AMG Reports Financial and Operating Results for Third Quarter and Nine Months Ended September 30, 2002; Company Reports Cash EPS for Third Quarter of $1.08.Business Editors BOSTON--(BUSINESS WIRE)--Oct. 23, 2002 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 third quarter and nine months ended September September: see month. 30, 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 third quarter of 2002 were $1.08. (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 third quarter of 2002 were $0.57, and net income for the third quarter was $12.8 million. 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 $24.2 million. 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 third quarter of 2001. For the third quarter of 2002, revenue was $115.3 million, compared to $96.6 million for the third 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 third quarter of 2002 was $32.7 million, compared to $31.9 million for the same period of 2001. For the nine months ended September 30, 2002, revenue was $364.2 million, compared to $297.7 million for the nine months ended September 30, 2001. EBITDA for the nine months ended September 30, 2002 was $105.5 million, compared to $96.8 million for the same period of 2001. The aggregate net client cash flows from directly managed assets for the third quarter were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $525 million, while outflows of 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 were approximately $742 million. These aggregate net client cash flows for the quarter resulted in essentially no change to AMG's 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 due to the mix of fees and ownership percentages. 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 September 30, 2002 were $68.5 billion. "AMG produced stable earnings notwithstanding the sharp declines in the equity markets during the third quarter," 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. "We continue to benefit from the diversity among our Affiliates, which provides us with a balanced exposure to value and growth investment styles, and broad participation in the mutual fund, high net worth and institutional distribution channels. In addition, we are pleased that our Affiliates continue to generate internal growth through positive client cash flows from directly managed assets for the year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , despite the difficult equity market environment." "As a group, our Affiliates produced strong performance relative to their peers and benchmarks for the quarter as well as the year-to-date," 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, deep value manager Tweedy, Browne continues to perform well. Its largest product, the Morningstar five-star rated Tweedy, Browne Global Value Fund, produced outstanding results compared to its competitors COMPETITORS, French law. Persons who compete or aspire to the same office, rank or employment. As an English word in common use, it has a much wider application. Ferriere, Dict. de Dr. h.t. . On a relative basis, growth manager Friess Associates is also having a very good year, with its Brandywine Bran·dy·wine A creek of southeast Pennsylvania and northern Delaware. It was the site of a major defeat of the Continental Army on September 11, 1777, thus allowing British troops to enter Philadelphia on September 27. and Brandywine Blue funds ranking in the top decile decile one of the groups when a series of ranked data is divided into ten equal parts, or dividing points between such groups. See also quartile. within their respective Morningstar categories for the year-to-date." Mr. Healey continued, "Finally, in addition to closing our investment in Third Avenue Management this quarter, we also closed the syndication See syndication format. of a new, three-year, $235 million credit facility. Combined with our strong cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , the credit facility provides AMG with an additional source of capital to fund new investments, repay indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. , or to opportunistically repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. our stock, as appropriate." AMG is an asset management company with equity investments 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. 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 December: see month. 31, 2001. The source for Morningstar information is Morningstar, Inc. and is provided at www.morningstar.com. Chicago-based Morningstar is the leading provider of mutual fund, stock, and variable-insurance investment information. An independent company, Morningstar does not own, operate, or hold any interest in mutual funds, stocks, or insurance products. 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 1-800-366-7449 (domestic calls) or 1-303-262-2141 (international calls) starting at 10:45 a.m. Eastern Time. Please dial the appropriate number at least ten minutes before the call begins. The teleconference will be available for replay from approximately one hour after the conclusion of the call until 5:00 p.m. Eastern Time on Wednesday Wednesday: see week. , October October: see month. 30, 2002. To access the replay, please dial 1-800-405-2236 (domestic calls) or 1-303-590-3000 (international calls), pass code 501618. The live call and the replay (through October 30, 2002) 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 Months Three Months
Ended Ended
9/30/01 9/30/02
Revenue $ 96,584 $ 115,258
EBITDA (A) $ 31,937 $ 32,690
Net Income $ 12,352 $ 12,819
Cash Net Income (B) $ 20,734 $ 24,166
Average shares outstanding - diluted 22,841,832 22,301,801
Earnings per share - diluted $ 0.54 $ 0.57
Cash earnings per share - diluted (C) $ 0.91 $ 1.08
December 31, September 30,
2001 2002
Cash and cash equivalents $ 73,427 $ 77,892
Senior debt $ 452,894 $ 533,751
Stockholders' equity $ 543,340 $ 560,613
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
Nine Months Nine Months
Ended Ended
9/30/01 9/30/02
Revenue $ 297,722 $ 364,224
EBITDA (A) $ 96,805 $ 105,536
Net Income $ 37,389 $ 42,680
Cash Net Income (B) $ 62,399 $ 74,561
Average shares outstanding - diluted 22,683,862 22,714,620
Earnings per share - diluted $ 1.65 $ 1.88
Cash earnings per share - diluted (C) $ 2.75 $ 3.28
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except as indicated)
Three Months Nine Months
Ended Ended
9/30/02 9/30/02
Assets under management
(at period end, in millions): $ 68,524 $ 68,524
Revenue: $ 115,258 $ 364,224
Owners' Allocation (D): $ 56,705 $ 186,718
EBITDA Contribution (E): $ 38,015 $ 122,861
Reconciliation of EBITDA Contribution
to EBITDA:
Total EBITDA Contribution (as above) $ 38,015 $ 122,861
Less, holding company expenses (5,325) (17,325)
EBITDA $ 32,690 $ 105,536
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
September 30, September 30,
2001 2002 2001 2002
Revenue $ 96,584 $115,258 $297,722 $364,224
Operating expenses:
Compensation and
related expenses 31,463 41,525 98,369 125,013
Amortization of
intangible assets 7,006 3,825 20,848 10,521
Depreciation and other
amortization 1,376 1,525 4,162 4,327
Selling, general and
administrative 18,487 18,893 55,601 62,561
Other operating expenses 2,578 4,265 7,866 11,279
60,910 70,033 186,846 213,701
Operating income 35,674 45,225 110,876 150,523
Non-operating (income)
and expenses:
Investment and other
income (1,952) (1,206) (3,946) (2,598)
Interest expense 2,970 5,974 9,482 19,554
1,018 4,768 5,536 16,956
Income before minority
interest and taxes 34,656 40,457 105,340 133,567
Minority interest (14,071) (19,091) (43,027) (62,433)
Income before income
taxes 20,585 21,366 62,313 71,134
Income taxes - current 6,525 2,550 20,473 11,421
Income taxes - deferred 1,708 5,997 4,451 17,033
Net income $ 12,352 $ 12,819 $ 37,389 $ 42,680
Average shares
outstanding - basic 22,180,058 21,907,342 22,117,858 22,108,441
Average shares
outstanding - diluted 22,841,832 22,301,801 22,683,862 22,714,620
Earnings per share
- basic $ 0.56 $ 0.59 $ 1.69 $ 1.93
Earnings per share
- diluted $ 0.54 $ 0.57 $ 1.65 $ 1.88
Affiliated Managers Group, Inc.
Consolidated Balance Sheets
(in thousands)
December 31, September 30,
2001 2002
Assets
Current assets:
Cash and cash equivalents $ 73,427 $ 77,892
Investment advisory fees receivable 57,148 47,372
Other current assets 9,464 11,080
Total current assets 140,039 136,344
Fixed assets, net 17,802 19,647
Equity investment in Affiliate 1,732 --
Acquired client relationships, net 319,645 377,174
Goodwill, net 655,311 736,081
Other assets 25,792 23,575
Total assets $1,160,321 $1,292,821
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 67,136 $ 81,593
Senior bank debt 25,000 --
Zero coupon convertible debt 227,894 --
Total current liabilities 320,030 81,593
Senior bank debt -- 75,000
Zero coupon convertible debt -- 228,751
Mandatory convertible debt 200,000 230,000
Deferred taxes 38,081 55,353
Other long-term liabilities 23,795 35,021
Total liabilities 581,906 705,718
Minority interest 35,075 26,490
Stockholders' equity:
Common stock 235 235
Additional paid-in capital 405,087 405,769
Accumulated other comprehensive income (846) (371)
Retained earnings 190,502 233,182
594,978 638,815
Less treasury shares, at cost (51,638) (78,202)
Total stockholders' equity 543,340 560,613
Total liabilities and stockholders' equity $1,160,321 $1,292,821
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