FILED PURSUANT TO RULE 424(b)(3) AND 424(c)
REGISTRATION NO. 333-74558
REMARKETING PROSPECTUS_SUPPLEMENT
(TO PROSPECTUS SUPPLEMENT DATED DECEMBER 18, 2001
AND PROSPECTUS DATED DECEMBER 10, 2001)
$83,524,000
[GRAPHIC]
AFFILIATED MANAGERS GROUP, INC.
5.406% SENIOR NOTES DUE 2006
------------------
This is a remarketing of $83,524,000 aggregate principal amount of senior
notes due November 17, 2006 of Affiliated Managers Group, Inc., each with a
stated amount of $25. The notes were originally issued in 2001 in connection
with our sale and issuance of Income PRIDES to the public. Interest on the notes
is payable quarterly in arrears on February 17, May 17, August 17 and
November 17 of each year. The notes will bear interest at the reset rate of
5.406%. Interest on the notes will accrue at the reset rate from and including
August 17, 2004. The first interest payment on the remarketed notes will be made
on November 17, 2004. For United States federal income tax purposes, the notes
constitute contingent payment debt instruments.
If a tax event occurs and is continuing, we may, at our option, redeem the
notes at the redemption price described in this remarketing prospectus
supplement under "Description of the Remarketed Notes--Tax Event Redemption."
We will not receive any of the proceeds from this remarketing of the notes.
In this remarketing, we will be purchasing $64,024,000 aggregate principal
amount of the remarketed notes.
INVESTING IN THE NOTES INVOLVES RISKS. SEE "RISK FACTORS" ON PAGE RS-4.
---------------------
PER NOTE TOTAL
-------- -----
Price to the public (1)..................................... 101.667% $84,916,345
Remarketing fee to remarketing agent........................ 0.253% $211,172
Net proceeds to holders of Income PRIDES.................... 101.414% $84,705,173
(1) Plus accrued interest from and including August 17, 2004, if settlement
occurs after that date.
--------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
remarketing prospectus supplement and the accompanying prospectus supplement and
prospectus are truthful and complete. Any representation to the contrary is a
criminal offense.
The notes will be delivered through the book-entry facilities of The
Depository Trust Company on or about August 17, 2004.
--------------------------
REMARKETING AGENT
MERRILL LYNCH & CO.
---------------
The date of this remarketing prospectus supplement is August 12, 2004.
--------------------------
"Income PRIDES" is a service mark of Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
REMARKETING PROSPECTUS SUPPLEMENT:
About this Remarketing Prospectus Supplement................ RS-1
Summary of the Remarketing.................................. RS-2
Affiliated Managers Group, Inc.............................. RS-4
Risk Factors................................................ RS-4
Use of Proceeds............................................. RS-4
Ratio of Earnings to Fixed Charges.......................... RS-4
Description of the Remarketed Notes......................... RS-5
Certain United States Federal Income Tax Consequences....... RS-8
Remarketing................................................. RS-13
Where You Can Find More Information......................... RS-14
Legal Matters............................................... RS-15
Independent Registered Public Accounting Firm............... RS-15
PROSPECTUS SUPPLEMENT:
About this Prospectus Supplement............................ S-3
Prospectus Supplement Summary............................... S-4
Risk Factors................................................ S-14
Forward-Looking Statements.................................. S-26
Accounting Treatment........................................ S-26
Use of Proceeds............................................. S-27
Ratio of Earnings to Fixed Charges.......................... S-27
Capitalization.............................................. S-28
Summary Selected Financial Data............................. S-29
Price Range of Common Stock and Dividends................... S-31
Description of the FELINE PRIDES............................ S-32
Description of the Purchase Contracts....................... S-37
Description of the Notes.................................... S-50
Certain Federal Income Tax Consequences..................... S-55
Certain U.S. Federal Income Tax Consequences to Non-United
States Holders............................................ S-61
ERISA Considerations........................................ S-63
Underwriting................................................ S-65
Validity of the Notes....................................... S-68
Experts..................................................... S-68
PROSPECTUS:
About this Prospectus....................................... 1
Where You Can Find More Information......................... 1
Forward-Looking Statements.................................. 2
About Affiliated Managers Group, Inc........................ 3
Ratios of Earnings to Fixed Charges......................... 3
How We Intend to Use the Proceeds........................... 3
Description of Debt Securities.............................. 4
Description of Preferred Stock.............................. 19
Description of Common Stock................................. 25
Description of the Stock Purchase Contracts and the Stock
Purchase Units............................................ 26
How We Plan to Offer and Sell the Securities................ 27
Experts..................................................... 29
Legal Opinions.............................................. 29
(i)
ABOUT THIS REMARKETING PROSPECTUS SUPPLEMENT
You should read this remarketing prospectus supplement along with the
prospectus supplement and prospectus that follow. The description of the
remarketed notes contained in this remarketing prospectus supplement supplements
and modifies the general terms of the debt securities set forth in the
accompanying prospectus supplement and prospectus. The information contained in
this remarketing prospectus supplement supersedes any inconsistent information
contained in the accompanying prospectus supplement or prospectus. You should
rely only on the information contained or incorporated by reference in this
remarketing prospectus supplement and, except as stated above, in the
accompanying prospectus supplement and prospectus. We and the remarketing agent
have not authorized anyone to provide you with different information. If anyone
provides you with different or inconsistent information, you should not rely on
it. We are not making an offer of these securities in any jurisdiction where the
offer is not permitted. You should not assume that the information contained in
this remarketing prospectus supplement is accurate as of any date other than the
date of this remarketing prospectus supplement. The business profile, financial
condition, results of operations and prospects of Affiliated Managers
Group, Inc. may have changed since that date.
Unless we have indicated otherwise, or the context otherwise requires,
references in this remarketing prospectus supplement and the accompanying
prospectus supplement and prospectus to "Affiliated Managers Group," "we," "us"
and "our" refer to Affiliated Managers Group, Inc. and not its affiliates or
other subsidiaries.
RS-1
SUMMARY OF THE REMARKETING
Issuer............................... Affiliated Managers Group, Inc.
Securities........................... $83,524,000 aggregate principal amount of 5.406% senior
notes due November 17, 2006. Each note was originally issued
on December 21, 2001 by us as a component of our Income
PRIDES.
Interest Rate........................ The notes will bear interest at the reset rate of 5.406% per
year, which was determined on August 12, 2004 and equals the
sum of the 2.75% reset spread determined by the reset agent
on August 3, 2004 and the applicable rate for the two and
one-quarter year benchmark Treasury maturing November 15,
2006 (CUSIP No. 912828BP4) on the remarketing date of
August 12, 2004. Interest on the notes will accrue at the
reset rate from and including August 17, 2004.
Interest Payment Dates............... February 17, May 17, August 17 and November 17 of each year.
The first interest payment on the remarketed notes will be
made on November 17, 2004.
Remarketing Agent;
Reset Agent........................ Merrill Lynch, Pierce, Fenner & Smith Incorporated
Participation........................ In this remarketing, we will be purchasing $64,024,000
aggregate principal amount of the remarketed notes.
Tax Event Redemption................. If a tax event occurs and is continuing, we may, at our
option, redeem the notes in whole, but not in part, at the
redemption price described under "Description of the
Remarketed Notes--Tax Event Redemption" in this remarketing
prospectus supplement.
Use of Proceeds...................... We will not receive any of the proceeds from this
remarketing. See "Use of Proceeds" in this remarketing
prospectus supplement.
Ranking.............................. The notes constitute senior debt, ranking equally with all
of our existing and future unsecured and unsubordinated
debt, and ranking senior to any future subordinated
indebtedness.
RS-2
Because we are a holding company, we receive substantially
all of our cash from distributions made to us by our
affiliated investment management firms, or Affiliates, and
other subsidiaries. Payment of distributions to us may be
subject to claims by the Affiliate's or subsidiary's
creditors and to limitations under federal and state laws,
including securities and bankruptcy laws. Payments of
distributions also will be subject to the financial
condition and operating requirements of our Affiliates and
subsidiaries. In addition, holders of the notes will have a
subordinate position to the claims of creditors of our
Affiliates and subsidiaries on their assets and earnings.
Our right to receive any assets of our Affiliates or
subsidiaries upon their liquidation or reorganization, and
thus the right of the holders of securities issued by us to
participate in those assets, typically would be subordinated
to the claims of that entity's creditors. In addition, even
if we were a creditor of any of our Affiliates or
subsidiaries, our rights as a creditor would be subordinate
to any security interest and indebtedness that is senior to
us. At June 30, 2004, our Affiliates and subsidiaries had
approximately $0.8 million of indebtedness, in addition to
other liabilities, to which the notes would be structurally
subordinated. See "Description of the Remarketed
Notes--Ranking" in this remarketing prospectus supplement.
Trustee, Registrar and
Paying Agent....................... The Bank of New York
RS-3
AFFILIATED MANAGERS GROUP, INC.
Affiliated Managers Group, Inc. is an asset management company with equity
investments in a diverse group of mid-sized investment management firms. As of
June 30, 2004, our Affiliates managed approximately $102.2 billion in assets
across a broad range of investment styles and in three principal distribution
channels: Mutual Fund, Institutional and High Net Worth. We pursue a growth
strategy designed to generate shareholder value through the internal growth of
our existing businesses across these three channels, in addition to investments
in mid-sized investment management firms and strategic transactions and
relationships designed to enhance our Affiliates' businesses and growth
prospects. Our principal executive office is located at 600 Hale Street, Prides
Crossing, Massachusetts 01965. Our telephone number is (617) 747-3300. For more
information regarding our company, see "Where You Can Find More Information" in
this remarketing prospectus supplement.
RISK FACTORS
AN ACTIVE TRADING MARKET FOR THE NOTES MAY NOT DEVELOP.
There is currently no public market for the notes, and we do not currently
plan to list the notes on any national securities exchange. In addition, the
liquidity of any trading market in the notes, and the market price quoted for
the notes, may be adversely affected by changes in the overall market for these
securities and by changes in our financial performance or prospects. A liquid
trading market in the notes may not develop. Due to our recently completed
tender offer, a privately negotiated purchase of notes by us, and our
participation in this remarketing, there will be only $75,750,000 aggregate
principal amount of the notes outstanding following completion of the
remarketing. Moreover, we may determine from time to time in the future, to
purchase additional notes through open market purchases, privately negotiated
transactions, tender offers, exchange offers or otherwise, which would further
create a limited market for the notes.
FOR ADDITIONAL RISK FACTORS, PLEASE SEE "RISK FACTORS" IN THE ACCOMPANYING
PROSPECTUS SUPPLEMENT BEGINNING ON PAGE S-14.
USE OF PROCEEDS
We will not receive any of the proceeds from this remarketing. As is more
fully described in the accompanying prospectus supplement relating to the
issuance of our Income PRIDES, a portion of the proceeds will be used to
purchase a Treasury portfolio at a cost of $84,494,000 that will be substituted
for the notes and will be pledged to the collateral agent to secure the Income
PRIDES holders' obligations to purchase our common stock under the purchase
contracts issued as components of the Income PRIDES. Proceeds in excess of the
Treasury portfolio purchase price will be used to pay to the remarketing agent a
remarketing fee of $211,172, and the remarketing agent will then remit the
remaining proceeds of $211,173 for the benefit of the holders of Income PRIDES.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the periods indicated is
as follows:
SIX MONTHS
ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------------------
2004 2003 2002 2001 2000 1999
---------- -------- ---------- ---------- ---------- --------
Ratios........................... 7.2x 7.5x 6.7x 8.8x 9.3x 15.4x
For the purpose of computing the ratios of earnings to fixed charges,
earnings consist of consolidated income from continuing operations before
provision for income taxes, minority interest
RS-4
and fixed charges, and fixed charges consist of interest expense, amortization
of debt issuance costs and the portion of rental expense deemed to represent
interest.
DESCRIPTION OF THE REMARKETED NOTES
The notes are issued under our indenture, as supplemented by a supplemental
indenture, each dated December 21, 2001, between us and The Bank of New York, as
successor trustee. The indenture and the supplemental indenture are together
referred to in this remarketing prospectus supplement as the "indenture." A copy
of the indenture is on file with the Securities and Exchange Commission and may
be obtained by accessing the Internet address provided or contacting us as
described under "Where You Can Find More Information." The following description
is qualified in its entirety by reference to the provisions of the indenture.
You should read the indenture carefully to fully understand the terms of the
notes.
GENERAL
This remarketing prospectus supplement relates to the remarketing of the
notes on behalf of the Income PRIDES holders and any holders of notes that have
been separated from the Income PRIDES who have elected to participate in the
remarketing.
The aggregate principal amount of notes to be remarketed pursuant to this
remarketing prospectus supplement is $83,524,000. Immediately following
completion of the remarketing, there will be $75,750,000 aggregate principal
amount of notes outstanding.
Unless an earlier tax event redemption has occurred, the entire principal
amount of the notes will mature and become due and payable, together with any
accrued and unpaid interest, on November 17, 2006. Except for a tax event
redemption, the notes will not be redeemable by us.
The notes will be remarketed in denominations of $25 and integral multiples
of $25.
The notes will not be subject to a sinking fund provision.
RANKING
Payment of the principal and interest on the notes will rank equally with
all of our other unsecured and unsubordinated debt. As of June 30, 2004, we had
approximately $723.6 million of indebtedness that would have ranked equally with
the notes.
Because we are a holding company, our cash flow and ability to service our
debt is dependent upon the earnings of our Affiliates and other subsidiaries.
Any right of Affiliated Managers Group to receive assets of any of its
Affiliates or subsidiaries upon their liquidation or reorganization (and the
resulting right of the holders of the notes to participate in those assets) will
be effectively subordinated to the claims of that Affiliate's or subsidiary's
creditors (including trade creditors), except to the extent that Affiliated
Managers Group is itself recognized as a creditor of such Affiliate or
subsidiary, in which case our claims would be subordinated to any security
interests in the assets of such Affiliate or subsidiary and any indebtedness of
such Affiliate or subsidiary senior to that held by us. As of June 30, 2004, our
Affiliates and subsidiaries had debt outstanding of approximately $0.8 million
on a consolidated basis, in addition to other liabilities.
We may, without the consent of the holders of the notes, create and issue
additional notes ranking equally with the notes and otherwise similar in all
respects so that such further notes would be consolidated and form a single
series of notes.
RS-5
PAYMENTS
Remarketed notes will be issued in the form of one or more global
certificates, which we refer to as global securities, registered in the name of
the depositary or its nominee. Payments on the notes issued as a global security
will be made to the depositary, a successor depositary or, in the event that no
depositary is used, to a paying agent for the notes. Principal and interest with
respect to certificated notes will be payable, the transfer of the notes will be
registrable and the notes will be exchangeable for notes of other denominations
of a like aggregate principal amount, at the office or agency maintained by us
for this purpose in the Borough of Manhattan, The City of New York. However, at
our option, payment of interest may be made by check mailed to the address of
the holder entitled to payment or by wire transfer to an account appropriately
designated by the holder entitled to payment. The Bank of New York is the
initial paying agent, transfer agent and registrar for the notes. We may at any
time designate additional transfer agents and paying agents with respect to the
notes, and may remove any transfer agent, paying agent or registrar for the
notes. We may change the place of payment on the notes, appoint one or more
additional paying agents (including Affiliated Managers Group) or remove any
paying agent, all at our discretion.
Any monies deposited with the trustee or any paying agent, or held by us in
trust, for the payment of principal of or interest on any note and remaining
unclaimed for two years after such principal or interest has become due and
payable shall, at our request, be repaid to us or released from trust, as
applicable, and the holder of the note shall thereafter look, as a general
unsecured creditor, only to us for the payment thereof.
INTEREST
Each note will bear interest at the rate of 5.406% per year from and
including August 17, 2004, payable quarterly in arrears on February 17, May 17,
August 17 and November 17 of each year, each an "interest payment date,"
commencing November 17, 2004, to the person in whose name the note is registered
as of the close of business on the regular record date for such interest payment
date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year consisting of twelve 30-day months. The amount of interest
payable for any period shorter than a full quarterly period for which interest
is computed will be computed on the basis of the actual number of days elapsed
in the 90-day period. In the event that any date on which interest is payable on
the notes is not a business day, the payment of the interest payable on that
date will be made on the next succeeding day that is a business day, without any
interest or other payment in respect of the delay, except that, if the business
day is in the next succeeding calendar year, then the payment will be made on
the immediately preceding business day, in each case with the same force and
effect as if made on the scheduled payment date.
In addition, since the notes are subject to the contingent payment debt
rules, original issue discount will accrue on the notes for United States
federal income tax purposes.
TAX EVENT REDEMPTION
If a tax event (as described below) shall occur and be continuing, we may,
at our option, redeem the notes in whole, but not in part, at any time at a
redemption price equal to, for each note, the par value of the note plus accrued
and unpaid interest to the date of redemption. Installments of interest on notes
which are due and payable on or prior to a redemption date will be payable to
holders of the notes registered as such on the close of business on the relevant
record dates. If, following the occurrence of a tax event, we exercise our
option to redeem the notes, the proceeds of the redemption will be payable in
cash to the holders of the notes. Notice of any redemption will be mailed at
least 30 days but not more than 60 days before the redemption date to each
registered holder of the notes to be redeemed at its registered address. Unless
we default in payment of the redemption price, on and
RS-6
after the redemption date interest shall cease to accrue on the notes. In the
event any notes are called for redemption, neither we nor the trustee will be
required to register the transfer of or exchange the notes to be redeemed.
"Tax event" means the receipt by Affiliated Managers Group of an opinion of
a nationally recognized tax counsel experienced in such matters to the effect
that there is more than an insubstantial risk that interest payable by us on the
notes on the next interest payment date would not be deductible, in whole or in
part, by us for United States federal income tax purposes as a result of any
amendment to, change in, or announced proposed change in, the laws, or any
regulations thereunder, of the United States or any political subdivision or
taxing authority thereof or therein affecting taxation, any amendment to or
change in an official interpretation or application of any such law or
regulations by any legislative body, court, governmental agency or regulatory
authority or any official interpretation or pronouncement that provides for a
position with respect to any such laws or regulations that differs from the
generally accepted position on the date of the indenture, which amendment,
change, or proposed change is effective or which interpretation or pronouncement
is announced on or after the date of the indenture.
Other than in the event of a tax event, we will not have the ability to
redeem the notes prior to their stated maturity date.
REGISTRATION AND TRANSFER
The transfer of notes may be registered, and notes may be exchanged for
other notes, of authorized denominations and with the same terms and principal
amount, at the corporate trust office of The Bank of New York in The City of New
York; provided, however, that payment of interest may be made at our option by
check mailed to the note holder at such address as shall appear in the security
register or by wire transfer to an account appropriately designated by the
holder entitled to payment.
BOOK ENTRY
The notes being offered in this remarketing will be represented by one or
more fully registered global securities and deposited with, or on behalf of, The
Depository Trust Corporation, or DTC, and registered in the name of DTC or its
nominee or such other depositary as any officer of our company may from time to
time designate. Except as provided in this remarketing prospectus supplement or
the accompanying prospectus supplement, a beneficial owner will not be entitled
to receive physical delivery of the notes. Accordingly, each beneficial owner
must rely on the procedures of DTC to exercise any rights under the notes.
DTC may discontinue providing its services as securities depository with
respect to the notes at any time by giving reasonable notice to us. In the event
no successor securities depository is obtained, certificates for the notes will
be printed and delivered. If we decide to discontinue use of the DTC system of
book-entry transfers, certificates for the notes will be printed and delivered.
RS-7
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion describes certain material United States federal
income tax consequences of the ownership and disposition of the notes acquired
by you in the remarketing and held by you as capital assets. This discussion
does not describe all of the tax consequences that may be relevant to you in
light of your particular circumstances or if you are subject to special rules,
such as, for example, certain financial institutions, insurance companies,
dealers and certain traders in securities, persons holding the notes as part of
a "straddle," "hedge," "conversion" or similar transaction, holders of notes
that are being remarketed in the remarketing, U.S. holders (as defined below)
whose functional currency is not the United States dollar, certain former
citizens or residents of the United States, partnerships or other entities
classified as partnerships for United States federal income tax purposes, and
persons subject to the alternative minimum tax. In addition, this summary does
not address any aspects of state, local or foreign tax laws. This summary is
based on the Internal Revenue Code of 1986, as amended, or the Code, Treasury
regulations, administrative pronouncements, and judicial decisions in effect as
of the date of this remarketing prospectus supplement, all of which are subject
to change, possibly on a retroactive basis. You are urged to consult your tax
advisor with regard to the application of the United States federal income tax
laws to your particular situation as well as any tax consequences arising under
the laws of any state, local or foreign taxing jurisdiction.
If a partnership or other entity classified as a partnership for United
States federal income tax purposes holds notes, the tax treatment of the
partnership and each partner generally will depend on the activities of the
partnership and the activities of the partner. Partnerships acquiring notes, and
partners in such partnerships, should consult their tax advisors.
CLASSIFICATION OF THE NOTES
In connection with the original issuance of the notes, Goodwin Procter LLP,
our counsel, delivered an opinion that, under then-current law, based on certain
representations, facts and assumptions contained in that opinion, the notes
would be classified as indebtedness for United States federal income tax
purposes. Generally, characterization of an obligation as indebtedness for
United States federal income tax purposes is made at the time of the issuance of
the obligation. Consistent with the opinion received from our counsel at the
time of the issuance of the notes, we have treated and will continue to treat
the notes as indebtedness for United States federal income tax purposes. An
opinion of counsel is not binding on the Internal Revenue Service, or IRS, or
any court, however, and it is possible that the IRS will successfully assert
that the notes are not properly treated as indebtedness, in which case your tax
consequences from the ownership and disposition of the notes may differ from
those described below. By acquiring notes in the remarketing, you will be deemed
to have agreed to treat the notes as indebtedness for United States federal
income tax purposes.
Because of the manner in which the interest rate on the notes is reset, we
have treated and will continue to treat the notes as indebtedness subject to the
Treasury regulations governing contingent payment debt instruments (the
"contingent payment debt regulations"). The proper application of the contingent
payment debt regulations to the notes following the remarketing is uncertain in
a number of respects, however, and it is possible that the IRS will assert that
the notes should be treated in a different manner than as described below. A
different treatment of the notes could affect the amount, timing and character
of income, gain or loss with respect to an investment in the notes. Accordingly,
you are urged to consult your tax advisor regarding the United States federal
income tax consequences of owning the notes.
The remainder of this discussion assumes that the notes will be treated as
indebtedness subject to the contingent payment debt regulations as described
above.
RS-8
TAX CONSEQUENCES TO U.S. HOLDERS
The following summary applies to U.S. holders. The term "U.S. holder" means
a beneficial owner of a note that is: (1) a person who is a citizen or resident
of the United States for United States federal income tax purposes; (2) a
corporation, or other entity classified as a corporation for United States
federal income tax purposes, created or organized in or under the laws of the
United States or any state thereof or the District of Columbia; (3) an estate
the income of which is subject to United States federal income taxation
regardless of its source; or (4) a trust if (a) a court within the United States
can exercise primary supervision over the administration of such trust and one
or more United States persons have the authority to control all substantial
decisions of such trust or (b) the trust has in effect a valid election to be
treated as a domestic trust for United States federal income tax purposes.
ORIGINAL ISSUE DISCOUNT ACCRUALS BASED ON COMPARABLE YIELD AND PROJECTED
PAYMENT SCHEDULE
Under the contingent payment debt regulations (subject to the discussion
below), regardless of your method of accounting for United States federal income
tax purposes, you are required to accrue interest income on the notes as
original issue discount on a constant-yield basis at an assumed yield (which we
refer to as the "comparable yield") that was determined at the time of original
issuance of the notes. The comparable yield for the notes was based on the yield
at which we could have issued, at the time of original issuance of the notes, a
fixed-rate debt instrument with no contingent payments but with terms and
conditions otherwise similar to those of the notes. Solely for purposes of
determining the amount of income that accrues on the notes, we were required, at
the time of original issuance of the notes, to construct a "projected payment
schedule" in respect of the notes representing a series of payments the amount
and timing of which would produce a yield to maturity on the notes equal to the
comparable yield.
For United States federal income tax purposes, you generally are required
under the contingent payment debt regulations to use the comparable yield and
the projected payment schedule provided by us in determining your original issue
discount accruals and adjustments in respect of a note, unless you timely
disclose and justify the use of a different comparable yield and projected
payment schedule to the IRS. However, there is uncertainty regarding the manner
in which the contingent payment debt regulations apply to the remarketing,
including the precise mechanics for determining the total amount and timing of
the adjustments to the accrual of original issue discount on the notes. The
following discussion assumes that you will use the original projected payment
schedule provided by us.
Furthermore, assuming that you report your income in a manner consistent
with our position described below, the amount of income that you will recognize
in respect of the notes generally should correspond to the economic accrual of
income on the notes to you and the amount of income you would have recognized if
the notes were not subject to the contingent payment debt regulations. No
assurance can be given that the IRS will agree with the application of the
contingent payment debt regulations to the remarketing in the manner described
below.
The amount of original issue discount on a note that accrues in an accrual
period is the product of the comparable yield on the note (adjusted to reflect
the length of the accrual period) and the adjusted issue price of the note at
the beginning of the accrual period. The daily portions of original issue
discount in respect of a note are determined by allocating to each day in an
accrual period the ratable portion of original issue discount on the note that
accrues in the accrual period. The adjusted issue price of each note at the
beginning of each accrual period equals $25.00, increased by original issue
discount previously accrued on the note (disregarding any positive or negative
adjustments) and decreased by the total amount of the projected payments made on
the note for all previous accrual periods.
At the time of the issuance of the notes, we determined that the comparable
yield was 7.1% and the projected payment schedule for the notes, per $25
principal amount, was $0.23 on February 17,
RS-9
2002, $0.38 for each subsequent quarterly payment date ending on or prior to
August 17, 2004, and $0.53 for each quarterly payment date ending after
August 17, 2004. We also determined that the projected payment for the notes,
per $25 principal amount, at the maturity date was $25.53 (which included the
stated principal amount of the notes as well as the final projected interest
payment).
ADJUSTMENTS REFLECTING THE ACTUAL RESET RATE
Based on the reset rate of 5.406%, actual payments on the notes, per $25
principal amount, will be approximately $0.34 for each quarterly payment date
ending after August 17, 2004. Because these payments will differ from the
projected quarterly payments of $0.53, you and we will be required to account
for these differences as negative adjustments to original issue discount accrued
based on the comparable yield of 7.1% in a reasonable manner over the period to
which they relate. For our own reporting purposes, we intend to treat the
difference of approximately $0.19 between the projected payment of $0.53 and the
actual payment of approximately $0.34 on the note as a negative adjustment to
the original issue discount accrued by you (based on the 7.1% comparable yield)
during each quarter. You are not required to use the same method to account for
the differences between the actual payments and the projected payment schedule
so long as you make these adjustments in a reasonable manner.
ADJUSTED TAX BASIS OF THE NOTES; ADDITIONAL POTENTIAL ADJUSTMENTS
Your initial adjusted tax basis in a note acquired by you in the remarketing
will equal the amount that you pay for the note. Your adjusted tax basis in the
note after the remarketing will equal (x) the sum of your initial adjusted tax
basis in the note and any original issue discount previously accrued on such
note by you (disregarding any positive or negative adjustments, other than those
described in the next paragraph) minus (y) the total amount of the projected
payments made on the note from the date of your purchase of the note.
If your initial adjusted tax basis in a note acquired in the remarketing
differs from the adjusted issue price of the note at the time of purchase, you
will be required to make additional negative or positive adjustments to original
issue discount accrued in each period. You will take into account any difference
between your initial adjusted tax basis in the note and the adjusted issue price
of the note at the time of purchase by reasonably allocating this difference to
daily portions of original issue discount or to projected payments over the
remaining term of the note. If your initial adjusted tax basis in a note is
greater than the adjusted issue price of the note at the time of purchase, you
will take the difference into account as a negative adjustment to original issue
discount on the date the daily portion accrues or the projected payment is made.
If your initial adjusted tax basis in a note is less than the adjusted issue
price of the note at the time of purchase, you will take the difference into
account as a positive adjustment to original issue discount on the date the
daily portion accrues or the projected payment is made. Your adjusted tax basis
in a note will be decreased by any such negative adjustments and increased by
any such positive adjustments. To the extent that your negative adjustment in a
particular taxable year exceeds your positive adjustment, such excess is a net
negative adjustment that is not subject to the two percent floor limitation
imposed on miscellaneous deductions under Section 67 of the Code.
Upon accruing interest income as original issue discount based on the
comparable yield of 7.1% and making positive and negative adjustments that
reflect the actual reset rate as described in the immediately preceding
subsection and the possible difference between your initial adjusted tax basis
in the note and the adjusted issue price of the note at the time of purchase, as
described in the immediately preceding paragraph of this subsection, the amount
of income that you will recognize in respect of the notes generally should
correspond to the economic accrual of income on the notes to you and the amount
of income you would have recognized if the notes were not subject to the
contingent payment debt regulations.
RS-10
SALE, EXCHANGE OR OTHER DISPOSITION OF THE NOTES
Upon a sale, exchange or other disposition of a note (including a tax event
redemption), you will generally recognize gain or loss equal to the difference
between the amount realized on the disposition and your adjusted tax basis in
the note. Such gain or loss generally will be capital gain or loss (except to
the extent of any positive adjustment that you have not yet accrued and included
in income, which will be treated as interest income) and generally will be
long-term capital gain or loss if you held the note for more than one year
immediately prior to such disposition. Long-term capital gains of individuals
are eligible for reduced rates of taxation. The deductibility of capital losses
is subject to limitations. If you sell a note at a loss that meets certain
thresholds, you may be required to file a disclosure statement with the IRS
under recently promulgated Treasury regulations.
TAX CONSEQUENCES TO NON-U.S. HOLDERS
The following applies to you if you are a holder of a note that is not a
U.S. holder or a partnership. Special rules may apply to you if you are a
"controlled foreign corporation," "passive foreign investment company," or
"foreign personal holding company" for United States federal income tax
purposes. If you are such an entity, you should consult your tax advisor to
determine the tax consequences that may be relevant to you.
All payments on a note made to you and any gain realized on a sale, exchange
or other disposition (including a tax event redemption) of a note will be exempt
from United States federal income and withholding tax, provided that:
- you do not own, actually or constructively, 10% or more of the total
combined voting power of all classes of our stock entitled to vote;
- you are not a controlled foreign corporation related, directly or
indirectly, to us through stock ownership;
- you are not a bank receiving certain types of interest;
- you have fulfilled the certification requirement described below;
- such payments are not effectively connected with the conduct by you of a
trade or business in the United States; and
- in the case of gain realized on the sale, exchange or other disposition
(including a tax redemption event) of a note, if you are a nonresident
alien individual, you are not present in the United States for 183 or more
days in the taxable year of the disposition and certain other conditions
are met.
The certification requirement referred to above will be fulfilled if you
certify to us on IRS Form W-8BEN (or other applicable form), under penalties of
perjury, that you are not a United States person and provide your name and
address.
If you are engaged in a trade or business in the United States, and if
payments on a note are effectively connected with the conduct of this trade or
business, you will generally be taxed in the same manner as a U.S. holder (see
"--Tax Consequences to U.S. Holders" above), except that you will be required to
provide a properly executed IRS Form W-8ECI in order to claim an exemption from
withholding tax. You should consult your tax advisor with respect to other tax
consequences of the ownership of the notes, including the possible imposition of
a 30% branch profits tax.
INFORMATION REPORTING AND BACKUP WITHHOLDING
Information returns may be filed with the IRS in connection with payments on
the notes and the proceeds from a sale or other disposition of the notes. You
may receive statements containing the
RS-11
information reflected on these returns. The amounts reported to you may not
reflect the amounts that you will be required to include in income in respect of
the notes, even if you take adjustments into account in the manner described
above. Please consult your tax advisor regarding calculating your taxable income
from the notes based on the amounts reported to you and other information
available to you, including the information provided in this remarketing
prospectus supplement.
If you are a U.S. holder, you may be subject to United States backup
withholding tax on these payments if you fail to provide your taxpayer
identification number to the paying agent and comply with certification
procedures or otherwise establish an exemption from backup withholding. If you
are not a U.S. holder, you may be subject to United States backup withholding
tax on these payments unless you comply with certification procedures to
establish that you are not a United States person. The certification procedures
required of you to claim the exemption from withholding tax on certain payments
on the notes described above will satisfy the certification requirements
necessary to avoid the backup withholding tax as well.
The amount of any backup withholding from a payment will be allowed as a
credit against your United States federal income tax liability and may entitle
you to a refund, provided that you timely furnish the required information to
the IRS.
RS-12
REMARKETING
The remarketing is being made under the terms and subject to the conditions
contained in a remarketing agreement, dated December 21, 2001, and a
supplemental remarketing agreement, dated August 12, 2004, which are referred to
together as the "remarketing agreement." Pursuant to the remarketing agreement,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, as the remarketing agent,
agreed to use its reasonable efforts to remarket the notes at an aggregate price
of approximately 100.5% of the Treasury portfolio purchase price, but not less
than 100.0% of the Treasury portfolio purchase price. If, despite using its
reasonable efforts, the remarketing agent is unable to successfully remarket the
notes, other than to us, at a price equal to or greater than 100.0% of the
Treasury portfolio purchase price, then the remarketing will have failed. In
this remarketing, we will be purchasing $64,024,000 aggregate principal amount
of the remarketed notes. The remarketing agent has no obligation to purchase any
of the notes.
Pursuant to the remarketing agreement, in the event of a successful
remarketing, the remarketing agent may deduct, as a remarketing fee, an amount
not exceeding 0.25% of the Treasury portfolio purchase price from the amount of
the proceeds, if any, in excess of the Treasury portfolio purchase price. The
remarketing agent will receive a remarketing fee of $211,172 upon completion of
this remarketing of the notes. The remarketing agent will then remit the
remaining portion of the proceeds of $211,173 for the benefit of the holders of
the Income PRIDES. Neither Affiliated Managers Group nor the participating
holders of Income PRIDES will be responsible for any remarketing fee in
connection with this remarketing.
We have been advised that the remarketing agent currently intends to make a
market in the notes; however, the remarketing agent is not obligated to do so.
Any such market-making may be discontinued at any time, for any reason and
without notice. If the remarketing agent ceases to act as a market-maker for the
notes for any reason, there can be no assurance that another firm or person will
make a market in the notes. There can be no assurance that an active market for
the notes will develop or, if a market does develop, at what prices the notes
will trade.
In connection with this remarketing and in compliance with applicable law,
the remarketing agent may effect transactions which stabilize, maintain or
otherwise affect the market price of the notes at levels above those which might
otherwise prevail in the open market. Such transactions may include placing bids
for the notes or effecting purchases of the notes for the purpose of pegging,
fixing or maintaining the price of the notes for the purpose of reducing a short
position created in connection with the remarketing. The remarketing agent is
not required to engage in any of these activities and such activities, if
commenced, may be discontinued at any time.
Neither we nor the remarketing agent makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the notes. In addition, neither we nor the
remarketing agent makes any representation that the remarketing agent will
engage in such transactions or that such transactions, once commenced, will not
be discontinued without notice.
The remarketing agent has performed investment banking and advisory services
for us from time to time for which it has received customary fees and expenses,
including acting as the reset agent with respect to the notes. The remarketing
agent may, from time to time, engage in transactions with and perform services
for us in the ordinary course of its business. To the extent that we purchase
any of the notes in the remarketing, such notes will be purchased in part with
available cash and borrowings under credit facilities.
The closing of the remarketing is subject to customary conditions including
the receipt by the remarketing agent of certain opinions of counsel and
officers' certificates and the non-occurrence of certain events, including
disruptions in the securities markets.
RS-13
We have agreed to indemnify the remarketing agent against payments that the
remarketing agent may be required to make in respect of certain liabilities,
including liabilities under the Securities Act of 1933, or to contribute to
payments the remarketing agent may be required to make because of any of those
liabilities.
WHERE YOU CAN FIND MORE INFORMATION
Affiliated Managers Group is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended, and in accordance with the
Exchange Act files reports, proxy and information statements and other
information with the Securities and Exchange Commission. Such reports, proxy
statements and other information can be inspected and copied at prescribed rates
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
Commission at 1-800-SEC-0330 for further information on the public reference
rooms. The Commission also maintains a website that contains reports, proxy and
information statements and other information. The website address is
HTTP://WWW.SEC.GOV. In addition, such material can be inspected at the offices
of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
The Commission allows us to "incorporate by reference" the information we
file with the Commission, which means that we can disclose important information
to you by referring to another document filed separately with the Commission.
The information that we file after the date of this remarketing prospectus
supplement with the Commission will automatically update and supersede this
information. We incorporate by reference into this remarketing prospectus
supplement the documents listed below and any future filings made with the
Commission under Section 13(a), 13(c), 14 or 15(d) of the Exchange Act until the
completion of this remarketing (other than any portions of any such documents
that are not deemed "filed" under the Exchange Act in accordance with the
Exchange Act and applicable Commission rules):
- Annual Report on Form 10-K for the year ended December 31, 2003, filed on
March 15, 2004.
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, filed
on May 10, 2004.
- Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, filed
on August 9, 2004.
- Current Reports on Form 8-K dated February 23, 2004 and April 29, 2004.
Any statement contained in a document incorporated or considered to be
incorporated by reference in this remarketing prospectus supplement shall be
considered to be modified or superseded for purposes of this remarketing
prospectus supplement to the extent that a statement contained in this
remarketing prospectus supplement or in any subsequently filed document that is
or is considered to be incorporated by reference modifies or supersedes such
statement. Any statement that is modified or superseded shall not, except as so
modified or superseded, constitute a part of this remarketing prospectus
supplement.
YOU MAY REQUEST A COPY OF ANY OF THE DOCUMENTS THAT ARE INCORPORATED BY
REFERENCE IN THIS REMARKETING PROSPECTUS SUPPLEMENT, OTHER THAN EXHIBITS THAT
ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS AND OUR
CERTIFICATE OF INCORPORATION AND BY-LAWS AND THE INDENTURE RELATED TO THE NOTES,
AT NO COST, BY WRITING OR TELEPHONING US AT THE FOLLOWING: AFFILIATED MANAGERS
GROUP, INC., 600 HALE STREET, PRIDES CROSSING, MA 01965, ATTENTION: INVESTOR
RELATIONS. OUR TELEPHONE NUMBER IS (617) 747-3300.
RS-14
LEGAL MATTERS
Affiliated Managers Group, Inc. is being represented by Goodwin Procter LLP,
Boston, Massachusetts in connection with the remarketing, and the remarketing
agent is being represented by Sidley Austin Brown & Wood LLP, New York, New
York.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The consolidated financial statements of Affiliated Managers Group
incorporated by reference to the Annual Report on Form 10-K for the year ended
December 31, 2003 have been so incorporated in reliance upon the report of
PricewaterhouseCoopers LLP, independent registered public accounting firm, given
on the authority of said firm as experts in accounting and auditing.
RS-15
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$83,524,000
[GRAPHIC]
AFFILIATED MANAGERS GROUP, INC.
5.406% SENIOR NOTES DUE 2006
---------------------------
REMARKETING PROSPECTUS SUPPLEMENT
------------------------------------
MERRILL LYNCH & CO.
AUGUST 12, 2004
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