AFFILIATED MANAGERS GROUP, INC. - Quarter Report: 2011 June (Form 10-Q)

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-Q


(Mark One)
ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2011
OR
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission File Number 001-13459

Affiliated Managers Group, Inc.
(Exact name of registrant as specified in its charter)


Delaware		04-3218510
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

600 Hale Street, Prides Crossing, Massachusetts 01965
(Address of principal executive offices)

(617) 747-3300
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ý		Accelerated filer o		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

There were 52,055,990 shares of the registrant's common stock outstanding on August 3, 2011.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

AFFILIATED MANAGERS GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)

(unaudited)

		For the Three Months Ended June 30,						For the Six Months Ended June 30,

		2010			2011			2010			2011
Revenue		$	332.1		$	462.3		$	583.1		$	888.5
Operating expenses:
	Compensation and related expenses		142.7			196.5			262.0			376.0
	Selling, general and administrative		72.1			90.6			117.4			178.1
	Amortization of intangible assets		9.6			22.1			18.5			44.2
	Depreciation and other amortization		3.4			3.8			6.4			7.6
	Other operating expenses		8.5			9.3			14.4			17.7

			236.3			322.3			418.7			623.6

Operating income			95.8			140.0			164.4			264.9

Non-operating (income) and expenses:
	Investment and other (income) loss		(0.7	)		6.1			(3.5	)		(2.6	)
	Income from equity method investments		(9.9	)		(20.1	)		(19.0	)		(30.3	)
	Investment loss from Affiliate investments in partnerships		8.6			—			4.5			—
	Interest expense		16.3			18.1			32.4			37.4
	Imputed interest expense		6.4			8.3			10.1			16.6

			20.7			12.4			24.5			21.1

Income before income taxes			75.1			127.6			139.9			243.8
Income taxes			16.9			26.6			28.9			53.4

Net income			58.2			101.0			111.0			190.4
Net income (non-controlling interests)			(41.4	)		(55.5	)		(72.7	)		(105.9	)
Net loss (non-controlling interests in partnerships)			8.4			—			4.4			—

Net Income (controlling interest)		$	25.2		$	45.5		$	42.7		$	84.5

Average shares outstanding—basic			44.6			52.1			43.5			51.9
Average shares outstanding—diluted			47.6			53.4			46.5			53.3
Earnings per share—basic		$	0.56		$	0.87		$	0.98		$	1.63
Earnings per share—diluted		$	0.53		$	0.85		$	0.92		$	1.59
Supplemental disclosure of total comprehensive income:
Net income		$	58.2		$	101.0		$	111.0		$	190.4
Other comprehensive income (loss)			(24.2	)		(1.5	)		1.2			9.9

Comprehensive income			34.0			99.5			112.2			200.3
Comprehensive income (non-controlling interests)			(33.0	)		(55.5	)		(68.3	)		(105.9	)

Comprehensive income (controlling interest)		$	1.0		$	44.0		$	43.9		$	94.4

The accompanying notes are an integral part of the Consolidated Financial Statements.

AFFILIATED MANAGERS GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)

			December 31, 2010			June 30, 2011

Assets
Current assets:
	Cash and cash equivalents		$	313.3		$	311.2
	Investment advisory fees receivable			236.4			252.7
	Investments in marketable securities			116.0			147.0
	Unsettled fund share receivables			42.0			92.0
	Prepaid expenses and other current assets			61.7			74.3

		Total current assets		769.4			877.2
Fixed assets, net				67.7			65.0
Equity investments in Affiliates				678.9			622.9
Acquired client relationships, net				1,424.2			1,384.6
Goodwill				2,131.2			2,138.1
Other assets				219.8			237.2

		Total assets	$	5,291.2		$	5,325.0

Liabilities and Equity
Current liabilities:
	Accounts payable and accrued liabilities		$	252.8		$	297.5
	Unsettled fund share payables			39.8			72.6
	Payables to related party			114.8			17.1

		Total current liabilities		407.4			387.2
Senior debt				460.0			295.0
Senior convertible securities				422.1			428.9
Junior convertible trust preferred securities				509.9			511.2
Deferred income taxes				495.4			508.1
Other long-term liabilities				207.8			216.1

		Total liabilities		2,502.6			2,346.5
Redeemable non-controlling interests				406.3			517.9
Equity:
	Common stock			0.5			0.5
	Additional paid-in capital			980.5			866.5
	Accumulated other comprehensive income			100.5			110.4
	Retained earnings			1,011.8			1,096.3

				2,093.3			2,073.7
	Less treasury stock, at cost			(293.3	)		(239.9	)

		Total stockholders' equity		1,800.0			1,833.8
	Non-controlling interests			582.3			626.8

	Total equity			2,382.3			2,460.6

	Total liabilities and equity		$	5,291.2		$	5,325.0

The accompanying notes are an integral part of the Consolidated Financial Statements.

AFFILIATED MANAGERS GROUP, INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in millions)

(unaudited)

	Total Stockholders' Equity

	Common Stock		Additional Paid-In Capital			Accumulated Other Comprehensive Income		Retained Earnings		Treasury Shares at Cost			Non- controlling interests			Total Equity
December 31, 2010	$	0.5	$	980.5		$	100.5	$	1,011.8	$	(293.3	)	$	582.3		$	2,382.3
Stock issued under option and other incentive plans		—		(32.5	)		—		—		53.4			—			20.9
Tax benefit of option exercises		—		5.7			—		—		—			—			5.7
Changes in Affiliate equity		—		(102.1	)		—		—		—			28.2			(73.9	)
Share-based payment arrangements		—		14.9			—		—		—			—			14.9
Distributions to non-controlling interests		—		—			—		—		—			(82.6	)		(82.6	)
Investments in Affiliates		—		—			—		—		—			(7.0	)		(7.0	)
Net Income		—		—			—		84.5		—			105.9			190.4
Other comprehensive income		—		—			9.9		—		—			—			9.9

June 30, 2011	$	0.5	$	866.5		$	110.4	$	1,096.3	$	(239.9	)	$	626.8		$	2,460.6

The accompanying notes are an integral part of the Consolidated Financial Statements.

AFFILIATED MANAGERS GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

			For the Three Months Ended June 30,						For the Six Months Ended June 30,

			2010			2011			2010			2011
Cash flow from operating activities:
	Net income		$	58.2		$	101.0		$	111.0		$	190.4
Adjustments to reconcile Net income to net cash flow from operating activities:
	Amortization of intangible assets			9.6			22.1			18.5			44.2
	Amortization of issuance costs			1.8			1.8			3.7			4.4
	Depreciation and other amortization			3.4			3.8			6.4			7.6
	Deferred income tax provision			9.0			7.4			17.7			17.0
	Imputed interest expense			6.4			8.3			10.1			16.6
	Income from equity method investments, net of amortization			(9.9	)		(20.1	)		(19.0	)		(30.3	)
	Distributions received from equity method investments			13.6			18.6			36.8			83.5
	Tax benefit from exercise of stock options			1.8			0.0			2.1			0.8
	Share-based compensation			3.2			5.9			6.8			12.0
	Affiliate equity expense			3.4			3.7			6.8			7.2
	Other adjustments			13.5			12.9			9.5			7.2
Changes in assets and liabilities:
	Increase in investment advisory fees receivable			(24.4	)		(21.8	)		(25.3	)		(18.8	)
	(Increase) decrease in prepaids and other current assets			8.2			(0.6	)		19.2			(3.0	)
	(Increase) decrease in other assets			3.0			(0.7	)		(8.1	)		(3.6	)
	(Increase) decrease in unsettled fund shares receivable			96.5			12.0			(2.2	)		(48.7	)
	Increase (decrease) in unsettled fund shares payable			(106.1	)		(22.9	)		2.3			31.5
	Increase (decrease) in accounts payable, accrued liabilities and other long-term liabilities			23.9			48.8			(13.2	)		(7.6	)

		Cash flow from operating activities		115.1			180.2			183.1			310.4

Cash flow used in investing activities:
	Investments in Affiliates			(665.4	)		—			(793.0	)		(13.3	)
	Purchase of fixed assets			(2.0	)		(2.7	)		(3.2	)		(4.4	)
	Purchase of investment securities			(15.5	)		(2.4	)		(30.4	)		(11.5	)
	Sale of investment securities			—			—			11.8			12.0

		Cash flow used in investing activities		(682.9	)		(5.1	)		(814.8	)		(17.2	)

Cash flow from (used in) financing activities:
	Borrowings of senior bank debt			782.5			110.0			1,017.5			110.0
	Repayments of senior bank debt			(293.0	)		(155.0	)		(358.0	)		(275.0	)
	Issuance of common stock			23.0			5.7			25.4			20.9
	Issuance costs			(0.1	)		—			(0.2	)		(7.7	)
	Excess tax benefit from exercise of stock options			4.4			—			4.7			4.9
	Settlement of treasury lock			—			—			—			4.0
	Settlement of forward equity sale agreement			100.0			—			100.0			—
	Note payments			(0.5	)		(72.5	)		(25.9	)		(72.5	)
	Distributions to non-controlling interests			(23.1	)		(13.2	)		(60.2	)		(82.6	)
	Affiliate equity issuances and repurchases			(6.9	)		8.0			(109.5	)		0.1

		Cash flow from (used in) financing activities		586.3			(117.0	)		593.8			(297.9	)

Effect of foreign exchange rate changes on cash and cash equivalents				(1.8	)		0.3			(1.1	)		2.6
Net increase (decrease) in cash and cash equivalents				16.7			58.4			(39.0	)		(2.1	)
Cash and cash equivalents at beginning of period				203.8			252.8			259.5			313.3

Cash and cash equivalents at end of period			$	220.5			311.2		$	220.5			311.2

Supplemental disclosure of non-cash financing activities:
	Notes received for Affiliate equity sales		$	1.9		$	2.1		$	7.6		$	11.6
	Payables recorded for Affiliate equity purchases			—			5.9			15.3			12.9
	Payables recorded under contingent payment arrangements			15.3			—			64.3			—
	Stock issued for Investments in Affiliates			146.9			—			146.9			—
	Stock issued for conversion of zero coupon senior convertible note			47.8			—			47.8			—
	Stock issued for settlement of forward equity sale agreement			44.5			—			44.5			—

The accompanying notes are an integral part of the Consolidated Financial Statements.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The consolidated financial statements of Affiliated Managers Group, Inc. ("AMG" or the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair statement of the results have been included. 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. Operating results for interim periods are not necessarily indicative of the results that may be expected for any other period or for the full year. The Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2010 includes additional information about AMG, its operations, financial position and accounting policies, and should be read in conjunction with this Quarterly Report on Form 10-Q.

All dollar and share amounts in these notes (except information that is presented on a per share, per security, per note or per contract basis) are stated in millions, unless otherwise indicated.

2. Senior Bank Debt

The Company has a revolving credit facility (the "credit facility") which allows for borrowings of up to $750.0 million at specified rates of interest that vary depending on the Company's credit ratings. Subject to the agreement of the lenders to provide incremental commitments and subject to certain requirements in the credit facility, the Company has the option to increase the credit facility by up to an additional $150.0 million.

The credit facility, which will mature in January 2015, is unsecured and contains financial covenants with respect to leverage and interest coverage and also contains customary affirmative and negative covenants, including limitations on indebtedness, liens, cash dividends, asset dispositions and fundamental corporate changes. At June 30, 2011, the Company had $295.0 million of outstanding borrowings.

As further described in Note 15, the Company has entered into interest rate swap contracts to exchange a fixed rate for the variable rate on a portion of its credit facility.

3. Convertible Securities

At June 30, 2011, the Company has one senior convertible security outstanding ("2008 senior convertible notes") and two junior convertible trust preferred securities outstanding issued in 2006 (the

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

"2006 junior convertible trust preferred securities") and in 2007 (the "2007 junior convertible trust preferred securities"). The carrying values of the Company's convertible securities are as follows:

		December 31, 2010				June 30, 2011

		Carrying Value		Principal amount at maturity		Carrying Value		Principal amount at maturity
Senior convertible securities:
	2008 senior convertible notes⁽¹⁾	$	422.1	$	460.0	$	428.9	$	460.0

Junior convertible trust preferred securities:
	2007 junior convertible trust preferred securities⁽¹⁾	$	296.3	$	430.8	$	297.0	$	430.8
	2006 junior convertible trust preferred securities⁽¹⁾		213.6		300.0		214.2		300.0

	Total junior convertible securities	$	509.9	$	730.8	$	511.2	$	730.8

(1): Carrying value is accreted to the principal amount at maturity over an expected life of five years for the 2008 senior convertible notes and 30 years for each of the junior convertible trust preferred securities.

The principal terms of these securities are summarized below.

	2008 Senior Convertible Notes⁽¹⁾		2007 Junior Convertible Trust Preferred Securities⁽²⁾		2006 Junior Convertible Trust Preferred Securities⁽³⁾

Issue Date	August 2008		October 2007		April 2006
Maturity Date	August 2038		October 2037		April 2036
Next Potential Put Date	August 2013		N/A		N/A
Denomination	$1,000		$50		$50
Current Conversion Rate	7.959		0.250		0.333
Current Conversion Price	$125.65		$200.00		$150.00
Stated Coupon	3.95	%	5.15	%	5.10	%
Coupon Frequency	Semi-annually		Quarterly		Quarterly
Tax Deduction Rate⁽⁴⁾	9.38	%	8.00	%	7.50	%

(1): The Company may redeem the notes for cash (subject to the holders' rights to convert) at any time on or after August 15, 2013.
(2): The Company may redeem the 2007 junior convertible trust preferred securities on or after October 15, 2012 if the closing price of the Company's common stock exceeds $260 per share for a specified period of time.
(3): The Company may redeem the 2006 junior convertible trust preferred securities on or after April 15, 2011 if the closing price of the Company's common stock exceeds $195 per share for a specified period of time.
(4): These 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. These deductions result in annual deferred tax liabilities of approximately $22.5 million. These deferred tax liabilities will be

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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.

4. Forward Equity Sale Agreements

In July 2011, the Company entered into a forward equity sale agreement with two major securities firms under which it may sell shares of common stock with an aggregate sales price of up to $300 million.

5. Income Taxes

The consolidated income tax provision includes taxes attributable to controlling interests and, to a lesser extent, taxes attributable to non-controlling interests as follows:

			For the Three Months Ended June 30,						For the Six Months Ended June 30,

			2010			2011			2010			2011
Controlling Interests:
	Current Tax		$	5.3		$	16.4		$	7.8		$	30.0
	Intangible related deferred taxes			14.3			12.9			25.1			25.8
	Other Deferred Taxes			(4.8	)		(5.0	)		(6.9	)		(7.8	)

		Total Controlling Interests		14.8			24.3			26.0			48.0

Non-Controlling Interests:
	Current Tax		$	2.6		$	2.8		$	3.4		$	6.4
	Deferred Taxes			(0.5	)		(0.5	)		(0.5	)		(1.0	)

		Total Non-Controlling Interests		2.1			2.3			2.9			5.4

Provision for income taxes			$	16.9		$	26.6		$	28.9		$	53.4

Income before income taxes (controlling interest)			$	40.0		$	69.8		$	68.7		$	132.5

Effective Tax rate attributable to controlling interests⁽¹⁾				37.0	%		34.8	%		37.8	%		36.2	%

(1): Taxes attributable to controlling interests divided by Income before income taxes (controlling interest).

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

A summary of the consolidated provision for income taxes is as follows:

		For the Three Months Ended June 30,						For the Six Months Ended June 30,

		2010			2011			2010			2011
Current:
	Federal	$	0.5		$	7.0		$	(0.2	)	$	13.2
	State		2.3			1.7			3.4			4.9
	Foreign		5.1			10.5			8.0			18.3

Total Current			7.9			19.2			11.2			36.4

Deferred:
	Federal	$	8.5		$	9.2		$	16.4		$	20.6
	State		1.6			0.5			2.8			1.1
	Foreign		(1.1	)		(2.3	)		(1.5	)		(4.7	)

Total Deferred			9.0			7.4			17.7			17.0

Provision for Income Taxes		$	16.9		$	26.6			28.9		$	53.4

The components of deferred tax assets and liabilities are as follows:

		December 31, 2010			June 30, 2011

Deferred Tax Assets
	State net operating loss carryforwards	$	30.6		$	28.6
	Foreign tax credit carryforwards		17.3			20.6
	Deferred compensation		10.3			13.4
	Tax benefit of uncertain tax positions		10.8			11.1
	Accrued expenses		8.5			10.7
	Capital loss carryforwards		1.5			1.5

Total deferred tax assets			79.0			85.9
Valuation allowance			(38.4	)		(36.6	)

Deferred tax assets, net of valuation allowance		$	40.6		$	49.3

Deferred Tax Liabilities
	Intangible asset amortization	$	(209.3	)	$	(231.0	)
	Convertible securities interest		(154.5	)		(162.6	)
	Non-deductible intangible amortization		(143.1	)		(141.8	)
	Deferred revenue		(26.3	)		(19.4	)
	Other		(2.8	)		(2.6	)

Total deferred tax liabilities			(536.0	)		(557.4	)

	Net deferred tax liability	$	(495.4	)	$	(508.1	)

Deferred tax liabilities are primarily the result of tax deductions for the Company's intangible assets and convertible securities. The Company amortizes most of its intangible assets for tax purposes only, reducing its tax basis below its carrying value for financial statement purposes and generating deferred taxes each reporting period. The Company's 2008 senior convertible notes and junior

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

convertible trust preferred securities also generate deferred taxes because the Company's tax deductions are higher than the interest expense recorded for financial statement purposes.

At June 30, 2011, the Company has state net operating loss carryforwards that expire over a 15-year period beginning in 2011. The Company also has foreign tax credit carryforwards that expire over a 10-year period beginning in 2011. The valuation allowances at December 31, 2010 and June 30, 2011 were principally related to the Company's ability to generate sufficient taxable income prior to the expiration of these carryforwards.

The Company has ongoing tax examinations in the United States and foreign jurisdictions. Examination outcomes, and any related settlements, are subject to significant uncertainty. The completion of examinations may result in the payment of additional taxes and/or the recognition of tax benefits.

At June 30, 2011, the Company's liability for uncertain tax positions was $23.2 million, including $11.1 million of liabilities that would generate tax benefits if settled. The Company's liability for uncertain tax positions also includes $2.6 million for interest and related charges. As a result of tax examination settlements and the expiration of statutes of limitations, this liability could increase by up to $3.0 million in the next 12 months.

6. Earnings Per Share

The calculation of basic earnings per share is based on the weighted average number of shares of the Company's common stock outstanding during the period. Diluted earnings per share is similar to basic earnings per share, 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 Three Months Ended June 30,				For the Six Months Ended June 30,

		2010		2011		2010		2011
Numerator:
Net Income (controlling interest)		$	25.2	$	45.5	$	42.7	$	84.5
Interest expense on convertible securities, net of taxes			0.0		—		0.0		—

Net Income (controlling interest), as adjusted		$	25.2	$	45.5	$	42.7	$	84.5

Denominator:
Average shares outstanding—basic			44.6		52.1		43.5		51.9
Effect of dilutive instruments:
	Stock options		1.0		1.3		1.0		1.4
	Forward sale		1.4		—		1.3		—
	Senior convertible securities		0.6		—		0.7		—

Average shares outstanding—diluted			47.6		53.4		46.5		53.3

As more fully discussed in Note 3, the Company had convertible securities outstanding during the periods presented and is required to apply the if-converted method to these securities in its calculation of diluted earnings per share. Under the if-converted method, shares that are issuable upon conversion are deemed outstanding, regardless of whether the securities are contractually convertible into the

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

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 diluted earnings per share calculations in the table above exclude the anti-dilutive effect of the following shares:

	For the Three Months Ended June 30,				For the Six Months Ended June 30,

	2010		2011		2010		2011
Stock options		0.8		0.6		1.2		0.6
Senior convertible securities		3.7		3.7		3.7		3.7
Junior convertible trust preferred securities		4.1		4.1		4.1		4.1

As discussed further in Note 18, the Company may settle portions of its Affiliate equity purchases in shares of its common stock. Because it is the Company's intent to settle these potential repurchases in cash, the calculation of diluted earnings per share excludes any potential dilutive effect from possible share settlements.

7. Commitments and Contingencies

The Company and its Affiliates are subject to claims, legal proceedings and other contingencies in the ordinary course of their business activities. Each of these matters is 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 for matters for which the outcome is probable and can be reasonably estimated. Management believes that any liability in excess of these accruals upon the ultimate resolution of these matters will not have a material adverse effect on the Company.

Certain Affiliates operate under regulatory authorities which require that they maintain minimum financial or capital requirements. Management is not aware of any material violations of such financial requirements.

In connection with its investment in Pantheon Ventures, the Company has committed to co-invest in certain investment partnerships where it serves as the general partner. As of June 30, 2011, these commitments totaled approximately $89.6 million and may be called in future periods. Russell Investments (Pantheon Ventures former owner) is contractually obligated to reimburse the Company for $58.7 million of these commitments if they are called.

Under past acquisition agreements, the Company is contingently liable, upon achievement of specified financial targets, to make payments of up to $496.8 million through 2015. In 2011, the Company expects to make payments of approximately $1.4 million to settle portions of these contingent obligations.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

8. Investments in Marketable Securities

Investments in marketable securities are comprised of the Company's investments in Value Partners Group Limited ("Value Partners"), a publicly-traded asset management firm based in Hong Kong, and investments held by Affiliates. The Company invested an additional $38.6 million in Value Partners during the quarter for a total investment of $79.6 million, representing 7.8% of the outstanding common stock at June 30, 2011. These investments are carried at their fair value. Changes in fair value for securities classified as available-for-sale are reported in accumulated other comprehensive income. Changes in fair value for trading securities are reported within other operating expenses.

A summary of our investments in marketable securities follows:

		December 31, 2010			June 30, 2011

Cost of investments in marketable securities		$	68.9		$	107.1
Gross unrealized gains			47.1			39.9
Gross unrealized losses			(0.0	)		(0.0	)

	Total	$	116.0		$	147.0

9. Cost Method Investments

The Company has other cost method investments reported in "Other assets" in which it owns less than a 20% interest and does not exercise significant influence. The balance of these investments was $27.4 million and $14.6 million as of December 31, 2010 and June 30, 2011, respectively. During the three months ended June 30, 2011, the Company determined that the value of a cost method investment had been reduced to zero and recorded a $12.8 million write-down in "Investment and other (income) loss" (allocated to the Company's High Net Worth distribution channel—see Note 16).

10. Unsettled Fund Share Receivables and Payables

Unsettled fund share receivables and payables are created by the normal settlement periods on transactions initiated by certain clients of Affiliate funds domiciled in the United Kingdom. The gross presentation of the receivable and offsetting payable reflects the legal relationship between the underlying investor and the Company.

11. Fair Value Measurements

The Company determines the fair value of certain investment securities and other financial and nonfinancial 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 the most advantageous market, 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 reflecting the Company's own assumptions concerning unobservable inputs to the valuation model. These inputs require significant management judgment and reflect the Company's estimation of assumptions that market participants would use in pricing the asset or liability.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes the Company's assets and liabilities that are measured at fair value on a recurring basis:

					Fair Value Measurements

			December 31, 2010		Fair Value Measurements
			December 31, 2010		Level 1		Level 2		Level 3
Financial Assets
	Cash and cash equivalents		$	36.0	$	36.0	$	—	$	—
	Partnership investments⁽¹⁾			124.5		16.9		21.8		85.8
	Investments in marketable securities⁽²⁾
		Trading securities		15.4		15.2		0.2		—
		Available for sale securities		100.6		99.2		1.4		—
	Interest rate derivatives			5.9		—		5.9		—
Financial Liabilities
	Contingent payment obligations⁽³⁾		$	84.0	$	—	$	—	$	84.0
	Obligations to related parties			79.6		—		—		79.6

					Fair Value Measurements

			June 30, 2011		Fair Value Measurements
			June 30, 2011		Level 1		Level 2		Level 3
Financial Assets
	Cash and cash equivalents		$	16.2	$	16.2	$	—	$	—
	Partnership investments⁽¹⁾			166.4		36.2		28.2		102.0
	Investments in marketable securities⁽²⁾
		Trading securities		15.7		15.7		—		—
		Available for sale securities		131.3		131.3		—		—
	Interest rate derivatives			0.7		—		0.7		—
Financial Liabilities
	Contingent payment obligations⁽³⁾		$	91.7	$	—	$	—	$	91.7
	Obligations to related parties			71.2		—		—		71.2

(1): Partnerships investments are reported within "Prepaid expenses and other current assets" and "Other assets" on the Consolidated Balance Sheets.
(2): Principally investments in equity securities.
(3): Contingent payment obligations are reported in "Other long-term liabilities."

The following is a description of the significant assets and liabilities measured at fair value and the fair value methodologies used.

Cash equivalents consist primarily of highly liquid investments in money market funds. Cash investments in actively traded money market funds are classified as Level 1.

Partnership investments consist of investments in funds advised by Affiliates and are valued using net asset value ("NAV"). Investments in actively traded funds that calculate daily NAVs are classified as Level 1. Investments in non-public funds that hold investments with observable market prices are classified as Level 2. Investments in funds that hold illiquid securities or that are subject to redemption restrictions are classified as Level 3. The fair value of Level 3 assets was determined using NAV one quarter in arrears (adjusted for current period calls and distributions).

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Investments in marketable securities consist primarily of investments in funds advised by Affiliates which are valued using NAV and in publicly traded securities. Investments in actively traded funds that calculate daily NAVs and actively traded public securities are classified as Level 1. Investments in other funds that hold investments with observable market prices are classified as Level 2.

Interest rate derivatives include Treasury rate lock contracts and interest rate swaps at December 31, 2010 and only interest rate swaps at June 30, 2011. The fair value of these assets was determined by model-derived valuations in which all significant inputs were observable in active markets.

Contingent payment obligations represents the present value of the expected future settlement of contingent payment arrangements related to the Company's business combinations. The fair value of these obligations is determined using an income approach with assumptions made about future cash flows and discount rates.

Obligations to related parties include agreements to repurchase Affiliate equity and liabilities offsetting certain investments which are held by the Company but economically attributable to a related party. The fair value of the agreements to repurchase Affiliate equity is determined using an income approach with assumptions made about future cash flows and discount rates. The liability to a related party is measured based upon certain investments held by the Company, the fair value of which is determined using NAV.

The following tables present the changes in Level 3 assets and liabilities for the three and six months ended June 30, 2010 and 2011:

	Level 3 Financial Assets and Financial Liabilities at Fair Value

Three Months Ended June 30, 2010	Balance, beginning of period		Net realized gains/(losses)			Net unrealized gains/losses relating to instruments still held at the reporting date			Net purchases, issuances and settlements		Settlements and reductions		Net transfers in and/or out of Level 3		Balance, end of period
Partnership investments	$	0.3	$	(0.1	)⁽¹⁾	$	—		$	63.5	$	—	$	—	$	63.7
Contingent payment obligations		49.1		2.6	⁽²⁾		(0.8	)⁽²⁾		15.3		—		—		66.2
Obligations to related parties		15.3		—			—			33.7		—		—		49.0

	Level 3 Financial Assets and Financial Liabilities at Fair Value

Three Months Ended June 30, 2011	Balance, beginning of period		Net realized gains/(losses)			Net unrealized gains/losses relating to instruments still held at the reporting date			Net purchases, issuances and settlements		Settlements and reductions			Net transfers in and/or out of Level 3		Balance, end of period
Partnership investments	$	93.6	$	(0.1	)⁽¹⁾	$	4.9	⁽¹⁾	$	5.8	$	(2.2	)	$	—	$	102.0
Contingent payment obligations		89.4		—			4.0	⁽²⁾		—		(1.7	)		—		91.7
Obligations to related parties		67.9		0.3	⁽³⁾		1.1	⁽³⁾		3.4		(1.5	)		—		71.2

	Level 3 Financial Assets and Financial Liabilities at Fair Value

Six Months Ended June 30, 2010	Balance, beginning of period		Net realized gains/(losses)			Net unrealized gains/losses relating to instruments still held at the reporting date			Net purchases, issuances and settlements		Settlements and reductions			Net transfers in and/or out of Level 3			Balance, end of period
Partnership investments	$	4.0	$	(0.1	)⁽¹⁾	$	—		$	63.5	$	—		$	(3.7	)	$	63.7
Contingent payment obligations		27.1		2.6	⁽²⁾		(0.8	)⁽²⁾		64.4		(27.1	)		—			66.2
Obligations to related parties		78.7		(0.2	)⁽³⁾		—			49.0		(78.5	)		—			49.0

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

	Level 3 Financial Assets and Financial Liabilities at Fair Value

Six Months Ended June 30, 2011	Balance, beginning of period		Net realized gains/(losses)			Net unrealized gains/losses relating to instruments still held at the reporting date			Net purchases, issuances and settlements		Settlements and reductions			Net transfers in and/or out of Level 3		Balance, end of period
Partnership investments	$	85.8	$	1.0	⁽¹⁾	$	10.5	⁽¹⁾	$	8.6	$	(3.9	)	$	—	$	102.0
Contingent payment obligations		84.0		—			9.4	⁽²⁾		—		(1.7	)		—		91.7
Obligations to related parties		79.6		0.6	⁽³⁾		3.6	⁽³⁾		13.0		(25.6	)		—		71.2

(1): Recorded in "Investment and other (income) loss" and "Investment loss from Affiliate investments in partnerships."
(2): Recorded in "Imputed interest expense" and "Other comprehensive income (loss)."
(3): Recorded in "Interest expense" and "Investment and other (income) loss."

There were no significant transfers of financial assets or liabilities between Level 2 and Level 1 in the three-month or six-month periods ended June 30, 2010 and 2011.

The Company relies on the NAV of certain investments as their fair value. The NAVs that have been provided by the investees have been derived from the fair values of the underlying investments as of the measurement dates. The following table summarizes, as of December 31, 2010 and June 30, 2011, the nature of these investments and any related liquidation restrictions or other factors which may impact the ultimate value realized:

	December 31, 2010				June 30, 2011

Category of Investment	Fair Value		Unfunded Commitments		Fair Value		Unfunded Commitments
Private equity fund-of-funds⁽¹⁾	$	85.7	$	89.2	$	102.0	$	89.6
Other funds⁽²⁾		55.2		—		65.1		—

	$	140.9	$	89.2	$	167.1	$	89.6

(1): These funds primarily invest in a broad range of private equity funds, as well as making direct investments. Distributions will be received as the underlying assets are liquidated over the life of the funds, generally 15 years.
(2): These are multi-disciplinary funds that invest across various asset classes and strategies including long/short equity, credit and real estate. Investments are generally redeemable on a daily or quarterly basis.

There are no current plans to sell any of these investments.

The carrying amount of the Company's cash, cash equivalents and short-term investments approximates fair value because of the short-term nature of these instruments. The carrying value of notes receivable approximates fair value because interest rates and other terms of the notes are at market rates. The carrying value of notes payable approximates fair value principally because of the short-term nature of the notes. The carrying value of senior bank debt approximates fair value because the debt is a credit facility with variable interest based on selected short-term rates. The fair market

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

value of the 2008 senior convertible notes and the junior convertible trust preferred securities at June 30, 2011 was $513.2 million and $653.1 million, respectively.

12. Variable Interest Entities

Sponsored Investment Funds

The Company's Affiliates act as the investment manager for certain investment funds that are considered variable interest entities ("VIEs"). In addition to an Affiliate's involvement as the investment manager, Affiliates may also hold investments in these products. Affiliates are not the primary beneficiary of these VIEs as their involvement is limited to that of a service provider and their investment, if any, represents an insignificant interest in the fund's assets under management. As a result, the Company's variable interests will not absorb the majority of the variability of the entity's net assets and therefore the Company has not consolidated these entities.

Trust Preferred Vehicles

The Company established wholly-owned trusts in connection with the 2006 and 2007 issuances of junior convertible trust preferred securities. These entities are considered VIEs and the Company is not the primary beneficiary, therefore these entities are not consolidated in the Company's financial statements.

The net assets and liabilities of these unconsolidated VIEs and the Company's maximum risk of loss related thereto are as follows:

	December 31, 2010				June 30, 2011

	Unconsolidated VIE Net Assets		Carrying Value and Maximum Exposure to Loss		Unconsolidated VIE Net Assets		Carrying Value and Maximum Exposure to Loss
Sponsored investment funds	$	3,350.7	$	0.9	$	3,635.9	$	1.0
Trust preferred vehicles		9.0		9.0		9.0		9.0

13. Related Party Transactions

The Company periodically records amounts receivable and payable to Affiliate partners in connection with the transfer of Affiliate equity interests. The Company also has liabilities to related parties for deferred purchase price and contingent payment obligations in connection with certain business combinations.

The total receivable as of December 31, 2010 was $42.9 million, which is included in "Other assets." The total receivable as of June 30, 2011 was $53.6 million, of which $3.3 million is included in "Prepaid expenses and other current assets" and $50.3 million is included in "Other assets." The total payable as of December 31, 2010 was $183.0 million, of which $114.8 million is included in "Payables to related party" and $68.2 million is included in "Other long-term liabilities." The total payable as of June 30, 2011 was $80.1 million, of which $17.1 million is included in "Payables to related party" and $63.0 million is included in "Other long-term liabilities."

In certain cases, Affiliate management owners and Company officers may serve as trustees or directors of certain mutual funds from which the Affiliate earns advisory fee revenue.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

14. Stock Option and Incentive Plans

The following summarizes the transactions of the Company's stock option and incentive plans for the six months ended June 30, 2011:

				Weighted Average Exercise Price

Unexercised options outstanding—January 1, 2011		5.1		$	62.34
	Options granted	—			—
	Options exercised	(0.4	)		47.23
	Options forfeited	(0.0	)		110.31

Unexercised options outstanding—June 30, 2011		4.7			63.75	4.7

Exercisable at June 30, 2011		2.3			59.22	3.8

The Company's Net Income (controlling interest) for the three and six months ended June 30, 2011 includes compensation expense of $3.6 million and $7.4 million, respectively (net of income tax benefits of $2.2 million and $4.6 million, respectively, related to the Company's Stock Option and Incentive, Executive Incentive, Long-Term Equity Interests and Deferred Compensation Plans). As of June 30, 2011, the Company expects to recognize compensation expense related to these share-based compensation arrangements of $63.8 million over a weighted average period of approximately three years (assuming no forfeitures). As of June 30, 2011, no outstanding options have expiration dates prior to the end of 2011.

15. Derivative Financial Instruments

The Company periodically uses derivative contracts to manage interest rate exposure associated with its variable interest rate debt.

In 2010, the Company entered into interest rate swap agreements as summarized in the table below:

	Notional Amount			Receiving	Start Date	Expiration Date

Counterparty A	$	25.0	1.67%	3-Month LIBOR	October 2010	October 2015
Counterparty A	$	25.0	1.65%	3-Month LIBOR	October 2010	October 2015
Counterparty B	$	25.0	1.59%	3-Month LIBOR	October 2010	October 2015
Counterparty B	$	25.0	2.14%	3-Month LIBOR	October 2010	October 2017

In November 2010, the Company entered into a series of treasury rate lock contracts with a total notional value of $100.0 million which were settled in February 2011 for a net pre-tax gain of $4.0 million (each contract was designated and qualified as a cash flow hedge). These contracts were intended to hedge the risks associated with changes in interest rates on a fixed-rate debt issuance that is anticipated to occur prior to June 2012. The gain on these contracts is reflected as a component of other comprehensive income and will be recognized as a deduction to interest expense over the life of

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

the expected fixed rate debt issuance, or recorded as other income in the event the Company determines that it is not probable it will issue the anticipated fixed rate debt.

Certain of the Company's derivative contracts contain provisions that may require the Company or the counterparties to post collateral based upon the current fair value of the derivative contracts. As of June 30, 2011, the Company had posted collateral of $1.3 million.

The Company records all derivative instruments on the balance sheet at fair value. As cash flow hedges, the effective portion of the unrealized gain or loss on the derivative instruments is recorded in accumulated other comprehensive income as a separate component of stockholders' equity. Hedge effectiveness is measured by comparing the present value of the cumulative change in the expected future variable cash flows of the hedged contract with the present value of the cumulative change in the expected future variable cash flows of the hedged item. To the extent that the critical terms of the hedged item and the derivative are not identical, hedge ineffectiveness would be reported in earnings as interest expense. Hedge ineffectiveness was not material in any periods presented. As of June 30, 2011, the unrealized gain (before taxes) on the derivative instruments was $0.7 million. The Company does not expect to reclassify any material portion of the unrealized gain into earnings in the next twelve months.

The following summarizes the location and amount of derivative instrument gains and losses (before taxes) reported in the Consolidated Statements of Income:

		Amount of Gain (Loss) Recognized in Other Comprehensive Income					Amount of Gain (Loss) Recognized in Other Comprehensive Income

		For the Three Months Ended June 30,					For the Six Months Ended June 30,
		2010		2011			2010		2011
Cash Flow Hedges
Interest rate swaps		$	—	$	(2.4	)	$	—	$	(1.8	)
Treasury rate locks			—		—			—		0.5

	Total	$	—	$	(2.4	)	$	—	$	(1.3	)

The following summarizes the location and fair values of derivative instruments on the Consolidated Balance Sheets:

		December 31, 2010		June 30, 2011

Cash Flow Hedges
Interest rate swaps⁽¹⁾		$	2.5	$	0.7
Treasury rate locks⁽¹⁾			3.4		—

	Total	$	5.9	$	0.7

(1): Recorded in "Other assets."

The Company does not hold or issue derivative financial instruments for trading purposes. Interest rate swaps and treasury locks are intended to enable the Company to achieve a level of variable-rate and fixed-rate debt that is acceptable to management and to limit interest rate exposure.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

16. Segment Information

Management has assessed and determined that the Company operates in three business segments representing the Company's three principal distribution channels: Mutual Fund, Institutional and High Net Worth, each of which has different client relationships.

Revenue in the Mutual Fund distribution channel is earned from advisory and sub-advisory relationships with all domestically-registered investment products as well as non-institutional investment products that are registered abroad.

Revenue in the Institutional distribution channel is earned from relationships with foundations and endowments, defined benefit and defined contribution plans and Taft-Hartley plans. Revenue in the High Net Worth distribution channel is earned from relationships with high net worth individuals, family trusts and managed account programs.

Revenue earned from client relationships managed by Affiliates accounted for under the equity method is not consolidated with the Company's reported revenue but instead is included (net of operating expenses, including amortization) in "Income from equity method investments," and reported in the distribution channel in which the Affiliate operates. Income tax attributable to the profits of the Company's equity-method Affiliates is reported within the Company's consolidated income tax provision.

In firms with revenue sharing arrangements, a certain percentage of revenue is allocated for use by management of an Affiliate in paying operating expenses of that Affiliate, including salaries and bonuses, and is called an "Operating Allocation." In reporting segment operating expenses, Affiliate expenses are allocated to a particular segment on a pro rata basis with respect to the revenue generated by that Affiliate in such segment. Generally, as revenue increases, additional compensation is typically paid to Affiliate management partners from the Operating Allocation. As a result, the contractual expense allocation pursuant to a revenue sharing arrangement may result in the characterization of any growth in profit margin beyond the Company's Owners' Allocation as an operating expense. All other operating expenses (excluding intangible amortization) and interest expense are generally allocated to segments based on the proportion of cash flow distributions reported by Affiliates in each segment.

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Statements of Income

		For the Three Months Ended June 30, 2010

		Mutual Fund			Institutional			High Net Worth			Total
Revenue		$	148.0		$	152.3		$	31.8		$	332.1
Operating expenses:
	Depreciation and other amortization		2.6			8.3			2.1			13.0
	Other operating expenses		102.7			99.6			21.0			223.3

			105.3			107.9			23.1			236.3

Operating income			42.7			44.4			8.7			95.8

Non-operating (income) and expenses:
	Investment and other (income) loss		1.4			(1.3	)		(0.8	)		(0.7	)
	Income from equity method investments		(0.4	)		(8.6	)		(0.9	)		(9.9	)
	Investment loss from Affiliate investments in partnerships		0.1			0.4			8.1			8.6
	Interest expense		9.2			11.3			2.2			22.7

			10.3			1.8			8.6			20.7

Income before income taxes			32.4			42.6			0.1			75.1
Income taxes			7.5			7.9			1.5			16.9

Net income			24.9			34.7			(1.4	)		58.2
	Net income (non-controlling interests)		(14.7	)		(22.8	)		(3.9	)		(41.4	)
	Net (income) loss (non-controlling interests in partnerships)		0.1			0.4			7.9			8.4

Net Income (controlling interest)		$	10.3		$	12.3		$	2.6		$	25.2

AFFILIATED MANAGERS GROUP, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

		December 31, 2010				June 30, 2011

		Carrying Amount		Accumulated Amortization		Carrying Amount		Accumulated Amortization
Amortized intangible assets:
	Acquired client relationships	$	974.8	$	228.6	$	973.2	$	272.8
Non-amortized intangible assets:
	Acquired client relationships-mutual fund management contracts		678.0		—		684.2		—
	Goodwill		2,131.2		—		2,138.1		—


Balance as of January 1, 2011	$	406.3
Issuance of Redeemable non-controlling interest		48.5
Repurchase of Redeemable non-controlling interest		(12.9	)
Changes in redemption value		76.0

Balance as of June 30, 2011	$	517.9

		December 31, 2010					June 30, 2011

(in billions)		Assets under Management		Percentage of Total			Assets under Management		Percentage of Total
Asset Class:
Equity⁽¹⁾		$	220.4		69	%	$	234.5		67	%
Alternative⁽²⁾			65.3		20	%		77.1		22	%
Fixed Income			34.3		11	%		36.8		11	%

	Total	$	320.0		100	%	$	348.4		100	%

Geography:⁽³⁾
Domestic		$	110.5		34	%	$	116.6		33	%
Global/International			169.1		53	%		188.1		54	%
Emerging Markets			40.4		13	%		43.7		13	%

	Total	$	320.0		100	%	$	348.4		100	%

Statement of Changes-Quarter to Date (in billions)			Mutual Fund			Institutional			High Net Worth			Total

March 31, 2011			$	90.6		$	212.7		$	36.5		$	339.8
	Client cash inflows			7.6			14.6			1.9			24.1
	Client cash outflows			(7.9	)		(7.2	)		(1.5	)		(16.6	)

		Net client cash flows		(0.3	)		7.4			0.4			7.5

	Investment performance			(0.3	)		0.8			0.6			1.1

June 30, 2011			$	90.0		$	220.9		$	37.5		$	348.4

	Mutual Fund		Institutional			High Net Worth		Total

Balance, as of December 31, 2010	$	785.9	$	1,083.7		$	261.6	$	2,131.2
Purchase price adjustments		1.2		(5.7	)		—		(4.5	)
Goodwill acquired		—		—			—		—
Foreign currency translation		2.6		5.5			3.3		11.4

Balance, as of June 30, 2011	$	789.7	$	1,083.5		$	264.9	$	2,138.1

	December 31, 2010		June 30, 2011

Foreign currency translation adjustments	$	67.9	$	84.3
Realized and unrealized gains on derivative securities		3.7		2.9
Unrealized gain on investment securities		28.9		23.2

Accumulated other comprehensive income	$	100.5	$	110.4

	For the Three Months Ended June 30,							For the Six Months Ended June 30,

(in millions, except as noted and per share data)	2010		2011		% Change			2010		2011		% Change
Assets under Management (in billions)	$	249.0	$	348.4		40	%	$	249.0	$	348.4		40	%
Revenue		332.1		462.3		39	%		583.1		888.5		52	%
Net Income (controlling interest)		25.2		45.5		81	%		42.7		84.5		98	%
Earnings per share—diluted		0.53		0.85		60	%		0.92		1.59		73	%
Economic Net Income⁽¹⁾		63.8		91.3		43	%		114.6		176.3		54	%
Economic Earnings per share⁽¹⁾		1.35		1.71		27	%		2.49		3.31		33	%
EBITDA⁽²⁾		81.7		123.8		52	%		150.0		242.0		61	%

Statement of Changes-Year to Date (in billions)			Mutual Fund			Institutional			High Net Worth			Total

December 31, 2010			$	85.2		$	200.1		$	34.7		$	320.0
	Client cash inflows			14.6			27.4			3.5			45.5
	Client cash outflows			(12.7	)		(15.7	)		(3.1	)		(31.5	)

		Net client cash flows		1.9			11.7			0.4			14.0

	Other⁽¹⁾			(0.2	)		—			—			(0.2	)
	Investment performance			3.1			9.1			2.4			14.6

June 30, 2011			$	90.0		$	220.9		$	37.5		$	348.4

		For the Three Months Ended June 30,								For the Six Months Ended June 30,

(dollars in millions, except as noted)		2010		2011			% Change			2010		2011		% Change
Average assets under management (in billions)⁽¹⁾
Mutual Fund		$	63.8	$	91.9			44	%	$	55.5	$	89.5		61	%
Institutional			134.4		217.8			62	%		136.3		212.9		56	%
High Net Worth			29.7		36.9			24	%		30.0		36.4		21	%

	Total	$	227.9	$	346.6			52	%	$	221.8	$	338.8		53	%

Revenue
Mutual Fund		$	148.0	$	192.5			30	%	$	245.9	$	376.7		53	%
Institutional			152.3		233.9			54	%		274.1		440.9		61	%
High Net Worth			31.8		35.9			13	%		63.1		70.9		12	%

	Total	$	332.1	$	462.3			39	%	$	583.1	$	888.5		52	%

Net Income (controlling interest)
Mutual Fund		$	10.3	$	18.8			83	%	$	17.8	$	35.4		99	%
Institutional			12.3		30.2			146	%		20.0		48.6		143	%
High Net Worth⁽²⁾			2.6		(3.5	)		(235	%)		4.9		0.5		(90	%)

	Total	$	25.2	$	45.5			81	%	$	42.7	$	84.5		98	%

EBITDA⁽³⁾
Mutual Fund		$	27.1	$	44.4			64	%	$	47.9	$	82.9		73	%
Institutional			45.7		80.0			75	%		83.9		148.9		77	%
High Net Worth⁽²⁾			8.9		(0.6	)		(107	%)		18.2		10.2		(44	%)

	Total	$	81.7	$	123.8			52	%	$	150.0	$	242.0		61	%

		For the Three Months Ended June 30,							For the Six Months Ended June 30,

(dollars in millions)		2010		2011		% Change			2010		2011		% Change
Compensation and related expenses		$	142.7	$	196.5		38	%	$	262.0	$	376.0		44	%
Selling, general and administrative			72.1		90.6		26	%		117.4		178.1		52	%
Amortization of intangible assets			9.6		22.1		130	%		18.5		44.2		139	%
Depreciation and other amortization			3.4		3.8		12	%		6.4		7.6		19	%
Other operating expenses			8.5		9.3		9	%		14.4		17.7		23	%

	Total operating expenses	$	236.3	$	322.3		36	%	$	418.7	$	623.6		49	%

		For the Three Months Ended June 30,					For the Six Months Ended June 30,

(in millions, except shares and per share data)		2010			2011		2010			2011
Net Income (controlling interest)		$	25.2		$	45.5	$	42.7		$	84.5
	Intangible amortization⁽¹⁾⁽²⁾		17.0			26.9		33.7			54.0
	Intangible-related deferred taxes		14.3			12.9		25.1			25.8
	Imputed interest and contingent payment adjustments⁽³⁾		3.2			4.4		5.5			8.8
	Affiliate equity expense		1.8			1.6		3.5			3.2
	Affiliate depreciation		2.3			—		4.1			—

Economic Net Income		$	63.8		$	91.3	$	114.6		$	176.3

Average shares outstanding—diluted			47.6			53.4		46.5			53.3
	Assumed issuance of senior convertible securities shares		(0.6	)		—		(0.7	)		—
	Assumed issuance of junior convertible securities shares		—			—		—			—
	Dilutive impact of senior convertible securities shares		0.2			—		0.2			—
	Dilutive impact of junior convertible securities shares		—			—		—			—

Average shares outstanding—adjusted diluted			47.2			53.4		46.0			53.3

Economic earnings per share		$	1.35		$	1.71	$	2.49		$	3.31

(in millions)	December 31, 2010		June 30, 2011

Balance Sheet Data
Cash and cash equivalents	$	313.3	$	311.2
Senior bank debt		460.0		295.0
2008 senior convertible notes		422.1		428.9
Junior convertible trust preferred securities		509.9		511.2

		For the Three Months Ended June 30,						For the Six Months Ended June 30,

(in millions)		2010			2011			2010			2011
Cash flow from operations		$	115.1		$	180.2		$	183.1		$	310.4
	Interest expense, net of non-cash items⁽¹⁾		14.4			16.3			28.6			33.0
	Current tax provision		5.3			16.4			7.9			30.0
	Income from equity method investments, net of distributions⁽²⁾		4.4			9.7			(1.6	)		(36.7	)
	Net income (non-controlling interests)		(41.4	)		(55.5	)		(72.7	)		(105.9	)
	Net loss (non-controlling interests in partnerships)		8.4			—			4.4			—
	Changes in assets and liabilities		(1.1	)		(14.8	)		27.3			50.2
	Other non-cash adjustments⁽³⁾		(23.4	)		(28.5	)		(27.0	)		(39.0	)

EBITDA		$	81.7		$	123.8		$	150.0		$	242.0

(in millions)	Amount

Senior Bank Debt	$	295.0	2012	(1	)
2008 Senior Convertibles Notes		460.0	2038	(2	)
Junior Convertible Trust Preferred Securities		730.8	2036/2037	(3	)

Year Ending December 31,	Estimated Amortization Expense

2011	$	32.9
2012		32.8
2013		32.8
2014		11.3
2015		4.1

				Payments Due

Contractual Obligations		Total		Remainder of 2011		2012-2013		2014-2015		Thereafter
(in millions)
Senior bank debt		$	295.0	$	—	$	—	$	295.0	$	—
Senior convertible securities⁽¹⁾			959.6		9.1		36.3		36.3		877.9
Junior convertible trust preferred securities			1,689.8		18.5		74.1		74.1		1,523.1
Leases			126.8		12.8		44.8		32.7		36.5
Other liabilities⁽²⁾			55.4		17.1		—		—		38.3

	Total Contractual Obligations	$	3,126.6	$	57.5	$	155.2	$	438.1	$	2,475.8

Contingent Obligations
Contingent payment obligations⁽³⁾		$	126.1	$	1.4	$	93.2	$	31.5	$	—


		AFFILIATED MANAGERS GROUP, INC. (Registrant)
August 9, 2011		/s/ JAY C. HORGEN Jay C. Horgen on behalf of the Registrant as Chief Financial Officer and Treasurer (and also as Principal Financial and Principal Accounting Officer)

Exhibit No.			Description

	10.1		Distribution Agency Agreement, dated July 26, 2011, by and between the Company, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Bank of America, N.A.
	10.2		Form of Confirmation Letter Agreement, dated July 26, 2011, by and between the Company and Bank of America, N.A.
	10.3		Distribution Agency Agreement, dated July 26, 2011, by and between the Company, Deutsche Bank Securities Inc. and Deutsche Bank AG, London Branch.
	10.4		Form of Confirmation Letter Agreement, dated July 26, 2011, by and between the Company, Deutsche Bank Securities Inc. and Deutsche Bank AG, London Branch.
	31.1		Certification of Registrant's Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	31.2		Certification of Registrant's Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
	32.1		Certification of Registrant's Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	32.2		Certification of Registrant's Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
	101		The following financial statements from the Registrant's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 are furnished herewith, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Statements of Income for the three month periods ended June 30, 2011 and 2010, (ii) the Consolidated Balance Sheets at June 30, 2011 and December 31, 2010, (iii) the Consolidated Statement of Equity for the three month period ended June 30, 2011, (iv) the Consolidated Statements of Cash Flows for the three month periods ended June 30, 2011 and 2010, and (v) the Notes to the Consolidated Financial Statements.