IGM Financial Inc.
TSX : IGM

IGM Financial Inc.

November 02, 2006 13:17 ET

IGM Financial Inc. Reports Third Quarter Earnings

WINNIPEG, MANITOBA--(CCNMatthews - Nov. 2, 2006) -

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 2006.

Net income for the three months ended September 30, 2006 was $191.4 million compared to $176.6 million in 2005, an increase of 8.4%. Earnings per share were 72 cents compared to 66 cents in 2005, an increase of 9.1%.

Net income for the nine months ended September 30, 2006, excluding a non-cash income tax benefit described below, was $563.4 million compared to net income of $505.2 million in 2005, an increase of 11.5%. Earnings per share on the same basis were $2.11 compared to earnings per share of $1.90 in 2005, an increase of 11.1%. A non-cash income tax benefit of $13.7 million resulting from decreases in the federal corporate income tax rates was reported in the second quarter of 2006. Net income for the nine months ended September 30, 2006, including the non-cash income tax benefit, totalled $577.1 million and earnings per share on the same basis were $2.16.

Gross revenues for the three months ended September 30, 2006 were $643.1 million, compared to $587.0 million in the prior year. Gross revenues for the nine months ended September 30, 2006 were $1.93 billion, compared to $1.74 billion in the prior year. Operating expenses were $361.9 million for the quarter and $1.11 billion for the nine months, compared to $341.8 million and $1.02 billion, respectively, in 2005.

Mutual fund assets under management at September 30, 2006 totalled $99.5 billion, compared to $91.0 billion at September 30, 2005, an increase of 9.3%. Total assets under management at September 30, 2006 totalled $110.4 billion including $3.3 billion of assets of the Cundill Group acquired by Mackenzie Financial Corporation during the third quarter of 2006. This compares with assets under management of $96.6 billion at September 30, 2005, an increase of 14.3%.

Shareholders' equity at September 30, 2006 was $3.72 billion, compared to $3.45 billion at December 31, 2005. Return on average common equity for the nine months ended September 30, 2006, excluding a non-cash income tax benefit, was 20.3% compared with return on average common equity of 19.9% for the same period in 2005.

INVESTORS GROUP OPERATIONS

Mutual fund sales for the third quarter of 2006 were $1.2 billion unchanged from the prior year and mutual fund net sales were $127 million compared to $56 million a year ago. Net sales of long-term funds were $45 million compared to net sales of $10 million in the prior year.

Year-to-date mutual fund sales were $4.7 billion compared to $4.1 billion in the prior year and mutual fund net sales were $1.0 billion compared to $524 million a year ago. Net sales of long-term funds were $772 million compared to $361 million in the prior year.

"Our Consultant network has now grown to its highest level on record," said Murray J. Taylor, President and Chief Executive Officer of Investors Group Inc. "The 93% increase in net sales over last year's first nine months was driven by continued growth of our Consultant network and an appreciation by our clients of our approach to long-term financial planning."

Investors Group's twelve month trailing redemption rate (excluding money market funds) was 8.1% at September 30, 2006, down from 9.1% at the same time last year. The corresponding average rate at September 30, 2006 for all other members of the Investment Funds Institute of Canada (IFIC) was approximately 15.5%.

Investors Group's mutual fund assets under management at September 30, 2006 were $54.0 billion, an increase of 10.1%, compared to $49.0 billion at September 30, 2005.

The number of Investors Group Consultants was 3,860 at September 30, 2006. Investors Group has experienced nine consecutive quarters of growth resulting in an increase of more than 20% in the Consultant network since June 30, 2004.

MACKENZIE OPERATIONS

Mackenzie recorded mutual fund sales of $1.4 billion for the third quarter of 2006 compared to $1.7 billion in the prior year. Mutual fund net redemptions were $194 million compared to net sales of $110 million in the prior year. Net redemptions of long-term funds (excluding money market and managed yield funds) were $307 million for the period compared to net sales of $85 million in 2005.

Year-to-date mutual fund sales were $6.3 billion compared to $5.9 billion in the prior year. Mutual fund net sales were $450 million compared to $663 million in the prior year. Net sales of long-term funds (excluding money market and managed yield funds) were $335 million for the period compared to $684 million in 2005.

"The acquisition of the Cundill Group, which closed this quarter, strengthens our internal investment management capabilities and enhances our ability to offer innovative products through our distribution channel to Canadian and foreign investors," said Charles R. Sims, President and Chief Executive Officer of Mackenzie Financial Corporation.

Mackenzie's twelve month trailing redemption rate for long-term funds was 15.1% at the end of September 2006, unchanged from the end of September 2005. The corresponding average rate at September 30, 2006 for all other members of IFIC was approximately 14.8%.

Mackenzie's mutual fund assets under management at September 30, 2006 were $43.5 billion, an increase of 8.2%, compared to $40.2 billion one year ago. Total assets under management at September 30, 2006 totalled $56.8 billion including $3.3 billion of assets of the Cundill Group acquired by Mackenzie Financial Corporation during the third quarter of 2006. This compares with assets under management of $47.9 billion at September 30, 2005, an increase of 18.7%.

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, 2006 to shareholders of record on November 30, 2006 and has declared a dividend of 39.75 cents per share on the Company's common shares payable on January 26, 2007 to shareholders of record on December 29, 2006.

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", "intends", "plans", "believes", "estimates" or negative versions thereof and similar expressions. 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, business competition, technological change, changes in government regulations, changes in tax laws, unexpected judicial or regulatory proceedings, catastrophic events, and the Company's ability to complete strategic transactions and integrate acquisitions. 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.

This release may also contain non-GAAP financial measures. Terms by which non-GAAP financial measures are identified include but are not limited to "net income excluding a non-cash income tax benefit", "earnings per share excluding a non-cash income tax benefit" 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 2006 Third Quarter Report to Shareholders which should be mailed to shareholders on or about November 13, 2006.

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 $113 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 2006 will be held Thursday, November 2, 2006, at 3:30 P.M. (ET) at www.igmfinancial.com. Media and interested parties may alternatively choose to listen to the live analyst teleconference call by dialing 1-888-789-0089 or (416) 695-5261.



IGM FINANCIAL INC.
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Consolidated Statements of Income

(unaudited) Three months ended Nine months ended
(in thousands of dollars, except September 30 September 30
shares and per share amounts) 2006 2005 2006 2005
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Fee and net investment income
Management $ 456,481 $ 420,516 $ 1,364,695 $ 1,217,628
Administration 77,097 74,481 233,659 229,362
Distribution 54,154 53,406 165,762 156,498
Net investment income
and other 55,370 38,594 161,920 135,767
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Total fee and net
investment income 643,102 586,997 1,926,036 1,739,255
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Operating expenses
Commission expense 205,198 183,491 613,811 536,972
Non-commission expense 134,491 135,611 425,426 414,124
Interest expense 22,221 22,746 66,198 67,676
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Total operating expenses 361,910 341,848 1,105,435 1,018,772
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Income before income taxes
and non-controlling interest 281,192 245,149 820,601 720,483
Income taxes 89,507 68,365 242,105 214,033
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Income before non-controlling
interest 191,685 176,784 578,496 506,450
Non-controlling interest 252 229 1,398 1,269
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Net income $ 191,433 $ 176,555 $ 577,098 $ 505,181
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Average number of common
shares
(in thousands)
- Basic 264,769 264,581 264,697 264,595
- Diluted 267,466 266,813 267,390 266,586

Earnings per share
(in dollars)
- Basic $ 0.72 $ 0.67 $ 2.18 $ 1.91
- Diluted $ 0.72 $ 0.66 $ 2.16 $ 1.90
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IGM FINANCIAL INC.
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Financial Highlights

Three Months ended Nine Months ended
September 30 September 30
2006 2005 Change 2006 2005 Change
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Net income
($ millions)
Excluding a
non-cash
income tax
benefit(1) $ 191.4 $ 176.6 8.4 % $ 563.4 $ 505.2 11.5 %
GAAP 191.4 176.6 8.4 577.1 505.2 14.2

Diluted earnings
per share
Excluding a
non-cash
income tax
benefit(1) 0.72 0.66 9.1 2.11 1.90 11.1
GAAP 0.72 0.66 9.1 2.16 1.90 13.7

Return on equity
Excluding a
non-cash
income tax
benefit(1) 20.3% 19.9%
GAAP 20.8% 19.9%

Dividends
per share 0.3975 0.3450 15.2 1.1375 0.9900 14.9
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($ millions)

Mutual funds
Investors Group
Sales $ 1,245 $ 1,205 3.3 % $ 4,693 $ 4,111 14.1 %
Net sales 127 56 129.0 1,010 524 92.8
Assets under
management 53,993 49,045 10.1

Mackenzie
Sales 1,446 1,721 (16.0) 6,285 5,892 6.7
Net sales
(redemptions) (194) 110 N/M 450 663 (32.1)
Assets under
management 43,498 40,215 8.2

Counsel Group of
Funds
Sales 63 91 (30.8) 269 317 (15.1)
Net sales 19 48 (60.4) 121 186 (35.0)
Assets under
management 2,026 1,772 14.3

Combined mutual
fund assets
under management(2) 99,483 90,996 9.3

Other managed
assets(3) 10,948 5,589 95.9

Total assets under
management 110,431 96,585 14.3

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Employees 3,244 3,222 0.7 %
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(1) Non-GAAP Financial Measures:
Results for the nine months 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 arising from the acquisition of Mackenzie Financial Corporation
in 2001.
(2) Adjusted for $34 million in inter-segment assets ($36 million at
September 30, 2005).
(3) Institutional accounts and structured products excluding $2.3 billion
of assets managed by Mackenzie on behalf of Investors Group
($2.0 billion at September 30, 2005).



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