NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1.Business and Summary of Significant Accounting Policies
(a)Organization and Nature of Operations
Affiliated Managers Group, Inc. (the “Company”) is a leading partner to independent active investment management firms globally. AMG’s strategy is to generate long-term value by investing in a diverse array of partner-owned investment firms, referred to as “Affiliates.” The Company’s Affiliates provide a comprehensive and diverse range of active, return-oriented strategies designed to assist institutional, retail, and high net worth clients worldwide in achieving their investment objectives. The Company operates in one segment, global asset management.
Each of the Company’s Affiliates operates through distinct legal entities, which affords the Company the flexibility to design a separate operating agreement for each Affiliate. Each operating agreement reflects the specific terms of the Company’s economic participation in the Affiliate, which, in each case, uses a “structured partnership interest.”
For a majority of Affiliates, the Company uses structured partnership interests in which the Company contractually shares in the Affiliate’s revenue without regard to expenses. In this type of structured partnership interest, the Affiliate allocates a specified percentage of its revenue to the Company and Affiliate management, while using the remainder of its revenue for operating expenses and for additional distributions to Affiliate management. The Company and Affiliate management, therefore, participate in any increase or decrease in revenue and only Affiliate management participates in any increase or decrease in expenses. Under these structured partnership interests, the Company’s contractual share of revenue generally has priority over distributions to Affiliate management. For other Affiliates, the Company uses structured partnership interests in which the Company contractually shares in the Affiliate’s revenue less agreed-upon expenses. This type of partnership interest allows the Company to benefit from any increase in revenue or any decrease in the agreed-upon expenses, but also exposes the Company to any decrease in revenue or any increase in such expenses. The degree of the Company’s exposure to expenses from these structured partnership interests varies by Affiliate and includes Affiliates in which the Company fully shares in the expenses of the business.
(b)Basis of Presentation and Use of Estimates
The Consolidated Financial Statements of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All dollar amounts, except per share data in the text and tables herein, are stated in millions unless otherwise indicated. All intercompany balances and transactions have been eliminated. Certain reclassifications have been made to the prior period’s financial statements to conform to the current period’s presentation.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
(c)Principles of Consolidation
In evaluating whether an investment must be consolidated, the Company evaluates the risk, rewards, and significant terms of each of its Affiliates and other investments to determine if an investment is considered a voting rights entity (“VRE”) or a variable interest entity (“VIE”). An entity is a VRE when the total equity investment at risk is sufficient to enable the entity to finance its activities independently, and when the equity holders have the obligation to absorb losses, the right to receive residual returns, and the right to direct the activities of the entity that most significantly impact its economic performance. An entity is a VIE when it lacks one or more of the characteristics of a VRE, which, for the Company, are Affiliate investments structured as partnerships (or similar entities) where the Company is a limited partner and lacks substantive kick-out or substantive participation rights over the general partner. Assessing whether an entity is a VRE or VIE involves judgment. Upon the occurrence of certain events, management reviews and reconsiders its previous conclusion regarding the status of an entity as a VRE or a VIE.
The Company consolidates VREs when it has control over significant operating, financial, and investing decisions of the entity. When the Company lacks such control, but is deemed to have significant influence, the Company accounts for the VRE under the equity method. Other investments in which the Company does not have rights to exercise significant influence are recorded at fair value on the Consolidated Balance Sheets, with changes in fair value included in Investment and other income on the Consolidated Statements of Income.
The Company consolidates VIEs when it is the primary beneficiary of the entity, which is defined as having the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. Substantially all of the Company’s consolidated Affiliates considered VIEs are controlled because the Company holds a majority of the voting interests or it is the managing member or general partner. Furthermore, an Affiliate’s assets can be used for purposes other than the settlement of the respective Affiliate’s obligations. The Company applies the equity method of accounting to VIEs where the Company is not the primary beneficiary, but has the ability to exercise significant influence over operating and financial matters of the VIE. See Note 5.
Investments in Affiliates
Substantially all of the Company’s Affiliates are considered VIEs and are either consolidated or accounted for under the equity method. A limited number of the Company’s Affiliates are considered VREs and most of these are accounted for under the equity method.
When an Affiliate is consolidated, the portion of the earnings attributable to Affiliate management’s equity ownership is included in Net income (non-controlling interests) in the Consolidated Statements of Income. Undistributed earnings attributable to Affiliate managements’ equity ownership, along with their share of any tangible or intangible net assets, are presented within Non-controlling interests on the Consolidated Balance Sheets. Affiliate equity interests where the holder has certain rights to demand settlement are presented, at their current redemption values, as Redeemable non-controlling interests on the Consolidated Balance Sheets. The Company periodically issues, sells, and repurchases the equity of its consolidated Affiliates. Because these transactions take place between entities under common control, any gains or losses attributable to these transactions are required to be included in Additional paid-in capital on the Consolidated Balance Sheets, net of any related income tax effects in the period the transaction occurs.
When an Affiliate is accounted for under the equity method, the Company’s share of an Affiliate’s earnings or losses, net of amortization and impairments, is included in Equity method loss (net) in the Consolidated Statements of Income and the carrying value of the Affiliate is reported in Equity method investments in Affiliates (net) in the Consolidated Balance Sheets. Deferred taxes recorded on intangible assets upon acquisition of an Affiliate accounted for under the equity method are presented on a gross basis within Equity method investments in Affiliates (net) and Deferred income tax liability (net) in the Consolidated Balance Sheets. The Company’s share of income taxes incurred directly by Affiliates accounted for under the equity method is recorded in Income tax expense in the Consolidated Statements of Income.
The Company periodically performs assessments to determine if fair value of an investment may have declined below its related carrying value for its Affiliates accounted for under the equity method for a period that the Company considers to be other-than temporary. Where the Company believes that such declines may have occurred, the Company determines the amount of impairment using valuation methods, such as discounted cash flow analyses. Impairments are recorded as an expense in Equity method loss (net) to reduce the carrying value of the Affiliate to its fair value.
Affiliate Sponsored Investment Products
The Company’s Affiliates sponsor various investment products where they also act as the investment adviser. These investment products are typically owned primarily by third-party investors; however, certain products are funded with general partner and seed capital investments from the Company and its Affiliates.
Third-party investors in Affiliate sponsored investment products are generally entitled to substantially all of the economics of these products, except for the asset and performance based fees earned by the Company’s Affiliates or any gains or losses attributable to the Company’s or its Affiliates’ investments in these products. As a result, the Company does not generally consolidate these products unless the Company’s or its consolidated Affiliates’ interest in the product is considered substantial. When the Company’s or its consolidated Affiliates’ interests are considered substantial and the products are consolidated, the Company retains the specialized investment company accounting principles of the underlying products, and all of the underlying investments are carried at fair value in Investments in marketable securities in the Consolidated Balance Sheets, with corresponding changes in the investments’ fair values included in Investment and other income. Purchases and sales of securities are presented within purchases and sales by consolidated Affiliate sponsored investment products in the Consolidated Statements of Cash Flows and the third-party investors’ interest is recorded in Redeemable non-controlling interests. When the Company or its consolidated Affiliates no longer control these products, due to a reduction in ownership or other reasons, the products are deconsolidated with only the Company’s or its consolidated Affiliate’s investment in the product reported from the date of deconsolidation.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(d)Cash and Cash Equivalents
The Company considers all highly liquid investments, including money market mutual funds, with original maturities of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates market value due to the short-term maturity of these investments. Money market mutual funds with a floating net asset value (“NAV”) would not meet the definition of a cash equivalent if the fund has enacted liquidity fees or redemption gates.
(e)Receivables
The Company’s Affiliates earn asset and performance based fees, which are billed based on the terms of the related contracts. Billed but uncollected asset and performance based fees are presented within Receivables on the Consolidated Balance Sheets and are generally short-term in nature.
Certain of the Company’s Affiliates in the UK act as intermediaries between clients and their sponsored investment products. Normal settlement periods on transactions initiated by these clients with the sponsored investment products result in unsettled fund share receivables and payables that are presented on a gross basis within Receivables and Payables and accrued liabilities on the Consolidated Balance Sheets. The gross presentation of these receivables and offsetting payables reflects the legal relationship between the underlying investor, the Company’s Affiliates and the sponsored investment products.
(f)Investments in Marketable Securities
Realized and unrealized gains or losses on investments in marketable securities are reported within Investment and other income. Realized gains and losses are recorded on the trade date on a specific identified basis, except for consolidated Affiliate sponsored investment products, which use an average cost basis.
(g)Fair Value Measurements
The Company determines the fair value of certain investment securities and other financial and non-financial assets and liabilities. Fair value is determined based on the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants in the principal or most advantageous market at the measurement date, utilizing a hierarchy of three different valuation techniques:
Level 1 - Unadjusted quoted market prices for identical instruments in active markets;
Level 2 - Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs, or significant value drivers, are observable; and
Level 3 - Prices that reflect the Company’s own assumptions concerning unobservable inputs to the valuation model. In these valuation models, the Company is required to make judgments about growth rates of assets under management, client attrition, asset and performance based fee rates, and expenses. These valuation models also require judgments about tax benefits, credit risk, interest rates, tax rates, discount rates, and discounts for lack of marketability. These inputs require significant management judgment and reflect the Company’s assumptions that the Company believes market participants would use in pricing the asset or liability.
(h)Acquired Client Relationships and Goodwill
Each Affiliate in which the Company makes an investment has identifiable assets arising from contractual or other legal rights with their clients (“acquired client relationships”). In determining the value of acquired client relationships, the Company analyzes the net present value of these Affiliates’ existing client relationships based on a number of factors, including: the Affiliate’s historical and potential future operating performance; the Affiliate’s historical and potential future rates of attrition of existing clients; the stability and longevity of existing client relationships; the Affiliate’s recent, as well as long-term, investment performance; the characteristics of the firm’s products and investment styles; the stability and depth of the Affiliate’s management team; and the Affiliate’s history and perceived franchise or brand value.
The Company has determined that certain of its acquired client relationships meet the criteria to be considered indefinite-lived assets because the Company expects the contracts to be renewed annually and, therefore, the cash flows generated by these contracts to continue indefinitely. Accordingly, the Company does not amortize these intangible assets, but instead assesses these assets annually or more frequently whenever events or circumstances occur indicating that the recorded indefinite-lived acquired client relationship may be impaired. Each reporting period, the Company assesses whether events or circumstances have occurred that indicate that the indefinite life criteria are no longer met.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company has determined that certain of its acquired client relationships meet the criteria to be considered definite-lived assets, including investment advisory contracts between its Affiliates and their underlying investors, and are amortized over their expected period of economic benefit. The expected period of economic benefit of definite-lived acquired client relationships is a judgment based on the historical and projected attrition rates of each Affiliate’s existing clients, and other factors that may influence the expected future economic benefit the Company will derive from these relationships. The expected lives of definite-lived acquired client relationships are analyzed annually or more frequently whenever events or circumstances have occurred that indicate the expected period of economic benefit may no longer be appropriate.
The Company assesses for the possible impairment of indefinite and definite-lived acquired client relationships annually or more frequently whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If such indicators exist, the Company considers various qualitative and quantitative factors (including market multiples) to determine if the fair value of each asset is greater than its carrying value. If the carrying value is greater than the fair value, an expense would be recorded in Intangible amortization and impairments in the Consolidated Statements of Income to reduce the carrying value of the asset to fair value.
Goodwill represents the future economic benefits arising from assets acquired in a business combination that are not separately recognized. Goodwill is not amortized, but is instead reviewed for impairment. The Company performs an impairment assessment annually or more frequently whenever events or circumstances occur indicating that the carrying value of its single reporting unit is in excess of its fair value. In this assessment, the Company typically measures the fair value of its reporting unit using various qualitative and quantitative factors (including the Company’s market capitalization and market multiples for asset management businesses). If a potential impairment is more-likely-than-not, then the Company will perform a single step assessment with any excess of carrying value over fair value recorded as an expense in Intangible amortization and impairments.
(i)Fixed Assets
Fixed assets are recorded at cost and depreciated using the straight-line method over their estimated useful lives. The estimated useful lives of office equipment and furniture and fixtures range from two years to ten years. Computer software developed or obtained for internal use is amortized over the estimated useful life of the software, generally two years to five years. Leasehold improvements are amortized over the shorter of their estimated useful lives or the term of the lease. Buildings are amortized over their expected useful lives, generally not to exceed 39 years. The costs of improvements that extend the life of a fixed asset are capitalized, while the cost of repairs and maintenance are expensed as incurred. Land and artwork are not depreciated; artwork is included in Other assets on the Consolidated Balance Sheets.
(j)Leases
Leases are classified as either operating leases or finance leases. The Company and its Affiliates currently lease office space and equipment primarily under operating lease arrangements. As these leases expire, it is expected that, in the normal course of business, they will be renewed or replaced. Whether a lease is classified as an operating lease or a finance lease, the Company and its Affiliates must record a right-of-use asset and a lease liability at the commencement date of the lease, other than for leases with an initial term of 12 months or less. As permitted under Accounting Standard Update (“ASU”) 2016-02 Leases (and related ASUs), the Company and its Affiliates elect not to record short-term leases with an initial lease term less than 12 months on the Company’s Consolidated Balance Sheets. Right-of-use assets and lease liabilities are reported in Other assets and Other liabilities, respectively, on the Consolidated Balance Sheets. A lease liability is initially and subsequently reported at the present value of the outstanding lease payments determined by discounting those lease payments over the remaining lease term using the incremental borrowing rate of the legal entity entering into the lease as of the commencement date. A right-of-use asset is initially reported at the present value of the corresponding lease liability plus any prepaid lease payments and initial direct costs of entering into the lease, and reduced by any lease incentives. Subsequently, a right-of-use asset is reported at the present value of the lease liability adjusted for any prepaid or accrued lease payments, remaining balances of any lease incentives received, unamortized initial direct costs of entering into the lease and any impairments of the right-of-use asset. The Company and its Affiliates test for possible impairments of right-of-use assets annually or more frequently whenever events or changes in circumstances indicate that the carrying value of a right-of-use asset may exceed its fair value. If the carrying value of the right-of-use asset exceeds its fair value, then the carrying value of the right-of-use asset is reduced to its fair value and the expense is recorded in Other expenses (net) on the Consolidated Statements of Income. Subsequent to an impairment, the carrying value of the right-of-use asset is amortized on a straight-line basis over the remaining lease term.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Lease liabilities and right-of-use assets based on variable lease payments that depend on an index or rate are initially measured using the index or rate at the commencement date with any subsequent changes in variable lease payments reported in Other expenses (net) as incurred. Most lease agreements for office space that are classified as operating leases contain renewal options, rent escalation clauses or other lease incentives provided by the lessor. Lease expense is accrued to recognize lease escalation provisions and renewal options that are reasonably certain to be exercised, as well as lease incentives provided by the lessor, on a straight-line basis over the lease term and is reported in Other expenses (net). If a right-of-use asset is impaired, the lease expense is subsequently reported in Other expenses (net) as the straight-line amortization of the right-of-use asset and the accretion of the lease liability, thereby transitioning to a front-loaded expense recognition profile for the associated lease.
The Company and its Affiliates combine lease and non-lease components for their office space leases and separate non-lease components for their equipment leases in calculating their lease liabilities. Sublease income is reported in Investment and other income.
(k)Issuance Costs
Issuance costs related to the Company’s senior bank debt are amortized over the remaining term of the senior unsecured multicurrency revolving credit facility (the “revolver”) and the senior unsecured term loan facility (the “term loan” and, together with the revolver, the “credit facilities”), which approximates the effective interest method. Issuance costs associated with the revolver are included in Other assets. Issuance costs associated with the term loan are included as a reduction of the related debt balance. Issuance costs associated with the Company’s senior notes, junior subordinated notes and junior convertible securities are amortized over the expected term of the security, and are included as a reduction of Debt in the Consolidated Balance Sheets. The expense resulting from the amortization of these issuance costs is reported in Interest expense in the Consolidated Statements of Income.
(l)Derivative Financial Instruments
The Company and its Affiliates may use derivative financial instruments to offset exposure to changes in interest rates, foreign currency exchange rates and markets. The Company records derivatives in the Consolidated Balance Sheets at fair value. If the Company’s or its Affiliates’ derivative financial instruments do not qualify as cash flow, net investment or fair value hedges, changes in the fair value of the derivatives are recorded as a gain or loss in Investment and other income.
If the Company’s or its Affiliates’ derivative financial instruments qualify as cash flow or net investment hedges, the effective portion of the unrealized gain or loss is recorded in Other comprehensive income (loss) as a separate component of stockholders’ equity and reclassified to earnings with the hedged item. The Company assesses hedge effectiveness on a quarterly basis. For interest rate swaps designated as cash flow hedges, we use a qualitative method of assessing hedge effectiveness by comparing the notional amount, timing of payments, and interest rates of the swap to the interest payments hedged. If the qualitative assessment indicates ineffectiveness, then we perform a quantitative assessment which is generally measured by comparing the present value of the cumulative change in the expected future cash flows of the hedged contract with the present value of the cumulative change in the expected future cash flows of the hedged item. For net investment hedges, hedge effectiveness is measured using the spot rate method. For fair value hedges, the entire change in the fair value of the hedging instrument is presented within earnings with the hedged item, unless the changes in fair value are not equal, which would result in hedge ineffectiveness which is presented within Investment and other income. Changes in the fair values of cash flow hedges are reported in Change in net realized and unrealized gain (loss) on derivative financial instruments in the Consolidated Statements of Comprehensive Income. Upon termination of cash flow hedges, any gain or loss recognized will be reclassified into earnings. Changes in the fair values of the effective net investment hedges are reported in Foreign currency translation gain (loss) in the Consolidated Statements of Comprehensive Income. Upon the sale or liquidation of the underlying investment, any gain or loss remaining in Accumulated other comprehensive loss will be reclassified to earnings.
Changes in fair value of a hedging instrument that are excluded from the assessment of hedge effectiveness, also known as excluded components, are recorded in earnings and amortized on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.
(m)Revenue Recognition
Consolidated revenue primarily represents asset and performance based fees earned by the Company and its Affiliates for managing the assets of clients. Substantially all of the Company’s and its Affiliates’ contracts contain a single performance obligation, which is the provision of investment management services. Investment management, broker-dealer, and administrative services are performed and consumed simultaneously and, therefore, the Company recognizes these asset based fees ratably over time. Substantially all the Company’s asset based fees for services are based on the value of client assets over time, which are typically determined using observable market data. Services may be invoiced in advance or in arrears and are
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
payable upon receipt. Any asset based fees collected in advance are deferred and recognized as the services are performed and consumed. Consolidated revenue recognized by the Company is adjusted for any expense reimbursement arrangements.
Performance based fees, including carried interests, are recognized only upon the satisfaction of performance obligations, the resolution of any constraints, which include exceeding performance benchmarks or hurdle rates that may extend over one or more reporting periods, and when it is improbable that there will be a significant reversal in the amount of revenue recognized. As a result, any performance based fees or carried interest recognized in the current reporting period may relate to performance obligations satisfied in a previous reporting period.
The Company and its Affiliates have contractual arrangements with third parties to provide distribution-related services. Fees received and expenses incurred under these arrangements are primarily based on the value of client assets over time. Distribution-related fees are presented within Consolidated revenue gross of any related expenses when the Company and its Affiliates are the principal in their role as primary obligor under their distribution-related services arrangements. Distribution-related expenses are presented within Selling, general and administrative expenses in the Consolidated Statements of Income.
The Company and its Affiliates may enter into contracts for which the costs to obtain or fulfill the contract are based upon a percentage of the value of a client’s future assets under management. The Company records these variable costs when incurred because they are subject to market volatility and are not estimable upon the inception of a contract with a client. Any expenses paid in advance are capitalized and amortized on a systematic basis, consistent with the transfer of services, which is the equivalent of recognizing the costs as incurred.
(n)Contingent Payment Arrangements
The Company periodically enters into contingent payment arrangements in connection with its investments in Affiliates. In these arrangements, the Company agrees to pay additional consideration to the sellers to the extent that certain specified financial targets are achieved. For consolidated Affiliates, the Company estimates the fair value of these potential future obligations at the time the investment in an Affiliate is consummated and records a liability in Other liabilities. The Company then accretes the obligation to its expected payment amount over the period until the arrangement is measured. If the Company’s expected payment amount subsequently changes, the obligation is reduced or increased in the current period resulting in a gain or loss, respectively. Gains and losses resulting from changes to expected payments are included in Other expenses (net) and the accretion of these obligations to their expected payment amounts are included in Interest expense. For Affiliates accounted for under the equity method of accounting, the Company records a liability in Payables and accrued liabilities when a payment becomes probable, with a corresponding increase to the carrying value of the Affiliate in Equity method investments in Affiliates (net).
(o)Income Taxes
The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of differences between the financial reporting bases of assets and liabilities and their respective tax bases, using tax rates in effect for the year in which the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recorded in Income tax expense in the period when the change is enacted.
The Company regularly assesses the recoverability of its deferred income tax assets to determine whether these assets are more-likely-than-not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and results of recent operations. If the Company determines it would not be able to realize its deferred tax assets, it records a valuation allowance to reflect the deferred tax assets at their current value. The recording of adjustments to the valuation allowance will increase or decrease Income tax expense.
The Company records unrecognized tax benefits based on whether it is more-likely-than-not that the uncertain tax positions will be sustained on the basis of the technical merits of the position. If it is determined that an uncertain tax position is more-likely-than-not to be sustained, the Company records the largest amount of tax benefit that is more than 50% likely to be realized upon ultimate settlement with the related tax authority in Income tax expense. Interest and penalties related to unrecognized tax benefits are also recorded in Income tax expense.
The Company has elected to treat taxes due on U.S. inclusions in taxable income related to Global Intangible Low Taxed Income (“GILTI”) as a current period expense when incurred (the “period cost method”).
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(p)Foreign Currency Translation
Assets and liabilities denominated in a functional currency other than the U.S. dollar are translated into U.S. dollars using exchange rates in effect as of the balance sheet date. Revenue and expenses denominated in a functional currency other than the U.S. dollar are translated into U.S. dollars using average exchange rates for the relevant period. Because of the long-term nature of the Company’s investments in its Affiliates, net translation exchange gains and losses resulting from foreign currency translation are recorded in Accumulated other comprehensive loss as a separate component of stockholders’ equity on the Consolidated Balance Sheets. Foreign currency transaction gains and losses are included in Investment and other income.
(q)Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash investments and derivative financial instruments. The Company and its Affiliates maintain cash and cash equivalents, investments and, at times, certain derivative financial instruments with various high credit-quality financial institutions. These financial institutions are typically located in countries in which the Company and its Affiliates operate. For the Company and certain of its Affiliates, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits.
(r)Earnings Per Share
The calculation of Earnings per share (basic) is based on the weighted average number of shares of the Company’s common stock outstanding during the period. Earnings per share (diluted) is similar to Earnings per share (basic), but adjusts for the dilutive effect of the potential issuance of incremental shares of the Company’s common stock.
The Company had junior convertible securities outstanding during the periods presented and is required to apply the if-converted method to these securities in its calculation of Earnings per share (diluted). Under the if-converted method, shares that are issuable upon conversion are deemed outstanding, regardless of whether the securities are contractually convertible into the Company’s common stock at that time. For this calculation, the interest expense (net of tax) attributable to these dilutive securities is added back to Net income (controlling interest), reflecting the assumption that the securities have been converted. Issuable shares for these securities and related interest expense are excluded from the calculation if an assumed conversion would be anti-dilutive to diluted earnings per share.
The Company had share-based compensation awards outstanding during the periods presented with vesting provisions subject to certain performance conditions. These awards are excluded from the calculation of Earnings per share (diluted) if the performance condition has not been met as of the end of the reporting period.
(s)Share-Based Compensation Plans
The Company recognizes expenses for all share-based compensation arrangements based on the number of awards expected to vest. The expense for awards without performance conditions is recognized on a straight-line basis over the requisite service period, including grants that are subject to graded vesting. The Company recognizes expenses for all other arrangements on a straight-line basis for each separately vesting portion of the award.
Tax windfalls or shortfalls are recorded in Income tax expense and have been classified as operating activities in the Consolidated Statements of Cash Flows. Taxes paid by the Company when it withholds shares to satisfy tax withholding obligations are classified as a financing activity in the Consolidated Statements of Cash Flows.
(t)Recent Accounting Developments
Effective January 1, 2020, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments issued by the Financial Accounting Standards Board (“FASB”). The adoption of this standard did not have a significant impact on the Company’s Consolidated Financial Statements.
In August 2020, the FASB issued ASU 2020-06, Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity. The standard is effective for interim and annual periods beginning after December 15, 2021 for the Company and its consolidated Affiliates, and is effective for interim and annual periods beginning after December 15, 2023 for the Company’s Affiliates accounted for under the equity method. This standard requires use of the if-converted method for convertible instruments and the inclusion of instruments where the Company has an option to settle in cash or shares in its calculation of Earnings per share (diluted). The Company is evaluating the impact of this standard on its Consolidated Financial Statements.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In June 2020, the FASB extended the effective date of ASU 2016-02, Leases for the Company’s Affiliates accounted for under the equity method. After the extension, ASU 2016-02 is effective for annual periods beginning after December 15, 2021 and interim periods beginning after December 15, 2022. The Company does not expect the adoption of this standard by its equity method investments to have a significant impact on its Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The standard is effective for interim and annual periods beginning after December 15, 2020 for the Company and its consolidated Affiliates, and is effective for annual periods beginning after December 15, 2021 and interim periods beginning after December 15, 2022 for the Company’s Affiliates accounted for under the equity method. The Company does not expect the adoption of this standard to have a significant impact on its Consolidated Financial Statements.
2.Investments in Marketable Securities
The following is a summary of the cost, gross unrealized gains, unrealized losses, and fair value of Investments in marketable securities:
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December 31,
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2019
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2020
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Cost
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$
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57.9
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$
|
69.4
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Unrealized gains
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2.1
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5.5
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Unrealized losses
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(0.6)
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(0.0)
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Fair value
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$
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59.4
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|
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$
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74.9
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|
As of December 31, 2019 and 2020, Investments in marketable securities include consolidated Affiliate sponsored investment products with fair values of $38.1 million and $52.3 million, respectively.
3.Other Investments
Other investments consist of investments in funds advised by the Company’s Affiliates that are carried at NAV as a practical expedient and investments without readily determinable fair values. The income or loss related to these investments is recorded in Investment and other income.
Investments Measured at NAV as a Practical Expedient
The Company’s Affiliates sponsor investment products in which the Company and its consolidated Affiliates may make general partner and seed capital investments. The Company uses the NAV of these investments as a practical expedient for their fair values. The following table summarizes the fair values of these investments and any related unfunded commitments:
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December 31, 2019
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December 31, 2020
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Category of Investment
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Fair Value
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Unfunded
Commitments
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Fair Value
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Unfunded
Commitments
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Private equity funds(1)
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$
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203.3
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$
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127.2
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$
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235.4
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$
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122.2
|
|
Investments in other strategies(2)
|
|
8.5
|
|
|
—
|
|
|
8.0
|
|
|
—
|
|
Total(3)
|
|
$
|
211.8
|
|
|
$
|
127.2
|
|
|
$
|
243.4
|
|
|
$
|
122.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________________
(1)The Company accounts for its interests in private equity funds under the equity method of accounting and, therefore, uses NAV as a practical expedient, one quarter in arrears (adjusted for current period calls and distributions) to determine the fair value. These funds primarily invest in a broad range of third-party funds and direct investments. Distributions will be received as the underlying assets are liquidated over the life of the funds, which is generally up to 15 years.
(2)These are multi-disciplinary funds that invest across various asset classes and strategies, including equity, credit, and real estate. Investments are generally redeemable on a daily, monthly or quarterly basis.
(3)Fair value attributable to the controlling interest was $137.6 million and $164.4 million as of December 31, 2019 and 2020, respectively.
As of December 31, 2019 and 2020, the Company held investments without readily determinable fair values of zero and $13.8 million, respectively. The carrying value of these investments included an upward adjustment of $5.3 million based on an observable price change during the fourth quarter of 2020.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
4.Fair Value Measurements
The following tables summarize the Company’s financial assets and liabilities that are measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements
|
|
|
December 31, 2019
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in marketable securities
|
|
$
|
59.4
|
|
|
$
|
24.4
|
|
|
$
|
35.0
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments(1)
|
|
7.9
|
|
|
—
|
|
|
7.9
|
|
|
—
|
|
Financial Liabilities(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate equity repurchase obligations
|
|
$
|
19.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19.8
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements
|
|
|
December 31, 2020
|
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments in marketable securities
|
|
$
|
74.9
|
|
|
$
|
25.7
|
|
|
$
|
49.2
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments(1)
|
|
3.5
|
|
|
—
|
|
|
3.5
|
|
|
—
|
|
Financial Liabilities(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate equity repurchase obligations
|
|
$
|
22.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
22.0
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
4.2
|
|
|
—
|
|
|
4.2
|
|
|
—
|
|
__________________________
(1)Amounts are presented within Other assets.
(2)Amounts are presented within Other liabilities.
Level 3 Financial Assets and Liabilities
The following table presents the changes in level 3 assets and liabilities for Affiliate equity repurchase obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
|
|
|
|
|
|
Balance, beginning of period
|
|
|
|
$
|
36.2
|
|
|
|
|
$
|
19.8
|
|
Net realized and unrealized (gains) losses(1)
|
|
|
|
0.1
|
|
|
|
|
(4.3)
|
|
Purchases and issuances(2)
|
|
|
|
118.6
|
|
|
|
|
310.6
|
|
Settlements and reductions
|
|
|
|
(135.1)
|
|
|
|
|
(304.1)
|
|
Balance, end of period
|
|
|
|
$
|
19.8
|
|
|
|
|
$
|
22.0
|
|
|
|
|
|
|
|
|
|
|
Net change in unrealized (gains) losses relating to instruments still held at the reporting date
|
|
|
|
$
|
—
|
|
|
|
|
$
|
—
|
|
__________________________
(1)Accretion expense for these arrangements and obligations is recorded in Interest expense.
(2)Includes transfers from Redeemable non-controlling interests.
The following table presents certain quantitative information about the significant unobservable inputs used in valuing the Company’s recurring level 3 fair value measurements:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantitative Information About Level 3 Fair Value Measurements
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2020
|
|
|
Valuation
Techniques
|
|
Unobservable Input
|
|
Fair Value
|
|
Range
|
|
Weighted Average(1)
|
|
Fair Value
|
|
Range
|
|
Weighted Average(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Affiliate equity repurchase obligations
|
|
Discounted cash flow
|
|
Growth rates(2)
|
|
$
|
19.8
|
|
|
(9)% - 7%
|
|
5%
|
|
$
|
22.0
|
|
|
(5)% - 8%
|
|
3
|
%
|
|
|
|
|
Discount rates
|
|
|
|
14% - 17%
|
|
15%
|
|
|
|
14% - 16%
|
|
15
|
%
|
__________________________
(1)Calculated by comparing the relative fair value of an obligation to its respective total.
(2)Represents growth rates of asset and performance based fees.
Affiliate equity repurchase obligations include agreements to repurchase Affiliate equity. As of December 31, 2020, there were no changes to growth or discount rates that had a significant impact to Affiliate equity repurchase obligations recorded in prior periods.
Other Financial Assets and Liabilities Not Carried at Fair Value
The Company has other financial assets and liabilities, which are not required to be carried at fair value, but the Company is required to disclose their fair values. The carrying amount of Cash and cash equivalents, Receivables, and Payables and accrued liabilities approximates fair value because of the short-term nature of these instruments. The carrying value of notes receivable, which is reported in Other assets, approximates fair value because interest rates and other terms are at market rates. The carrying value of the credit facilities approximates fair value because the credit facilities have variable interest based on selected short-term rates.
The following table summarizes the Company’s other financial liabilities not carried at fair value:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2020
|
|
|
|
|
Carrying Value
|
|
Fair Value
|
|
Carrying Value
|
|
Fair Value
|
|
Fair Value Hierarchy
|
Senior notes
|
|
$
|
746.8
|
|
|
$
|
797.4
|
|
|
$
|
1,097.3
|
|
|
$
|
1,206.6
|
|
|
Level 2
|
Junior convertible securities
|
|
315.4
|
|
|
415.7
|
|
|
318.4
|
|
|
427.6
|
|
|
Level 2
|
Junior subordinated notes
|
|
290.7
|
|
|
327.7
|
|
|
565.7
|
|
|
623.1
|
|
|
Level 2
|
5.Investments in Affiliates and Affiliate Sponsored Investment Products
Investments in Affiliates
The Company’s Affiliates are consolidated or accounted for under the equity method, depending upon the underlying structure of and relationship with each Affiliate.
Substantially all of the Company’s consolidated Affiliates are considered VIEs. The unconsolidated assets, net of liabilities and non-controlling interests of Affiliates accounted for under the equity method considered VIEs, and the Company’s carrying value and maximum exposure to loss, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2020
|
|
|
Unconsolidated
VIE Net Assets
|
|
Carrying Value and
Maximum Exposure
to Loss
|
|
Unconsolidated
VIE Net Assets
|
|
Carrying Value and
Maximum Exposure
to Loss
|
Affiliates accounted for under the equity method
|
|
$
|
1,141.4
|
|
|
$
|
1,843.0
|
|
|
$
|
1,384.2
|
|
|
$
|
1,962.1
|
|
As of December 31, 2019 and 2020, the carrying value and maximum exposure to loss for all of the Company’s Affiliates accounted for under the equity method was $2,195.6 million and $2,074.8 million, respectively, including Affiliates accounted for under the equity method considered VREs of $352.6 million and $112.7 million, respectively.
Affiliate Sponsored Investment Products
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company’s carrying value, and maximum exposure to loss from unconsolidated Affiliate sponsored investment products is its, or its consolidated Affiliates’, interest in the unconsolidated net assets of the respective products. The net assets of unconsolidated VIEs attributable to Affiliate sponsored investment products, and the Company’s carrying value and maximum exposure to loss, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2020
|
|
|
Unconsolidated
VIE Net Assets
|
|
Carrying Value and
Maximum Exposure
to Loss
|
|
Unconsolidated
VIE Net Assets
|
|
Carrying Value and
Maximum Exposure
to Loss
|
Affiliate sponsored investment products
|
|
$
|
2,282.1
|
|
|
$
|
0.9
|
|
|
$
|
2,378.2
|
|
|
$
|
0.9
|
|
6.Debt
The following table summarizes the Company’s Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
2019
|
|
2020
|
Senior bank debt
|
$
|
449.7
|
|
|
$
|
349.8
|
|
Senior notes
|
743.8
|
|
|
1,091.9
|
|
Junior convertible securities
|
310.6
|
|
|
314.0
|
|
Junior subordinated notes
|
289.7
|
|
|
556.4
|
|
Debt
|
$
|
1,793.8
|
|
|
$
|
2,312.1
|
|
The Company’s senior notes, junior convertible securities, and junior subordinated notes are carried at amortized cost. Unamortized discounts and debt issuance costs are presented within the Consolidated Balance Sheets as an adjustment to the carrying value of the associated debt. As of December 31, 2020, Debt with a par value of $400.0 million and $350.0 million matures in 2024 and 2025, respectively.
Senior Bank Debt
The Company has a $1.25 billion senior unsecured multicurrency revolving credit facility and a $350.0 million senior unsecured term loan facility. The revolver matures on January 18, 2024, and the term loan, as amended, matures on January 18, 2026. Subject to certain conditions, the Company may increase the commitments under the revolver by up to an additional $500.0 million and may borrow up to an additional $75.0 million under the term loan. The Company pays interest on any outstanding obligations under the credit facilities at specified rates, based either on an applicable LIBOR or prime rate, plus a marginal rate determined based on its credit rating. As of December 31, 2020, the interest rate for the Company’s outstanding borrowings under the credit facilities was LIBOR plus 0.875%.
The credit facilities contain financial covenants with respect to leverage and interest coverage, as well as customary affirmative and negative covenants, including limitations on priority indebtedness, asset dispositions and fundamental corporate changes, and certain customary events of default.
As of December 31, 2019 and 2020, the Company had no outstanding borrowings under the revolver. As of December 31, 2019 and 2020, the Company had outstanding borrowings under the term loan of $450.0 million and $350.0 million, respectively, and the weighted-average interest rate on outstanding borrowings was 2.66% and 1.02%, respectively. The Company pays commitment fees on the unused portion of its revolver. For the years ended December 31, 2019 and 2020, these fees amounted to $1.5 million.
On January 8, 2021, the Company amended and refinanced the term loan to adjust the marginal rate by 0.075% to 0.950% and to extend the maturity by three years from January 18, 2023 to January 18, 2026. The commercial terms of the term loan otherwise remained the same.
Senior Notes and Junior Subordinated Notes
As of December 31, 2020, the Company had senior notes and junior subordinated notes outstanding. The carrying value of the senior notes and junior subordinated notes is accreted to the principal amount at maturity over the remaining life of the underlying instrument.
The principal terms of the senior notes and junior subordinated notes were as follows:
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2024
Senior Notes
|
|
2025
Senior Notes
|
|
2030
Senior Notes
|
|
2059
Junior Subordinated Notes
|
|
2060
Junior Subordinated Notes
|
Issue date
|
|
February 2014
|
|
February 2015
|
|
June 2020
|
|
March 2019
|
|
September 2020
|
Maturity date
|
|
February 2024
|
|
August 2025
|
|
June 2030
|
|
March 2059
|
|
September 2060
|
Par value (in millions)
|
|
$
|
400.0
|
|
|
$
|
350.0
|
|
|
$
|
350.0
|
|
|
$
|
300.0
|
|
|
$
|
275.0
|
|
Stated coupon
|
|
4.25
|
%
|
|
3.50
|
%
|
|
3.30
|
%
|
|
5.875
|
%
|
|
4.750
|
%
|
Coupon frequency
|
|
Semi-annually
|
|
Semi-annually
|
|
Semi-annually
|
|
Quarterly(3)
|
|
Quarterly(3)
|
Potential call date
|
|
Any time(1)
|
|
Any time(1)
|
|
Any time(1)
|
|
March 2024(2)
|
|
September 2025(2)
|
Call price
|
|
As defined(1)
|
|
As defined(1)
|
|
As defined(1)
|
|
As defined(2)
|
|
As defined(2)
|
Listing
|
|
N.A.
|
|
N.A.
|
|
N.A.
|
|
NYSE
|
|
NYSE
|
__________________________
(1)The 2024, 2025 and 2030 senior notes may be redeemed, in whole or in part, at any time, in the case of the 2024 and 2025 senior notes, and at any time prior to March 15, 2030, in the case of the 2030 senior notes. In each case, the senior notes may be redeemed at a make-whole redemption price plus accrued and unpaid interest. The make-whole redemption price, in each case, is equal to the greater of 100% of the principal amount of the notes to be redeemed and the remaining principal and interest payments on the notes being redeemed (excluding accrued but unpaid interest to, but not including, the redemption date) discounted to their present value as of the redemption date at the applicable treasury rate plus 0.25%, in the case of the 2024 and the 2025 senior notes, and to their present value as of the redemption date on a semi-annual basis at the applicable treasury rate plus 0.40%, in the case of the 2030 senior notes.
(2)The 2059 and 2060 junior subordinated notes may be redeemed at any time, in whole or in part, on or after March 30, 2024, in the case of the 2059 junior subordinated notes, and on or after September 30, 2025, in the case of the 2060 junior subordinated notes. In each case, the junior subordinated notes may be redeemed at 100% of the principal amount of the notes being redeemed plus any accrued and unpaid interest thereon. Prior to the applicable redemption date, at the Company’s option, the applicable junior subordinated notes may also be redeemed, in whole but not in part, at 100% of the principal amount, plus any accrued and unpaid interest, if certain changes in tax laws, regulations or interpretations occur; or at 102% of the principal amount, plus any accrued and unpaid interest, if a rating agency makes certain changes relating to the equity credit criteria for securities with features similar to the applicable notes.
(3)The Company may, at its option, and subject to certain conditions and restrictions, defer interest payments subject to the terms of the junior subordinated notes.
As of December 31, 2020, the effective interest rates of the 2024, the 2025 and the 2030 senior notes were 4.42%, 3.66% and 3.39%, respectively. As of December 31, 2020, the effective interest rates of the 2059 and the 2060 junior subordinated notes were 5.90% and 4.83%, respectively.
Junior Convertible Securities
The following table summarizes the Company’s junior convertible trust preferred securities outstanding (the “junior convertible securities”). The carrying value and principal amount at maturity of the junior convertible securities were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2020
|
|
|
Carrying
Value
|
|
Principal Amount
at Maturity
|
|
Carrying
Value
|
|
Principal Amount
at Maturity
|
Junior convertible securities(1)
|
|
$
|
315.4
|
|
|
$
|
430.8
|
|
|
$
|
318.4
|
|
|
$
|
430.8
|
|
__________________________
(1)The carrying value is accreted to the principal amount at maturity over a remaining life of 17 years.
The junior convertible securities bear interest at a rate of 5.15% per annum, payable quarterly in cash. Holders of the junior convertible securities have no rights to put these securities to the Company. Upon conversion, holders will receive cash or shares of common stock, or a combination thereof, at the Company’s election. The Company may redeem the junior convertible securities, subject to the stock trading at or above certain specified levels over specified times periods, and may also
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
repurchase junior subordinated notes in the open market or in privately negotiated transactions from time to time at management’s discretion. The junior convertible securities are considered contingent payment debt instruments under federal income tax regulations, which require the Company to deduct interest in an amount greater than its reported interest expense. The Company estimates that these deductions will generate annual deferred tax liabilities of approximately $9 million. Assuming no redemptions or repurchases, these deferred tax liabilities will be reclassified directly to stockholders’ equity if the Company’s common stock is trading above certain thresholds at the time of the conversion of the securities. If the Company redeems the securities or repurchases the notes at a price below such thresholds, all or a portion of these deferred tax liabilities may be reclassified to income taxes payable which is presented within Other liabilities. In August 2019, in accordance with the convertible securities indenture, the Company adjusted the conversion rate of the junior convertible securities to 0.2558 shares of common stock per $50.00 junior convertible security, equivalent to an adjusted conversion price of $195.47 per share of common stock. The adjustment was the result of the Company’s cumulative declared dividends on its common stock since the prior adjustment. The Company may redeem the junior convertible securities if the closing price of its common stock exceeds $254.10 per share for 20 trading days in a period of 30 consecutive trading days.
7.Derivative Financial Instruments
In 2018, the Company entered into two separate pound sterling-denominated forward foreign currency contracts (the “forward contracts”) with a large financial institution (the “counterparty”). Concurrent to entering into each of the forward contracts, the Company also entered into two separate collar contracts (the “collar contracts”) with the same counterparty for the same notional amounts and expiration dates as each of the forward contracts. The combinations of the forward contracts and the collar contracts were designated as net investment hedges against fluctuations in foreign currency exchange rates on certain of the Company’s investments in Affiliates with the pound sterling as their functional currency.
In the first quarter of 2020, the Company terminated the forward contracts and the corresponding collar contracts, and upon settlement received net proceeds of $24.9 million. The net proceeds from the termination of the contracts are presented within sale of investment securities in the Consolidated Statements of Cash Flows. The Company’s forward contracts and collar contracts with the counterparty were governed by an International Swaps and Derivative Association Master Agreement, which provided for legally enforceable rights to set-off. The terms of the contracts also required the Company and the counterparty to post cash collateral in certain circumstances throughout the duration of the contracts. As of December 31, 2019, the Company held $8.7 million of cash collateral from the counterparty, and the counterparty held no cash collateral from the Company.
In the first quarter of 2020, the Company entered into an interest rate swap contract (the “interest rate swap”) with a large financial institution (the “swap counterparty”), which will expire in March 2023. The interest rate swap, which is designated as a cash flow hedge, is used to exchange a portion of the Company’s LIBOR-based interest payments for fixed rate interest payments. Under the contract, the Company receives payments based on one month LIBOR and makes payments based on an annual fixed rate of 0.5135% on a notional amount of $250.0 million. The terms of the contract also require the Company and the swap counterparty to post cash collateral in certain circumstances throughout the duration of the contract. As of December 31, 2020, the Company held no cash collateral from the swap counterparty, and the swap counterparty held $2.2 million of cash collateral from the Company.
Certain of the Company’s Affiliates use forward foreign currency contracts to hedge the risk of foreign currency exchange rate movements, which were not significant.
The following table summarizes the Company’s and its Affiliates’ derivative financial instruments measured at fair value on a recurring basis:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
December 31, 2020
|
|
Assets
|
|
Liabilities
|
|
Assets
|
|
Liabilities
|
Forward contracts
|
$
|
23.8
|
|
|
$
|
(1.0)
|
|
|
$
|
3.5
|
|
|
$
|
(2.3)
|
|
Put options
|
—
|
|
|
(31.0)
|
|
|
—
|
|
|
—
|
|
Call options
|
15.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Interest rate swap
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9)
|
|
Total
|
$
|
38.9
|
|
|
$
|
(32.0)
|
|
|
$
|
3.5
|
|
|
$
|
(4.2)
|
|
The forward and collar contracts entered into in 2018 included a set-off right and were therefore, presented on a net basis in Other assets; they were $5.7 million as of December 31, 2019. The Company and certain of its consolidated Affiliates have also entered into contracts that do not include set-off rights and are, therefore, presented on a gross basis in Other assets and
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Other liabilities; they were $2.2 million and $1.0 million, respectively, as of December 31, 2019, and $3.5 million and $4.2 million, respectively, as of December 31, 2020.
The following table summarizes the effect of the derivative financial instruments on the Consolidated Statements of Comprehensive Income and the Consolidated Statements of Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2019
|
|
2020
|
|
|
Gain (Loss) Recorded in Other Comprehensive Income
|
|
Gain Reclassified from Accumulated Other Comprehensive Income into Earnings
|
|
Gain Recorded in Earnings from Excluded Components(1)
|
|
Gain (Loss) Recorded in Other Comprehensive Income (Loss)
|
|
Gain Reclassified from Accumulated Other Comprehensive Loss into Earnings
|
|
Gain Recorded in Earnings from Excluded Components(1)
|
Forward contracts
|
|
$
|
(21.7)
|
|
|
$
|
0.5
|
|
|
$
|
13.9
|
|
|
$
|
65.4
|
|
|
$
|
0.6
|
|
|
$
|
2.8
|
|
Put options
|
|
29.3
|
|
|
—
|
|
|
—
|
|
|
(47.7)
|
|
|
—
|
|
|
—
|
|
Call options
|
|
(19.0)
|
|
|
—
|
|
|
—
|
|
|
(1.3)
|
|
|
—
|
|
|
—
|
|
Interest rate swap
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.9)
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
(11.4)
|
|
|
$
|
0.5
|
|
|
$
|
13.9
|
|
|
$
|
14.5
|
|
|
$
|
0.6
|
|
|
$
|
2.8
|
|
__________________________
(1)The excluded components of the forward contracts were recognized in earnings on a straight-line basis over the respective period of the contracts as a reduction to Interest expense.
8.Commitments and Contingencies
From time to time, the Company and its Affiliates may be subject to claims, legal proceedings, and other contingencies in the ordinary course of their business activities. Any such matters are subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company or its Affiliates. The Company and its Affiliates establish accruals, as necessary, for matters for which the outcome is probable and the amount of the liability can be reasonably estimated.
The Company has committed to co-invest in certain Affiliate sponsored investment products. As of December 31, 2020, these unfunded commitments were $122.2 million and may be called in future periods.
In addition, as of December 31, 2020, the Company was contingently liable to make payments related to the achievement of specified financial targets by certain of its Affiliates accounted for under the equity method, of which, $37.5 million may become payable in 2022 and $77.5 million from 2023 through 2025. As of December 31, 2020, the Company expected to make payments of approximately $13 million. In the event certain financial targets are not met at one of the Company’s Affiliates, the Company may receive payments of up to $12.5 million and also has the option to reduce its ownership interest and receive an incremental payment of $25.0 million.
Affiliate equity interests provide holders at consolidated Affiliates with a conditional right to put their interests to the Company over time. See Note 18. In connection with one of the Company’s investments in an Affiliate accounted for under the equity method, a minority owner has the right to elect to sell a portion of its ownership interest in the Affiliate to the Company annually. As of December 31, 2020, the minority owner maintains a 14% ownership interest in the Affiliate. In the fourth quarter of 2020, the Company was notified by the minority owner that it may, after determining the fair market value of its interest, elect to sell a 5% ownership interest in the Affiliate to the Company. If the minority owner elects to sell this interest, the transaction is expected to close in the first half of 2021; however, the Company cannot currently predict the amount that may be paid to settle this commitment. If the minority owners sells its interest to the Company, then the Company will continue to account for the Affiliate under the equity method.
The Company and certain of its consolidated Affiliates operate under regulatory authorities that require the maintenance of minimum financial or capital requirements. Management is not aware of any significant violations of such requirements.
9.Goodwill and Acquired Client Relationships
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following tables present the changes in the Company’s consolidated Affiliates’ Goodwill and components of Acquired client relationships (net):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
2019
|
|
2020
|
Balance, beginning of period
|
|
$
|
2,633.4
|
|
|
$
|
2,651.7
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
18.3
|
|
|
11.6
|
|
Other
|
|
—
|
|
|
(1.9)
|
|
Balance, end of period
|
|
$
|
2,651.7
|
|
|
$
|
2,661.4
|
|
As of September 30, 2020, the Company completed its impairment assessment on goodwill and no impairment was indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired Client Relationships (Net)
|
|
|
Definite-lived
|
|
Indefinite-lived
|
|
Total
|
|
|
Gross Book
Value
|
|
Accumulated
Amortization
|
|
Net Book
Value
|
|
Net Book
Value
|
|
Net Book
Value
|
Balance, as of December 31, 2018
|
|
$
|
1,279.8
|
|
|
$
|
(976.2)
|
|
|
$
|
303.6
|
|
|
$
|
1,006.3
|
|
|
$
|
1,309.9
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization and impairments
|
|
—
|
|
|
(93.4)
|
|
|
(93.4)
|
|
|
(51.1)
|
|
|
(144.5)
|
|
Foreign currency translation
|
|
5.1
|
|
|
(5.5)
|
|
|
(0.4)
|
|
|
17.0
|
|
|
16.6
|
|
Transfers(1)
|
|
(36.1)
|
|
|
36.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Balance, as of December 31, 2019
|
|
$
|
1,248.8
|
|
|
$
|
(1,039.0)
|
|
|
$
|
209.8
|
|
|
$
|
972.2
|
|
|
$
|
1,182.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible amortization and impairments
|
|
—
|
|
|
(69.8)
|
|
|
(69.8)
|
|
|
(70.7)
|
|
|
(140.5)
|
|
Foreign currency translation
|
|
3.5
|
|
|
(3.7)
|
|
|
(0.2)
|
|
|
7.5
|
|
|
7.3
|
|
Transfers(1)
|
|
(85.7)
|
|
|
85.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Balance, as of December 31, 2020
|
|
$
|
1,166.6
|
|
|
$
|
(1,026.8)
|
|
|
$
|
139.8
|
|
|
$
|
909.0
|
|
|
$
|
1,048.8
|
|
__________________________
(1)Transfers include acquired client relationships at Affiliates that were deconsolidated during the period.
Definite-lived acquired client relationships at the Company’s consolidated Affiliates are amortized over their expected period of economic benefit. The Company recorded amortization expense in Intangible amortization and impairments for these relationships of $114.4 million, $93.4 million and $55.3 million for the years ended December 31, 2018, 2019 and 2020, respectively. Based on relationships existing as of December 31, 2020, the Company estimates that its consolidated amortization expense will be approximately $30 million in each of 2021, 2022, and 2023, approximately $20 million in 2024 and approximately $10 million in 2025.
In the fourth quarter of 2019, the Company completed an impairment assessment of the indefinite-lived acquired client relationships at one of its Affiliates, and determined that the fair value of the asset had declined below its carrying value. Accordingly, the Company recorded an expense in Intangible amortization and impairments of $31.2 million attributable to the controlling interest ($35.0 million in aggregate) to reduce the carrying value of the asset to fair value. The decline in the fair value was a result of a projected decline in assets under management that decreased the forecasted revenue associated with the asset. The fair value of the asset was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of (9)% for assets under management, discount rate of 14.5% for asset based fees, and a market participant tax rate of 25%. No other impairments of indefinite-lived acquired client relationships were indicated.
In addition, in the fourth quarter of 2019, the Company recorded an expense in Intangible amortization and impairments of $16.1 million attributable to the controlling interest and in aggregate to reduce the carrying value of an indefinite-lived acquired client relationship to zero due to the closure of certain retail investment products on its U.S. retail distribution platform.
In the second quarter of 2020, the Company agreed with a consolidated Affiliate to strategically reposition their business and to sell its equity interest in the Affiliate. The Company recorded an expense in Intangible amortization and impairments of $32.8 million attributable to the controlling interest ($60.3 million in aggregate) to reduce the carrying value of the Affiliate’s acquired client relationships to zero as of June 30, 2020. In the third quarter of 2020, the Company sold its interest in the Affiliate and the Company recorded no significant gain or loss on the transaction.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
In the third quarter of 2020, the Company completed an impairment assessment of the indefinite-lived acquired client relationships at one of its Affiliates, and determined that the fair value of the asset had declined below its carrying value. Accordingly, the Company recorded an expense in Intangible amortization and impairments of $12.5 million attributable to the controlling interest ($14.0 million in aggregate) to reduce the carrying value of the asset to fair value. The decline in the fair value was a result of a projected decline in assets under management that decreased the forecasted revenue associated with the asset. The fair value of the asset was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of (14)% for assets under management, discount rate of 15% for asset based fees, and a market participant tax rate of 25%.
In addition, in the third quarter of 2020, the Company recorded an expense in Intangible amortization and impairments of $7.4 million attributable to the controlling interest ($10.9 million in aggregate) to reduce the carrying value of an indefinite-lived acquired client relationship to zero due to the closure of one of its Affiliate’s retail investment products.
As of December 31, 2020, no other impairments of indefinite-lived acquired client relationships were indicated. If financial markets become depressed for a prolonged period as a result of the novel coronavirus global pandemic (“COVID-19”) or other factors, the fair values of these assets could drop below their carrying values resulting in future impairments.
10.Equity Method Investments in Affiliates
In the first, third and fourth quarters of 2020, the Company completed minority investments in Comvest Partners, Inclusive Capital Partners LP and Jackson Square Partners LLC (“Jackson Square”), respectively. The majority of the consideration paid for Jackson Square is deductible for U.S. tax purposes over a 15 year life. The Company’s purchase price allocation for each investment was measured using financial models that included assumptions of expected market performance, net client cash flows, and discount rates.
The financial results of certain Affiliates accounted for under the equity method are recognized in the Consolidated Financial Statements one quarter in arrears.
The following table presents the change in Equity method investments in Affiliates (net):
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Method Investments in Affiliates (Net)
|
|
2019
|
|
2020
|
Balance, beginning of period
|
$
|
2,791.0
|
|
|
$
|
2,195.6
|
|
Earnings
|
289.4
|
|
|
288.6
|
|
Intangible amortization and impairments
|
(627.4)
|
|
|
(332.0)
|
|
Distributions of earnings
|
(252.4)
|
|
|
(236.8)
|
|
Foreign currency translation
|
(40.0)
|
|
|
5.1
|
|
Investments in Affiliates
|
162.3
|
|
|
128.7
|
|
Divestments of Affiliates
|
(117.7)
|
|
|
—
|
|
Other
|
(9.6)
|
|
|
25.6
|
|
Balance, end of period
|
$
|
2,195.6
|
|
|
$
|
2,074.8
|
|
Definite-lived acquired client relationships at the Company’s Affiliates accounted for under the equity method are amortized over their expected period of economic benefit. The Company recorded amortization expense for these relationships of $97.5 million, $142.4 million and $147.0 million for the years ended December 31, 2018, 2019 and 2020, respectively. Based on relationships existing as of December 31, 2020, the Company estimates the annual amortization expense attributable to its Affiliates will be approximately $120 million in 2021 and approximately $50 million in each of 2022, 2023, 2024 and 2025.
In the first quarter of 2019, the Company recorded a $415.0 million expense to reduce the carrying value of an Affiliate to fair value. In March 2019, the Company concluded that the growth expectations of the Affiliate had declined and determined that the estimated fair value of the Affiliate had also declined meaningfully. Therefore, the Company performed a valuation to determine whether the fair value of the Affiliate had declined below its carrying value. The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement, that included a projected compounded asset based fee growth over the first five years of (13)%, discount rates of 11% and 20% for asset and performance based fees, respectively, and a market participant tax rate of 25%. Based on the probability-weighted discounted
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary. In October 2019, the Company sold its interest in the Affiliate.
In the third quarter of 2019, the Company recorded a $10.0 million expense to reduce the carrying value of an Affiliate to fair value. The fair value of the investment was determined using a probability-weighted discounted cash flow analysis, a level 3 fair value measurement, that included a projected growth rate of (20)%, discount rates of 11% and 20% for asset and performance based fees, respectively, and a market participant tax rate of 25%. Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.
In the fourth quarter of 2019, the Company recorded a $60.0 million expense to reduce the carrying value of an Affiliate to fair value. The decline in the fair value was a result of a decline in assets under management and a reduction in projected growth, which decreased the forecasted revenue associated with the investment. The fair value of the investment was determined using a discounted cash flow analysis, a level 3 fair value measurement that included a projected growth rate of 9% for assets under management, discount rates of 11% and 20% for asset and performance based fees, respectively, and a market participant tax rate of 25%. Based on the discounted cash flow analysis, the Company concluded that the fair value of its investment had declined below its carrying value and that the decline was other-than-temporary.
In the first and fourth quarters of 2020, the Company recorded expenses of $140.0 million and $45.0 million, respectively, to reduce the carrying value of an Affiliate to fair value. The decline in the fair values was a result of declines in assets under management and reductions in projected growth, which decreased the forecasted revenues associated with the investment. The fair values of the investment were determined using probability-weighted discounted cash flow analyses, level 3 fair value measurements that included projected compounded growth in assets under management over the first five years of (2)% and (5)% for the first and fourth quarters of 2020, respectively, discount rates of 11% for asset based fees, discount rates of 20% for performance based fees, and market participant tax rates of 25%. Based on the discounted cash flow analyses, the Company concluded that the fair value of its investment had declined below its carrying value at each of the respective measurement dates and that the decline was other-than-temporary.
For the year ended December 31, 2020, the Company completed its annual assessment of its investments in Affiliates accounted for under the equity method and no other impairments were indicated. If financial markets become depressed for a prolonged period as a result of COVID-19 or other factors, or the financial performance of an Affiliate worsens as a result of net client cash outflows or performance, regardless of the performance of financial markets, the fair values of these assets could drop below their carrying values for periods considered other than temporary, resulting in future impairments.
In connection with one of the Company’s investments in an Affiliate, a minority owner has the right to elect to sell a portion of its ownership interest in the Affiliate to the Company annually. In the second quarter of 2019, the minority owner sold a 5% ownership interest in the Affiliate to the Company for $25.7 million.
In the fourth quarter of 2020, the Company recorded a liability in Other liabilities of $40.0 million, with a corresponding increase to the carrying value of the Affiliate in Equity method investments in Affiliates (net), related to the achievement of specified financial targets by the Affiliate. This payment is expected to settle in 2022.
As of December 31, 2020, the Company was obligated to make payments related to an investment in an Affiliate accounted for under the equity method. The maximum the company is obligated to pay is $35.0 million in 2021 and $37.5 million in 2022.
The following table presents summarized financial information for Affiliates accounted for under the equity method:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Revenue(1)
|
|
$
|
3,231.7
|
|
|
$
|
2,760.9
|
|
|
$
|
2,659.7
|
|
Net income(1)
|
|
1,286.1
|
|
|
1,061.3
|
|
|
1,061.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2019
|
|
2020
|
Assets
|
|
$
|
2,718.5
|
|
|
$
|
2,958.9
|
|
|
|
|
|
|
Liabilities and Non-controlling interests
|
|
1,212.7
|
|
|
1,245.5
|
|
__________________________
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(1)Revenue and net income include asset and performance based fees, the impact of consolidated sponsored investment products and investments in new Affiliates for the full-year, regardless of the date of the Company’s investment.
The Company’s share of undistributed earnings from equity method investments is recorded in Equity method investments in Affiliates (net) and was $170.6 million as of December 31, 2020.
11.Lease Commitments
The Company and its Affiliates currently lease office space and equipment under various operating leasing arrangements. For the year ended December 31, 2018, consolidated lease costs were $40.5 million. The following table presents total lease costs (net) for 2019 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2019
|
|
2020
|
Operating lease costs
|
|
$
|
41.7
|
|
|
$
|
37.6
|
|
Short-term lease costs
|
|
2.1
|
|
|
0.8
|
|
Variable lease costs
|
|
0.1
|
|
|
0.0
|
|
Sublease income
|
|
(4.4)
|
|
|
(5.0)
|
|
Total lease costs (net)
|
|
$
|
39.5
|
|
|
$
|
33.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, 2019 and 2020, new right-of-use assets obtained in exchange for lease liabilities were $26.1 million and $24.4 million, respectively. As of December 31, 2019 and 2020, the Company’s and its Affiliates’ weighted average operating lease term was eight years and seven years, respectively, and the weighted average operating lease discount rate was 4% as of both December 31, 2019 and 2020.
As of December 31, 2020, the maturities of lease liabilities were as follows:
|
|
|
|
|
|
|
|
|
Year
|
|
Operating Leases
|
2021
|
|
$
|
40.5
|
|
2022
|
|
36.7
|
|
2023
|
|
32.0
|
|
2024
|
|
25.9
|
|
2025
|
|
21.3
|
|
Thereafter
|
|
59.6
|
|
Total undiscounted lease liabilities(1)
|
|
$
|
216.0
|
|
__________________________
(1)Total undiscounted lease liabilities were $34.9 million greater than the operating leases recorded in Other liabilities primarily due to present value discounting. Both amounts exclude leases with initial terms of 12 months or less and leases that have not yet commenced.
In the fourth quarter of 2019, the Company recorded an $8.1 million expense to reduce the carrying value to fair value of certain of the Company’s right-of-use assets related to a reduction in leased office space. The fair values of the right-of-use assets were determined using a discounted cash flow analysis, a Level 3 fair value measurement that included market rental rates ranging from $13 to $68 per square foot (a weighted-average of $46 per square foot), weighted-average discount rates ranging from 3.3% to 5.5% and a market participant tax rate of 25%. In 2020, no impairments of right-of-use assets were indicated.
12.Fixed Assets
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Fixed assets (net) consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2019
|
|
2020
|
Buildings and leasehold improvements
|
|
$
|
116.3
|
|
|
$
|
116.5
|
|
Software
|
|
52.6
|
|
|
55.3
|
|
Equipment
|
|
43.0
|
|
|
44.3
|
|
Furniture and fixtures
|
|
21.3
|
|
|
21.0
|
|
Land, improvements and other
|
|
17.9
|
|
|
18.0
|
|
Fixed assets, at cost
|
|
251.1
|
|
|
255.1
|
|
Accumulated depreciation and amortization
|
|
(158.8)
|
|
|
(175.5)
|
|
Fixed assets (net)
|
|
$
|
92.3
|
|
|
$
|
79.6
|
|
13.Payables and Accrued Liabilities
Payables and accrued liabilities consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2019
|
|
2020
|
Accrued compensation
|
|
$
|
421.5
|
|
|
$
|
400.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
213.1
|
|
|
312.4
|
|
Payables and accrued liabilities
|
|
$
|
634.6
|
|
|
$
|
712.4
|
|
14.Related Party Transactions
A prior owner of one of the Company’s consolidated Affiliates retains interests in certain of the Affiliate’s private equity partnerships and, as a result, is a related party of the Company. The prior owner’s interests are presented within Other liabilities and were $38.5 million and $35.4 million as of December 31, 2019 and 2020, respectively.
The Company may invest from time to time in funds or products advised by its Affiliates. The Company’s executive officers and directors may invest from time to time in funds advised or products offered by its Affiliates on substantially the same terms as other investors. In addition, the Company and its Affiliates earn asset and performance based fees and incur distribution and other expenses for services provided to Affiliate sponsored investment products. Affiliate management owners and the Company’s officers may serve as trustees or directors of certain investment vehicles from which the Company or an Affiliate earns fees.
The Company has related party transactions in association with its contingent payment arrangements and Affiliate equity transactions, as more fully described in Notes 8, 10, 17 and 18.
15.Stockholders’ Equity
Common Stock
The Company is authorized to issue up to 150.0 million shares of voting common stock and 3.0 million shares of class B non-voting common stock.
The Company’s Board of Directors authorized share repurchase programs in October 2019 and January 2019 to repurchase up to 6.0 million and 3.3 million shares of its common stock, respectively, and these authorizations have no expiry. Purchases may be made from time to time, at management’s discretion, in the open market or in privately negotiated transactions, including through the use of trading plans as well as pursuant to accelerated share repurchase programs or other share repurchase strategies that may include derivative financial instruments. As of December 31, 2020, the Company had repurchased all of the shares of the January 2019 program, and there were a total of 1.9 million shares available for repurchase under the Company’s October 2019 share repurchase program.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following is a summary of the Company’s share repurchase activity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Shares
Repurchased
|
|
Average
Price
|
2018
|
|
3.3
|
|
|
$
|
150.31
|
|
2019
|
|
4.1
|
|
|
88.73
|
|
2020
|
|
5.0
|
|
|
86.35
|
|
Between January 1 and February 18, 2021, the Company repurchased 1.2 million shares of its common stock for $151.9 million, including shares repurchased in the open market, through a 10b5-1 trading plan, and pursuant to an accelerated share repurchase program.
Equity Distribution Program
The Company has equity distribution and forward equity agreements with several major securities firms under which it may, from time to time, issue and sell shares of its common stock (immediately or on a forward basis) having an aggregate sales price of up to $500.0 million (the “equity distribution program”). As of December 31, 2020, no sales had occurred under the equity distribution program.
Preferred Stock
The Company is authorized to issue up to 5.0 million shares of Preferred Stock. Any such Preferred Stock issued by the Company may rank prior to common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock.
Financial Instruments
The Company’s junior convertible securities contain an embedded right for holders to receive shares of the Company’s common stock under certain conditions. These arrangements, as well as the equity distribution program, meet the definition of equity and are not required to be accounted for separately as derivative financial instruments.
16.Share-Based Compensation
Share-Based Incentive Plans
The Company has established various plans under which it is authorized to grant restricted stock, restricted stock units, stock options, and stock appreciation rights. The Company may also grant cash awards that can be notionally invested in one or more specified measurement funds, including the Company’s common stock. Awards granted under the Company’s share-based incentive plans typically participate in any dividends declared, but such amounts are deferred until delivery of the shares and are forfeitable if the requisite service is not satisfied. Dividends may accrue in cash or may be reinvested in the Company’s common stock.
Share-Based Compensation
The following table presents share-based compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
Share-Based
Compensation
Expense
|
|
Tax Benefit
|
2018
|
|
$
|
44.7
|
|
|
$
|
11.2
|
|
2019
|
|
49.9
|
|
|
8.2
|
|
2020
|
|
67.4
|
|
|
10.3
|
|
The excess tax benefit (deficiency) recognized from share-based incentive plans was $0.7 million, $(3.2) million, and $(3.9) million, for the years ended December 31, 2018, 2019, and 2020, respectively.
As of December 31, 2019, the Company had unrecognized share-based compensation expense of $106.6 million. As of December 31, 2020, the Company had $86.2 million of unrecognized share-based compensation, which will be recognized over a weighted average period of approximately three years (assuming no forfeitures).
Restricted Stock
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table summarizes transactions in the Company’s restricted stock units:
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock Units
|
|
Weighted
Average
Grant Date
Value
|
Unvested units—December 31, 2019
|
1.1
|
|
|
$
|
123.70
|
|
Units granted
|
0.4
|
|
|
73.75
|
|
Units vested
|
(0.4)
|
|
|
141.67
|
|
Units forfeited
|
(0.0)
|
|
|
134.52
|
|
Performance condition changes
|
0.1
|
|
|
105.92
|
|
Unvested units—December 31, 2020
|
1.2
|
|
|
99.46
|
|
The Company granted restricted stock unit awards with fair values of $37.7 million, $59.7 million, and $31.8 million for the years ended December 31, 2018, 2019, and 2020, respectively. These restricted stock units were valued based on the closing price of the Company’s common stock on the grant date and the number of shares expected to vest. Restricted stock units containing vesting conditions generally require service over a period of three years to four years and may also require the satisfaction of certain performance conditions. For awards with performance conditions, the number of restricted stock units expected to vest may change over time depending upon the performance level achieved.
The total fair value of shares vested was $5.9 million, $18.9 million, and $24.1 million during the years ended December 31, 2018, 2019, and 2020, respectively. As of December 31, 2020, the Company had 3.3 million shares available for grant under its plans.
Stock Options
The following table summarizes transactions in the Company’s stock options:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted
Average
Remaining
Contractual
Life (Years)
|
Unexercised options outstanding—December 31, 2019
|
2.3
|
|
|
$
|
85.58
|
|
|
|
Options granted
|
0.2
|
|
|
74.31
|
|
|
|
Options exercised
|
(0.0)
|
|
|
86.78
|
|
|
|
Options forfeited
|
(0.0)
|
|
|
147.77
|
|
|
|
Performance condition changes
|
0.4
|
|
|
74.42
|
|
|
|
Unexercised options outstanding—December 31, 2020
|
2.9
|
|
|
82.14
|
|
|
5.1
|
Exercisable at December 31, 2020
|
0.4
|
|
|
126.95
|
|
|
1.7
|
The Company granted stock options with fair values of $1.0 million, $34.2 million, and $4.4 million for the years ended December 31, 2018, 2019, and 2020, respectively. Stock options generally vest over a period of three years to five years and expire seven years after the grant date. All stock options have been granted with exercise prices equal to the closing price of the Company’s common stock on the grant date. Substantially all of the Company’s outstanding stock options contain both service and performance conditions. For awards with performance conditions, the number of stock options expected to vest may change over time depending upon the performance level achieved.
The Company generally uses treasury stock to settle stock option exercises. The total intrinsic value of stock options exercised during the years ended December 31, 2018, 2019, and 2020 was $8.2 million, $0.2 million, and $0.0 million, respectively. The cash received for stock options exercised was $9.7 million, $0.9 million, and zero during the years ended December 31, 2018, 2019, and 2020, respectively. As of December 31, 2020, the intrinsic value of exercisable stock options outstanding was $0.5 million, and 1.2 million options were available for grant under the Company’s option plans.
The weighted average fair value of stock options was $48.64, $18.36, and $18.33, per option, for the years ended December 31, 2018, 2019, and 2020, respectively. The Company uses the Black-Scholes option pricing model to determine the fair value of options. The weighted average grant date assumptions used to estimate the fair value of stock options granted were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
2018
|
|
2019
|
|
2020
|
Dividend yield
|
0.8
|
%
|
|
1.7
|
%
|
|
1.6
|
%
|
Expected volatility(1)
|
25.5
|
%
|
|
29.4
|
%
|
|
30.5
|
%
|
Risk-free interest rate(2)
|
2.8
|
%
|
|
1.5
|
%
|
|
0.9
|
%
|
Expected life of stock options (in years)(3)
|
5.7
|
|
5.7
|
|
5.7
|
Forfeiture rate
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
__________________________
(1)Expected volatility is based on historical and implied volatility.
(2)Risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant.
(3)Expected life of options (in years) is based on the Company’s historical and expected exercise behavior.
17.Redeemable Non-Controlling Interests
Affiliate equity interests provide holders with an equity interest in one of the Company’s Affiliates, consistent with the structured partnership interests in place at the respective Affiliate. Affiliate equity holders generally have a conditional right to put their interests to the Company at certain intervals (between five years and 15 years from the date the equity interest is received by the Affiliate equity holder or on an annual basis following an Affiliate equity holder’s departure). Prior to becoming redeemable, the value of the Company’s Affiliate equity is presented within Non-controlling interests. Upon becoming redeemable, the value of these interests is reclassified and the current redemption value of these interests is presented as Redeemable non-controlling interests. Changes in the current redemption value are recorded to Additional paid-in capital. When the Company receives a put notice, and, therefore, has an unconditional obligation to repurchase Affiliate equity interests, they are reclassified to Other liabilities.
The following table presents the changes in Redeemable non-controlling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
Redeemable Non-controlling Interests
|
|
2019
|
|
2020
|
Balance, beginning of period(1)
|
$
|
833.7
|
|
|
$
|
916.7
|
|
(Decreases) increases attributable to consolidated Affiliate sponsored investment products
|
(69.4)
|
|
|
13.8
|
|
Transfers to Other liabilities
|
(118.6)
|
|
|
(310.6)
|
|
Transfers from (to) Non-controlling interests
|
105.0
|
|
|
(7.8)
|
|
Changes in redemption value
|
166.0
|
|
|
59.4
|
|
Balance, end of period(1)
|
$
|
916.7
|
|
|
$
|
671.5
|
|
__________________________
(1) As of December 31, 2019 and 2020, Redeemable non-controlling interests include consolidated Affiliate sponsored investment products primarily attributable to third-party investors of $21.6 million and $35.4 million, respectively.
18.Affiliate Equity
Affiliate equity interests are allocated income in a manner that is consistent with the structured partnership interests in place at the respective Affiliate. The Company’s Affiliates generally pay quarterly distributions to Affiliate equity holders. Distributions paid to Affiliate equity holders (non-controlling interests) were $370.5 million, $347.9 million, and $306.3 million for the years ended December 31, 2018, 2019, and 2020, respectively.
Affiliate equity interests provide the Company a conditional right to call (on an annual basis following an Affiliate equity holder’s departure) and Affiliate equity holders have a conditional right to put their interests at certain intervals (between five years and 15 years from the date the equity interest is received by the Affiliate equity holder or on an annual basis following an Affiliate equity holder’s departure). For Affiliates accounted for under the equity method, we do not typically have such put and call arrangements. The purchase price of these conditional purchases are generally calculated based upon a multiple of cash flow distributions, which is intended to represent fair value. Affiliate equity holders are also permitted to sell their equity interests to other individuals or entities in certain cases, subject to the Company's approval or other restrictions. The Company,
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
at its option, may pay for Affiliate equity purchases in cash, shares of its common stock or other forms of consideration, and can consent to the transfer of these interests to other individuals or entities.
The Company periodically repurchases Affiliate equity from and issues Affiliate equity to the Company’s consolidated Affiliate partners and its officers. The amount of cash paid for repurchases was $120.0 million, $146.0 million, and $315.1 million for the years ended December 31, 2018, 2019, and 2020, respectively. The total amount of cash received for issuances was $6.3 million, $10.5 million, and $20.2 million for the years ended December 31, 2018, 2019, and 2020, respectively.
Sales and repurchases of Affiliate equity generally occur at fair value; however, the Company also grants Affiliate equity to its consolidated Affiliate partners and its officers as a form of compensation. If the equity is issued for consideration below the fair value of the equity, or repurchased for consideration above the fair value of the equity, the difference is recorded as compensation expense in Compensation and related expenses in the Consolidated Statements of Income over the requisite service period.
The following table presents Affiliate equity compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
2018
|
|
2019
|
|
2020
|
Controlling interest
|
$
|
16.7
|
|
|
$
|
9.6
|
|
|
$
|
20.9
|
|
Non-controlling interests
|
39.7
|
|
|
30.9
|
|
|
30.9
|
|
Total
|
$
|
56.4
|
|
|
$
|
40.5
|
|
|
$
|
51.8
|
|
The following table presents unrecognized Affiliate equity compensation expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
Controlling Interest
|
|
Remaining Life
|
|
Non-controlling Interests
|
|
Remaining Life
|
2018
|
$
|
38.7
|
|
|
5 years
|
|
$
|
118.3
|
|
|
6 years
|
2019
|
40.9
|
|
|
4 years
|
|
124.6
|
|
|
6 years
|
2020
|
35.9
|
|
|
4 years
|
|
109.7
|
|
|
5 years
|
The Company records amounts receivable from, and payable to, Affiliate equity holders in connection with the transfer of Affiliate equity interests that have not settled at the end of the period and other related transactions. The total receivable was $14.8 million and $9.6 million as of December 31, 2019 and 2020, respectively, and was included in Other assets. The total payable was $19.8 million and $22.0 million as of December 31, 2019 and 2020, respectively, and was included in Other liabilities.
Effects of Changes in the Company’s Ownership in Affiliates
The Company periodically acquires interests from, and transfers interests to, Affiliate equity holders. Because these transactions do not result in a change of control, any gain or loss related to these transactions is recorded to Additional paid-in capital, which increases or decreases the controlling interest’s equity. No gain or loss related to these transactions is recorded in the Consolidated Statements of Income or the Consolidated Statements of Comprehensive Income.
While the Company presents the current redemption value of Affiliate equity within Redeemable non-controlling interests, with changes in the current redemption value increasing or decreasing the controlling interest’s equity over time, the following table presents the cumulative effect that ownership changes had on the controlling interest’s equity related only to Affiliate equity transactions that settled during the applicable periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Net income (controlling interest)
|
|
$
|
243.6
|
|
|
$
|
15.7
|
|
|
$
|
202.2
|
|
(Decrease) increase in controlling interest paid-in capital from Affiliate equity issuances
|
|
(5.0)
|
|
|
(3.1)
|
|
|
1.1
|
|
Decrease in controlling interest paid-in capital from Affiliate equity repurchases
|
|
(67.9)
|
|
|
(50.8)
|
|
|
(239.1)
|
|
Net income (loss) (controlling interest) including the net impact of Affiliate equity transactions
|
|
$
|
170.7
|
|
|
$
|
(38.2)
|
|
|
$
|
(35.8)
|
|
19.Benefit Plans
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company has a defined contribution plan that is a qualified employee profit-sharing plan, covering substantially all of its employees. Under this plan, the Company is able to make discretionary contributions for the benefit of its employees that are qualified plan participants, up to Internal Revenue Service limits. The Company’s consolidated Affiliates generally have their own qualified defined contribution retirement plans covering their respective employees or, for several Affiliates, have their employees covered under the Company’s plan. In each case, the relevant Affiliate is able to make discretionary contributions for the benefit of its employees, as applicable, that are qualified plan participants, up to Internal Revenue Service limits. Consolidated expenses related to these plans were $20.8 million, $19.4 million, and $17.6 million for the years ended December 31, 2018, 2019, and 2020, respectively. The controlling interest’s portion of expenses related to these plans were $4.8 million, $3.6 million, and $3.0 million for the years ended December 31, 2018, 2019, and 2020, respectively.
20.Income Taxes
The Company’s consolidated income tax provision includes taxes attributable to the controlling interest and, to a lesser extent, taxes attributable to non-controlling interests.
The following table presents the consolidated provision for income taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Controlling interest:
|
|
|
|
|
|
|
Current taxes
|
|
$
|
117.2
|
|
|
$
|
46.5
|
|
|
$
|
44.6
|
|
Intangible-related deferred taxes
|
|
79.7
|
|
|
(51.3)
|
|
|
(9.9)
|
|
Other deferred taxes
|
|
(27.5)
|
|
|
(4.3)
|
|
|
34.8
|
|
Total controlling interest
|
|
169.4
|
|
|
(9.1)
|
|
|
69.5
|
|
Non-controlling interests:
|
|
|
|
|
|
|
Current taxes
|
|
$
|
12.2
|
|
|
$
|
12.2
|
|
|
$
|
10.0
|
|
Deferred taxes
|
|
(0.3)
|
|
|
(0.2)
|
|
|
1.9
|
|
Total non-controlling interests
|
|
11.9
|
|
|
12.0
|
|
|
11.9
|
|
Income tax expense
|
|
$
|
181.3
|
|
|
$
|
2.9
|
|
|
$
|
81.4
|
|
Income before income taxes (controlling interest)
|
|
$
|
413.0
|
|
|
$
|
6.6
|
|
|
$
|
271.7
|
|
Effective tax rate (controlling interest)(1)
|
|
41.0
|
%
|
|
(137.0)
|
%
|
|
25.6
|
%
|
__________________________
(1)Taxes attributable to the controlling interest divided by income before income taxes (controlling interest).
The consolidated provision for income taxes consisted of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Current:
|
|
|
|
|
|
|
Federal
|
|
$
|
52.2
|
|
|
$
|
(18.2)
|
|
|
$
|
(9.6)
|
|
State
|
|
28.6
|
|
|
(8.8)
|
|
|
17.0
|
|
Foreign
|
|
48.6
|
|
|
85.7
|
|
|
47.2
|
|
Total current
|
|
129.4
|
|
|
58.7
|
|
|
54.6
|
|
Deferred:
|
|
|
|
|
|
|
Federal
|
|
$
|
51.3
|
|
|
$
|
(23.9)
|
|
|
$
|
20.1
|
|
State
|
|
13.2
|
|
|
3.4
|
|
|
5.4
|
|
Foreign
|
|
(12.6)
|
|
|
(35.3)
|
|
|
1.3
|
|
Total deferred
|
|
51.9
|
|
|
(55.8)
|
|
|
26.8
|
|
Income tax expense
|
|
$
|
181.3
|
|
|
$
|
2.9
|
|
|
$
|
81.4
|
|
For financial reporting purposes, Income before income taxes consisted of the following:
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Domestic
|
|
$
|
637.3
|
|
|
$
|
152.2
|
|
|
$
|
446.1
|
|
International
|
|
76.3
|
|
|
155.8
|
|
|
62.2
|
|
Total
|
|
$
|
713.6
|
|
|
$
|
308.0
|
|
|
$
|
508.3
|
|
The following table reconciles the U.S. federal statutory tax rate to the Company’s effective tax rate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Statutory U.S. federal tax rate
|
|
21.0
|
%
|
|
21.0
|
%
|
|
21.0
|
%
|
State income taxes, net of federal benefit
|
|
3.7
|
|
|
3.5
|
|
|
3.5
|
|
Foreign operations
|
|
1.3
|
|
|
(471.2)
|
|
|
(8.5)
|
|
Compensation plans
|
|
1.6
|
|
|
240.6
|
|
|
5.8
|
|
Changes in tax laws
|
|
—
|
|
|
—
|
|
|
3.0
|
|
Change in valuation allowances
|
|
0.0
|
|
|
(107.2)
|
|
|
6.9
|
|
Unrecognized tax benefits
|
|
0.5
|
|
|
420.4
|
|
|
(1.1)
|
|
Affiliate divestments
|
|
—
|
|
|
(120.4)
|
|
|
(6.2)
|
|
Reduction in carrying value of Affiliates
|
|
13.0
|
|
|
—
|
|
|
—
|
|
Changes in U.S. tax provision to return
|
|
(1.0)
|
|
|
(195.7)
|
|
|
0.8
|
|
Other
|
|
0.9
|
|
|
72.0
|
|
|
0.4
|
|
Effective tax rate (controlling interest)
|
|
41.0
|
%
|
|
(137.0)
|
%
|
|
25.6
|
%
|
Effect of income from non-controlling interests
|
|
(15.6)
|
|
|
137.9
|
|
|
(9.6)
|
|
Effective tax rate
|
|
25.4
|
%
|
|
0.9
|
%
|
|
16.0
|
%
|
The Company’s effective tax rate (controlling interest) in 2018 is higher than the marginal tax rate primarily due to a $240.0 million expense recorded to reduce the carrying value of one of the Company’s Affiliates to fair value for which the Company did not recognize an income tax benefit. The effective tax rate (controlling interest) in 2019 is lower than the marginal tax rate primarily due to lower Income before income taxes, as a result of increased Intangible amortization and impairments expense, and tax benefits related to an Affiliate divestment. The effective tax rate (controlling interest) in 2020 is not significantly different from the marginal tax rate.
Deferred income tax liability (net) reflects the expected future tax consequences of temporary differences between the financial reporting bases and tax bases of the Company’s assets and liabilities. The significant components of the Company’s Deferred income tax liability (net) are as follows:
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
2019
|
|
2020
|
Deferred Tax Assets
|
|
|
|
|
Deferred compensation
|
|
$
|
13.8
|
|
|
$
|
15.4
|
|
State loss carryforwards
|
|
15.9
|
|
|
17.0
|
|
Foreign loss carryforwards
|
|
17.7
|
|
|
19.7
|
|
Tax benefit of uncertain tax positions
|
|
27.4
|
|
|
26.3
|
|
Deferred income
|
|
3.0
|
|
|
—
|
|
Lease liabilities
|
|
12.3
|
|
|
10.0
|
|
|
|
|
|
|
Foreign tax credits
|
|
—
|
|
|
8.2
|
|
Other
|
|
2.6
|
|
|
—
|
|
Total deferred tax assets
|
|
92.7
|
|
|
96.6
|
|
Valuation allowance
|
|
(16.9)
|
|
|
(35.6)
|
|
Deferred tax assets, net of valuation allowance
|
|
$
|
75.8
|
|
|
$
|
61.0
|
|
Deferred Tax Liabilities
|
|
|
|
|
Intangible asset amortization
|
|
$
|
(293.7)
|
|
|
$
|
(235.6)
|
|
Non-deductible intangible amortization
|
|
(110.9)
|
|
|
(116.6)
|
|
Junior convertible securities interest
|
|
(91.6)
|
|
|
(99.3)
|
|
Right-of-use assets
|
|
(10.3)
|
|
|
(7.3)
|
|
|
|
|
|
|
Deferred income
|
|
—
|
|
|
(10.7)
|
|
|
|
|
|
|
Other
|
|
(4.1)
|
|
|
(8.5)
|
|
Total deferred tax liabilities
|
|
(510.6)
|
|
|
(478.0)
|
|
Deferred income tax liability (net)(1)
|
|
$
|
(434.8)
|
|
|
$
|
(417.0)
|
|
__________________________
(1)As of December 31, 2019 and 2020, foreign loss carryforwards of $17.7 million and $19.7 million, respectively, net of a $2.3 million and a $13.3 million valuation allowance, respectively, are presented within Other assets as they represent a net deferred tax asset in a foreign jurisdiction.
As of December 31, 2020, the Company had available state net operating loss carryforwards of $243.7 million, a majority of which will expire over ten years to 15 years. As of December 31, 2020, the Company had foreign loss carryforwards of $74.2 million, of which $64.6 million will expire over 11 years to 19 years and $9.6 million will carry forward indefinitely. As of December 31, 2020, the Company had foreign tax credit carryforwards of $8.2 million which will expire over eight years to ten years.
The Company believed it was more-likely-than-not that the benefit from certain state and foreign loss carryforwards and foreign tax credit carryforwards would not be fully realized, and, as of December 31, 2020, had valuation allowances of $14.1 million, $13.3 million, and $8.2 million on the state and foreign loss carryforwards and the foreign tax credit carryforwards, respectively. For the years ended December 31, 2019 and 2020, there was a $7.2 million reduction and an $18.7 million increase in the valuation allowances, respectively.
The Company’s estimates and assumptions regarding the realization of its state and foreign loss carryforwards do not contemplate certain changes in ownership of the Company’s stock which could limit the utilization of these carryforwards.
The Company does not provide for U.S. income taxes on the excess of the financial reporting bases over tax bases in the Company’s investments in foreign subsidiaries considered permanent in duration. Such amount would generally become taxable upon the repatriation of assets from, or a sale or liquidation of, the foreign subsidiaries. While a determination of the potential amount of unrecognized deferred U.S. income tax liability related to these amounts is not practicable because of the numerous assumptions associated with this hypothetical calculation, as of December 31, 2020, the estimated amount of such difference was $317.1 million.
A reconciliation of the changes in unrecognized tax benefits is as follows:
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Balance, beginning of period
|
|
$
|
32.4
|
|
|
$
|
33.1
|
|
|
$
|
65.4
|
|
Additions based on current year tax positions
|
|
2.4
|
|
|
39.8
|
|
|
1.1
|
|
Additions based on prior years’ tax positions
|
|
8.4
|
|
|
3.2
|
|
|
1.7
|
|
Reduction for prior years’ tax positions
|
|
(2.0)
|
|
|
(3.5)
|
|
|
(0.4)
|
|
Lapse of the statute of limitations
|
|
(6.3)
|
|
|
(4.0)
|
|
|
(7.6)
|
|
Settlements
|
|
(1.3)
|
|
|
(0.4)
|
|
|
—
|
|
Foreign currency translation
|
|
(0.5)
|
|
|
(2.8)
|
|
|
3.3
|
|
Balance, end of period
|
|
$
|
33.1
|
|
|
$
|
65.4
|
|
|
$
|
63.5
|
|
Included in the balance of unrecognized tax benefits as of December 31, 2018, 2019, and 2020 were $33.1 million, $65.4 million, and $63.5 million, respectively, of tax benefits that, if recognized, would favorably affect the Company’s effective tax rate (controlling interest). As of December 31, 2020, certain of these benefits, if realized, would be offset by the utilization of indirect tax benefits, for which the Company has accrued deferred tax assets of $26.3 million.
The Company records accrued interest and penalties, if any, related to unrecognized tax benefits in Income tax expense. For the years ended December 31, 2018, 2019, and 2020, interest and penalties related to unrecognized tax benefits were $0.4 million, $8.4 million, and $0.8 million, respectively. As of December 31, 2019 and 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of $10.5 million and $11.4 million, respectively.
The Company is subject to U.S. federal, state and local, and foreign income tax in multiple jurisdictions and is periodically subject to tax examinations in these jurisdictions. The completion of examinations may result in the payment of additional taxes and/or the recognition of tax benefits. The Company is generally no longer subject to income tax examinations by U.S. federal, state and local, or foreign taxing authorities for periods prior to 2016.
21.Earnings Per Share
The calculation of Earnings per share (basic) is based on the weighted average number of shares of the Company’s common stock outstanding during the period. Earnings per share (diluted) is similar to Earnings per share (basic), but adjusts for the dilutive effect of the potential issuance of incremental shares of the Company’s common stock. The following is a reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per share available to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
|
2018
|
|
2019
|
|
2020
|
Numerator
|
|
|
|
|
|
|
Net income (controlling interest)
|
|
$
|
243.6
|
|
|
$
|
15.7
|
|
|
$
|
202.2
|
|
Interest expense on junior convertible securities, net of taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
Net income (controlling interest), as adjusted
|
|
$
|
243.6
|
|
|
$
|
15.7
|
|
|
$
|
202.2
|
|
Denominator
|
|
|
|
|
|
|
Average shares outstanding (basic)
|
|
53.6
|
|
|
50.5
|
|
|
46.5
|
|
Effect of dilutive instruments:
|
|
|
|
|
|
|
Stock options and restricted stock units
|
|
0.2
|
|
|
0.1
|
|
|
0.2
|
|
|
|
|
|
|
|
|
Junior convertible securities
|
|
—
|
|
|
—
|
|
|
—
|
|
Average shares outstanding (diluted)
|
|
53.8
|
|
|
50.6
|
|
|
46.7
|
|
Average shares outstanding (diluted) in the table above excludes stock options and restricted stock units that have not met certain performance conditions and items that have an anti-dilutive effect on Earnings per share (diluted). The following is a summary of items excluded from the denominator in the table above:
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
2018
|
|
2019
|
|
2020
|
Stock options and restricted stock units
|
0.2
|
|
|
2.6
|
|
|
2.9
|
|
Junior convertible securities
|
2.2
|
|
|
2.2
|
|
|
2.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company may settle portions of its Affiliate equity purchases in shares of its common stock. Because it is the Company’s intention to settle these potential purchases in cash, the calculation of Average shares outstanding (diluted) excludes any potential dilutive effect from possible share settlements of Affiliate equity purchases.
22.Comprehensive Income
The following tables present the tax effects allocated to each component of Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2018
|
|
|
Pre-Tax
|
|
Tax Expense
|
|
Net of Tax
|
Foreign currency translation loss
|
|
$
|
(87.0)
|
|
|
$
|
(15.1)
|
|
|
$
|
(102.1)
|
|
Change in net realized and unrealized loss on derivative financial instruments
|
|
(0.1)
|
|
|
—
|
|
|
(0.1)
|
|
|
|
|
|
|
|
|
Other comprehensive loss
|
|
$
|
(87.1)
|
|
|
$
|
(15.1)
|
|
|
$
|
(102.2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2019
|
|
|
Pre-Tax
|
|
Tax Benefit
|
|
Net of Tax
|
Foreign currency translation gain (loss)
|
|
$
|
(11.4)
|
|
|
$
|
22.3
|
|
|
$
|
10.9
|
|
Change in net realized and unrealized gain on derivative financial instruments
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
$
|
(9.7)
|
|
|
$
|
22.3
|
|
|
$
|
12.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2020
|
|
|
Pre-Tax
|
|
Tax (Expense) Benefit
|
|
Net of Tax
|
Foreign currency translation gain (loss)
|
|
$
|
25.5
|
|
|
$
|
(10.3)
|
|
|
$
|
15.2
|
|
Change in net realized and unrealized gain (loss) on derivative financial instruments
|
|
(1.9)
|
|
|
0.4
|
|
|
(1.5)
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
$
|
23.6
|
|
|
$
|
(9.9)
|
|
|
$
|
13.7
|
|
The components of accumulated other comprehensive income (loss), net of taxes, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign Currency Translation Adjustment
|
|
Realized and Unrealized Gains (Losses) on Derivative Financial Instruments
|
|
|
|
Total
|
Balance, as of December 31, 2018
|
|
$
|
(188.0)
|
|
|
$
|
(0.5)
|
|
|
|
|
$
|
(188.5)
|
|
Other comprehensive income before reclassifications
|
|
10.9
|
|
|
2.2
|
|
|
|
|
13.1
|
|
Amounts reclassified
|
|
—
|
|
|
(0.5)
|
|
|
|
|
(0.5)
|
|
Net other comprehensive income
|
|
10.9
|
|
|
1.7
|
|
|
|
|
12.6
|
|
Balance, as of December 31, 2019
|
|
$
|
(177.1)
|
|
|
$
|
1.2
|
|
|
|
|
$
|
(175.9)
|
|
Other comprehensive income (loss) before reclassifications
|
|
15.2
|
|
|
(0.9)
|
|
|
|
|
14.3
|
|
Amounts reclassified
|
|
—
|
|
|
(0.6)
|
|
|
|
|
(0.6)
|
|
Net other comprehensive income (loss)
|
|
15.2
|
|
|
(1.5)
|
|
|
|
|
13.7
|
|
Balance, as of December 31, 2020
|
|
$
|
(161.9)
|
|
|
$
|
(0.3)
|
|
|
|
|
$
|
(162.2)
|
|
In connection with the adoption of ASU 2018-02 in 2019, the Company elected to reclassify to Retained earnings $6.6 million of tax effects stranded in Accumulated other comprehensive loss as a result of the enactment of the Tax Cuts and Jobs Act on December 22, 2017.
23.Geographic Information
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents Consolidated revenue and Fixed assets (net) of the Company by geographic location. For Affiliates, this information is primarily based on the location of the Affiliates’ headquarters.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Years Ended December 31,
|
|
2018
|
|
2019
|
|
2020
|
Consolidated revenue
|
|
|
|
|
|
United States
|
$
|
1,611.7
|
|
|
$
|
1,642.2
|
|
|
$
|
1,524.0
|
|
United Kingdom
|
628.8
|
|
|
515.2
|
|
|
462.3
|
|
Other
|
137.9
|
|
|
82.2
|
|
|
41.2
|
|
Total
|
$
|
2,378.4
|
|
|
$
|
2,239.6
|
|
|
$
|
2,027.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
2019
|
|
2020
|
Fixed assets (net)
|
|
|
|
|
|
United States
|
|
|
$
|
75.6
|
|
|
$
|
64.2
|
|
United Kingdom
|
|
|
15.8
|
|
|
14.6
|
|
Other
|
|
|
0.9
|
|
|
0.8
|
|
Total
|
|
|
$
|
92.3
|
|
|
$
|
79.6
|
|
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Schedule II
Valuation and Qualifying Accounts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
Balance
Beginning of
Period
|
|
Additions
Charged to Costs
and Expenses
|
|
Additions
Charged to
Other Accounts
|
|
Deductions
|
|
Balance
End of Period
|
Income Tax Valuation Allowance
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31,
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
$
|
16.9
|
|
|
$
|
18.4
|
|
|
$
|
0.3
|
|
|
$
|
—
|
|
|
$
|
35.6
|
|
2019
|
|
24.1
|
|
|
4.9
|
|
|
—
|
|
|
12.1
|
|
|
16.9
|
|
2018
|
|
24.1
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
|
24.1
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Allowances(1)
|
|
|
|
|
|
|
|
|
|
|
Year Ending December 31,
|
|
|
|
|
|
|
|
|
|
|
2020
|
|
$
|
4.1
|
|
|
$
|
3.8
|
|
|
$
|
—
|
|
|
$
|
3.1
|
|
|
$
|
4.8
|
|
2019
|
|
5.0
|
|
|
1.0
|
|
|
—
|
|
|
1.9
|
|
|
4.1
|
|
2018
|
|
3.6
|
|
|
6.4
|
|
|
—
|
|
|
5.0
|
|
|
5.0
|
|
__________________________
(1)Other allowances represented reserves on notes received in connection with transfers of our interests in certain Affiliates, as well as other receivable amounts, which we considered uncollectible. Deductions represented the reversal of such reserves upon collection of the amounts due.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A.Controls and Procedures
As required by Rule 13a-15 of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), as of December 31, 2020, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that (i) information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible controls and procedures. Our disclosure controls and procedures were designed to provide reasonable assurance of achieving their stated objectives, and our principal executive officer and principal financial officers concluded that our disclosure controls and procedures were effective at the reasonable assurance level. We review on an ongoing basis and document our disclosure controls and procedures, and our internal control over financial reporting, and we may from time to time make changes in an effort to enhance their effectiveness and ensure that our systems evolve with our business. See “Management’s Report on Internal Control over Financial Reporting” in Item 8.
Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has issued an audit report on our internal control over financial reporting, which is included in Item 8.
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended December 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Item 9B.Other Information
None.
AFFILIATED MANAGERS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
PART III
Item 10.Directors, Executive Officers and Corporate Governance
Information required by this Item will be set forth in our proxy statement for our 2020 Annual Meeting of Stockholders (to be filed within 120 days after December 31, 2020) (the “Proxy Statement”), and is incorporated herein by reference.
Item 11.Executive Compensation
Information required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Information required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.
Item 13.Certain Relationships and Related Transactions and Director Independence
Information required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.
Item 14.Principal Accountant Fees and Services
Information required by this Item will be set forth in our Proxy Statement, and is incorporated herein by reference.
PART IV
Item 15.Exhibits, Financial Statement Schedules
(a)(1) Financial Statements: See Item 8 of this Annual Report on Form 10-K.
(2) Financial Statement Schedule required by Part II, Item 8 is included in Item 8:
|
|
|
|
|
|
|
|
|
|
|
Page No.
|
Schedule II - Valuation and Qualifying Accounts for the years ended December 31, 2020, 2019 and 2018
|
|
|
(3) Exhibits: See the Exhibit Index below and incorporated by reference herein.
Item 16.Form 10-K Summary
None.
Exhibit Index
|
|
|
|
|
|
3.1
|
|
|
3.2
|
|
|
3.3
|
|
|
3.4
|
|
|
3.5
|
|
|
4.1
|
|
4.2
|
Amended and Restated Declaration of Trust of AMG Capital Trust II, dated as of October 17, 2007, by and among Affiliated Managers Group, Inc., U.S. Bank National Association, successor in interest to Bank of America National Trust Delaware, successor by merger to LaSalle National Trust Delaware, as Delaware Trustee, U.S. Bank National Association, successor in interest to Bank of America, N.A., successor by merger to LaSalle Bank National Association, as Property Trustee and Institutional Administrator, and the holders from time to time of undivided beneficial interests in the assets of AMG Capital Trust II (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed October 18, 2007)
|
4.3
|
Indenture, dated as of October 17, 2007, by and between Affiliated Managers Group, Inc. and U.S. Bank National Association, successor in interest to Bank of America, N.A., successor by merger to LaSalle Bank National Association, as Debenture Trustee (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed October 18, 2007)
|
4.4
|
First Supplemental Indenture, dated as of January 10, 2014, by and between Affiliated Managers Group, Inc. and U.S. Bank National Association, successor in interest to Bank of America, N.A., successor by merger to LaSalle Bank National Association, as Debenture Trustee (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (No. 001-13459), filed February 27, 2014)
|
4.5
|
Guarantee Agreement, dated as of October 17, 2007, by and between Affiliated Managers Group, Inc. and U.S. Bank National Association, successor in interest to Bank of America, N.A., successor by merger to LaSalle Bank National Association, as Guarantee Trustee (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed October 18, 2007)
|
4.6
|
|
|
4.7
|
|
|
4.8
|
|
|
4.9
|
|
|
4.10
|
|
First Supplemental Indenture related to the 5.875% Junior Subordinated Notes due 2059, dated as of March 27, 2019, between Affiliated Managers Group, Inc., as issuer, and U.S. Bank National Association, as trustee, including the form of Global Note attached as Annex A thereto (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed March 27, 2019)
|
4.11
|
|
Second Supplemental Indenture related to the 4.750% Junior Subordinated Notes due 2060, dated as of September 23, 2020, between Affiliated Managers Group, Inc., as issuer, and U.S. Bank National Association, as trustee, including the form of Global Note attached as Annex A thereto (incorporated by reference to the Company's Current Report on Form 8-K (No. 001-13459), filed September 23, 2020)
|
4.12
|
|
|
|
|
|
|
|
|
4.13
|
|
First Supplemental Indenture related to the 3.300% Senior Notes due 2030, dated as of June 5, 2020, between Affiliated Managers Group, Inc., as issuer, and U.S. Bank National Association, as trustee, including the form of Global Note attached as Annex A thereto (incorporated by reference to the Company's Current Report on Form 8-K (No. 001-13459), filed June 5, 2020)
|
4.14
|
|
|
10.1†
|
|
10.2†
|
|
10.3†
|
|
10.4†
|
|
10.5†
|
|
10.6†
|
|
10.7†
|
|
10.8†
|
|
10.9†
|
|
10.10†
|
|
10.11†
|
|
10.12†
|
|
10.13†
|
|
10.14†
|
|
10.15†
|
|
10.16†
|
|
10.17†
|
|
10.18†
|
|
10.19†
|
|
10.20†
|
|
10.21†
|
|
10.22†
|
|
10.23†
|
|
10.24†
|
|
|
|
|
|
|
|
10.25†
|
|
10.26†
|
|
10.27†
|
|
10.28†
|
|
10.29†
|
|
10.30†
|
|
10.31†
|
|
10.32†
|
|
10.33†
|
|
10.34
|
|
Amended and Restated Credit Agreement, dated as of January 18, 2019, by and among Affiliated Managers Group, Inc., Bank of America, N.A., as administrative agent, letter of credit issuer and swingline lender, and the other lending institutions from time to time party thereto, and the exhibits and schedules thereto (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed January 22, 2019)
|
10.35
|
|
Third Amended and Restated Term Credit Agreement, dated as of January 18, 2019, by and among Affiliated Managers Group, Inc., Bank of America, N.A., as administrative agent, and the other lending institutions from time to time party thereto, and the exhibits and schedules thereto (incorporated by reference to the Company’s Current Report on Form 8-K (No. 001-13459), filed January 22, 2019)
|
10.36
|
|
First Amendment to Third Amended and Restated Term Credit Agreement, dated as of January 8, 2021, among Affiliated Managers Group, Inc., as borrower, Bank of America, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to the Company's Current Report on Form 8-K (No. 001-13459), filed January 8, 2021)
|
10.37
|
|
|
10.38
|
|
|
21.1
|
|
23.1
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101
|
The following financial statements from the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are filed herewith, formatted in XBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Income for the years ended December 31, 2020, 2019, and 2018, (ii) the Consolidated Balance Sheets as of December 31, 2020 and December 31, 2019, (iii) the Consolidated Statement of Equity for the years ended December 31, 2020, 2019, and 2018, (iv) the Consolidated Statements of Cash Flows for the years ended December 31, 2020, 2019, and 2018, and (v) the Notes to the Consolidated Financial Statements
|
104
|
|
The cover page from the Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, formatted in XBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101
|
† Indicates a management contract or compensatory plan
* Filed herewith
** Furnished herewith
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AFFILIATED MANAGERS GROUP, INC.
(Registrant)
|
Date: February 19, 2021
|
|
|
By:
|
/s/ JAY C. HORGEN
|
|
|
|
|
Jay C. Horgen
President and Chief Executive Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ JAY C. HORGEN
|
|
President, Chief Executive Officer
(Principal Executive Officer) and Director
|
|
February 19, 2021
|
Jay C. Horgen
|
|
|
|
|
|
|
|
/s/ THOMAS M. WOJCIK
|
|
Chief Financial Officer (Principal Financial and Principal
Accounting Officer)
|
|
February 19, 2021
|
Thomas M. Wojcik
|
|
|
|
|
|
|
|
/s/ KAREN L. ALVINGHAM
|
|
Director
|
|
February 19, 2021
|
Karen L. Alvingham
|
|
|
|
|
|
|
|
|
/s/ TRACY A. ATKINSON
|
|
Director
|
|
February 19, 2021
|
Tracy A. Atkinson
|
|
|
|
|
|
|
|
|
|
/s/ DWIGHT D. CHURCHILL
|
|
Director
|
|
February 19, 2021
|
Dwight D. Churchill
|
|
|
|
|
|
|
|
|
|
/s/ REUBEN JEFFERY III
|
|
Director
|
|
February 19, 2021
|
Reuben Jeffery III
|
|
|
|
|
|
|
|
|
|
/s/ FELIX V. MATOS RODRIGUEZ
|
|
Director
|
|
February 19, 2021
|
Felix V. Matos Rodriguez
|
|
|
|
|
|
|
|
|
|
/s/ TRACY P. PALANDJIAN
|
|
Director
|
|
February 19, 2021
|
Tracy P. Palandjian
|
|
|
|
|
|
|
|
|
|
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