What changed in this filing

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Item 1. Financial Statements

2020-11-06 compared with 2020-08-10 · 247 added, 150 removed, 815 unchanged (33% of the section changed)

3 unchanged sentences

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

September 30,

2020 December 31,

9 unchanged sentences

Deferred tax assets 212.7 243.6

Assets held for sale:

Affiliate assets held for sale 151.0 —

Assets of consolidated Funds:

2 unchanged sentences

Other assets — 4.9

Consolidated Funds’ assets held for sale 114.3 —

Total assets $ 1,417.2 $ 1,419.7

9 unchanged sentences

Third party borrowings 474.2 533.8

Liabilities held for sale:

Affiliate liabilities held for sale 80.4 —

Liabilities of consolidated Funds:

2 unchanged sentences

Other liabilities — 0.1

Consolidated Funds’ liabilities held for sale 0.1 —

Total liabilities 1,145.8 1,221.3

15 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

17 unchanged sentences

Interest expense ( 6.9 ) ( 8.3 ) ( 22.1 ) ( 24.1 )

Net consolidated Funds’ investment gains (losses) 35.6 ( 4.5 ) 18.4 9.1

Gain on sale of Affiliate 7.2 — 7.2 —

Net consolidated Funds’ investment gains 2.1 4.7 20.5 13.8

Total non-operating income (loss) 6.3 ( 0.9 ) 2.9 2.9

Income from continuing operations before taxes 46.8 51.0 143.7 169.4

Income tax expense 7.3 14.1 20.9 35.7

Income tax expense (benefit) 12.8 ( 32.0 ) 33.7 3.7

Income from continuing operations 34.0 83.0 110.0 165.7

16 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

7 unchanged sentences

Total comprehensive income attributable to controlling interests $ 39.2 $ 75.2 $ 90.0 $ 157.0

$ 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 June 30, 2020 and 2019

For the three months ended September 30, 2020 and 2019

($ in millions except share data, unaudited)

8 unchanged sentences

non-controlling

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

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

Repurchase of common stock ( 2.8 ) — ( 25.5 ) — — ( 25.5 ) — — ( 25.5 ) — ( 25.5 )

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

Capital contributions (redemptions) — — — — — — — 0.9 0.9 ( 1.0 ) ( 0.1 )

Equity-based compensation — — 0.7 — — 0.7 — — 0.7 — 0.7

3 unchanged sentences

— — — — 0.6 0.6 — — 0.6 — 0.6

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

Other changes in non-controlling interests — — — — — — 0.1 — 0.1 — 0.1

Dividends ($ 0.10 per share)

1 unchanged sentence

Net income — — — 75.4 — 75.4 — 6.5 81.9 1.1 83.0

September 30, 2019 88.8 $ 0.1 $ 560.4 $ ( 511.7 ) $ ( 20.0 ) $ 28.8 $ 1.9 $ 40.1 $ 70.8 $ 81.9 $ 152.7

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

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 — — 0.2 — — 0.2 — — 0.2 — 0.2

Repurchase of common stock — — — — — — — — — — —

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

Capital contributions — — — — — — — 0.3 0.3 129.7 130.0

Equity-based compensation — — 0.4 — — 0.4 — — 0.4 — 0.4

4 unchanged sentences

— — — — — — — — — — —

Net de-consolidation of Funds — — — — — — — — ( 126.8 ) ( 126.8 )

Dividends ($ 0.01 per share)

1 unchanged sentence

Net income — — — 37.2 — 37.2 — ( 6.1 ) 31.1 2.8 33.9

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

September 30, 2020 80.1 $ 0.1 $ 501.2 $ ( 373.7 ) $ ( 16.2 ) $ 111.4 $ 1.4 $ 73.0 $ 185.8 $ 85.6 $ 271.4

See Notes to Condensed Consolidated Financial Statements

1 unchanged sentence

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2020 and 2019

For the nine months ended September 30, 2020 and 2019

($ in millions except share data, unaudited)

11 unchanged sentences

Repurchase of common stock ( 16.6 ) — ( 209.3 ) — — ( 209.3 ) — — ( 209.3 ) — ( 209.3 )

Capital contributions (redemptions) — — — — — — — 4.0 4.0 37.3 41.3

Capital contributions — — — — — — — 4.9 4.9 36.3 41.2

Equity-based compensation — — 5.1 — — 5.1 — — 5.1 — 5.1

7 unchanged sentences

— — — ( 27.3 ) — ( 27.3 ) — — ( 27.3 ) — ( 27.3 )

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

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

Net income — — — 156.1 — 156.1 — 5.9 162.0 3.7 165.7

September 30, 2019 88.8 $ 0.1 $ 560.4 $ ( 511.7 ) $ ( 20.0 ) $ 28.8 $ 1.9 $ 40.1 $ 70.8 $ 81.9 $ 152.7

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

10 unchanged sentences

— — — — — — 0.1 — 0.1 — 0.1

Net de-consolidation of Funds — — — — — — — — — ( 126.8 ) ( 126.8 )

Dividends ($ 0.12 per share)

1 unchanged sentence

Net income (loss) — — — 88.7 — 88.7 — 22.8 111.5 ( 1.6 ) 109.9

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

September 30, 2020 80.1 $ 0.1 $ 501.2 $ ( 373.7 ) $ ( 16.2 ) $ 111.4 $ 1.4 $ 73.0 $ 185.8 $ 85.6 $ 271.4

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in millions, unaudited)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from operating activities:

4 unchanged sentences

Amortization of acquired intangibles 5.1 4.9

(Gain) on sale of Affiliate ( 7.2 ) —

Depreciation and other amortization 15.6 12.2

18 unchanged sentences

(Increase) decrease in receivables and other assets ( 28.7 ) 4.8

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

Increase (decrease) in accounts payable and other liabilities 3.0 ( 4.0 )

Net cash flows from operating activities of continuing operations of consolidated Funds ( 52.7 ) ( 33.7 )

9 unchanged sentences

Distributions received from equity method investees 1.3 3.8

Deconsolidation of Funds ( 86.0 ) —

Net cash flows from investing activities of continuing operations ( 60.1 ) ( 8.8 )

5 unchanged sentences

(in millions, unaudited)

Six Months Ended

Nine Months Ended

September 30,

Cash flows from financing activities:

1 unchanged sentence

Repayment of third party and non-recourse borrowings ( 175.0 ) ( 275.0 )

Payment for debt issuance costs — ( 1.8 )

Payment to OM plc for DTA Deed — ( 32.7 )

12 unchanged sentences

Effect of foreign exchange rate changes on cash and cash equivalents — —

Net increase (decrease) in cash and cash equivalents, including cash classified within assets held for sale 22.9 ( 220.8 )

net (increase) in cash classified within Affiliate assets held for sale ( 12.2 ) —

net (increase) in cash classified within Consolidated funds' assets held for sale ( 0.8 ) —

Net increase (decrease) in cash and cash equivalents 9.9 ( 220.8 )

26 unchanged sentences

and emerging markets equities, as well as fixed income.

(1) In July 2020, the Company completed the sale of Copper Rock Capital Partners LLC (“Copper Rock”) and announced the divestiture of Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”).

See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures and Affiliate assets and liabilities held for sale.

Prior to 2014, the Company was a wholly-owned subsidiary of Old Mutual plc (“OM plc”), an international long-term savings, protection and investment group, listed on the London Stock Exchange.

13 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 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.

For the three months ended September 30, 2020, the Company did no t repurchase any shares of common stock.

For the nine months ended September 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.)

On July 26, 2020, the Company and Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”) entered into a purchase and sale agreement with Perpetual U.S.

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.

The assets and liabilities of Barrow Hanley have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2020.

See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

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 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.

The three and nine months ended September 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.

11 unchanged sentences

Notes to Condensed Consolidated Financial Statements

3) Divestitures and Assets and Liabilities Held for Sale

Copper Rock Capital Partners LLC

On July 24, 2020 BrightSphere completed the sale of all of its equity interests in Copper Rock to Spouting Rock Asset Management LLC.

The Company recognized a pre-tax gain of $ 7.2 million during the three and nine months ended September 30, 2020, respectively.

Assets and Liabilities Held for Sale

Barrow Hanley

On July 26, 2020, the Company and Barrow Hanley entered into a purchase and sale agreement with 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.

As of September 30, 2020, the Company had assets of $ 151.0 million and liabilities of $ 80.4 million of Barrow Hanley classified as held for sale.

The transaction is expected to close in the fourth quarter of 2020.

Operational information for Barrow Hanley is included in the Company’s Liquid Alpha segment for the three and nine months ended September 30, 2020 and 2019, respectively.

Barrow Hanley’s income from continuing operations before taxes was $ 9.6 million and $ 20.4 million for the three months ended September 30, 2020 and 2019, respectively.

Barrow Hanley’s income from continuing operations before taxes was $ 33.1 million and $ 60.5 million for the nine months ended September 30, 2020 and 2019, respectively.

The Company also holds seed investments of $ 17.1 million in Barrow Hanley’s investment products as of September 30, 2020 which will be redeemed upon consummation of the sale.

The major classes of assets and liabilities comprising the Affiliate classified as held for sale are as follows at September 30, 2020 (in millions):

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

3) Divestitures and Assets Held for Sale (cont.)

September 30,

Cash and cash equivalents $ 12.2

Investment advisory fees receivable 21.5

Investments, at fair value 27.0

Goodwill 76.1

Right of use assets 12.4

Other Assets 1.8

Affiliate assets held for sale $ 151.0

Accounts payable and accrued expenses $ 3.0

Accrued incentive compensation 8.3

Other compensation liabilities 56.4

Operating lease liabilities 12.7

Affiliate liabilities held for sale $ 80.4

Consolidated Funds

The Barrow Hanley purchase and sale agreement provides for the redemption of all of the Company’s seed investments with Barrow Hanley.

The redemption will result in the deconsolidation of consolidated Funds considered to be VIEs.

The assets and liabilities of the consolidated Funds have been classified as held for sale as the criteria for held for sale accounting treatment was met and are presented separately in the Company’s Condensed Consolidated Balance Sheet.

As of September 30, 2020, the Company had assets of $ 114.3 million and liabilities of $ 0.1 million for consolidated Funds classified as held for sale.

The transaction is expected to close in the fourth quarter of 2020.

The consolidated Funds’ operational information is included in the Company’s Statement of Operations for the three and nine months ended September 30, 2020 and 2019.

The consolidated Funds’ income from continuing operations was $ 4.7 million and $ 1.0 million for the three months ended September 30, 2020 and 2019, respectively.

The consolidated Funds’ income from continuing operations was $( 2.0 ) million and $ 5.4 million for the nine months ended September 30, 2020 and 2019, respectively.

The major classes of assets and liabilities comprising the consolidated Funds classified as held for sale are as follows at September 30, 2020 (in millions):

September 30,

Cash and cash equivalents $ 0.8

Investments, at fair value 112.9

Other Assets 0.6

Consolidated Funds’ assets held for sale $ 114.3

Accounts payable and accrued expenses $ 0.1

Consolidated Funds’ liabilities held for sale $ 0.1

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

4) Investments

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

September 30,

2020 December 31,

Investments of consolidated Funds held at fair value

$ 110.0 $ 119.5

Other investments held at fair value 48.6 95.5

3 unchanged sentences

Total investments per Condensed Consolidated Balance Sheets 218.4 376.9

$ 357.5 $ 376.9

Investments related to long-term incentive compensation plans of an Affiliate held for sale held at fair value (Note 3) 27.0 —

Investments of consolidated Funds held for sale held at fair value (Note 3) 112.9 —

Total investments held for sale 139.9 —

Total investments and investments held for sale per Condensed Consolidated Balance Sheets $ 358.3 $ 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 and six months ended June 30 (in millions):

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Realized and unrealized gains (losses) on other investments held at fair value $ 2.9 $ 1.5 $ ( 5.4 ) $ 9.3

Investment return of equity-accounted investments in Affiliates

0.6 0.7 1.2 1.3

Earnings from equity-accounted investments in Affiliates 1.0 0.8 2.2 2.1

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

$ 3.9 $ 2.3 $ ( 3.2 ) $ 11.4

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Realized and unrealized gains (losses) on consolidated Funds held at fair value $ 2.9 $ ( 0.4 ) $ ( 7.6 ) $ 2.6

Investment return of equity-accounted investments

28.9 ( 4.6 ) 28.9 6.1

Earnings from equity-accounted investments ( 0.8 ) 5.1 28.1 11.2

Total net consolidated Funds’ investment gains per Condensed Consolidated Statements of Operations $ 2.1 $ 4.7 $ 20.5 $ 13.8

2 unchanged sentences

5) Fair Value Measurements

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):

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

Quoted prices

2 unchanged sentences

(Level III) Uncategorized Total value,

June 30, 2020

Assets of BSIG and consolidated Funds (1)

Common and preferred stock $ 7.9 $ — $ — $ — $ 7.9

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

September 30, 2020

Assets of BSIG, consolidated Funds and assets held for sale (1)

Investments in separate accounts (2)

5 unchanged sentences

BSIG total 82.6 13.0 2.7 16.4 114.7

Investments related to long-term incentive compensation plans (5)

27.0 — — — 27.0

Investments of Affiliate held for sale total (Note 3) 27.0 — — — 27.0

Common and preferred stock 5.9 — — — 5.9

Short-term investment funds 0.5 — — — 0.5

Bank loans — 106.5 — — 106.5

Investments of consolidated Funds held for sale total (Note 3) 6.4 106.5 — — 112.9

Total fair value assets $ 116.0 $ 119.5 $ 2.7 $ 16.4 $ 254.6

Liabilities of consolidated Funds (1)

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

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

Total fair value liabilities $ ( 1.1 ) $ ( 0.1 ) $ — $ — $ ( 1.2 )

BrightSphere Investment Group Inc.

41 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.

(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.

(2) Investments in separate accounts of $ 29.5 million at September 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).

(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.

(3) Investments related to long-term incentive compensation plans of $ 66.1 million and $ 88.8 million at September 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.

(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.

(4) The uncategorized amounts of $ 16.4 million and $ 48.2 million at September 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 $ 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 real estate investment Funds of $ 5.9 million and $ 6.4 million at September 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 September 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 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.

Investments in unconsolidated Funds categorized as Level III of $ 2.7 million and $ 3.0 million at September 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.

2 unchanged sentences

5) Fair Value Measurements (cont.)

(5) Affiliate investments held for sale is comprised of Investments related to long-term incentive compensation plans of $ 27.0 million at September 30, 2020.

These were investments in publicly registered daily redeemable funds, 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 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

Investments in unconsolidated Funds 2020 2019 2020 2019

1 unchanged sentence

At beginning of the period $ 3.0 $ 3.0 $ 3.0 $ 3.0

Additions (redemptions) ( 0.3 ) 0.1 ( 0.3 ) 0.1

Transfers in (out) of Level III

Total net fair value gains/losses recognized in net income

— ( 0.1 ) — ( 0.1 )

Total Level III financial assets

$ 2.7 $ 3.0 $ 2.7 $ 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.

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

BrightSphere Investment Group Inc.

3 unchanged sentences

These VIEs are primarily Funds managed by Affiliates and other partnership interests typically owned entirely by third party investors.

Certain Funds may be capitalized with seed capital investments from the Company and may be owned partially by Affiliate key employees and/or individuals that own minority interests in an Affiliate.

The Company’s determination of whether it is the primary beneficiary of a Fund that is a VIE is based in part on an

assessment of whether or not the Company and its related parties are exposed to absorb more than an insignificant

amount of the risks and rewards of the entity.

Typically, the Fund’s investors are entitled to substantially all of the

economics of these VIEs with the exception of the management fees and performance fees, if any, earned by the

Company or any investment the Company has made into the Funds.

The Company generally is not the primary

beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including

interests of related parties, is substantial.

Certain Funds may be capitalized with seed capital investments from the Company and may be owned partially by Affiliate key employees and/or individuals that own non-controlling interests in an Affiliate.

The Company’s determination of whether it is the primary beneficiary of a Fund that is a VIE is based in part on an assessment of whether or not the Company and its related parties are exposed to absorb more than an insignificant amount of the risks and rewards of the entity.

Typically, the Fund’s investors are entitled to substantially all of the economics of these VIEs with the exception of the management fees and performance fees, if any, earned by the Company or any investment the Company has made into the Funds.

The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest, including interests of related parties, is substantial.

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

September 30,

2020 December 31,

1 unchanged sentence

Other assets of consolidated Funds 103.0 85.7

Assets of consolidated Funds held for sale (Note 3) 114.3 —

Total Assets $ 217.3 $ 205.2

Liabilities of consolidated Funds $ — $ 6.2

Liabilities of consolidated Funds held for sale (Note 3) 0.1 —

Total Liabilities $ 0.1 $ 6.2

“Investments at fair value” consist of investments in bank loans, common and preferred stock, and other securities.

“Investments at fair value” consist of investments in bank loans, common and preferred stock, and other securities as of December 31, 2019.

These investments are included in the “assets of consolidated Funds held for sale” as of September 30, 2020.

To the extent the Company also has consolidated Funds that are not VIEs, the assets and liabilities of those Funds are not included in the table above.

9 unchanged sentences

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

September 30,

2020 December 31,

10 unchanged sentences

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

June 30, 2020 December 31, 2019

September 30, 2020 December 31, 2019

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

2 unchanged sentences

$ 80.0 $ 80.0 2 $ 140.0 $ 140.0 2

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

$ 275 million 4.80 % Senior Notes Due

July 27, 2026 (3)

272.7 294.4 2 272.4 287.2 2

3 unchanged sentences

Non-recourse borrowings:

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

Non-recourse seed capital facility (1)(4)

$ — $ — $ 35.0 $ 35.0 2

2 unchanged sentences

(1) Fair value approximates carrying value because the credit facilities have variable interest rates based on selected short term market rates.

(2) An amendment to the revolving credit facility was entered into on September 3, 2020 to reduce the revolving credit facility to $ 150 million upon the consummation of the sale of the Company’s equity interests in Barrow Hanley.

(3) The difference between the principal amounts and the carrying values of the senior notes in the table above reflects the unamortized debt issuance costs and discounts.

(4) Non-recourse seed capital facility set to expire on January 15, 2021 was paid down in the third quarter and terminated.

Revolving Credit Facility

On September 3, 2020, the Company, Royal Bank of Canada, BMO Harris Bank, N.A., Bank of China, New York Branch, Wells Fargo Bank, National Association, Barclays Bank PLC, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into an amendment (the “Amendment") to the Revolving Credit Agreement dated as of August 20, 2019 (the “Credit Agreement”).

The Amendment includes changes to the Credit Agreement to permit the sale of the Company's equity interests in Barrow Hanley (the “Barrow Hanley Sale”).

Under the Credit Agreement, the Barrow Hanley Sale required consent of the Lenders given that Barrow Hanley accounted for more than 10 % of the Company's consolidated Adjusted EBITDA.

The Amendment provides that, effective immediately upon the consummation of the Barrow Hanley Sale, the Lenders commitments under the Credit Agreement shall be $ 150 million.

BrightSphere Investment Group Inc.

2 unchanged sentences

The operating leases have remaining lease terms of 1 year to 13 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 and six months ended June 30, (in millions):

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

1 unchanged sentence

Variable lease cost 0.1 0.1 0.2 0.2

Sublease income ( 0.1 ) — ( 0.1 ) —

Total operating lease expense 4.0 3.5 12.0 10.5

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash flows from operating leases 3.6 3.7 11.1 11

ROU asset obtained in exchange for new operating lease liabilities

6.4 0.3 77.1 5.4

Right of use assets obtained in exchange for new operating lease liabilities 0.2 0.1 77.3 5.5

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 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.

For the nine months ended September 30, 2020 and 2019, the weighted average remaining lease term was 11.7 years and 4.5 years, respectively, and the weighted average discount rate was 3.47 % and 4.13 %, respectively.

In connection with the pending divestiture of Barrow Hanley, the Company reclassified $ 12.4 million of Right of use assets and $ 12.7 million of Operating lease liabilities as of September 30, 2020 on the Condensed Consolidated Balance Sheet to Affiliate assets and liabilities held for sale, respectively.

See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

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

1 unchanged sentence

Year Ending December 31,

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

2020 (excluding the nine months ended September 30, 2020)

Thereafter 87.8

5 unchanged sentences

9) Goodwill and Intangible Assets

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

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

Quant & Solutions Alternatives Liquid Alpha Total

5 unchanged sentences

Disposals — — — —

Decrease from reclassification to assets held

— — ( 76.1 ) ( 76.1 )

Goodwill 22.1 153.1 57.2 232.4

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

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

September 30, 2020 $ 20.3 $ 148.1 $ 13.7 $ 182.1

(1) In connection with the pending divestiture of Barrow Hanley, the Company assigned $ 76.1 million of goodwill to “Affiliate Assets held for sale” in the Condensed Consolidated Balance Sheet as of September 30, 2020.

See Note 3, Divestitures and Assets and Liabilities Held for Sale, in these Notes for additional information.

Quant & Solutions Alternatives Liquid Alpha Total

7 unchanged sentences

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

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

September 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.

Due to the decline in the Company’s assets under management for the three months ended March 31, 2020, management determined that an interim impairment assessment was necessary as of March 31, 2020.

The Company performed a quantitative impairment test for the Copper Rock Capital Partners LLC (“Copper Rock”) reporting unit which is included within the Liquid Alpha segment.

In the first quarter of 2020, the Company performed a quantitative impairment test for Copper Rock reporting unit which was included within the Liquid Alpha segment prior to its disposition.

The quantitative impairment test concluded that the fair value of the reporting unit did not exceed its carrying value.

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.

Cash flow projections are based on management’s estimates of Assets Under Management (“AUM”) growth rates, product mix and effective fee rates, taking into consideration industry and market conditions.

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

BrightSphere Investment Group Inc.

1 unchanged sentence

9) Goodwill and Intangible Assets (cont.)

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.

impairment charges were recognized for the three months ended September 30, 2020 and the Company recognized a goodwill impairment charge of $ 16.4 million for the nine months ended September 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.

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 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 six months ended June 30, 2020 and 2019 (in millions):

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

Book Value Accumulated

5 unchanged sentences

Disposals — — —

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

September 30, 2020 $ 108.3 $ ( 49.3 ) $ 59.0

Book Value Accumulated

5 unchanged sentences

Disposals — — —

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

September 30, 2019 $ 108.3 $ ( 42.5 ) $ 65.8

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

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.

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 June 30, 2020 and 2019.

As of September 30, 2020, these assets were being amortized over remaining useful lives of three to nine years .

The Company recorded amortization expense of $ 1.6 million and $ 1.6 million for the three months ended September 30, 2020 and 2019, respectively.

The Company recorded amortization expense of $ 5.1 million and $ 4.9 million for the nine months ended months ended September 30, 2020 and 2019, respectively.

BrightSphere Investment Group Inc.

1 unchanged sentence

9) Goodwill and Intangible Assets (cont.)

The 2019 annual impairment assessment of definite and indefinite-lived intangible assets determined that no impairment existed.

3 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.

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

2020 (excluding the nine months ended September 30, 2020)

Thereafter 31.7

3 unchanged sentences

Operational commitments

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

The Company had unfunded commitments to invest up to approximately $ 37 million in co-investments as of September 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 June 30, 2020 related to this guaranty.

There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of September 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 June 30, 2020, there were no material accruals for claims, legal proceedings or other contingencies.

As of September 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 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.

At September 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 September 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 June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

7 unchanged sentences

Restricted stock units 115,155 1,429 48,915 79,775

Employee stock options 735,023 — 245,008 —

Weighted-average shares of common stock outstanding—diluted

7 unchanged sentences

11) 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.

Employee options to purchase 8,970,000 shares were not included in the computation of diluted EPS for the three and nine months ended September 30, 2019 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 $ 1.3 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.

Revenue from expense reimbursement amounted to $ 1.1 million and $ 0.9 million for the three months ended September 30, 2020 and 2019, respectively.

Revenues from expense reimbursement amounted to $ 3.3 million and $ 3.2 million for the nine months ended September 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.

9 unchanged sentences

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.

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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

3 unchanged sentences

Alternatives 43.2 37.2 126.4 124.5

Liquid Alpha (1)

Global / non-U.S.

4 unchanged sentences

$ 178.2 $ 196.4 $ 527.4 $ 609.8

(1) In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley.

See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures.

The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020.

The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale.

BrightSphere Investment Group Inc.

1 unchanged sentence

13) Accumulated Other Comprehensive Income (Loss)

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):

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended September 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

Balance, as of June 30, 2020

$ 1.0 $ ( 19.2 ) $ ( 18.2 )

2 unchanged sentences

Tax impact — ( 0.2 ) ( 0.2 )

Other comprehensive income (loss) 0.3 0.6 0.9

Balance, as of June 30, 2020

Other comprehensive income 1.4 0.6 2.0

Balance, as of September 30, 2020

$ 2.4 $ ( 18.6 ) $ ( 16.2 )

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of March 31, 2019

Balance, as of June 30, 2019

$ 1.7 $ ( 21.5 ) $ ( 19.8 )

3 unchanged sentences

Other comprehensive income (loss) ( 0.8 ) 0.6 ( 0.2 )

Balance, as of June 30, 2019

Balance, as of September 30, 2019

$ 0.9 $ ( 20.9 ) $ ( 20.0 )

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):

For the three months ended September 30, 2020 and 2019, the Company reclassified $ 0.8 million and $ 0.7 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 nine months ended September 30, 2020 and 2019 were as follows (in millions):

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

4 unchanged sentences

Other comprehensive income (loss) ( 0.4 ) 1.7 1.3

Balance, as of June 30, 2020

Balance, as of September 30, 2020

$ 2.4 $ ( 18.6 ) $ ( 16.2 )

8 unchanged sentences

Other comprehensive income (loss) ( 0.9 ) 1.8 0.9

Balance, as of June 30, 2019

Balance, as of September 30, 2019

$ 0.9 $ ( 20.9 ) $ ( 20.0 )

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

For the nine months ended September 30, 2020 and 2019, the Company reclassified $ 2.3 million and $ 2.2 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

14) Derivatives and Hedging

6 unchanged sentences

Refer to Note 7, Borrowings and Debt, for additional information on the debt issuances.

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

As of September 30, 2020, the balance recorded in accumulated other comprehensive income (loss) was $( 18.6 ) million, net of tax.

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

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.

Amounts of $ 0.8 million and $ 0.7 million have been reclassified for each of the three months ended September 30, 2020 and 2019, respectively.

Amounts of $ 2.3 million and $ 2.2 million have been reclassified for the nine months ended September 30, 2020 and 2019, respectively.

During the next twelve months the Company expects to reclassify approximately $ 3.3 million to interest expense.

14 unchanged sentences

and emerging markets equities, as well as fixed income.

(1) In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley.

See Note 3, Divestitures and Assets and Liabilities Held for Sale, for further discussion of divestitures.

The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale.

The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020.

The Company has a corporate head office that is included in “Other”.

The corporate head office supports the segments by providing infrastructure and administrative support in the areas of accounting/finance, information technology, legal, compliance and human resources.

The corporate head office expenses are not allocated to the Company’s three business segments but the CODM does consider the cost structure of the corporate head office when evaluating the financial performance of the segments.

The corporate head office expenses are not allocated to the Company’s three business segments but the Chief Operating Decision Maker (“CODM”) does consider the cost structure of the corporate head office when evaluating the financial performance of the segments.

Performance Measure

11 unchanged sentences

GAAP for certain Fund expenses reimbursed to our Affiliates.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

15) Segments (cont.)

ENI operating expenses include compensation and benefits, general and administrative expense, and depreciation and amortization under U.S.

2 unchanged sentences

Additionally, variable compensation and Affiliate key employee distributions are segregated from ENI operating expenses.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

14) Segments (cont.)

ENI segment results are also adjusted to exclude the portion of consolidated Fund revenues, expenses and investment return recorded under U.S.

2 unchanged sentences

GAAP net income (loss):

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

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

Three Months Ended September 30, 2020

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

12 unchanged sentences

Net investment income — — — — 6.0 (e) 6.0

Gain on sale of Affiliate — — — — 7.2 (e) 7.2

Net income attributable to non-controlling interests in consolidated Funds

— — — — 3.2 (e) 3.2

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

Income tax expense — — — ( 11.8 ) ( 1.0 ) (f) ( 12.8 )

Economic net income

3 unchanged sentences

15) 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

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

Three Months Ended September 30, 2019

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

12 unchanged sentences

Net investment loss — — — — 7.0 (e) 7.0

Net loss attributable to non-controlling interests in consolidated Funds

Net income attributable to non-controlling interests in consolidated Funds

— — — — ( 7.6 ) (e) ( 7.6 )

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

Income tax (expense) benefit — — — ( 12.3 ) 44.3 (f) 32.0

Economic net income $ 32.0 $ 8.5 $ 25.0 $ ( 28.1 ) $ 38.0 $ 75.4

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

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

Nine Months Ended September 30, 2020

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

12 unchanged sentences

Net investment income — — — — 17.3 (e) 17.3

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

Gain on sale of Affiliate — — — — 7.2 (e) 7.2

Net income attributable to non-controlling interests in consolidated Funds

— — — — ( 21.3 ) (e) ( 21.3 )

Income tax expense — — — ( 31.4 ) ( 2.3 ) (f) ( 33.7 )

4 unchanged sentences

15) Segments (cont.)

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

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

Nine Months Ended September 30, 2019

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

12 unchanged sentences

Net investment income — — — — 25.2 (e) 25.2

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 )

Net income attributable to non-controlling interests in consolidated Funds

— — — — ( 9.6 ) (e) ( 9.6 )

Income tax (expense) benefit — — — ( 36.9 ) 33.2 (f) ( 3.7 )

Economic net income

25 unchanged sentences

15) Segments (cont.)

(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.

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

GAAP net income attributable to controlling interests.

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

(f) Adjusted to include the impact of deferred tax attributable to the 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 and six months ended June 30 (in millions):

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

5 unchanged sentences

Certain Affiliates have provided loans to Affiliate employees.

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.

At September 30, 2020 and December 31, 2019, the balance of the loans to Affiliate employees was $ 11.9 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.

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