Affiliated Managers (MGR) 8-K Results of Operations and Financial Condition

Exhibit 99.2

Affiliated Managers Group, Inc.

Financial Highlights

(dollars in thousands, except per share data)

	Three Months		Three Months
	Ended		Ended
	9/30/08*		9/30/09
Revenue	$	290,824	$	217,461
Net Income (controlling interest)	$	16,471	$	17,769
Cash Net Income (A)	$	52,804	$	45,629
EBITDA (B)	$	77,234	$	60,532
Average shares outstanding - diluted	42,063,538		44,267,107
Earnings per share - diluted	$	0.39	$	0.40

	December 31, 2008*		September 30, 2009
Cash and cash equivalents	$	396,431	$	225,250
Senior debt	$	233,514	$	—
Senior convertible securities (C)	$	445,535	$	454,116
Junior convertible trust preferred securities (C)	$	505,034	$	506,756
Stockholders’ equity	$	924,801	$	1,104,640

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Affiliated Managers Group, Inc.

Financial Highlights

(dollars in thousands, except per share data)

	Nine Months		Nine Months
	Ended		Ended
	9/30/08*		9/30/09
Revenue	$	934,822	$	597,182
Net Income (controlling interest)	$	82,329	$	34,873
Cash Net Income (A)	$	173,079	$	125,754
EBITDA (B)	$	254,110	$	162,916
Average shares outstanding - diluted	41,759,696		42,835,258
Earnings per share - diluted	$	2.02	$	0.82

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Affiliated Managers Group, Inc.

Reconciliations of Earnings Per Share Calculation

(dollars in thousands, except per share data)

	Three Months		Three Months
	Ended		Ended
	9/30/08*		9/30/09
Net Income (controlling interest)	$	16,471	$	17,769
Convertible securities interest expense, net (D)	48		36
Net Income (controlling interest), as adjusted	$	16,519	$	17,805
Average shares outstanding - diluted	42,063,538		44,267,107
Earnings per share - diluted	$	0.39	$	0.40

	Nine Months		Nine Months
	Ended		Ended
	9/30/08*		9/30/09
Net Income (controlling interest)	$	82,329	$	34,873
Convertible securities interest expense, net (D)	2,124		108
Net Income (controlling interest), as adjusted	$	84,453	$	34,981
Average shares outstanding - diluted	41,759,696		42,835,258
Earnings per share - diluted	$	2.02	$	0.82

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Affiliated Managers Group, Inc.

Operating Results

(in millions)

Assets Under Management

Statement of Changes - Quarter to Date

	Mutual Fund			Institutional			High Net Worth			Total
Assets under management, June 30, 2009	$	35,192		$	111,926		$	26,686		$	173,804
Client cash inflows	2,298			5,503			1,596			9,397
Client cash outflows	(2,294		)	(6,732		)	(1,475		)	(10,501		)
Net client cash flows	4			(1,229		)	121			(1,104		)
New investments (E)	2,669			1,661			1,258			5,588
Investment performance	5,539			16,876			2,955			25,370
Other (F)	(248		)	(1,851		)	(2,231		)	(4,330		)
Assets under management, September 30, 2009	$	43,156		$	127,383		$	28,789		$	199,328

Statement of Changes - Year to Date

	Mutual Fund			Institutional			High Net Worth			Total
Assets under management, December 31, 2008	$	34,704		$	109,450		$	25,991		$	170,145
Client cash inflows	5,700			20,693			4,212			30,605
Client cash outflows	(7,957		)	(24,873		)	(4,837		)	(37,667		)
Net client cash flows	(2,257		)	(4,180		)	(625		)	(7,062		)
New investments (E)	2,669			1,661			1,258			5,588
Investment performance	8,288			27,022			4,466			39,776
Other (F)	(248		)	(6,570		)	(2,301		)	(9,119		)
Assets under management, September 30, 2009	$	43,156		$	127,383		$	28,789		$	199,328

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Affiliated Managers Group, Inc.

Operating Results

(in thousands)

Financial Results

	Three Months Ended 9/30/08*		Percent of Total	Three Months Ended 9/30/09		Percent of Total
Revenue
Mutual Fund	$	115,170	39%	$	80,682	37%
Institutional	141,647		49%	109,918		51%
High Net Worth	34,007		12%	26,861		12%
	$	290,824	100%	$	217,461	100%
EBITDA (B)
Mutual Fund	$	25,091	33%	$	14,514	24%
Institutional	43,291		56%	38,230		63%
High Net Worth	8,852		11%	7,788		13%
	$	77,234	100%	$	60,532	100%

	Nine Months Ended 9/30/08*		Percent of Total	Nine Months Ended 9/30/09		Percent of Total
Revenue
Mutual Fund	$	376,013	40%	$	221,380	37%
Institutional	449,135		48%	293,646		49%
High Net Worth	109,674		12%	82,156		14%
	$	934,822	100%	$	597,182	100%
EBITDA (B)
Mutual Fund	$	86,312	34%	$	43,781	27%
Institutional	138,042		54%	97,357		60%
High Net Worth	29,756		12%	21,778		13%
	$	254,110	100%	$	162,916	100%

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Affiliated Managers Group, Inc.

Reconciliations of Performance and Liquidity Measures

(in thousands)

	Three Months Ended 9/30/08*			Three Months Ended 9/30/09
Net Income (controlling interest)	$	16,471		$	17,769
Intangible amortization	13,501			16,120
Intangible-related deferred taxes	14,093			6,181
APB 14-1 expense	5,041			2,067
Affiliate equity expense	1,987			1,579
Affiliate depreciation	1,711			1,913
Cash Net Income (A)	$	52,804		$	45,629
Cash flow from operations	$	187,275		$	80,162
Interest expense, net of non-cash items	16,308			14,249
Current tax provision	6,212			63
Income from equity method investments, net of distributions	2,156			2,484
Changes in assets and liabilities and other adjustments	(134,717		)	(36,426		)
EBITDA (B)	$	77,234		$	60,532
Holding company expenses	20,333			11,426
EBITDA Contribution	$	97,567		$	71,958

	Nine Months Ended 9/30/08*			Nine Months Ended 9/30/09
Net Income (controlling interest)	$	82,329		$	34,873
Intangible amortization	40,301			48,120
Intangible-related deferred taxes	32,154			25,296
APB 14-1 expense	6,498			6,177
Affiliate equity expense	6,860			5,474
Affiliate depreciation	4,937			5,814
Cash Net Income (A)	$	173,079		$	125,754
Cash flow from operations	$	430,056		$	168,067
Interest expense, net of non-cash items	52,103			42,899
Current tax provision	31,713			(9,108		)
Income from equity method investments, net of distributions	(9,990		)	3,293
Changes in assets and liabilities and other adjustments	(249,772		)	(42,235		)
EBITDA (B)	$	254,110		$	162,916
Holding company expenses	53,574			32,474
EBITDA Contribution	$	307,684		$	195,390

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Affiliated Managers Group, Inc.

Consolidated Statements of Income

(dollars in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008*			2009			2008*			2009
Revenue	$	290,824		$	217,461		$	934,822		$	597,182
Operating expenses:
Compensation and related expenses	123,703			105,237			415,605			292,770
Selling, general and administrative	53,482			28,294			154,510			92,958
Amortization of intangible assets	8,562			8,293			25,463			24,430
Depreciation and other amortization	2,996			3,167			8,672			9,649
Other operating expenses	4,898			10,865			15,361			21,351
	193,641			155,856			619,611			441,158
Operating income	97,183			61,605			315,211			156,024
Non-operating (income) and expenses:
Investment and other (income) loss	3,865			(6,614		)	5,378			(13,564		)
Income from equity method investments	(13,177		)	(8,203		)	(40,579		)	(21,970		)
Investment (income) loss from Affiliate investments in partnerships (G)	22,841			(14,914		)	31,771			(26,065		)
Interest expense	19,883			19,540			59,747			58,681
	33,412			(10,191		)	56,317			(2,918		)
Income before income taxes	63,771			71,796			258,894			158,942
Income taxes - current	6,212			63			31,713			(9,108		)
Income taxes - intangible-related deferred	14,093			6,181			32,154			25,296
Income taxes - other deferred	4,078			(2,308		)	(806		)	(4,595		)
Net income	39,388			67,860			195,833			147,349
Net income (non-controlling interests) (G)	(44,914		)	(35,459		)	(143,738		)	(87,008		)
Net (income) loss (non-controlling interests in partnerships) (G)	21,997			(14,632		)	30,234			(25,468		)
Net Income (controlling interest)	$	16,471		$	17,769		$	82,329		$	34,873
Average shares outstanding - basic	39,522,159			41,854,249			37,770,720			41,115,819
Average shares outstanding - diluted	42,063,538			44,267,107			41,759,696			42,835,258
Earnings per share - basic	$	0.42		$	0.42		$	2.18		$	0.85
Earnings per share - diluted	$	0.39		$	0.40		$	2.02		$	0.82

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Affiliated Managers Group, Inc.

Consolidated Balance Sheets

(in thousands)

	December 31,			September 30,
	2008*			2009
Assets
Current assets:
Cash and cash equivalents	$	396,431		$	225,250
Investment advisory fees receivable	131,099			132,160
Affiliate investments in partnerships (G)	68,789			95,587
Affiliate investments in marketable securities	10,399			16,574
Prepaid expenses and other current assets	23,968			24,975
Total current assets	630,686			494,546
Fixed assets, net	71,845			64,874
Equity investments in Affiliates	678,887			662,854
Acquired client relationships, net	491,408			585,604
Goodwill	1,243,583			1,406,615
Other assets	96,291			110,043
Total assets	$	3,212,700		$	3,324,536
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities	$	183,794		$	130,201
Payables to related party	26,187			87,847
Total current liabilities	209,981			218,048
Senior debt	233,514			—
Senior convertible securities (C)	445,535			454,116
Junior convertible trust preferred securities (C)	505,034			506,756
Deferred income taxes	319,491			323,308
Other long-term liabilities	30,414			26,329
Total liabilities	1,743,969			1,528,557
Redeemable non-controlling interests	297,733			362,833
Equity:
Common stock	458			458
Additional paid-in capital	817,713			671,588
Accumulated other comprehensive income	(4,081		)	36,515
Retained earnings	813,664			848,537
	1,627,754			1,557,098
Less treasury stock, at cost	(702,953		)	(452,458		)
Total stockholders’ equity	924,801			1,104,640
Non-controlling interests (G)	180,732			236,517
Non-controlling interests in partnerships (G)	65,465			91,989
Total equity	1,170,998			1,433,146
Total liabilities and equity	$	3,212,700		$	3,324,536

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Affiliated Managers Group, Inc.

Consolidated Statements of Cash Flow

(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2008*			2009			2008*			2009
Cash flow from operating activities:
Net income	$	39,388		$	67,860		$	195,833		$	147,349
Adjustments to reconcile Net income to net cash flow from operating activities:
Amortization of intangible assets	8,562			8,293			25,463			24,430
Amortization of issuance costs	1,195			1,843			2,404			5,479
Depreciation and other amortization	2,996			3,167			8,672			9,649
Deferred income tax provision	18,171			3,873			31,348			20,701
Accretion of interest	2,380			3,448			5,240			10,303
Income from equity method investments, net of amortization	(13,177		)	(8,202		)	(40,579		)	(21,970		)
Distributions received from equity method investments	15,960			13,725			65,407			42,545
Tax benefit from exercise of stock options	488			1,715			2,767			3,174
Stock option expense	3,802			2,560			11,202			5,695
Affiliate equity expense	3,144			3,150			10,754			9,869
Other adjustments	30,034			(14,605		)	36,314			(33,302		)
Changes in assets and liabilities:
(Increase) decrease in investment advisory fees receivable	8,480			(17,051		)	67,404			845
(Increase) decrease in Affiliate investments in partnerships	3,866			—			(2,790		)	331
(Increase) decrease in prepaids and other current assets	5,442			(811		)	23,822			(10,024		)
(Increase) decrease in other assets	433			(46		)	9,544			2,869
Increase (decrease) in accounts payable, accrued liabilities and other long-term liabilities	56,111			11,243			(22,749		)	(49,876		)
Cash flow from operating activities	187,275			80,162			430,056			168,067
Cash flow used in investing activities:
Investments in Affiliates	—			(137,860		)	(60,910		)	(139,271		)
Purchase of fixed assets	(2,950		)	(438		)	(8,091		)	(1,653		)
Purchase of investment securities	(9,191		)	—			(32,635		)	(11,746		)
Sale of investment securities	9,144			1,584			24,146			7,303
Cash flow used in investing activities	(2,997		)	(136,714		)	(77,490		)	(145,367		)
Cash flow from (used in) financing activities:
Borrowings of senior bank debt	65,000			—			366,000			—
Repayments of senior bank debt	(398,000		)	—			(645,500		)	(233,514		)
Issuance of senior convertible notes	460,000			—			460,000			—
Settlement of convertible securities	—			—			(208,730		)	—
Issuance of common stock	5,980			18,139			238,781			29,760
Repurchase of common stock	(29,796		)	—			(54,550		)	—
Issuance costs	(26,223		)	(288		)	(28,164		)	(1,209		)
Excess tax benefit from exercise of stock options	1,294			2,750			11,101			3,836
Settlement of derivative contracts	—			—			8,154			—
Settlement of forward equity sale agreement	—			—			—			144,258
Note payments	(563		)	7,196			1,263			2,718
Distributions to non-controlling interests	(45,933		)	(14,962		)	(231,019		)	(102,087		)
Repurchases of Affiliate equity	(3,141		)	(7,502		)	(89,822		)	(40,308		)
Subscriptions (redemptions) of Non-controlling interests in partnerships	(1,667		)	—			1,989			(471		)
Cash flow from (used in) financing activities	26,951			5,333			(170,497		)	(197,017		)
Effect of foreign exchange rate changes on cash and cash equivalents	(1,456		)	2,100			(2,013		)	3,136
Net increase (decrease) in cash and cash equivalents	209,773			(49,119		)	180,056			(171,181		)
Cash and cash equivalents at beginning of period	193,237			274,369			222,954			396,431
Cash and cash equivalents at end of period	$	403,010		$	225,250		$	403,010		$	225,250

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Affiliated Managers Group, Inc.

Notes

*In the first quarter of 2009, the Company adopted Statement of Financial Accounting Standards (“FAS”) No. 141 (revised 2007), “Business Combinations” (“FAS 141R”), FAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” (“FAS 160”), Emerging Issues Task Force Topic No. D-98 “Classification and Measurement of Redeemable Securities” (“Topic D-98”) and FASB Staff Position APB 14-1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (including Partial Cash Settlement)” (“APB 14-1”), each of which is discussed in further detail in its Quarterly Report on Form 10-Q for the first quarter of 2009.  These accounting changes have been retrospectively applied to prior periods, and are reflected in the financial results presented herein.

(A)Under our Cash Net Income definition, we add to Net Income (controlling interest) amortization (including equity method amortization) and deferred taxes related to intangible assets and Affiliate depreciation and equity expenses, and exclude the effect of APB 14-1. 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.  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 portion of deferred taxes generally attributable to intangible assets (including goodwill) that it no longer amortizes but which continues to generate tax deductions is added back because the Company believes it is unlikely these accruals will be used to settle material tax obligations.  The Company adds back non-cash expenses relating to certain transfers of equity between Affiliate management partners when these transfers have no dilutive effect to shareholders. 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. 

In connection with the recent accounting changes described above, in the first quarter of 2009 the Company modified its Cash Net Income definition to add back Affiliate equity and APB 14-1 expenses (both net of tax).  In prior periods, Cash Net Income was defined as “Net Income plus amortization and deferred taxes related to intangible assets plus Affiliate depreciation.”  Under this definition, Cash Net Income reported for the three and nine months ended September 30, 2008 was $54,153 and $170,313, respectively.

(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)In accordance with APB 14-1, the Company has bifurcated certain of its convertible debt securities into their debt and equity components on its balance sheet.  The senior convertible securities balance consists of zero coupon senior convertible notes, which were not required to be bifurcated, and senior convertible notes due 2038.  The principal amount at maturity of the senior convertible notes due 2038 was $460,000 at December 31, 2008 and September 30, 2009.  The principal amount at maturity of the junior convertible trust preferred securities was $730,820 at December 31, 2008 and September 30, 2009.

(D)Convertible securities interest expense, net, includes the interest expense, net of tax, associated with the Company’s dilutive convertible securities (including the incremental interest expense attributable to APB 14-1 but excluding the interest expense associated with the Company’s mandatory convertible securities).

(E)The Company completed its investment in Harding Loevner LP during the third quarter of 2009.

(F)Other includes assets under management attributable to Affiliate product closings and transfers of the Company’s interests in certain Affiliated investment management firms, the financial effects of which are not material to the Company’s ongoing results.

(G)Income attributable to non-controlling interests on the Company’s income statement represents the profits allocated to Affiliate management owners and investors in certain Affiliate investments in partnerships that the Company is required to consolidate.  Non-controlling interests 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.  Non-controlling interests in partnerships on the Company’s balance sheet represent the net assets owned by investors in certain Affiliate investment partnerships, who retain the conditional right to redeem their interests to the investment partnership.