Attached files
| file | filename |
|---|---|
| 8-K - 8-K - AFFILIATED MANAGERS GROUP, INC. | a12-24671_18k.htm |
| EX-99.1 - EX-99.1 - AFFILIATED MANAGERS GROUP, INC. | a12-24671_1ex99d1.htm |
Exhibit 99.2
Affiliated Managers Group, Inc.
Financial Highlights
(in millions, except per share data)
|
|
|
Three Months |
|
Three Months |
| ||
|
|
|
Ended |
|
Ended |
| ||
|
|
|
9/30/11 |
|
9/30/12 |
| ||
|
|
|
|
|
|
| ||
|
Revenue |
|
$ |
413.8 |
|
$ |
467.3 |
|
|
|
|
|
|
|
| ||
|
Net income (controlling interest) |
|
$ |
40.1 |
|
$ |
54.9 |
|
|
|
|
|
|
|
| ||
|
Economic net income (A) |
|
$ |
82.1 |
|
$ |
101.2 |
|
|
|
|
|
|
|
| ||
|
EBITDA (B) |
|
$ |
112.9 |
|
$ |
133.5 |
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
Average shares outstanding - diluted |
|
53.0 |
|
53.0 |
| ||
|
|
|
|
|
|
| ||
|
Earnings per share - diluted |
|
$ |
0.76 |
|
$ |
1.04 |
|
|
|
|
|
|
|
| ||
|
Average shares outstanding - adjusted diluted (C) |
|
53.0 |
|
53.0 |
| ||
|
|
|
|
|
|
| ||
|
Economic earnings per share (C) |
|
$ |
1.55 |
|
$ |
1.91 |
|
|
|
|
December 31, |
|
September 30, |
| ||
|
|
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
449.5 |
|
$ |
372.6 |
|
|
|
|
|
|
|
| ||
|
Senior bank debt |
|
$ |
250.0 |
|
$ |
445.0 |
|
|
|
|
|
|
|
| ||
|
Senior notes (D) |
|
$ |
— |
|
$ |
200.0 |
|
|
|
|
|
|
|
| ||
|
Senior convertible securities (E) |
|
$ |
435.6 |
|
$ |
446.5 |
|
|
|
|
|
|
|
| ||
|
Junior convertible trust preferred securities (E) |
|
$ |
512.6 |
|
$ |
514.8 |
|
|
|
|
|
|
|
| ||
|
Stockholders’ equity |
|
$ |
1,866.0 |
|
$ |
1,931.0 |
|
(more)
Affiliated Managers Group, Inc.
Financial Highlights
(in millions, except per share data)
|
|
|
Nine Months |
|
Nine Months |
| ||
|
|
|
Ended |
|
Ended |
| ||
|
|
|
9/30/11 |
|
9/30/12 |
| ||
|
|
|
|
|
|
| ||
|
Revenue |
|
$ |
1,302.4 |
|
$ |
1,314.5 |
|
|
|
|
|
|
|
| ||
|
Net income (controlling interest) (F) |
|
$ |
124.6 |
|
$ |
98.9 |
|
|
|
|
|
|
|
| ||
|
Economic net income (A) |
|
$ |
258.5 |
|
$ |
272.3 |
|
|
|
|
|
|
|
| ||
|
EBITDA (B) |
|
$ |
355.0 |
|
$ |
361.2 |
|
|
|
|
|
|
|
| ||
|
|
|
|
|
|
| ||
|
Average shares outstanding - diluted |
|
53.2 |
|
52.9 |
| ||
|
|
|
|
|
|
| ||
|
Earnings per share - diluted (F) |
|
$ |
2.34 |
|
$ |
1.87 |
|
|
|
|
|
|
|
| ||
|
Average shares outstanding - adjusted diluted (C) |
|
53.2 |
|
52.9 |
| ||
|
|
|
|
|
|
| ||
|
Economic earnings per share (C) |
|
$ |
4.86 |
|
$ |
5.15 |
|
(more)
Affiliated Managers Group, Inc.
Reconciliations of Earnings Per Share Calculation
(in millions, except per share data)
|
|
|
Three Months |
|
Three Months |
| ||
|
|
|
Ended |
|
Ended |
| ||
|
|
|
9/30/11 |
|
9/30/12 |
| ||
|
|
|
|
|
|
| ||
|
Net income (controlling interest) |
|
$ |
40.1 |
|
$ |
54.9 |
|
|
Convertible securities interest expense, net (G) |
|
— |
|
— |
| ||
|
Net income (controlling interest), as adjusted |
|
$ |
40.1 |
|
$ |
54.9 |
|
|
|
|
|
|
|
| ||
|
Average shares outstanding - diluted |
|
53.0 |
|
53.0 |
| ||
|
|
|
|
|
|
| ||
|
Earnings per share - diluted |
|
$ |
0.76 |
|
$ |
1.04 |
|
|
|
|
Nine Months |
|
Nine Months |
| ||
|
|
|
Ended |
|
Ended |
| ||
|
|
|
9/30/11 |
|
9/30/12 |
| ||
|
|
|
|
|
|
| ||
|
Net income (controlling interest) (F) |
|
$ |
124.6 |
|
$ |
98.9 |
|
|
Convertible securities interest expense, net (G) |
|
— |
|
— |
| ||
|
Net income (controlling interest), as adjusted |
|
$ |
124.6 |
|
$ |
98.9 |
|
|
|
|
|
|
|
| ||
|
Average shares outstanding - diluted |
|
53.2 |
|
52.9 |
| ||
|
|
|
|
|
|
| ||
|
Earnings per share - diluted (F) |
|
$ |
2.34 |
|
$ |
1.87 |
|
(more)
Affiliated Managers Group, Inc.
Reconciliations of Average Shares Outstanding
(in millions)
|
|
|
Three Months |
|
Three Months |
|
|
|
|
Ended |
|
Ended |
|
|
|
|
9/30/11 |
|
9/30/12 |
|
|
|
|
|
|
|
|
|
Average shares outstanding - diluted |
|
53.0 |
|
53.0 |
|
|
Assumed issuance of 2008 Senior Convertible Notes shares |
|
— |
|
— |
|
|
Assumed issuance of Trust Preferred shares |
|
— |
|
— |
|
|
Dilutive impact of 2008 Senior Convertible Notes shares |
|
— |
|
— |
|
|
Dilutive impact of Trust Preferred shares |
|
— |
|
— |
|
|
Average shares outstanding - adjusted diluted (C) |
|
53.0 |
|
53.0 |
|
|
|
|
Nine Months |
|
Nine Months |
|
|
|
|
Ended |
|
Ended |
|
|
|
|
9/30/11 |
|
9/30/12 |
|
|
|
|
|
|
|
|
|
Average shares outstanding - diluted |
|
53.2 |
|
52.9 |
|
|
Assumed issuance of 2008 Senior Convertible Notes shares |
|
— |
|
— |
|
|
Assumed issuance of Trust Preferred shares |
|
— |
|
— |
|
|
Dilutive impact of 2008 Senior Convertible Notes shares |
|
— |
|
— |
|
|
Dilutive impact of Trust Preferred shares |
|
— |
|
— |
|
|
Average shares outstanding - adjusted diluted (C) |
|
53.2 |
|
52.9 |
|
(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, June 30, 2012 |
|
$ |
108,514 |
|
$ |
223,767 |
|
$ |
52,284 |
|
$ |
384,565 |
|
|
Client cash inflows |
|
10,227 |
|
11,434 |
|
3,138 |
|
24,799 |
| ||||
|
Client cash outflows |
|
(6,813 |
) |
(4,410 |
) |
(2,717 |
) |
(13,940 |
) | ||||
|
Net client cash flows |
|
3,414 |
|
7,024 |
|
421 |
|
10,859 |
| ||||
|
Investment performance |
|
6,052 |
|
13,303 |
|
2,177 |
|
21,532 |
| ||||
|
Other (I) |
|
(128 |
) |
(338 |
) |
(376 |
) |
(842 |
) | ||||
|
Assets under management, September 30, 2012 |
|
$ |
117,852 |
|
$ |
243,756 |
|
$ |
54,506 |
|
$ |
416,114 |
|
Statement of Changes - Year to Date
|
|
|
Mutual |
|
Institutional |
|
High Net |
|
Total |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Assets under management, December 31, 2011 |
|
$ |
85,222 |
|
$ |
205,658 |
|
$ |
36,582 |
|
$ |
327,462 |
|
|
New investments (H) |
|
14,773 |
|
13 |
|
13,219 |
|
28,005 |
| ||||
|
Client cash inflows |
|
25,485 |
|
33,303 |
|
8,177 |
|
66,965 |
| ||||
|
Client cash outflows |
|
(17,596 |
) |
(17,863 |
) |
(6,434 |
) |
(41,893 |
) | ||||
|
Net client cash flows |
|
7,889 |
|
15,440 |
|
1,743 |
|
25,072 |
| ||||
|
Investment performance |
|
10,142 |
|
23,398 |
|
3,340 |
|
36,880 |
| ||||
|
Other (I) |
|
(174 |
) |
(753 |
) |
(378 |
) |
(1,305 |
) | ||||
|
Assets under management, September 30, 2012 |
|
$ |
117,852 |
|
$ |
243,756 |
|
$ |
54,506 |
|
$ |
416,114 |
|
(more)
Affiliated Managers Group, Inc.
Operating Results
(in millions)
Financial Results
|
|
|
Three |
|
|
|
Three |
|
|
| ||
|
|
|
Months |
|
|
|
Months |
|
|
| ||
|
|
|
Ended |
|
Percent |
|
Ended |
|
Percent |
| ||
|
|
|
9/30/11 |
|
of Total |
|
9/30/12 |
|
of Total |
| ||
|
Revenue |
|
|
|
|
|
|
|
|
| ||
|
Mutual Fund |
|
$ |
179.0 |
|
43% |
|
$ |
208.3 |
|
45% |
|
|
Institutional |
|
199.6 |
|
48% |
|
210.7 |
|
45% |
| ||
|
High Net Worth |
|
35.2 |
|
9% |
|
48.3 |
|
10% |
| ||
|
|
|
$ |
413.8 |
|
100% |
|
$ |
467.3 |
|
100% |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
EBITDA (B) |
|
|
|
|
|
|
|
|
| ||
|
Mutual Fund |
|
$ |
38.1 |
|
34% |
|
$ |
46.4 |
|
35% |
|
|
Institutional |
|
64.1 |
|
57% |
|
73.3 |
|
55% |
| ||
|
High Net Worth |
|
10.7 |
|
9% |
|
13.8 |
|
10% |
| ||
|
|
|
$ |
112.9 |
|
100% |
|
$ |
133.5 |
|
100% |
|
|
|
|
Nine |
|
|
|
Nine |
|
|
| ||
|
|
|
Months |
|
|
|
Months |
|
|
| ||
|
|
|
Ended |
|
Percent |
|
Ended |
|
Percent |
| ||
|
|
|
9/30/11 |
|
of Total |
|
9/30/12 |
|
of Total |
| ||
|
Revenue |
|
|
|
|
|
|
|
|
| ||
|
Mutual Fund |
|
$ |
555.7 |
|
43% |
|
$ |
557.4 |
|
42% |
|
|
Institutional |
|
640.6 |
|
49% |
|
636.8 |
|
49% |
| ||
|
High Net Worth |
|
106.1 |
|
8% |
|
120.3 |
|
9% |
| ||
|
|
|
$ |
1,302.4 |
|
100% |
|
$ |
1,314.5 |
|
100% |
|
|
|
|
|
|
|
|
|
|
|
| ||
|
EBITDA (B) |
|
|
|
|
|
|
|
|
| ||
|
Mutual Fund |
|
$ |
121.0 |
|
34% |
|
$ |
119.9 |
|
33% |
|
|
Institutional |
|
213.1 |
|
60% |
|
207.0 |
|
57% |
| ||
|
High Net Worth |
|
20.9 |
|
6% |
|
34.3 |
|
10% |
| ||
|
|
|
$ |
355.0 |
|
100% |
|
$ |
361.2 |
|
100% |
|
(more)
Affiliated Managers Group, Inc.
Reconciliations of Performance and Liquidity Measures
(in millions)
|
|
|
Three Months |
|
Three Months |
| ||
|
|
|
Ended |
|
Ended |
| ||
|
|
|
9/30/11 |
|
9/30/12 |
| ||
|
|
|
|
|
|
| ||
|
Net income (controlling interest) |
|
$ |
40.1 |
|
$ |
54.9 |
|
|
Intangible amortization and impairments |
|
26.9 |
|
29.9 |
| ||
|
Intangible-related deferred taxes |
|
10.4 |
|
11.7 |
| ||
|
Imputed interest and contingent payment arrangements |
|
4.3 |
|
4.0 |
| ||
|
Affiliate equity expense |
|
0.4 |
|
0.7 |
| ||
|
Economic net income (A) |
|
$ |
82.1 |
|
$ |
101.2 |
|
|
|
|
|
|
|
| ||
|
Cash flow from operations |
|
$ |
242.2 |
|
$ |
211.1 |
|
|
Interest expense, net of non-cash items |
|
16.3 |
|
19.7 |
| ||
|
Current tax provision |
|
1.9 |
|
8.8 |
| ||
|
Income from equity method investments, net of distributions |
|
(9.0 |
) |
8.8 |
| ||
|
Changes in assets and liabilities and other adjustments |
|
(138.5 |
) |
(114.9 |
) | ||
|
EBITDA (B) |
|
$ |
112.9 |
|
$ |
133.5 |
|
|
Holding company expenses |
|
18.9 |
|
22.0 |
| ||
|
EBITDA Contribution |
|
$ |
131.8 |
|
$ |
155.5 |
|
|
|
|
Nine Months |
|
Nine Months |
| ||
|
|
|
Ended |
|
Ended |
| ||
|
|
|
9/30/11 |
|
9/30/12 |
| ||
|
|
|
|
|
|
| ||
|
Net income (controlling interest) (F) |
|
$ |
124.6 |
|
$ |
98.9 |
|
|
Intangible amortization and impairments |
|
80.9 |
|
184.1 |
| ||
|
Intangible-related deferred taxes |
|
36.2 |
|
0.1 |
| ||
|
Imputed interest and contingent payment arrangements |
|
13.1 |
|
(12.7 |
) | ||
|
Affiliate equity expense |
|
3.7 |
|
1.9 |
| ||
|
Economic net income (A) |
|
$ |
258.5 |
|
$ |
272.3 |
|
|
|
|
|
|
|
| ||
|
Cash flow from operations |
|
$ |
549.9 |
|
$ |
447.1 |
|
|
Interest expense, net of non-cash items |
|
49.4 |
|
53.1 |
| ||
|
Current tax provision |
|
31.9 |
|
31.1 |
| ||
|
Income from equity method investments, net of distributions |
|
(45.6 |
) |
(5.5 |
) | ||
|
Changes in assets and liabilities and other adjustments |
|
(230.6 |
) |
(164.6 |
) | ||
|
EBITDA (B) |
|
$ |
355.0 |
|
$ |
361.2 |
|
|
Holding company expenses |
|
61.0 |
|
65.9 |
| ||
|
EBITDA Contribution |
|
$ |
416.0 |
|
$ |
427.1 |
|
(more)
Affiliated Managers Group, Inc.
Consolidated Statements of Income
(in millions, except per share data)
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
|
September 30, |
|
September 30, |
| ||||||||
|
|
|
2011 |
|
2012 |
|
2011 |
|
2012 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Revenue |
|
$ |
413.8 |
|
$ |
467.3 |
|
$ |
1,302.4 |
|
$ |
1,314.5 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Compensation and related expenses |
|
168.9 |
|
196.8 |
|
544.9 |
|
565.9 |
| ||||
|
Selling, general and administrative |
|
83.5 |
|
93.9 |
|
261.6 |
|
267.7 |
| ||||
|
Intangible amortization and impairments (J) |
|
22.1 |
|
24.0 |
|
66.3 |
|
169.1 |
| ||||
|
Depreciation and other amortization |
|
4.0 |
|
3.5 |
|
11.6 |
|
10.6 |
| ||||
|
Other operating expenses |
|
9.3 |
|
9.4 |
|
27.1 |
|
27.7 |
| ||||
|
|
|
287.8 |
|
327.6 |
|
911.5 |
|
1,041.0 |
| ||||
|
Operating income |
|
126.0 |
|
139.7 |
|
390.9 |
|
273.5 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Non-operating (income) and expenses: |
|
|
|
|
|
|
|
|
| ||||
|
Investment and other (income) loss |
|
9.5 |
|
(6.9 |
) |
6.8 |
|
(20.3 |
) | ||||
|
Income from equity method investments |
|
(9.8 |
) |
(19.4 |
) |
(40.1 |
) |
(47.3 |
) | ||||
|
Interest expense |
|
18.1 |
|
21.8 |
|
55.6 |
|
58.8 |
| ||||
|
Imputed interest expense and contingent |
|
8.3 |
|
6.7 |
|
24.9 |
|
(35.7 |
) | ||||
|
|
|
26.1 |
|
2.2 |
|
47.2 |
|
(44.5 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income before income taxes |
|
99.9 |
|
137.5 |
|
343.7 |
|
318.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income taxes (L) |
|
19.8 |
|
19.4 |
|
73.2 |
|
46.0 |
| ||||
|
Net income |
|
80.1 |
|
118.1 |
|
270.5 |
|
272.0 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Net income (non-controlling interests) |
|
(40.0 |
) |
(63.2 |
) |
(145.9 |
) |
(173.1 |
) | ||||
|
Net income (controlling interest) (F) |
|
$ |
40.1 |
|
$ |
54.9 |
|
$ |
124.6 |
|
$ |
98.9 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Average shares outstanding - basic |
|
51.9 |
|
51.7 |
|
51.9 |
|
51.6 |
| ||||
|
Average shares outstanding - diluted |
|
53.0 |
|
53.0 |
|
53.2 |
|
52.9 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Earnings per share - basic |
|
$ |
0.77 |
|
$ |
1.06 |
|
$ |
2.40 |
|
$ |
1.92 |
|
|
Earnings per share - diluted (F) |
|
$ |
0.76 |
|
$ |
1.04 |
|
$ |
2.34 |
|
$ |
1.87 |
|
(more)
Affiliated Managers Group, Inc.
Consolidated Balance Sheets
(in millions)
|
|
|
December 31, |
|
September 30, |
| ||
|
|
|
2011 |
|
2012 |
| ||
|
Assets |
|
|
|
|
| ||
|
Current assets: |
|
|
|
|
| ||
|
Cash and cash equivalents |
|
$ |
449.5 |
|
$ |
372.6 |
|
|
Investment advisory fees receivable |
|
214.9 |
|
243.8 |
| ||
|
Investments in marketable securities |
|
100.4 |
|
109.9 |
| ||
|
Unsettled fund share receivables |
|
34.5 |
|
50.5 |
| ||
|
Prepaid expenses and other current assets |
|
77.1 |
|
61.3 |
| ||
|
Total current assets |
|
876.4 |
|
838.1 |
| ||
|
|
|
|
|
|
| ||
|
Fixed assets, net |
|
69.1 |
|
72.4 |
| ||
|
Equity investments in Affiliates |
|
615.8 |
|
935.8 |
| ||
|
Acquired client relationships, net |
|
1,321.1 |
|
1,615.3 |
| ||
|
Goodwill |
|
2,117.3 |
|
2,353.3 |
| ||
|
Other assets |
|
219.2 |
|
215.9 |
| ||
|
Total assets |
|
$ |
5,218.9 |
|
$ |
6,030.8 |
|
|
|
|
|
|
|
| ||
|
Liabilities and Equity |
|
|
|
|
| ||
|
Current liabilities: |
|
|
|
|
| ||
|
Accounts payable and accrued liabilities |
|
$ |
343.6 |
|
$ |
309.7 |
|
|
Unsettled fund share payables |
|
40.8 |
|
52.5 |
| ||
|
Payables to related party |
|
33.2 |
|
10.7 |
| ||
|
Total current liabilities |
|
417.6 |
|
372.9 |
| ||
|
|
|
|
|
|
| ||
|
Senior bank debt |
|
250.0 |
|
445.0 |
| ||
|
Senior notes (D) |
|
— |
|
200.0 |
| ||
|
Senior convertible securities (E) |
|
435.6 |
|
446.5 |
| ||
|
Junior convertible trust preferred securities (E) |
|
512.6 |
|
514.8 |
| ||
|
Deferred income taxes |
|
506.0 |
|
521.4 |
| ||
|
Other long-term liabilities |
|
145.7 |
|
162.4 |
| ||
|
Total liabilities |
|
2,267.5 |
|
2,663.0 |
| ||
|
|
|
|
|
|
| ||
|
Redeemable non-controlling interests |
|
451.8 |
|
513.1 |
| ||
|
|
|
|
|
|
| ||
|
Equity: |
|
|
|
|
| ||
|
Common stock |
|
0.5 |
|
0.5 |
| ||
|
Additional paid-in capital |
|
927.5 |
|
855.3 |
| ||
|
Accumulated other comprehensive income |
|
50.0 |
|
66.0 |
| ||
|
Retained earnings |
|
1,176.7 |
|
1,275.6 |
| ||
|
|
|
2,154.7 |
|
2,197.4 |
| ||
|
Less treasury stock, at cost |
|
(288.7 |
) |
(266.4 |
) | ||
|
Total stockholders’ equity |
|
1,866.0 |
|
1,931.0 |
| ||
|
|
|
|
|
|
| ||
|
Non-controlling interests |
|
633.6 |
|
923.7 |
| ||
|
Total equity |
|
2,499.6 |
|
2,854.7 |
| ||
|
Total liabilities and equity |
|
$ |
5,218.9 |
|
$ |
6,030.8 |
|
(more)
Affiliated Managers Group, Inc.
Consolidated Statements of Cash Flow
(in millions)
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
|
September 30, |
|
September 30, |
| ||||||||
|
|
|
2011 |
|
2012 |
|
2011 |
|
2012 |
| ||||
|
Cash flow from operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Net income |
|
$ |
80.1 |
|
$ |
118.1 |
|
$ |
270.5 |
|
$ |
272.0 |
|
|
Adjustments to reconcile Net income to net cash flow from operating activities: |
|
|
|
|
|
|
|
|
| ||||
|
Intangible amortization and impairments |
|
22.1 |
|
24.0 |
|
66.3 |
|
169.1 |
| ||||
|
Amortization of issuance costs |
|
1.8 |
|
2.0 |
|
6.2 |
|
5.7 |
| ||||
|
Depreciation and other amortization |
|
4.0 |
|
3.5 |
|
11.6 |
|
10.6 |
| ||||
|
Deferred income tax provision |
|
14.8 |
|
7.8 |
|
31.8 |
|
5.8 |
| ||||
|
Imputed interest expense and contingent payment arrangements |
|
8.3 |
|
6.7 |
|
24.9 |
|
(35.7 |
) | ||||
|
Income from equity method investments, net of amortization |
|
(9.8 |
) |
(19.4 |
) |
(40.1 |
) |
(47.3 |
) | ||||
|
Distributions received from equity method investments |
|
27.0 |
|
20.8 |
|
110.5 |
|
79.4 |
| ||||
|
Tax benefit from exercise of stock options |
|
— |
|
0.7 |
|
0.8 |
|
1.4 |
| ||||
|
Share-based compensation |
|
7.3 |
|
8.0 |
|
19.3 |
|
24.1 |
| ||||
|
Affiliate equity expense |
|
1.9 |
|
2.3 |
|
9.1 |
|
9.4 |
| ||||
|
Other adjustments |
|
9.0 |
|
1.9 |
|
19.5 |
|
1.3 |
| ||||
|
Changes in assets and liabilities: |
|
|
|
|
|
|
|
|
| ||||
|
(Increase) decrease in investment advisory fees receivable |
|
37.1 |
|
2.4 |
|
18.2 |
|
(21.3 |
) | ||||
|
Increase in prepaids and other current assets |
|
(6.2 |
) |
(3.8 |
) |
(9.2 |
) |
(12.9 |
) | ||||
|
(Increase) decrease in other assets |
|
0.6 |
|
(1.6 |
) |
(1.7 |
) |
(2.5 |
) | ||||
|
(Increase) decrease in unsettled fund shares receivable |
|
32.0 |
|
(5.6 |
) |
(16.7 |
) |
(15.3 |
) | ||||
|
Increase (decrease) in unsettled fund shares payable |
|
(24.5 |
) |
4.4 |
|
7.0 |
|
10.7 |
| ||||
|
Increase (decrease) in accounts payable, accrued liabilities and other long-term liabilities |
|
36.7 |
|
38.9 |
|
21.9 |
|
(7.4 |
) | ||||
|
Cash flow from operating activities |
|
242.2 |
|
211.1 |
|
549.9 |
|
447.1 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cash flow used in investing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Investments in Affiliates |
|
— |
|
(350.0 |
) |
(13.3 |
) |
(755.3 |
) | ||||
|
Purchase of fixed assets |
|
(3.9 |
) |
(4.9 |
) |
(8.3 |
) |
(9.9 |
) | ||||
|
Purchase of investment securities |
|
(39.4 |
) |
(2.7 |
) |
(48.4 |
) |
(13.8 |
) | ||||
|
Sale of investment securities |
|
0.5 |
|
3.6 |
|
10.9 |
|
31.1 |
| ||||
|
Cash flow used in investing activities |
|
(42.8 |
) |
(354.0 |
) |
(59.1 |
) |
(747.9 |
) | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cash flow from (used in) financing activities: |
|
|
|
|
|
|
|
|
| ||||
|
Borrowings of senior bank debt |
|
— |
|
360.0 |
|
110.0 |
|
555.0 |
| ||||
|
Repayments of senior bank debt |
|
(85.0 |
) |
(360.0 |
) |
(360.0 |
) |
(360.0 |
) | ||||
|
Issuance of senior notes |
|
— |
|
200.0 |
|
— |
|
200.0 |
| ||||
|
Issuance of common stock |
|
0.3 |
|
23.3 |
|
21.2 |
|
45.7 |
| ||||
|
Repurchase of common stock |
|
(48.0 |
) |
— |
|
(48.0 |
) |
(60.9 |
) | ||||
|
Issuance costs |
|
(0.8 |
) |
(6.0 |
) |
(8.5 |
) |
(6.0 |
) | ||||
|
Excess tax benefit from exercise of stock options |
|
— |
|
6.9 |
|
4.9 |
|
11.6 |
| ||||
|
Settlement of treasury lock |
|
— |
|
— |
|
4.0 |
|
— |
| ||||
|
Note payments |
|
(8.4 |
) |
(1.8 |
) |
(80.7 |
) |
(2.1 |
) | ||||
|
Distributions to non-controlling interests |
|
(34.6 |
) |
(18.0 |
) |
(115.6 |
) |
(137.7 |
) | ||||
|
Affiliate equity issuances and repurchases |
|
(6.8 |
) |
(2.2 |
) |
(6.7 |
) |
(25.1 |
) | ||||
|
Cash flow from (used in) financing activities |
|
(183.3 |
) |
202.2 |
|
(479.4 |
) |
220.5 |
| ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
Effect of foreign exchange rate changes on cash and cash equivalents |
|
(4.0 |
) |
2.3 |
|
(1.4 |
) |
3.4 |
| ||||
|
Net increase (decrease) in cash and cash equivalents |
|
12.1 |
|
61.6 |
|
10.0 |
|
(76.9 |
) | ||||
|
Cash and cash equivalents at beginning of period |
|
311.2 |
|
311.0 |
|
313.3 |
|
449.5 |
| ||||
|
Cash and cash equivalents at end of period |
|
$ |
323.3 |
|
$ |
372.6 |
|
$ |
323.3 |
|
$ |
372.6 |
|
(more)
Affiliated Managers Group, Inc.
Notes
(in millions, except per share data)
|
(A) |
Under our Economic net income definition, we add to Net income (controlling interest) amortization (including equity method amortization and reductions in the carrying value of our intangible assets), deferred taxes related to intangible assets, non-cash imputed interest expense (principally related to the accounting for convertible securities and contingent payment arrangements) and Affiliate equity expense. We consider Economic net income an important measure of our financial performance, as we believe it best represents operating performance before non-cash expenses relating to the acquisition of interests in our affiliated investment management firms, and it is therefore employed as our principal performance benchmark. This non-GAAP performance measure is provided in addition to, but not as a substitute for, Net income; Economic net income is not a liquidity measure, and should not be used in place of liquidity measures calculated under GAAP. |
|
|
|
|
|
We add back amortization attributable to acquired client relationships (because this expense does not correspond to the changes in the value of these assets, which do not diminish predictably over time) and other reductions in the carrying value of acquired client relationships, including impairments. The portion of deferred taxes generally attributable to intangible assets (including goodwill) that are no longer amortized but continue to generate tax deductions is added back because we believe it is unlikely these accruals will be used to settle material tax obligations. We add back non-cash expenses relating to certain transfers of equity between Affiliate management partners when these transfers have no dilutive effect to shareholders. |
|
|
|
|
(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, we believe EBITDA is useful as an indicator of our ability to service debt, make new investments and meet working capital requirements. EBITDA, as calculated by us, 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) |
Economic earnings per share represents Economic net income divided by the adjusted diluted average shares outstanding. In this calculation, the potential share issuance in connection with our 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. We believe 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 we are relieved of our debt obligation. This method does not take into account any increase or decrease in our cost of capital in an assumed conversion. Economic earnings per share is not a liquidity measure, and should not be used in place of liquidity measures calculated under GAAP. |
|
|
|
|
(D) |
In the third quarter of 2012, we sold $200.0 aggregate principal amount of 6.375% Senior Notes due 2042. |
(more)
|
(E) |
We have bifurcated our convertible debt securities into their debt and equity components on our balance sheet. The principal amount at maturity of the senior convertible notes due 2038 was $460.0 at December 31, 2011 and September 30, 2012. The principal amount at maturity of the junior convertible trust preferred securities was $730.8 at December 31, 2011 and September 30, 2012, comprised of $300.0 due 2036 and $430.8 due 2037. |
|
|
|
|
(F) |
Excluding the valuation adjustments described further in Notes J and K, Net income (controlling interest) and Earnings per share - diluted would have been $137.8 and $2.61, respectively, for the nine months ended September 30, 2012. |
|
|
|
|
(G) |
Convertible securities interest expense, net, includes the interest expense, net of tax, associated with our dilutive convertible securities. |
|
|
|
|
(H) |
In the second quarter of 2012, we completed investments in Yacktman Asset Management Co. and Veritable, LP. |
|
|
|
|
(I) |
Other includes assets under management attributable to Affiliate product transitions, new investment client transitions and transfers of our interests in certain Affiliated investment management firms, the financial effects of which are not material to our ongoing results. |
|
|
|
|
(J) |
In the first and second quarters of 2012, we reduced the carrying value of certain of our indefinite-lived intangible assets and, accordingly, recorded pre-tax expenses of $8.7 and $93.5, respectively. |
|
|
|
|
(K) |
In the first and second quarters of 2012, we reduced our current estimate of our potential contingent payment obligations and, accordingly, recorded pre-tax gains of $9.9 and $47.4, respectively, (of which $5.0 and $34.6 were attributable to the controlling interest). |
|
|
|
|
(L) |
Our consolidated income tax provision includes taxes attributable to the controlling interest, and to a lesser extent, taxes attributable to non-controlling interests, as follows: |
|
|
|
Three Months Ended |
|
Nine Months Ended |
| ||||||||
|
|
|
September 30, |
|
September 30, |
| ||||||||
|
|
|
2011 |
|
2012 |
|
2011 |
|
2012 |
| ||||
|
Current income taxes |
|
$ |
1.9 |
|
$ |
8.8 |
|
$ |
31.9 |
|
$ |
31.1 |
|
|
Intangible-related deferred taxes |
|
10.4 |
|
11.7 |
|
36.2 |
|
0.1 |
| ||||
|
Other deferred taxes |
|
6.2 |
|
(1.2 |
) |
(1.6 |
) |
4.9 |
| ||||
|
Taxes attributable to controlling interest |
|
18.5 |
|
19.3 |
|
66.5 |
|
36.1 |
| ||||
|
Taxes attributable to non-controlling interests |
|
1.3 |
|
0.1 |
|
6.7 |
|
9.9 |
| ||||
|
Total income taxes |
|
$ |
19.8 |
|
$ |
19.4 |
|
$ |
73.2 |
|
$ |
46.0 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Income before taxes (controlling interest) |
|
$ |
58.6 |
|
$ |
74.2 |
|
$ |
191.1 |
|
$ |
135.0 |
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Effective tax rate* |
|
31.6 |
% |
26.0 |
% |
34.8 |
% |
26.7 |
% | ||||
|
|
|
|
|
|
|
|
|
|
| ||||
|
* Taxes attributable to controlling interests divided by controlling interest share of the consolidated income before taxes. | |||||||||||||