What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2020-08-10 compared with 2020-05-11 · 351 added, 124 removed, 614 unchanged (44% of the section changed)

3 unchanged sentences

(in millions, except for share and per share data, unaudited)

2020 December 31,

Cash and cash equivalents $ 115.8 $ 111.3

5 unchanged sentences

Acquired intangibles, net 61.6 65.1

Goodwill 258.2 274.6

Other assets 60.7 52.0

Deferred tax assets 219.4 243.6

2 unchanged sentences

Investments (includes balances reported at fair value of $ 110.0 and $ 119.5 )

Other assets 5.7 4.9

Total assets $ 1,422.8 $ 1,419.7

Liabilities and stockholders’ equity

29 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Management fees $ 170.7 $ 205.9 $ 349.2 $ 413.4

22 unchanged sentences

Gain (loss) on disposal of discontinued operations, net of tax — — — —

Net income 53.9 21.6 76.0 82.7

Net income (loss) attributable to non-controlling interests in consolidated Funds 35.0 ( 6.4 ) 24.5 2.0

3 unchanged sentences

Continuing operations earnings per share (basic) attributable to controlling interests

0.23 0.31 0.62 0.85

Continuing operations earnings per share (diluted) attributable to controlling interests

0.23 0.31 0.62 0.85

Weighted average common stock outstanding 80.4 91.5 82.8 94.6

5 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Net income $ 53.9 $ 21.6 $ 76.0 $ 82.7

Other comprehensive income (loss):

Amortization related to derivative securities, net of tax

0.6 0.6 1.1 1.2

Foreign currency translation adjustment 0.3 ( 0.6 ) ( 1.8 ) ( 0.1 )

2 unchanged sentences

Total comprehensive income attributable to controlling interests

$ 19.8 $ 28.0 $ 50.8 $ 81.8

See Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended March 31, 2020 and 2019

For the three months ended June 30, 2020 and 2019

($ in millions except share data, unaudited)

Common stock,

Additional paid-in capital

Retained earnings (deficit)

(millions) Common stock,

value Additional paid-in capital Retained earnings (deficit) Accumulated

comprehensive

income (loss)

income (loss) Total

stockholders’

interests Non-controlling

equity Redeemable non-controlling interests in consolidated

Funds Total equity and

non-controlling

Redeemable non-controlling interests in consolidated

Total equity and

March 31, 2019 91.9 $ 0.1 $ 587.3 $ ( 597.0 ) $ ( 19.8 ) ( 29.4 ) $ 1.8 $ 36.0 $ 8.4 $ 43.2 $ 51.6

Repurchase of common stock ( 0.3 ) — ( 3.3 ) — — ( 3.3 ) — — ( 3.3 ) — ( 3.3 )

Capital contributions — — — — — — — 4.0 4.0 37.7 41.7

Equity-based compensation — — 1.2 — — 1.2 — — 1.2 — 1.2

Foreign currency translation adjustment

— — — — ( 0.6 ) ( 0.6 ) — — ( 0.6 ) — ( 0.6 )

Amortization related to derivatives securities, net of tax

— — — — 0.6 0.6 — — 0.6 — 0.6

Net de-consolidation of Funds — — — — — — — — — — —

Dividends ($ 0.10 per share)

— — — ( 9.2 ) — ( 9.2 ) — — ( 9.2 ) — ( 9.2 )

Net income — — — 28.0 — 28.0 — ( 7.3 ) 20.7 0.9 21.6

June 30, 2019 91.6 $ 0.1 $ 585.2 $ ( 578.2 ) $ ( 19.8 ) $ ( 12.7 ) $ 1.8 $ 32.7 $ 21.8 $ 81.8 $ 103.6

March 31, 2020 82.5 $ 0.1 $ 516.2 $ ( 428.3 ) $ ( 19.1 ) $ 68.9 $ 1.3 $ 49.1 $ 119.3 $ 74.5 $ 193.8

Issuance of common stock 0.1 — — — — — — — — —

Repurchase of common stock ( 2.5 ) — ( 16.1 ) — — ( 16.1 ) — — ( 16.1 ) — ( 16.1 )

Capital contributions (redemptions) — — — — — — — 0.9 0.9 ( 0.8 ) 0.1

Equity-based compensation — — 0.5 — — 0.5 — — 0.5 — 0.5

Foreign currency translation adjustment — — — — 0.3 0.3 — — 0.3 — 0.3

Amortization related to derivative securities, net of tax

— — — — 0.6 0.6 — — 0.6 — 0.6

Other changes in non-controlling interests

— — — — — — 0.1 — 0.1 — 0.1

Dividends ($ 0.01 per share)

— — — ( 0.7 ) — ( 0.7 ) — — ( 0.7 ) — ( 0.7 )

Net income — — — 18.9 — 18.9 — 28.8 47.7 6.2 53.9

June 30, 2020 80.1 $ 0.1 $ 500.6 $ ( 410.1 ) $ ( 18.2 ) $ 72.4 $ 1.4 $ 78.8 $ 152.6 $ 79.9 $ 232.5

See Notes to Condensed Consolidated Financial Statements

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2020 and 2019

($ in millions except share data, unaudited)

(millions) Common stock,

value Additional paid-in capital Retained earnings (deficit) Accumulated

comprehensive

income (loss) Total

stockholders’

interests Non-controlling

equity Redeemable non-controlling interests in consolidated

Funds Total equity and

non-controlling

5 unchanged sentences

Foreign currency translation adjustment

— — — — ( 0.1 ) ( 0.1 ) — — ( 0.1 ) — ( 0.1 )

Amortization related to derivatives securities, net of tax

— — — — 1.2 1.2 — — 1.2 — 1.2

Other changes in non-controlling interests

— — — — — — 0.2 — 0.2 — 0.2

Dividends ($ 0.20 per share)

— — — ( 18.4 ) — ( 18.4 ) — — ( 18.4 ) — ( 18.4 )

Net income (loss) — — — 80.7 — 80.7 — ( 0.6 ) 80.1 2.6 82.7

March 31, 2019

June 30, 2019 91.6 $ 0.1 $ 585.2 $ ( 578.2 ) $ ( 19.8 ) $ ( 12.7 ) $ 1.8 $ 32.7 $ 21.8 $ 81.8 $ 103.6

December 31, 2019 85.9 $ 0.1 $ 534.3 $ ( 452.5 ) $ ( 17.5 ) $ 64.4 $ 1.3 $ 48.8 $ 114.5 $ 83.9 $ 198.4

Issuance of common stock 0.1 — — — — — — — — — —

Retirement of common stock ( 0.2 ) — — — — — — — — — —

3 unchanged sentences

Foreign currency translation adjustment

— — — — ( 1.8 ) ( 1.8 ) — — ( 1.8 ) — ( 1.8 )

Amortization related to derivative securities, net of tax

— — — — 1.1 1.1 — — 1.1 — 1.1

Other changes in non-controlling interests

— — — — — — 0.1 — 0.1 — 0.1

Dividends ($ 0.11 per share)

— — — ( 9.1 ) — ( 9.1 ) — — ( 9.1 ) — ( 9.1 )

Net income (loss) — — — 51.5 — 51.5 — 28.9 80.4 ( 4.4 ) 76.0

March 31, 2020

June 30, 2020 80.1 $ 0.1 $ 500.6 $ ( 410.1 ) $ ( 18.2 ) $ 72.4 $ 1.4 $ 78.8 $ 152.6 $ 79.9 $ 232.5

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in millions, unaudited)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

Net (income) loss attributable to non-controlling interests in consolidated Funds

Net income $ 76.0 $ 82.7

Net income attributable to non-controlling interests in consolidated Funds ( 24.5 ) ( 2.0 )

Adjustments to reconcile net income to net cash flows from operating activities from continuing operations:

Loss from discontinued operations, excluding consolidated Funds

Impairment of goodwill 16.4 —

13 unchanged sentences

Net cash flows from operating activities of continuing operations, excluding consolidated Funds 62.6 ( 229.5 )

Net income (loss) attributable to non-controlling interests in consolidated Funds

Net income attributable to non-controlling interests in consolidated Funds 24.5 2.0

Adjustments to reconcile net income (loss) attributable to non-controlling interests in consolidated Funds to net cash flows from operating activities from continuing operations of consolidated Funds:

(Gains) losses on other investments

Losses on other investments 7.3 6.9

Purchase of investments ( 46.1 ) ( 126.4 )

Sale of investments 45.5 87.3

Earnings from equity method investees ( 28.9 ) ( 6.1 )

(Increase) decrease in receivables and other assets ( 0.7 ) 5.4

Increase in accounts payable and other liabilities

Decrease in accounts payable and other liabilities ( 2.2 ) ( 4.2 )

Net cash flows from operating activities of continuing operations of consolidated Funds ( 0.6 ) ( 35.1 )

16 unchanged sentences

(in millions, unaudited)

Three Months Ended

Six Months Ended

Cash flows from financing activities:

1 unchanged sentence

Repayment of third party and non-recourse borrowings ( 103.3 ) ( 30.0 )

Payment to OM plc for DTA Deed — ( 32.7 )

Payment to OM plc for co-investment redemptions ( 0.3 ) ( 5.1 )

3 unchanged sentences

Cash flows from financing activities of consolidated Funds

Non-controlling interest capital raised 1.3 7.0

Non-controlling interest capital redeemed ( 0.3 ) ( 3.0 )

8 unchanged sentences

Cash and cash equivalents at end of period (including cash at consolidated Funds classified as restricted)

$ 125.3 $ 103.3

Supplemental disclosure of cash flow information:

37 unchanged sentences

began trading on July 15, 2019, and the Company’s trading symbol on the NYSE remained unchanged as “BSIG.”

For the three months ended March 31, 2020 , the Company repurchased 3,230,262 shares of common stock at an average price of $ 5.93 per share, or approximately $ 19.2 million in total, including commissions.

For the three months ended June 30, 2020, the Company repurchased 2,437,700 shares of common stock at an average price of $ 6.56 per share, or approximately $ 16.0 million in total, including commissions.

For the six months ended June 30, 2020, the Company repurchased 5,667,962 shares of common stock at an average price of $ 6.20 per share, or approximately $ 35.3 million in total, including commissions.

2) Basis of Presentation and Significant Accounting Policies

15 unchanged sentences

2) Basis of Presentation and Significant Accounting Policies (cont.)

The Company has revised certain amounts in prior-period financial statements to conform to the current period’s presentation.

The Company changed the presentation of the purchase and sale of investments by its consolidated Funds within cash flows from investing activities in the prior period’s Condensed Consolidated Statements of Cash Flows to conform to the current period’s presentation of showing such purchase and sale of investments within cash flows from operating activities.

The change had no impact on the total cash provided by or used in operating, investing or financing activities within the Condensed Consolidated Statements of Cash Flows, or any impact on the other Condensed Consolidated Financial Statements.

Certain disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (annual report on Form 10-K) are not required to be included on an interim basis in the Company’s quarterly reports on Form 10-Q.

4 unchanged sentences

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.

The three months ended March 31, 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management.

The three and six months ended June 30, 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management.

Actual results could differ from such estimates, and the differences may be material to the Condensed Consolidated Financial Statements.

2 unchanged sentences

This standard modifies the disclosure requirements on fair value measurements and is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

Notably, this guidance removes the disclosure requirements for the valuation processes for Level 3 fair value measurements.

This guidance also adds new disclosure requirements for the range and weighted average of significant unobservable inputs used to develop fair value measurements categorized within Level 3 of the fair value hierarchy.

The Company adopted the standard on January 1, 2020.

Notably, this guidance removes the disclosure requirements for the valuation processes for Level III fair value measurements.

The Company has determined that the adoption of this standard did not have a material impact on its Condensed Consolidated Financial Statements and related disclosures.

New accounting standard not yet adopted

New accounting standards not yet adopted

The Company has considered all other newly issued accounting guidance that is applicable to the Company’s operations and the preparation of the unaudited Condensed Consolidated Financial Statements, including those that have not yet been adopted.

4 unchanged sentences

Investments are comprised of the following as of the dates indicated (in millions):

2020 December 31,

Investments of consolidated Funds held at fair value

$ 110.0 $ 119.5

Other investments held at fair value 54.6 95.5

3 unchanged sentences

Total investments per Condensed Consolidated Balance Sheets

$ 357.5 $ 376.9

(1) Equity-accounted investments in consolidated Funds is comprised of Investments in partnership interests where a portion of return includes carried interest.

These investments are accounted for within the scope of ASC 323, Investments - Equity Method and Joint Ventures because the Company has determined it has significant influence.

Investment income is comprised of the following for the three months ended March 31 (in millions):

Three Months Ended March 31,

Investment income is comprised of the following for the three and six months ended June 30 (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Realized and unrealized gains (losses) on other investments held at fair value $ 6.0 $ 1.4 $ ( 8.3 ) $ 7.8

Investment return of equity-accounted investments in Affiliates

0.6 0.7 1.2 1.3

Total investment income (loss) per Condensed Consolidated Statements of Operations

Investment gains (losses) on net consolidated funds is comprised of the following for the three months ended March 31 (in millions):

Three Months Ended March 31,

$ 6.6 $ 2.1 $ ( 7.1 ) $ 9.1

Investment gains (losses) on net consolidated funds is comprised of the following for the three and six months ended June 30 (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Realized and unrealized gains (losses) on consolidated Funds held at fair value $ 6.7 $ 0.1 $ ( 10.5 ) $ 3.0

Investment return of equity-accounted investments

Total net consolidated Funds’ investment gains (losses) per Condensed Consolidated Statements of Operations

28.9 ( 4.6 ) 28.9 6.1

Total net consolidated Funds’ investment gains per Condensed Consolidated Statements of Operations $ 35.6 $ ( 4.5 ) $ 18.4 $ 9.1

BrightSphere Investment Group Inc.

1 unchanged sentence

4) Fair Value Measurements

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at March 31, 2020 (in millions):

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at June 30, 2020 (in millions):

Quoted prices

Uncategorized

March 31, 2020

(Level I) Significant

(Level II) Significant

(Level III) Uncategorized Total value,

June 30, 2020

Assets of BSIG and consolidated Funds (1)

1 unchanged sentence

Short-term investment funds 1.6 — — — 1.6

Bank loans — 99.7 — — 99.7

Derivatives 0.5 0.3 — — 0.8

Consolidated Funds total 10.0 100.0 — — 110.0

Investments in separate accounts (2)

21.1 10.4 — — 31.5

Investments related to long-term incentive compensation plans (3)

88.9 — — — 88.9

Investments in unconsolidated Funds (4)

— — 3.0 20.1 23.1

BSIG total 110.0 10.4 3.0 20.1 143.5

Total fair value assets $ 120.0 $ 110.4 $ 3.0 $ 20.1 $ 253.5

Liabilities of consolidated Funds (1)

Derivatives ( 1.1 ) ( 0.1 ) — — ( 1.2 )

Consolidated Funds total ( 1.1 ) ( 0.1 ) — — ( 1.2 )

5 unchanged sentences

Quoted prices

Uncategorized

Total value December 31, 2019

(Level I) Significant

(Level II) Significant

(Level III) Uncategorized Total value December 31, 2019

Assets of BSIG and consolidated Funds (1)

1 unchanged sentence

Short-term investment funds 0.1 — — — 0.1

Bank loans — 109.0 — — 109.0

Derivatives 0.5 0.1 — — 0.6

Consolidated Funds total 10.4 109.1 — — 119.5

Investments in separate accounts (2)

33.2 11.1 — — 44.3

Investments related to long-term incentive compensation plans (3)

88.8 — — — 88.8

Investments in unconsolidated Funds (4)

— — 3.0 48.2 51.2

BSIG total 122.0 11.1 3.0 48.2 184.3

Total fair value assets $ 132.4 $ 120.2 $ 3.0 $ 48.2 $ 303.8

Liabilities of consolidated Funds (1)

Common stock $ ( 0.5 ) $ — $ — $ — $ ( 0.5 )

Derivatives ( 0.1 ) ( 0.3 ) — — ( 0.4 )

Consolidated Funds total ( 0.6 ) ( 0.3 ) — — ( 0.9 )

16 unchanged sentences

The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures.

Investments in separate accounts of $ 37.4 million at March 31, 2020 consist of approximately 30 % of cash equivalents and 70 % of equity securities, fixed income securities, and other investments.

(2) Investments in separate accounts of $ 31.5 million at June 30, 2020 consist of approximately 2 % of cash equivalents and 98 % of equity securities, fixed income securities, and other investments.

Investments in separate accounts of $ 44.3 million at December 31, 2019 consist of approximately 3 % of cash equivalents and 97 % of equity securities, fixed income securities, and other investments.

The Company values these using the published price of the underlying securities (classified as Level I) or quoted price supported by observable inputs as of the measurement date (classified as Level II).

Investments related to long-term incentive compensation plans of $ 89.3 million and $ 88.8 million at March 31, 2020 and December 31, 2019 , respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates.

(3) Investments related to long-term incentive compensation plans of $ 88.9 million and $ 88.8 million at June 30, 2020 and December 31, 2019, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates.

Accordingly, the Company has classified these investments as Level I.

The uncategorized amounts of $ 28.9 million and $ 48.2 million at March 31, 2020 and December 31, 2019 , respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

(4) The uncategorized amounts of $ 20.1 million and $ 48.2 million at June 30, 2020 and December 31, 2019, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to amounts presented in the Condensed Consolidated Balance Sheets.

2 unchanged sentences

UCITS and other investment vehicles are not subject to redemption restrictions.

The real estate investment Funds of $ 5.9 million and $ 6.4 million at March 31, 2020 and December 31, 2019 , respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds.

The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to eleven years from March 31, 2020 .

The real estate investment Funds of $ 6.3 million and $ 6.4 million at June 30, 2020 and December 31, 2019, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds.

The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to eleven years from June 30, 2020.

The valuation process for the underlying real estate investments held by the real estate investment Funds begins with each property or loan being valued by the investment teams.

2 unchanged sentences

In connection with this process, changes in fair value measurements from period to period are evaluated for reasonableness, considering items such as market rents, capitalization and discount rates, and general economic and market conditions.

Investments in unconsolidated Funds categorized as Level III of $ 3.0 million and $ 3.0 million at March 31, 2020 and December 31, 2019 , respectively, related to investments in Forestry Funds advised by Affiliates and are valued by the general partner of those Funds.

Investments in unconsolidated Funds categorized as Level III of $ 3.0 million and $ 3.0 million at June 30, 2020 and December 31, 2019, respectively, related to investments in Forestry Funds advised by Affiliates and are valued by the general partner of those Funds.

Determination of estimated fair value involves subjective judgment because the actual fair value can be determined only through negotiation between parties in a sale transaction, and amounts ultimately realized may vary significantly from the fair value presented.

3 unchanged sentences

The following table reconciles the opening balances of Level III financial assets to closing balances at the end of the period (in millions):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Investments in unconsolidated Funds 2020 2019 2020 2019

4 unchanged sentences

Total Level III financial assets

There were no significant transfers of financial assets or liabilities between Levels II or III during the three months ended March 31, 2020 .

$ 3.0 $ 3.0 $ 3.0 $ 3.0

There were no significant transfers of financial assets or liabilities between Levels II or III during the three and six months ended June 30, 2020.

BrightSphere Investment Group Inc.

14 unchanged sentences

The following table presents the assets and liabilities of Funds that are VIEs and consolidated by the Company (in millions):

2020 December 31,

Investments at fair value $ 110.0 $ 119.5

Other assets of consolidated Funds 117.6 85.7

Total Assets $ 227.6 $ 205.2

Liabilities of consolidated Funds $ 4.2 $ 6.2

12 unchanged sentences

The following information pertains to unconsolidated VIEs for which the Company holds a variable interest (in millions):

2020 December 31,

Unconsolidated VIE assets $ 6,428.3 $ 6,625.5

2 unchanged sentences

Maximum risk of loss (1)

$ 23.2 $ 23.9

(1) Includes equity investments the Company has made or is required to make and any earned but uncollected management and incentive fees.

4 unchanged sentences

The Company’s borrowings and long-term debt was comprised of the following as of the dates indicated (in millions):

March 31, 2020

December 31, 2019

(in millions)

Carrying value

Fair Value Level

Carrying value

Fair Value Level

June 30, 2020 December 31, 2019

(in millions) Carrying Value Fair Value Fair Value Level Carrying Value Fair Value Fair Value Level

Third party borrowings:

$ 450 million revolving credit facility expiring August 22, 2022 (1)

$275 million 4.80% Senior Notes Due

July 27, 2026 (2)

$ 130.0 $ 130.0 2 $ 140.0 $ 140.0 2

$ 275 million 4.80 % Senior Notes Due July 27, 2026 (2)

272.6 273.8 2 272.4 287.2 2

$ 125 million 5.125 % Senior Notes Due August 1, 2031 (2)

121.4 121.0 2 121.4 126.4 2

Total third party borrowings $ 524.0 $ 524.8 $ 533.8 $ 553.6

1 unchanged sentence

Non-recourse seed capital facility expiring January 15, 2021 (1)

$ 21.7 $ 21.7 2 $ 35.0 $ 35.0 2

Total non-recourse borrowing $ 21.7 $ 21.7 $ 35.0 $ 35.0

6 unchanged sentences

The operating leases have remaining lease terms of 1 year to 14 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

The following table summarizes information about the Company’s operating leases for the three months ended March 31, (in millions):

Three Months Ended March 31,

The following table summarizes information about the Company’s operating leases for the three and six months ended June 30, (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Operating lease cost $ 4.1 $ 3.5 $ 7.9 $ 6.9

3 unchanged sentences

ROU asset obtained in exchange for new operating lease liabilities

6.4 0.3 77.1 5.4

In determining the incremental borrowing rate, the Company considered the interest rate yield for the specific interest rate environment and the Company’s credit spread at the inception of the lease.

For the three months ended March 31, 2020 and 2019 , the weighted average remaining lease term was 12.1 years and 4.7 years respectively, and the weighted average discount rate was 3.48 % and 3.97 % , respectively.

For the six months ended June 30, 2020 and 2019, the weighted average remaining lease term was 11.8 years and 5 years respectively, and the weighted average discount rate was 3.47 % and 4.11 %, respectively.

Maturities of operating lease liabilities were as follows (in millions):

1 unchanged sentence

Year Ending December 31,

2020 (excluding the three months ended March 31, 2020)

2020 (excluding the six months ended June 30, 2020)

Thereafter 98.8

Total lease payments 154.1

Less imputed interest ( 29.2 )

Excluded from the table above is an operating lease for office space that was entered into during the fourth quarter of 2019, but has not yet commenced.

The expected lease obligations are approximately $ 7.5 million and will be paid over an expected lease term of 12 years .

This operating lease will commence in the second quarter of 2020.

Total $ 124.9

BrightSphere Investment Group Inc.

1 unchanged sentence

8) Goodwill and Intangible Assets

The following table presents the changes in goodwill for the three months ended March 31, 2020 and 2019 (in millions):

Quant & Solutions

The following table presents the changes in goodwill for the six months ended June 30, 2020 and 2019 (in millions):

Quant & Solutions Alternatives Liquid Alpha Total

Goodwill $ 22.1 $ 153.1 $ 133.3 $ 308.5

Accumulated impairment ( 1.8 ) ( 5.0 ) ( 27.1 ) ( 33.9 )

December 31, 2019 $ 20.3 $ 148.1 $ 106.2 $ 274.6

Additions — — — —

Impairments — — ( 16.4 ) ( 16.4 )

Disposals — — — —

Goodwill 22.1 153.1 133.3 308.5

Accumulated impairment ( 1.8 ) ( 5.0 ) ( 43.5 ) ( 50.3 )

March 31, 2020

Quant & Solutions

June 30, 2020 $ 20.3 $ 148.1 $ 89.8 $ 258.2

Quant & Solutions Alternatives Liquid Alpha Total

Goodwill $ 22.1 $ 153.1 $ 133.3 $ 308.5

Accumulated impairment ( 1.8 ) ( 5.0 ) ( 27.1 ) ( 33.9 )

December 31, 2018 $ 20.3 $ 148.1 $ 106.2 $ 274.6

Additions — — — —

Impairments — — — —

Disposals — — — —

Goodwill 22.1 153.1 133.3 308.5

Accumulated impairment ( 1.8 ) ( 5.0 ) ( 27.1 ) ( 33.9 )

March 31, 2019

June 30, 2019 $ 20.3 $ 148.1 $ 106.2 $ 274.6

The 2019 annual impairment assessment determined that no impairment existed at the annual assessment date.

3 unchanged sentences

Accordingly, the Company recognized a goodwill impairment charge of $ 16.4 million for the three months ended March 31, 2020.

No goodwill impairment charges were recognized for the three months ended June 30, 2020 and the Company recognized a goodwill impairment charge of $ 16.4 million for the six months ended June 30, 2020.

The fair value of the reporting unit was estimated using the income approach, which calculates the fair value based on the present value of estimated future cash flows.

1 unchanged sentence

The discount rates used are based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics.

The Company’s quantitative impairment analysis at March 31, 2020 incorporated revised forecasts that took into account the market disruptions during the

The Company’s quantitative impairment

BrightSphere Investment Group Inc.

1 unchanged sentence

8) Goodwill and Intangible Assets (cont.)

quarter and its impact on the results in future periods.

analysis at March 31, 2020 incorporated revised forecasts that took into account the market disruptions during the quarter and its impact on the results in future periods.

Given the significant level of uncertainty that currently exists, management also considered alternative scenarios for market and reporting unit performance over the next several years.

If the Company’s assets under management are further impacted by the global economic conditions caused by COVID-19, such as adverse and significant declines in the value of global financial markets, additional impairments of goodwill or intangible assets are possible in future periods.

The following table presents the change in definite-lived acquired intangible assets comprised of client relationships for the three months ended March 31, 2020 and 2019 (in millions):

The following table presents the change in definite-lived acquired intangible assets comprised of client relationships for the six months ended June 30, 2020 and 2019 (in millions):

Book Value Accumulated

Amortization &

Impairment Net Book

December 31, 2019 $ 108.3 $ ( 44.2 ) $ 64.1

March 31, 2020

Additions — — —

Amortization — ( 3.5 ) ( 3.5 )

Disposals — — —

June 30, 2020 $ 108.3 $ ( 47.7 ) $ 60.6

Book Value Accumulated

Amortization &

Impairment Net Book

December 31, 2018 $ 108.3 $ ( 37.6 ) $ 70.7

March 31, 2019

Additions — — —

Amortization — ( 3.3 ) ( 3.3 )

Disposals — — —

June 30, 2019 $ 108.3 $ ( 40.9 ) $ 67.4

The Company’s definite-lived acquired intangibles are amortized over their expected useful lives.

As of March 31, 2020 , these assets were being amortized over remaining useful lives of three to ten years.

The Company recorded amortization expense of $ 1.6 million for each of the three months ended March 31, 2020 and 2019 .

The Company also acquired a $ 1.0 million indefinite-lived intangible trade name in the acquisition of Landmark, included in acquired intangibles, net, on the Condensed Consolidated Balance Sheets at March 31, 2020 and 2019 .

As of June 30, 2020, these assets were being amortized over remaining useful lives of four to ten years .

The Company recorded amortization expense of $ 1.9 million and $ 1.7 million for the three months ended June 30, 2020 and 2019, respectively.

The Company recorded amortization expense of $ 3.5 million and $ 3.3 million for the six months ended months ended June 30, 2020 and 2019, respectively.

BrightSphere Investment Group Inc.

6 unchanged sentences

As such, no impairment charges were determined for both the definite and indefinite-lived intangible assets.

No impairment charges were determined for the definite and indefinite-lived intangible assets for the three months ended June 30, 2020.

The Company estimates that its consolidated annual amortization expense, assuming no useful life changes or additional investments in new or existing Affiliates, for each of the next five fiscal years is as follows (in millions):

Year Ending December 31,

2020 (excluding the three months ended March 31, 2020)

2020 (excluding the six months ended June 30, 2020)

Thereafter 31.7

BrightSphere Investment Group Inc.

2 unchanged sentences

Operational commitments

The Company had unfunded commitments to invest up to approximately $ 41 million in co-investments as of March 31, 2020 .

The Company had unfunded commitments to invest up to approximately $ 39 million in co-investments as of June 30, 2020.

These commitments will be funded as required through the end of the respective investment periods ranging through fiscal 2022.

4 unchanged sentences

This guaranty expires in 2022.

There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of March 31, 2020 related to this guaranty.

There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of June 30, 2020 related to this guaranty.

The Company and its Affiliates are subject to claims, legal proceedings and other contingencies in the ordinary course of their business activities.

2 unchanged sentences

If an insurance claim or other indemnification for a litigation accrual is available to the Company, the associated gain will not be recognized until all contingencies related to the gain have been resolved.

As of March 31, 2020 , there were no material accruals for claims, legal proceedings or other contingencies.

As of June 30, 2020, there were no material accruals for claims, legal proceedings or other contingencies.

Indemnifications

6 unchanged sentences

However, given the fact that uncertainty exists around the requirement, the Company has chosen to evaluate its potential exposure related to non-collection and remittance of these taxes.

At March 31, 2020 , management of the Company has estimated the potential maximum exposure and concluded that it is not material.

No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at March 31, 2020 .

At June 30, 2020, management of the Company has estimated the potential maximum exposure and concluded that it is not material.

No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at June 30, 2020.

BrightSphere Investment Group Inc.

12 unchanged sentences

The calculation of basic and diluted earnings per share of common stock is as follows (dollars in millions, except per share data):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Net income attributable to controlling interests $ 18.9 $ 28.0 $ 51.5 $ 80.7

Total income available to participating unvested securities (1)

— — — ( 0.1 )

Total net income attributable to common stock $ 18.9 $ 28.0 $ 51.5 $ 80.6

Weighted-average shares of common stock outstanding—basic

80,435,389 91,457,301 82,758,277 94,550,527

Potential shares of common stock:

1 unchanged sentence

Weighted-average shares of common stock outstanding—diluted

80,449,124 91,495,633 82,774,091 94,669,475

Earnings per share of common stock attributable to controlling interests:

Basic $ 0.23 $ 0.31 $ 0.62 $ 0.85

Diluted $ 0.23 $ 0.31 $ 0.62 $ 0.85

(1) Income available to participating unvested securities includes dividends paid on unvested restricted shares and their proportionate share of undistributed earnings.

Employee options to purchase 9,330,000 shares were not included in the computation of diluted EPS for the three months ended March 31, 2020 because the assumed proceeds from exercising such options exceed the average price of the shares of common stock for the period and, therefore, the options are deemed antidilutive.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

10) Earnings Per Share (cont.)

Employee options to purchase 7,474,000 shares were not included in the computation of diluted EPS for the three and six months ended June 30, 2020 because the assumed proceeds from exercising such options exceed the average price of the shares of common stock for the period and, therefore, the options are deemed antidilutive.

Management fees

10 unchanged sentences

In instances where a customer reimburses the Company for a cost paid on the customer’s behalf, the Company is acting as a principal and the reimbursement is accrued on a gross basis at cost as the corresponding reimbursable expenses are incurred.

Revenue from expense reimbursement amounted to $ 1.1 million and $ 1.0 million for the three months ended March 31, 2020 and 2019 , respectively, and is recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations.

Revenue from expense reimbursement amounted to $ 1.1 million and $ 1.3 million for the three months ended June 30, 2020 and 2019, respectively.

Revenues from expense reimbursement amounted to $ 2.2 million and $ 2.3 million for the six months ended June 30, 2020 and 2019, respectively, are recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations.

Other revenue may also consist of other miscellaneous revenue, consisting primarily of administration and consulting services.

4 unchanged sentences

equity, which includes global and international equities including emerging markets;

Fixed income, which includes government bonds, corporate bonds and other fixed income investments in the United States;

Alternatives, which is comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

BrightSphere Investment Group Inc.

1 unchanged sentence

11) Revenue (cont.)

Management fee revenue by segment and asset class is comprised of the following for the three months ended March 31 (in millions):

Three Months Ended March 31,

Fixed income, which includes government bonds, corporate bonds and other fixed income investments in the United States;

Management fee revenue by segment and asset class is comprised of the following for the three and six months ended June 30 (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Quant & Solutions

Global / non-U.S.

equity $ 82.2 $ 93.6 $ 167.4 $ 184.1

Alternatives 41.8 43.5 83.2 87.3

Global / non-U.S.

equity 19.9 22.3 38.7 48.7

Fixed income 6.1 6.5 12.4 12.9

equity 20.7 40.0 47.5 80.4

Management fee revenue

$ 170.7 $ 205.9 $ 349.2 $ 413.4

BrightSphere Investment Group Inc.

1 unchanged sentence

12) Accumulated Other Comprehensive Income (Loss)

T he components of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2020 and 2019 were as follows (in millions):

Foreign currency translation adjustment

Valuation and amortization of derivative securities

Balance, as of December 31, 2019

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended June 30, 2020 and 2019 are as follows (in millions):

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of March 31, 2020

$ 0.7 $ ( 19.8 ) $ ( 19.1 )

Foreign currency translation adjustment 0.3 — 0.3

Amortization related to derivatives securities, before tax

Tax impact — ( 0.2 ) ( 0.2 )

Other comprehensive income (loss) 0.3 0.6 0.9

Balance, as of June 30, 2020

$ 1.0 $ ( 19.2 ) $ ( 18.2 )

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of March 31, 2019

$ 2.3 $ ( 22.1 ) $ ( 19.8 )

Foreign currency translation adjustment ( 0.6 ) — ( 0.6 )

Valuation and amortization of derivative securities

Amortization related to derivatives securities, before tax

Tax impact — ( 0.2 ) ( 0.2 )

Other comprehensive income (loss) ( 0.6 ) 0.6 —

Balance, as of June 30, 2019

$ 1.7 $ ( 21.5 ) $ ( 19.8 )

For the three months ended June 30, 2020 and 2019, the Company reclassified $ 0.8 million and $ 0.8 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

The components of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2020 and 2019 were as follows (in millions):

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of December 31, 2019 $ 2.8 $ ( 20.3 ) $ ( 17.5 )

1 unchanged sentence

Amortization related to derivatives securities, before tax

Other comprehensive income

Balance, as of March 31, 2019

For the three months ended March 31, 2020 and 2019 , the Company reclassified $ 0.7 million and $ 0.7 million , respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

Tax impact — ( 0.4 ) ( 0.4 )

Other comprehensive income (loss) ( 1.8 ) 1.1 ( 0.7 )

Balance, as of June 30, 2020

$ 1.0 $ ( 19.2 ) $ ( 18.2 )

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

12) Accumulated Other Comprehensive Income (Loss) (cont.)

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of December 31, 2018 $ 1.8 $ ( 22.7 ) $ ( 20.9 )

Foreign currency translation adjustment ( 0.1 ) — ( 0.1 )

Amortization related to derivatives securities, before tax

Tax impact — ( 0.3 ) ( 0.3 )

Other comprehensive income (loss) ( 0.1 ) 1.2 1.1

Balance, as of June 30, 2019

$ 1.7 $ ( 21.5 ) $ ( 19.8 )

For the six months ended June 30, 2020 and 2019, the Company reclassified $ 1.5 million and $ 1.5 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

13) Derivatives and Hedging

6 unchanged sentences

Refer to Note 6, Borrowings and Debt, for additional information on the debt issuances.

As of March 31, 2020 , the balance recorded in accumulated other comprehensive income (loss) was $( 19.8 ) million , net of tax.

As of June 30, 2020, the balance recorded in accumulated other comprehensive income (loss) was $( 19.2 ) million, net of tax.

This balance will be reclassified to earnings through interest expense over the life of the issued debt.

Amounts of $ 0.7 million have been reclassified for each of the three months ended March 31, 2020 and 2019 .

Amounts of $ 0.8 million and $ 0.8 million have been reclassified for each of the three months ended June 30, 2020 and 2019, respectively.

Amounts of $ 1.5 million and $ 1.5 million have been reclassified for the six months ended June 30, 2020 and 2019, respectively.

During the next twelve months the Company expects to reclassify approximately $ 3.2 million to interest expense.

41 unchanged sentences

GAAP net income (loss):

The following table presents the financial data for the Company’s three segments for the three months ended March 31, 2020 (in millions):

Three Months Ended March 31, 2020

Quant & Solutions

Alter-natives

Reconciling Adjustments

ENI operating expenses

The following table presents the financial data for the Company’s three segments for the three months ended June 30, 2020 (in millions):

Three Months Ended June 30, 2020

Quant & Solutions Alter-natives Liquid Alpha Other Reconciling Adjustments Total U.S.

ENI revenue $ 82.8 $ 42.5 $ 47.1 $ 0.1 $ 2.2 (a) $ 174.7

ENI operating expenses 35.0 15.7 17.4 5.9 16.4 (b) 90.4

Earnings before variable compensation

Variable compensation

47.8 26.8 29.7 ( 5.8 ) ( 14.2 ) 84.3

Variable compensation 17.7 9.7 11.2 0.8 7.7 (c) 47.1

ENI operating earnings (after variable comp)

30.1 17.1 18.5 ( 6.6 ) ( 21.9 ) 37.2

Affiliate key employee distributions

1.3 6.9 2.8 — — 11.0

Earnings after Affiliate key employee distributions

Net interest expense

Net investment loss

28.8 10.2 15.7 ( 6.6 ) ( 21.9 ) 26.2

Net interest expense — — — ( 5.6 ) ( 1.6 ) (d) ( 7.2 )

Net investment income — — — — 42.2 (e) 42.2

Net income attributable to non-controlling interests in consolidated Funds

— — — — ( 35.0 ) (e) ( 35.0 )

Income tax (expense) benefit — — — ( 9.6 ) 2.3 (f) ( 7.3 )

Economic net income

$ 28.8 $ 10.2 $ 15.7 $ ( 21.8 ) $ ( 14.0 ) $ 18.9

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

14) Segments (cont.)

The following table presents the financial data for the Company’s three segments for the three months ended June 30, 2019 (in millions):

Three Months Ended June 30, 2019

Quant & Solutions Alter-natives Liquid Alpha Other Reconciling Adjustments Total U.S.

ENI revenue $ 93.7 $ 44.3 $ 66.5 $ 0.1 $ 2.5 (a) $ 207.1

ENI operating expenses 39.7 15.6 19.9 7.8 14.7 (b) 97.7

Earnings before variable compensation

54.0 28.7 46.6 ( 7.7 ) ( 12.2 ) 109.4

Variable compensation 20.0 10.4 15.7 2.3 0.6 (c) 49.0

ENI operating earnings (after variable comp)

34.0 18.3 30.9 ( 10.0 ) ( 12.8 ) 60.4

Affiliate key employee distributions

1.6 6.4 5.8 — — 13.8

Earnings after Affiliate key employee distributions

32.4 11.9 25.1 ( 10.0 ) ( 12.8 ) 46.6

Net interest expense — — — ( 6.2 ) ( 2.3 ) (d) ( 8.5 )

Net investment loss — — — — ( 2.4 ) (e) ( 2.4 )

Net loss attributable to non-controlling interests in consolidated Funds

Income tax (expense) benefit

— — — — 6.4 (e) 6.4

Income tax expense — — — ( 12.2 ) ( 1.9 ) (f) ( 14.1 )

Economic net income $ 32.4 $ 11.9 $ 25.1 $ ( 28.4 ) $ ( 13.0 ) $ 28.0

The following table presents the financial data for the Company’s three segments for the six months ended June 30, 2020 (in millions):

Six Months Ended June 30, 2020

Quant & Solutions Alter-natives Liquid Alpha Other Reconciling Adjustments Total U.S.

ENI revenue $ 168.9 $ 84.4 $ 99.6 $ 0.2 $ 4.2 (a) $ 357.3

ENI operating expenses 72.1 32.3 37.2 13.6 ( 12.2 ) (b) 143.0

Earnings before variable compensation

96.8 52.1 62.4 ( 13.4 ) 16.4 214.3

Variable compensation 34.7 18.9 23.7 1.8 14.1 (c) 93.2

ENI operating earnings (after variable comp)

62.1 33.2 38.7 ( 15.2 ) 2.3 121.1

Affiliate key employee distributions

2.1 12.7 6.0 — — 20.8

Earnings after Affiliate key employee distributions

60.0 20.5 32.7 ( 15.2 ) 2.3 100.3

Net interest expense — — — ( 11.2 ) ( 3.5 ) (d) ( 14.7 )

Net investment income — — — — 11.3 (e) 11.3

Net income attributable to non-controlling interests in consolidated Funds — — — — ( 24.5 ) (e) ( 24.5 )

Income tax expense — — — ( 19.6 ) ( 1.3 ) (f) ( 20.9 )

Economic net income

$ 60.0 $ 20.5 $ 32.7 $ ( 46.0 ) $ ( 15.7 ) $ 51.5

BrightSphere Investment Group Inc.

1 unchanged sentence

14) Segments (cont.)

The following table presents the financial data for the Company’s three segments for the three months ended March 31, 2019 (in millions):

Three Months Ended March 31, 2019

Quant & Solutions

Alter-natives

Reconciling Adjustments

ENI operating expenses

The following table presents the financial data for the Company’s three segments for the six months ended June 30, 2019 (in millions):

Six Months Ended June 30, 2019

Quant & Solutions Alter-natives Liquid Alpha Other Reconciling Adjustments Total U.S.

ENI revenue $ 184.2 $ 88.3 $ 137.6 $ 0.2 $ 4.0 (a) $ 414.3

ENI operating expenses 79.6 33.3 41.4 17.2 ( 0.7 ) (b) 170.8

Earnings before variable compensation

Variable compensation

104.6 55.0 96.2 ( 17.0 ) 4.7 243.5

Variable compensation 38.7 20.2 32.6 5.6 4.6 (c) 101.7

ENI operating earnings (after variable comp)

65.9 34.8 63.6 ( 22.6 ) 0.1 141.8

Affiliate key employee distributions

2.6 12.1 12.5 — — 27.2

Earnings after Affiliate key employee distributions

Net interest expense

Net investment income

Net income attributable to non-controlling interests in consolidated Funds

Income tax expense

63.3 22.7 51.1 ( 22.6 ) 0.1 114.6

Net interest expense — — — ( 9.7 ) ( 4.7 ) (d) ( 14.4 )

Net investment income — — — — 18.2 (e) 18.2

Net income attributable to non-controlling interests in consolidated Funds — — — — ( 2.0 ) (e) ( 2.0 )

Income tax expense — — — ( 24.6 ) ( 11.1 ) (f) ( 35.7 )

Economic net income

$ 63.3 $ 22.7 $ 51.1 $ ( 56.9 ) $ 0.5 $ 80.7

(1) The most directly comparable U.S.

11 unchanged sentences

Reconciling Adjustments:

Adjusted to exclude earnings from equity-accounted Affiliates, which are included in U.S.

(a) Adjusted to exclude earnings from equity-accounted Affiliate, which are included in U.S.

GAAP investment income, and to include consolidated Funds revenues and the separate revenues recorded for certain Fund expenses reimbursed by customers, which are included in U.S.

GAAP revenue.

Adjusted to include non-cash amortization expense for pre-acquisition employee equity, non-cash expenses for key employee equity and profit interest revaluations, capital transaction costs, goodwill impairment and amortization of acquired intangible assets, restructuring costs, consolidated Funds’ operating expenses and the Fund expenses reimbursed by customers, each of which are included in U.S.

(b) Adjusted to include non-cash amortization expense for pre-acquisition employee equity, non-cash expenses for key employee equity and profit interest revaluations, capital transaction costs, goodwill impairment and amortization of acquired intangible assets, restructuring costs, consolidated Funds’ operating expenses and the Fund expenses reimbursed by customers, each of which are included in U.S.

GAAP operating expenses.

Adjusted to include restructuring costs and the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, which are included in U.S.

(c) Adjusted to include restructuring costs and the impact of a one-time compensation arrangement entered into during the first quarter of 2020 that includes advances against future compensation payments, which are included in U.S.

GAAP compensation expense.

Adjusted to include the cost of seed financing, which is included in U.S.

(d) Adjusted to include the cost of seed financing, which is included in U.S.

GAAP interest expense.

2 unchanged sentences

14) Segments (cont.)

Adjusted to include net investment income (loss), net income (loss) attributable to non-controlling interests in consolidated Funds, and the gain on disposal of discontinued operations, all of which are included in U.S.

(e) Adjusted to include net investment income (loss), net income (loss) attributable to non-controlling interests in consolidated Funds, and the gain on disposal of discontinued operations, all of which are included in U.S.

GAAP net income attributable to controlling interests.

Adjusted to include the impact of deferred taxes resulting from changes in tax law and the amortization of goodwill and acquired intangibles.

(f) Adjusted to include the impact of amortization of goodwill and acquired intangibles.

Also adjusted to include tax expense or benefits relating to uncertain tax positions, the tax impact of certain ENI adjustments and other unusual items that are not included in current operating results for ENI purposes.

Management fee revenue by principal geographic area is comprised of the following for the three months ended March 31 (in millions):

Three Months Ended March 31,

Management fee revenue by principal geographic area is comprised of the following for the three and six months ended June 30 (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

$ 128.7 $ 154.9 $ 261.8 $ 311.2

42.0 51.0 87.4 102.2

Management fee revenue

$ 170.7 $ 205.9 $ 349.2 $ 413.4

15) Related Party Transactions

Certain Affiliates have provided loans to Affiliate employees.

At March 31, 2020 and December 31, 2019 the balance of the loans to Affiliate employees was $ 14.3 million and $ 16.1 million , respectively.

At June 30, 2020 and December 31, 2019 the balance of the loans to Affiliate employees was $ 11.8 million and $ 16.1 million, respectively.

These loans will be repaid by 2022.

16) Subsequent Events

On July 24, 2020, BrightSphere Inc., a Delaware corporation and wholly owned subsidiary of the Company, entered into a Purchase Agreement (the “CR Purchase Agreement”) with Copper Rock Capital Partners LLC (“Copper Rock”), an Affiliate within the Liquid Alpha segment, and Spouting Rock Asset Management LLC (“Spouting Rock”).

Pursuant to the CR Purchase Agreement, Spouting Rock has purchased all of BrightSphere Inc.’s equity interests in Copper Rock.

The consummation of the transaction did not have a significant impact on the Condensed Consolidated Financial Statements of the Company.

On July 26, 2020, the Company, through its subsidiaries BrightSphere Intermediary (BHMS) LLC (the “Seller”), BHMS Investment GP LLC (“BHMS GP”), BHMS Investment Holdings LP (“BHMS LP”), and Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”), an Affiliate within the Liquid Alpha segment, entered into an Equity Purchase Agreement (the “BHMS Purchase Agreement”) with Perpetual US Holdings Company Inc.

(“Perpetual”), pursuant to which Perpetual agreed to purchase all of the Company’s interests in Barrow Hanley in exchange for $ 319 million of cash consideration, on a cash-free, debt-free basis, subject to certain customary closing and post-closing adjustments.

Barrow Hanley comprised $ 17.5 million of the Company’s net income attributable to controlling interests of $ 51.5 million for the six months ended June 30, 2020.

The transaction is expected to close during fourth quarter of 2020.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements