29.07.2009 12:06:00

AMG Reports Financial and Operating Results for the Second Quarter and First Half of 2009

Affiliated Managers Group, Inc. (NYSE: AMG) today reported its financial and operating results for the quarter and six months ended June 30, 2009.

For the second quarter of 2009, Cash Earnings Per Share ("Cash EPS”) were $1.00, compared to $1.49 for the same period of 2008, while diluted earnings per share for the second quarter of 2009 were $0.26, compared to $0.82 for the same period of 2008. For the second quarter of 2009, Cash Net Income was $42.4 million, compared to $62.1 million for the same period of 2008. For the second quarter of 2009, Net Income was $11.0 million, compared to $34.6 million for the same period of 2008. (Cash EPS and Cash Net Income are defined in the attached tables.)

For the second quarter of 2009, revenue was $201.2 million, compared to $309.0 million for the same period of 2008. For the second quarter of 2009, EBITDA was $53.2 million, compared to $88.3 million for the same period of 2008.

For the six months ended June 30, 2009, Cash Net Income was $80.1 million, while EBITDA was $102.4 million. For the same period, Net Income was $17.1 million, on revenue of $379.7 million. For the six months ended June 30, 2008, Cash Net Income was $120.3 million, while EBITDA was $176.9 million. For the same period, Net Income was $65.9 million, on revenue of $644.0 million.

Net client cash flows for the second quarter of 2009 were approximately $(1.6) billion. Pro forma for its pending investment with Harding Loevner, AMG’s aggregate assets under management were approximately $178.7 billion at June 30, 2009.

"AMG’s results reflect a strong quarter in the equity markets, and we remain confident in our forward growth prospects as the environment improves,” stated Sean M. Healey, President and Chief Executive Officer of AMG. "Our Affiliates produced strong relative performance across a diverse range of investment styles. Highlights for the quarter included value managers Tweedy, Browne and Third Avenue, which produced outstanding results in their highly regarded products, and emerging markets manager Genesis, which outperformed peers and benchmarks across its product set. Among our alternative products, AQR posted excellent performance in its major strategies, and credit specialist BlueMountain continued to deliver strong returns for its clients. Despite this strong performance, continued alternative outflows offset positive flows into our Affiliates’ traditional products. Looking ahead, with our Affiliates’ long-term track records of outperformance, we are well-positioned to generate strong organic growth as investors increasingly reallocate to risk-oriented assets.”

Mr. Healey added, "In addition, we continue to make excellent progress in our new investments area. We are pleased to announce today our agreement to complete our investment in Harding Loevner, a leading global growth equity manager. More broadly, we continue to actively evaluate an array of new investment prospects, and given AMG’s proven partnership approach, we are uniquely positioned to execute our growth strategy through accretive investments in new Affiliates. Our acquisition pipeline includes attractive investment opportunities involving the divestitures of asset management subsidiaries, and with improving market conditions, an increasing number of demographically-driven, succession-oriented transactions. With approximately $375 million of available cash resources, as well as an undrawn credit facility of $770 million, we remain well-positioned to execute on our new investment opportunities. Given our proven track record and significant financial capacity, we are confident in our ability to capitalize on this broad set of opportunities to deliver strong long-term returns for our shareholders.”

About Affiliated Managers Group

AMG is an asset management company with equity investments in a diverse group of boutique 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. In addition, AMG provides centralized assistance to its Affiliates in strategic matters, marketing, distribution, product development and operations. For more information, please visit the Company’s website at www.amg.com.

Certain matters discussed in this 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 interests in investment management firms, the ability to close pending investments, 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 for the year ended December 31, 2008.

AMG routinely posts information may be significant for investors in the Investor Information section of its website, and encourages investors to consult that section regularly. For additional information, please visit www.amg.com.

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 1-877-941-8609 (domestic calls) or 1-480-629-9818 (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 approximately one hour after the conclusion of the call. To access the replay, please dial 1-800-406-7325 (domestic calls) or 1-303-590-3030 (international calls) and enter the pass code, 4116595#. The live call and the replay of the session, and the additional financial information referenced during the teleconference, may also be accessed via the Web at www.amg.com.

Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
   
Three Months Three Months
Ended Ended
6/30/08* 6/30/09
 
Revenue $ 308,964 $ 201,246
 
Net Income (controlling interest) $ 34,635 $ 10,979
 
Cash Net Income (A) $ 62,088 $ 42,419
 
EBITDA (B) $ 88,305 $ 53,155
 
 
Average shares outstanding - diluted 42,371,454 43,159,140
 
Earnings per share - diluted $ 0.82 $ 0.26
 
Average shares outstanding - adjusted diluted (C) 41,577,019 42,286,500
 
Cash earnings per share (C) $ 1.49 $ 1.00
 
 
 

December 31, 2008*

June 30, 2009
 
Cash and cash equivalents $ 396,431 $ 274,369
 
Senior debt $ 233,514 $ -
 
Senior convertible securities (D) $ 445,535 $ 451,255
 
Junior convertible trust preferred securities (D) $ 505,034 $ 506,169
 
Stockholders’ equity $ 924,801 $ 1,105,253
 
 
 
 
Affiliated Managers Group, Inc.
Financial Highlights
(dollars in thousands, except per share data)
 
Six Months Six Months
Ended Ended
6/30/08* 6/30/09
 
Revenue $ 643,998 $ 379,721
 

Net Income (controlling interest)

$ 65,858 $ 17,104
 
Cash Net Income (A) $ 120,275 $ 80,125
 
EBITDA (B) $ 176,876 $ 102,383
 
 
 
Average shares outstanding - diluted 41,597,282 42,082,991
 
Earnings per share - diluted $ 1.63 $ 0.41
 
Average shares outstanding - adjusted diluted (C) 40,153,957 41,209,769
 

Cash earnings per share (C)

$ 3.00 $ 1.94
Affiliated Managers Group, Inc.
Reconciliations of Earnings Per Share Calculation
(dollars in thousands, except per share data)
   
Three Months Three Months
Ended Ended
6/30/08* 6/30/09
 
Net Income (controlling interest) $ 34,635 $ 10,979
Convertible securities interest expense, net (E)   81   36
Net Income (controlling interest), as adjusted $ 34,716 $ 11,015
 
Average shares outstanding - diluted 42,371,454 43,159,140
 
Earnings per share - diluted $ 0.82 $ 0.26
 
 
Six Months Six Months
Ended Ended
6/30/08* 6/30/09
 
Net Income (controlling interest) $ 65,858 $ 17,104
Convertible securities interest expense, net (E)   2,075   72
Net Income (controlling interest), as adjusted $ 67,933 $ 17,176
 
Average shares outstanding - diluted 41,597,282 42,082,991
 
Earnings per share - diluted $ 1.63 $ 0.41
Affiliated Managers Group, Inc.
Reconciliations of Average Shares Outstanding
   
Three Months Three Months
Ended Ended
6/30/08 6/30/09
 
Average shares outstanding - diluted 42,371,454 43,159,140
Assumed issuance of COBRA shares - -
Assumed issuance of LYONS shares (1,454,332 ) (873,803 )
Assumed issuance of 2008 Senior Convertible Notes shares - -
Assumed issuance of Trust Preferred shares - -
Dilutive impact of COBRA shares - -
Dilutive impact of LYONS shares 659,897 1,163
Dilutive impact of 2008 Senior Convertible Notes shares - -
Dilutive impact of Trust Preferred shares -   -  
Average shares outstanding - adjusted diluted (C) 41,577,019   42,286,500  
 
 
 
Six Months Six Months
Ended Ended
6/30/08 6/30/09
 
Average shares outstanding - diluted 41,597,282 42,082,991
Assumed issuance of COBRA shares (1,398,081 ) -
Assumed issuance of LYONS shares (1,454,419 ) (873,803 )
Assumed issuance of 2008 Senior Convertible Notes shares - -
Assumed issuance of Trust Preferred shares - -
Dilutive impact of COBRA shares 757,385 -
Dilutive impact of LYONS shares 651,790 581
Dilutive impact of 2008 Senior Convertible Notes shares - -
Dilutive impact of Trust Preferred shares -   -  
Average shares outstanding - adjusted diluted (C) 40,153,957   41,209,769  
Affiliated Managers Group, Inc.
Operating Results
(in millions)
       
Assets Under Management
 
Statement of Changes - Quarter to Date
Mutual Fund Institutional High Net Worth Total
 
Assets under management, March 31, 2009 $ 30,623 $ 98,379 $ 23,914 $ 152,916
Client cash inflows 1,927 7,965 1,296 11,188
Client cash outflows   (2,994 )   (8,342 )   (1,404 )   (12,740 )
Net client cash flows (1,067 ) (377 ) (108 ) (1,552 )
Investment performance 5,636 16,054 2,891 24,581
Other (F)   -     (2,130 )   (11 )   (2,141 )
Assets under management, June 30, 2009 $ 35,192   $ 111,926   $ 26,686   $ 173,804  
 
 
 
Statement of Changes - Year to Date
Mutual Fund Institutional High Net Worth Total
 
Assets under management, December 31, 2008 $ 34,704 $ 109,450 $ 25,991 $ 170,145
Client cash inflows 3,402 15,190 2,616 21,208
Client cash outflows   (5,663 )   (18,141 )   (3,362 )   (27,166 )
Net client cash flows (2,261 ) (2,951 ) (746 ) (5,958 )
Investment performance 2,749 10,146 1,511 14,406
Other (F)   -     (4,719 )   (70 )   (4,789 )
Assets under management, June 30, 2009 $ 35,192   $ 111,926   $ 26,686   $ 173,804  
Affiliated Managers Group, Inc.
Operating Results
(in thousands)
       
Financial Results
 
 

 

 

Three Months

Three Months

Ended

Percent of

Ended

Percent of

6/30/08*

Total

6/30/09

Total

Revenue
Mutual Fund $ 125,980 41 % $ 72,360 36 %
Institutional 147,409 48 % 101,491 50 %
High Net Worth   35,575 11 %   27,395 14 %
$ 308,964 100 % $ 201,246 100 %
 
EBITDA (B)
Mutual Fund $ 30,079 34 % $ 14,391 27 %
Institutional 47,317 54 % 31,690 60 %
High Net Worth   10,909 12 %   7,074 13 %
$ 88,305 100 % $ 53,155 100 %
 
 
 

Six Months

Six Months

Ended

Percent of

Ended

Percent of

6/30/08*

Total

6/30/09

Total

Revenue
Mutual Fund $ 260,843 40 % $ 140,698 37 %
Institutional 307,488 48 % 183,729 48 %
High Net Worth   75,667 12 %   55,294 15 %
$ 643,998 100 % $ 379,721 100 %
 
EBITDA (B)
Mutual Fund $ 61,221 35 % $ 29,266 28 %
Institutional 94,751 53 % 59,127 58 %
High Net Worth   20,904 12 %   13,990 14 %
$ 176,876 100 % $ 102,383 100 %
Affiliated Managers Group, Inc.
Reconciliations of Performance and Liquidity Measures
(in thousands)
   
 
Three Months Three Months
Ended Ended
6/30/08* 6/30/09
 
Net Income (controlling interest) $ 34,635 $ 10,979
Intangible amortization 13,500 16,000
Intangible-related deferred taxes 9,040 9,544
APB 14-1 expense 375 2,053
Affiliate equity expense 2,858 1,889
Affiliate depreciation   1,680     1,954  
Cash Net Income (A) $ 62,088   $ 42,419  
 
Cash flow from operations $

179,573

$

72,214

Interest expense, net of non-cash items 15,705 13,928
Current tax provision 12,356 (1,126 )
Income from equity method investments, net of distributions 1,821 5,428
Changes in assets and liabilities and other adjustments  

(121,150

)  

(37,289

)
EBITDA (B) $ 88,305   $ 53,155  
Holding company expenses   15,700     10,537  
EBITDA Contribution $ 104,005   $ 63,692  
 
Six Months Six Months
Ended Ended
6/30/08* 6/30/09
 
Net Income (controlling interest) $ 65,858 $ 17,104
Intangible amortization 26,800 32,000
Intangible-related deferred taxes 18,061 19,115
APB 14-1 expense 1,457 4,110
Affiliate equity expense 4,873 3,895
Affiliate depreciation   3,226     3,901  
Cash Net Income (A) $ 120,275   $ 80,125  
 
Cash flow from operations $

242,780

$

87,905

Interest expense, net of non-cash items 35,796 28,650
Current tax provision 25,501 (9,171 )
Income from equity method investments, net of distributions (12,146 ) 809
Changes in assets and liabilities and other adjustments  

(115,055

)  

(5,810

)
EBITDA (B) $ 176,876   $ 102,383  
Holding company expenses   33,241     21,049  
EBITDA Contribution $

210,117

  $ 123,432  
Affiliated Managers Group, Inc.
Consolidated Statements of Income
(dollars in thousands, except per share data)
       
Three Months Ended Six Months Ended
June 30, June 30,
2008* 2009 2008* 2009
 
Revenue $ 308,964 $ 201,246 $ 643,998 $ 379,721
 
Operating expenses:
Compensation and related expenses 140,822 103,373 291,902 187,533
Selling, general and administrative 48,178 32,157 101,028 64,664
Amortization of intangible assets 8,551 8,044 16,901 16,138
Depreciation and other amortization 2,902 3,243 5,676 6,482
Other operating expenses   5,050     4,736     10,463     10,486  
  205,503     151,553     425,970     285,303  
Operating income   103,461     49,693     218,028     94,418  
 
Non-operating (income) and expenses:
Investment and other (income) loss (426 ) (7,191 ) 1,513 (6,950 )
Income from equity method investments (13,414 ) (7,351 ) (27,402 ) (13,767 )
Investment (income) loss from Affiliate
investments in partnerships (G) (5,404 ) (14,947 ) 8,930 (11,152 )
Interest expense   16,927     19,193     39,864     39,141  
  (2,317 )   (10,296 )   22,905     7,272  
 
Income before income taxes 105,778 59,989 195,123 87,146
 
Income taxes - current 12,356 (1,126 ) 25,501 (9,171 )
Income taxes - intangible-related deferred 9,040 9,544 18,061 19,115
Income taxes - other deferred   (1,055 )   (4,678 )   (4,884 )   (2,287 )
Net income 85,437 56,249 156,445 79,489
 
Net income (non-controlling interests) (G) (45,650 ) (30,671 ) (98,824 ) (51,549 )
Net (income) loss (non-controlling interests
in partnerships) (G)   (5,152 )   (14,599 )   8,237     (10,836 )
 
Net Income (controlling interest) $ 34,635   $ 10,979   $ 65,858   $ 17,104  
 
Average shares outstanding - basic 39,300,624 41,450,659 36,885,373 40,740,486
Average shares outstanding - diluted 42,371,454 43,159,140 41,597,282 42,082,991
 
Earnings per share - basic $ 0.88 $ 0.26 $ 1.79 $ 0.42
Earnings per share - diluted $ 0.82 $ 0.26 $ 1.63 $ 0.41
Affiliated Managers Group, Inc.
Consolidated Balance Sheets
(in thousands)
  December 31,   June 30,
2008* 2009
Assets
Current assets:
Cash and cash equivalents $ 396,431 $ 274,369
Investment advisory fees receivable 131,099 113,899
Affiliate investments in partnerships (G) 68,789 78,560
Affiliate investments in marketable securities 10,399 13,789
Prepaid expenses and other current assets   23,968     27,591  
Total current assets 630,686 508,208
 
Fixed assets, net 71,845 66,885
Equity investments in Affiliates 678,887 664,669
Acquired client relationships, net 491,408 476,571
Goodwill 1,243,583 1,255,793
Other assets   96,291     108,170  
Total assets $ 3,212,700   $ 3,080,296  
 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued liabilities $ 183,794 $ 118,909
Payables to related party   26,187     2,907  
Total current liabilities 209,981 121,816
 
Senior debt 233,514 -
Senior convertible securities (D) 445,535 451,255
Junior convertible trust preferred securities (D) 505,034 506,169
Deferred income taxes 319,491 338,047
Other long-term liabilities   30,414     26,133  
Total liabilities 1,743,969 1,443,420
 
Redeemable non-controlling interests 297,733 307,066
 
Equity:
Common stock 458 458
Additional paid-in capital 817,713 762,292
Accumulated other comprehensive income (4,081 ) 10,723
Retained earnings   813,664     830,768  
1,627,754 1,604,241
Less treasury stock, at cost   (702,953 )   (498,988 )
Total stockholders' equity 924,801 1,105,253
 
Non-controlling interests (G) 180,732 149,252
Non-controlling interests in partnerships (G)   65,465     75,305  
 
Total equity   1,170,998     1,329,810  
Total liabilities and equity $ 3,212,700   $ 3,080,296  
Affiliated Managers Group, Inc.
Consolidated Statements of Cash Flow
(in thousands)
  Three Months Ended   Six Months Ended
June 30, June 30,
2008*   2009 2008*   2009
Cash flow from operating activities:
Net income $ 85,437 $ 56,249 $ 156,445 $ 79,489
Adjustments to reconcile Net income to net cash flow
from operating activities:
Amortization of intangible assets 8,551 8,044 16,901 16,138
Amortization of issuance costs 530 1,841 1,209 3,636
Depreciation and other amortization 2,902 3,243 5,676 6,482
Deferred income tax provision 7,985 4,866 13,177 16,828
Accretion of interest

692

3,424

2,859

6,855
Income from equity method investments, net of amortization (13,414 ) (7,351 ) (27,402 ) (13,767 )
Distributions received from equity method investments 16,542 9,879 49,447 28,820
Tax benefit from exercise of stock options 1,606 1,459 2,279 1,459
Stock option expense 3,617 1,958 7,400 3,135
Affiliate equity expense 4,475 3,469 7,610 6,719
Other adjustments

(6,650

)

(21,248

)

6,280

 

(18,698

)

Changes in assets and liabilities:
(Increase) decrease in investment advisory fees receivable 30,874 (11,447 ) 58,924 17,895
(Increase) decrease in Affiliate investments in partnerships (72 ) (648 ) (6,656 ) 331
(Increase) decrease in prepaids and other current assets (1,616 ) (9,470 ) 18,380 (9,213 )
Decrease in other assets 7,357 1,085 9,111 2,915

Increase (decrease) in accounts payable, accrued liabilities
   and other long-term liabilities

  30,757     26,861     (78,860 )   (61,119 )
Cash flow from operating activities  

179,573

   

72,214

   

242,780

   

87,905

 
Cash flow used in investing activities:
Cost of new investments, net of cash acquired (50,000 ) (1,411 )

(60,909

) (1,412 )
Purchase of fixed assets (2,592 ) (663 )

(5,140

) (1,215 )
Purchase of investment securities (9,001 ) (2,911 ) (23,444 ) (11,746 )
Sale of investment securities   9,451     -    

15,001

    5,720  
Cash flow used in investing activities   (52,142 )   (4,985 )  

(74,492

)   (8,653 )
Cash flow used in financing activities:
Borrowings of senior bank debt 124,000 - 301,000 -
Repayments of senior bank debt (126,500 ) - (247,500 ) (233,514 )
Settlement of convertible securities - - (208,730 ) -
Issuance of common stock 19,026 11,622

232,803

11,622
Repurchase of common stock (14,252 ) - (24,754 ) -
Issuance costs (1,002 ) - (1,941 ) (921 )
Excess tax benefit from exercise of stock options 6,921 1,086 9,807 1,086
Settlement of derivative contracts 8,154 -

8,154

-
Settlement of forward equity sale agreement - - - 144,258
Note payments 946 (2,932 )

1,824

(4,479 )
Distributions to non-controlling interests

(59,118

)

(25,506

)

(185,086

)

(87,125

)
Repurchases of Affiliate equity (54,243 ) (16,421 ) (86,681 ) (32,806 )

Subscriptions (redemptions) of Non-controlling interests in partnerships

  4     508     3,656     (471 )
Cash flow used in financing activities  

(96,064

)  

(31,643

)  

(197,448

)  

(202,350

)
 
Effect of foreign exchange rate changes on cash and cash equivalents (358 ) 1,492 (557 ) 1,036
Net increase (decrease) in cash and cash equivalents 31,009 37,078 (29,717 ) (122,062 )
Cash and cash equivalents at beginning of period   162,228     237,291     222,954     396,431  
Cash and cash equivalents at end of period $ 193,237   $ 274,369   $ 193,237   $ 274,369  
Affiliated Managers Group, Inc.
Notes  
 
* In the first quarter of 2009, the Company adopted Statement of Financial Accounting Standards ("FAS”) No. 141 (revised 2007), "Business Combinations” ("FAS 141R”), FAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51” ("FAS 160”), Emerging Issues Task Force Topic No. D-98 "Classification and Measurement of Redeemable Securities” ("Topic D-98”) and FASB Staff Position APB 14-1, "Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (including Partial Cash Settlement)” ("APB 14-1”), each of which is discussed in further detail in its Quarterly Report on Form 10-Q for the first quarter of 2009. These accounting changes have been retrospectively applied to prior periods, and are reflected in the financial results presented herein.
 
(A) Under our Cash Net Income definition, we add to Net Income (controlling interest) amortization (including equity method amortization) and deferred taxes related to intangible assets and Affiliate depreciation and equity expenses, and exclude the effect of APB 14-1. This supplemental non-GAAP performance measure is provided in addition to, but not as a substitute for, Net Income. The Company considers Cash Net Income an important measure of its financial performance, as management believes it best represents operating performance before non-cash expenses relating to the acquisition of interests in its affiliated investment management firms. Cash Net Income is used by the Company’s management and Board of Directors as a principal performance benchmark.
 

The Company adds back amortization attributable to acquired client relationships because this expense does not correspond to the changes in value of these assets, which do not diminish predictably over time. The portion of deferred taxes generally attributable to intangible assets (including goodwill) that it no longer amortizes but which continues to generate tax deductions is added back because the Company believes it is unlikely these accruals will be used to settle material tax obligations. The Company adds back non-cash expenses relating to certain transfers of equity between Affiliate management partners when these transfers have no dilutive effect to shareholders. The Company adds back the portion of consolidated depreciation expense incurred by Affiliates because under its Affiliate operating agreements, the Company is generally not required to replenish these depreciating assets.

 
In connection with the recent accounting changes described above, in the first quarter of 2009 the Company modified its Cash Net Income definition to add back Affiliate equity and APB 14-1 expenses (both net of tax). In prior periods, Cash Net Income was defined as "Net Income plus amortization and deferred taxes related to intangible assets plus Affiliate depreciation.” Under this definition, Cash Net Income reported for the three and six months ended June 30, 2008 was $59,515 and $116,160, respectively.
 
(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, the Company believes EBITDA is useful as an indicator of its ability to service debt, make new investments and meet working capital requirements. EBITDA, as calculated by the Company, 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) Cash earnings per share represents Cash Net Income divided by the adjusted diluted average shares outstanding. In this calculation, the potential share issuance in connection with the Company’s 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. The Company believes 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 the Company is relieved of its debt obligation. This method does not take into account any increase or decrease in the Company’s cost of capital in an assumed conversion.
 
(D) In accordance with APB 14-1, the Company has bifurcated certain of its convertible debt securities into their debt and equity components on its balance sheet. The senior convertible securities balance consists of zero coupon senior convertible notes, which were not required to be bifurcated, and senior convertible notes due 2038. The principal amount at maturity of the senior convertible notes due 2038 was $460,000 at December 31, 2008 and June 30, 2009. The principal amount at maturity of the junior convertible trust preferred securities was $730,820 at December 31, 2008 and June 30, 2009.
 
(E) Convertible securities interest expense, net, includes the interest expense, net of tax, associated with the Company’s dilutive convertible securities (including the incremental interest expense attributable to APB 14-1 but excluding the interest expense associated with the Company’s mandatory convertible securities).
 
(F) Other includes assets under management attributable to Affiliate product closings, the financial effect of which is not material to the Company’s ongoing results.
 
(G)

Income attributable to non-controlling interests on the Company’s income statement represents the profits allocated to Affiliate management owners and investors in certain Affiliate investments in partnerships that the Company is required to consolidate. Non-controlling interests on the Company’s balance sheet represents the undistributed profits and capital owned by Affiliate management, who retain a conditional right to sell their interests to the Company. Non- controlling interests in partnerships on the Company’s balance sheet represent the net assets owned by investors in certain Affiliate investment partnerships, who retain the conditional right to redeem their interests to the investment partnership.

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Affiliated Managers Group Inc. 186,59 -1,20% Affiliated Managers Group Inc.