10-QPeriod: Q3 FY2000

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q3 Ended Sep 30, 2000

Filed November 14, 2000For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported strong performance for the nine months ended September 30, 2000, with net income increasing by approximately 52% to $41.9 million compared to the same period in 1999. This growth was driven by a significant increase in revenues, up by nearly 48% to $343.9 million, reflecting the internal growth of existing affiliates and contributions from new investments, notably Frontier Capital Management Company and The Managers Funds LLC. The company's balance sheet shows total assets of $814.6 million as of September 30, 2000, a decrease from $909.1 million at the end of 1999. This decrease is primarily due to a significant reduction in current assets, specifically 'investment advisory fees receivable,' which fell from $239.4 million to $64.0 million, and a decrease in cash and cash equivalents. However, intangible assets, including goodwill and acquired client relationships, continue to represent a substantial portion of total assets. Despite increased debt levels, the company maintains a strong liquidity position with significant borrowing capacity under its credit facility. AMG continues its strategy of acquiring and holding equity interests in mid-sized investment management firms. The company's financial health is robust, supported by substantial assets under management ($85.1 billion as of September 30, 2000) and a clear path for continued growth through strategic acquisitions and the internal expansion of its affiliate network. Investors should note the significant increase in operating expenses, largely driven by compensation and related expenses, which rose in line with revenue growth.

Key Highlights

  • 1Net income for the first nine months of 2000 increased by 52% to $41.9 million, compared to $27.5 million in the prior year period.
  • 2Total revenues grew significantly by 48% to $343.9 million for the nine months ended September 30, 2000, driven by affiliate growth and new investments.
  • 3Assets under management reached $85.1 billion as of September 30, 2000.
  • 4Total assets decreased to $814.6 million from $909.1 million, primarily due to a reduction in investment advisory fees receivable.
  • 5Goodwill and acquired client relationships represent a substantial portion of the company's assets.
  • 6The company has $182 million in senior bank debt outstanding and an additional $148 million available under its credit facility.
  • 7Earnings per diluted share increased to $1.84 for the nine months ended September 30, 2000, from $1.22 in the prior year period.

Frequently Asked Questions

AMG's primary business strategy involves acquiring and holding equity interests in mid-sized investment management firms, referred to as 'Affiliates.' The company derives its revenues from these Affiliates through revenue-sharing arrangements, where AMG receives a portion of the Affiliate's revenues after operating expenses are covered.

AMG demonstrated strong revenue growth, with total revenues increasing by approximately 48% to $343.9 million for the first nine months of 2000 compared to the same period in 1999. Net income also saw substantial growth, rising by 52% to $41.9 million for the same nine-month period.

AMG's balance sheet shows substantial intangible assets, consisting of goodwill and acquired client relationships. These are generated from the company's strategy of acquiring interests in investment management firms and represent a significant portion of its total assets, with goodwill at $445.8 million and acquired client relationships at $201.1 million as of September 30, 2000.

As of September 30, 2000, AMG had $182 million in senior bank debt outstanding and had the capacity to borrow an additional $148 million under its credit facility, with an option to increase it further. The company's liquidity appears sufficient to meet its obligations and fund future investments.