01—Abstract
Summary
Summary of the 10-K/A filed March 31, 2014. Cited figures are marked; the original filing is the authoritative source.
This Form 10-K/A (Amendment No. 1) does not contain Affiliated Managers Group's own consolidated financial statements.
It was filed to add Exhibit 99.1, the audited financial statements of ValueAct Holdings, L.P. and its Controlled Affiliates, an investment manager in which AMG holds a minority interest. AMG's full 2013 results were included in its original 10-K filed February 27, 2014. Investors should read this amendment as supplemental disclosure about an equity-method affiliate, not as an update to AMG's earnings or balance sheet.
The filing does not quantify AMG's ownership stake or its share of ValueAct's income. ValueAct's 2013 results were very strong. Total assets rose to $14.62 billiona from $9.76 billion, driven by investments in securities at fair value of $12.44 billion, up from $8.58 billion.
Net income was $3.98 billionb, including $1.21 billion of net realized gains and $2.64 billion of net unrealized gains. Net income attributable to the partners was $849.4 million, versus $302.5 million in 2012. Most of the economics belong to redeemable noncontrolling interests (outside investors), which account for $12.45 billion of the balance sheet and $3.13 billion of 2013 net income.
Operating expenses were modest at $65.7 millionc. Management and performance fee economics flow through the controlled management company, which is why the underlying fund flows and asset growth matter to AMG's affiliate-level earnings. The auditor, PricewaterhouseCoopers LLP, issued an unqualified opinion dated March 28, 2014, on the 2013 statements only.
The 2012 and 2011 figures are marked as not covered by the auditor's report. The 2012 financials were revised to correct a $61.6 milliond accounting error for equity-based compensation, which was recorded as a liability instead of an increase in partners' capital. Two ValueAct AllCap partnerships were dissolved after year-end 2013.
02—Key points
Key Highlights
- Filing purpose: Amendment No. 1 adds Exhibit 99.1, the audited financial statements of ValueAct Holdings, L.P., a minority-owned affiliate of AMG. It contains no new AMG consolidated financials.
- ValueAct total assets grew 50% to $14.62 billion at December 31, 2013, led by investments in securities of $12.44 billion (versus $8.58 billion in 2012).
- Net income of $3.98 billion in 2013, with $849.4 million attributable to partners (up from $302.5 million) and $3.13 billion attributable to redeemable noncontrolling interests.
- Investment gains drove results: $1.21 billion of net realized gains and $2.64 billion of net unrealized gains, against only $189.3 million of dividend income and $65.7 million of total expenses.
- Net contributions from redeemable noncontrolling interests of about $1.98 billion in 2013, versus $1.15 billion in withdrawals and distributions, reflecting strong capital inflows into ValueAct funds.
- Clean audit opinion from PricewaterhouseCoopers on the 2013 statements, dated March 28, 2014. The 2012 and 2011 comparatives are not covered by the auditor's report.
- AMG's own market data from the cover page: 55,179,092 shares outstanding as of March 27, 2014, and a June 28, 2013 non-affiliate market value of about $8.61 billion at $163.94 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-K/AFY2013filed March 31, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| SG&A Expenses | $427.20M$366.90M | +16.4% |
| Operating Expenses | $1.55B$1.41B | +10.6% |
| Operating Income | $634.10M$400.40M | +58.4% |
| Interest Expense | $87.30M$83.00M | +5.2% |
| Net Income | $360.50M$174.00M | +107.2% |
| EPS (Basic) | $6.79$3.36 | +102.1% |
| EPS (Diluted) | $6.55$3.28 | +99.7% |
| Shares Outstanding (Basic) | 53.10M51.70M | +2.7% |
| Shares Outstanding (Diluted) | 56.70M53.00M | +7.0% |
05—Questions
Frequently Asked Questions
Does this amendment change AMG's reported 2013 financial results?
No. The 10-K/A states that AMG's financial statements are incorporated by reference from the original 10-K filed February 27, 2014. The amendment only adds Exhibit 99.1, which contains ValueAct Holdings' separate financial statements.
Why would AMG include ValueAct's financial statements?
ValueAct is an affiliate in which AMG holds a minority interest. When an affiliate is significant to a public company, SEC rules can require separate financial statements of that affiliate. This exhibit provides that required information. The filing does not state AMG's ownership percentage or how much income AMG records from ValueAct.
How much did ValueAct grow in 2013?
Total assets rose from $9.76 billion to $14.62 billion. Net income was $3.98 billion, compared with $1.75 billion in 2012. Net income attributable to partners was $849.4 million, up from $302.5 million. Much of the growth came from investment gains and net capital inflows from outside investors.
Are there any accounting corrections or unusual items investors should know about?
Yes. ValueAct found that it had recorded a liability instead of an increase in partners' capital for $61.6 million of 2012 equity-based compensation. Management judged the 2012 statements not materially misstated but revised them anyway. In addition, ValueAct AllCap Partners, L.P. and ValueAct AllCap International, L.P. were dissolved after year-end 2013.
06—Continue