10-KPeriod: FY2010

AFFILIATED MANAGERS GROUP, INC. Annual Report, Year Ended Dec 31, 2010

Filed March 1, 2011For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) presented a strong recovery in 2010, with significant growth across key financial metrics following a challenging 2009. Total assets under management surged by 54% to $320.0 billion, driven by both market performance and strategic investments in four new boutique investment management firms: Artemis, Aston, Pantheon, and Trilogy. This expansion diversified AMG's business into alternative and international asset classes. Revenue increased by 61% to $1.36 billion, supported by higher asset-based fees and a substantial 154% increase in performance fees. Net income attributable to controlling interest grew substantially from $59.5 million in 2009 to $138.6 million in 2010, reflecting improved operational leverage and successful integration of new affiliates. The company's strategic focus on acquiring high-quality boutique firms and enhancing their growth prospects through operational and distribution support appears to be yielding positive results, positioning AMG for continued expansion in the global asset management market.

Financial Highlights

47 data points
Beta

Net Income

$138.60M

EPS (Diluted)

$2.81

Total Assets

$5.28B

Cash & Equivalents

$313.30M

Free Cash Flow

$471.90M

Financial Statements
Beta
SG&A Expenses$284.60M
Operating Expenses$984.20M
Operating Income$374.00M
Interest Expense$66.20M
Net Income$138.60M
EPS (Basic)$2.92
EPS (Diluted)$2.81
Shares Outstanding (Basic)47.40M
Shares Outstanding (Diluted)49.40M

Key Highlights

  • 1Total assets under management grew by 54% to $320.0 billion by the end of 2010.
  • 2Revenue increased by 61% to $1.36 billion in 2010, primarily due to increased assets under management and improved market conditions.
  • 3Net income attributable to controlling interest increased significantly to $138.6 million in 2010, a 133% rise from 2009.
  • 4Completed significant investments in four new Affiliates: Artemis, Aston, Pantheon, and Trilogy, expanding diversification into alternative and international strategies.
  • 5Performance fees more than doubled, increasing by 154% to $58.4 million, indicating improved investment performance for certain products.
  • 6Economic Net Income (a non-GAAP measure) grew by 61% to $299.1 million, demonstrating underlying operational performance improvements.
  • 7The company maintained a strong balance sheet with total assets reaching $5.3 billion and improved its leverage ratio.

Frequently Asked Questions

AMG completed significant investments in four new affiliates (Artemis, Aston, Pantheon, and Trilogy) during 2010, which contributed $305.9 million in revenue and $41.0 million to earnings. These acquisitions expanded AMG's asset base and diversified its product offerings, notably into alternative and international markets, driving overall revenue and asset growth.

The significant increase in revenue was driven by a 54% rise in total assets under management to $320.0 billion, fueled by positive market performance (especially in equities) and the successful integration of new affiliate investments. Higher average assets under management directly translated to increased asset-based fees. Additionally, a 154% surge in performance fees contributed to revenue growth. These factors, combined with controlled operating expenses, led to a 133% increase in net income attributable to controlling interest.

Key risks include a strong dependence on equity market returns and the investment performance of its affiliates, which directly impacts revenue. The company also faces risks related to its growth strategy, which relies on successful new investments and the ability to raise capital. Regulatory changes in the financial services industry, international operational risks, and the potential loss of key personnel at its affiliates are also significant concerns.

AMG's strategy is to reinvest earnings to finance investments in new affiliates, repay debt, and develop its existing businesses. The company stated it does not anticipate paying cash dividends, and its credit facility prohibits cash dividend payments to stockholders. This focus on growth and reinvestment underscores a commitment to long-term value creation through strategic acquisitions and organic growth within its affiliate network.