<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED JUNE 30, 1996 OR
[ ] 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 1-9215
___________________________________
UNITED ASSET MANAGEMENT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2714625
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
ONE INTERNATIONAL PLACE
BOSTON, MASSACHUSETTS 02110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 330-8900
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. X Yes No
----- -----
The number of shares of common stock outstanding as of July 31, 1996
was 60,918,442.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements. (F-1 to F-4)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (F-5 to F-7)
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Certain of the Company's subsidiaries are subject to legal proceedings
arising in the ordinary course of business. On the basis of
information presently available and advice received from counsel, it
is the opinion of management that the disposition or ultimate
determination of such legal proceedings will not have a material
adverse effect on the financial position of the Company.
Item 2. Changes in Securities. Not Applicable
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders.
On May 16, 1996, the Company held its Annual Meeting of Stockholders
(the "Annual Meeting") at which each of Harold J. Baxter, John K.
Dwight, Robert J. Greenebaum, Jay O. Light, John F. McNamara, Norton
H. Reamer, David I. Russell, Philip Scaturro, John A. Shane, Barbara
S. Thomas, C. Giles H. Weaver and John S. Williams were elected as
directors to serve until the next Annual Meeting. Each of the
directors were elected with the following votes: Mr. Baxter,
26,585,672 votes cast for and 414,030 votes withholding authority; Mr.
Dwight, 26,591,622 votes cast for and 408,080 votes withholding
authority; Mr. Greenebaum, 26,620,558 votes cast for and 379,144 votes
withholding authority; Mr. Light, 26,640,177 votes cast for and
359,525 votes withholding authority; Mr. McNamara, 26,562,897 votes
cast for and 436,805 votes withholding authority; Mr. Reamer,
26,586,957 votes cast for and 412,745 votes withholding authority; Mr.
Russell, 26,594,867 votes cast for and 404,835 votes withholding
authority; Mr. Scaturro, 26,640,317 votes cast for and 359,385 votes
withholding authority; Mr. Shane, 26,640,572 votes cast for and
359,130 votes withholding authority; Ms. Thomas, 26,638,758 votes cast
for and 360,944 votes withholding authority; Mr. Weaver, 26,588,848
votes cast for and 410,854 votes withholding authority; and Mr.
Williams, 26,589,597 votes cast for and 410,105 votes withholding
authority.
The Company's stockholders approved the Compensation Arrangements for
Certain Executive Officers with 26,434,292 votes cast for such
approval, 236,298 votes cast against such approval, 62,885 votes
abstaining from such approval and 266,277 non votes.
The Company's stockholders also approved the selection of Price
Waterhouse LLP as independent accountants of the Company for the
fiscal year ending December 31, 1996, with 26,720,149 votes cast for
such approval, 239,126 votes cast against such approval and 40,427
votes abstaining from such approval.
Item 5. Other Information. None
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 2 - Not Applicable
Exhibit 3 - Not Applicable
Exhibit 4 - Not Applicable
Exhibit 10 - First Amendment to Consulting Agreement between
United Asset Management Corporation and David I.
Russell dated as of June 17, 1996
Exhibit 11 - Calculation of Earnings Per Share (F-8)
Exhibit 15 - Not Applicable
Exhibit 18 - Not Applicable
Exhibit 19 - Not Applicable
Exhibit 22 - Not Applicable
Exhibit 23 - Not Applicable
Exhibit 24 - Not Applicable
Exhibit 27 - Financial Data Schedule
(b) There have been no reports on Form 8-K filed by the Company for the
quarter ended June 30, 1996.
SIGNATURES
Pursuant to the requirements 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.
UNITED ASSET MANAGEMENT CORPORATION
October 8, 1996 /s/ William H. Park
- ----------------------------- -----------------------------------
(Date) William H. Park
Executive Vice President and
Chief Financial Officer
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED ASSET MANAGEMENT CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
--------------------- -------------------
1996 1995 1996 1995
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues........................... $197,334,000 $170,987,000 $396,203,000 $322,089,000
------------ ------------ ------------ ------------
Operating expenses:
Compensation and related
expenses....................... 94,379,000 80,457,000 189,944,000 151,732,000
Amortization of cost assigned
to contracts acquired.......... 24,582,000 23,794,000 53,362,000 43,862,000
Other operating expenses......... 32,089,000 26,012,000 61,999,000 49,802,000
------------ ------------ ------------ ------------
151,050,000 130,263,000 305,305,000 245,396,000
------------ ------------ ------------ ------------
Operating income................... 46,284,000 40,724,000 90,898,000 76,693,000
------------ ------------ ------------ ------------
Non-operating expenses:
Interest expense, net............ 9,533,000 11,017,000 19,960,000 19,336,000
Other amortization............... 471,000 390,000 930,000 763,000
------------ ------------ ------------ ------------
10,004,000 11,407,000 20,890,000 20,099,000
------------ ------------ ------------ ------------
Income before income tax expense... 36,280,000 29,317,000 70,008,000 56,594,000
Income tax expense................. 15,529,000 12,548,000 29,964,000 24,220,000
------------ ------------ ------------ ------------
Net income......................... $ 20,751,000 $ 16,769,000 $ 40,044,000 $ 32,374,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
Earnings per share:
Primary earnings per share....... $.32 $.26(1) $.63(1) $.52(1)
Fully diluted earnings per
share.......................... $.32 $.26(1) $.62(1) $.52(1)
Dividends declared per share....... $.16 $.14(1) $.32(1) $.28(1)
</TABLE>
(1) Historical per-share figures restated for a two-for-one common stock
split declared May 16, 1996 (see Note 4).
See Notes to Condensed Consolidated Financial Statements.
F-1
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
(Unaudited)
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents............................. $ 176,447,000 $ 123,768,000
Investment advisory fees receivable................... 125,555,000 124,055,000
Other current assets.................................. 11,267,000 12,877,000
-------------- --------------
Total current assets................................... 313,269,000 260,700,000
Fixed assets, net...................................... 28,715,000 26,746,000
Cost assigned to contracts acquired, net............... 984,016,000 1,037,280,000
Other assets........................................... 59,910,000 60,211,000
-------------- --------------
Total assets........................................... $1,385,910,000 $1,384,937,000
-------------- --------------
-------------- --------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses................. $ 106,394,000 $ 93,714,000
Accrued compensation.................................. 76,118,000 85,766,000
Current portion of notes payable...................... 1,355,000 1,852,000
-------------- --------------
Total current liabilities.............................. 183,867,000 181,332,000
Senior notes payable................................... 150,000,000 150,000,000
Subordinated notes payable............................. 499,232,000 523,020,000
Deferred income taxes.................................. 39,719,000 44,688,000
-------------- --------------
Total liabilities...................................... 872,818,000 899,040,000
-------------- --------------
Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01 per share(1)............. 616,000 616,000
Capital in excess of par value(1)..................... 343,265,000 341,090,000
Retained earnings..................................... 180,390,000 175,695,000
-------------- --------------
524,271,000 517,401,000
Less treasury shares at cost.......................... (11,179,000) (31,504,000)
-------------- --------------
Total stockholders' equity............................. 513,092,000 485,897,000
-------------- --------------
Total liabilities and stockholders' equity............. $1,385,910,000 $1,384,937,000
-------------- --------------
-------------- --------------
</TABLE>
(1) December 31, 1995 figures restated for a two-for-one common stock split
declared May 16, 1996 (see Note 4).
See Notes to Condensed Consolidated Financial Statements.
F-2
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flow from operating activities:
Net income.......................................... $ 20,751,000 $ 16,769,000 $ 40,044,000 $ 32,374,000
Adjustments to reconcile net
income to net cash flow
from operating activities:
Amortization of cost assigned
to contracts acquired.......................... 24,582,000 23,794,000 53,362,000 43,862,000
Depreciation..................................... 1,921,000 1,551,000 3,743,000 2,757,000
Other amortization............................... 471,000 390,000 930,000 763,000
------------ ------------ ------------ ------------
Net income plus amortization and
depreciation..................................... 47,725,000 42,504,000 98,079,000 79,756,000
Changes in assets and liabilities:
Decrease (increase) in
investment advisory fees
receivable..................................... 328,000 (20,136,000) (1,294,000) (28,816,000)
Decrease (increase) in other
current assets................................. 1,855,000 (1,278,000) 1,584,000 (662,000)
Increase in accounts payable
and accrued expenses........................... 20,594,000 3,774,000 13,922,000 10,313,000
Increase (decrease) in accrued
compensation................................... 25,499,000 19,691,000 (9,620,000) 6,088,000
Increase (decrease) in deferred
income taxes................................... (3,343,000) 3,015,000 (4,969,000) 4,558,000
------------ ------------ ------------ ------------
Net cash flow from operating
activities.......................................... 92,658,000 47,570,000 97,702,000 71,237,000
------------ ------------ ------------ ------------
Cash flow used in investing
activities:
Cash additions to cost assigned
to contracts acquired............................. (93,000) (29,102,000) (103,000) (40,661,000)
Change in other assets.............................. (2,265,000) (4,551,000) (6,353,000) (10,579,000)
------------ ------------ ------------ ------------
Net cash flow used in investing
activities.......................................... (2,358,000) (33,653,000) (6,456,000) (51,240,000)
------------ ------------ ------------ ------------
Cash flow from (used in) financing
activities:
Purchase of treasury shares......................... (15,476,000) (16,482,000) (29,663,000) (19,806,000)
Additions to (reductions in)
long-term debt, net............................... (5,893,000) 7,759,000 (7,264,000) 2,641,000
Issuance or reissuance of equity
securities........................................ 8,159,000 4,178,000 17,180,000 6,709,000
Dividends paid...................................... (9,750,000) (8,519,000) (18,746,000) (17,124,000)
------------ ------------ ------------ ------------
Net cash flow used in financing
activities.......................................... (22,960,000) (13,064,000) (38,493,000) (27,580,000)
------------ ------------ ------------ ------------
Effect of foreign exchange rate
changes on cash flow................................ 431,000 (327,000) (74,000) 512,000
------------ ------------ ------------ ------------
Net increase (decrease) in cash and
cash equivalents.................................... 67,771,000 526,000 52,679,000 (7,071,000)
Cash and cash equivalents at beginning
of period........................................... 108,676,000 81,453,000 123,768,000 89,050,000
------------ ------------ ------------ ------------
Cash and cash equivalents at end of
period.............................................. $176,447,000 $ 81,979,000 $176,447,000 $ 81,979,000
------------ ------------ ------------ ------------
------------ ------------ ------------ ------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
F-3
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1
In the opinion of management, the accompanying unaudited Condensed
Consolidated Financial Statements contain all adjustments, consisting only of
normal recurring accruals, necessary to present fairly the financial position
of the Company and its subsidiaries at June 30, 1996 and their results of
operations and cash flows for the three and six-month periods ended June 30,
1996 and 1995. These Financial Statements should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
Note 2
Accumulated depreciation of fixed assets was $35,460,000 and $31,717,000
at June 30, 1996 and December 31, 1995, respectively. The accumulated
amortization of cost assigned to contracts acquired was $418,998,000 and
$365,636,000 at June 30, 1996 and December 31, 1995, respectively.
Note 3
The Company has a systematic program to repurchase shares of its common
stock to meet the requirements for future issuance of shares upon the
exercise of stock options and warrants. During the three month period ended
June 30, 1996, the Company repurchased 658,000 shares of its common stock at
a cost of $15,476,000. For the six months ended June 30, 1996, common stock
repurchases totaled 1,358,000 shares at a cost of $29,663,000. During the
three and six-month periods ended June 30, 1996, exercises of warrants and
stock options resulted in the Company extinguishing subordinated notes,
receiving cash proceeds and issuing stock as follows:
THREE MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, 1996 JUNE 30, 1996
Subordinated notes extinguished $4,032,000 $16,932,000
Cash proceeds received $8,187,000 $17,208,000
Shares issued - -
Treasury shares reissued 901,186 2,566,772
As of June 30, 1996, the Company held 468,158 treasury shares.
As of June 30, 1996, 10,029,000 warrants and 7,084,000 stock options
were outstanding at weighted average exercise prices of $20.32 and $16.40,
respectively.
Note 4
During the three months ended June 30, 1996, the Company's Board of
Directors approved a two-for-one common stock split effected in the form of a
100% stock dividend. The stock split was payable June 21, 1996 to the
stockholders of record at the close of business on June 7, 1996. The par
value of the Company's common stock remained unchanged. An amount equal to
the $.01 par value of the shares outstanding at December 31, 1995 has been
transferred from capital in excess of par value to common stock. All
historical share and per-share amounts have been restated to retroactively
reflect the stock split.
The Company acquired OSV Partners on April 2, 1996 in a transaction
that is being accounted for as a purchase. This transaction is not material
to the Company's Condensed Consolidated Financial Statements. Also during
the quarter, the Company signed agreements to acquire Rogge Global Partners,
plc and Clay Finlay Inc. These transactions will be accounted for as poolings
of interests, and are expected to close during the third quarter of 1996.
F-4
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The revenues of UAM's affiliated firms are derived from fees for
investment advisory services provided to institutional and other clients.
Investment advisory fees are generally a function of the overall fee rate
charged to each account and the level of assets under management by the
affiliated firms. A minor portion of revenues are generated when firms
consummate transactions for client portfolios. Assets under management can
be affected by the addition of new client accounts or client contributions to
existing accounts, withdrawals of assets from or terminations of client
accounts and investment performance, which may depend on general market
conditions.
During the second quarter of 1996, UAM experienced a net increase in
assets under management of $6.2 billion to a total of $155.0 billion as of
June 30, 1996. Investment performance and the acquisition completed during
the quarter added $6.3 billion in assets. Net client cash flow was a
negative $71.0 million for the quarter, an improvement over the 1995 quarters.
AMORTIZATION OF COST ASSIGNED TO CONTRACTS ACQUIRED AND OPERATING CASH FLOW
(NET INCOME PLUS AMORTIZATION AND DEPRECIATION)
Cost assigned to contracts acquired, net of accumulated amortization,
represented 71% of the Company's total assets as of June 30, 1996.
Amortization of cost assigned to contracts acquired, which is a non-cash
charge, represented 16% and 17% of the Company's operating expenses for the
three and six-month periods ended June 30, 1996, respectively. Recording the
cost assigned to contracts acquired as an asset, with the resulting
amortization as an operating expense, reflects the application of generally
accepted accounting principles to acquisitions by UAM of investment
management firms in transactions accounted for as purchases, where the
principal assets acquired are the contracts which evidence the firms' ongoing
relationships with their clients.
Although the contracts acquired are typically terminable on 30 days
notice, analyses conducted by independent consultants retained by UAM to
assist the Company in allocating the purchase price among the assets acquired
and the experience of UAM's firms to date have indicated that: 1) contracts
are usually relatively long-lived; 2) the duration of contracts can be
reasonably estimated; and 3) the value of the cost assigned to contracts
acquired can be estimated based on the present value of their projected
income stream.
The cost assigned to contracts acquired is amortized on a straight-line
basis over the estimated weighted average useful life of the contracts of
individual firms acquired. These lives are estimated through statistical
analyses of historical patterns of terminations and the size and age of the
contracts acquired as of the acquisition date.
When actual terminations differ from the statistical patterns developed
or upon the occurrence of certain other events, the Company updates the
lifing analyses discussed above. If the update indicates that any of the
estimates of the average remaining lives should be shortened, the remaining
cost assigned to contracts acquired will be amortized over the shorter life
commencing in the year in which the new estimate is determined. There has
been no material effect on the Company's financial position or results of
operations as a result of these updates.
Cost assigned to contracts acquired is amortized as an operating
expense. It does not, however, require the use of cash and therefore,
management believes that it is important to distinguish this expense from
other operating expenses in order to evaluate the performance of the Company.
Amortization of cost assigned to contracts acquired per share referred to
below has been calculated by dividing total amortization by the same number
of shares used in the fully diluted earnings-per-share calculation.
For purposes of this discussion, Operating Cash Flow is defined as net
income plus amortization and depreciation, as reflected in the Company's
Condensed Consolidated Statement of Cash Flows. Management uses Operating
Cash Flow not to the exclusion of net income, but rather as an additional
important measure of the Company's performance.
F-5
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
OPERATING RESULTS
SIX MONTHS ENDED JUNE 30, 1996
COMPARED TO
SIX MONTHS ENDED JUNE 30, 1995
Revenues increased 23% to $396,203,000 for the six months ended June 30,
1996, from $322,089,000 for the first six months of 1995, due to several
factors. This increase is the result of acquisitions, as well as the impact
of favorable portfolio performance achieved by UAM's affiliated firms
partially offset by the effect of net client cash outflows experienced in
1995. The revenues of Provident Investment Counsel, Pilgrim Baxter &
Associates and OSV Partners, acquired February 15, 1995, April 28, 1995 and
April 2, 1996, respectively, have been included since their acquisition dates.
Compensation and related expenses together with other operating expenses
increased 25% to $251,943,000 from $201,534,000 primarily reflecting the
acquisitions described in the preceding paragraph and higher compensation
earned at existing affiliates. The amortization of cost assigned to
contracts acquired increased 22% to $53,362,000 from $43,862,000 primarily as
a result of the acquisitions discussed above as well as an adjustment made
during the first quarter of 1996 to the carrying value of a contract with an
executive at a UAM affiliate who died in March 1996. After consideration of
related insurance proceeds, this event did not have a material impact on the
Company's consolidated results of operations.
Interest expense increased to $21,795,000 from $20,706,000, reflecting
the cost of financing the acquisitions discussed above.
Income before income tax expense increased 24% to $70,008,000 from
$56,594,000, reflecting the net result of the circumstances discussed above.
The Company's estimated annual effective tax rate approximated 43% for both
of the six month periods ended June 30, 1996 and 1995.
Net income increased 24% to $40,044,000 from $32,374,000 reflecting the
factors described above. Fully diluted earnings per share increased 19% to
$.62 from $.52, reflecting higher net income and the effect of the Company's
common stock repurchased, partially offset by the impact of the issuance of
shares of common stock, the Company's higher common stock price and the
exercise of warrants and stock options on the calculation of earnings per
share under the modified treasury stock method. Amortization of cost assigned
to contracts acquired on a per-share basis increased to $.80 from $.67
primarily as a result of the acquisitions described above.
THREE MONTHS ENDED JUNE 30, 1996
COMPARED TO
THREE MONTHS ENDED JUNE 30, 1995
Revenues increased 15% to $197,334,000 for the three months ended June
30, 1996, from $170,987,000 for the second quarter of 1995 due to several
factors. This increase is the result of acquisition activity, as well as the
overall increase in revenues due to positive portfolio performance achieved
by UAM's affiliated firms partially offset by the effect of net client cash
outflows experienced in 1995. The revenues of Pilgrim Baxter & Associates
and OSV Partners, acquired April 28, 1995 and April 2, 1996, respectively,
have been included since their acquisition dates.
Compensation and related expenses together with other operating expenses
increased 19% to $126,468,000 from $106,469,000 primarily reflecting the
activity described above and higher compensation and operating expenses
earned at existing affiliates. The amortization of cost assigned to
contracts acquired increased 3% to $24,582,000 from $23,794,000 as a result
of the acquisitions discussed above.
Interest expense decreased to $10,700,000 from $11,763,000 primarily due
to the decrease in the Company's average senior debt level.
F-6
<PAGE>
Income before income tax expense increased 24% to $36,280,000 from
$29,317,000, reflecting the net result of the circumstances described above.
The Company's estimated annual effective tax rate approximated 43% for both
the three month periods ended June 30, 1996 and 1995.
Net income increased 24% to $20,751,000 from $16,769,000 reflecting the
factors described above. Fully diluted earnings per share increased 23% to
$.32 for the second quarter of 1996 from $.26 in the second quarter of 1995,
reflecting higher net income and the effect of the Company's common stock
repurchased, partially offset by the impact of the issuance of shares of
common stock, the Company's higher common stock price and the exercise of
warrants and stock options on the calculation of earnings per share under the
modified treasury stock method. Amortization of cost assigned to contracts
acquired on a per-share basis increased to $.37 from $.35 primarily as a
result of the activity described above.
CHANGES IN FINANCIAL CONDITION AND LIQUIDITY
The Company generated $98,079,000 and $47,725,000 in Operating Cash Flow
(net income plus amortization and depreciation) for the six and three-month
periods ended June 30, 1996, respectively. The primary use of this Operating
Cash Flow was to repurchase shares of the Company's common stock, to pay
dividends to shareholders and to fund the costs of acquisitions. The Company
invests its excess cash in deposits with major banks, money market funds or
in securities, principally commercial paper of companies with strong credit
ratings in diversified industries. As of June 30, 1996, the Company had no
borrowings outstanding under its $500,000,000 Revolving Credit Agreement.
Management believes that the Company's existing capital, together with
Operating Cash Flow and borrowings available under its revolving line of
credit, will provide the Company with sufficient resources to meet its
present and reasonably foreseeable future cash needs. Management expects
that the principal need for financial resources will be to acquire additional
investment management firms, to fund commitments due or potentially due to
existing affiliates, to pay shareholder dividends and to repurchase shares of
the Company's common stock, which will require cash, the issuance of
additional UAM securities, or some combination thereof. Whether the Company
ultimately completes additional acquisitions or the timing of such
acquisitions is not certain.
F-7
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
Exhibit 11
CALCULATION OF EARNINGS PER SHARE
(In thousands, except per-share amounts)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -----------------
1996 1995(1) 1996(1) 1995(1)
---- ---- ---- ----
<S> <C> <C> <C> <C>
Common and common equivalent shares:
Net income.......................... $20,751 $16,769 $40,044 $32,374
Adjustments thereto(2).............. 497 1,045 1,533 1,693
------- ------- ------- -------
Adjusted net income................. $21,248 $17,814 $41,577 $34,067
------- ------- ------- -------
------- ------- ------- -------
Average shares outstanding.......... 61,140 61,342 60,790 60,276
Adjustments thereto(3).............. 5,243 6,260 5,720 5,418
------- ------- ------- -------
Shares used in computation.......... 66,383 67,602 66,510 65,694
------- ------- ------- -------
------- ------- ------- -------
Per share............................. $.32 $.26 $.63 $.52
------- ------- ------- -------
------- ------- ------- -------
Common shares -- assuming full dilution:
Net income.......................... $20,751 $16,769 $40,044 $32,374
Adjustments thereto(2).............. 383 1,045 888 1,693
------- ------- ------- -------
Adjusted net income................. $21,134 $17,814 $40,932 $34,067
------- ------- ------- -------
------- ------- ------- -------
Average shares outstanding.......... 61,140 61,342 60,790 60,276
Adjustments thereto(3).............. 5,243 6,260 5,720 5,418
------- ------- ------- -------
Shares used in computation.......... 66,383 67,602 66,510 65,694
------- ------- ------- -------
------- ------- ------- -------
Per share............................. $.32 $.26 $.62 $.52
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
___________________________
(1) Historical share and per-share figures restated for a two-for-one common
stock split declared May 16, 1996.
(2) The proceeds from the exercise of stock options and warrants in accordance
with the modified treasury stock method are first used to buy back up to 20%
of the Company's common stock at the average price for the period in the
primary calculation and at the higher of the average or closing price in the
fully diluted calculation. Any remaining proceeds are used to retire debt,
and this adjusts income for interest assumed to be saved, net of income tax,
from the use of such proceeds.
(3) Adjusts shares for stock options and warrants under the modified treasury
stock method and contingently issuable shares based on the probability of
issuance, after adjusting for the stock assumed repurchased in accordance
with (2) above.
F-8
<PAGE>
AMENDMENT TO CONSULTING AGREEMENT
THIS AMENDMENT is made this 17th day of June, 1996, and effective as of
January 1, 1994, by and between United Asset Management Corporation, a
Delaware Corporation (the "Company") and David I. Russell (the "Consultant").
BACKGROUND
1. The parties hereto are parties to a Consulting Agreement dated as of
January 1, 1993 (the "Agreement").
2. The initial term ("Term") of the Agreement expired as of December
31, 1993.
3. Since the expiration of the Term, the parties have elected to
continue their relationship governed by the terms of the Agreement.
4. The parties wish to memorialize the terms of their relationship by
amending the Agreement to provide for the automatic renewal of the Term on a
yearly basis and to state certain other amendments thereto
AGREEMENT
For value received the parties hereby agree that the Agreement shall be
amended as follows:
1. Paragraph 1 of the Agreement is amended by adding the following
sentence at the end of the paragraph:
"The Term shall be automatically renewed for an additional Term of
one year on December 31 of each year, unless earlier terminated by
written notice by either party hereto in accordance with the
provisions of Paragraph 4."
2. Paragraph 2 of the Agreement is amended by adding the following
clause to the last sentence of the paragraph:
", as may be amended from time to time by agreement of the parties."
3. The penultimate sentence of Paragraph 3 of the Agreement is amended
so as to read in its entirety as follows:
"Services and expenses shall be invoiced on a quarterly basis to the
attention of William H. Park."
<PAGE>
4. Paragraph 5 is amended by adding the following at the end of
subparagraph (g) thereof:
"and such other locations as the Company and the Consultant agree."
All other terms and conditions of the Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Amendment, to take
effect as of January 1, 1994.
CONSULTANT
/s/ David I. Russell
------------------------------
David I. Russell
UNITED ASSET MANAGEMENT
CORPORATION
By: /s/ William H. Park
------------------------------
William H. Park
Executive Vice President
2
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S SIX MONTHS ENDED JUNE 30, 1996 CONSOLIDATED STATEMENT OF
INCOME AND THE CONDENSED BALANCE SHEET. THIS INFORMATION IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 176,447
<SECURITIES> 0
<RECEIVABLES> 125,555
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 313,269
<PP&E> 64,175
<DEPRECIATION> 35,460
<TOTAL-ASSETS> 1,385,910<F1>
<CURRENT-LIABILITIES> 183,867
<BONDS> 649,232<F2>
616
0
<COMMON> 0
<OTHER-SE> 512,476
<TOTAL-LIABILITY-AND-EQUITY> 1,385,910
<SALES> 0
<TOTAL-REVENUES> 396,203
<CGS> 0
<TOTAL-COSTS> 251,943
<OTHER-EXPENSES> 53,362<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,890
<INCOME-PRETAX> 70,008
<INCOME-TAX> 29,964
<INCOME-CONTINUING> 40,044
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 40,044
<EPS-PRIMARY> .63
<EPS-DILUTED> .62
<FN>
<F1>INCLUDES $984,016,000 OF COST ASSIGNED TO CONTRACTS ACQUIRED, NET.
<F2>INCLUDES $150,000,000 IN SENIOR NOTES PAYABLE AND $499,232,000 IN SUBORDINATED
NOTES PAYABLE.
<F3>REPRESENTS AMORTIZATION OF COST ASSIGNED TO CONTRACTS ACQUIRED FOR THE SIX
MONTHS ENDED JUNE 30, 1996.
</FN>
</TABLE>