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MANAGEMENT'S DISCUSSION AND ANALYSIS
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The revenues of UAM's affiliated firms are derived from fees for investment
advisory services provided to institutional and other clients. Investment
advisory fees are generally a function of the overall fee rate charged to
each account and the level of assets under management by the affiliated
firms. A minor portion of revenues are generated when firms consummate
transactions for client portfolios. Assets under management can be affected
by the addition of new client accounts or client contributions to existing
accounts, withdrawals of assets from or terminations of client accounts and
investment performance, which may depend on general market conditions.

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AMORTIZATION OF COST ASSIGNED TO CONTRACTS ACQUIRED AND OPERATING CASH FLOW
(NET INCOME PLUS AMORTIZATION AND DEPRECIATION)

Cost assigned to contracts acquired, net of accumulated amortization,
represented approximately 75% of the Company's total assets as of December
31, 1995. Amortization of cost assigned to contracts acquired, which is a
non-cash charge, represented 17% of the Company's operating expenses.
Recording the cost assigned to contracts acquired as an asset, with the
resulting amortization as an operating expense, reflects the application of
generally accepted accounting principles to acquisitions by UAM of investment
management firms in transactions accounted for as purchases, where the
principal assets acquired are the investment advisory contracts which
evidence the firms' ongoing relationships with their clients.


Although the contracts acquired are typically terminable on 30 days notice,
analyses conducted by independent consultants retained by UAM to assist the
Company in allocating the purchase price among the assets acquired and the
experience of UAM's firms to date have indicated that: (1) contracts are
usually relatively long-lived; (2) the duration of contracts can be
reasonably estimated; and (3) the value of the cost assigned to contracts
acquired can be estimated based on the present value of its projected income
stream.


The cost assigned to contracts acquired is amortized on a straight-line basis
over the estimated weighted average useful life of the contracts of
individual firms acquired. These lives are estimated through statistical
analysis of historical patterns of terminations and the size and age of the
contracts acquired as of the acquisition date.


When actual terminations differ from the statistical patterns developed or
upon the occurrence of certain other events, the Company updates the lifing
analyses discussed above. If the update indicates that any of the estimates
of the average remaining lives should be shortened, the remaining cost
assigned to contracts acquired will be amortized over the shorter life
commencing in the year in which the new estimate is determined. There has
been no material effect on the Company's financial position or results of
operations as a result of these updates.



Cost assigned to contracts acquired is amortized as an operating expense. It
does not, however, require the use of cash and therefore, management believes
that it is important to distinguish this expense from other operating
expenses in order to evaluate the performance of the Company. Amortization of
cost assigned to contracts acquired per share referred to below has been
calculated by dividing total amortization by the same number of shares used
in the fully diluted earnings-per-share calculation.



For purposes of this discussion, Operating Cash Flow is defined as net income
plus amortization and depreciation, as reflected in the Company's
Consolidated Statement of Cash Flows. Management uses Operating Cash Flow not
to the exclusion of net income, but rather as an additional important measure
of the Company's performance.


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RESULTS OF OPERATIONS

1995 COMPARED TO 1994


Revenues increased 42% to $698,462,000 in 1995 from $492,288,000 in 1994.
This increase is the result of acquisitions that occurred during both 1995
and 1994, as well as the overall increase in revenues due to positive
portfolio performance achieved by UAM's affiliated firms partially offset by
the effect of net client cash outflows. The revenues of Provident Investment
Counsel and Pilgrim Baxter & Associates have been included since their
acquisition dates, February 15, 1995 and April 28, 1995, respectively. In
addition, the revenues from the acquisitions of Suffolk Capital Management,
Inc. and JMB Institutional Realty acquired July 14, 1994 and December 2,
1994, respectively, have been included for a full year in 1995.



During 1995, UAM experienced a net increase in assets under management of
$38.1 billion to a total of $142.1 billion as of December 31, 1995.
Acquisitions totaling $19.6 billion and investment performance of $27.2
billion were partially offset by net client cash outflows of $8.7 billion.



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Compensation increased 40% to $336,787,000 from $240,611,000 and other
operating expenses increased 33% to $106,773,000 from $80,577,000, reflecting
the acquisitions described above and higher operating expenses and
compensation earned by employees of existing affiliated firms in accordance
with revenue sharing agreements. Amortization of cost assigned to contracts
acquired rose 69% to $93,192,000 from $55,121,000 primarily due to the
acquisitions of Provident Investment Counsel and Pilgrim Baxter & Associates
and a full year of amortization of Suffolk Capital Management, Inc. and JMB
Institutional Realty.



Interest expense increased to $45,557,000 from $13,337,000 in 1994, due to
the increase in both the Company's average debt levels and interest rates
charged on senior debt.


Income before income tax expense increased 14% to $117,690,000 from
$103,206,000, reflecting the net result of the events discussed above. Net
income for 1995 increased 14% to $67,317,000 from $59,012,000 in 1994.


Fully diluted earnings per share for 1995 increased 8% to $2.16 compared to
$2.00 in 1994. This increase reflects the higher net income and the effect of
the Company's common stock repurchased, partially offset by the impact of the
issuance of shares of common stock, the Company's higher common stock price
and the exercise of warrants and stock options on the calculation of earnings
per share under the modified treasury stock method. Amortization of cost
assigned to contracts acquired on a per-share basis increased to $2.80 in
1995 from $1.86 in 1994 primarily as a result of the acquisitions described
above.


Operating Cash Flow increased 40% to $168,355,000 from $119,986,000 in 1994,
as a result of the circumstances discussed above.

1994 COMPARED TO 1993


Revenues increased 9% to $492,288,000 in 1994 from $449,858,000 in 1993. This
increase is the result of acquisitions that occurred during both 1994 and
1993 being partially offset by the effect of net client cash outflows and by
net declines in portfolio market values. The revenues from the acquisitions
of Dwight Asset Management Company, Suffolk Capital Management, Inc. and JMB
Institutional Realty were included from January 4, 1994, July 14, 1994 and
December 2, 1994, their respective dates of acquisition. The revenues of
Investment Research Company, acquired February 25, 1994 in a pooling of
interests transaction, have been included for all of 1994. In addition, the
revenues of Pell, Rudman & Co., Inc., acquired March 29, 1993, and GSB
Investment Management, Inc., acquired December 29, 1993, were included for a
full year in 1994, while only being included after their acquisition dates in
1993.



Compensation increased 10% to $240,611,000 from $218,617,000 and other
operating expenses increased 10% to $80,577,000 from $73,043,000, reflecting
the acquisitions described above and higher operating expenses and
compensation earned by employees of existing affiliated firms in accordance
with revenue sharing agreements. Amortization of cost assigned to contracts
acquired rose 14% to $55,121,000 from $48,493,000 primarily due to the
acquisitions of Dwight Asset Management Company, Suffolk Capital Management,
Inc. and JMB Institutional Realty and a full year of amortization of Pell,
Rudman & Co., Inc. and GSB Investment Management, Inc.


Interest expense decreased to $13,337,000 from $15,111,000 in 1993, primarily
due to the decrease in the average senior debt balance partially offset by
the increase in interest rates.

Income before income tax expense increased 9% to $103,206,000 from
$94,470,000 in 1993 as a result of the events discussed above. Net income for
1994 increased 11% to $59,012,000 from $53,287,000 in 1993.

Fully diluted earnings per share for 1994 increased 9% to $2.00 compared to
$1.83 in 1993. This increase reflects the higher net income together with the
effect of the Company's lower common stock price, partially offset by the
issuance of shares of common stock and the exercise of warrants and stock
options on the calculation of earnings per share under the modified treasury
stock method. Amortization of cost assigned to contracts acquired on a per-
share basis increased to $1.86 in 1994 from $1.67 in 1993, primarily as a
result of the acquisitions discussed above.

Operating Cash Flow increased 12% to $119,986,000 from $107,397,000 in 1993,
as a result of the circumstances discussed above.

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FINANCIAL CONDITION AND LIQUIDITY


The Company generated $168,355,000 of Operating Cash Flow in 1995. This
Operating Cash Flow as well as the proceeds from the issuance of $150,000,000
in Senior Notes (the Senior Notes) completed in August 1995 were used
primarily for the following: to finance the $56,693,000 cash portion of the
acquisitions completed in 1995 (including additional purchase price
associated with prior years acquisitions), to repurchase shares of the
Company's common stock for $48,819,000, to pay dividends to shareholders
totaling $35,275,000 and to pay down $172,000,000 of borrowings under the
Company's line of credit. As of December 31, 1995, the Company had working
capital of $79,368,000 and had the full $400,000,000 line of credit
available. Subsequent to December 31, 1995, the Company is extending and
expanding its line of credit into a five year, $500,000,000 revolving
facility (see Note 3 to the Consolidated Financial Statements included in
this Annual Report).



Management believes that the Company's existing capital, together with
Operating Cash Flow and borrowings available under its revolving line of
credit, will provide the Company with sufficient resources to meet its
present and reasonably foreseeable future cash needs. Management expects that
the principal need for financial resources will be to acquire additional
investment management firms, to fund commitments due or potentially due to
existing affiliates, to pay shareholder dividends and to repurchase shares of
the Company's common stock, which will require cash, the issuance of
additional UAM securities, or some combination thereof.



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STOCK-BASED COMPENSATION PLANS



The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, Accounting for Stock-Based Compensation, which
requires the Company to either adopt the fair value method of accounting for
stock-based compensation plans or to continue accounting for these plans
under the intrinsic value method and provide pro forma disclosures of net
income and earnings per share, including the tax effects if any, as if the
fair value accounting method had been adopted. This standard is effective for
fiscal years beginning after December 15, 1995. The Company intends to
continue accounting for its stock-based compensation plans under the
intrinsic value method and provide the necessary pro forma disclosures in
1996.



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EFFECTS OF INFLATION



The Company's business is not capital intensive. Management believes that
financial results as reported would not be significantly affected had such
results been adjusted to reflect the effects of inflation and price changes.



Increases or decreases in interest rates affect UAM's costs of operations
chiefly through increasing or decreasing the interest expense related to the
Company's assumption of debt. To mitigate the risks associated with increases
in interest rates, UAM has entered into and plans to continue to enter into
interest rate protection agreements (see Notes 1 and 3 to the Consolidated
Financial Statements included in this Annual Report). Rates of interest on
the Senior Notes and a portion of existing subordinated debt are fixed.
Increases and decreases in interest rates may also affect market prices for
the various asset classes held by the Company's affiliated firms as assets
under management for clients. Changes in such prices may affect the
affiliated firm's revenues, and therefore UAM's consolidated revenues.



                                      41