Attached files
| file | filename |
|---|---|
| 8-K - 8-K - AFFILIATED MANAGERS GROUP, INC. | a10-12738_48k.htm |
| EX-99.1 - EX-99.1 - AFFILIATED MANAGERS GROUP, INC. | a10-12738_4ex99d1.htm |
| EX-23.1 - EX-23.1 - AFFILIATED MANAGERS GROUP, INC. | a10-12738_4ex23d1.htm |
| EX-99.2 - EX-99.2 - AFFILIATED MANAGERS GROUP, INC. | a10-12738_4ex99d2.htm |
Exhibit 99.3
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial information and explanatory notes show the impact on the historical financial positions and results of operations of Affiliated Managers Group, Inc. (AMG) and Pantheon Ventures Inc., Pantheon Capital (Asia) Limited, and Pantheon Holdings Limited and subsidiaries (collectively, Pantheon) of the investment by AMG in Pantheon under the acquisition method of accounting. Under the acquisition method of accounting, the assets, liabilities and non-controlling interests of Pantheon will be recorded by AMG at their respective fair values as of the date the investment is completed. The unaudited pro forma condensed combined financial information combines the historical financial information of AMG and Pantheon as of March 31, 2010 and for the three months ended March 31, 2010 and the year ended December 31, 2009. The unaudited pro forma condensed combined statement of income gives effect to the transaction as if it had been completed at the beginning of the period.
The unaudited pro forma condensed combined financial information has been derived from and should be read in conjunction with:
· AMG’s historical audited financial statements as of and for the year ended December 31, 2009 included in AMG’s Annual Report on Form 10-K for the year ended December 31, 2009 and AMG’s historical quarterly financial information as of and for the three months ended March 31, 2010 included in AMG’s Quarterly Report on Form 10-Q for the three months ended March 31, 2010; and
· Pantheon’s historical audited financial statements as of and for the year ended December 31, 2009 and the unaudited quarterly financial information for the three months ended March 31, 2010 and 2009 incorporated herein.
The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the combined companies had the companies actually been combined at the beginning of the periods presented. The adjustments included in these unaudited pro forma condensed financial statements are preliminary and may be revised. The unaudited pro forma condensed combined financial information also does not consider any potential impact of current market conditions on revenues, among other factors. Further, as explained in more detail in the accompanying notes to the unaudited pro forma condensed combined financial information, the pro forma allocation of purchase price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary significantly from the actual purchase price allocation that will be recorded.
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 2010
(dollars in thousands)
|
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Pro Forma |
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||||
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|
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AMG |
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Pantheon |
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Adjustments |
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|
AMG |
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||||
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ASSETS |
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Current assets: |
|
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||||
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Cash and cash equivalents |
|
$ |
203,751 |
|
$ |
65,941 |
|
$ |
(65,795 |
) |
A |
|
$ |
203,897 |
|
|
Investment advisory fees receivable |
|
157,502 |
|
23,950 |
|
— |
|
|
|
181,452 |
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||||
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Investments in partnerships |
|
97,304 |
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— |
|
— |
|
|
|
97,304 |
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||||
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Investments in marketable securities |
|
80,814 |
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— |
|
— |
|
|
|
80,814 |
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||||
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Unsettled fund share receivables |
|
154,740 |
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— |
|
— |
|
|
|
154,740 |
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||||
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Prepaid expenses and other current assets |
|
22,119 |
|
24,240 |
|
(1,749 |
) |
B |
|
44,610 |
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||||
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Total current assets |
|
716,230 |
|
114,131 |
|
(67,544 |
) |
|
|
762,817 |
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||||
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|
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||||
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Fixed assets, net |
|
65,309 |
|
3,872 |
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— |
|
|
|
69,181 |
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||||
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Equity investments in Affiliates |
|
644,876 |
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— |
|
— |
|
|
|
644,876 |
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||||
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Intangible assets, net |
|
803,250 |
|
60,434 |
|
452,692 |
|
C |
|
1,316,376 |
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||||
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Goodwill |
|
1,521,222 |
|
94,544 |
|
298,168 |
|
D |
|
1,913,934 |
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||||
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Other assets |
|
114,984 |
|
74,318 |
|
(5,898 |
) |
E |
|
183,404 |
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||||
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Total assets |
|
$ |
3,865,871 |
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$ |
347,299 |
|
$ |
677,418 |
|
|
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$ |
4,890,588 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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||||
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Accounts payable and accrued liabilities |
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$ |
126,960 |
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$ |
43,275 |
|
$ |
(3,882 |
) |
B |
|
$ |
166,353 |
|
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Unsettled fund share payables |
|
159,039 |
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— |
|
— |
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|
|
159,039 |
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||||
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Payables to related party |
|
18,314 |
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— |
|
72,994 |
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F |
|
91,308 |
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||||
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Total current liabilities |
|
304,313 |
|
43,275 |
|
69,112 |
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|
416,700 |
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||||
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Senior bank debt |
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170,000 |
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— |
|
589,300 |
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G |
|
759,300 |
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||||
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Senior convertible securities |
|
460,137 |
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— |
|
— |
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|
|
460,137 |
|
||||
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Junior convertible trust preferred securities |
|
507,965 |
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— |
|
— |
|
|
|
507,965 |
|
||||
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Deferred income taxes |
|
393,263 |
|
12,935 |
|
38,982 |
|
H |
|
445,180 |
|
||||
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Other long-term liabilities |
|
123,655 |
|
1,760 |
|
50,896 |
|
I |
|
176,311 |
|
||||
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Total liabilities |
|
1,959,333 |
|
57,970 |
|
748,290 |
|
|
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2,765,593 |
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||||
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Redeemable non-controlling interests |
|
368,702 |
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— |
|
18,260 |
|
J |
|
386,962 |
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Equity: |
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Common Stock |
|
458 |
|
127 |
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(127 |
) |
K |
|
458 |
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||||
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Additional paid-in capital |
|
594,842 |
|
191,936 |
|
(91,936 |
) |
K |
|
694,842 |
|
||||
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Accumulated other comprehensive income (loss) |
|
71,350 |
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(31,944 |
) |
31,944 |
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K |
|
71,350 |
|
||||
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Retained earnings |
|
890,599 |
|
129,210 |
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(129,210 |
) |
K |
|
890,599 |
|
||||
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|
|
1,557,249 |
|
289,329 |
|
(189,329 |
) |
|
|
1,657,249 |
|
||||
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Less : treasury stock, at cost |
|
(416,588 |
) |
— |
|
— |
|
|
|
(416,588 |
) |
||||
|
Total stockholders’ equity |
|
1,140,661 |
|
289,329 |
|
(189,329 |
) |
|
|
1,240,661 |
|
||||
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|
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|
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||||
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Non-controlling interests |
|
303,674 |
|
— |
|
100,197 |
|
L |
|
403,871 |
|
||||
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Non-controlling interests in partnerships |
|
93,501 |
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— |
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— |
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|
|
93,501 |
|
||||
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||||
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Total equity |
|
1,537,836 |
|
289,329 |
|
(89,132 |
) |
|
|
1,738,033 |
|
||||
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Total liabilities and equity |
|
$ |
3,865 ,871 |
|
$ |
347,299 |
|
$ |
677,418 |
|
|
|
$ |
4,890,588 |
|
See accompanying notes to unaudited pro forma condensed combined financial statements.
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Three Months Ended March 31, 2010
(dollars in thousands, except per share data)
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Pro Forma |
|
||||
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AMG |
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Pantheon |
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Adjustments |
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|
AMG |
|
||||
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Revenue |
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$ |
251,021 |
|
$ |
42,052 |
|
$ |
— |
|
|
|
$ |
293,073 |
|
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Operating expenses: |
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|
|
|
|
|
|
|
|
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|
||||
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Compensation and related expenses |
|
119,229 |
|
8,554 |
|
— |
|
|
|
127,783 |
|
||||
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Selling, general and administrative |
|
46,059 |
|
2,755 |
|
— |
|
|
|
48,814 |
|
||||
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Amortization of intangible assets |
|
8,937 |
|
1,414 |
|
11,414 |
|
M |
|
21,765 |
|
||||
|
Depreciation and other amortization |
|
3,026 |
|
— |
|
— |
|
|
|
3,026 |
|
||||
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Other operating expenses |
|
6,053 |
|
10,291 |
|
— |
|
|
|
16,344 |
|
||||
|
|
|
183,304 |
|
23,014 |
|
11,414 |
|
|
|
217,732 |
|
||||
|
Operating income |
|
67,717 |
|
19,038 |
|
(11,414 |
) |
|
|
75,341 |
|
||||
|
|
|
|
|
|
|
|
|
|
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|
||||
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Non-operating (income) and expenses: |
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|
|
|
|
|
|
|
|
|
|
||||
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Investment and other income |
|
(2,822 |
) |
(1,851 |
) |
— |
|
|
|
(4,673 |
) |
||||
|
Income from equity method investments |
|
(9,147 |
) |
(2,949 |
) |
— |
|
|
|
(12,096 |
) |
||||
|
Investment income from Affiliate |
|
|
|
|
|
|
|
|
|
— |
|
||||
|
investments in partnerships |
|
(4,091 |
) |
— |
|
— |
|
|
|
(4,091 |
) |
||||
|
Interest expense |
|
19,851 |
|
1 |
|
2,259 |
|
N |
|
22,111 |
|
||||
|
|
|
3,791 |
|
(4,799 |
) |
2,259 |
|
|
|
1,251 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before income taxes |
|
63,926 |
|
23,837 |
|
(13,673 |
) |
|
|
74,090 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income taxes |
|
11,165 |
|
8,124 |
|
(6,024 |
) |
O |
|
13,265 |
|
||||
|
Net income |
|
|
52,761 |
|
|
15,713 |
|
|
(7,649 |
) |
|
|
|
60,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income (non-controlling interests) |
|
(31,285 |
) |
— |
|
(2,941 |
) |
P |
|
(34,226 |
) |
||||
|
Net income (non-controlling interests in partnerships) |
|
(4,014 |
) |
— |
|
— |
|
|
|
(4,014 |
) |
||||
|
Net Income (loss) (controlling interest) |
|
$ |
17,462 |
|
$ |
15,713 |
|
$ |
(10,590 |
) |
|
|
$ |
22,585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Average shares outstanding - basic |
|
42,360,311 |
|
— |
|
1,799,111 |
|
|
|
44,159,422 |
|
||||
|
Average shares outstanding - diluted |
|
45,421,716 |
|
— |
|
1,393,870 |
|
|
|
46,815,586 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per share - basic |
|
$ |
0.41 |
|
$ |
— |
|
$ |
— |
|
|
|
$ |
0.51 |
|
|
Earnings per share - diluted |
|
$ |
0.38 |
|
$ |
— |
|
$ |
— |
|
|
|
$ |
0.48 |
|
See accompanying notes to unaudited pro forma condensed combined financial statements.
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
Year Ended December 31, 2009
(dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
Pro Forma |
|
||||
|
|
|
AMG |
|
Pantheon |
|
Adjustments |
|
|
|
AMG |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenue |
|
$ |
841,840 |
|
$ |
167,151 |
|
$ |
— |
|
|
|
$ |
1,008,991 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Compensation and related expenses |
|
402,584 |
|
59,498 |
|
— |
|
|
|
462,082 |
|
||||
|
Selling, general and administrative |
|
131,538 |
|
5,430 |
|
— |
|
|
|
136,968 |
|
||||
|
Amortization of intangible assets |
|
32,939 |
|
5,642 |
|
45,671 |
|
M |
|
84,252 |
|
||||
|
Depreciation and other amortization |
|
12,745 |
|
— |
|
— |
|
|
|
12,745 |
|
||||
|
Other operating expenses |
|
26,945 |
|
9,812 |
|
— |
|
|
|
36,757 |
|
||||
|
|
|
606,751 |
|
80,382 |
|
45,671 |
|
|
|
732,804 |
|
||||
|
Operating income |
|
235,089 |
|
86,769 |
|
(45,671 |
) |
|
|
276,187 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Non-operating (income) and expenses: |
|
|
|
|
|
|
|
|
|
|
|
||||
|
Investment and other (income) loss |
|
(24,902 |
) |
3,639 |
|
— |
|
|
|
(21,263 |
) |
||||
|
Income from equity method investments |
|
(31,632 |
) |
(1,218 |
) |
— |
|
|
|
(32,850 |
) |
||||
|
Investment income from Affiliate |
|
|
|
|
|
|
|
|
|
— |
|
||||
|
investments in partnerships |
|
(27,425 |
) |
— |
|
— |
|
|
|
(27,425 |
) |
||||
|
Interest expense |
|
78,129 |
|
172 |
|
11,161 |
|
N |
|
89,462 |
|
||||
|
|
|
(5,830 |
) |
2,593 |
|
11,161 |
|
|
|
7,924 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income before income taxes |
|
240,919 |
|
84,176 |
|
(56,832 |
) |
|
|
268,263 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income taxes |
|
28,003 |
|
29,505 |
|
(21,764 |
) |
O |
|
35,744 |
|
||||
|
Net income |
|
|
212,916 |
|
|
54,671 |
|
|
(35,068 |
) |
|
|
|
232,519 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income (non-controlling interests) |
|
(126,764 |
) |
— |
|
(1,696 |
) |
P |
|
(128,460 |
) |
||||
|
Net income (non-controlling interests in partnerships) |
|
(26,679 |
) |
— |
|
— |
|
|
|
(26,679 |
) |
||||
|
Net Income (loss) (controlling interest) |
|
$ |
59,473 |
|
$ |
54,671 |
|
$ |
(36,764 |
) |
|
|
$ |
77,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Average shares outstanding - basic |
|
41,385,359 |
|
— |
|
1,799,111 |
|
|
|
43,184,470 |
|
||||
|
Average shares outstanding - diluted |
|
43,333,355 |
|
— |
|
1,654,190 |
|
|
|
44,987,545 |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Earnings per share - basic |
|
$ |
1.44 |
|
$ |
— |
|
$ |
— |
|
|
|
$ |
1.79 |
|
|
Earnings per share - diluted |
|
$ |
1.38 |
|
$ |
— |
|
$ |
— |
|
|
|
$ |
1.72 |
|
See accompanying notes to unaudited pro forma condensed combined financial statements.
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION
As of and for the Three Months Ended March 31, 2010 and for the Year Ended
December 31, 2009
Note 1: Basis of Presentation
The unaudited pro forma condensed combined financial information has been prepared using the acquisition method of accounting, giving effect to the investment by Affiliated Managers Group, Inc. (AMG) in Pantheon Ventures Inc, Pantheon Capital (Asia) Limited, and Pantheon Holdings Limited and subsidiaries (collectively, Pantheon) as if it had occurred as of the beginning of the earliest period presented. The unaudited pro forma condensed combined financial information is presented for illustrative purposes only and is not necessarily indicative of the results of operations or financial position had the investment been consummated at the beginning of the period presented, nor is it necessarily indicative of the results of operations in future periods or the future financial position of the combined entities. Certain historical financial information has been reclassified to conform to the current presentation.
AMG paid approximately $700 million at closing on June 30, 2010, and will pay approximately $75 million in installments over the following twelve-month period. In addition, AMG may make additional payments of up to $225 million over the next three to five years, contingent on the growth of Pantheon’s business. This transaction was financed with borrowings under AMG’s revolving credit facility and proceeds from the partial settlement of forward equity sales.
The unaudited pro forma condensed combined financial information includes preliminary estimated adjustments to record assets and liabilities of Pantheon at their respective fair values and represents management’s estimates based on available information. The pro forma adjustments included herein are subject to updates as additional information existing at the date of completion of the transaction becomes available. The final allocation of the purchase price will be determined after the acquisition is complete based on thorough analyses to determine the fair value of Pantheon’s tangible and identifiable intangible assets, liabilities and non-controlling interests as of the date of the transaction. Increases or decreases in the estimated fair values of the tangible and identifiable intangible assets, liabilities and non-controlling interests, and other items of Pantheon as compared with the information shown in the unaudited pro forma condensed combined financial information may change the amount of the purchase price allocated to goodwill and other assets and liabilities and may impact the statement of income due to adjustments in amortization of the adjusted assets or liabilities.
The unaudited pro forma condensed combined statements of income do not include the impact of transaction and integration related charges expected to be incurred to combine the operations of AMG and Pantheon.
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION — (Continued)
As of and for the Three Months Ended March 31, 2010 and for the Year Ended December 31, 2009
Note 2: Pro Forma Adjustments
The following pro forma adjustments have been reflected in the unaudited pro forma condensed combined financial information. All adjustments are based on current assumptions and valuations which are subject to change.
Balance Sheet Adjustments (dollars in thousands)
|
A |
To reflect distribution of excess working capital to seller. |
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|
|
|
B |
To eliminate Pantheon’s current deferred tax assets of $1,749 and current deferred tax liabilities of $3,882. |
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|
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|
C |
Intangible assets was adjusted by $452,692 to reflect the elimination of Pantheons historic intangible assets of $60,434 and establish new intangible assets of $513,126 estimated as the result of the transaction. |
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|
|
|
D |
Goodwill was adjusted by $298,168 to reflect the elimination of Pantheon’s historical goodwill of $94,544 and establish new goodwill of $392,712 estimated as the result of the transaction. |
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E |
To adjust for assets retained by seller. |
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F |
To record the present value of $75,000 of the purchase price that is payable in installments over a twelve month period after closing of the transaction. |
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G |
To reflect borrowings under AMG’s senior credit facility to finance the transaction. |
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|
H |
Deferred income taxes were adjusted to eliminate Pantheon’s historic deferred income taxes and record a deferred income tax liability of $51,917 because AMG’s investment is not deductible outside the United States. |
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|
|
I |
To record the estimated value of the contingent consideration payable and other obligations to seller. |
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J |
To record the fair value of redeemable non-controlling interests held by management of Pantheon after the closing. |
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|
K |
Historical stockholders’ equity of Pantheon has been eliminated and consolidated stockholders’ equity has been adjusted to reflect AMG’s settlement of $100,000 under its forward equity agreement. |
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|
|
L |
To record the fair value of the Non-controlling interests held by management of Pantheon after the closing. |
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION — (Continued)
As of and for the Three Months Ended March 31, 2010 and for the Year Ended December 31, 2009
Income Statement Adjustments (dollars in thousands)
|
M |
Intangible amortization expense has been adjusted to estimate the amortization of incremental identifiable definite-lived intangible assets recognized. |
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|
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|
N |
Interest expense has been adjusted to reflect additional borrowings under AMG’s senior credit facility and non-cash interest from accretion of AMG’s contingent consideration liability and installment payable. |
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|
O |
Income tax expense reflects adjustment to AMG’s effective tax rate. |
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|
P |
To reflect the Non-controlling interests share of net income in Pantheon. |
Note 3: Pro Forma Earnings Per Share
The pro forma combined earnings and diluted earnings per share for the respective periods presented are based on the combined weighted average number of common and diluted potential common shares of AMG. The number of weighted average common shares, including all diluted potential common shares, reflects the assumed settlement of approximately $100,000 of forward equity sales by issuing approximately 1.8 million common shares. Amounts used in the determination of the pro forma basic and diluted earnings per share are as follows:
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Three Months |
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Year Ended |
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||
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2010 |
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2009 |
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Numerator: |
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|
|
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||
|
Pro Forma Net Income (controlling interest) |
|
$ |
22,585,000 |
|
$ |
77,380,000 |
|
|
Interest expense on convertible securities, net of taxes |
|
24,000 |
|
144,000 |
|
||
|
Pro Forma Net Income (controlling interest), as adjusted |
|
$ |
22,609,000 |
|
$ |
77,524,000 |
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||
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Denominator: |
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|
|
|
|
||
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Average shares outstanding - basic |
|
44,159,422 |
|
43,184,470 |
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||
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Effect of dilutive instruments: |
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|
|
|
|
||
|
Stock options |
|
917,575 |
|
565,877 |
|
||
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Forward sale |
|
864,960 |
|
363,395 |
|
||
|
Senior convertible securities |
|
873,629 |
|
873,803 |
|
||
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Mandatory convertible securities |
|
— |
|
— |
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||
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Average shares outstanding - diluted |
|
46,815,586 |
|
44,987,545 |
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||
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Earnings per share - basic |
|
$ |
0.51 |
|
$ |
1.79 |
|
|
Earnings per share - diluted |
|
$ |
0.48 |
|
$ |
1.72 |
|
AFFILIATED MANAGERS GROUP AND PANTHEON
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION — (Continued)
As of and for the Three Months Ended March 31, 2010 and for the Year Ended December 31, 2009
Note 4: Preliminary Purchase Price Allocation
The investment will be accounted for using the acquisition method of accounting; accordingly AMG’s cost to acquire Pantheon will be allocated to the assets (including identifiable intangible assets), liabilities and non-controlling interests of Pantheon at their respective estimated fair values as of the closing date. Accordingly, the pro forma purchase price was preliminarily allocated to the assets acquired and the liabilities and non-controlling interests assumed based on their estimated fair values as summarized in the following table:
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|
|
(dollars in |
|
|
|
Consideration: |
|
|
|
|
|
Cash |
|
$ |
689,300 |
|
|
Note payable |
|
72,994 |
|
|
|
Contingent consideration arrangement |
|
15,283 |
|
|
|
Fair value of total consideration transferred |
|
$ |
777,577 |
|
|
|
|
|
|
|
|
Identifiable assets acquired and liabilities assumed: |
|
|
|
|
|
|
|
|
|
|
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Current assets |
|
$ |
46,587 |
|
|
Fixed assets |
|
3,872 |
|
|
|
Definite-lived acquired client relationships |
|
513,126 |
|
|
|
Other assets |
|
68,420 |
|
|
|
Accounts payable and accrued liabilities |
|
(39,393 |
) |
|
|
Deferred income taxes |
|
(51,917 |
) |
|
|
Other liabilities |
|
(37,373 |
) |
|
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Net assets |
|
503,322 |
|
|
|
|
|
|
|
|
|
Redeemable non-controlling interests |
|
(18,260 |
) |
|
|
Non-controlling interest |
|
(100,197 |
) |
|
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Goodwill |
|
392,712 |
|
|
|
|
|
$ |
777,577 |
|