,570,211 |
| ||
|
|
|
|
|
| ||
Earnings per share - diluted (C) |
| $ | 0.50 |
| $ | 0.55 |
|
|
|
|
|
|
| ||
Cash earnings per share - diluted (C) (D) |
| $ | 0.84 |
| $ | 0.96 |
|
|
|
|
|
|
|
|
| December 31, |
| September 30, |
| ||
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 253,334 |
| $ | 314,867 |
|
|
|
|
|
|
| ||
Senior bank debt |
| $ | — |
| $ | 51,000 |
|
|
|
|
|
|
| ||
Senior convertible debt |
| $ | 423,340 |
| $ | 423,803 |
|
|
|
|
|
|
| ||
Mandatory convertible securities |
| $ | 230,000 |
| $ | 375,750 |
|
|
|
|
|
|
| ||
Stockholders’ equity |
| $ | 614,769 |
| $ | 491,105 |
|
4
|
| Nine Months |
| Nine Months |
| ||
|
|
|
|
|
| ||
Revenue |
| $ | 355,413 |
| $ | 476,042 |
|
|
|
|
|
|
| ||
Net Income |
| $ | 43,215 |
| $ | 53,889 |
|
|
|
|
|
|
| ||
Cash Net Income (A) |
| $ | 76,489 |
| $ | 88,986 |
|
|
|
|
|
|
| ||
EBITDA (B) |
| $ | 106,608 |
| $ | 132,607 |
|
|
|
|
|
|
| ||
Average shares outstanding - diluted (C) |
| 32,572,684 |
| 30,991,442 |
| ||
|
|
|
|
|
| ||
Earnings per share - diluted (C) |
| $ | 1.33 |
| $ | 1.74 |
|
|
|
|
|
|
| ||
Cash earnings per share - diluted (C) (D) |
| $ | 2.35 |
| $ | 2.87 |
|
|
|
|
|
|
|
5
Affiliated Managers Group, Inc.
Operating Results
(in millions)
Assets Under Management
Statement of Changes - Quarter to Date
|
| Mutual |
| Institutional |
| High Net |
| Total |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Assets under management, June 30, 2004 |
| $ | 25,805 |
| $ | 54,335 |
| $ | 22,079 |
| $ | 102,219 |
|
Net client cash flows - directly managed assets |
| 475 |
| (308 | ) | (1,178 | ) | (1,011 | ) | ||||
Net client cash flows - overlay assets |
| — |
| (99 | ) | — |
| (99 | ) | ||||
Investment performance |
| (99 | ) | 528 |
| (527 | ) | (98 | ) | ||||
Assets under management, September 30, 2004 |
| $ | 26,181 |
| $ | 54,456 |
| $ | 20,374 |
| $ | 101,011 |
|
Statement of Changes - Year to Date
|
| Mutual |
| Institutional |
| High Net |
| Total |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Assets under management, December 31, 2003 |
| $ | 23,339 |
| $ | 44,686 |
| $ | 23,499 |
| $ | 91,524 |
|
Net client cash flows - directly managed assets |
| 1,118 |
| 837 |
| (2,928 | ) | (973 | ) | ||||
Net client cash flows - overlay assets |
| — |
| 33 |
| — |
| 33 |
| ||||
New investments |
| 361 |
| 7,257 |
| — |
| 7,618 |
| ||||
Investment performance |
| 1,363 |
| 1,643 |
| (197 | ) | 2,809 |
| ||||
Assets under management, September 30, 2004 |
| $ | 26,181 |
| $ | 54,456 |
| $ | 20,374 |
| $ | 101,011 |
|
6
Affiliated Managers Group, Inc.
Operating Results
(in thousands)
Financial Results
|
| Three |
|
|
| Three |
|
|
| ||
|
| Ended |
| Percent of |
| Ended |
| Percent of |
| ||
|
| 9/30/03 |
| Total |
| 9/30/04 |
| Total |
| ||
Revenue |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 50,094 |
| 39% |
| $ | 63,857 |
| 38% |
|
Institutional |
| 44,956 |
| 35% |
| 67,808 |
| 41% |
| ||
High Net Worth |
| 33,415 |
| 26% |
| 34,181 |
| 21% |
| ||
|
| $ | 128,465 |
| 100% |
| $ | 165,846 |
| 100% |
|
|
|
|
|
|
|
|
|
|
| ||
EBITDA (B) |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 15,975 |
| 41% |
| $ | 17,537 |
| 41% |
|
Institutional |
| 12,632 |
| 32% |
| 16,744 |
| 39% |
| ||
High Net Worth |
| 10,707 |
| 27% |
| 8,447 |
| 20% |
| ||
|
| $ | 39,314 |
| 100% |
| $ | 42,728 |
| 100% |
|
|
| Nine |
|
|
| Nine |
|
|
| ||
|
| Ended |
| Percent of |
| Ended |
| Percent of |
| ||
|
| 9/30/03 |
| Total |
| 9/30/04 |
| Total |
| ||
Revenue |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 136,286 |
| 38% |
| $ | 185,710 |
| 39% |
|
Institutional |
| 122,220 |
| 35% |
| 185,421 |
| 39% |
| ||
High Net Worth |
| 96,907 |
| 27% |
| 104,911 |
| 22% |
| ||
|
| $ | 355,413 |
| 100% |
| $ | 476,042 |
| 100% |
|
|
|
|
|
|
|
|
|
|
| ||
EBITDA (B) |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 42,000 |
| 40% |
| $ | 53,906 |
| 41% |
|
Institutional |
| 34,533 |
| 32% |
| 50,063 |
| 38% |
| ||
High Net Worth |
| 30,075 |
| 28% |
| 28,638 |
| 21% |
| ||
|
| $ | 106,608 |
| 100% |
| $ | 132,607 |
| 100% |
|
7
Affiliated Managers Group, Inc.
Reconciliation of Performance and Liquidity Measures
(in thousands)
|
| Three Months |
| Three Months |
| ||
|
| Ended |
| Ended |
| ||
|
| 9/30/03 |
| 9/30/04 |
| ||
|
|
|
|
|
| ||
Net Income |
| $ | 16,395 |
| $ | 16,799 |
|
Intangible amortization |
| 4,065 |
| 4,950 |
| ||
Intangible-related deferred taxes |
| 5,950 |
| 6,441 |
| ||
Affiliate depreciation |
| 1,117 |
| 1,063 |
| ||
Cash Net Income (A) |
| $ | 27,527 |
| $ | 29,253 |
|
|
|
|
|
|
| ||
Cash flow from operations |
| $ | 49,348 |
| $ | 51,133 |
|
Interest expense, net of non-cash items |
| 4,789 |
| 6,829 |
| ||
Current tax provision |
| 3,372 |
| 3,240 |
| ||
Changes in assets and liabilities and other adjustments |
| (18,195 | ) | (18,474 | ) | ||
EBITDA (B) |
| $ | 39,314 |
| $ | 42,728 |
|
Holding company expenses |
| 5,000 |
| 7,036 |
| ||
EBITDA Contribution |
| $ | 44,314 |
| $ | 49,764 |
|
|
| Nine Months |
| Nine Months |
| ||
|
| Ended |
| Ended |
| ||
|
| 9/30/03 |
| 9/30/04 |
| ||
|
|
|
|
|
| ||
Net Income |
| $ | 43,215 |
| $ | 53,889 |
|
Intangible amortization |
| 12,112 |
| 13,214 |
| ||
Intangible-related deferred taxes |
| 17,849 |
| 18,684 |
| ||
Affiliate depreciation |
| 3,313 |
| 3,199 |
| ||
Cash Net Income (A) |
| $ | 76,489 |
| $ | 88,986 |
|
|
|
|
|
|
| ||
Cash flow from operations |
| $ | 83,034 |
| $ | 128,535 |
|
Interest expense, net of non-cash items |
| 14,350 |
| 20,641 |
| ||
Current tax provision |
| 7,114 |
| 13,413 |
| ||
Changes in assets and liabilities and other adjustments |
| 2,110 |
| (29,982 | ) | ||
EBITDA (B) |
| $ | 106,608 |
| $ | 132,607 |
|
Holding company expenses |
| 14,982 |
| 20,965 |
| ||
EBITDA Contribution |
| $ | 121,590 |
| $ | 153,572 |
|
8
Affiliated Managers Group, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share data)
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| ||||||||
|
| 2003 |
| 2004 |
| 2003 |
| 2004 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 128,465 |
| $ | 165,846 |
| $ | 355,413 |
| $ | 476,042 |
|
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Compensation and related expenses |
| 47,054 |
| 61,296 |
| 126,578 |
| 176,178 |
| ||||
Selling, general and administrative |
| 21,447 |
| 28,440 |
| 61,843 |
| 77,086 |
| ||||
Amortization of intangible assets |
| 4,065 |
| 4,950 |
| 12,112 |
| 13,214 |
| ||||
Depreciation and other amortization |
| 1,560 |
| 1,587 |
| 4,684 |
| 4,746 |
| ||||
Other operating expenses |
| 3,741 |
| 5,176 |
| 11,519 |
| 12,349 |
| ||||
|
| 77,867 |
| 101,449 |
| 216,736 |
| 283,573 |
| ||||
Operating income |
| 50,598 |
| 64,397 |
| 138,677 |
| 192,469 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Non-operating (income) and expenses: |
|
|
|
|
|
|
|
|
| ||||
Investment and other (income) loss |
| (3,334 | ) | 1,387 |
| (6,293 | ) | (2,195 | ) | ||||
Interest expense |
| 5,901 |
| 8,193 |
| 17,323 |
| 24,318 |
| ||||
|
| 2,567 |
| 9,580 |
| 11,030 |
| 22,123 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before minority interest and taxes |
| 48,031 |
| 54,817 |
| 127,647 |
| 170,346 |
| ||||
Minority interest (E) |
| (20,243 | ) | (26,819 | ) | (55,158 | ) | (80,017 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before income taxes |
| 27,788 |
| 27,998 |
| 72,489 |
| 90,329 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income taxes - current |
| 3,372 |
| 3,240 |
| 7,114 |
| 13,413 |
| ||||
Income taxes - intangible-related deferred |
| 5,950 |
| 6,441 |
| 17,849 |
| 18,684 |
| ||||
Income taxes - other deferred |
| 2,071 |
| 1,518 |
| 4,311 |
| 4,343 |
| ||||
Net Income |
| $ | 16,395 |
| $ | 16,799 |
| $ | 43,215 |
| $ | 53,889 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding - basic (C) |
| 31,843,368 |
| 29,353,068 |
| 31,831,957 |
| 29,551,383 |
| ||||
Average shares outstanding - diluted (C) |
| 32,951,832 |
| 30,570,211 |
| 32,572,684 |
| 30,991,442 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share - basic (C) |
| $ | 0.51 |
| $ | 0.57 |
| $ | 1.36 |
| $ | 1.82 |
|
Earnings per share - diluted (C) |
| $ | 0.50 |
| $ | 0.55 |
| $ | 1.33 |
| $ | 1.74 |
|
9
Affiliated Managers Group, Inc.
Consolidated Balance Sheets
(in thousands)
|
| December 31, |
| September 30, |
| ||
|
| 2003 |
| 2004 |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 253,334 |
| $ | 314,867 |
|
Investment advisory fees receivable |
| 65,288 |
| 89,004 |
| ||
Prepaid expenses and other current assets |
| 20,861 |
| 18,951 |
| ||
Total current assets |
| 339,483 |
| 422,822 |
| ||
|
|
|
|
|
| ||
Fixed assets, net |
| 36,886 |
| 40,884 |
| ||
Acquired client relationships, net |
| 364,429 |
| 373,893 |
| ||
Goodwill |
| 751,607 |
| 814,379 |
| ||
Other assets |
| 26,800 |
| 33,950 |
| ||
Total assets |
| $ | 1,519,205 |
| $ | 1,685,928 |
|
|
|
|
|
|
| ||
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable and accrued liabilities |
| $ | 89,707 |
| $ | 128,037 |
|
Notes payable to related party |
| 11,744 |
| 9,305 |
| ||
Total current liabilities |
| 101,451 |
| 137,342 |
| ||
|
|
|
|
|
| ||
Senior bank debt |
| — |
| 51,000 |
| ||
Senior convertible debt |
| 423,340 |
| 423,803 |
| ||
Mandatory convertible securities |
| 230,000 |
| 375,750 |
| ||
Deferred income taxes |
| 92,707 |
| 115,308 |
| ||
Other long-term liabilities |
| 16,144 |
| 24,952 |
| ||
Total liabilities |
| 863,642 |
| 1,128,155 |
| ||
|
|
|
|
|
| ||
Minority interest (E) |
| 40,794 |
| 66,668 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Common stock |
| 235 |
| 353 |
| ||
Additional paid-in capital |
| 408,449 |
| 381,252 |
| ||
Accumulated other comprehensive income |
| 944 |
| 1,689 |
| ||
Retained earnings |
| 306,972 |
| 360,861 |
| ||
|
| 716,600 |
| 744,155 |
| ||
Less treasury stock, at cost |
| (101,831 | ) | (253,050 | ) | ||
Total stockholders’ equity |
| 614,769 |
| 491,105 |
| ||
Total liabilities and stockholders’ equity |
| $ | 1,519,205 |
| $ | 1,685,928 |
|
10
Affiliated Managers Group, Inc.
Consolidated Statements of Cash Flow
(in thousands)
|
| Three Months Ended September 30, |
| Nine Months Ended September 30, |
| ||||||||
|
| 2003 |
| 2004 |
| 2003 |
| 2004 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash flow from operating activities: |
|
|
|
|
|
|
|
|
| ||||
Net Income |
| $ | 16,395 |
| $ | 16,799 |
| $ | 43,215 |
| $ | 53,889 |
|
Adjustments to reconcile Net Income to net cash flow from operating activities: |
|
|
|
|
|
|
|
|
| ||||
Amortization of intangible assets |
| 4,065 |
| 4,950 |
| 12,112 |
| 13,214 |
| ||||
Amortization of debt issuance costs |
| 958 |
| 1,020 |
| 2,414 |
| 2,852 |
| ||||
Depreciation and amortization of fixed assets |
| 1,560 |
| 1,587 |
| 4,684 |
| 4,746 |
| ||||
Deferred income tax provision |
| 8,021 |
| 7,959 |
| 22,160 |
| 23,027 |
| ||||
Accretion of interest |
| 154 |
| 344 |
| 559 |
| 825 |
| ||||
Tax benefit from exercise of stock options |
| 1,506 |
| 16 |
| 2,420 |
| 5,525 |
| ||||
Other adjustments |
| — |
| 2,493 |
| (555 | ) | 2,493 |
| ||||
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
| ||||
Increase in investment advisory fees receivable |
| (4,825 | ) | (9,109 | ) | (5,417 | ) | (23,716 | ) | ||||
Decrease (increase) in other current assets |
| (2,360 | ) | (18 | ) | (3,065 | ) | 6,847 |
| ||||
Decrease (increase) in non-current other receivables |
| 3,364 |
| (4,127 | ) | 2,664 |
| (599 | ) | ||||
Increase (decrease) in accounts payable, |
| 13,996 |
| 15,121 |
| (770 | ) | 17,933 |
| ||||
Increase in minority interest |
| 6,514 |
| 14,098 |
| 2,613 |
| 21,499 |
| ||||
Cash flow from operating activities |
| 49,348 |
| 51,133 |
| 83,034 |
| 128,535 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash flow used in investing activities: |
|
|
|
|
|
|
|
|
| ||||
Cost of investments, net of cash acquired |
| (1,750 | ) | (2,112 | ) | (7,868 | ) | (82,178 | ) | ||||
Purchase of fixed assets |
| (20,352 | ) | (2,966 | ) | (23,211 | ) | (6,485 | ) | ||||
Investment in marketable securities |
| — |
| — |
| (1,852 | ) | (2,592 | ) | ||||
Increase in other assets |
| — |
| — |
| (12 | ) | (57 | ) | ||||
Cash flow used in investing activities |
| (22,102 | ) | (5,078 | ) | (32,943 | ) | (91,312 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash flow from (used in) financing activities: |
|
|
|
|
|
|
|
|
| ||||
Borrowings of senior bank debt |
| — |
| 51,000 |
| 85,000 |
| 51,000 |
| ||||
Repayments of senior bank debt |
| — |
| — |
| (85,000 | ) | — |
| ||||
Issuances of convertible securities |
| — |
| — |
| 300,000 |
| 300,000 |
| ||||
Repurchase of convertible securities |
| — |
| (124,525 | ) | (105,841 | ) | (124,525 | ) | ||||
Issuance of equity securities |
| 4,199 |
| 145 |
| 8,972 |
| 11,559 |
| ||||
Repurchases of common stock |
| — |
| — |
| (33,688 | ) | (194,420 | ) | ||||
Issuance costs |
| (358 | ) | (2,521 | ) | (7,819 | ) | (12,365 | ) | ||||
Repayments of notes payable |
| (506 | ) | — |
| (8,574 | ) | (7,041 | ) | ||||
Cash flow from (used in) financing activities |
| 3,335 |
| (75,901 | ) | 153,050 |
| 24,208 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Effect of foreign exchange rate changes on |
| — |
| 41 |
| 244 |
| 102 |
| ||||
Net increase (decrease) in cash and cash equivalents |
| 30,581 |
| (29,805 | ) | 203,385 |
| 61,533 |
| ||||
Cash and cash equivalents at beginning of period |
| 200,512 |
| 344,672 |
| 27,708 |
| 253,334 |
| ||||
Cash and cash equivalents at end of period |
| $ | 231,093 |
| $ | 314,867 |
| $ | 231,093 |
| $ | 314,867 |
|
11
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.
The Company adds back amortization attributable to acquired client relationships because this expense does not correspond to the changes in value of these assets, which do not diminish predictably over time. The Company adds back the portion of deferred taxes generally attributable to intangible assets (including goodwill) that it no longer amortizes but which continues to generate tax deductions. These deferred tax expense accruals would be used in the event of a future sale of an Affiliate or an impairment charge, which the Company considers unlikely. The Company adds back the portion of consolidated depreciation expense incurred by Affiliates because under its Affiliate operating agreements, the Company is generally not required to replenish these depreciating assets.
|
(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) |
| In January 2004, the Company’s Board of Directors authorized a three-for-two stock split. The additional shares of common stock were distributed on March 29, 2004. The weighted average shares outstanding and per share figures reflect the stock split.
|
(D) |
| Cash earnings per share represents Cash Net Income divided by average shares outstanding.
|
(E) |
| 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.
|
12