10-KPeriod: FY2002

AFFILIATED MANAGERS GROUP, INC. Annual Report, Year Ended Dec 31, 2002

Filed March 31, 2003For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) presents its 2002 Form 10-K, detailing a significant year marked by revenue growth and strategic investments despite challenging market conditions. Total revenue saw an 18% increase, driven by acquisitions like Third Avenue and contributions from Friess and Welch & Forbes, though a broad decline in equity markets impacted overall assets under management, which ended the year at $70.8 billion. The company continues to execute its growth strategy by acquiring equity interests in mid-sized investment management firms, aiming to preserve entrepreneurial culture while providing scale benefits. Net income rose by 12% to $55.9 million, supported by the adoption of new accounting standards for intangible assets, which reduced amortization expenses. AMG's financial health appears stable, supported by a revolving credit facility and strong operating cash flow, although long-term obligations and potential future capital needs remain key considerations for investors.

Key Highlights

  • 1Total revenue increased by 18% to $482.5 million in 2002, driven by strategic acquisitions and a growing mutual fund segment.
  • 2Assets under management decreased by 12.6% to $70.8 billion by the end of 2002, primarily due to broad equity market declines.
  • 3Net Income grew 12% to $55.9 million in 2002, partly due to accounting changes reducing amortization expenses.
  • 4The company successfully integrated new acquisitions, including Third Avenue, Friess Associates, and Welch & Forbes, bolstering its presence in key distribution channels.
  • 5EBITDA showed a slight increase of 5% to $138.8 million, demonstrating operational resilience.
  • 6Significant long-term debt and convertible securities were in place, with plans to manage repurchase obligations potentially through cash or stock.
  • 7AMG continues to focus on acquiring minority stakes in mid-sized asset management firms, aligning with its growth strategy.

Frequently Asked Questions

In 2002, AMG experienced a revenue increase of 18% to $482.5 million and a net income increase of 12% to $55.9 million. This growth was primarily driven by strategic acquisitions and improved performance in certain segments, although assets under management saw a decline due to market conditions.

The broad decline in equity markets during 2002 negatively impacted AMG's assets under management, which decreased by 12.6% to $70.8 billion by the end of the year. This is a common challenge for asset management firms during periods of market downturn.

AMG's growth strategy centers on acquiring equity interests in mid-sized investment management firms. They aim to preserve the entrepreneurial culture of these firms while offering benefits of scale in distribution, operations, and technology. Internal growth from existing Affiliates and strategic transactions are also key components of their strategy.

Key risks highlighted include the adverse impact of equity market declines on advisory fees, reliance on the success of new investments, potential need for future capital raising, subordination of holding company claims to affiliate creditors, potential inadequacy of expense allocations in revenue sharing agreements, and the reliance on key personnel within their Affiliates. The company also faces substantial intangible assets on its balance sheet, which could be subject to impairment.