YMG Capital Management Inc. has announced earnings from continuing operations before interest, amortization, income taxes and investment income of $540,000 for the three months ended September 30, 2002. That compares with $353,000 for the same period in 2001.

Earnings from continuing operations before interest, amortization and income taxes, but excluding investment income, increased to $2,103,000 for the nine months ended September 30, 2002 compared to $1,372,000 for the same period in 2001.

Year to date, YMG’s investment processes have outperformed all of their respective benchmarks. Despite this strong performance, assets under management declined to $13.0 billion in the third quarter of 2002, a decrease of $1.1 billion from $14.1 billion at December 31, 2001. At Sept. 30, 2001, YMG had assets under management of $13.7 billion. Fee revenue of $11,421,000 year to date is 2.2% lower than the comparable period of 2001. Fee revenue of $3,726,000 in the third quarter of 2002 was slightly higher than the comparable quarter of 2001.

Ongoing efforts to reduce expenses, says YMG, has resulted in a 5.3% reduction in selling, general and administrative (SG&A) expenses for the third quarter of 2002 over the same period in 2001. In the nine months ending Sept. 30, 2002, SG&A expenses were 9.6% lower than the same period in 2001. Expenses for the third quarter and year to date 2002 include $150,000 for non-recurring items. By comparison, $173,000 of non-recurring items were included in the third quarter of 2001 and $231,000 year to date.

During the quarter, YMG says it recorded investment losses of $297,000 compared to investment losses of $554,000 in the third quarter of 2001. Year to date, investment losses were $709,000 compared to investment losses of $5,674,000 in the same period of 2001. These losses were primarily related to YMG’s venture investments that must be recorded at fair value.

The Corporation’s operating margin excluding investment income and non-recurring expenses for the quarter ended September 30, 2002 was 18.5% compared to 14.1% for the same period of 2001. Year to date the Corporation’s operating margin excluding investment income and non-recurring expenses was 19.7% compared to 13.7% for the nine months ended September 30, 2001.

The Corporation no longer records a future tax asset for unrealized capital losses. The effect of this change in estimate was to record a future tax expense of $491,000 during the quarter. The total future tax expense recorded in the third quarter of 2002 was $665,000 and $1,093,000 year to date.

For the quarter ended September 30, 2002, YMG reported a net loss from continuing operations of $610,000, compared to a net loss of $1,505,000 for the same quarter of 2001. For the nine months ended September 30, 2002, YMG reported a net loss from continuing operations of $248,000 compared to a net loss of $4,994,000 for the same period of 2001. The year over year change is due primarily to the investment losses recorded in 2001 and from the write down of management contracts in the third quarter of 2001.

YMG also announced that the Board of Directors has declared a quarterly dividend of 5¢ per common share payable on December 31, 2002 to shareholders of record on Dec. 17, 2002.