<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE PERIOD ENDED MARCH 31, 1997 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 Identification Number)
incorporation or organization)
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 May 1, 1997 was
69,719,390.
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements. (Page F-1 to F-5)
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. (Page 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 advise received from legal
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 Company's consolidated financial
position, its consolidated results of operations nor its consolidated
cash flows.
Item 2. Changes in Securities.
On February 28, 1997, UAM issued Warrants to the former owners of
Pilgrim Baxter & Associates, resulting from a contingent payment
earned as specified in the Acquisition agreement dated February 3,
1995. Warrants to purchase 271,739 shares of Common Stock, $.01 par
value, of UAM for $23.00 per share, were issued and may be exercisable
in whole or in part prior to the earlier of (a) February 28, 2004 or
(b) if UAM gives notice specified in the Warrant Agreement, at such
time as the Closing price of Common Stock of UAM reaches specified
levels for periods specified in the Warrant Agreement.
The Warrants and the shares of Common Stock issuable upon exercise
thereof have not been registered under the Securities Act of 1933, as
amended, in reliance on the exemption for transactions not involving a
public offering contained in Section 4(2) of the Act. The Warrants
contain, and the shares issuable upon exercise will contain,
restrictive legends. No commission was paid to any underwriter in
connection with the issuance of the Warrants.
In addition, during the first quarter of 1997, UAM issued an
aggregated of 508,070 shares of Common Stock, $.01 par value, pursuant
to Section 4(2) of the Securities Act of 1933 to certain executives of
its subsidiaries upon the exercise of Warrants originally issued in
connection with the acquisition of such subsidiaries by UAM. The
exercise prices of the Warrants ranged from $8.25 to $22.65 per
share.
Item 3. Defaults Upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information. None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibit 2 - Not Applicable
Exhibit 3 - Amended and restated By-Laws(effective
as of March 18, 1997)
Exhibit 4 - Not Applicable
<PAGE>
Exhibit 10 - Not Applicable
Exhibit 11 - Calculation of Earnings Per Share (Page 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 March 31,1997.
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
May 5, 1997 /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 March 31, 1997 1996(1)
- --------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $215,522,000 $208,522,000
- --------------------------------------------------------------------------------------
Operating expenses:
Compensation and related expenses 105,072,000 101,904,000
Amortization of cost assigned to contracts acquired 24,912,000 28,780,000
Other operating expenses 35,086,000 32,527,000
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165,070,000 163,211,000
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Operating income 50,452,000 45,311,000
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Non-operating expenses:
Interest expense, net 7,917,000 10,596,000
Other amortization 481,000 459,000
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8,398,000 11,055,000
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Income before income tax expense 42,054,000 34,256,000
Income tax expense 17,999,000 14,769,000
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Net income $ 24,055,000 $ 19,487,000
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Primary earnings per share (2) $ .33 $.28
Fully diluted earnings per share (2) $ .33 $.27
Dividends declared per share $.185 $.16
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</TABLE>
(1) Restated due to pooling of interests transactions completed in the third
quarter of 1996 and the two-for-one common stock split effective June 7,
1996.
(2) See Note 5 for pro forma earnings per share calculated in accordance with
Statement of Financial Accounting Standards No. 128, Earnings per Share,
which will be effective for financial statements for both interim and
annual periods ending after December 15, 1997.
See Notes to Condensed Consolidated Financial Statements.
F-1
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
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March 31, December 31,
1997 1996
(Unaudited)
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<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 177,177,000 $ 248,399,000
Investment advisory fees receivable 143,589,000 149,843,000
Other current assets 11,068,000 11,713,000
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Total current assets 331,834,000 409,955,000
Fixed assets, net 31,042,000 30,297,000
Cost assigned to contracts acquired, net 958,678,000 941,490,000
Other assets 48,018,000 48,911,000
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Total assets $1,369,572,000 $1,430,653,000
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 99,130,000 $ 113,718,000
Accrued compensation 70,059,000 116,005,000
Current portion of notes payable 1,217,000 3,481,000
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Total current liabilities 170,406,000 233,204,000
Senior notes payable 150,000,000 150,000,000
Subordinated notes payable 445,274,000 457,486,000
Deferred income taxes 36,478,000 37,719,000
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Total liabilities 802,158,000 878,409,000
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Commitments and contingencies
Stockholders' equity:
Common stock, par value $.01 per share 703,000 692,000
Capital in excess of par value 352,659,000 346,017,000
Retained earnings 219,814,000 217,703,000
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573,176,000 564,412,000
Less treasury shares at cost (5,762,000) (12,168,000)
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Total stockholders' equity 567,414,000 552,244,000
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Total liabilities and stockholders' equity $1,369,572,000 $1,430,653,000
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</TABLE>
F-2
See Notes to Condensed Consolidated Financial Statements.
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
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Three Months Ended March 31, 1997 1996(1)
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<S> <C> <C>
Cash flow from (used in) operating activities:
Net income $ 24,055,000 $ 19,487,000
Adjustments to reconcile net income to net cash flow
from operating activities:
Amortization of cost assigned to contracts acquired 24,912,000 28,780,000
Depreciation 2,376,000 2,006,000
Other amortization 481,000 459,000
- --------------------------------------------------------------------------------------------------------------
Net income plus amortization and depreciation 51,824,000 50,732,000
Changes in assets and liabilities:
Decrease (increase) in investment advisory fees receivable 5,875,000 (1,604,000)
Decrease (increase) in other current assets 703,000 (26,000)
Decrease in accounts payable and accrued expenses (14,037,000) (3,647,000)
Decrease in accrued compensation (45,782,000) (35,762,000)
Decrease in deferred income taxes (1,241,000) (1,502,000)
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Net cash flow from (used in) operating activities (2,658,000) 8,191,000
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Cash flow used in investing activities:
Cash additions to cost assigned to contracts acquired (42,933,000) (10,000)
Change in other assets (3,307,000) (4,560,000)
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Net cash flow used in investing activities (46,240,000) (4,570,000)
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Cash flow from (used in) financing activities:
Purchase of treasury shares (9,543,000) (14,187,000)
Reductions in notes payable, net (10,163,000) (1,735,000)
Issuance or reissuance of equity securities 10,165,000 9,021,000
Dividends paid (11,703,000) (8,996,000)
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Net cash flow used in financing activities (21,244,000) (15,897,000)
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Effect of foreign exchange rate changes on cash flow (1,080,000) (517,000)
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Net decrease in cash and cash equivalents (71,222,000) (12,793,000)
Cash and cash equivalents at beginning of quarter 248,399,000 125,448,000
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Cash and cash equivalents at end of quarter $177,177,000 $112,655,000
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</TABLE>
(1) Restated due to pooling of interests transactions completed in the third
quarter of 1996.
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 March 31, 1997 and their results of
operations and cash flows for the three months ended March 31, 1997 and 1996.
These Financial Statements should be read in conjunction with the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
Note 2
Accumulated depreciation of fixed assets was $42,416,000 and $40,040,000 at
March 31, 1997 and December 31, 1996, respectively. The accumulated
amortization of cost assigned to contracts acquired was $492,483,000 and
$467,571,000 at March 31, 1997 and December 31, 1996, 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 March 31,
1997, the Company repurchased 351,400 shares of its common stock at a cost of
$9,543,000. During the same period ended March 31, 1997, exercises of warrants
and stock options resulted in the Company extinguishing subordinated notes,
receiving cash proceeds and issuing stock as follows:
Three Months
Ended
March 31, 1997
--------------
Subordinated notes extinguished $ 4,373,000
Cash proceeds received $10,165,000
Shares issued 1,129,151
Treasury shares reissued 644,897
As of March 31, 1997, the Company held 212,549 treasury shares. In
addition, 9,169,000 warrants and 6,901,000 stock options were outstanding at
weighted average exercise prices of $21.25 and $20.15, respectively.
Note 4
The Company acquired J.R. Senecal & Associates Investment Counsel Corp. on
January 7, 1997 in a transaction that has been accounted for as a purchase.
Also during the quarter, the Company signed an agreement to acquire Pacific
Financial Research, Inc. Neither transaction is material to the Company's
Condensed Consolidated Financial Statements.
F-4
<PAGE>
Note 5
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 128, Earnings per Share (FAS 128), which replaces
Accounting Principles Board Opinion No. 15. FAS 128 required dual presentation
of basic and diluted earnings per share. This standard is effective for
financial statements for both interim and annual periods ending after December
15, 1997. Although earlier adoption is prohibited, disclosing pro forma
earnings per share data in the notes to the financial statements is permitted.
Based on the provisions of FAS 128, pro forma earnings per share is set
forth below:
Three Months Ended
March 31,
1997 1996
---- ----
Basic earnings per share $.35 $.29
Diluted earnings per share $.33 $.27
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 is 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.
UAM's assets under management were $171.4 billion as of March 31, 1997,
slightly higher than the $171.0 billion under management on December 31, 1996.
During the first quarter of 1997, a completed acquisition added $4.6 billion in
assets under management and market performance subtracted $3.0 billion. In
addition, negative net client cash flow during the quarter was $1.2 billion,
representing an improvement over the prior two 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 approximately 70% of the Company's total assets as of March 31,
1997. Amortization of coast assigned to contracts acquired, which is a non-cash
charge, represented 15% of the Company's operating expenses for the three months
ended March 31, 1997. 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. The
principal assets acquired are the investment advisory 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 its projected income stream.
F-5
<PAGE>
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
analysis 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.
OPERATING RESULTS
THREE MONTHS ENDED MARCH 31, 1997
COMPARED TO
THREE MONTHS ENDED MARCH 31, 1996
The 1996 results of operations have been restated to reflect the
two-for-one common stock split effective June 7, 1996 and the August 1996
acquisitions of Rogge Global Partners Plc and Clay Finlay Inc., which were
accounted for as poolings of interests transactions.
Revenues increased 3% to $215,522,000 for the three months ended March 31,
1997, from $208,522,000 for the first quarter of 1996. This increase is the
result of the overall increase in revenues due to positive portfolio performance
achieved by UAM's affiliated firms as well as acquisition activity, partially
offset by the effect of negative net client cash flows. The revenues of OSV
Partners and J.R. Senecal & Associates Investment Counsel Corp. acquired April
22, 1996 and January 7, 1997, respectively, have been included since their
acquisition dates.
Compensation and related expenses together with other operating expenses
increased 4% to $140,158,000 from $134,431,000 primarily reflecting the
acquisitions described above and higher operating expenses and compensation
earned by employees of existing affiliated firms in accordance with revenue
sharing plans. Amortization of cost assigned to contracts acquired decreased
13% from $28,780,000 to $24,912,000 primarily due to 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.
Interest expense decreased from $11,286,000 to $9,776,000, primarily due to
the decrease in the Company's average debt levels.
Income before income tax expense increased 23% to $42,054,000 from
$34,256,000, reflecting the circumstances described above. The Company's
estimated annual effective tax rate approximated 43% for both of the
three-months periods ended March 31, 997 and 1996.
F-6
<PAGE>
Net income increased 23% to $24,055,000 from $19,487,000 reflecting the net
results of the events discussed above. Fully diluted earnings per share
increased 22% to $.33 for the first quarter of 1997 from $.27 in the first
quarter of 1996, 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
hypothetical 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 was $.34 compared to
$.40 in the first quarter of 1996 primarily due to the circumstances discussed
above.
CHANGES IN FINANCIAL CONDITION; LIQUIDITY AND CAPITAL RESOURCES
The Company generated $51,824,000 in Operating Cash Flow (net income plus
amortization and depreciation) for the three months ended March 31, 1997. The
primary use of this Operating Cash Flow was to fund the costs of acquisitions,
to pay dividends to shareholders and to repurchase shares of the Company's
common stock. 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 march 31, 1997, the
Company had no borrowings outstanding under its $500,000,000 Reducing 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
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 former owners of affiliated firms,
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 (1)
(In thousands, except per-share amounts)
(Unaudited)
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Three Months Ended March 31, 1997 1996(2)
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Common and common equivalent shares:
Net income $ 24,055 $ 19,487
Adjustments thereto (3) - 611
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Adjusted net income $ 24,055 $ 20,098
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Average shares outstanding 69,332 67,847
Adjustments thereto (3) 4,109 4,782
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Shares used in computation 73,441 72,629
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Per share $.33 $.28
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Common shares - assuming full dilution:
Net income $ 24,055 $ 19,487
Adjustments thereto (3) - 220
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Adjusted net income $ 24,055 $ 19,707
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Average shares outstanding 69,332 67,847
Adjustments thereto (3) 4,109 4,782
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Shares used in computation 73,441 72,629
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Per share $.33 $.27
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(1) See Note 5 for pro forma earnings per share calculated in accordance with
Statement of Financial Accounting Standards No. 128, Earnings per Share,
which will be effective for financial statements for both interim and
annual periods ending after December 15, 1997.
(2) Restated due to pooling of interests transactions completed in the third
quarter of 1996 and the two-for-one common stock split effective June 7,
1996.
(3) Adjustments relate to application of modified treasury stock method.
F-8
<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
---ooOoo---
AMENDED AND RESTATED
BY-LAWS
(effective as of March 18, 1997)
---ooOoo---
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington,County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other
places both within and without the State of Delaware as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of
directors shall be held in the City of Boston, State of Massachusetts, at
such place as may be fixed from time to time by the board of directors, or at
such other place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated in the
notice of the meeting. Meetings of stockholders for any other purpose may be
held at such time and place, within or without the State of Delaware, as
shall be stated in the notice of the meeting or in a duly executed waiver of
notice thereof.
Section 2. Annual meetings of stockholders, commencing with the
year 1981, shall be held on the second Wednesday of May if not a legal
holiday,and if a legal holiday, then on the next secular day following, at
10:00 A.M., or at such other date and time as shall
<PAGE>
be designated from time to time by the board of directors and stated in the
notice of the meeting, at which they shall elect by a plurality vote a board
of directors, and transact such other business as may properly be brought
before the meeting.
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each stockholder
entitled to vote at such meeting not less than ten nor more than sixty days
before the date of the meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours, for a
period of at least ten days prior to the meeting, either at a place within
the city where the meeting is to be held, which place shall be specified in
the notice of the meeting, or, if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may be inspected
by any stockholder who is present.
Section 5. Special meetings of the stockholders, for any purpose
or purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board
of directors, or at the request in writing of stockholders owning a majority
in amount of the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes for which the
meeting is called, shall be given not less than ten nor more than sixty days
before the date of the meeting, to each stockholder entitled to vote at such
meeting.
-2-
<PAGE>
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall constitute a quorum at all meetings of the stockholders for the
transaction of business except as otherwise provided by statute or by the
certificate of incorporation. If, however, such quorum shall not be present
or represented at any meeting of the stockholders, the stockholders entitled
to vote thereat, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present or represented.
At such adjourned meeting at such a quorum shall be present or represented
any business may be transacted which might have been transacted at the
meeting as originally notified. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person
or represented by proxy shall decide any question brought before such
meeting, unless the question is one upon which by express provision of the
statutes or of the certificate of incorporation, a different vote is required
in which case such express provision shall govern and control the decision of
such question.
Section 10. Unless otherwise provided in the certificate of
incorporation each stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of the capital
stock having voting power held by such stockholder, but no proxy shall be
voted on after three years from its date, unless the proxy provides for a
longer period.
-3-
<PAGE>
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or special
meeting of stockholders of the corporation, or any action which may be taken
at any annual or special meeting of such stockholders, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented
in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the
whole board shall not be less than one or more than fourteen. The first
board shall consist of one director. Thereafter, within the limits above
specified, the number of directors shall be determined by resolution of the
board of directors or by the stockholders at the annual meeting. The
directors shall be elected at the annual meeting of the stockholders, except
as provided in Section 2 of this Article, and each director shall hold office
until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting
from any increase in the authorized number of directors may be filled by a
majority of the directors then in office, though less than a quorum, or by a
sole remaining director, and the directors so chosen shall hold office until
the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced. If there are no directors in office,
then an election of directors may be held in the manner provided by statute.
If, at the time of filling any vacancy or any newly created directorship, the
directors then in office shall constitute
-4-
<PAGE>
less than a majority of the whole board (as constituted immediately prior to
any such increase), the Court of Chancery may, upon application of any
stockholder or stockholders holding at least ten percent of the total number
of shares at the time outstanding having the right to vote for such
directors, summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors chosen by the
directors then in office.
Section 3. The business of the corporation shall be managed by
or under the direction of its board of directors which may exercise all such
powers of the corporation and do all such lawful acts and things as are not
by statute or by the certificate of incorporation or by these by-laws
directed or required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Delaware.
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed by the vote
of the stockholders at the annual meeting and no notice of such meeting shall
be necessary to the newly elected directors in order legally to constitute
the meeting, provided a quorum shall be present. In the event of the failure
of stockholders to fix the time or place of such first meeting of the newly
elected board of directors, or in the event such meeting is not held at the
time and place so fixed by the stockholders, the meeting may be held at such
time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be
held without notice at such time and at such place as shall from time to time
as determined by the board.
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<PAGE>
Section 7. Special meetings of the board may be called by the
president on two days' notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president or
secretary in like manner and on like notice on the written request of two
directors unless the board consists of only one director; in which case
special meetings shall be called by the president or secretary in like manner
and on like notice on the written request of the sole director.
Section 8. At all meetings of the board a majority of the board
of directors shall constitute a quorum for the transaction of business and
the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum shall not be present at any meeting of the board
of directors the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a
quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of
incorporation or these by-laws, any action required or permitted to be taken
at any meeting of the board of directors or of any committee thereof may be
taken without a meeting, if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing or writings are
filed with the minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of
incorporation or these by-laws, members of the board of directors, or any
committee designated by the board of directors, may participate in a meeting
of the board of directors, or any committee, by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a
meeting shall constitute presence in person at the meeting.
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<PAGE>
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution or
resolutions passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation. The board may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member
at any meeting of the committee.
Unless otherwise specified by resolution of the Board, in the
absence or disqualification of a member of a committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another member of
the board of directors to act at the meeting in the place of any such absent
or disqualified member.
Any such committee, to the extent provided in the resolution of
the board of directors, or in these by-laws, shall have and may exercise all
the powers and authority of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but no such
committee shall have the power or authority in reference to amending the
certificate of incorporation (except that a committee may, to the extent
authorized in the resolution or resolutions providing for the issuance of
shares of stock adopted by the board of directors as provided in Section 151(a)
of the General Corporation Law of Delaware (GCL), fix the designations
and any of the preferences or rights of such shares relating to dividends,
redemption, dissolution, any distribution of assets of the corporation or the
conversion into, or the exchange of such shares for, shares of any other
class or classes or any other series of the same or any other class or
classes of stock of the corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopting an agreement of merger or consolidation under Sections 251 and 252
of the GCL, recommending to the stockholders the sale, lease or exchange of
all or substantially all of the
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<PAGE>
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending
the by-laws of the corporation; and, unless the resolution, by-laws or the
certificate of incorporation expressly so provide, no such committee shall
have the power or authority to declare a dividend or to authorize the
issuance of stock, or to adopt a certificate of ownership and merger pursuant
to Section 253 of the GCL. Such committee or committees shall have such name
or names as may be determined from time to time by resolution adopted by the
board of directors.
Section 12. Each committee shall keep regular minutes of its
meetings and report the same to the board of directors when requested.
Section 13. A committee may hold meetings, both regular and
special, either within or without the State of Delaware. Meetings of a
committee may be called by the president or the chair of such committee on
two days' notice to each member, either personally or by mail or by facsimile
or telegram.
Unless otherwise specified by resolution of the Board, at all
meetings of a committee, a majority of the members thereof shall constitute a
quorum for the transaction of business and the act of a majority of the
members present at any meeting at which there is a quorum shall be the act of
the committee. If a quorum shall not be present at any meeting of a
committee, the members present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.
Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting
of a committee may be taken without a meeting, if all members of the
committee consent thereto in writing, and the writing or writings are filed
with the minutes of proceedings of the committee.
-8-
<PAGE>
Unless otherwise restricted by the certificate of incorporation
or these by-laws, members of a committee may participate in a meeting of the
committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
COMPENSATION OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation or these by-laws, the board of directors shall have the
authority to fix the compensation of directors. The directors may be paid
their expenses, if any, of attendance at each meeting of the board of
directors and may be paid a fixed sum for attendance at each meeting of the
board of directors or a stated salary as director. No such payment shall
preclude any director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing committees
may be allowed like compensation for attending committee meetings.
REMOVAL OF DIRECTORS
Section 15. Unless otherwise restricted by the certificate of
incorporation or by law, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of shares
entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of
the certificate of incorporation or of these by-laws, notice is required to
be given to any director or stockholder, it shall not be construed to mean
personal notice, but such notice may be given in writing, by mail, addressed
to such director or stockholder, at his address as it appears on the records
of the corporation, with postage thereon prepaid, and such notice shall be
deemed
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<PAGE>
to be given at the time when the same shall be deposited in the United States
mail. Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the certificate of incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein,
shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the board of directors and shall be a president, a vice-president, a
secretary and a treasurer. The board of directors may also choose additional
vice-presidents, and one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after
each annual meeting of stockholders shall choose a president, one or more
vice-presidents, a secretary and a treasurer.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold their offices
for such terms and shall exercise such powers and perform such duties as
shall be determined from time to time by the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office
until their successors are chosen and qualify. Any officer elected or
appointed by the board of directors may be removed at any time by the
affirmative vote of a majority of the board of directors. Any vacancy
occurring in any office of the corporation shall be filled by the board of
directors.
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<PAGE>
THE PRESIDENT
Section 6. The president shall be the chief executive officer of
the corporation, shall preside at all meetings of the stockholders and the
board of directors, shall have general and active management of the business
of the corporation and shall see that all orders and resolutions of the board
of directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation, except where required or
permitted by law to be otherwise signed and executed and except where the
signing and execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of
his inability or refusal to act, the vice-president (or in the event there be
more than one vice-president, the vice-presidents in the order designated by
the directors, or in the absence of any designation, then in the order of
their election) shall perform the duties of the president, and when so
acting, shall have all the powers of and be subject to all the restrictions
upon the president. The vice-presidents shall perform such other duties and
have such other powers as the board of directors may from time to time
prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board
of directors and all meetings of the stockholders and record all the
proceedings of the meetings of the corporation and of the board of directors
in a book to be kept for that purpose and shall perform like duties for the
standing committees when required. He shall give, or cause to be given,
notice of all meetings of the stockholders and special meetings of the board
of directors, and shall perform other duties as may be prescribed by the
board of directors or president, under whose supervision he shall be. He
shall have custody of the corporate seal
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<PAGE>
of the corporation and he, or an assistant secretary, shall have the
authority to affix the same to any instrument requiring it and when so
affixed, it may be attested by his signature or by the signature of such
assistant secretary. The board of directors may give general authority to
any other officer to affix the seal of the corporation and to attest the
affixing by his signature.
Section 10. The assistant secretary, or if there be more than
one, the assistant secretaries in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election) shall, in the absence of the secretary or in the event of his
inability or refusal to act, perform the duties and exercise the powers of
the secretary and shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the corporation and shall
deposit all moneys and other valuable effects in the name and to the credit
of the corporation in such depositories as may be designated by the board of
directors.
Section 12. He shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors,
at its regular meetings, or when the board of directors so requires, an
account of all his transactions as treasurer and of the financial condition
of the corporation.
Section 13. If required by the board of directors, he shall give
the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for
the restoration to the corporation, in case of his death, resignation,
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<PAGE>
retirement or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his control
belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors (or if there be no such determination, then in the order of their
election), shall, in the absence of the treasurer or in the event of his
inability or refusal to act, perform the duties and exercise the powers of
the treasurer and shall perform such other duties and have such other powers
as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATE OF STOCK
Section 1. Every holder of stock in the corporation shall be
entitled to have a certificate, signed by, or in the name of the corporation
by, the chairman or vice-chairman of the board of directors, or the president
or a vice-president and the treasurer or an assistant treasurer, or the
secretary or an assistant secretary of the corporation, certifying the number
of shares owned by him in the corporation.
Certificates may be issued for partly paid shares and in such
case upon the face or back of the certificates issued to represent any such
partly paid shares, the total amount of the consideration to be paid
therefor, and the amount paid thereon shall be specified.
Section 2. Any of or all the signatures on the certificate may
be facsimile. In case any officer, transfer or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the corporation with the same
effect as if he were such officer, transfer agent or registrar at the date of
issue.
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<PAGE>
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate
or certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed certificate or
certificates, or his legal representative, to advertise the same in such
manner as it shall require and/or to give the corporation a bond in such sum
as it may direct as indemnity against any claim that may be made against the
corporation with respect to the certificate alleged to have been lost, stolen
or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignation or authority to
transfer, it shall be the duty of the corporation to issue a new certificate
to the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders
or any adjournment thereof, or to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the date of such meeting, nor more than sixty days prior to any
other action. A determination of stockholders of record
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<PAGE>
entitled to notice of or to vote at a meeting of stockholders shall apply to
any adjournment of the meeting: provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the
exclusive right of a person registered on its books as the owner of shares to
receive dividends, and to vote as such owner, and to hold liable for calls
and assessments a person registered on its books as the owner of shares, and
shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as otherwise provided by
the laws of Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting,
pursuant to law. Dividends may be paid in cash, in property, or in shares of
the capital stock, subject to the provisions of the certificate or
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends such sum or
sums as the directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation,
or for such other purpose as the directors shall think conducive to the
interest of the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
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<PAGE>
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual
meeting, and at any special meeting of the stockholders when called for by
vote of the stockholders, a full and clear statement of the business and
condition of the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such other person
or persons as the board of directors may from time to time designate.
FISCAL YEARS
Section 5. The fiscal year of the corporation shall be fixed by
resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the
name of the corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
Section 7. The corporation shall indemnify its officers,
directors, employees and agents to the extent permitted by the General
Corporation Law of Delaware.
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<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or
new by-laws may be adopted by the stockholders or by the board of directors,
when such power is conferred upon the board of directors by the certificate
or incorporation at any regular meeting of the stockholders or of the board
of directors or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or adoption of new
by-laws be contained in the notice of such special meeting. If the power to
adopt, amend or repeal by-laws is conferred upon the board of directors by
the certificate of incorporation it shall not divest or limit the power of
the stockholders to adopt, amend or repeal by-laws.
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<PAGE>
UNITED ASSET MANAGEMENT CORPORATION
Exhibit 11
CALCULATION OF EARNINGS PER SHARE (1)
(In thousands, except per-share amounts)
(Unaudited)
- --------------------------------------------------------------------------------
Three Months Ended March 31, 1997 1996(2)
- --------------------------------------------------------------------------------
Common and common equivalent shares:
Net income $ 24,055 $ 19,487
Adjustments thereto (3) - 611
- --------------------------------------------------------------------------------
Adjusted net income $ 24,055 $ 20,098
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average shares outstanding 69,332 67,847
Adjustments thereto (3) 4,109 4,782
- --------------------------------------------------------------------------------
Shares used in computation 73,441 72,629
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Per share $.33 $.28
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Common shares - assuming full dilution:
Net income $ 24,055 $ 19,487
Adjustments thereto (3) - 220
- --------------------------------------------------------------------------------
Adjusted net income $ 24,055 $ 19,707
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Average shares outstanding 69,332 67,847
Adjustments thereto (3) 4,109 4,782
- --------------------------------------------------------------------------------
Shares used in computation 73,441 72,629
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Per share $.33 $.27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) See Note 5 for pro forma earnings per share calculated in accordance with
Statement of Financial Accounting Standards No. 128, Earnings per Share,
which will be effective for financial statements for both interim and
annual periods ending after December 15, 1997.
(2) Restated due to pooling of interests transactions completed in the third
quarter of 1996 and the two-for-one common stock split effective June 7,
1996.
(3) Adjustments relate to application of modified treasury stock method.
F-8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS FINANCIAL DATA SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE COMPANY'S THREE MONTHS ENDED MARCH 31, 1997 CONSOLIDATED STATEMENT OF
INCOME AND THE CONDENSED CONSOLIDATED BALANCE SHEET. THIS INFORMATION IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000796370
<NAME> UNITED ASSET MANAGEMENT
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 177,177
<SECURITIES> 0
<RECEIVABLES> 143,589
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 331,834
<PP&E> 73,458
<DEPRECIATION> 42,416
<TOTAL-ASSETS> 1,369,572<F1>
<CURRENT-LIABILITIES> 170,406
<BONDS> 595,274<F2>
0
0
<COMMON> 703
<OTHER-SE> 566,711
<TOTAL-LIABILITY-AND-EQUITY> 1,369,572
<SALES> 0
<TOTAL-REVENUES> 215,522
<CGS> 0
<TOTAL-COSTS> 140,158
<OTHER-EXPENSES> 24,912<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,398
<INCOME-PRETAX> 42,054
<INCOME-TAX> 17,999
<INCOME-CONTINUING> 24,055
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,055
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
<FN>
<F1>INCLUDES $958,678,000 OF COST ASSIGNED TO CONTRACTS ACQUIRED, NET.
<F2>INCLUDES $150,000,000 IN SENIOR NOTES PAYABLE AND $445,274,000 IN
SUBORDINATED NOTES PAYABLE.
<F3>REPRESENTS AMORTIZATION OF COST ASSIGNED TO CONTRACTS ACQUIRED FOR THE THREE
MONTHS ENDED MARCH 31, 1997.
</FN>
</TABLE>
