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Manning & Napier, Inc. Reports Second Quarter 2012 Earnings Results

Investors should consider the non-GAAP measures in addition to, and not as a substitute for, financial measures prepared in accordance with GAAP. Additionally, the Company’s non-GAAP measures may differ from similar measures by other companies, even if similar terms are used to identify such measures.

About Manning & Napier, Inc.

Manning & Napier (NYSE: MN) provides a broad range of investment solutions through separately managed accounts, mutual funds, and collective investment trust funds, as well as a variety of consultative services that complement our investment process. Founded in 1970, we offer equity and fixed income portfolios as well as a range of blended asset portfolios, such as life cycle funds, that use a mix of stocks and bonds. We serve a diversified client base of high-net-worth individuals and institutions, including 401(k) plans, pension plans, Taft-Hartley plans, endowments and foundations. For many of these clients, our relationship goes beyond investment management and includes customized solutions that address key issues and solve client-specific problems. We are headquartered in Fairport, NY and had 512 employees as of June 30, 2012.

Safe Harbor Statement

This press release and other statements that the Company may make may contain forward-looking statements within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, which reflect the Company’s current views with respect to, among other things, its operations and financial performance. Words like “believes,” “expects,” “may,” “estimates,” “will,” “should,” “intends,” “plans,” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, are used to identify forward-looking statements, although not all forward-looking statements contain these words. Although the Company believes that it is basing its expectations and beliefs on reasonable assumptions within the bounds of what it currently knows about its business and operations, there can be no assurance that its actual results will not differ materially from what the Company expects or believes. Some of the factors that could cause the Company’s actual results to differ from its expectations or beliefs include, without limitation: changes in securities or financial markets or general economic conditions; a decline in the performance of the Company’s products; client sales and redemption activity; changes of government policy or regulations; and other risks discussed from time to time in the Company’s filings with the Securities and Exchange Commission.

Manning & Napier, Inc.
Combined Consolidated Statements of Income
(in thousands, except per share data)
(unaudited)
Three Months Ended     Six Months Ended
June 30,   March 31,   June 30, June 30,   June 30,
  2012     2012   2011     2012     2011  
 
Revenues
Investment management services revenue $ 81,529 $ 85,014 $ 85,805 $ 166,543 $ 163,845
 
Expenses
Compensation and related costs 46,570 27,732 27,061 74,302 49,955
Sub-transfer agent and shareholder service costs 12,471 12,674 12,668 25,145 24,363
Other operating costs   9,259     8,589   9,700     17,848     15,925  
Total operating expenses   68,300     48,995   49,429     117,295     90,243  
Operating income 13,229 36,019 36,376 49,248 73,602
 
Non-operating (loss) income
Interest expense on shares subject to mandatory redemption - - (16,095 ) - (29,383 )
Other non-operating (loss) income   (574 )   395   (155 )   (179 )   (147 )
 
Total non-operating (loss) income   (574 )   395   (16,250 )   (179 )   (29,530 )
Income before provision for income taxes 12,655 36,414 20,126 49,069 44,072
Provision for income taxes   3,199     1,990   253     5,189     539  
Net income attributable to the controlling and the noncontrolling interests 9,456 34,424 19,873 43,880 43,533
Less: net income attributable to the noncontrolling interests   11,292     31,521   19,873     42,813     43,533  
Net (loss) income attributable to Manning & Napier, Inc. $ (1,836 ) $ 2,903 $ -   $ 1,067   $ -  
 
 
Net (loss) income per share available to Class A common stock
Basic $ (0.14 ) $ 0.21 $ 0.08  
Diluted $ (0.14 ) $ 0.21 $ 0.08  
 

Weighted average shares of Class A common stock outstanding

Basic   13,583,873     13,583,873   13,583,873  
Diluted   13,583,873     13,583,873   13,583,873  
Manning & Napier, Inc.
Reconciliation of Non-GAAP Financial Measures
(in thousands, except per share data)
(unaudited)
Three Months Ended     Six Months Ended
June 30,   March 31,   June 30, June 30,   June 30,
  2012     2012     2011   2012     2011
Reconciliation of non-GAAP financial measures:
 
Net (loss) income attributable to Manning & Napier, Inc. $ (1,836 ) $ 2,903 $ - $ 1,067 $ -
Plus: net income attributable to the noncontrolling interests   11,292     31,521     19,873   42,813     43,533
Net income attributable to the controlling and the

noncontrolling interests

9,456 34,424 19,873 43,880 43,533
Provision for income taxes   3,199     1,990     253   5,189     539
Income before provision for income taxes 12,655 36,414 20,126 49,069 44,072
Interest expense on shares subject to mandatory redemption - - 16,095 - 29,383
Reorganization-related share-based compensation   24,037     3,709     -   27,746     -
Economic income 36,692 40,123 36,221 76,815 73,455
Adjusted income taxes   14,035     15,347     13,855   29,382     28,097
Economic net income

$

22,657   $ 24,776   $ 22,366 $ 47,433   $ 45,358
 
Reconciliation of non-GAAP per share financial measures:
 
Net (loss) income available to Class A common stock per basic share $ (0.14 ) $ 0.21 $ 0.08
Plus: net income attributable to the noncontrolling interests per

basic share

  0.83     2.32     3.15  
Net income attributable to the controlling and the noncontrolling

interests per basic share

0.69 2.53 3.23
Provision for income taxes per basic share   0.24     0.15     0.38  
Income before provision for income taxes per basic share 0.93 2.68 3.61
Interest expense on shares subject to mandatory redemption per basic share - - -
Reorganization-related share-based compensation per basic share   1.77     0.27     2.04  
Economic income per basic share 2.70 2.95 5.65
Adjusted income taxes per basic share   1.03     1.13     2.16  
Economic net income per basic share 1.67 1.82 3.49
Less: Impact of Manning & Napier Group, LLC units converted to

publicly traded shares

  (1.42 )   (1.54 )   (2.96 )
Economic net income per adjusted share $ 0.25   $ 0.28   $ 0.53  
 
Total basic shares of Class A common stock outstanding 13,583,873 13,583,873 13,583,873

Total exchangeable units of Manning & Napier Group, LLC

  76,400,000     76,400,000     76,400,000  
Total adjusted Class A common stock outstanding   89,983,873     89,983,873     89,983,873  
Manning & Napier, Inc.
Assets Under Management (in millions)
 
                             
Investment Vehicle Portfolio
     

Assets Under Management

Three-months ended

Separate accounts

Mutual funds and collective investment trusts

  Total   Blended   Equity   Fixed Income Total
 
As of March 31, 2012 $ 24,827.7 $ 19,904.3 $ 44,732.0 $ 19,658.1 $ 23,819.0 $ 1,254.9 $ 44,732.0
Gross client inflows 979.2 1,443.5 2,422.7 1,015.6 1,365.7 41.4 2,422.7
Gross client outflows (1,193.8 ) (1,422.4 ) (2,616.2 ) (894.0 ) (1,626.5 ) (95.7 ) (2,616.2 )
Market appreciation (depreciation)   (1,062.6 )   (1,104.4 )   (2,167.0 )   (329.0 )   (1,862.3 )   24.3     (2,167.0 )
As of June 30, 2012 $ 23,550.5 $ 18,821.0 $ 42,371.5 $ 19,450.7 $ 21,695.9 $ 1,224.9 $ 42,371.5
 
 
As of December 31, 2011 $ 22,658.1 $ 17,542.0 $ 40,200.1 $ 18,122.5 $ 20,812.0 $ 1,265.6 $ 40,200.1
Gross client inflows 879.2 1,853.1 2,732.3 1,031.3 1,613.6 87.4 2,732.3
Gross client outflows (939.3 ) (1,472.2 ) (2,411.5 ) (820.2 ) (1,494.5 ) (96.8 ) (2,411.5 )
Market appreciation (depreciation)   2,229.7     1,981.4     4,211.1     1,324.5     2,887.9     (1.3 )   4,211.1  
As of March 31, 2012 $ 24,827.7 $ 19,904.3 $ 44,732.0 $ 19,658.1 $ 23,819.0 $ 1,254.9 $ 44,732.0
 
 
As of March 31, 2011 $ 24,384.1 $ 18,180.0 $ 42,564.1 $ 18,420.4 $ 22,871.3 $ 1,272.4 $ 42,564.1
Gross client inflows 1,262.8 2,385.4 3,648.2 1,055.3 2,546.1 46.8 3,648.2
Gross client outflows (961.9 ) (958.6 ) (1,920.5 ) (799.4 ) (1,038.0 ) (83.1 ) (1,920.5 )
Market appreciation   225.8     105.5     331.3     115.0     194.2     22.1     331.3  
As of June 30, 2011 $ 24,910.8 $ 19,712.3 $ 44,623.1 $ 18,791.3 $ 24,573.6 $ 1,258.2 $ 44,623.1
 
                       
Investment Vehicle Portfolio
 

Assets Under Management

Six-months ended

Separate accounts

Mutual funds and collective investment trusts

  Total   Blended   Equity   Fixed Income Total

 

As of December 31, 2011 $ 22,658.1 $ 17,542.0 $ 40,200.1 $ 18,122.5 $ 20,812.0 $ 1,265.6 $ 40,200.1
Gross client inflows 1,858.4 3,296.6 5,155.0 2,046.9 2,979.3 128.8 5,155.0
Gross client outflows (2,133.1 ) (2,894.6 ) (5,027.7 ) (1,714.2 ) (3,121.0 ) (192.5 ) (5,027.7 )
Market appreciation   1,167.1     877.0     2,044.1     995.5     1,025.6     23.0     2,044.1  
As of June 30, 2012 $ 23,550.5 $ 18,821.0 $ 42,371.5 $ 19,450.7 $ 21,695.9 $ 1,224.9 $ 42,371.5
 
 
As of December 31, 2010 $ 22,935.1 $ 15,906.6 $ 38,841.7 $ 17,280.5 $ 20,256.9 $ 1,304.3 $ 38,841.7
Gross client inflows 2,224.1 4,799.2 7,023.3 2,201.5 4,748.3 73.5 7,023.3
Gross client outflows (1,459.6 ) (1,800.0 ) (3,259.6 ) (1,473.5 ) (1,632.9 ) (153.2 ) (3,259.6 )
Market appreciation   1,211.2     806.5     2,017.7     782.8     1,201.3     33.6     2,017.7  
As of June 30, 2011 $ 24,910.8 $ 19,712.3 $ 44,623.1 $ 18,791.3 $ 24,573.6 $ 1,258.2 $ 44,623.1




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