Exhibit 99.2
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
|
| Three Months |
| Three Months |
| ||
|
| Ended |
| Ended |
| ||
|
| 12/31/07 |
| 12/31/08 |
| ||
|
|
|
|
|
| ||
Revenue |
| $ | 382,960 |
| $ | 223,395 |
|
|
|
|
|
|
| ||
Net Income (loss) |
| $ | 60,867 |
| $ | (69,751 | ) |
|
|
|
|
|
| ||
Cash Net Income (A) |
| $ | 81,758 |
| $ | 51,649 |
|
|
|
|
|
|
| ||
EBITDA (B) |
| $ | 132,932 |
| $ | 74,265 |
|
|
|
|
|
|
| ||
|
|
|
|
|
| ||
Average shares outstanding - diluted |
| 43,133,652 |
| 39,523,560 |
| ||
|
|
|
|
|
| ||
Earnings per share - diluted |
| $ | 1.53 |
| $ | (1.76 | ) |
|
|
|
|
|
| ||
Average shares outstanding - adjusted diluted (C) |
| 37,975,356 |
| 39,717,773 |
| ||
|
|
|
|
|
| ||
Cash earnings per share - diluted (C) |
| $ | 2.15 |
| $ | 1.30 |
|
|
| December 31, |
| December 31, |
| ||
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 222,954 |
| $ | 396,431 |
|
|
|
|
|
|
| ||
Senior debt |
| $ | 519,500 |
| $ | 233,514 |
|
|
|
|
|
|
| ||
Senior convertible securities |
| $ | 378,083 |
| $ | 507,146 |
|
|
|
|
|
|
| ||
Mandatory convertible securities |
| $ | 300,000 |
| $ | — |
|
|
|
|
|
|
| ||
Junior convertible trust preferred securities |
| $ | 800,000 |
| $ | 730,820 |
|
|
|
|
|
|
| ||
Stockholders’ equity |
| $ | 469,202 |
| $ | 1,092,560 |
|
(more)
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
|
| Year |
| Year |
| ||
|
| Ended |
| Ended |
| ||
|
| 12/31/07 |
| 12/31/08 |
| ||
|
|
|
|
|
| ||
Revenue |
| $ | 1,369,866 |
| $ | 1,158,217 |
|
|
|
|
|
|
| ||
Net Income |
| $ | 181,961 |
| $ | 23,170 |
|
|
|
|
|
|
| ||
Cash Net Income (A) |
| $ | 258,749 |
| $ | 221,962 |
|
|
|
|
|
|
| ||
EBITDA (B) |
| $ | 418,229 |
| $ | 335,311 |
|
|
|
|
|
|
| ||
|
|
|
|
|
| ||
Average shares outstanding - diluted |
| 42,398,686 |
| 40,872,656 |
| ||
|
|
|
|
|
| ||
Earnings per share - diluted |
| $ | 4.55 |
| $ | 0.57 |
|
|
|
|
|
|
| ||
Average shares outstanding - adjusted diluted (C) |
| 38,904,810 |
| 40,452,588 |
| ||
|
|
|
|
|
| ||
Cash earnings per share - diluted (C) |
| $ | 6.65 |
| $ | 5.49 |
|
(more)
Affiliated Managers Group, Inc.
Reconciliations of Earnings Per Share Calculation
(dollars in thousands, except per share data)
|
| Three Months |
| Three Months |
| ||
|
| Ended |
| Ended |
| ||
|
| 12/31/07 |
| 12/31/08 |
| ||
|
|
|
|
|
| ||
Net Income (loss) |
| $ | 60,867 |
| $ | (69,751 | ) |
Convertible securities interest expense, net (D) |
| 5,039 |
| — |
| ||
Net Income, as adjusted |
| $ | 65,906 |
| $ | (69,751 | ) |
|
|
|
|
|
| ||
Average shares outstanding - diluted |
| 43,133,652 |
| 39,523,560 |
| ||
|
|
|
|
|
| ||
Earnings per share - diluted |
| $ | 1.53 |
| $ | (1.76 | ) |
|
| Year |
| Year |
| ||
|
| Ended |
| Ended |
| ||
|
| 12/31/07 |
| 12/31/08 |
| ||
|
|
|
|
|
| ||
Net Income |
| $ | 181,961 |
| $ | 23,170 |
|
Convertible securities interest expense, net (D) |
| 10,780 |
| 279 |
| ||
Net Income, as adjusted |
| $ | 192,741 |
| $ | 23,449 |
|
|
|
|
|
|
| ||
Average shares outstanding - diluted |
| 42,398,686 |
| 40,872,656 |
| ||
|
|
|
|
|
| ||
Earnings per share - diluted |
| $ | 4.55 |
| $ | 0.57 |
|
(more)
Affiliated Managers Group, Inc.
Reconciliations of Average Shares Outstanding
|
| Three Months |
| Three Months |
|
|
| Ended |
| Ended |
|
|
| 12/31/07 |
| 12/31/08 |
|
|
|
|
|
|
|
Average shares outstanding - diluted |
| 43,133,652 |
| 39,523,560 |
|
Assumed issuance of COBRA shares |
| (7,452,526 | ) | — |
|
Assumed issuance of LYONS shares |
| (1,454,506 | ) | — |
|
Assumed issuance of 2008 Senior Convertible Notes shares |
| — |
| — |
|
Assumed issuance of Trust Preferred shares |
| (2,000,000 | ) | — |
|
Dilutive impact of Options |
| — |
| 194,213 |
|
Dilutive impact of COBRA shares |
| 4,918,225 |
| — |
|
Dilutive impact of LYONS shares |
| 830,511 |
| — |
|
Dilutive impact of 2008 Senior Convertible Notes shares |
| — |
| — |
|
Dilutive impact of Trust Preferred shares |
| — |
| — |
|
Average shares outstanding - adjusted diluted (C) |
| 37,975,356 |
| 39,717,773 |
|
|
| Year |
| Year |
|
|
| Ended |
| Ended |
|
|
| 12/31/07 |
| 12/31/08 |
|
|
|
|
|
|
|
Average shares outstanding - diluted |
| 42,398,686 |
| 40,872,656 |
|
Assumed issuance of COBRA shares |
| (7,441,980 | ) | — |
|
Assumed issuance of LYONS shares |
| (1,834,237 | ) | (1,238,736 | ) |
Assumed issuance of 2008 Senior Convertible Notes shares |
| — |
| — |
|
Assumed issuance of Trust Preferred shares |
| — |
| — |
|
Dilutive impact of COBRA shares |
| 4,779,885 |
| 378,692 |
|
Dilutive impact of LYONS shares |
| 1,002,456 |
| 439,976 |
|
Dilutive impact of 2008 Senior Convertible Notes shares |
| — |
| — |
|
Dilutive impact of Trust Preferred shares |
| — |
| — |
|
Average shares outstanding - adjusted diluted (C) |
| 38,904,810 |
| 40,452,588 |
|
(more)
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, September 30, 2008 |
| $ | 46,058 |
| $ | 135,971 |
| $ | 25,287 |
| $ | 207,316 |
|
New investments (E) |
| 52 |
| 822 |
| 6,550 |
| 7,424 |
| ||||
Net client cash flows |
| (1,735 | ) | (739 | ) | (816 | ) | (3,290 | ) | ||||
Investment performance |
| (9,671 | ) | (24,821 | ) | (4,973 | ) | (39,465 | ) | ||||
Other (F) |
| — |
| (1,783 | ) | (57 | ) | (1,840 | ) | ||||
Assets under management, December 31, 2008 |
| $ | 34,704 |
| $ | 109,450 |
| $ | 25,991 |
| $ | 170,145 |
|
Statement of Changes - Year to Date
|
| Mutual |
| Institutional |
| High Net |
| Total |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Assets under management, December 31, 2007 |
| $ | 62,194 |
| $ | 180,426 |
| $ | 32,144 |
| $ | 274,764 |
|
New investments (E) |
| 52 |
| 822 |
| 6,550 |
| 7,424 |
| ||||
Net client cash flows |
| (4,092 | ) | (14,339 | ) | (1,336 | ) | (19,767 | ) | ||||
Investment performance |
| (23,023 | ) | (53,432 | ) | (9,708 | ) | (86,163 | ) | ||||
Other (F) |
| (427 | ) | (4,027 | ) | (1,659 | ) | (6,113 | ) | ||||
Assets under management, December 31, 2008 |
| $ | 34,704 |
| $ | 109,450 |
| $ | 25,991 |
| $ | 170,145 |
|
(more)
Affiliated Managers Group, Inc.
Operating Results
(in thousands)
Financial Results
|
| Three |
|
|
| Three |
|
|
| ||
|
| Months |
|
|
| Months |
|
|
| ||
|
| Ended |
| Percent |
| Ended |
| Percent |
| ||
|
| 12/31/07 |
| of Total |
| 12/31/08 |
| of Total |
| ||
Revenue |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 142,533 |
| 37% |
| $ | 80,174 |
| 36% |
|
Institutional |
| 198,448 |
| 52% |
| 110,666 |
| 50% |
| ||
High Net Worth |
| 41,979 |
| 11% |
| 32,555 |
| 14% |
| ||
|
| $ | 382,960 |
| 100% |
| $ | 223,395 |
| 100% |
|
|
|
|
|
|
|
|
|
|
| ||
EBITDA (B) |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 41,774 |
| 31% |
| $ | 22,367 |
| 30% |
|
Institutional |
| 75,651 |
| 57% |
| 41,079 |
| 55% |
| ||
High Net Worth |
| 15,507 |
| 12% |
| 10,819 |
| 15% |
| ||
|
| $ | 132,932 |
| 100% |
| $ | 74,265 |
| 100% |
|
|
| Year |
|
|
| Year |
|
|
| ||
|
| Ended |
| Percent |
| Ended |
| Percent |
| ||
|
| 12/31/07 |
| of Total |
| 12/31/08 |
| of Total |
| ||
Revenue |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 558,257 |
| 41% |
| $ | 456,187 |
| 40% |
|
Institutional |
| 645,613 |
| 47% |
| 559,801 |
| 48% |
| ||
High Net Worth |
| 165,996 |
| 12% |
| 142,229 |
| 12% |
| ||
|
| $ | 1,369,866 |
| 100% |
| $ | 1,158,217 |
| 100% |
|
|
|
|
|
|
|
|
|
|
| ||
EBITDA (B) |
|
|
|
|
|
|
|
|
| ||
Mutual Fund |
| $ | 153,928 |
| 37% |
| $ | 110,963 |
| 33% |
|
Institutional |
| 211,291 |
| 50% |
| 182,976 |
| 55% |
| ||
High Net Worth |
| 53,010 |
| 13% |
| 41,372 |
| 12% |
| ||
|
| $ | 418,229 |
| 100% |
| $ | 335,311 |
| 100% |
|
(more)
Affiliated Managers Group, Inc.
Reconciliations of Performance and Liquidity Measures
(in thousands)
|
| Three Months |
| Three Months |
| ||
|
| Ended |
| Ended |
| ||
|
| 12/31/07 |
| 12/31/08 |
| ||
|
|
|
|
|
| ||
Net Income (loss) |
| $ | 60,867 |
| $ | (69,751 | ) |
Intangible amortization |
| 7,882 |
| 8,391 |
| ||
Intangible amortization - equity method investments (G) |
| 3,407 |
| 155,856 |
| ||
Intangible-related deferred taxes |
| 7,925 |
| (44,930 | ) | ||
Affiliate depreciation |
| 1,677 |
| 2,083 |
| ||
Cash Net Income (A) |
| $ | 81,758 |
| $ | 51,649 |
|
|
|
|
|
|
| ||
Cash flow from operations |
| $ | 99,141 |
| $ | 56,640 |
|
Interest expense, net of non-cash items |
| 20,557 |
| 16,375 |
| ||
Current tax provision |
| 27,622 |
| 17,567 |
| ||
Income from equity method investments, net of distributions (G) |
| 21,824 |
| 3,055 |
| ||
Changes in assets and liabilities and other adjustments |
| (36,212 | ) | (19,372 | ) | ||
EBITDA (B) |
| $ | 132,932 |
| $ | 74,265 |
|
Holding company expenses |
| 14,253 |
| 11,586 |
| ||
EBITDA Contribution |
| $ | 147,185 |
| $ | 85,851 |
|
|
| Year |
| Year |
| ||
|
| Ended |
| Ended |
| ||
|
| 12/31/07 |
| 12/31/08 |
| ||
|
|
|
|
|
| ||
Net Income |
| $ | 181,961 |
| $ | 23,170 |
|
Intangible amortization |
| 31,653 |
| 33,854 |
| ||
Intangible amortization - equity method investments (G) |
| 10,386 |
| 170,694 |
| ||
Intangible-related deferred taxes |
| 28,576 |
| (12,776 | ) | ||
Affiliate depreciation |
| 6,173 |
| 7,020 |
| ||
Cash Net Income (A) |
| $ | 258,749 |
| $ | 221,962 |
|
|
|
|
|
|
| ||
Cash flow from operations |
| $ | 326,654 |
| $ | 255,676 |
|
Interest expense, net of non-cash items |
| 70,897 |
| 68,479 |
| ||
Current tax provision |
| 74,634 |
| 51,758 |
| ||
Income from equity method investments, net of distributions (G) |
| 14,971 |
| (6,935 | ) | ||
Changes in assets and liabilities and other adjustments |
| (68,927 | ) | (33,667 | ) | ||
EBITDA (B) |
| $ | 418,229 |
| $ | 335,311 |
|
Holding company expenses |
| 56,377 |
| 58,224 |
| ||
EBITDA Contribution |
| $ | 474,606 |
| $ | 393,535 |
|
(more)
Affiliated Managers Group, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share data)
|
| Three Months Ended |
| Year Ended |
| ||||||||
|
| December 31, |
| December 31, |
| ||||||||
|
| 2007 |
| 2008 |
| 2007 |
| 2008 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Revenue |
| $ | 382,960 |
| $ | 223,395 |
| $ | 1,369,866 |
| $ | 1,158,217 |
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Compensation and related expenses |
| 147,448 |
| 101,290 |
| 579,365 |
| 516,895 |
| ||||
Selling, general and administrative |
| 51,967 |
| 52,499 |
| 197,967 |
| 200,072 |
| ||||
Amortization of intangible assets |
| 7,882 |
| 8,391 |
| 31,653 |
| 33,854 |
| ||||
Depreciation and other amortization |
| 2,873 |
| 4,095 |
| 10,444 |
| 12,767 |
| ||||
Other operating expenses |
| 5,041 |
| 11,149 |
| 18,822 |
| 26,511 |
| ||||
|
| 215,211 |
| 177,424 |
| 838,251 |
| 790,099 |
| ||||
Operating income |
| 167,749 |
| 45,971 |
| 531,615 |
| 368,118 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Non-operating (income) and expenses: |
|
|
|
|
|
|
|
|
| ||||
Investment and other income |
| (3,621 | ) | (49,032 | ) | (17,133 | ) | (43,654 | ) | ||||
(Income) loss from equity method investments |
| (30,703 | ) | 137,721 |
| (58,197 | ) | 97,142 |
| ||||
Investment (income) loss from Affiliate |
| (678 | ) | 31,639 |
| (38,877 | ) | 63,410 |
| ||||
Interest expense |
| 22,156 |
| 18,425 |
| 76,919 |
| 73,891 |
| ||||
|
| (12,846 | ) | 138,753 |
| (37,288 | ) | 190,789 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income before minority interest and taxes |
| 180,595 |
| (92,782 | ) | 568,903 |
| 177,329 |
| ||||
Minority interest (H) |
| (83,183 | ) | (49,990 | ) | (241,987 | ) | (193,728 | ) | ||||
Minority interest in Affiliate investments |
| (798 | ) | 30,270 |
| (38,089 | ) | 60,504 |
| ||||
Income before income taxes |
| 96,614 |
| (112,502 | ) | 288,827 |
| 44,105 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income taxes - current |
| 27,622 |
| 17,567 |
| 74,634 |
| 51,758 |
| ||||
Income taxes - intangible-related deferred |
| 7,925 |
| (44,930 | ) | 28,576 |
| (12,776 | ) | ||||
Income taxes - other deferred |
| 200 |
| (15,388 | ) | 3,656 |
| (18,047 | ) | ||||
Net Income (loss) |
| $ | 60,867 |
| $ | (69,751 | ) | $ | 181,961 |
| $ | 23,170 |
|
|
|
|
|
|
|
|
|
|
| ||||
Average shares outstanding - basic |
| 28,465,544 |
| 39,523,560 |
| 29,464,764 |
| 38,211,326 |
| ||||
Average shares outstanding - diluted |
| 43,133,652 |
| 39,523,560 |
| 42,398,686 |
| 40,872,656 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Earnings per share - basic |
| $ | 2.14 |
| $ | (1.76 | ) | $ | 6.18 |
| $ | 0.61 |
|
Earnings per share - diluted |
| $ | 1.53 |
| $ | (1.76 | ) | $ | 4.55 |
| $ | 0.57 |
|
(more)
Affiliated Managers Group, Inc.
Consolidated Balance Sheets
(in thousands)
|
| December 31, |
| December 31, |
| ||
|
| 2007 |
| 2008 |
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 222,954 |
| $ | 396,431 |
|
Investment advisory fees receivable |
| 237,636 |
| 131,099 |
| ||
Affiliate investments in partnerships (I) |
| 134,657 |
| 68,789 |
| ||
Affiliate investments in marketable securities |
| 21,237 |
| 10,399 |
| ||
Prepaid expenses and other current assets |
| 33,273 |
| 34,603 |
| ||
Total current assets |
| 649,757 |
| 641,321 |
| ||
|
|
|
|
|
| ||
Fixed assets, net |
| 69,879 |
| 71,845 |
| ||
Equity investments in Affiliates |
| 842,490 |
| 678,887 |
| ||
Acquired client relationships, net |
| 496,602 |
| 491,408 |
| ||
Goodwill |
| 1,230,387 |
| 1,243,583 |
| ||
Other assets |
| 106,590 |
| 119,326 |
| ||
Total assets |
| $ | 3,395,705 |
| $ | 3,246,370 |
|
|
|
|
|
|
| ||
Liabilities and Stockholders’ Equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Accounts payable and accrued liabilities |
| $ | 246,400 |
| $ | 186,385 |
|
Payables to related party |
| 69,952 |
| 26,187 |
| ||
Total current liabilities |
| 316,352 |
| 212,572 |
| ||
|
|
|
|
|
| ||
Senior debt |
| 519,500 |
| 233,514 |
| ||
Senior convertible securities |
| 378,083 |
| 507,146 |
| ||
Mandatory convertible securities |
| 300,000 |
| — |
| ||
Junior convertible trust preferred securities |
| 800,000 |
| 730,820 |
| ||
Deferred income taxes |
| 257,022 |
| 228,429 |
| ||
Other long-term liabilities |
| 33,516 |
| 30,414 |
| ||
Total liabilities |
| 2,604,473 |
| 1,942,895 |
| ||
|
|
|
|
|
| ||
Minority interest (H) |
| 194,633 |
| 145,450 |
| ||
Minority interest in Affiliate investments in partnerships (I) |
| 127,397 |
| 65,465 |
| ||
|
|
|
|
|
| ||
Stockholders’ equity: |
|
|
|
|
| ||
Common stock |
| 390 |
| 458 |
| ||
Additional paid-in capital |
| 662,454 |
| 939,540 |
| ||
Accumulated other comprehensive income |
| 64,737 |
| (4,081 | ) | ||
Retained earnings |
| 836,426 |
| 859,596 |
| ||
|
| 1,564,007 |
| 1,795,513 |
| ||
Less treasury stock, at cost |
| (1,094,805 | ) | (702,953 | ) | ||
Total stockholders’ equity |
| 469,202 |
| 1,092,560 |
| ||
Total liabilities and stockholders’ equity |
| $ | 3,395,705 |
| $ | 3,246,370 |
|
(more)
Affiliated Managers Group, Inc.
Consolidated Statements of Cash Flow
(in thousands)
|
| Three Months Ended |
| Year Ended |
| ||||||||
|
| December 31, |
| December 31, |
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|
| 2007 |
| 2008 |
| 2007 |
| 2008 |
| ||||
Cash flow from operating activities: |
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Net Income (loss) |
| $ | 60,867 |
| $ | (69,751 | ) | $ | 181,961 |
| $ | 23,170 |
|
Adjustments to reconcile Net Income (loss) to net cash flow |
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| ||||
Amortization of intangible assets |
| 7,882 |
| 8,391 |
| 31,653 |
| 33,854 |
| ||||
Amortization of issuance costs |
| 933 |
| 1,990 |
| 3,250 |
| 4,726 |
| ||||
Depreciation and other amortization |
| 2,873 |
| 4,095 |
| 10,444 |
| 12,767 |
| ||||
Deferred income tax provision (benefit) |
| 8,125 |
| (60,318 | ) | 32,232 |
| (30,823 | ) | ||||
Accretion of interest |
| 666 |
| 60 |
| 2,772 |
| 686 |
| ||||
(Income) loss from equity method investments, net of amortization |
| (30,703 | ) | 137,721 |
| (58,197 | ) | 97,142 |
| ||||
Distributions received from equity method investments |
| 12,286 |
| 15,080 |
| 53,612 |
| 80,487 |
| ||||
Tax benefit from exercise of stock options |
| 35 |
| — |
| 5,780 |
| 2,767 |
| ||||
Stock option expense |
| 2,423 |
| 42,766 |
| 9,039 |
| 53,968 |
| ||||
Affiliate equity expense |
| 2,556 |
| 3,194 |
| 8,109 |
| 13,948 |
| ||||
Other adjustments |
| 124 |
| (39,288 | ) | (2,130 | ) | (33,209 | ) | ||||
Changes in assets and liabilities: |
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(Increase) decrease in investment advisory fees receivable |
| (40,076 | ) | 35,384 |
| (35,963 | ) | 102,788 |
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Decrease in Affiliate investments in partnerships |
| 968 |
| 8,835 |
| 12,766 |
| 6,045 |
| ||||
(Increase) decrease in prepaids and other current assets |
| (5,113 | ) | 2,753 |
| (4,722 | ) | 19,640 |
| ||||
(Increase) decrease in other assets |
| 6,686 |
| 226 |
| (3,178 | ) | 9,770 |
| ||||
Increase (decrease) in accounts payable, accrued liabilities |
| 3,022 |
| (29,043 | ) | 21,035 |
| (49,315 | ) | ||||
Increase (decrease) in minority interest |
| 65,587 |
| (5,455 | ) | 58,191 |
| (92,735 | ) | ||||
Cash flow from operating activities |
| 99,141 |
| 56,640 |
| 326,654 |
| 255,676 |
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Cash flow used in investing activities: |
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Cost of investments in Affiliates, net of cash acquired |
| (492,712 | ) | (20,669 | ) | (556,683 | ) | (171,400 | ) | ||||
Purchase of fixed assets |
| (5,438 | ) | (1,464 | ) | (16,821 | ) | (9,554 | ) | ||||
Purchase of investment securities |
| — |
| (977 | ) | (13,648 | ) | (33,613 | ) | ||||
Sale of investment securities |
| 1,767 |
| 1,010 |
| 6,397 |
| 25,156 |
| ||||
Cash flow used in investing activities |
| (496,383 | ) | (22,100 | ) | (580,755 | ) | (189,411 | ) | ||||
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Cash flow from (used in) financing activities: |
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Borrowings of senior bank debt |
| 515,000 |
| — |
| 727,000 |
| 366,000 |
| ||||
Repayments of senior bank debt |
| (350,000 | ) | (6,486 | ) | (573,000 | ) | (651,986 | ) | ||||
Issuance of senior convertible notes |
| — |
| — |
| — |
| 460,000 |
| ||||
Settlement of convertible securities |
| — |
| — |
| — |
| (208,730 | ) | ||||
Issuance of junior convertible trust preferred securities |
| 500,000 |
| — |
| 500,000 |
| — |
| ||||
Repurchase of junior convertible trust preferred securities |
| — |
| (24,213 | ) | — |
| (24,213 | ) | ||||
Issuance of common stock |
| 640 |
| 32 |
| 53,324 |
| 238,814 |
| ||||
Repurchase of common stock |
| (233,154 | ) | (10,940 | ) | (435,997 | ) | (65,490 | ) | ||||
Issuance costs |
| (18,179 | ) | (695 | ) | (19,999 | ) | (28,859 | ) | ||||
Excess tax benefit from exercise of stock options |
| 317 |
| — |
| 36,528 |
| 11,101 |
| ||||
Settlement of derivative contracts |
| — |
| — |
| — |
| 8,154 |
| ||||
Note payments |
| (66 | ) | 4,366 |
| (2,542 | ) | 5,628 |
| ||||
Redemptions of Minority interest - Affiliate |
| (968 | ) | (2,661 | ) | (12,766 | ) | (672 | ) | ||||
Cash flow from (used in) financing activities |
| 413,590 |
| (40,597 | ) | 272,548 |
| 109,747 |
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Effect of foreign exchange rate changes on cash and cash equivalents |
| (3 | ) | (522 | ) | 2,778 |
| (2,535 | ) | ||||
Net increase (decrease) in cash and cash equivalents |
| 16,345 |
| (6,579 | ) | 21,225 |
| 173,477 |
| ||||
Cash and cash equivalents at beginning of period |
| 206,609 |
| 403,010 |
| 201,729 |
| 222,954 |
| ||||
Cash and cash equivalents at end of period |
| $ | 222,954 |
| $ | 396,431 |
| $ | 222,954 |
| $ | 396,431 |
|
(more)
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. |
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| 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. |
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(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. |
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(C) |
| Cash earnings per share represents Cash Net Income divided by the adjusted diluted average shares outstanding. In this calculation, the potential share issuance in connection with the Company’s convertible securities is measured 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 and the junior convertible trust preferred 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. |
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(D) |
| Convertible securities interest expense, net, includes the interest expense, net of tax, associated with the Company’s dilutive convertible securities (excluding the interest expense associated with the Company’s mandatory convertible securities). |
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(E) |
| The Company completed its investment in Gannett Welsh & Kotler during the fourth quarter of 2008. |
(more)
(F) |
| In the first and third quarters of 2008, the Company agreed to transfer its interests in certain Affiliates and in the fourth quarter of 2008, certain Affiliates’ products were closed. Also during the first quarter of 2008, the Company reclassified approximately $100 million of assets under management from the High Net Worth distribution channel to each of the Mutual Fund and Institutional distribution channels, respectively. The financial effect of these items is not material to the Company’s ongoing results. |
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(G) |
| The Company is required to use the equity method of accounting for certain of its investments (“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 “Income from equity method investments.” 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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(H) |
| 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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(I) |
| EITF Issue No. 04-05, “Determining Whether a General Partner, or the General Partners as a Group, Controls a Limited Partnership or Similar Entity When the Limited Partners Have Certain Rights” (“EITF 04-05”), became effective January 1, 2006. EITF 04-05 requires the Company to consolidate certain Affiliate investment partnerships (including interests in the partnerships in which the Company does not have ownership rights) in its consolidated financial statements. For the year ended December 31, 2008, the total non- operating loss associated with those partnerships was $63.4 million, while the portion attributable to the underlying investors unrelated to the Company (the “outside owners”) was $60.5 million; as of December 31, 2008, the total assets attributable to these investment partnerships was $68.8 million, while the portion owned by the outside owners was $65.5 million. |