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Item 2. Management’s Discussion and Analysis

2020-11-06 compared with 2020-08-10 · 336 added, 288 removed, 1036 unchanged (38% of the section changed)

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This section also provides a Summary Results of Operations and information regarding our Assets Under Management by Affiliate, strategy, client type and location, and net flows by segment, client type and client location.

GAAP Results of Operations for the Three and Six Months Ended June 30, 2020 and 2019 includes an explanation of changes in our U.S.

GAAP revenue, expense and other items for the three and six months ended June 30, 2020 and 2019, as well as key U.S.

GAAP Results of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 includes an explanation of changes in our U.S.

GAAP revenue, expense and other items for the three and nine months ended September 30, 2020 and 2019, as well as key U.S.

GAAP operating metrics.

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This section also provides a reconciliation between U.S.

GAAP net income attributable to controlling interests and ENI for the three and six months ended June 30, 2020 and 2019 as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses.

GAAP net income attributable to controlling interests and ENI for the three and nine months ended September 30, 2020 and 2019 as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses.

This section also provides key non-GAAP operating metrics and a calculation of tax on economic net income.

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and emerging markets equities, as well as fixed income.

Within our three segments, we have seven affiliate firms to whom we refer in this Quarterly Report as our Affiliates.

(1) In July 2020, we completed the sale of Copper Rock Capital Partners LLC (“Copper Rock”) and announced the divestiture of Barrow Hanley Mewhinney & Strauss, LLC (“Barrow Hanley”), which is expected to close in the fourth quarter of 2020, see "Recent Developments" herein.

Within our three segments, we have five (1) affiliate firms to whom we refer in this Quarterly Report as our Affiliates.

Through our Affiliates, we offer a diverse range of actively-managed investment strategies and products to institutional investors around the globe.

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We may also be required to consolidate certain of our Affiliates’ sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third party clients in those Funds.

(1) In July 2020, we completed the sale of Copper Rock and announced divestiture of Barrow Hanley, which is expected to close in the fourth quarter of 2020.

This number gives effect to these divestitures.

See "Recent Developments" herein.

Our Affiliates within each business segment and their principal strategies include:

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◦ Barrow, Hanley, Mewhinney & Strauss, LLC (“Barrow Hanley”) (2) —a widely recognized value-oriented investment manager of U.S., international and global equities, fixed income and a range of balanced investment management strategies.

◦ Copper Rock Capital Partners LLC (“Copper Rock”) (2) —a specialized growth equity investment manager of small-cap international, global and emerging markets equity strategies.

◦ Thompson, Siegel & Walmsley LLC (“TSW”) (1) —a value-oriented investment manager focused on small- and mid-cap U.S.

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(1) Certain smaller Acadian strategies are included in Alternatives and certain TSW strategies are included in Quant & Solutions where the classification is more appropriate.

(2) In July 2020, we announced the divestiture of Barrow Hanley and Copper Rock, see "Recent Developments" herein.

(2) In July 2020, we announced the divestiture of Barrow Hanley.

See "Recent Developments" herein.

We have presented operational information (including AUM and flow data) including Barrow Hanley for all periods.

GAAP, financial results continue to include Barrow Hanley until the transaction closes, which is expected to be in the fourth quarter of 2020.

(3) Accounted for under the equity method of accounting.

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Divestiture of Barrow Hanley and Copper Rock

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”) 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”), entered into an Equity Purchase Agreement (the “BHMS Purchase Agreement”) with Perpetual, pursuant to which Perpetual agreed to purchase all of 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 transaction is expected to close during fourth quarter of 2020.

On July 24, 2020, we sold all of our equity interests in Copper Rock, a former Affiliate, to Spouting Rock Asset Management LLC.

The transaction resulted in a $7.2 million gain which is reflected on our Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020.

On July 26, 2020, we entered into a purchase and sale agreement with Perpetual U.S.

Holdings Company Inc.

to sell all our 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 transaction is expected to close in the fourth quarter of 2020.

COVID-19 Impact

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Our Affiliates earn management fees based on assets under management.

Approximately 70% of our management fees for the three months ended June 30, 2020 are calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM or other measuring methods.

Approximately 70% of our management fees for the three months ended September 30, 2020 are calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM or other measuring methods.

Changes in the levels of our AUM are driven by our investment performance and net client cash flows.

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Revenue included within ENI differs from U.S.

GAAP revenue in that it excludes amounts from consolidated Funds which are not attributable to our stockholders, it excludes reimbursement of certain costs we paid on behalf of our customers and includes our share of earnings from equity-accounted Affiliates.

ENI expenses are calculated to reflect all usual expenses from ongoing continuing operations attributable to our stockholders.

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Summary Results of Operations

The following table summarizes our unaudited results of operations for the three and six months ended June 30, 2020 and 2019:

($ in millions, unless otherwise noted) Three Months Ended June 30, Six Months Ended June 30,

The following table summarizes our unaudited results of operations for the three and nine months ended September 30, 2020 and 2019:

($ in millions, unless otherwise noted) Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 vs.

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Net client cash flows (in billions) (1.5) (6.2) 4.7 (2.2) (7.6) 5.4

(1.7) (1.1) (0.6) (0.7) (1.4) 0.7

Annualized revenue impact of net flows (8)

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GAAP financial information and a further discussion of economic net income refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis.”

(3) Excludes restructuring costs at the Center and Affiliates of $3.0 million and $3.4 million, costs associated with the transfer of an insurance policy from our former Parent of $0.3 million and $0.6 million and costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments of $4.7 million and $10.7 million for the three and six ended June 30, 2020, respectively.

(3) Excludes restructuring costs at the Center and Affiliates of $1.4 million and $4.8 million, costs associated with the transfer of an insurance policy from our former Parent of $0.4 million and $1.0 million, costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments of $3.2 million and $13.9 million, and the gain on sale of Copper Rock of $7.2 million and $7.2 million for the three and nine ended September 30, 2020, respectively.

Excludes restructuring costs at the Center of $0.1 million and $4.6 million and costs associated with the redomicile to the U.S.

of $0.8 million and $1.1 million for the three and six months ended June 30, 2019, respectively.

of $0.9 million and $2.0 million for the three and nine months ended September 30, 2019, respectively.

(4) ENI revenue is the ENI measure which corresponds to U.S.

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GAAP net income from continuing operations attributable to controlling interests.

(8) Net flows and revenue impact of net flows for all periods above have been revised for the inclusion of reinvested income and distributions, and the exclusion of realizations.

(8) Annualized revenue impact of net flows represents annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts (inflows), less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts (outflows), plus revenue impact from reinvested income and distribution.

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Assets Under Management

On July 24, 2020, we completed the sale of all of our equity interests in Copper Rock, a former Affiliate, to Spouting Rock.

Unless specifically noted, flow information from Copper Rock is included up to June 30, 2020, but excluded thereafter, and AUM data at September 30, 2020 excludes the Copper Rock AUM.

On July 26, 2020, we entered into a purchase and sale agreement to sell our interests in Barrow Hanley to Perpetual 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 transaction is expected to close in the fourth quarter of 2020.

Barrow Hanley will continue to contribute to our financial results until the transaction closes.

Unless specifically noted, flow information includes flows from Barrow Hanley, and AUM data at September 30, 2020 includes the Barrow Hanley AUM.

The following table presents our assets under management by Affiliate as of each of the dates indicated:

($ in billions) June 30, 2020 December 31, 2019

($ in billions) September 30, 2020 December 31, 2019

Acadian Asset Management $ 95.9 $ 102.2

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Total assets under management $ 184.8 $ 204.4

(1) In July 2020, we announced the divestiture of Barrow Hanley and Copper Rock, see "Recent Developments" herein.

(1) On July 24, 2020, we completed the sale of all of our equity interests in Copper Rock to Spouting Rock.

Our strategies include:

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The following table presents our assets under management by strategy as of each of the dates indicated:

($ in billions) June 30, 2020 December 31, 2019

($ in billions) September 30, 2020 December 31, 2019

equity, small/smid cap value $ 5.2 $ 6.0

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The following table shows assets under management by client type as of each of the dates indicated:

($ in billions) June 30, 2020 December 31, 2019

($ in billions) September 30, 2020 December 31, 2019

AUM % of total AUM % of total

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The following table shows assets under management by client location as of each of the dates indicated:

($ in billions) June 30, 2020 December 31, 2019

($ in billions) September 30, 2020 December 31, 2019

AUM % of total AUM % of total

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AUM flows and the annualized revenue impact of net flows

Net client cash flows and revenue impact of net client cash flows for all periods have been revised for the inclusion of reinvested income and distributions, and the exclusion of realizations.

Net client cash flows and revenue impact of net client cash flows for all periods include reinvested income and distributions, and exclude realizations.

Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash.

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The following table summarizes our asset flows and market appreciation (depreciation) by segment for each of the periods indicated:

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

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

($ in billions, unless otherwise noted) 2020 2019 2020 2019

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Net flows (2.3) 0.1 (0.5) 3.6

0.3 1.0 1.8 3.5

Market appreciation (depreciation) 5.7 (2.2) (6.0) 6.7

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Net flows 0.7 0.5 1.3 0.6

— (0.1) 0.6 0.1

Market appreciation (depreciation) — (0.2) — (0.1)

Market depreciation (0.2) — (0.2) (0.1)

Realizations and other (2)

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Beginning balance $ 64.9 $ 103.9 $ 78.7 $ 97.3

Sale of Affiliate (1.7) — (1.7) —

Gross inflows 2.8 1.0 8.0 4.7

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Net flows 0.1 (6.8) (3.0) (11.8)

(2.0) (2.0) (3.1) (5.0)

Market appreciation (depreciation) 2.2 1.0 (8.5) 12.6

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Beginning balance $ 181.0 $ 225.0 $ 204.4 $ 206.3

Sale of Affiliate (1.7) — (1.7) —

Gross inflows 6.4 4.6 19.4 16.6

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Net flows (1.5) (6.2) (2.2) (7.6)

(1.7) (1.1) (0.7) (1.4)

Market appreciation (depreciation) 7.7 (1.2) (14.7) 19.2

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Annualized revenue impact of net flows ($ in millions) $ (0.5) $ (16.2) $ (14.1) $ (24.4)

$ (13.4) $ (7.8) $ (13.6) $ (8.2)

(1) Net flows and revenue impact of net flows for all periods above have been revised for the inclusion of reinvested income and distributions, and the exclusion of realizations.

(1) Average AUM equals average AUM of consolidated Affiliates.

(2) Realizations include distributions related to the sale of alternative assets, and represent a return on investments.

Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing base on committed AUM to net asset value.

(4) In July 2020, we announced divestiture of Barrow Hanley and Copper Rock.

See “Recent Developments” herein.

Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing based on committed AUM to net asset value.

(3) The following table summarizes our asset flows and market appreciation (depreciation) for the Liquid Alpha segment excluding Barrow Hanley and Copper Rock for the periods indicated:

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

($ in billions) 2020 2019 2020 2019

Beginning balance $ 19.1 $ 22.8 $ 23.1 $ 21.3

Net flows 1.1 (0.6) 0.5 (1.3)

Market appreciation (depreciation) 0.7 — (2.7) 2.2

Ending balance $ 20.9 $ 22.2 $ 20.9 $ 22.2

Average AUM of consolidated Affiliates $ 18.0 $ 20.1 $ 17.9 $ 20.6

(4) The following table summarizes our total asset flows and market appreciation (depreciation) excluding Barrow Hanley and Copper Rock:

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

($ in billions) 2020 2019 2020 2019

Beginning balance $ 135.2 $ 143.9 $ 148.8 $ 130.3

Net flows (0.5) — 1.4 2.9

Market appreciation (depreciation) 6.2 (2.2) (9.0) 8.8

Realizations and other (0.7) (0.8) (1.0) (1.1)

Ending balance $ 140.2 $ 140.9 $ 140.2 $ 140.9

Average AUM of consolidated Affiliates $ 137.6 $ 139.3 $ 135.1 $ 138.3

We also analyze our asset flows by client type and client location.

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The following table summarizes our asset flows by client type for each of the periods indicated:

($ in billions) Three Months Ended June 30, Six Months Ended June 30,

($ in billions) Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Beginning balance $ 34.5 $ 64.3 $ 40.5 $ 61.3

Sale of Affiliate (0.2) — (0.2) —

Gross inflows 1.5 0.9 5.3 3.4

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Net flows 0.3 (4.4) 0.1 (8.8)

(0.1) (2.6) (0.2) (4.4)

Market appreciation (depreciation) 1.7 0.3 (4.1) 7.7

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Beginning balance $ 136.3 $ 149.3 $ 152.0 $ 135.1

Sale of Affiliate (1.4) — (1.4) —

Gross inflows 4.3 3.3 12.1 11.5

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Net flows (2.3) (1.9) (2.8) 0.6

(1.5) 1.6 (0.5) 2.5

Market appreciation (depreciation) 5.7 (1.4) (9.2) 10.6

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Beginning balance $ 10.2 $ 11.4 $ 11.9 $ 9.9

Sale of Affiliate (0.1) — (0.1) —

Gross inflows 0.6 0.4 2.0 1.7

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Reinvested income and distributions (1)

Net flows (2)

0.1 0.1 0.2 0.2

Net flows 0.5 0.1 0.5 0.6

Market appreciation (depreciation) 0.3 (0.1) (1.4) 0.9

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Beginning balance $ 181.0 $ 225.0 $ 204.4 $ 206.3

Sale of Affiliate (1.7) — (1.7) —

Gross inflows 6.4 4.6 19.4 16.6

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Net flows (1.5) (6.2) (2.2) (7.6)

(1.7) (1.1) (0.7) (1.4)

Market appreciation (depreciation) 7.7 (1.2) (14.7) 19.2

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(1) Reinvested income and distributions is allocated based on consolidated total distribution rate multiplied by the beginning of period AUM of each client type.

(2) Net flows for all periods above have been revised for the inclusion of reinvested income and distributions, and the exclusion of realizations.

(2) Realizations include distributions related to the sale of alternative assets, and represent a return on investments.

Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing base on committed AUM to net asset value.

Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing based on committed AUM to net asset value.

It is a strategic objective to increase our percentage of assets under management sourced from non-U.S.

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The following table summarizes asset flows by client location for each of the periods indicated:

($ in billions) Three Months Ended June 30, Six Months Ended June 30,

($ in billions) Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Beginning balance $ 132.1 $ 169.9 $ 148.4 $ 156.8

Sale of Affiliate (0.5) — (0.5) —

Gross inflows 4.5 2.9 14.1 10.5

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Net flows 0.1 (4.9) 0.2 (7.2)

(1.2) (1.3) 0.1 (2.3)

Market appreciation (depreciation) 5.8 (0.6) (10.4) 15.0

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Beginning balance $ 48.9 $ 55.1 $ 56.0 $ 49.5

Sale of Affiliate (1.2) — (1.2) —

Gross inflows 1.9 1.7 5.3 6.1

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Net flows (1.6) (1.3) (2.4) (0.4)

(0.5) 0.2 (0.8) 0.9

Market appreciation (depreciation) 1.9 (0.6) (4.3) 4.2

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Beginning balance $ 181.0 $ 225.0 $ 204.4 $ 206.3

Sale of Affiliate (1.7) — (1.7) —

Gross inflows 6.4 4.6 19.4 16.6

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Net flows (1.5) (6.2) (2.2) (7.6)

(1.7) (1.1) (0.7) (1.4)

Market appreciation (depreciation) 7.7 (1.2) (14.7) 19.2

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(1) Reinvested income and distributions is allocated based on consolidated distribution total rate multiplied by the beginning of period AUM of each client location.

(2) Net flows for all periods above have been revised for the inclusion of reinvested income and distributions, and the exclusion of realizations.

(2) Realizations include distributions related to the sale of alternative assets, and represent a return on investments.

Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing base on committed AUM to net asset value.

At June 30, 2020, our total assets under management were $181.0 billion, an increase of $19.2 billion, or 11.9%, compared to $161.8 billion at March 31, 2020 and a decrease of $(44.0) billion, or (19.6)%, compared to $225.0 billion at June 30, 2019.

The change in assets under management during the three months ended June 30, 2020 reflects net market appreciation of $21.1 billion from the second quarter market recovery, partially offset by net flows of $(1.7) billion.

The change in assets under management during the six months ended June 30, 2020 reflects net market depreciation of $(22.4) billion, driven by the COVID-19 pandemic that caused significant market disruption in the first quarter of 2020, realizations and other of $(0.3) billion, and net flows of $(0.7) billion including reinvested income and distributions of $2.5 billion.

For the three months ended June 30, 2020, our net flows were $(1.7) billion compared to $1.0 billion for the three months ended March 31, 2020 and $(1.1) billion for the three months ended June 30, 2019.

The change in net flows during the three months ended June 30, 2020 compared to the three months ended March 31, 2020 included $(2.1) billion related to Barrow Hanley and Copper Rock.

Reinvested income and distributions of $1.2 billion, $1.3 billion and $1.6 billion are reflected in the net flows for the three months ended June 30, 2020, March 31, 2020 and June 30, 2019, respectively.

For the three months ended June 30, 2020, the annualized revenue impact of the net flows was $(13.4) million.

This is compared to the annualized revenue impact of net flows of $(0.2) million for the three months ended March 31, 2020 and $(7.8) million for the three months ended June 30, 2019.

Other activity primarily relates to the decline in billable AUM as a legacy alternative fund transitioned from billing based on committed AUM to net asset value.

At September 30, 2020, our total assets under management were $184.8 billion, an increase of $3.8 billion, or 2.1%, compared to $181.0 billion at June 30, 2020 and a decrease of $(32.0) billion, or (14.8)%, compared to $216.8 billion at September 30, 2019.

The change in assets under management during the three months ended September 30, 2020 reflects net market appreciation of $7.7 billion from continued market recovery, partially offset by net flows of $(1.5) billion and the sale of Copper Rock of $(1.7) billion.

The change in assets under management during the nine months ended September 30, 2020 reflects net market depreciation of $(14.7) billion, driven by the COVID-19 pandemic that caused significant market disruption in the first quarter of 2020, realizations and other of $(1.0) billion, net flows of $(2.2) billion including reinvested income and distributions of $3.5 billion, and the sale of Copper Rock of $(1.7) billion.

For the three months ended September 30, 2020, our net flows were $(1.5) billion compared to $(1.7) billion for the three months ended June 30, 2020 and $(6.2) billion for the three months ended September 30, 2019.

Net flows for the three months ended September 30, 2020 inc luded $(1.0) billion related to Barrow Hanley and Copper Rock.

Reinvested income and distributions of $1.0 billion, $1.2 billion and $1.3 billion are reflected in the net flows for the three months ended September 30, 2020, June 30, 2020 and September 30, 2019, respectively.

For the three months ended September 30, 2020, the annualized revenue impact of the net flows was $(0.5) million.

This is compared to the annualized revenue impact of net flows of $(13.4) million for the three months ended June 30, 2020 and $(16.2) million for the three months ended September 30, 2019.

Gross inflows of $6.4 billion during the three-month period yielded approximately 42 bps, and gross outflows in the same period of $(8.9) billion yielded approximately 34 bps.

For the six months ended June 30, 2020, our net flows were $(0.7) billion compared to $(1.4) billion for the six months ended June 30, 2019.

The improvement in net flows during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was mainly impacted by higher gross sales.

The change in net flows during the six months ended June 30, 2020 compared to the six months ended June 30, 2019 included $(2.6) billion related to Barrow Hanley and Copper Rock.

Reinvested income and distributions of $2.5 billion, and $3.0 billion are reflected in the net flows for the six months ended June 30, 2020 and June 30, 2019, respectively.

For the six months ended June 30, 2020, the annualized revenue impact of the net flows was $(13.6) million compared to $(8.2) million for the six months ended June 30, 2019 due to average basis points from inflows which included managed volatility strategies that were lower than average basis points from outflows.

Gross inflows of $13.0 billion in the six months ended June 30, 2020 yielded approximately 35 bps compared to $12.0 billion yielding approximately 35 bps in the year-ago period.

Gross outflows of $(16.2) billion yielded approximately 42 bps in the six months ended June 30, 2020 compared to $(16.4) billion yielding approximately 37 bps in the year-ago period.

GAAP Results of Operations for the Three and Six Months Ended June 30, 2020 and 2019

GAAP results of operations were as follows for the three and six months ended June 30, 2020 and 2019:

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

For the nine months ended September 30, 2020, our net flows were $(2.2) billion compared to $(7.6) billion for the nine months ended September 30, 2019.

The improvement in net flows during the nine months ended September 30, 2020 compared to the nine months ended September 30, 2019 was primarily due to improvement of the Liquid Alpha segment.

Net flows during the nine months ended September 30, 2020 included $(3.6) billion related to Barrow Hanley and Copper Rock.

Reinvested income and distributions of $3.5 billion, and $4.3 billion are reflected in the net flows for the nine months ended September 30, 2020 and September 30, 2019, respectively.

For the nine months ended September 30, 2020, the annualized revenue impact of the net flows was $(14.1) million compared to $(24.4) million for the nine months ended September 30, 2019 due to lower net outflows in 2020.

Gross inflows of $19.4 billion in the nine months ended September 30, 2020 yielded approximately 37 bps compared to $16.6 billion yielding approximately 35 bps in the year-ago period.

Gross outflows of $(25.1) billion yielded approximately 39 bps in the nine months ended September 30, 2020 compared to $(28.5) billion yielding approximately 34 bps in the year-ago period.

GAAP Results of Operations for the Three and Nine Months Ended September 30, 2020 and 2019

GAAP results of operations were as follows for the three and nine months ended September 30, 2020 and 2019:

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

($ in millions, unless otherwise noted) 2020 2019 Increase

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Interest expense (6.9) (8.3) 1.4 (22.1) (24.1) 2.0

Net consolidated Funds’ investment gains (losses) 35.6 (4.5) 40.1 18.4 9.1 9.3

Gain on sale of Affiliate 7.2 — 7.2 7.2 — 7.2

Net consolidated Funds’ investment gains 2.1 4.7 (2.6) 20.5 13.8 6.7

Income from continuing operations before taxes

46.8 51.0 (4.2) 143.7 169.4 (25.7)

Income tax expense 7.3 14.1 (6.8) 20.9 35.7 (14.8)

Income tax expense (benefit) 12.8 (32.0) 44.8 33.7 3.7 30.0

Income from continuing operations 34.0 83.0 (49.0) 110.0 165.7 (55.7)

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34.0 83.0 (49.0) 110.0 165.7 (55.7)

Net income (loss) attributable to non-controlling interests in consolidated Funds 35.0 (6.4) 41.4 24.5 2.0 22.5

Net income attributable to non-controlling interests in consolidated Funds (3.2) 7.6 (10.8) 21.3 9.6 11.7

Net income attributable to controlling interests

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GAAP operating margin (1)

15.0 % 22.5 % 28.1 % 27.7 % 41 bps

22.2 % 26.2 % 26.1 % 27.2 %

GAAP operating margin equals operating income from continuing operations divided by total revenue.

1 unchanged sentence

($ in millions) Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

GAAP Statement of Operations 2020 2019 2020 2019

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Our management fees are a function of the fee rates our Affiliates charge to their clients, which are typically expressed in basis points, and the levels of our assets under management.

Excluding assets managed by our equity-accounted Affiliate, average basis points earned on average assets under management were 39.8 bps and 38.6 bps for the three and six months ended June 30, 2020, respectively, and 37.5 bps and 38.3 bps for the three and six months ended June 30, 2019, respectively.

Excluding assets managed by our equity-accounted Affiliate, average basis points earned on average assets under management were 38.8 bps and 38.6 bps for the three and nine months ended September 30, 2020, respectively, and 35.9 bps and 37.6 bps for the three and nine months ended September 30, 2019, respectively.

The most significant driver of increases or decreases in this average fee rate is changes in the mix of our assets under management caused by net inflows or outflows in certain segments, net catch-up fees, or disproportionate market movements.

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($ in millions,

except AUM data in billions) Three Months Ended June 30, Six Months Ended June 30,

except AUM data in billions) Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

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GAAP management fee revenue & weighted average fee rate on average AUM of consolidated Affiliates (1)

Average AUM excluding equity-accounted Affiliates

$ 178.2 38.8 $ 196.4 35.9 $ 527.4 38.6 $ 609.8 37.6

Average AUM excluding equity-accounted Affiliates $ 182.6 $ 216.8 $ 182.5 $ 216.8

Average AUM including equity-accounted Affiliates & weighted average fee rate $ 184.8 39.0 $ 219.0 36.2 $ 184.6 38.8 $ 218.9 37.8

$ 174.4 40 $ 222.1 37.7 $ 184.0 38.8 $ 219.7 38.5

(1) Amounts shown are equivalent to ENI management fee revenue.

(See “ENI Revenues”)

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Management fees decreased $(35.2) million, or (17.1)%, from $205.9 million for the three months ended June 30, 2019 to $170.7 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Management fees decreased $(18.2) million, or (9.3)%, from $196.4 million for the three months ended September 30, 2019 to $178.2 million for the three months ended September 30, 2020.

The decrease was primarily due to lower levels of average assets under management, which is attributable to outflows in the last twelve months and market decline in the first quarter of 2020.

Average assets under management excluding our equity-accounted Affiliate decreased (21.6)%, from $219.9 billion for the three months ended June 30, 2019 to $172.5 billion for the three months ended June 30, 2020, mainly due to the equity market decline during the first quarter of 2020 driven by the COVID-19 pandemic and the impact of the $(22.8) billion reallocation of several Vanguard subadvisory strategies in the fourth quarter of 2019.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Management fees decreased $(64.2) million, or (15.5)%, from $413.4 million for the six months ended June 30, 2019 to $349.2 million for the six months ended June 30, 2020.

Average assets under management excluding our equity-accounted Affiliate decreased (15.8)%, from $216.8 billion for the three months ended September 30, 2019 to $182.6 billion for the three months ended September 30, 2020, mainly due to the equity market decline during the first quarter of 2020 driven by the COVID-19 pandemic and the impact of the $(22.8) billion reallocation of several Vanguard subadvisory strategies in the fourth quarter of 2019.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Management fees decreased $(82.4) million, or (13.5)%, from $609.8 million for the nine months ended September 30, 2019 to $527.4 million for the nine months ended September 30, 2020.

The decrease was primarily attributable to a decrease in average assets under management.

Average assets under management excluding equity-accounted Affiliate decreased (16.4)%, from $217.6 billion for the six months ended June 30, 2019 to $182.0 billion for the six months ended June 30, 2020, mainly due to the equity market decline during the six months ended June 30, 2020 driven by the COVID-19 pandemic and the impact of the $(22.8) billion reallocation of several Vanguard subadvisory strategies in the fourth quarter of 2019.

Average assets under management excluding equity-accounted Affiliate decreased (15.8)%, from $216.8 billion for the nine months ended September 30, 2019 to $182.5 billion for the nine months ended September 30, 2020, mainly due to the equity market decline during the nine months ended September 30, 2020 driven by the COVID-19 pandemic and the impact of the $(22.8) billion reallocation of several Vanguard subadvisory strategies in the fourth quarter of 2019.

Performance Fees

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Performance fees are typically shared with our Affiliate key employees through various contractual compensation and profit-sharing arrangements.

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Performance fees improved $2.5 million, from $(2.2) million for the three months ended June 30, 2019 to $0.3 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Performance fees improved $3.1 million, from $(1.9) million for the three months ended September 30, 2019 to $1.2 million for the three months ended September 30, 2020.

A performance fee penalty in 2019 was attributable to sub-advisory assets no longer with the Affiliates.

Performance fees can be variable and are contractually triggered based on investment performance results over agreed upon time periods.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Performance fees improved $6.3 million, from $(5.0) million for the six months ended June 30, 2019 to $1.3 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Performance fees improved $9.4 million, from $(6.9) million for the nine months ended September 30, 2019 to $2.5 million for the nine months ended September 30, 2020.

A performance fee penalty in 2019 was attributable to sub-advisory assets no longer with the Affiliates.

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With respect to liquidations likely to occur in the near term, we do not expect to receive any net performance fees that would be material to our operating results.

These projections are based on market conditions and investment performance as of June 30, 2020.

These projections are based on market conditions and investment performance as of September 30, 2020.

Other Revenue

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Other revenue increased $0.5 million, from $1.5 million for the three months ended June 30, 2019 to $2.0 million for the three months ended June 30, 2020.

The increase was primarily attributable to an increase in consulting performed by an Affiliate for three months ended June 30, 2020.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Other revenue increased $0.7 million, from $2.9 million for the six months ended June 30, 2019 to $3.6 million for the six months ended June 30, 2020.

The increase was primarily attributable to an increase in consulting performed by an Affiliate for the six months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Other revenue increased $0.2 million, from $1.4 million for the three months ended September 30, 2019 to $1.6 million for the three months ended September 30, 2020.

The increase was primarily attributable to an increase in consulting performed by an Affiliate for three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Other revenue increased $0.9 million, from $4.3 million for the nine months ended September 30, 2019 to $5.2 million for the nine months ended September 30, 2020.

The increase was primarily attributable to an increase in consulting performed by an Affiliate for the nine months ended September 30, 2020.

GAAP Expenses

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The following table presents the components of U.S.

GAAP compensation expense for the three and six months ended June 30, 2020 and 2019:

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

GAAP compensation expense for the three and nine months ended September 30, 2020 and 2019:

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

($ in millions) 2020 2019 2020 2019

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(1) Fixed compensation and benefits include base salaries, payroll taxes and the cost of benefit programs provided.

For the three and six months ended June 30, 2020, $42.8 million and $89.4 million, respectively, of fixed compensation and benefits (of the $43.9 million and $91.5 million above) are included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed.

For the three and six months ended June 30, 2019, $47.3 million and $97.0 million, respectively, of fixed compensation and benefits (of the $48.4 million and $99.2 million above) are included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed.

For the three and nine months ended September 30, 2020, $42.8 million and $132.2 million, respectively, of fixed compensation and benefits (of the $44.0 million and $135.5 million above) are included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed.

For the three and nine months ended September 30, 2019, $46.7 million and $143.7 million, respectively, of fixed compensation and benefits (of the $47.7 million and $146.9 million above) are included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed.

(2) Sales-based compensation is paid to our and our Affiliates’ sales and distribution teams and represents compensation earned by our sales professionals, paid over a multi-year period, related to revenue earned on new sales.

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The variable compensation ratio at each Affiliate, calculated as variable compensation divided by ENI earnings before variable compensation, will typically be between 25% and 35%.

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

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

($ in millions) 2020 2019 2020 2019

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$ 44.5 $ 44.1 $ 137.7 $ 145.8

(a) For the three and six months ended June 30, 2020, $39.4 million and $79.1 million, respectively, of variable compensation expense (of the $47.1 million and $93.2 million above) are included within economic net income, which excludes $3.0 million and $3.4 million of variable compensation associated with restructuring at an Affiliate and $4.7 million and $10.7 million of a one-time compensation arrangement entered into that includes advances against future compensation payments.

For the three and six months ended June 30, 2019, $48.4 million and $97.1 million, respectively, of variable compensation expense (of the $49.0 million and $101.7 million above) are included within economic net income, which excludes $0.5 million and $4.5 million, respectively, of variable compensation associated with restructuring at the Center.

(a) For the three and nine months ended September 30, 2020, $41.2 million and $120.3 million, respectively, of variable compensation expense (of the $44.5 million and $137.7 million above) are included within economic net income, which excludes $0.1 million and $3.5 million of variable compensation associated with restructuring at the Center and Affiliates and $3.2 million and $13.9 million of a one-time compensation arrangement entered into that includes advances against future compensation payments.

For the three and nine months ended September 30, 2019, $44.1 million and $141.2 million, respectively, of variable compensation expense (of the $44.1 million and $145.8 million above) are included within economic net income, which excludes $0.1 million and $4.6 million, respectively, of variable compensation associated with restructuring at the Center.

(4) Affiliate key employee distributions represent the share of Affiliate profits after variable compensation that is attributable to Affiliate key employee equity and profit interests holders, according to their ownership interests.

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Fluctuations in compensation and benefits expense for the periods presented are discussed below.

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Compensation and benefits expense decreased $(6.8) million, or (5.5)%, from $123.7 million for the three months ended June 30, 2019 to $116.9 million for the three months ended June 30, 2020.

Fixed compensation and benefits decreased $(4.5) million, or (9.3)%, from $48.4 million for the three months ended June 30, 2019 to $43.9 million for the three months ended June 30, 2020, primarily reflecting cost savings from the restructuring at the Center and the Affiliates.

Variable compensation decreased $(1.9) million, or (3.9)%, from $49.0 million for the three months ended June 30, 2019 to $47.1 million for the three months ended June 30, 2020.

The decrease was attributable to lower pre-variable compensation earnings, which in turn was primarily attributable to the decrease in management fee revenue, as well as a lower cost structure at the Center.

Sales-based compensation decreased $(1.0) million, or (32.3)%, from $3.1 million for the three months ended June 30, 2019 to $2.1 million for the three months ended June 30, 2020, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods.

Affiliate key employee distributions decreased $(2.8) million, or (20.3)%, from $13.8 million for the three months ended June 30, 2019 to $11.0 million for the three months ended June 30, 2020 as a result of lower underlying operating earnings at the consolidated Affiliates.

Revaluations of Affiliate equity increased by $3.8 million reflecting revaluations of key employee ownership interests at our consolidated Affiliates as the value of Affiliate equity increased $7.1 million for the three months ended June 30, 2019 and increased $10.9 million for the three months ended June 30, 2020.

Amortization of pre-acquisition equity decreased by $(0.4) million from $2.3 million for the three months ended June 30, 2019 to $1.9 million for the three months ended June 30, 2020 as a result of the vesting of the employee equity.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Compensation and benefits expense decreased $(50.5) million, or (22.5)%, from $224.8 million for the six months ended June 30, 2019 to $174.3 million for the six months ended June 30, 2020.

Fixed compensation and benefits decreased $(7.7) million, or (7.8)%, from $99.2 million for the six months ended June 30, 2019 to $91.5 million for the six months ended June 30, 2020, primarily reflecting cost savings from the restructuring at the Center and Affiliates.

Variable compensation decreased $(8.5) million, or (8.4)%, from $101.7 million for the six months ended June 30, 2019 to $93.2 million for the six months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Compensation and benefits expense increased $1.7 million, or 1.6%, from $108.0 million for the three months ended September 30, 2019 to $109.7 million for the three months ended September 30, 2020.

Fixed compensation and benefits decreased $(3.7) million, or (7.8)%, from $47.7 million for the three months ended September 30, 2019 to $44.0 million for the three months ended September 30, 2020, primarily reflecting cost savings from the restructuring at the Center and the Affiliates.

Variable compensation increased $0.4 million, or 0.9%, from $44.1 million for the three months ended September 30, 2019 to $44.5 million for the three months ended September 30, 2020.

The increase was attributable to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, offset by lower pre-variable compensation earnings during the current period.

Sales-based compensation decreased $(0.7) million, or (25.9)%, from $2.7 million for the three months ended September 30, 2019 to $2.0 million for the three months ended September 30, 2020, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods.

Affiliate key employee distributions decreased $(1.6) million, or (12.7)%, from $12.6 million for the three months ended September 30, 2019 to $11.0 million for the three months ended September 30, 2020 as a result of lower underlying operating earnings at the consolidated Affiliates.

Revaluations of Affiliate equity increased by $21.3 million reflecting revaluations of key employee ownership interests at our consolidated Affiliates as the value of Affiliate equity decreased $(14.7) million for the three months ended September 30, 2019 and increased $6.6 million for the three months ended September 30, 2020.

Amortization of pre-acquisition equity decreased by $(14.0) million from $15.6 million for the three months ended September 30, 2019 to $1.6 million for the three months ended September 30, 2020 as a result of vesting of the employee equity in the prior year period.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Compensation and benefits expense decreased $(48.8) million, or (14.7)%, from $332.8 million for the nine months ended September 30, 2019 to $284.0 million for the nine months ended September 30, 2020.

Fixed compensation and benefits decreased $(11.4) million, or (7.8)%, from $146.9 million for the nine months ended September 30, 2019 to $135.5 million for the nine months ended September 30, 2020, primarily reflecting cost savings from the restructuring at the Center and Affiliates.

Variable compensation decreased $(8.1) million, or (5.6)%, from $145.8 million for the nine months ended September 30, 2019 to $137.7 million for the nine months ended September 30, 2020.

Sales-based compensation decreased $(1.6) million, or (27.6)%, from $5.8 million for the six months ended June 30, 2019 to $4.2 million for the six months ended June 30, 2020, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods.

Affiliate key employee distributions decreased $(6.4) million, or (23.5)%, from $27.2 million for the six months ended June 30, 2019 to $20.8 million for the six months ended June 30, 2020, primarily as a result of lower earnings before Affiliate key employee distributions at the consolidated Affiliates.

Revaluations of Affiliate equity decreased by $(25.4) million, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(13.0) million for the six months ended June 30, 2019 and decreased $(38.4) million for the six months ended June 30, 2020.

Amortization of pre-acquisition equity decreased $(0.9) million, or (23.1)% from $3.9 million for the six months ended June 30, 2019 to $3.0 million for the six months ended June 30, 2020, as a result of the vesting of the employee equity.

Sales-based compensation decreased $(2.3) million, or (27.1)%, from $8.5 million for the nine months ended September 30, 2019 to $6.2 million for the nine months ended September 30, 2020, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows which trigger sales-based compensation in both current and prior periods.

Affiliate key employee distributions decreased $(8.0) million, or (20.1)%, from $39.8 million for the nine months ended September 30, 2019 to $31.8 million for the nine months ended September 30, 2020, primarily as a result of lower earnings before Affiliate key employee distributions at the consolidated Affiliates.

Revaluations of Affiliate equity decreased by $(4.1) million, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(27.7) million for the nine months ended September 30, 2019 and decreased $(31.8) million for the nine months ended September 30, 2020.

Amortization of pre-acquisition equity decreased $(14.9) million, or (76.4)% from $19.5 million for the nine months ended September 30, 2019 to $4.6 million for the nine months ended September 30, 2020, as a result of vesting of the employee equity in the prior year period.

General and Administrative Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

General and administrative expense decreased $(6.6) million, or (21.2)%, from $31.1 million for the three months ended June 30, 2019 to $24.5 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

General and administrative expense decreased $(6.3) million, or (19.9)%, from $31.7 million for the three months ended September 30, 2019 to $25.4 million for the three months ended September 30, 2020.

The decrease was primarily due to cost saving initiatives at the Center and Affiliates.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

General and administrative expense decreased $(11.4) million, or (17.9)%, from $63.6 million for the six months ended June 30, 2019 to $52.2 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

General and administrative expense decreased $(17.7) million, or (18.6)%, from $95.3 million for the nine months ended September 30, 2019 to $77.6 million for the nine months ended September 30, 2020.

The decrease was primarily due to cost saving initiatives at the Center and Affiliates.

Impairment of Goodwill

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

No goodwill impairment charge was recorded for the three months ended June 30, 2019 and 2020.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Impairment of goodwill was $0.0 million for the six months ended June 30, 2019 and $16.4 million for the six months ended June 30, 2020.

The increase was the result of an impairment charge recorded for the Copper Rock reporting unit in the six months ended June 30, 2020.

In the first half of 2020, we performed a quantitative impairment test of Copper Rock due to the decline in assets under management during the period.

The fair value of the Copper Rock reporting unit did not exceed its carrying value.

Accordingly, we recognized a goodwill impairment charge of $16.4 million for the six months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

No goodwill impairment charge was recorded in either the three months ended September 30, 2019 or 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

No goodwill impairment charge was recorded in the nine months ended September 30, 2019.

Impairment of goodwill was $16.4 million for the nine months ended September 30, 2020.

The increase was the result of an impairment charge recorded for the Copper Rock reporting unit which was included within the Liquid Alpha segment prior to its disposition in the nine months ended September 30, 2020.

In the first half of 2020, we performed a quantitative impairment test of Copper Rock due to the decline in assets under management and the fair value of the Copper Rock reporting unit did not exceed its carrying value.

Accordingly, we recognized a goodwill impairment charge of $16.4 million for the nine months ended September 30, 2020.

In July 2020, we completed the sale of our equity interests in Copper Rock to Spouting Rock.

See "Recent Developments" herein.

Amortization of Acquired Intangibles Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Amortization of acquired intangibles expense increased $0.2 million, or 11.8%, from $1.7 million for the three months ended June 30, 2019 to $1.9 million for the three months ended June 30, 2020.

This account primarily reflects the amortization of intangible assets acquired in the Copper Rock and Landmark transactions.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Amortization of acquired intangibles expense increased $0.2 million, or 6.1%, from $3.3 million for the six months ended June 30, 2019 to $3.5 million for the six months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Amortization of acquired intangibles expense was unchanged, at $1.6 million for the three months ended September 30, 2019 and $1.6 million for the three months ended September 30, 2020.

This account primarily reflects the amortization of intangible assets acquired in the Landmark transaction.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Amortization of acquired intangibles expense increased $0.2 million, or 4.1%, from $4.9 million for the nine months ended September 30, 2019 to $5.1 million for the nine months ended September 30, 2020.

This account primarily reflects the amortization of intangible assets acquired in the Copper Rock and Landmark transactions.

Depreciation and Amortization Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Depreciation and amortization expense increased $1.1 million, or 27.5%, from $4.0 million for the three months ended June 30, 2019 to $5.1 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Depreciation and amortization expense increased $0.8 million, or 18.2%, from $4.4 million for the three months ended September 30, 2019 to $5.2 million for the three months ended September 30, 2020.

The increase was primarily due to additional software and technology investments in the business.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Depreciation and amortization expense increased $2.6 million, or 33.3%, from $7.8 million for the six months ended June 30, 2019 to $10.4 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Depreciation and amortization expense increased $3.4 million, or 27.9%, from $12.2 million for the nine months ended September 30, 2019 to $15.6 million for the nine months ended September 30, 2020.

The increase was primarily due to additional software and technology investments in the business.

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Investment Income

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Investment income increased $4.5 million, from $2.1 million for the three months ended June 30, 2019 to $6.6 million for the three months ended June 30, 2020, reflecting an increase in returns generated by seed capital investments as the market recovered from declines in the first quarter of 2020.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Investment income decreased $(16.2) million from $9.1 million for the six months ended June 30, 2019 to $(7.1) million for the six months ended June 30, 2020.

The decrease is primarily due to unrealized losses on seed investments driven by the market decline in the first quarter of 2020, which was partially offset by unrealized gains in the second quarter of 2020 as the market recovered.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Investment income increased $1.6 million, from $2.3 million for the three months ended September 30, 2019 to $3.9 million for the three months ended September 30, 2020, reflecting an increase in returns in the current period generated by seed capital investments as the market recovered from declines in the first quarter of 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Investment income decreased $(14.6) million, from $11.4 million for the nine months ended September 30, 2019 to $(3.2) million for the nine months ended September 30, 2020.

Interest Income

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Interest income decreased $(0.1) million, from $0.3 million for the three months ended June 30, 2019 to $0.2 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Interest income decreased $(0.4) million, from $0.4 million for the three months ended September 30, 2019 to $0.0 million for the three months ended September 30, 2020.

The decrease was due to decreases in short-term investment returns in the quarter.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Interest income decreased $(0.9) million, from $1.4 million for the six months ended June 30, 2019 to $0.5 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Interest income decreased $(1.3) million, from $1.8 million for the nine months ended September 30, 2019 to $0.5 million for the nine months ended September 30, 2020.

The decrease was due to lower average cash balances and decreases in short-term investment returns in 2020.

Interest Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Interest expense decreased $(1.4) million, or (15.9)%, from $8.8 million for the three months ended June 30, 2019 to $7.4 million for the three months ended June 30, 2020, reflecting a lower balance drawn on the non-recourse seed capital and revolving credit facilities in the current quarter.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Interest expense decreased $(0.6) million, or (3.8)%, from $15.8 million for the six months ended June 30, 2019 to $15.2 million for the six months ended June 30, 2020, primarily reflecting a lower balance drawn on the non-recourse seed capital and revolving credit facilities in the current year.

GAAP Income Tax Expense

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Interest expense decreased $(1.4) million, or (16.9)%, from $8.3 million for the three months ended September 30, 2019 to $6.9 million for the three months ended September 30, 2020, reflecting a lower quarterly average balance in 2020 on our revolving credit and non-recourse seed capital facilities.

We repaid the balance on our non-recourse seed capital facility, and paid down a portion of the balance on our revolving credit facility in the three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Interest expense decreased $(2.0) million, or (8.3)%, from $24.1 million for the nine months ended September 30, 2019 to $22.1 million for the nine months ended September 30, 2020, primarily reflecting a lower balance drawn on the non-recourse seed capital and revolving credit facilities in the current year.

We repaid the balance on our non-recourse seed capital facility, and paid down a portion of the balance on our revolving credit facility in the nine months ended September 30, 2020.

GAAP Income Tax Expense (Benefit)

Our effective tax rate has been impacted by changes in liabilities for uncertain tax positions, tax effects of stock-based compensation, limitations on executive compensation, the mix of income earned in the United States versus lower-taxed foreign jurisdictions and benefits from intercompany financing arrangements.

Our effective tax rate could be impacted in the future by these items as well as further changes in tax laws and regulations in jurisdictions in which we operate.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) contains numerous income tax provisions including some that are expected to be effective retroactively.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) contains numerous income tax provisions including some that are effective retroactively.

Our Condensed Consolidated Balance Sheet reflects the benefit of a provision that increased the business interest limitation under IRC Section 163(j) from 30% to 50% for tax years 2019 and 2020.

This provision will allow the Company to utilize more deferred tax assets.

We have assessed the CARES Act and at this time do not expect any other provisions of the CARES Act to have a material impact to the financial statements.

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Income tax expense decreased $(6.8) million, from $14.1 million for the three months ended June 30, 2019 to $7.3 million for the three months ended June 30, 2020.

The decrease relates primarily to decreases in income from continuing operations before tax attributable to controlling interests and a decrease in expense attributable to uncertain tax positions.

Six months ended June 30, 2020 compared to six months ended June 30, 2019 :

Income tax expense decreased $(14.8) million, from $35.7 million for the six months ended June 30, 2019 to $20.9 million for the six months ended June 30, 2020.

The decrease was primarily due to the decrease in income from continuing operations before tax attributable to controlling interests and a decrease in expense attributable to adjustments for uncertain tax positions.

This provision will allow us to utilize more of the deferred tax asset related to IRC Section 163(j).

We have assessed the CARES Act and at this time do not expect any other provisions of the CARES Act to have a material impact to our financial statements.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Income tax expense (benefit) increased $44.8 million, from a benefit of $(32.0) million for the three months ended September 30, 2019 to an expense of $12.8 million for the three months ended September 30, 2020.

The increase in income tax expense relates to the reductions to liabilities for uncertain tax positions and the revaluation of certain deferred tax assets in connection with the Redomestication in the three months ended September 30, 2019 that did not occur in the three months ended September 30, 2020, In addition, the gain from the disposition of Copper Rock also contributed to the increase in income tax expense in the three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019 :

Income tax expense increased $30.0 million, from $3.7 million for the nine months ended September 30, 2019 to $33.7 million for the nine months ended September 30, 2020.

This increase is partially offset by a decrease in income from continuing operations as of September 30, 2020 as compared to September 30, 2019.

Gain on Sale of Affiliate

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

No gain on sale of Affiliate was recorded in the three months ended September 30, 2019.

Gain on sale of Affiliate was $7.2 million for the three months ended September 30, 2020, representing our gain on the sale of our equity interests in Copper Rock.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

No gain on sale of an Affiliate was recorded in the nine months ended September 30, 2019.

Gain on sale of Affiliate was $7.2 million for the nine months ended September 30, 2020, representing our gain on the sale of our equity interests in Copper Rock.

GAAP Consolidated Funds

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Consolidated Funds’ revenue decreased $(0.2) million, from $1.9 million for the three months ended June 30, 2019 to $1.7 million for the three months ended June 30, 2020.

Consolidated Funds’ expense increased $0.1 million for the three months ended June 30, 2020 compared to the three months ended June 30, 2019.

Net consolidated Funds’ investment gain (loss) increased $40.1 million from $(4.5) million for the three months ended June 30, 2019 to $35.6 million for the three months ended June 30, 2020 due to market appreciation in the second quarter of 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Consolidated Funds’ revenue decreased $(0.5) million, from $1.9 million for the three months ended September 30, 2019 to $1.4 million for the three months ended September 30, 2020.

Consolidated Funds’ expense decreased $(0.2) million for the three months ended September 30, 2020 compared to the three months ended September 30, 2019.

Net consolidated Funds’ investment gain (loss) decreased $(2.6) million, from $4.7 million for the three months ended September 30, 2019 to $2.1 million for the three months ended September 30, 2020.

The net income or loss of all consolidated Funds, excluding any income or loss attributable to seed capital or co-investments we make in the Funds, is included in non-controlling interests in our Condensed Consolidated Financial Statements and is not included in net income attributable to controlling interests or in management fees.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Consolidated Funds’ revenue increased $0.2 million, from $3.0 million for the six months ended June 30, 2019 to $3.2 million for the six months ended June 30, 2020.

Consolidated Funds’ expense remained unchanged at $0.2 million for the three and six months ended June 30, 2019 and 2020.

Net consolidated Funds’ investment gain (loss) increased $9.3 million, from $9.1 million for the six months ended June 30, 2019 to $18.4 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Consolidated Funds’ revenue decreased $(0.3) million, from $4.9 million for the nine months ended September 30, 2019 to $4.6 million for the nine months ended September 30, 2020.

Consolidated Funds’ expense decreased $(0.2) million, from $0.4 million for the nine months ended September 30, 2019 to $0.2 million for the nine months ended September 30, 2020.

Net consolidated Funds’ investment gain (loss) increased $6.7 million, from $13.8 million for the nine months ended September 30, 2019 to $20.5 million for the nine months ended September 30, 2020.

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The following table shows our key U.S.

GAAP operating metrics for the three and six months ended June 30, 2020 and 2019.

GAAP operating metrics for the three and nine months ended September 30, 2020 and 2019.

The second, third and fourth metrics below have each been adjusted to eliminate the effect of consolidated Funds to more accurately reflect the economics of our Company.

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

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

($ in millions) 2020 2019 2020 2019

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(1) Excluding the effect of Funds consolidation in the applicable periods, the U.S.

GAAP operating margin is 14.2% for the three months ended June 30, 2020, 21.8% for the three months ended June 30, 2019, 27.5% for the six months ended June 30, 2020, and 27.2% or the six months ended June 30, 2019.

(2) Excludes consolidated Funds expense of $0.1 million for the three months ended June 30, 2020, $0.0 million for the three months ended June 30, 2019, $0.2 million for the six months ended June 30, 2020 and $0.2 million for the six months ended June 30, 2019.

(3) Excludes the effect of Funds consolidation for the three and six months ended June 30, 2020 and 2019.

(4) Excludes consolidated Funds revenue of $1.7 million for the three months ended June 30, 2020, $1.9 million for the three months ended June 30, 2019, $3.2 million for the six months ended June 30, 2020 and $3.0 million for the six months ended June 30, 2019.

GAAP operating margin is 21.6% for the three months ended September 30, 2020, 25.6% for the three months ended September 30, 2019, 25.5% for the nine months ended September 30, 2020, and 26.7% for the nine months ended September 30, 2019.

(2) Excludes consolidated Funds expense of $0.0 million for the three months ended September 30, 2020, $0.2 million for the three months ended September 30, 2019, $0.2 million for the nine months ended September 30, 2020 and $0.4 million for the nine months ended September 30, 2019.

(3) Excludes the effect of Funds consolidation for the three and nine months ended September 30, 2020 and 2019.

(4) Excludes consolidated Funds revenue of $1.4 million for the three months ended September 30, 2020, $1.9 million for the three months ended September 30, 2019, $4.6 million for the nine months ended September 30, 2020 and $4.9 million for the nine months ended September 30, 2019.

(5) The following table identifies the components of operating income before variable compensation and Affiliate key employee distributions, as well as operating income before Affiliate key employee distributions:

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

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

($ in millions) 2020 2019 2020 2019

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Effects of Inflation

For the three and six months ended June 30, 2020 and 2019, inflation did not have a material effect on our consolidated results of operations.

For the three and nine months ended September 30, 2020 and 2019, inflation did not have a material effect on our consolidated results of operations.

Non-GAAP Supplemental Performance Measure — Economic Net Income and Segment Analysis

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Reconciliation of U.S.

GAAP Net Income to Economic Net Income for the Three and Six Months Ended June 30, 2020 and 2019

The following table reconciles net income attributable to controlling interests to economic net income for the three and six months ended June 30, 2020 and 2019:

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

GAAP Net Income to Economic Net Income for the Three and Nine Months Ended September 30, 2020 and 2019

The following table reconciles net income attributable to controlling interests to economic net income for the three and nine months ended September 30, 2020 and 2019:

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

($ in millions) 2020 2019 2020 2019

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$ 37.7 $ 37.4 $ 104.9 $ 117.6

(1) The net return on seed/co-investment (gains) losses and financings for the three and six months ended June 30, 2020 and 2019 is shown in the following table:

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

(1) The net return on seed/co-investment (gains) losses and financings for the three and nine months ended September 30, 2020 and 2019 is shown in the following table:

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

($ in millions) 2020 2019 2020 2019

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* The blended rate is based first on the interest rate paid on our non-recourse seed capital facility up to the average amount drawn, and thereafter on the weighted average rate of the long-term debt.

(2) The three months ended June 30, 2020 includes $3.0 million of restructuring at the Center and Affiliates, $0.3 million associated with the transfer of an insurance policy from our former Parent, and $4.7 million relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The six months ended June 30, 2020 includes $3.4 million of restructuring at the Center and Affiliates, $0.6 million associated with the transfer of an insurance policy from our former Parent, and $10.7 million relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payment.

The three months ended June 30, 2019 includes $0.5 million of restructuring costs at the Center and $0.8 million associated with the redomicile to the U.S.

The six months ended June 30, 2019 includes $4.5 million of restructuring costs at the Center and $1.1 million associated with the redomicile to the U.S.

(2) The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the gain on sale of Copper Rock of $7.2 million.

The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payment, and the gain on sale of Copper Rock of $7.2 million.

The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million associated with the redomicile to the U.S.

The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

(3) Reflects the sum of lines (i), (ii), (iii), (iv) and the restructuring component of line (vi) multiplied by the 27.3% U.S.

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The following table reconciles U.S.

GAAP revenue to ENI revenue for the three and six months ended June 30, 2020 and 2019:

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

GAAP revenue to ENI revenue for the three and nine months ended September 30, 2020 and 2019:

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

($ in millions) 2020 2019 2020 2019

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The following table identifies the components of ENI revenue:

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

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

($ in millions) 2020 2019 2020 2019

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(3) ENI other income is comprised primarily of other revenue under U.S.

GAAP, plus our earnings from our equity-accounted Affiliate of $0.6 million and $0.7 million for the three months ended June 30, 2020 and June 30, 2019, respectively.

For the six months ended June 30, 2020 and June 30, 2019, our earnings from our equity-accounted Affiliate were $1.2 million and $1.3 million, respectively.

GAAP, plus our earnings from our equity-accounted Affiliate of $0.9 million and $0.8 million for the three months ended September 30, 2020 and September 30, 2019, respectively.

For the nine months ended September 30, 2020 and September 30, 2019, our earnings from our equity-accounted Affiliate were $2.1 million and $2.1 million, respectively.

As further described in “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis,” ENI other income also excludes certain Fund expenses initially paid by our Affiliates on the Funds’ behalf and subsequently reimbursed.

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

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

($ in millions) 2020 2019 2020 2019

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The following table reconciles U.S.

GAAP operating expense to ENI operating expense for the three and six months ended June 30, 2020 and 2019.

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

GAAP operating expense to ENI operating expense for the three and nine months ended September 30, 2020 and 2019.

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

($ in millions) 2020 2019 2020 2019

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ENI operating expense $ 73.8 $ 83.7 $ 229.0 $ 255.2

(1) The three months ended June 30, 2020 includes $3.0 million of restructuring at the Center and Affiliates, $0.3 million associated with the transfer of an insurance policy from our former Parent, and $4.7 million relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The three months ended June 30, 2019 includes $0.5 million of restructuring costs at the Center and $0.8 million associated with the redomicile to the U.S.

The six months ended June 30, 2019 includes $4.5 million of restructuring costs at the Center and $1.1 million associated with the redomicile to the U.S.

(1) The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, and $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, and $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million costs associated with the redomicile to the U.S.

The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

The following table identifies the components of ENI operating expense:

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

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

($ in millions) 2020 2019 2020 2019

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The following table reconciles U.S.

GAAP compensation and benefits expense for the three and six months ended June 30, 2020 and 2019 to ENI fixed compensation and benefits expense:

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

GAAP compensation and benefits expense for the three and nine months ended September 30, 2020 and 2019 to ENI fixed compensation and benefits expense:

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

($ in millions) 2020 2019 2020 2019

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ENI fixed compensation and benefits $ 42.8 $ 46.7 $ 132.2 $ 143.7

(a) The three months ended June 30, 2020 includes $3.0 million of restructuring at the Center and Affiliates, $0.3 million associated with the transfer of an insurance policy from our former Parent, and $4.7 million relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The three months ended June 30, 2019 includes $0.5 million of restructuring costs at the Center and $0.8 million associated with the redomicile to the U.S.

The six months ended June 30, 2019 includes $4.5 million of restructuring costs at the Center and $1.1 million associated with the redomicile to the U.S.

(a) The three months ended September 30, 2020 includes $0.2 million of restructuring costs at the Center and $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The nine months ended September 30, 2020 includes $3.5 million of restructuring costs at the Center and Affiliates and $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center.

The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center.

(2) The following table reconciles U.S.

GAAP general and administrative expense to ENI general and administrative expense:

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

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

($ in millions) 2020 2019 2020 2019

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Key Non-GAAP Operating Metrics

The following table shows our key non-GAAP operating metrics for the three and six months ended June 30, 2020 and 2019.

The following table shows our key non-GAAP operating metrics for the three and nine months ended September 30, 2020 and 2019.

We present these metrics because they are the measures our management uses to evaluate the profitability of our business and are useful to investors because they represent the key drivers and measures of economic performance within our business model.

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GAAP measure:

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

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

($ in millions) 2020 2019 2020 2019

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GAAP operating income to ENI operating earnings:

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

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

($ in millions) 2020 2019 2020 2019

22 unchanged sentences

$ 54.8 $ 55.4 $ 152.8 $ 169.9

The three months ended June 30, 2019 includes $0.5 million of restructuring costs at the Center and $0.8 million associated with the redomicile to the U.S.

The six months ended June 30, 2019 includes $4.5 million of restructuring costs at the Center and $1.1 million associated with the redomicile to the U.S.

(a) The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, and $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, and $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments.

The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million associated with the redomicile to the U.S.

The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

(2) The ENI operating margin, which is calculated before Affiliate key employee distributions, is used by management and is useful to investors to evaluate the overall operating margin of the business without regard to our various ownership levels at each of the Affiliates.

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GAAP operating margin.

GAAP operating margin, excluding the effect of consolidated Funds, is 14.2% for the three months ended June 30, 2020 and 21.8% for the three months ended June 30, 2019.

GAAP operating margin, excluding the effect of consolidated Funds, is 21.6% for the three months ended September 30, 2020, 25.6% for the three months ended September 30, 2019, 25.5% for the nine months ended September 30, 2020, and 26.7% for the nine months ended September 30, 2019.

The ENI operating margin is important because it gives investors an understanding of the profitability of the total business relative to revenue, irrespective of the ownership position which we have in each of our Affiliates.

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The following table reconciles the United States statutory tax to tax on economic net income:

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

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

($ in millions) 2020 2019 2020 2019

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Add back intercompany interest expense previously excluded

— 16.4 — 33.2

Economic net income

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(1) Includes interest income and third party ENI interest expense, as shown in the following table:

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

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

($ in millions) 2020 2019 2020 2019

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and emerging markets equities, as well as fixed income.

(1) In July 2020, we completed the sale of Copper Rock and announced the divestiture of Barrow Hanley, expected to close in the fourth quarter of 2020.

See "Recent Developments" herein.

We have a corporate head office that is included in “Other”.

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Segment ENI Revenue

The following table identifies the components of segment ENI revenue for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

The following table identifies the components of segment ENI revenue for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,

($ in millions) 2020 2019

6 unchanged sentences

ENI revenue $ 89.0 $ 43.8 $ 47.9 $ 0.1 $ 180.8 $ 93.1 $ 37.4 $ 65.2 $ 0.1 $ 195.8

The following table identifies the components of segment ENI revenue for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

The following table identifies the components of segment ENI revenue for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

($ in millions) 2020 2019

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Quant & Solutions Segment ENI Revenue

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Quant & Solutions ENI revenue decreased $(10.9) million, or (11.6)%, from $93.7 million for three months ended June 30, 2019 to $82.8 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Quant & Solutions ENI revenue decreased $(4.1) million, or (4.4)%, from $93.1 million for three months ended September 30, 2019 to $89.0 million for the three months ended September 30, 2020.

The decrease was attributable to (5.2)% lower management fees driven by lower average AUM primarily resulting from the equity market decline in the first quarter of 2020.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Quant & Solutions ENI revenue decreased $(15.3) million, or (8.3)%, from $184.2 million for the six months ended June 30, 2019 to $168.9 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Quant & Solutions ENI revenue decreased $(19.4) million, or (7.0)%, from $277.3 million for the nine months ended September 30, 2019 to $257.9 million for the nine months ended September 30, 2020.

The decrease was attributable to (7.8)% lower management fees, driven by lower average AUM primarily resulting from the equity market decline in the current year.

Alternatives Segment ENI Revenue

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Alternatives ENI revenue decreased $(1.8) million, or (4.1)%, from $44.3 million for three months ended June 30, 2019 to $42.5 million for the three months ended June 30, 2020.

The decrease was attributable to (3.9)% lower management fees resulting from lower blended fee rate due to change in asset mix.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Alternatives ENI revenue decreased $(3.9) million, or (4.4)%, from $88.3 million for the six months ended June 30, 2019 to $84.4 million for the six months ended June 30, 2020.

The decrease was attributable to (4.7)% largely from lower blended fee rate due to change in asset mix and lower performance fees.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Alternatives ENI revenue increased $6.4 million, or 17.1%, from $37.4 million for three months ended September 30, 2019 to $43.8 million for the three months ended September 30, 2020.

The increase was attributable to 16.1% higher management fees resulting from inflows and change in net catch-up fees.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Alternatives ENI revenue increased $2.5 million, or 2.0%, from $125.7 million for the nine months ended September 30, 2019 to $128.2 million for the nine months ended September 30, 2020.

The increase was attributable to inflows and change in net catch-up fees.

Liquid Alpha Segment ENI Revenue

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Liquid Alpha ENI revenue decreased $(19.4) million, or (29.2)%, from $66.5 million for three months ended June 30, 2019 to $47.1 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Liquid Alpha ENI revenue decreased $(17.3) million, or (26.5)%, from $65.2 million for three months ended September 30, 2019 to $47.9 million for the three months ended September 30, 2020.

The decrease was attributable to (29.2)% lower management fees driven by lower average AUM resulting from the equity market decline and net outflows over the last twelve months, as well as the Vanguard reallocation in the fourth quarter of 2019.

The change in performance fees for the three months ended June 30, 2020 compared to the three months ended June 30, 2019 was primarily due to fulcrum fees recorded in the prior period that did not repeat.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Liquid Alpha ENI revenue decreased $(38.0) million, or (27.6)%, from $137.6 million for the six months ended June 30, 2019 to $99.6 million for the six months ended June 30, 2020.

The change in performance fees was primarily due to fulcrum fees recorded in the three months ended September 30, 2019 that did not repeat in the three months ended September 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Liquid Alpha ENI revenue decreased $(55.3) million, or (27.3)%, from $202.8 million for the nine months ended September 30, 2019 to $147.5 million for the nine months ended September 30, 2020.

The decrease was attributable to (30.1)% lower management fees, driven by lower average AUM resulting from the equity market decline and net outflows over the last twelve months, as well as the Vanguard reallocation in the fourth quarter of 2019.

The change in performance fees for the six months ended June 30, 2020 compared to the six months ended June 30, 2019 was primarily due to fulcrum fees recorded in the prior period that did not repeat.

The change in performance fees was primarily due to fulcrum fees recorded in nine months ended September 30, 2019 that did not repeat in the nine months ended September 30, 2020.

Segment ENI Expense

The following table identifies the components of segment ENI expense for the three months ended June 30, 2020 and 2019:

Three Months Ended June 30,

The following table identifies the components of segment ENI expense for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,

($ in millions) 2020 2019

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Total Expenses $ 56.0 $ 32.7 $ 30.7 $ 6.6 $ 126.0 $ 61.1 $ 28.9 $ 40.2 $ 10.2 $ 140.4

The following table identifies the components of segment ENI expense for the six months ended June 30, 2020 and 2019:

Six Months Ended June 30,

The following table identifies the components of segment ENI expense for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30,

($ in millions) 2020 2019

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Quant & Solutions Segment ENI Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Quant & Solutions ENI operating expense decreased $(4.7) million, or (11.8)%, from $39.7 million for the three months ended June 30, 2019 to $35.0 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Quant & Solutions ENI operating expense decreased $(3.6) million, or (8.8)%, from $40.8 million for the three months ended September 30, 2019 to $37.2 million for the three months ended September 30, 2020.

The decrease was driven by (9.3)% lower ENI fixed compensation and benefits expense resulting from headcount reduction, and (13.3)% lower ENI general and administrative expense resulting from cost saving initiatives.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, decreased (11.5)%, as a result of lower pre-variable compensation earnings.

Affiliate key employee distributions attributable to Quant & Solutions decreased (18.8)%, primarily due to lower Quant & Solutions ENI earnings after variable compensation.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Quant & Solutions ENI operating expense decreased $(7.5) million, or (9.4)%, from $79.6 million for the six months ended June 30, 2019 to $72.1 million for the six months ended June 30, 2020.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, decreased (4.3)%, as a result of change in the mix of cash and non-cash variable compensation.

Affiliate key employee distributions attributable to Quant & Solutions decreased (46.7)%, primarily due to the leveraged nature of the profit-sharing agreement .

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Quant & Solutions ENI operating expense decreased $(11.1) million, or (9.2)%, from $120.4 million for the nine months ended September 30, 2019 to $109.3 million for the nine months ended September 30, 2020.

The decrease was driven by (10.3)% lower ENI fixed compensation and benefits expense resulting from headcount reduction, and (15.8)% lower ENI general and administrative expense resulting from cost saving initiatives.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, decreased (10.3)%, as a result of lower pre-variable compensation earnings.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, decreased (8.5)%, as a result of lower earnings before variable compensation.

Affiliate key employee distributions attributable to Quant & Solutions decreased (29.3)%, primarily due to lower Quant & Solutions ENI earnings after variable compensation.

Alternatives Segment ENI Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Alternatives ENI operating expense increased $0.1 million, or 0.6%, from $15.6 million for three months ended June 30, 2019 to $15.7 million for the three months ended June 30, 2020.

The increase was driven by 2.4% higher ENI general and administrative related to outside services, partially offset by (0.9)% lower ENI fixed compensation and benefits expense.

Alternatives ENI variable compensation expense, which is based on contractual arrangements, decreased (6.7)%, as a result of lower pre-variable compensation earnings.

Affili ate key employee distributions attributable to Alternatives increased 7.8%, primarily driven by the mix of distributable earnings between Affiliates period over period.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Alternatives ENI operating expense decreased $(1.0) million, or (3.0)%, from $33.3 million for the six months ended June 30, 2019 to $32.3 million for the six months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Alternatives ENI operating expense decreased $(0.8) million, or (5.0)%, from $16.1 million for three months ended September 30, 2019 to $15.3 million for the three months ended September 30, 2020.

The decrease was driven by (22.0)% lower ENI general and administrative related to outside services, partially offset by 0.9% higher ENI fixed compensation and benefits expense.

Alternatives ENI variable compensation expense, which is based on contractual arrangements, increased 29.5%, as a result of higher earnings before variable compensation.

Affiliate key employee distributions attributable to Alternatives increased 46.0%, primarily driven by higher Alternatives ENI earnings after variable compensation.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Alternatives ENI operating expense decreased $(1.8) million, or (3.6)%, from $49.4 million for the nine months ended September 30, 2019 to $47.6 million for the nine months ended September 30, 2020.

The decrease was driven by (17.4)% lower ENI general and administrative expense resulting from lower consulting costs.

Alternatives ENI variable compensation expense, which is based on contractual arrangements, decreased (6.4)%, as a result of lower pre-variable compensation earnings.

Affiliate key employee distributions attributable to Alternatives increased 5.0%, primarily driven by the mix of distributable earnings between Affiliates period over period.

Alternatives ENI variable compensation expense, which is based on contractual arrangements, increased 3.6%, as a result of higher earnings before variable compensation.

Affiliate key employee distributions attributable to Alternatives increased 17.0%, primarily driven by higher Alternatives ENI earnings after variable compensation.

Liquid Alpha Segment ENI Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Liquid Alpha ENI operating expense decreased $(2.5) million, or (12.6)%, from $19.9 million for the three months ended June 30, 2019 to $17.4 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Liquid Alpha ENI operating expense decreased $(3.0) million, or (16.2)%, from $18.5 million for the three months ended September 30, 2019 to $15.5 million for the three months ended September 30, 2020.

The decrease was driven by (8.4)% lower ENI fixed compensation and benefits expense resulting from headcount reduction and (30.8)% lower ENI general and administrative expense resulting from cost-saving initiatives.

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Affiliate key employee distributions attributable to Liquid Alpha decreased (52.5)%, primarily driven by lower Liquid Alpha ENI earnings after variable compensation.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Liquid Alpha ENI operating expense decreased $(4.2) million, or (10.1)%, from $41.4 million for the six months ended June 30, 2019 to $37.2 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Liquid Alpha ENI operating expense decreased $(7.3) million, or (12.2)%, from $60.0 million for the nine months ended September 30, 2019 to $52.7 million for the nine months ended September 30, 2020.

The decrease was driven by (6.8)% lower ENI fixed compensation and benefits expense resulting from headcount reduction and (21.8)% lower ENI general and administrative expense resulting from cost-saving initiatives.

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Other ENI Expense

Three months ended June 30, 2020 compared to three months ended June 30, 2019:

Other ENI operating expense decreased $(1.9) million or (24.4)%, from $7.8 million for the three months ended June 30, 2019 to $5.9 million for the three months ended June 30, 2020.

Three months ended September 30, 2020 compared to three months ended September 30, 2019:

Other ENI operating expense decreased $(2.5) million or (30.1)%, from $8.3 million for the three months ended September 30, 2019 to $5.8 million for the three months ended September 30, 2020.

The decrease was driven by (30.6)% lower fixed compensation and benefit expense resulting from a reduction in headcount, and (32.6)% lower general and administrative expense resulting from cost-saving initiatives.

Other ENI variable compensation expense decreased (57.9)% which was driven by a reduction in headcount.

Six months ended June 30, 2020 compared to six months ended June 30, 2019:

Other ENI operating expense decreased $(3.6) million, or (20.9)%, from $17.2 million for the six months ended June 30, 2019 to $13.6 million for the six months ended June 30, 2020.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019:

Other ENI operating expense decreased $(6.0) million, or (23.6)%, from $25.4 million for the nine months ended September 30, 2019 to $19.4 million for the nine months ended September 30, 2020.

The decrease was driven by (26.5)% lower fixed compensation and benefit expense resulting from a reduction in headcount, and (22.4)% lower general and administrative expense resulting from cost-saving initiatives.

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All amounts presented exclude consolidated Funds:

Six Months Ended June 30,

Nine Months Ended September 30,

($ in millions) 2020 2019

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(2) Cash flow data shown only includes cash flows from continuing operations.

Comparison for the six months ended June 30, 2020 and 2019

Net cash provided by operating activities from continuing operations increased $292.1 million, from net cash used of $229.5 million for the six months ended June 30, 2019 to net cash provided of $62.6 million for the six months ended June 30, 2020, driven by the change in operating liabilities as a result of the Landmark earnout that was settled in the six months ended June 30, 2019.

In the six months ended June 30, 2020, net cash provided by investing activities of continuing operations increased $16.9 million, from $6.8 million used in the six months ended June 30, 2019 to $10.1 million provided by the six months ended June 30, 2020, driven primarily by increased sales of investment securities in the six months ended June 30, 2020.

Net cash used in financing activities of continuing operations increased $59.6 million, from $8.6 million used in the six months ended June 30, 2019 to $68.2 million used in the six months ended June 30, 2020, primarily due to a lower drawdown on the revolving credit facility, and decreased share repurchases in the six months ended June 30, 2020 compared to 2019.

Comparison for the nine months ended September 30, 2020 and 2019

Net cash provided by operating activities from continuing operations increased $294.6 million, from net cash used of $149.9 million for the nine months ended September 30, 2019 to net cash provided of $144.7 million for the nine months ended September 30, 2020, driven by the change in operating liabilities as a result of the Landmark earnout that was settled in the nine months ended September 30, 2019.

In the nine months ended September 30, 2020, net cash provided by investing activities of continuing operations increased $31.1 million, from $4.6 million used in the nine months ended September 30, 2019 to $26.5 million provided in the nine months ended September 30, 2020, driven primarily by increased sales of investment securities in the nine months ended September 30, 2020.

Net cash used in financing activities of continuing operations increased $71.0 million, from $69.6 million used in the nine months ended September 30, 2019 to $140.6 million used in the nine months ended September 30, 2020, primarily due to a lower drawdown on the revolving credit facility, the pay down and termination of the non-recourse seed facility and decreased share repurchases in the nine months ended September 30, 2020 compared to 2019.

Supplemental Liquidity Measure — Adjusted EBITDA

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The following table reconciles our U.S.

GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three and six months ended June 30, 2020 and 2019.

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

GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three and nine months ended September 30, 2020 and 2019.

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

($ in millions) 2020 2019 2020 2019

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$ 37.7 $ 37.4 $ 104.9 $ 117.6

The three months ended June 30, 2019 includes $0.5 million of restructuring costs at the Center and $0.8 million associated with the redomicile to the U.S.

The six months ended June 30, 2019 includes $4.5 million of restructuring costs at the Center and $1.1 million associated with the redomicile to the U.S.

(2) The three and six months ended June 30, 2020 includes non-cash equity-based award amortization expense.

(1) The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and Affiliates, $0.4 million costs associated with the transfer of an insurance policy from our former Parent, $3.2 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the gain on sale of Copper Rock of $7.2 million.

The nine months ended September 30, 2020 includes $4.8 million of restructuring costs at the Center and Affiliates, $1.0 million costs associated with the transfer of an insurance policy from our former Parent, $13.9 million costs relating to the impact of a one-time compensation arrangement entered into that includes advances against future compensation payments, and the gain on sale of Copper Rock of $7.2 million.

The three months ended September 30, 2019 includes $0.1 million of restructuring costs at the Center and $0.9 million associated with the redomicile to the U.S.

The nine months ended September 30, 2019 includes $4.6 million of restructuring costs at the Center and $2.0 million associated with the redomicile to the U.S.

(2) The three and nine months ended September 30, 2020 includes non-cash equity-based award amortization expense.

Limitations of Adjusted EBITDA

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We believe that our available cash and cash equivalents to be generated from operations, supplemented by short-term and long-term financing, as necessary, will be sufficient to fund current operations and capital requirements for at least the next twelve months, as well as our day-to-day operations and future investment requirements.

We also expect to realize future proceeds from the sale of our equity interest in Barrow Hanley during the second half of 2020.

We also expect to realize future proceeds from the sale of our equity interest in Barrow Hanley during the fourth quarter of 2020.

Our ability to secure short-term and long-term financing in the future will depend on several factors, including our future profitability, our relative levels of debt and equity and the overall condition of the credit markets.

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The following table summarizes our financing arrangements as of the dates indicated:

($ in millions) June 30,

($ in millions) September 30,

2020 December 31,

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Third party borrowings:

Revolving credit facility $ 130.0 $ 140.0 LIBOR + 1.50% plus 0.20% commitment fee August 22, 2022

Revolving credit facility (1)

$ 80.0 $ 140.0 LIBOR + 1.50% plus 0.20% commitment fee August 22, 2022

4.80% Senior Notes Due 2026 272.7 272.4 4.80% July 27, 2026

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Non-recourse borrowing:

Non-recourse seed capital facility 21.7 35.0 LIBOR + 1.55% plus 0.95% commitment fee January 15, 2021

Non-recourse seed capital facility (2)

— 35.0 LIBOR + 1.55% plus 0.95% commitment fee N/A

Total non-recourse borrowing $ — $ 35.0

Total borrowings $ 474.2 $ 568.8

(1) We entered into an amendment on September 3, 2020 to the revolving credit facility to reduce the revolving credit facility to $150 million upon the consummation of sale of our equity interests in Barrow Hanley.

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

Revolving Credit Facility

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In addition, we are charged a commitment fee based on the average daily unused portion of the Credit Facility at a per annum rate ranging from 0.125% to 0.45%, with such amount based on our credit rating.

On September 3, 2020, we along with the 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 our 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.

Under the Credit Facility, the ratio of third party borrowings to trailing twelve months Adjusted EBITDA cannot exceed 3.0x, and the interest coverage ratio must not be less than 4.0x.

At June 30, 2020, our ratio of third party borrowings to trailing twelve months Adjusted EBITDA was 2.2x and our interest coverage ratio was 7.8x.

At June 30, 2020, our ratio of third party borrowings net of total cash and cash equivalents to trailing twelve months Adjusted EBITDA was 1.7x.

At September 30, 2020, our ratio of third party borrowings to trailing twelve months Adjusted EBITDA was 2.0x and our interest coverage ratio was 8.1x.

At September 30, 2020, our ratio of third party borrowings net of total cash and cash equivalents to trailing twelve months Adjusted EBITDA was 1.5x.

Moody’s Investor Service, Inc.

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In July 2017, we entered into a non-recourse seed capital facility collateralized by our seed capital holdings and can borrow up to $65.0 million, so long as the borrowing does not represent more than 50% of the value of the seed capital collateral.

At June 30, 2020, amounts outstanding under this non-recourse seed capital facility amounted to $21.7 million.

At September 30, 2020, amounts outstanding under this non-recourse seed capital facility amounted to $0.0 million.

During the three months ended September 30, 2020, we paid down and terminated the non-recourse seed capital facility that was set to expire on January 15, 2021.

Since this facility is non-recourse to us beyond the seed investments themselves, drawdowns under this facility are excluded from our third party debt levels for purposes of calculating our credit ratio covenants under the Credit Facility.

As of June 30, 2020, we were in compliance with the required covenants related to borrowings and debt facilities.

As of September 30, 2020, we were in compliance with the required covenants related to borrowings and debt facilities.

Other Compensation Liabilities

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The following table summarizes our other long-term liabilities:

September 30,

2020 December 31,

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Voluntary deferral plan liability 65.8 88.3

Total $ 367.5 $ 404.9

$ 313.5 $ 404.9

(1) Total other compensation liabilities excludes balance of Affiliate other compensation liabilities classified as held for sale on the Condensed Consolidated Balance Sheet.

See discussion of Divestitures and Held for Sale in Note 3 of the accompanying Condensed Consolidated Financial Statements.

Share-based payments liability represents the value of Affiliate key employee-owned equity that may under certain circumstances be repurchased by us that is considered an equity award under U.S.

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Forward Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements, including information relating to our pending divestiture of Barrow Hanley, anticipated revenues, margins, cash flows or earnings, anticipated future performance of our business and our Affiliates or particular segments, our expected future net cash flows, our anticipated expense levels, capital management, expected impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows,and/or expectations regarding market conditions.

This Quarterly Report on Form 10-Q includes forward-looking statements, including information relating to our pending divestiture of Barrow Hanley, including the expected timing for the closing of the divestiture, anticipated revenues, margins, cash flows or earnings, anticipated future performance of our business and our Affiliates or particular segments, our expected future net cash flows, our anticipated expense levels, capital management, expected impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows,and/or expectations regarding market conditions.

The words or phrases “will likely result,” “are expected to,” “will continue,” “is anticipated,” “can be,” “may be,” “aim to,” “may affect,” “may depend,” “intends,” “expects,” “believes,” “estimate,” “project,” and other similar expressions are intended to identify such forward-looking statements.

Such statements are subject to various known and unknown risks and uncertainties and we caution readers that any forward-looking information provided by or on behalf of us is not a guarantee of future performance.

Actual results may differ materially from those in forward-looking information as a result of various factors, some of which are beyond our control, including but not limited to those discussed above and elsewhere in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 2, 2020, in our most recent Quarterly Report on Form 10-Q, filed with the Securities Exchange Commission on May 11, 2020 and subsequent SEC filings.

Actual results may differ materially from those in forward-looking information as a result of various factors, some of which are beyond our control, including but not limited to those discussed above and elsewhere in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 2, 2020, in our Quarterly Report on Form 10-Q, filed with the Securities Exchange Commission on May 11, 2020 and subsequent SEC filings.

Due to such risks and uncertainties and other factors, we caution each person receiving such forward-looking information not to place undue reliance on such statements.

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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 2. Management’s Discussion and Analysis