10-QPeriod: Q2 FY2009

AFFILIATED MANAGERS GROUP, INC. Quarterly Report for Q2 Ended Jun 30, 2009

Filed August 6, 2009For Securities:AMGMGRBMGRMGRDMGRE

Summary

Affiliated Managers Group, Inc. (AMG) reported a significant decline in revenue and net income for the three and six months ended June 30, 2009, compared to the same periods in 2008. This downturn was primarily driven by a substantial decrease in average assets under management, attributed to the challenging global equity markets and negative net client cash flows. Despite the overall financial contraction, the company's financial position appears stable. Total assets decreased slightly to $3.08 billion from $3.21 billion, while total liabilities saw a more pronounced reduction, falling to $1.44 billion from $1.74 billion. Notably, senior bank debt was fully repaid, and the company maintained compliance with its credit facility covenants. The company also announced a new agreement to acquire a majority interest in Harding Loevner LLC, indicating a continued strategy of growth through acquisitions.

Financial Highlights

23 data points
Beta

Net Income

$10.98M

EPS (Diluted)

$0.26

Cash & Equivalents

$274.37M

Free Cash Flow

$71.55M

Financial Statements
Beta
SG&A Expenses$30.95M
Operating Expenses$150.35M
Operating Income$50.90M
Interest Expense$15.83M
Net Income$10.98M
EPS (Basic)$0.26
EPS (Diluted)$0.26
Shares Outstanding (Basic)41.45B
Shares Outstanding (Diluted)43.16B

Key Highlights

  • 1Total revenue for the three months ended June 30, 2009, decreased by 35% to $201.2 million compared to $309.0 million in the prior year period.
  • 2Net income attributable to controlling interest significantly declined by 68% to $11.0 million for the three months ended June 30, 2009, from $34.6 million in the same period of 2008.
  • 3Average assets under management across all segments decreased by 33% for the three months ended June 30, 2009, reflecting market downturns and net client outflows.
  • 4Operating expenses decreased by 26% to $151.6 million for the three months ended June 30, 2009, due to lower compensation and selling, general, and administrative costs.
  • 5The company fully repaid its outstanding senior bank debt of $233.5 million during the first quarter of 2009.
  • 6AMG announced an agreement to acquire a majority interest in Harding Loevner LLC, managing approximately $5 billion in assets, expected to close in Q3 2009.
  • 7The company's cash net income, a non-GAAP measure, decreased by 32% to $42.4 million for the three months ended June 30, 2009.

Frequently Asked Questions

The primary drivers of AMG's financial performance were the challenging global equity markets and negative net client cash flows, which led to a significant decrease in average assets under management. This, in turn, resulted in lower revenue and, consequently, lower net income compared to the prior year period.

AMG made significant progress in reducing its debt. The company fully repaid its outstanding senior bank debt of $233.5 million in the first quarter of 2009. While senior convertible securities and junior convertible trust preferred securities remain outstanding, the repayment of senior bank debt strengthens the company's balance sheet.

AMG's strategy remains focused on growth through both internal expansion of its existing businesses and strategic acquisitions. The announced agreement to acquire a majority interest in Harding Loevner LLC demonstrates this commitment to acquiring new investment management firms and expanding its asset base.

AMG adopted several new accounting standards in 2009, including FAS 141R (Business Combinations), FAS 160 (Non-Controlling Interests), and APB 14-1 (Convertible Debt Instruments). These adoptions primarily affected presentation of non-controlling interests and required bifurcation of convertible debt into debt and equity components, leading to incremental non-cash interest expense. While these changes impact reporting, management believes they provide a more accurate financial picture.