IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

February 12, 2010 10:38 ET

IGM Financial Inc. Reports Fourth Quarter and 2009 Earnings

Readers are referred to the disclaimer regarding Forward-Looking Statements and financial measures not in accordance with Canadian generally accepted accounting principles (Non-GAAP Financial Measures) at the end of this Release.

WINNIPEG, MANITOBA--(Marketwire - Feb. 12, 2010) - IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the fourth quarter and for the year ended December 31, 2009.

Adjusted net income for the three months ended December 31, 2009 was $176.5 million compared to adjusted net income of $140.1(1) million a year ago and net income of $167.4 million in the prior quarter. Adjusted earnings per share were 67 cents compared to adjusted earnings per share of 53(1) cents a year ago and earnings per share of 63 cents in the prior quarter.

Adjusted net income for the year ended December 31, 2009 was $621.9 million compared to adjusted net income of $766.1(1) million in 2008. Adjusted earnings per share were $2.35 in 2009 compared to adjusted earnings per share of $2.89(1) in 2008.

Adjusted net income for the three months and for the year ended December 31, 2009 excluded:

- A non-cash charge of $76.5 million ($66.2 million after tax) on available for sale (AFS) equity securities related to the market environment.

- A non-cash income tax benefit of $17.8 million resulting from decreases in Ontario corporate income tax rates and their effect on the future income tax liability related to indefinite life intangible assets arising from the acquisition of Mackenzie Financial Corporation in 2001.

- A premium of $14.4 million paid on the redemption of the Series A preferred shares on December 31, 2009.

Net income without adjustment for the three months ended December 31, 2009 was $113.7 million compared to net income without adjustment of $79.8 million in 2008. Earnings per share on this basis were 43 cents in 2009 compared to 30 cents in 2008.

Net income without adjustment for the year ended December 31, 2009 was $559.1 million compared to net income without adjustment of $730.8 million in 2008. Earnings per share on this basis were $2.12 in 2009 compared to $2.76 in 2008.

Gross revenues for the three months ended December 31, 2009 were $542.8 million compared to $523.6 million a year ago and $622.6 million in the prior quarter. Operating expenses were $391.5 million for the fourth quarter of 2009, compared to $393.4 million a year ago and $383.1 million in the prior quarter.

Gross revenues for the year ended December 31, 2009 were $2.31 billion compared to $2.67 billion in the prior year. Operating expenses were $1.53 billion for the twelve months ended December 31, 2009 compared to $1.64 billion a year ago.

Total assets under management at December 31, 2009 were $120.5 billion. This compared with total assets under management of $101.7 billion at December 31, 2008 and $117.9 billion at September 30, 2009.

Shareholders' equity at December 31, 2009 was $4.4 billion, compared to $4.1 billion at December 31, 2008 and compared to $4.3 billion at September 30, 2009. Adjusted return on average common equity for the twelve months ended December 31, 2009 was 14.8% and for the comparative period in 2008 adjusted return on equity was 18.2%.

INVESTORS GROUP OPERATIONS

The number of Investors Group Consultants was 4,633 at December 31, 2009 up from 4,479 at December 31, 2008.

"Our Consultant network expanded for the 22nd consecutive quarter," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Increasing stock market values in 2009 led to an average 20 % increase in our clients' investment values."

Mutual fund sales for the fourth quarter were $1.4 billion compared to $1.2 billion in the prior year and mutual fund net sales for the fourth quarter were $154 million compared to net sales of $60 million a year ago and net sales of $36 million in the prior quarter.

Mutual fund sales for the year ended December 31, 2009 were $5.0 billion compared to $5.9 billion in the prior year and mutual fund net sales were $404 million compared to $625 million a year ago.

The twelve month trailing redemption rate (excluding money market funds) was 7.4% at December 31, 2009, compared to 7.9% at December 31, 2008 and 7.3% at September 30, 2009.

Mutual fund assets under management at December 31, 2009 were $57.7 billion compared to $47.5 billion at December 31, 2008 and $56.6 billion at September 30, 2009.

MACKENZIE OPERATIONS

Total sales for the fourth quarter of 2009 were $3.0 billion compared to $3.1 billion in the prior year. Total net redemptions for the fourth quarter were $509 million compared to total net redemptions of $1.5 billion in the prior year and total net redemptions of $62 million in the prior quarter.

Total sales for the year ended December 31, 2009 were $11.6 billion compared to $12.3 billion in the prior year. Total net redemptions were $1.4 billion compared to total net redemptions of $2.7 billion in the prior year.

"During the fourth quarter, total sales were $3.0 billion, compared to $2.4 billion in the third quarter," said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial Corporation. "The medium term relative performance of our diversified offering of mutual funds remained strong, with 65% of our fund assets ranked in the first or second quartile of their respective asset categories over the last three years."

Mackenzie's total assets under management at December 31, 2009 totalled $63.6 billion. This compares with total assets under management of $54.7 billion at December 31, 2008 and $62.0 billion at September 30, 2009. Mutual fund assets under management at December 31, 2009 were $40.6 billion compared to $35.8 billion a year ago and $39.9 billion at September 30, 2009.

DIVIDENDS

The Board of Directors has declared a dividend of 51.25 cents per share on the Company's common shares and has declared the initial dividend of $0.57788 per share on the Company's 5.90% Non-Cumulative First Preferred Shares, Series "B" issued on December 8, 2009. The common and preferred share dividends are payable on April 30, 2010 to shareholders of record on March 29, 2010.

(1) Adjusted net income in 2008 excluded items related to the Company's equity interest in Great-West Lifeco Inc.:

- A $60.3 million charge recorded in the fourth quarter representing the Company's proportionate share of Great-West Lifeco Inc.'s after-tax impairment charge related to goodwill and indefinite life intangible assets.

- A $25.0 million gain recorded in the second quarter representing the Company's proportionate share of Great-West Lifeco Inc.'s after-tax gain on the sale of its healthcare business, Great-West Healthcare.

FORWARD-LOOKING STATEMENTS AND NON-GAAP FINANCIAL MEASURES

Certain statements in this Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect IGM Financial's current expectations. Forward-looking statements are provided for the purposes of assisting the reader in understanding the Company's financial position and results of operations as at and for the periods ended on certain dates and to present information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, expected financial results, performance, prospects, opportunities, priorities, targets, goals, ongoing objectives, strategies and outlook of the Company, as well as the outlook for North American and international economies, for the current fiscal year and subsequent periods. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "seeks", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could".

This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances.

By its nature, this information is subject to inherent risks and uncertainties that may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, that assumptions may not be correct and that objectives, strategic goals and priorities will not be achieved.

A variety of material factors, many of which are beyond the Company's, and its subsidiaries' control, affect the operations, performance and results of the Company, and its subsidiaries, and their businesses, and could cause actual results to differ materially from current expectations of estimated or anticipated events or results. These factors include, but are not limited to: the impact or unanticipated impact of general economic, political and market factors in North America and internationally, interest and foreign exchange rates, global equity and capital markets, management of market liquidity and funding risks, changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates), the effect of applying future accounting changes (including adoption of International Financial Reporting Standards), operational and reputational risks, business competition, technological change, changes in government regulations and legislation, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, the Company's ability to complete strategic transactions, integrate acquisitions and implement other growth strategies, and the Company's success in anticipating and managing the foregoing factors.

The reader is cautioned that the foregoing list of factors is not exhaustive of the factors that may affect any of the Company's forward-looking statements. The reader is also cautioned to consider these and other factors, uncertainties and potential events carefully and not place undue reliance on forward-looking statements.

Other than as specifically required by law, the Company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statements are made, or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

Additional information about the risks and uncertainties of the Company's business is provided in its disclosure materials filed with the securities regulatory authorities in Canada, available at www.sedar.com.

This release contains non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to "adjusted net income", "adjusted earnings per share", "adjusted return on average common equity", "net income without adjustment" and other similar expressions. Non-GAAP financial measures are used to provide management and investors with additional measures of performance. However, non-GAAP financial measures do not have standard meanings prescribed by GAAP and are not directly comparable to similar measures used by other companies. Please refer to the attached Financial Highlights for the appropriate reconciliations of these non-GAAP financial measures to measures prescribed by GAAP.

A review of activities and performance for IGM Financial Inc., together with financial details and a management discussion, will be published in the Company's 2009 Annual Report to Shareholders which should be mailed to shareholders on or about March 24, 2010.

IGM Financial Inc. is one of Canada's premier personal financial services companies, and one of the country's largest managers and distributors of mutual funds and other managed asset products, with $118 billion in total assets under management as of January 31, 2010. Its activities are carried out principally through Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel. IGM Financial Inc. is a member of the Power Financial Corporation group of companies.

Media Note: A live webcast of IGM's Analyst conference call for the Fourth Quarter 2009 will be held Friday February 12, 2010, at 1:00 P.M. (ET) at www.igmfinancial.com. Media and interested parties may alternatively choose to listen to the live analyst teleconference call by dialing 1-866-226-1792 or (416) 340-2216



IGM FINANCIAL INC.
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Consolidated Statements of Income

(unaudited) Three months ended Twelve months ended
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(in thousands of
dollars, except December September December December December
shares and 31 30 31 31 31
per share amounts) 2009 2009 2008 2009 2008
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Fee and net
investment income
Management $ 449,687 $ 432,190 $ 396,325 $1,646,636 $ 1,867,223
Administration 88,259 88,537 84,248 346,020 349,249
Distribution 70,753 62,001 67,364 257,427 286,044
Net investment
income and other (65,864) 39,910 (24,334) 62,207 165,563
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Total fee and net
investment income 542,835 622,638 523,603 2,312,290 2,668,079
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Operating expenses
Commission expense 213,504 205,293 206,421 808,482 906,271
Non-commission
expense 148,732 148,723 162,566 614,222 647,854
Interest expense 29,264 29,125 24,448 109,864 90,604
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Total operating
expenses 391,500 383,141 393,435 1,532,568 1,644,729
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Income before income
taxes 151,335 239,497 130,168 779,722 1,023,350
Income taxes 37,624 72,147 50,367 220,630 292,551
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Net income $ 113,711 $ 167,350 $ 79,801 $ 559,092 $ 730,799
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Average number of
common shares
(in thousands)

- Basic 263,488 264,026 262,389 263,217 263,323
- Diluted 264,909 265,562 263,355 264,324 264,808

Earnings per share
(in dollars)

- Basic $ 0.43 $ 0.63 $ 0.30 $ 2.12 $ 2.78
- Diluted $ 0.43 $ 0.63 $ 0.30 $ 2.12 $ 2.76

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IGM FINANCIAL INC.

Financial Highlights

Three months ended Twelve months ended
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% Change % Change
---------------- --------
2009 2009 2008 2009 2008 2009 2008 2008
Dec. Sep. Dec. Sep. Dec. Dec. Dec. Dec.
(unaudited) 31 30 31 30 31 31 31 31
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Net income
($ millions)
Adjusted(1) $176.5 $ 167.4 $ 140.1 5.4% 26.0% $ 621.9 $766.1 (18.8)%
GAAP 113.7 167.4 79.8 (32.1) 42.5 559.1 730.8 (23.5)

Diluted
earnings
per share
Adjusted(1) 0.67 0.63 0.53 6.3 26.4 2.35 2.89 (18.7)
GAAP 0.43 0.63 0.30 (31.7) 43.3 2.12 2.76 (23.2)

Return on
equity
Adjusted(1) 14.8% 18.2%
GAAP 13.3% 17.3%

Dividends
per share 0.5125 0.5125 0.5125 - - 2.05 2.00 2.5
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% Change
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2009 2009 2008 2009 2008
($ millions) Dec. 31 Sep. 30 Dec. 31 Sep. 30 Dec. 31
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Total assets under
management (2) $120,545 $117,904 $101,742 2.2% 18.5%
Investors Group
Mutual funds 57,655 56,560 47,491 1.9 21.4
Mackenzie
Mutual funds 40,624 39,854 35,814
Sub-advisory,
Institutional and
other accounts 22,955 22,176 18,846
Total 63,579 62,030 54,660 2.5 16.3
Counsel
Mutual funds 2,140 2,030 1,740 5.4 23.0
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Mutual Funds and Investors
Institutional Sales Group Mackenzie Counsel Total (3)

For the three months ended
December 31, 2009
Gross sales $ 1,376 $ 2,951 $ 120 $4,356
Net sales (redemptions) 154 (509) 54 (336)

For the twelve months ended
December 31, 2009
Gross sales $ 5,042 $11,643 $ 343 $16,661
Net sales (redemptions) 404 (1,405) 106 (1,045)

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(1) Non-GAAP Financial Measures:
2009 fourth quarter and annual results excluded:
- $66.2 million which represented a non-cash after-tax charge on
available for sale equity securities related to the market
environment.
- $17.8 million which represented a non-cash income tax benefit
resulting from decreases in Ontario corporate income tax rates and
their effect on the future income tax liability related to
indefinite life intangible assets arising from the acquisition of
Mackenzie Financial Corporation in 2001. There is no expectation
that the future tax liability will become payable as the Company has
no intention of disposing of these assets.
- $14.4 million which represented the premium paid on the redemption
of the Series A preferred shares on December 31, 2009.

2008 results excluded:
- $60.3 million charge recorded in the fourth quarter which
represented the Company's proportionate share of Great-West Lifeco
Inc.'s after-tax impairment charge related to goodwill and
indefinite life intangible assets.
- $25.0 million gain recorded in the second quarter which represented
the Company's proportionate share of Great-West Lifeco Inc.'s after-
tax gain on the sale of its healthcare business, Great-West
Healthcare.

(2) Total assets under management excluded $2.8 billion of assets sub-
advised by Mackenzie on behalf of Investors Group and Investment
Planning Counsel ($2.7 billion at September 30, 2009 and $2.1 billion at
December 31, 2008).

(3) Total Gross Sales and Net Redemptions for the three months ended
December 31, 2009 excluded $91 million and $35 million respectively in
accounts sub-advised by Mackenzie on behalf of Investors Group and
Investment Planning Counsel.
Total Gross Sales and Net Redemptions for the twelve months ended
December 31, 2009 excluded $367 million and $150 million respectively
in accounts sub-advised by Mackenzie on behalf of Investors Group and
Investment Planning Counsel.

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