IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

October 31, 2007 18:16 ET

IGM Financial Inc. Reports Third Quarter Earnings

WINNIPEG, MANITOBA--(Marketwire - Oct. 31, 2007) - IGM Financial Inc. (TSX:IGM) -

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

IGM Financial Inc. (IGM or the Company) (TSX:IGM) today announced earnings results for the third quarter of 2007.

Net income for the three months ended September 30, 2007 was $218.4 million compared to $191.4 million in 2006, an increase of 14.1%. Earnings per share were 82 cents in 2007 compared to 72 cents in 2006, an increase of 13.9%.

Net income for the nine months ended September 30, 2007 was $644.8 million compared to adjusted net income of $563.4 million in 2006, an increase of 14.4%. Earnings per share were $2.41 in 2007 compared to adjusted earnings per share of $2.11 in 2006, an increase of 14.2%. Adjusted net income and earnings per share for the nine months ended September 30, 2006 excluded a non-cash income tax benefit. Net income for the nine months ended September 30, 2006 without adjustment totalled $577.1 million and earnings per share on this basis were $2.16.

Total assets under management at September 30, 2007 were $124.2 billion. This compares with total assets under management of $110.4 billion at September 30, 2006, an increase of 12.5%.

Gross revenues for the three months ended September 30, 2007 were $730.8 million, compared to $643.1 million in the prior year. Gross revenues for the nine months ended September 30, 2007 were $2.17 billion, compared to $1.93 billion in the prior year. Operating expenses were $415.2 million for the quarter and $1.24 billion for the nine months, compared to $361.9 million and $1.11 billion, respectively, in 2006.

Shareholders' equity at September 30, 2007 was $4.1 billion, compared to $3.8 billion at December 31, 2006. Return on average common equity for the nine months ended September 30, 2007 was 21.5% compared with adjusted return on average common equity of 21.0% for the same period in 2006.

INVESTORS GROUP OPERATIONS

Investors Group's mutual fund assets under management at September 30, 2007 were $61.2 billion compared to $54.0 billion at September 30, 2006, an increase of 13.4%.

The number of Investors Group Consultants was 4,225 at September 30, 2007 up from 3,917 at December 31, 2006. Investors Group has experienced thirteen consecutive quarters of growth resulting in an increase of more than 31% in the Consultant network since June 30, 2004.

"We are pleased to see continued growth in our Consultant network with a net increase of over 300 Consultants since the beginning of this year," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "Strong sales and a record low 7.3% long term mutual fund redemption rate led to an increase of over 75% in net sales compared to the first nine months of last year."

Mutual fund sales for the third quarter of 2007 were $1.6 billion compared to $1.2 billion in the prior year and mutual fund net sales for the third quarter were $370 million compared to $127 million a year ago. Year-to-date mutual fund sales for 2007 were $5.6 billion compared to $4.7 billion in the prior year and mutual fund net sales were $1.8 billion compared to $1.0 billion a year ago.

Investors Group's twelve month trailing redemption rate (excluding money market funds) was at a record low level of 7.3% at September 30, 2007, down from 7.9% at December 31, 2006 and down from 8.1% at September 30, 2006.

MACKENZIE OPERATIONS

Mackenzie's total assets under management at September 30, 2007 totalled $63.5 billion. This compares with assets under management of $56.8 billion at September 30, 2006, an increase of 11.8%. Mutual fund assets under management at September 30, 2007 were $47.5 billion, an increase of 9.2%, compared to $43.5 billion one year ago.

"We continue to see positive year over year asset growth trends in the business," said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial Corporation. "Our focus on product innovation and development continues to attract interest from advisors and investors."

Total sales for the third quarter of 2007 were $2.8 billion compared to $2.0 billion in the prior year. Total net redemptions for the third quarter were $473 million compared to net sales of $12 million in the prior year. Total year-to-date sales for 2007 were $9.7 billion compared to $8.7 billion in the prior year. Total net sales were $841 million compared to $1.6 billion in the prior year.

DIVIDENDS

The Board of Directors has declared a quarterly dividend of $0.359375 per share on the Company's 5.75% Non-Cumulative First Preferred Shares, Series "A" payable on December 31, 2007 to shareholders of record on November 30, 2007 and has declared a quarterly dividend of 46.0 cents per share on the Company's common shares payable on January 28, 2008 to shareholders of record on December 28, 2007.

FORWARD-LOOKING INFORMATION AND NON-GAAP FINANCIAL MEASURES

This Release may contain forward-looking statements about the Company, including its business operations, strategy and expected financial performance and condition. 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", "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". In addition, any statement that may be made concerning future financial performance (including revenues, earnings or growth rates), ongoing business strategies or prospects, and possible future Company action, is also a forward-looking statement. Forward-looking statements are based on current expectations and projections about future events and are inherently subject to, among other things, risks, uncertainties and assumptions about the Company, economic factors and the financial services industry generally. They are not guarantees of future performance, and actual events and results could differ materially from those expressed or implied by forward-looking statements made by the Company due to, but not limited to, important factors such as 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, 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 and integrate acquisitions and the Company's success in anticipating and managing the foregoing risks. The reader is cautioned that the foregoing list of important factors is not exhaustive. The reader is also cautioned to consider these and other factors carefully and not place undue reliance on forward-looking statements. Other than as specifically required by applicable law, the Company has no specific intention to update any forward-looking statements whether as a result of new information, future events or otherwise.

This release may also contain 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 2007 Third Quarter Report to Shareholders which should be mailed to shareholders on or about November 13, 2007.

IGM Financial Inc. is one of Canada's premier personal financial services companies, and the country's largest manager and distributor of mutual funds and other managed asset products, with over $124 billion in total assets under management. Its activities are carried out principally through Investors Group, Mackenzie Financial 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 Third Quarter 2007 will be held Thursday, November 1, 2007, at 9:30 A.M. (ET) at www.igmfinancial.com. Media and interested parties may alternatively choose to listen to the live analyst teleconference call by dialing 1-888-789-0089 or (416) 695-5261.



Consolidated Statements of Income

(unaudited)
(in thousands of dollars, Three months ended Nine months ended
except shares and per September 30 September 30
share amounts) 2007 2006 2007 2006
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Fee and net investment
income
Management $ 531,636 $ 456,481 $ 1,573,938 $ 1,364,695
Administration 90,740 77,097 259,173 233,659
Distribution 64,620 54,154 188,732 165,762
Net investment income
and other 43,833 55,370 151,647 161,920
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Total fee and net
investment income 730,829 643,102 2,173,490 1,926,036
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Operating expenses
Commission expense 237,970 205,198 705,625 613,811
Non-commission expense 154,994 134,491 466,303 425,426
Interest expense 22,221 22,221 66,108 66,198
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Total operating expenses 415,185 361,910 1,238,036 1,105,435
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Income before income
taxes and non-controlling
interest 315,644 281,192 935,454 820,601
Income taxes 96,424 89,507 288,365 242,105
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Income before
non-controlling interest 219,220 191,685 647,089 578,496
Non-controlling interest 823 252 2,289 1,398
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Net income $ 218,397 $ 191,433 $ 644,800 $ 577,098
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Average number of common
shares (in thousands)
- Basic 264,399 264,769 264,725 264,697
- Diluted 267,217 267,466 267,468 267,390

Earnings per share
(in dollars)
- Basic $ 0.83 $ 0.72 $ 2.44 $ 2.18
- Diluted $ 0.82 $ 0.72 $ 2.41 $ 2.16
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Financial Highlights

Three months ended Nine months ended
September 30 September 30
(unaudited) 2007 2006 Change 2007 2006 Change
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Net income
($ millions)
Adjusted (1) $ 218.4 $ 191.4 14.1% $ 644.8 $ 563.4 14.4%
GAAP 218.4 191.4 14.1 644.8 577.1 11.7

Diluted earnings
per share
Adjusted (1) 0.82 0.72 13.9 2.41 2.11 14.2
GAAP 0.82 0.72 13.9 2.41 2.16 11.6

Return on equity
Adjusted (1) 21.5% 21.0%
GAAP 21.5% 21.5%

Dividends per share 0.4600 0.3975 15.7 1.3150 1.1375 15.6
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Total Assets under
management (2)
($ millions) $ 124,228 $ 110,431 12.5%
Investors Group
Mutual funds 61,205 53,993 13.4
Mackenzie
Mutual funds 47,492 43,498
Sub-advisory
accounts 14,135 11,022
Institutional and
other accounts 1,868 2,271
Total 63,495 56,791 11.8
Counsel Group of Funds
Mutual funds 2,294 2,026 13.3
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Counsel
Investors Group of Total
Group Mackenzie Funds (3)

Mutual Funds and
Institutional Sales
($ millions)
For the three months
ended September 30, 2007
Gross sales $ 1,593 $ 2,784 $ 80 $ 4,315
Net sales 370 (473) 34 (89)

For the nine months ended
September 30, 2007
Gross sales $ 5,592 $ 9,736 $ 298 $15,275
Net sales 1,772 841 140 2,617

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(1) Non-GAAP Financial Measures:
Results for the nine month period ended September 30, 2006 exclude a
non-cash income tax benefit recorded in the second quarter resulting
from decreases in federal corporate income tax rates and their effect
on the future income tax liability related to indefinite life
intangible assets from the acquisition of Mackenzie Financial
Corporation in 2001.
(2) Total assets under management excludes $2.7 billion of assets
sub-advised by Mackenzie on behalf of Investors Group ($2.3 billion at
September 30, 2006) and is adjusted for $32 million in inter-segment
assets ($34 million at September 30, 2006).
(3) Total Gross Sales and Net Sales for the three months ended
September 30, 2007 exclude $142 million and $20 million respectively in
accounts sub-advised by Mackenzie on behalf of Investors Group.
Total Gross Sales and Net Sales for the nine months ended
September 30, 2007 exclude $351 million and $136 million respectively
in accounts sub-advised by Mackenzie on behalf of Investors Group.

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