Delaware

001-13459

04-3218510

(State or other jurisdiction of
incorporation)

(Commission file number)

(IRS employer identification no.)

600 Hale Street
Prides Crossing, Massachusetts

01965

(Address of principal executive offices)

(Zip Code)

AFFILIATED MANAGERS GROUP, INC.

Date: April 28, 2004

By:

/s/ Darrell W. Crate

Darrell W. Crate

Executive Vice President, Chief

Financial Officer and Treasurer

(and also as Principal Financial and

Accounting Officer)

Exhibit No.

Description

Exhibit 99.1

Press Release dated April 28, 2004

Contact:

Darrell W. Crate

Affiliated Managers Group, Inc.

(617) 747-3300

Three Months
Ended
3/31/03

Three Months
Ended
3/31/04

Revenue

$

110,247

$

151,634

Net Income

$

12,997

$

18,170

Cash Net Income (A)

$

24,014

$

29,379

EBITDA (B)

$

32,631

$

43,752

Average shares outstanding - diluted (C)

32,593,413

31,955,353

Earnings per share - diluted (C)

$

0.40

$

0.57

Cash earnings per share - diluted (C) (D)

$

0.74

$

0.92

December 31,
2003

March 31,
2004

Cash and cash equivalents

$

253,334

$

359,734

Senior convertible debt

$

423,340

$

423,494

Mandatory convertible securities

$

230,000

$

530,000

Stockholders’ equity

$

614,769

$

422,854

Mutual
Fund

Institutional

High Net
Worth

Total

Assets under management, December 31, 2003

$

23,339

$

44,686

$

23,499

$

91,524

Net client cash flows - directly managed assets

220

562

(609

)

173

Net client cash flows - overlay assets

—

—

—

—

New investments

361

—

—

361

Investment performance

1,268

1,166

306

2,740

Assets under management, March 31, 2004

$

25,188

$

46,414

$

23,196

$

94,798

Three
Months
Ended
3/31/03

Percent of
Total

Three
Months
Ended
3/31/04

Percent of
Total

Revenue

Mutual Fund

$

41,446

38%

$

60,303

40%

Institutional

36,786

33%

55,241

36%

High Net Worth

32,015

29%

36,090

24%

$

110,247

100%

$

151,634

100%

EBITDA (B)

Mutual Fund

$

12,350

38%

$

18,111

41%

Institutional

10,502

32%

15,240

35%

High Net Worth

9,779

30%

10,401

24%

$

32,631

100%

$

43,752

100%

Three Months
Ended
3/31/03

Three Months
Ended
3/31/04

Net Income

$

12,997

$

18,170

Intangible amortization

4,014

4,101

Intangible-related deferred taxes

5,950

6,083

Affiliate depreciation

1,053

1,025

Cash Net Income (A)

$

24,014

$

29,379

Cash flow from operations

$

(2,085

)

$

11,806

Interest expense, net of non-cash items

4,588

6,257

Current tax provision

2,052

4,549

Changes in assets and liabilities and other adjustments

28,076

21,140

EBITDA (B)

$

32,631

$

43,752

Holding company expenses

4,985

6,891

EBITDA Contribution

$

37,616

$

50,643

Three Months Ended March 31,

2003

2004

Revenue

$

110,247

$

151,634

Operating expenses:

Compensation and related expenses

39,311

57,291

Selling, general and administrative

19,518

23,321

Amortization of intangible assets

4,014

4,101

Depreciation and other amortization

1,514

1,539

Other operating expenses

3,968

3,722

68,325

89,974

Operating income

41,922

61,660

Non-operating (income) and expenses:

Investment and other income

(1,475

)

(1,884

)

Interest expense

5,441

7,315

3,966

5,431

Income before minority interest and taxes

37,956

56,229

Minority interest (E)

(16,294

)

(25,432

)

Income before income taxes

21,662

30,797

Income taxes - current

2,052

4,549

Income taxes - intangible-related deferred

5,950

6,083

Income taxes - other deferred

663

1,995

Net Income

$

12,997

$

18,170

Average shares outstanding - basic (C)

32,088,223

30,310,432

Average shares outstanding - diluted (C)

32,593,413

31,955,353

Earnings per share - basic (C)

$

0.41

$

0.60

Earnings per share - diluted (C)

$

0.40

$

0.57

December 31,
2003

March 31,
2004

Assets

Current assets:

Cash and cash equivalents

$

253,334

$

359,734

Investment advisory fees receivable

65,288

74,120

Prepaid expenses and other current assets

20,861

22,149

Total current assets

339,483

456,003

Fixed assets, net

36,886

36,641

Acquired client relationships, net

364,429

359,401

Goodwill

751,607

751,265

Other assets

26,800

31,551

Total assets

$

1,519,205

$

1,634,861

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable and accrued liabilities

$

89,707

$

75,680

Notes payable to related party

11,744

9,510

Total current liabilities

101,451

85,190

Senior convertible debt

423,340

423,494

Mandatory convertible securities

230,000

530,000

Deferred income taxes

92,707

100,785

Other long-term liabilities

16,144

31,737

Total liabilities

863,642

1,171,206

Minority interest (E)

40,794

40,801

Stockholders’ equity:

Common stock

235

353

Additional paid-in capital

408,449

377,767

Accumulated other comprehensive income

944

1,194

Retained earnings

306,972

325,142

716,600

704,456

Less treasury stock, at cost

(101,831

)

(281,602

)

Total stockholders’ equity

614,769

422,854

Total liabilities and stockholders’ equity

$

1,519,205

$

1,634,861

Three Months Ended March 31,

2003

2004

Cash flow from (used in) operating activities:

Net Income

$

12,997

$

18,170

Adjustments to reconcile Net Income to net cash flow from operating activities:

Amortization of intangible assets

4,014

4,101

Amortization of debt issuance costs

603

904

Depreciation and amortization of fixed assets

1,514

1,539

Deferred income tax provision

6,613

8,078

Accretion of interest

250

154

Tax benefit from exercise of stock options

—

5,509

Other adjustments

(531

)

—

Changes in assets and liabilities:

Decrease (increase) in investment advisory fees receivable

5,605

(8,832

)

Decrease (increase) in other current assets

(1,793

)

1,549

Decrease in non-current other receivables

234

711

Decrease in accounts payable, accrued expenses and other liabilities

(25,300

)

(20,084

)

Increase (decrease) in minority interest

(6,291

)

7

Cash flow from (used in) operating activities

(2,085

)

11,806

Cash flow used in investing activities:

Cost of investments, net of cash acquired

(3,119

)

(4,114

)

Purchase of fixed assets

(1,509

)

(1,295

)

Investment in marketable securities

—

(2,586

)

Increase in other assets

(15

)

(106

)

Cash flow used in investing activities

(4,643

)

(8,101

)

Cash flow from financing activities:

Borrowings of senior bank debt

85,000

—

Repayments of senior bank debt

(85,000

)

—

Issuances of convertible securities

300,000

300,000

Repurchase of convertible securities

(101,297

)

—

Issuance of equity securities

—

11,414

Repurchases of common stock

(33,688

)

(194,420

)

Issuance costs

(7,297

)

(9,715

)

Repayments of notes payable

(7,502

)

(4,584

)

Cash flow from financing activities

150,216

102,695

Effect of foreign exchange rate changes on cash flow

189

—

Net increase in cash and cash equivalents

143,677

106,400

Cash and cash equivalents at beginning of period

27,708

253,334

Cash and cash equivalents at end of period

$

171,385

$

359,734

(A)

Cash Net Income is defined as Net Income plus amortization and deferred taxes related to intangible assets plus Affiliate depreciation. This supplemental non-GAAP performance measure is provided in addition to, but not as a substitute for, Net Income.  The Company considers Cash Net Income an important measure of its financial performance, as management believes it best represents operating performance before non-cash expenses relating to the acquisition of interests in its affiliated investment management firms.  Since acquired assets do not generally depreciate or require replacement, and since they generate deferred tax expenses that are unlikely to reverse, the Company adds back these non-cash expenses.  Cash Net Income is used by the Company’s management and Board of Directors as a principal performance benchmark. 

The Company adds back amortization attributable to acquired client relationships because this expense does not correspond to the changes in value of these assets, which do not diminish predictably over time.  The Company adds back the portion of deferred taxes generally attributable to intangible assets (including goodwill) that it no longer amortizes but which continues to generate tax deductions.  These deferred tax expense accruals would be used in the event of a future sale of an Affiliate or an impairment charge, which the Company considers unlikely. The Company adds back the portion of consolidated depreciation expense incurred by Affiliates because under its Affiliate operating agreements, the Company is generally not required to replenish these depreciating assets.

(B)

EBITDA is defined as earnings before interest expense, income taxes, depreciation and amortization.  This supplemental non-GAAP liquidity measure is provided in addition to, but not as a substitute for, cash flow from operations.  As a measure of liquidity, the Company believes EBITDA is useful as an indicator of its ability to service debt, make new investments and meet working capital requirements.  EBITDA, as calculated by the Company, may not be consistent with computations of EBITDA by other companies.  In reporting EBITDA by segment, Affiliate expenses are allocated to a particular segment on a pro rata basis with respect to the revenue generated by that Affiliate in such segment.

(C)

In January 2004, the Company’s Board of Directors authorized a three-for-two stock split.  The additional shares of common stock were distributed on March 29, 2004.  The weighted average shares outstanding and per share figures reflect the stock split.

(D)

Cash earnings per share represents Cash Net Income divided by average shares outstanding.

(E)

Minority interest on the Company’s income statement represents the profits allocated to Affiliate management owners for that period.  Minority interest on the Company’s balance sheet represents the undistributed profits and capital owned by Affiliate management, who retain a conditional right to sell their interests to the Company.