SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): February 1, 1999
AFFILIATED MANAGERS GROUP, INC.
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(Exact name of Registrant as specified in charter)
Delaware 001-13459 043218510
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(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
Two International Place, 23rd Floor, Boston, MA 02110
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(Address of principal executive offices) (Zip code)
(617) 747-3300
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(Registrant's telephone number, including area code)
Item 5. Other Events
Registrant is filing this Form 8-K in order to file a current earnings press
release. By this filing, Registrant is not establishing the practice of filing
all earnings press releases in the future and may discontinue such filings at
any time.
Item 7. Financial Statements and Exhibits
(c) Exhibits
Exhibit "A" -- Press Release issued on January 27, 1999 by Affiliated
Managers Group, Inc.
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.
AFFILIATED MANAGERS GROUP, INC.
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(Registrant)
Date: February 1, 1999 /s/ Darrell W. Crate
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DARRELL W. CRATE
Senior Vice President,
Chief Financial Officer and Treasurer
(and also as Principal Financial and
Accounting Officer)
Exhibits
A. Press Release issued on January 27, 1999 by Affiliated Managers
Group, Inc.
[LETTERHEAD OF AMG AFFILIATED MANAGERS GROUP, INC.]
Contact: Darrell W. Crate
Affiliated Managers Group, Inc.
(617) 747-3300
AMG REPORTS FINANCIAL AND OPERATING RESULTS
FOR FOURTH QUARTER AND FULL YEAR 1998
COMPANY REPORTS FOURTH QUARTER EBITDA OF $24.0 MILLION AND EPS OF $0.48
BOSTON, MA, JANUARY 27, 1999 -- Affiliated Managers Group, Inc. (NYSE:AMG), an
asset management holding company, today reported its financial and operating
results for the fourth quarter and full year ended December 31, 1998.
Reported net income for the fourth quarter was $9.3 million, or $0.48 per share
on a diluted basis, on revenues of $80.3 million. Reported earnings before
interest expense, income taxes, depreciation and amortization ("EBITDA") for the
fourth quarter was $24.0 million. These results compare to reported net income
before extraordinary item for the fourth quarter 1997 of $0.8 million, or $0.07
per share on a diluted basis, on revenues of $42.0 million, and EBITDA before
extraordinary item of $12.1 million. The revenues, EBITDA and net income for the
fourth quarter 1998 include substantial performance fees which, due to their
dependence on investment results, may not recur to the same magnitude in future
years.
For the year ended December 31, 1998, reported net income was $25.6 million, or
$1.33 per share on a diluted basis, on revenues of $238.5 million, while on a
reported basis, EBITDA for the year ended December 31, 1998 was $76.3 million.
For the year ended December 31, 1997, reported net income before the
extraordinary item was $1.6 million, or $0.20 per share on a diluted basis, on
revenues of $95.3 million. Reported EBITDA for the year ended December 31, 1997
was $20.0 million.
On a pro forma basis (giving effect to the investments in Essex Investment
Management Company, LLC, completed on March 20, 1998, Davis Hamilton Jackson &
Associates, L.P., completed on December 31, 1998, and Rorer Asset Management,
LLC, completed on January 6, 1999, as if each occurred as of January 1, 1998),
net income for the year ended December 31, 1998 was $28.3 million, or $1.45 per
share. EBITDA on the same pro forma basis for the year ended December 31, 1998
was $89.3 million.
(MORE)
Affiliated Managers Group Reports 4Q98 and Full Year 1998 Results
January 27, 1999
Page 2 of 5
Pro forma for the investment in Rorer, assets under management at December
31, 1998 were $62.1 billion. Assets under management by Tweedy, Browne
Company LLC, AMG's largest Affiliate based on EBITDA Contribution (as defined
in Note 6 to the attached Summary Financial Data), rose to $6.6 billion, a
24.3 percent increase for the year. Aggregate net client cash flows were
positive for the year at $160 million, although those for the fourth quarter
were negative $1.5 billion due to a decline in assets indirectly managed
using "overlay" strategies. Overlay assets (which generally carry lower fees
than directly managed assets) declined by $1.6 billion in the fourth quarter
and for the year. Excluding the effect of these overlay assets, aggregate
directly managed assets of AMG's Affiliates increased by $170 million in the
fourth quarter and $1.7 billion for the year.
"We are pleased with AMG's strategic and financial achievements in 1998, our
first year as a public company," said William J. Nutt, Chairman, President, and
Chief Executive Officer. "Notwithstanding volatile markets in the latter half of
the year, our Affiliates produced impressive growth resulting from strong
investment performance and positive aggregate net client cash flows over the
year. In addition, we continued to successfully execute our strategy of
generating growth through investments in new Affiliates. With the additions of
Rorer, Davis Hamilton, and Essex, AMG has grown to 13 Affiliates. These new
Affiliates further expand AMG's diversity by asset class, investment style,
client type, and geographic region. Finally, we are also pleased to have
assisted one of our Affiliates, The Burridge Group LLC, in acquiring an
excellent firm, Sound Capital Partners, LLC, in July of 1998."
AMG was founded in 1993 to address the succession and transition issues facing
the founders and owners of many mid-sized investment firms. AMG's strategy is to
generate growth through new investments, as well as through the internal growth
of existing Affiliates. AMG's innovative transaction structure allows individual
members of each Affiliate's management to retain or receive significant direct
ownership in their firm while maintaining operating autonomy. In addition, AMG
provides centralized assistance to its Affiliates, when requested, in strategic
matters, marketing, product development, and operations support.
CERTAIN MATTERS DISCUSSED IN THE 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 INTEREST IN INVESTMENT MANAGEMENT FIRMS, 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, 1997.
[FINANCIAL TABLES FOLLOW]
# # #
FOR MORE INFORMATION ON AFFILIATED MANAGERS GROUP, VIA FAX AT NO CHARGE,
PLEASE DIAL 1-800-PRO-INFO AND ENTER TICKER SYMBOL "AMG"
OR VISIT AMG'S WEB SITE AT WWW.AMG-BOSTON.COM
AFFILIATED MANAGERS GROUP, INC.
SUMMARY FINANCIAL DATA
(dollars in thousands, except as indicated and per share data)
Pro Forma
Three Months Three Months Three Months
Ended 12/31/97 Ended 12/31/98 Ended 12/31/98(3)
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(unaudited)
STATEMENT OF INCOME DATA:
Revenues................................................. $ 42,007 $ 80,293 $ 88,635
Other operating expenses................................. 24,040 42,390 46,853
Depreciation and amortization............................ 4,378 5,398 6,230
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Operating income......................................... 13,589 32,505 35,552
Investment and other income.............................. (360) (910) (992)
Interest expense......................................... 5,772 3,036 4,045
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Income before minority interest, income taxes
and extraordinary item................................. 8,177 30,379 32,499
Minority interest........................................ (6,224) (14,862) (16,232)
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Income before income taxes and extraordinary item........ 1,953 15,517 16,267
Income tax expense....................................... 1,143 6,207 6,832
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Income before extraordinary item......................... 810 9,310 9,435
Extraordinary item....................................... (10,011) -- --
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Net income (loss)........................................ $ (9,201) $ 9,310 $ 9,435
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Average shares outstanding - basic....................... 7,331,741 17,492,720 17,490,992
Average shares outstanding - diluted..................... 12,344,678 19,360,481 19,358,753
Income before extraordinary item per share - basic....... $ 0.11 $ 0.53 $ 0.54
Income before extraordinary item per share - diluted..... $ 0.07 $ 0.48 $ 0.49
OTHER FINANCIAL DATA:
EBITDA (1)............................................... $ 12,103 $ 23,951 $ 26,542
EBITDA as adjusted (2)................................... $ 5,188 $ 14,708 $ 15,665
EBITDA as adjusted per share............................. $ 0.42 $ 0.76 $ 0.81
(under same method used to calculate
diluted earnings per share)
Pro Forma
December 31, December 31, December 31,
BALANCE SHEET DATA: 1997 1998 1998
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(unaudited)
Senior debt.............................................. $ 159,500 $ 212,500 $ 277,500
Subordinated debt........................................ 800 800 800
Stockholders' equity..................................... $ 259,740 $ 313,655 $ 313,655
(more)
AFFILIATED MANAGERS GROUP, INC.
SUMMARY FINANCIAL DATA
(dollars in thousands, except as indicated and per share data)
Pro Forma
Year Ended Year Ended Year Ended
12/31/97 12/31/98 12/31/98(3)
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(unaudited)
STATEMENT OF INCOME DATA:
Revenues............................................ $ 95,287 $ 238,494 $ 278,327
Other operating expenses............................ 64,168 125,590 146,175
Depreciation and amortization....................... 8,558 20,124 24,386
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Operating income.................................... 22,561 92,780 107,766
Investment and other income......................... (1,174) (2,251) (2,585)
Interest expense.................................... 8,479 13,603 16,179
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Income before minority interest, income taxes
and extraordinary item............................ 15,256 81,428 94,172
Minority interest................................... (12,249) (38,843) (45,459)
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Income before income taxes and extraordinary item... 3,007 42,585 48,713
Income tax expense.................................. 1,364 17,034 20,459
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Income before extraordinary item.................... 1,643 25,551 28,254
Extraordinary item.................................. (10,011) -- --
----------- ------------- -----------
Net income (loss)................................... $ (8,368) $ 25,551 $ 28,254
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Average shares outstanding--basic................... 2,270,684 17,582,900 17,490,992
Average shares outstanding--diluted................. 8,235,529 19,222,831 19,479,900
Income before extraordinary item per share - basic.. 0.72 1.45 1.62
Income before extraordinary item per share - diluted 0.20 1.33 1.45
OTHER FINANCIAL DATA:
EBITDA (1).......................................... $ 20,044 $ 76,312 $ 89,278
EBITDA as adjusted (2).............................. $ 10,201 $ 45,675 $ 52,640
EBITDA as adjusted per share........................ $ 1.24 $ 2.38 $ 2.70
(under same method used to calculate
diluted earnings per share)
(more)
AFFILIATED MANAGERS GROUP, INC.
SUMMARY FINANCIAL DATA
(dollars in thousands, except as indicated and per share data)
SUPPLEMENTAL REPORTED AND PRO FORMA INFORMATION:
Reported Reported Pro Forma Pro Forma
Three Months Year Ended Three Months Year Ended
Ended 12/31/98 12/31/98 Ended 12/31/98(3) 12/31/98(3)
-------------- -------------- ----------------- -----------------
(unaudited)
Assets under management (at period end in millions):
Tweedy, Browne $ 6,641 $ 6,641 $ 6,641 $ 6,641
Other Affiliates (4) 51,090 51,090 55,490 55,490
-------------- -------------- ----------------- -----------------
Total $57,731 $ 57,731 $62,131 $ 62,131
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Revenues:
Tweedy, Browne $18,937 $ 78,243 $18,937 $ 78,243
Other Affiliates 61,356 160,251 69,698 200,084
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Total $80,293 $238,494 $88,635 $278,327
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Owners' Allocation (5):
Tweedy, Browne $13,072 $ 54,097 $13,072 $ 54,097
Other Affiliates 28,902 69,785 32,818 88,936
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Total $41,974 $123,882 $45,890 $143,033
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EBITDA Contribution (6):
Tweedy, Browne $ 9,392 $ 39,284 $ 9,392 $ 39,284
Other Affiliates 17,027 44,676 19,618 57,642
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Total $26,419 $ 83,960 $29,010 $ 96,926
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RECONCILIATION OF EBITDA CONTRIBUTION TO EBITDA:
Total EBITDA Contribution (as above) $26,419 $ 83,960 $29,010 $ 96,926
Less, holding company expenses (2,468) (7,648) (2,468) (7,648)
-------------- -------------- ----------------- -----------------
EBITDA (1) $23,951 $ 76,312 $26,542 $ 89,278
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Notes:
(1) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization and extraordinary item.
(2) EBITDA as adjusted represents earnings after interest expense and income
taxes but before depreciation and amortization and extraordinary item.
(3) Pro forma financial data gives effect to the investments in Essex, Davis
Hamilton and Rorer and financing transactions which occurred during 1998
and 1999 as if each of such transactions occurred as of January 1, 1998.
(4) Assets under management for Reported Three Months 12/31/98 and Reported
Year Ended 12/31/98 reflect assets for Davis Hamilton. Reported Revenues,
Owners, Allocation, and EBITDA Contribution for the same periods do not
reflect the investment in Davis Hamilton due to its closing date of
December 31, 1998.
(5) Owners' Allocation represents the portion of an Affiliate's revenues
that is allocated to the owners of that Affiliate, including AMG, generally
in proportion to their ownership interests, pursuant to the revenue
sharing agreement with such Affiliate.
(6) EBITDA Contribution represents the portion of an Affiliate's revenues
that is allocated to AMG after amounts retained by the Affiliate for
compensation and day-to-day operating and overhead expenses, but before
the interest, income taxes, depreciation and amortization expenses of the
Affiliate.