10-QPeriod: Q1 FY2001

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q1 Ended Mar 31, 2001

Filed May 15, 2001For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported financial results for the first quarter ended March 31, 2001. Net income decreased to $11.9 million from $13.8 million in the prior year's first quarter. This decline was primarily driven by a decrease in total revenues to $100.5 million from $114.8 million, largely due to the impact of a broad equity market decline on asset-based fees. Despite the revenue decrease, total operating expenses also fell by $7.7 million, largely due to a reduction in compensation and related expenses linked to the lower revenue base. Liquidity remains a key focus, with the company utilizing its revolving credit facility. Subsequent to the quarter, AMG completed private placements of zero-coupon convertible notes, raising approximately $221 million in net proceeds, which are intended for debt repayment and general corporate purposes. Assets under management decreased to $69.7 billion from $77.5 billion at the end of the previous year, attributed to market declines and the loss of overlay assets. Management highlighted a potential future benefit to net income if new accounting standards for goodwill amortization are adopted.

Key Highlights

  • 1Net income for the first quarter of 2001 was $11.9 million, down from $13.8 million in the same period of 2000.
  • 2Total revenues decreased by $14.3 million to $100.5 million, primarily due to a decline in asset-based fees driven by a broad equity market downturn.
  • 3Operating expenses saw a reduction of $7.7 million, largely attributed to lower compensation and related expenses reflecting the decrease in revenues.
  • 4Assets under management declined to $69.7 billion from $77.5 billion at the end of 2000, impacted by market value decreases and the loss of overlay assets.
  • 5The company successfully raised approximately $221 million in net proceeds from private placements of zero-coupon convertible notes subsequent to the quarter.
  • 6Despite a decrease in net income, the company's financial position was strengthened by significant debt repayment using proceeds from recent convertible note offerings.

Frequently Asked Questions

The decrease in net income for the first quarter of 2001, from $13.8 million to $11.9 million compared to the prior year, was primarily driven by a decline in total revenues to $100.5 million. This revenue decrease was mainly due to lower asset-based fees resulting from a broad equity market decline.

Affiliated Managers Group, Inc. reduced its total operating expenses by $7.7 million in the first quarter of 2001 compared to the same period in 2000. This reduction was largely due to a decrease in compensation and related expenses, which is a direct consequence of the lower revenue generated by the company's affiliates.

Assets under management decreased to $69.7 billion as of March 31, 2001, down from $77.5 billion at the end of 2000. This decline was attributed to a net loss of low-fee overlay assets and a general decline in the value of assets under management due to the broad equity markets. However, this was partially offset by positive net client cash flows for directly managed assets.

Subsequent to the quarter, AMG completed private placements of zero-coupon convertible notes, raising approximately $221 million in net proceeds. The company has already used approximately $101 million of these proceeds to repay existing indebtedness and intends to use the balance for further debt repayment and general corporate purposes, thereby improving its liquidity and capital structure.