AMG Reports Financial and Operating Results for Fourth Quarter and Full Year 2002; Company Reports Cash EPS for Fourth Quarter of $1.13, Full Year 2002 of $4.41.Business/Technology Editors BOSTON--(BUSINESS WIRE)--Jan. 29, 2003 Affiliated af·fil·i·ate v. af·fil·i·at·ed, af·fil·i·at·ing, af·fil·i·ates v.tr. 1. To adopt or accept as a member, subordinate associate, or branch: Managers Group, Inc. (NYSE NYSE See: New York Stock Exchange : AMG AMG All Music Guide (music website) AMG All Media Guide (group of media websites) AMG All Movie Guide (Movie website) AMG Arzneimittelgesetz (German Law) ) today reported its financial and operating results for the fourth quarter and full year 2002. Cash earnings per share ("Cash EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") for the fourth quarter and full year 2002 were $1.13 and $4.41, respectively. (Cash EPS is the Company's reported EPS figure plus non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. on a per share basis which arise from the use of the purchase method of accounting. The Company considers Cash EPS to be the most meaningful measure of its financial performance.) Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of for the fourth quarter and full year 2002 were $0.60 and $2.48, respectively. Cash Net Income (net income plus the non-cash charges for depreciation and amortization and deferred taxes related to intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. ) was $25.0 million for the fourth quarter and $99.6 million for the full year 2002. These operating results reflect changes in the accounting for intangible assets as a result of the implementation of Financial Accounting Standard No. 142 in the first quarter of 2002, and therefore are not directly comparable to operating results for the fourth quarter and full year 2001. For the fourth quarter of 2002, revenue was $118.3 million, compared to $110.5 million for the fourth quarter of 2001. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become for the fourth quarter of 2002 was $33.3 million, compared to $35.3 million for the same period of 2001. For the year ended December December: see month. 31, 2002, revenue was $482.5 million, while EBITDA was $138.8 million. These results compare to $408.2 million and $132.1 million for the same period of 2001. Aggregate client cash flows from directly managed assets were net outflows of $260 million for the fourth quarter and net inflows of $383 million for the full year 2002, resulting in an increase of $1.9 million in annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. EBITDA for 2002. Outflows from overlay (1) A preprinted, precut form placed over a screen, key or tablet for identification purposes. See keyboard template. (2) A program segment called into memory when required. assets for the fourth quarter and full year 2002 were $31 million and $1.1 billion, respectively. The aggregate assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. of AMG's affiliated investment management firms at December 31, 2002 were $70.8 billion. "AMG continues to benefit from the diversity of investment styles, client types and distribution channels among our group of high quality, mid-sized investment managers," stated William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack J. Nutt, Chairman and Chief Executive Officer. "The stability of our earnings throughout the difficult market environment during 2002 continues to evidence the strength of our business model." Mr. Nutt continued, "While the equity market conditions generally favored our value-oriented Affiliates such as Tweedy, Browne and Third Avenue, many of our growth-oriented Affiliates, including Friess and Frontier frontier, in U.S. history, the border area of settlement of Europeans and their descendants; it was vital in the conquest of the land between the Atlantic and the Pacific. , produced strong relative performance in 2002. With our Affiliates' proven investment disciplines and their commitment to providing strong investment performance and superior client service, AMG is well positioned for continued growth when market conditions improve." "Our Affiliate Affiliate Relationship between two companies when one company owns substantial interest, but less than a majority of the voting stock of another company, or when two companies are both subsidiaries of a third company. See: Subsidiaries, parent company. Development team made significant progress during this past year in promoting individual and collective growth opportunities for our Affiliates," stated Sean M. Healey Healey is a surname originally from the Sligo area of the Republic of Ireland and the Gaelic word O hEalaighthe which derives from the word 'ealadhach' meaning indigenous. Other versions of this surname include Haly, Haley, Haily, Hely, Healy, O'Healey, O'Haly and many more. , President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "For example, we created our first multi-Affiliate product when we launched Multiple Attribute (1) In relational database management, a field within a record. (2) In object technology, a single element of data. See instance attribute and static attribute. Portfolios (MAPs), a series of diversified diversified (di·verˑ·s portfolios managed by independent specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. managers selected from among our Affiliates. In addition, we recently announced the launch of a separate account distribution platform, Portfolio Services Group (PSG PSG, n polysomnograph; polygraph performed during sleep. Physiological variables such as pulse, blood pressure, and respiration are monitored and charted. ), which will enable our Affiliates with appropriate products to enter the broker-sold channel." Mr. Healey added, "Another important achievement this past year was the addition of Third Avenue Management to our group of Affiliates. Third Avenue Management, the highly regarded adviser to the Third Avenue Value family of no-load mutual funds No-load mutual fund An open-end investment company whose shares are sold without a sales charge. There can be other distribution charges, however, such as Article 12B-1 fees. A true no-load fund has neither a sales charge nor a distribution fee. , broadens our participation in the mutual fund distribution channel and enhances our diversity with exposure to real estate and distressed debt distressed debt Debt with low junk status and a market price substantially below par value, often pennies on the dollar. Investors sometimes buy distressed debt on the possibility that management can renegotiate loan agreements and keep the issuer out of investments." AMG is an asset management company which acquires and holds majority interests in a diverse group of mid-sized investment management firms. AMG's strategy is to generate growth through the internal growth of its existing Affiliates, as well as through investments in new Affiliates. AMG's innovative transaction structure allows individual members of each Affiliate's management team to retain or receive significant direct equity ownership in their firm while maintaining operating autonomy autonomy (ôtŏn`əmē) [Gr.,=self-rule], in a political sense, limited self-government, short of independence, of a political state or, more frequently, of a subdivision. . In addition, AMG provides centralized cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. assistance to its Affiliates in strategic matters, marketing, distribution, product development and operations. The investment management services accessed through the multi-Affiliate portfolios discussed in this press release are provided by the registered investment advisory Affiliates of AMG, and not by AMG itself. Certain matters discussed in this press release may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay , competition for acquisitions of interests in investment management firms, the investment performance of our Affiliates and their ability to effectively market their investment strategies, 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2001. Financial Tables Follow A teleconference will be held with AMG's management at 11:00 a.m. Eastern Time today. Parties interested in listening to the teleconference should dial 1-800-218-9073 (domestic calls) or 1-303-262-2191 (international calls) starting at 10:45 a.m. Eastern Time. Those wishing to listen to the teleconference should dial the appropriate number at least ten minutes before the call begins. The teleconference will be available for replay from approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. one hour after the conclusion of the call until 5:00 p.m. Eastern Time on Wednesday Wednesday: see week. , February February: see month. 5, 2003. To access the replay, please dial 1-800-405-2236 (domestic calls) or 1-303-590-3000 (international calls), pass code 520717. The live call and the replay (through February 5, 2003) may also be accessed via the Web at www.amg.com. For more information on Affiliated Managers Group, Inc., please visit AMG's Web site at www.amg.com.
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
Three Three
Months Months
Ended Ended
12/31/01 12/31/02
Revenue $ 110,488 $ 118,312
EBITDA (A) $ 35,338 $ 33,295
Net Income $ 12,600 $ 13,262
Cash Net Income (B) $ 21,691 $ 24,991
Average shares outstanding - diluted 22,886,908 22,169,274
Earnings per share - diluted $ 0.55 $ 0.60
Cash earnings per share - diluted (C) $ 0.95 $ 1.13
December 31, December 31,
2001 2002
Cash and cash equivalents $ 73,427 $ 27,708
Senior debt $ 452,894 $ 459,023
Stockholders' equity $ 543,340 $ 571,861
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
Twelve Twelve
Months Months
Ended Ended
12/31/01 12/31/02
Revenue $ 408,210 $ 482,536
EBITDA (A) $ 132,143 $ 138,831
Net Income $ 49,989 $ 55,942
Cash Net Income (B) $ 84,090 $ 99,552
Average shares outstanding - diluted 22,732,129 22,577,233
Earnings per share - diluted $ 2.20 $ 2.48
Cash earnings per share - diluted (C) $ 3.70 $ 4.41
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except as indicated)
Three Twelve
Months Months
Ended Ended
12/31/02 12/31/02
Assets under management (at period end, in
millions): $ 70,809 $ 70,809
Revenue: $ 118,312 $ 482,536
Owners' Allocation (D): $ 56,685 $ 243,403
EBITDA Contribution (E): $ 39,085 $ 161,946
Reconciliation of EBITDA Contribution to
EBITDA:
Total EBITDA Contribution (as above) $ 39,085 $ 161,946
Less, holding company expenses (5,790) (23,115)
EBITDA $ 33,295 $ 138,831
Notes:
(A) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization.
(B) Cash Net Income represents net income plus depreciation,
amortization and deferred taxes. In periods prior to 2002, Cash
Net Income represents net income plus depreciation and
amortization.
(C) Cash earnings per share represents Cash Net Income divided by
average shares outstanding.
(D) Owners' Allocation represents the portion of an Affiliate's
revenue which is allocated to the owners of that Affiliate,
including AMG, generally in proportion to their ownership
interest, pursuant to the revenue sharing agreement with such
Affiliate.
(E) EBITDA Contribution represents the portion of an Affiliate's
revenue 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.
Affiliated Managers Group, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share data)
Quarter Ended Year to Date
December 31, December 31,
2001 2002 2001 2002
Revenue $110,488 $118,312 $408,210 $482,536
Operating expenses:
Compensation and
related expenses 36,531 40,896 134,900 165,909
Amortization of
intangible assets 7,584 4,008 28,432 14,529
Depreciation and other
amortization 1,507 1,520 5,669 5,847
Selling, general and
administrative 18,178 21,892 73,779 84,453
Other operating
expenses 3,277 4,691 11,143 15,970
67,077 73,007 253,923 286,708
Operating income 43,411 45,305 154,287 195,828
Non-operating (income)
and expenses:
Investment and other
income (1,159) (875) (5,105) (3,473)
Interest expense 5,246 5,663 14,728 25,217
4,087 4,788 9,623 21,744
Income before minority
interest and taxes 39,324 40,517 144,664 174,084
Minority interest (18,323) (18,413) (61,350) (80,846)
Income before income
taxes 21,001 22,104 83,314 93,238
Income taxes- current 7,121 2,641 27,594 14,062
Income taxes- deferred 1,280 6,201 5,731 23,234
Net income $ 12,600 $ 13,262 $ 49,989 $ 55,942
Average shares
outstanding - basic 22,191,463 21,755,498 22,136,410 22,019,482
Average shares
outstanding - diluted 22,886,908 22,169,274 22,732,129 22,577,233
Earnings per share -
basic $ 0.57 $ 0.61 $ 2.26 $ 2.54
Earnings per share -
diluted $ 0.55 $ 0.60 $ 2.20 $ 2.48
Affiliated Managers Group, Inc.
Consolidated Balance Sheets
(in thousands)
December 31, December 31,
2001 2002
Assets
Current assets:
Cash and cash equivalents $ 73,427 $ 27,708
Investment advisory fees receivable 57,148 50,798
Other current assets 9,464 11,009
Total current assets 140,039 89,515
Fixed assets, net 17,802 19,228
Equity investment in Affiliate 1,732 -
Acquired client relationships, net 319,645 374,011
Goodwill, net 655,311 739,053
Other assets 25,792 21,187
Total assets $1,160,321 $1,242,994
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 67,136 $ 93,752
Senior bank debt 25,000 -
Zero coupon convertible debt 227,894 -
Total current liabilities 320,030 93,752
Zero coupon convertible debt - 229,023
Mandatory convertible debt 200,000 230,000
Deferred taxes 38,081 61,658
Other long-term liabilities 23,795 26,202
Total liabilities 581,906 640,635
Minority interest 35,075 30,498
Stockholders' equity:
Common stock 235 235
Additional paid-in capital 405,087 405,769
Accumulated other comprehensive income (846) (244)
Retained earnings 190,502 246,444
594,978 652,204
Less treasury shares, at cost (51,638) (80,343)
Total stockholders' equity 543,340 571,861
Total liabilities and stockholders'
equity $1,160,321 $1,242,994
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