What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-08-09 compared with 2021-05-07 · 372 added, 177 removed, 639 unchanged (46% of the section changed)

16 unchanged sentences

Assets held for sale 136.7 326.8

Affiliate assets held for sale 241.6 249.7

Assets of consolidated Funds held for sale:

Consolidated Funds’ assets held for sale — 114.3

8 unchanged sentences

Other liabilities 0.2 1.5

Revolving credit facility 53.9 —

Third party borrowings 394.6 394.3

Liabilities held for sale 119.2 313.3

Affiliate liabilities held for sale 224.3 226.9

Total liabilities 884.6 994.8

3 unchanged sentences

Additional paid-in capital 493.4 492.4

Retained deficit ( 150.3 ) ( 176.5 )

Retained earnings (deficit) 381.6 ( 176.5 )

Accumulated other comprehensive loss ( 11.2 ) ( 13.6 )

1 unchanged sentence

Non-controlling interests in consolidated Funds — 80.3

Total equity and non-controlling interests in consolidated Funds 430.0 384.4

Total equity and non-controlling interests 863.9 384.4

Total liabilities and equity $ 1,748.5 $ 1,379.2

4 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Management fees $ 111.6 $ 118.6 $ 215.4 $ 243.1

7 unchanged sentences

Impairment of goodwill — — — 16.4

Amortization of acquired intangibles — 0.3 — 0.3

Depreciation and amortization 5.8 4.7 11.3 9.8

Consolidated Funds’ expense — 0.1 — 0.1

Total operating expenses 97.2 92.7 174.4 180.6

11 unchanged sentences

Income from discontinued operations, net of tax 53.4 26.7 75.3 50.0

Gain on disposal of discontinued operations, net of tax 509.2 — 509.2 —

Net income 587.3 53.9 627.7 76.0

Net income (loss) attributable to non-controlling interests in consolidated Funds 13.4 ( 10.5 )

Net income attributable to non-controlling interests in consolidated Funds 54.6 35.0 68.0 24.5

Net income attributable to controlling interests $ 532.7 $ 18.9 $ 559.7 $ 51.5

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2021 2020 2021 2020

Net income $ 587.3 $ 53.9 $ 627.7 $ 76.0

1 unchanged sentence

Amortization related to derivative securities, net of tax

0.6 0.6 1.2 1.1

Foreign currency translation adjustment 0.1 0.3 1.2 ( 1.8 )

Total other comprehensive income (loss) 0.7 0.9 2.4 ( 0.7 )

Comprehensive income (loss) attributable to non-controlling interests in consolidated Funds 13.4 ( 10.5 )

Comprehensive income attributable to non-controlling interests in consolidated Funds 54.6 35.0 68.0 24.5

Total comprehensive income attributable to controlling interests $ 533.4 $ 19.8 $ 562.1 $ 50.8

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended March 31, 2021 and 2020

For the three months ended June 30, 2021 and 2020

($ in millions except share data, unaudited)

8 unchanged sentences

non-controlling

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

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

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

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

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

Foreign currency translation adjustment

— — — — 0.3 0.3 — — 0.3 — 0.3

Amortization related to derivatives securities, net of tax

— — — — 0.6 0.6 — — 0.6 — 0.6

Other changes in non-controlling interests

— — — — — — 0.1 — 0.1 — 0.1

Dividends ($ 0.01 per share)

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

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

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

March 31, 2021 79.4 $ 0.1 $ 492.8 $ ( 150.3 ) $ ( 11.9 ) $ 330.7 $ 5.6 $ 93.7 $ 430.0 $ — $ 430.0

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

Capital contributions — — — — — — — 29.7 29.7 — 29.7

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

Foreign currency translation adjustment

— — — — 0.1 0.1 — — 0.1 — 0.1

Amortization related to derivatives securities, net of tax

— — — — 0.6 0.6 — — 0.6 — 0.6

Other changes in non-controlling interests

— — — — — — ( 5.6 ) — ( 5.6 ) — ( 5.6 )

Net de-consolidation of Funds — — — — — — ( 178.0 ) ( 178.0 ) — ( 178.0 )

Dividends ($ 0.01 per share)

— — — ( 0.8 ) — ( 0.8 ) — — ( 0.8 ) — ( 0.8 )

Net income — — — 532.7 — 532.7 — 54.6 587.3 — 587.3

June 30, 2021 79.4 $ 0.1 $ 493.4 $ 381.6 $ ( 11.2 ) $ 863.9 $ — $ — $ 863.9 $ — $ 863.9

See Notes to Condensed Consolidated Financial Statements

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the six months ended June 30, 2021 and 2020

($ in millions except share data, unaudited)

(millions) Common stock,

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

comprehensive

income (loss) Total

stockholders’

interests Non-controlling

equity Redeemable non-controlling interests in consolidated

Funds Total equity and

non-controlling

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

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

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

6 unchanged sentences

— — — — 1.1 1.1 — — 1.1 — 1.1

Other changes in non-controlling interests

— — — — — — 0.1 — 0.1 — 0.1

Dividends ($ 0.11 per share)

1 unchanged sentence

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

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

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

December 31, 2020 79.4 $ 0.1 $ 492.4 $ ( 176.5 ) $ ( 13.6 ) $ 302.4 $ 1.7 $ 80.3 $ 384.4 $ — $ 384.4

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

Capital contributions — — — — — — 3.8 29.7 33.5 — 33.5

6 unchanged sentences

— — — — — — ( 5.5 ) — ( 5.5 ) — ( 5.5 )

Net de-consolidation of Funds — — — — — — — ( 178.0 ) ( 178.0 ) — ( 178.0 )

Dividends ($ 0.02 per share)

1 unchanged sentence

Net income (loss) — — — 559.7 — 559.7 — 68.0 627.7 — 627.7

March 31, 2021 79.4 $ 0.1 $ 492.8 $ ( 150.3 ) $ ( 11.9 ) $ 330.7 $ 5.6 $ 93.7 $ 430.0 $ — $ 430.0

June 30, 2021 79.4 $ 0.1 $ 493.4 $ 381.6 $ ( 11.2 ) $ 863.9 $ — $ — $ 863.9 $ — $ 863.9

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in millions, unaudited)

Three Months Ended

Six Months Ended

Cash flows from operating activities:

4 unchanged sentences

Impairment of goodwill — 16.4

Amortization of acquired intangibles — 0.3

Gain on sale of discontinued operations, net of tax ( 509.2 ) —

Loss on sale of subsidiary 1.3 —

19 unchanged sentences

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

Increase in accounts payable and other liabilities — 1.6

Increase (decrease) in accounts payable and other liabilities — ( 2.2 )

Net cash flows from operating activities of continuing operations of consolidated Funds — ( 0.5 )

4 unchanged sentences

Additions of fixed assets, excluding discontinued operations ( 7.4 ) ( 15.2 )

Cash proceeds from sale of discontinued operations 713.7 —

Purchase of investment securities ( 2.5 ) ( 8.8 )

1 unchanged sentence

Net cash flows from investing activities of continuing operations 712.2 12.3

Net cash flows from investing activities of discontinued operations 1.8 ( 0.1 )

Total net cash flows from investing activities 2.8 1.3

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in millions, unaudited)

Three Months Ended

Six Months Ended

Net cash flows from investing activities of discontinued operations 11.7 ( 3.2 )

Total net cash flows from investing activities 723.9 9.1

Cash flows from financing activities:

8 unchanged sentences

Redeemable non-controlling interest capital raised — 1.2

Redeemable non-controlling interest capital redeemed — ( 0.8 )

Net cash flows from financing activities of continuing operations 50.5 ( 67.8 )

4 unchanged sentences

Cash and cash equivalents at beginning of period (including restricted cash) 372.9 82.1

Cash and cash equivalents at beginning of period classified within assets held for sale (Affiliate and consolidated funds) $ 11.2 $ 15.7

Cash and cash equivalents at beginning of period classified within assets held for sale $ 31.2 $ 38.9

Cash and cash equivalents at end of period $ 1,195.5 $ 125.3

cash and cash equivalents at end of period classified within assets held for sale (Affiliate and consolidated funds) ( 13.3 ) ( 14.1 )

cash and cash equivalents at end of period classified within assets held for sale ( 18.5 ) ( 27.2 )

Cash and cash equivalents at end of period from continuing operations (including restricted cash) $ 1,177.0 98.1

9 unchanged sentences

BrightSphere Investment Group Inc.

(“BrightSphere”, “BSIG” or the “Company”), through its subsidiaries, is a global asset management company with interests in a diverse group of investment management firms (the “Affiliates”) individually headquartered in the United States.

The Company provides investment management services globally to predominantly institutional investors, in asset classes that include U.S.

and global equities, fixed income, alternative assets and forestry.

Fees for services are largely asset-based and, as a result, the Company’s revenue fluctuates based on the performance of financial markets and investors’ asset flows in and out of the Company’s products.

(“BrightSphere”, “BSIG” or the “Company”), through its subsidiaries, is a global asset management company.

The Company provides investment management services globally to predominantly institutional investors.

The Company historically held interests in a group of investment management firms (the “Affiliates”) individually headquartered in the United States.

The Company has completed the disposition of certain Affiliates and currently operates the business through its Quant & Solutions segment.

The Company’s Affiliates are organized as limited liability companies.

The Company generally utilizes a profit-sharing model in structuring its compensation and ownership arrangements with its Affiliates.

2 unchanged sentences

The profit-sharing model results in the alignment of BSIG and Affiliate key employee economic interests, which is critical to the Company’s talent management strategy and long-term growth of the business.

The Company conducts its operations through the following two reportable segments (1) :

• Quant & Solutions —comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

• Liquid Alpha (2) —comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S.

equities, as well as fixed income.

(1) Prior to March 31, 2021, the Company had an Alternatives reportable segment which was comprised of the Landmark Partners, LLC (“Landmark”) and Campbell Global, LLC (“Campbell Global”) operating segments.

On March 30, 2021, the Company entered into an agreement to sell of all of the Company’s interests in Landmark.

As a result of this transaction, Landmark has been reclassified to discontinued operations, and the Alternatives segment no longer constitutes a reportable segment of the Company.

The reportable segments for all periods presented have been recast to reflect the reporting of Landmark within discontinued operations and the Campbell Global operating segment has been reclassified to “Other” within the Company’s segment reporting.

The Company currently conducts its operations through the following reportable segment (1)(2) :

• Quant & Solutions —comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes in developed and emerging markets, including global, non-U.S.

and small-cap equities, as well as managed volatility, ESG, multi-asset, equity alternatives, and long/short strategies.

This segment is comprised of the Company’s interest in Acadian Asset Management LLC (“Acadian”).

Campbell Global, LLC (“Campbell Global”), Investment Counselors of Maryland (“ICM”) and the corporate head office are included within the Other (1)(2) category.

(1) Prior to March 31, 2021, the Company had an Alternatives reportable segment which was comprised of Landmark Partners, LLC (“Landmark”) and Campbell Global operating segments.

On March 30, 2021, the Company entered into an agreement to sell all of the Company’s interests in Landmark.

As a result of this transaction, Landmark was reclassified to discontinued operations, and the Alternatives segment no longer constitutes a reportable segment of the Company.

The reportable segments for all periods presented have been recast to reflect the reporting of Landmark within discontinued operations and the reclassification of Campbell Global to “Other”.

On June 21, 2021, the Company entered into an agreement to sell all of the Company’s interests in Campbell Global.

See Note 3, Divestitures, Held for Sale and Discontinued Operations and Note 15, Segments for further discussion.

(2) On February 6, 2021, the Company announced the divestiture of all of the Company’s interests in Investment Counselors of Maryland (“ICM”), an equity-accounted Affiliate.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for further discussion.

(2) Prior to June 30, 2021, the Company had a Liquid Alpha reportable segment which was comprised of Thompson, Siegel & Walmsley LLC (“TSW”) and ICM.

On February 6, 2021, the Company entered into an agreement to sell all of the Company’s interests in ICM, an equity-accounted Affiliate.

On May 9, 2021, the Company entered into an agreement to sell all of the Company’s interests in TSW.

As a result of this transaction, TSW has been reclassified to discontinued operations and the Liquid Alpha no longer constitutes a reportable segment of the Company.

The reportable segments for all periods presented have been recast to reflect the reporting of TSW within discontinued operations.

Also, the ICM operating segment has been reclassified to “Other” within the Company’s segment reporting for the three and six months ended June 30, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations and Note 15, Segments for further discussion.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

1) Organization and Description of the Business (cont.)

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

2 unchanged sentences

(“HNA”) completed a series of transactions in the Company’s shares, including a two-step transaction announced on March 25, 2017 for a sale by OM plc of a 24.95 % shareholding in the Company to HNA and a two-step transaction announced on November 19, 2018 for a sale of the substantial majority of the shares held by HNA of the Company to Paulson & Co.

On February 25, 2019, this transaction was completed and Paulson

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

1) Organization and Description of the Business (cont.)

held approximately 21.7 % of the shares of the Company.

On February 25, 2019, this transaction was completed and Paulson held approximately 21.7 % of the shares of the Company.

The remaining shares held by HNA were bought back by the Company in the first quarter of 2019.

For the three months ended March 31, 2021, the Company did no t repurchase any shares of common stock.

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

For the three and six months ended June 30, 2021, the Company did no t repurchase any shares of common stock.

For the three months ended June 30, 2020, the Company repurchased 2,437,700 shares of common stock at an average price of $ 6.56 per share, or approximately $ 16 million in total, including commissions.

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

2) Basis of Presentation and Significant Accounting Policies

7 unchanged sentences

Transactions between the Company and its related parties are included in the Condensed Consolidated Financial Statements, however, material intercompany balances and transactions among the Company, its consolidated Affiliates and consolidated Funds are eliminated in consolidation.

On February 6, 2021 the Company entered into a definitive agreement to sell all of the Company’s interests in ICM, an equity-accounted Affiliate within the Liquid Alpha reporting segment, in exchange for approximately $ 19 million of cash consideration, subject to certain customary closing and post-closing adjustments.

As of March 31, 2021 the carrying value of the Company’s investment was approximately $ 2 million.

The criteria for discontinued operations were not met for this pending divestiture.

The transaction is expected to close during second quarter of 2021.

On February 6, 2021 the Company entered into a definitive agreement to sell all of the Company’s interests in ICM, an equity-accounted Affiliate.

The criteria for discontinued operations were not met for this divestiture.

The transaction closed on July 19, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for additional information.

2 unchanged sentences

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

On March 30, 2021, the Company entered into an Equity Purchase Agreement with Ares Holdings L.P.

(“Ares”), pursuant to which Ares agreed to purchase all of the Company’s interests in Landmark for $ 690 million of cash consideration, on a cash-free, debt-free basis subject to certain customary closing and post-closing adjustments.

The Company also agreed to sell its carried interest and co-investments in Landmark funds on the date of closing for approximately $ 34 million, subject to adjustment for certain related cashflow.

The pending divestiture of Landmark met the discontinued operations criteria as it represents a strategic shift that has a major effect on the Company’s operations and financial results.

As a result, the Company has reclassified the financial results of Landmark and consolidated Landmark Funds to income from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and March 31, 2020.

The assets and liabilities of Landmark and consolidated Landmark Funds have been reflected as assets and liabilities held for sale in the Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020.

Cash flows from our discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and March 31, 2020.

On March 30, 2021, the Company entered into a definitive agreement with Ares Holdings L.P.

(“Ares”), pursuant to which Ares agreed to purchase all of the Company’s interests in Landmark and the Company’s carried interest and co-investments in Landmark Funds.

The transaction closed on June 2, 2021.

The divestiture of Landmark met the discontinued operations criteria as it represented a strategic shift that had a major effect on the Company’s operations and financial results.

The assets and liabilities of Landmark and consolidated Landmark Funds have been reflected as assets and liabilities held for sale in the Condensed Consolidated Balance Sheet as of December 31, 2020.

Cash flows from discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and June 30, 2020.

On May 9, 2021, the Company entered into a definitive agreement with Pendal Group Limited (“Pendal”), pursuant to which Pendal agreed to purchase all of the Company’s interests in TSW and the Company’s seed investments in TSW strategies.

The transaction closed on July 22, 2021.

The divestiture of TSW met the discontinued operations criteria as it represented a strategic shift that had a major effect on the Company’s operations and financial results.

As a result, the Company has reclassified the financial results of TSW to income from discontinued operations, net of tax in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and June 30, 2020.

The assets and liabilities of TSW have been reflected as assets and liabilities held for sale in the Condensed Consolidated Balance Sheet as of June 30, 2021 and December 31, 2020.

Cash flows from discontinued operations are presented in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and June 30, 2020.

On June 21, 2021, the Company entered into a definitive agreement to sell all of the Company’s interests in Campbell Global and the Company’s co-investments in Campbell Global’s Funds.

The transaction is expected to close in the third quarter of 2021.

The pending divestiture of Campbell Global did not meet the discontinued operations criteria as it did not represent a strategic shift that has a major effect on the Company’s operations and financial results.

The assets and liabilities of Campbell Global and Campbell Global Funds have been reflected as assets and liabilities held for sale in the Condensed Consolidated Balance Sheet as of June 30, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for additional information.

The Notes to the Condensed Consolidated Financial Statements are presented on a continuing operations basis unless otherwise noted.

4 unchanged sentences

The Company’s significant accounting policies, which have been consistently applied, are summarized in those financial statements.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

Use of estimates

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

The three months ended March 31, 2021 were characterized by continued uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management.

The three and six months ended June 30, 2021 were characterized by continued uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management.

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

6 unchanged sentences

New accounting standards not yet adopted

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

On March 12, 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848) - Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions that reference London Interbank Offered Rate (“LIBOR”) or other reference rates expected to be discontinued because of reference rate reform.

This ASU is effective as of March 12, 2020 through December 31, 2022.

The Company has not adopted any of the optional expedients or exceptions as of March 31, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period to determine the impact on its Condensed Consolidated Financial Statements and related disclosures.

The Company has not adopted any of the optional expedients or exceptions as of June 30, 2021, but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period to determine the impact on its Condensed Consolidated Financial Statements and related disclosures.

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

3 unchanged sentences

3) Divestitures, Held for Sale and Discontinued Operations

Investment Counselors of Maryland

On February 6, 2021, the Company entered into a definitive agreement to sell all of the Company’s interests in ICM, an equity-accounted Affiliate within the Liquid Alpha segment, in exchange for approximately $ 19 million of cash consideration, subject to certain customary closing and post-closing adjustments.

The criteria for discontinued operations were not met for this pending divestiture.

The transaction is expected to close in the second quarter of 2021.

Landmark Partners

On March 30, 2021, the Company entered into an Equity Purchase Agreement with Ares, pursuant to which Ares agreed to purchase all of the Company’s interests in Landmark for $ 690 million of cash consideration, on a cash-free, debt-free basis subject to certain customary closing and post-closing adjustments.

The pending divestiture of Landmark met the discontinued operations criteria as it represents a strategic shift that has a major effect on the Company’s operations and financial results.

The transaction is expected to close in the second quarter of 2021.

The Company also agreed to sell its carried interest and co-investments in Landmark funds on the date of closing for approximately $ 34 million, subject to adjustment for certain related cashflow.

BrightSphere International Ltd.

On March 17, 2021, BrightSphere completed the sale of its subsidiary BrightSphere International Ltd.

to Perpetual U.S.

Holdings Company Inc.

(“Perpetual”).

The Company recognized a pre-tax loss of $( 1.3 ) million within the Condensed Consolidated Statement of Operations for the three months ended March 31, 2021.

On March 30, 2021, the Company entered into a definitive agreement with Ares, pursuant to which Ares agreed to purchase all of the Company’s interests in Landmark and the Company’s co-investments in Landmark funds.

On June 2, 2021, the Company completed the sale of all its interests in Landmark to Ares for cash consideration of $ 690 million, adjusted for customary closing adjustments.

The Company recognized a gain on disposal of discontinued operations of $ 509.2 million, net of tax of $ 176.6 million for the three and six months ended June 30, 2021.

The divestiture of Landmark met the discontinued operations criteria as it represented a strategic shift that had a major effect on the Company’s operations and financial results.

The Company also redeemed co-investments of $ 31.5 million in Landmark’s funds as of June 2, 2021 upon consummation of the sale.

Thompson Siegel & Walmsley, LLC

On May 9, 2021, the Company entered into an agreement to sell all of the Company’s interests in TSW to Pendal for cash consideration totaling approximately $ 240 million, adjusted for customary closing adjustments.

The Company also agreed to redeem its seed investments in TSW strategies post-close for approximately $ 14 million, subject to adjustment for certain related cashflow.

The divestiture of TSW met the discontinued operations criteria as it represents a strategic shift that has a major effect on the Company’s operations and financial results.

On July 22, 2021, the Company completed the sale of TSW to Pendal.

Campbell Global

On June 21, 2021, the Company entered into a definitive agreement to sell all of the Company’s interests in Campbell Global, an Affiliate included within “Other” category, to J.P.

Morgan Asset Management.

The assets and liabilities of Campbell Global have been classified as held for sale as the criteria for held for sale accounting treatment was met.

The criteria for discontinued operations were not met for this pending divestiture.

The transaction is expected to close in the third quarter of 2021.

BrightSphere Investment Group Inc.

1 unchanged sentence

3) Divestitures, Held for Sale and Discontinued Operations (cont.)

Assets and Liabilities Held for Sale

The major classes of assets and liabilities of discontinued operations of Landmark classified as held for sale in the Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 are as follows (in millions):

The major classes of assets and liabilities held for sale in the Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020 are as follows (in millions):

2021 December 31,

3 unchanged sentences

Right of use assets 3.6 12.1

Investments 28.7 25.1

Intangible assets, net — 58.2

2 unchanged sentences

Deferred tax assets — 0.5

Affiliate assets held for sale $ 241.6 $ 249.7

Assets of discontinued operations classified as held for sale (1)

$ 74.2 $ 326.8

Other assets held for sale (2)

Assets held for sale $ 136.7 $ 326.8

Accounts payable and accrued expenses $ 1.1 $ 2.2

3 unchanged sentences

Other liabilities $ — $ 1.3

Affiliate liabilities held for sale $ 224.3 $ 226.9

Liabilities of discontinued operations classified as held for sale (1)

$ 92.4 $ 313.3

Other liabilities held for sale (3)

Liabilities held for sale $ 119.2 $ 313.3

(1) Includes assets and liabilities of discontinued operations of TSW that are classified as held for sale as of June 30, 2021 and of Landmark and TSW as of December 31, 2020.

(2) Includes assets of Campbell Global, the Company's co-investments in Campbell Global Funds and seed investments in TSW strategies as of June 30, 2021.

(3) Includes liabilities of Campbell Global as of June 30, 2021.

BrightSphere Investment Group Inc.

1 unchanged sentence

3) Divestitures, Held for Sale and Discontinued Operations (cont.)

The major classes of revenue and expenses constituting income from discontinued operations attributable to controlling interests for Landmark in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2021 and 2020 are as follows (in millions):

Three Months Ended March 31,

The major classes of revenue and expenses constituting net income from discontinued operations attributable to controlling interests for Landmark and TSW in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021 and 2020 are as follows (in millions):

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

2021 2020 2021 2020

Revenues $ 51.3 $ 52.1 $ 109.5 $ 106.1

4 unchanged sentences

Depreciation and amortization 0.2 0.4 0.5 0.6

Consolidated Funds other expense 0.1 0.1

Consolidated Funds’ expense — — 0.1 0.1

Total operating expenses 48.4 55.8 98.6 76.4

Operating income 3.4 22.6

Operating income (loss) 2.9 ( 3.7 ) 10.9 29.7

Investment gains of consolidated Funds 51.5 28.9 68.1 28.9

Income from discontinued operations before taxes 54.4 25.2 79.0 58.6

Income tax expense 1.5 7.2

Income tax expense (benefit) 1.0 ( 1.5 ) 3.7 8.6

Income from discontinued operations, net of tax 53.4 26.7 75.3 50.0

Gain on disposal, net of tax of $ 176.6 , and $ 176.6

509.2 — 509.2 —

Total discontinued operations 562.6 26.7 584.5 50.0

Income from discontinued operations attributable to non-controlling interests 54.6 28.9 68.0 29.0

1 unchanged sentence

Consolidated Funds

The Landmark Equity Purchase agreement provides for the redemption of all of the Company’s carried interest and co-investments in Landmark funds on the date of closing for approximately $ 34 million, subject to adjustment for certain related cashflow.

The redemption will result in the deconsolidation of consolidated Funds that are considered to be variable interest entities (“VIEs”).

The assets and liabilities of the consolidated Funds have been classified as held for sale as the criteria for held for sale and discontinued operations accounting treatment were met and are therefore presented separately in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020.

The transaction is expected to close in the second quarter of 2021.

The consolidated Funds’ investments gains/(losses) from discontinued operations, net of tax, attributable to controlling interests was $ 3.1 million and $( 0.2 ) million in the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2021 and 2020, respectively.

The major classes of assets comprising the consolidated Funds classified as held for sale are as follows at March 31, 2021 and December 31, 2020 (in millions):

In connection with the sale of Landmark on June 2, 2021, the Company transferred its co-investment interests in Landmark funds to Ares for $ 31.5 million.

The redemption resulted in the de-consolidation of consolidated Funds that were considered to be variable interest entities (“VIEs”) as of June 2, 2021 upon consummation of the sale.

The consolidated Funds’ investments gains/(losses) from discontinued operations, net of tax, attributable to controlling interests was $( 3.1 ) million and $ 0.0 million in the Company’s Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2021, respectively.

The consolidated Funds’ investments gains/(losses) from discontinued operations, net of tax, attributable to controlling interests was $ 0.0 million and $( 0.2 ) million in the Company’s Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2020, respectively.

The major classes of assets comprising the consolidated Funds classified as held for sale are as follows at June 30, 2021 and December 31, 2020 (in millions):

BrightSphere Investment Group Inc.

7 unchanged sentences

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

Other divestitures

Investment Counselors of Maryland

On February 6, 2021, the Company entered into a definitive agreement to sell all of the Company’s interests in ICM, an equity-accounted Affiliate within “Other” category.

The criteria for discontinued operations were not met for this divestiture.

On July 19, 2021, the Company completed the sale of all its interest in ICM to William Blair Investment Management for cash consideration totaling $ 18.5 million.

BrightSphere International Ltd.

On March 17, 2021, BrightSphere completed the sale of its subsidiary BrightSphere International Ltd.

to Perpetual U.S.

Holdings Company Inc.

(“Perpetual”).

The Company recognized a pre-tax loss on sale of subsidiary of $( 1.3 ) million within the Condensed Consolidated Statement of Operations for the six months ended June 30, 2021.

4) Investments

6 unchanged sentences

Total investments per Condensed Consolidated Balance Sheets 62.0 90.0

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

Three Months Ended March 31,

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

4) Investments (cont.)

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

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

2021 2020 2021 2020

Realized and unrealized gains (losses) on other investments held at fair value $ 3.5 $ 6.0 $ 4.9 $ ( 8.3 )

5 unchanged sentences

5) Fair Value Measurements

The following table summarizes the Company’s assets that are measured at fair value on a recurring basis at March 31, 2021 (in millions):

The following table summarizes the Company’s assets that are measured at fair value on a recurring basis at June 30, 2021 (in millions):

Quoted prices

2 unchanged sentences

(Level III) Uncategorized Total value,

March 31, 2021

June 30, 2021

Assets of BSIG (1)

33 unchanged sentences

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

(2) Investments in separate accounts of $ 22.7 million at March 31, 2021 consist of approximately 1 % of cash equivalents and 99 % of equity securities, fixed income securities, and other investments.

(2) Investments in separate accounts of $ 9.3 million at June 30, 2021 consist of approximately 1 % of cash equivalents and 99 % of equity securities, fixed income securities, and other investments.

Investments in separate accounts of $ 21.3 million at December 31, 2020 consist of approximately 11 % of cash equivalents and 89 % of equity securities, fixed income securities, and other investments.

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

(3) Investments related to long-term incentive compensation plans of $ 75.0 million and $ 73.0 million at March 31, 2021 and December 31, 2020, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates.

(3) Investments related to long-term incentive compensation plans of $ 45.6 million and $ 48.0 million at June 30, 2021 and December 31, 2020, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates.

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

(4) The uncategorized amounts of $ 12.3 million and $ 16.2 million at March 31, 2021 and December 31, 2020, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

(4) The uncategorized amounts of $ 5.6 million and $ 16.2 million at June 30, 2021 and December 31, 2020, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

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

2 unchanged sentences

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

The real estate investment Funds of $ 5.2 million and $ 6.2 million at March 31, 2021 and December 31, 2020, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds.

The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to ten years from March 31, 2021.

The real estate investment Funds of $ 4.9 million and $ 6.2 million at June 30, 2021 and December 31, 2020, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds.

The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year to ten years from June 30, 2021.

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

2 unchanged sentences

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

Investments in unconsolidated Funds categorized as Level III of $ 2.6 million and $ 2.6 million at March 31, 2021 and December 31, 2020, respectively, related to investments in Forestry Funds advised by an Affiliate and are valued by the general partner of those Funds.

Investments in unconsolidated Funds categorized as Level III of $ 0.0 million and $ 2.5 million at June 30, 2021 and December 31, 2020, respectively, related to investments in Forestry Funds advised by an Affiliate and are valued by the general partner of those Funds.

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

3 unchanged sentences

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

Three Months Ended March 31,

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

Investments in unconsolidated Funds 2021 2020 2021 2020

1 unchanged sentence

At beginning of the period $ 2.5 $ 3.0 $ 2.5 $ 3.0

Transfers in (out) of Level III

Additions (redemptions) ( 0.1 ) — ( 0.1 ) —

Transfers to held for sale (see Note 3) ( 2.7 ) — ( 2.7 ) —

Total net fair value gains/losses recognized in net income

Total Level III financial assets

There were no significant transfers of financial assets or liabilities between Levels II or III during the three months ended March 31, 2021 and 2020, respectively.

$ — $ 3.0 $ — $ 3.0

There were no significant transfers of financial assets or liabilities between Levels II or III during the three and six months ended June 30, 2021 and 2020, respectively.

BrightSphere Investment Group Inc.

1 unchanged sentence

6) Variable Interest Entities

The Company, through its Affiliates, sponsors the formation of various entities considered to be variable interest entities (“VIEs”).

The Company, through its Affiliates, sponsors the formation of various entities considered to be VIEs.

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

7 unchanged sentences

Total Assets $ — $ 114.3

In connection with the pending divestiture of Landmark, the Company reclassified assets of consolidated Funds as “Consolidated Funds’ assets held for sale” in the Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020.

In connection with the sale of Landmark on June 2, 2021, the Company transferred its co-investment interests in Landmark funds to Ares for $ 31.5 million.

The redemption resulted in the de-consolidation of consolidated Funds that were considered to be VIEs as of June 2, 2021 upon consummation of the sale.

The Company reclassified assets of consolidated Funds as “Consolidated Funds’ assets held for sale” in the Condensed Consolidated Balance Sheet as of December 31, 2020.

See Note 3, Divestitures, Held for Sale and Discontinued Operations, in these Notes for additional information.

13 unchanged sentences

Equity interests on the Condensed Consolidated Balance Sheets (2)

$ 14.0 $ 14.3

Maximum risk of loss (1)(2)

2 unchanged sentences

The Company does not record performance or incentive allocations until the respective measurement period has ended.

(2) Includes co-investment interests in Campbell Funds classified as “assets held for sale” as of June 30, 2021 in connection with the pending divestiture of Campbell Global.

See Note 3, Divestitures, Held for Sale and Discontinued Operations, in these Notes for additional information.

BrightSphere Investment Group Inc.

2 unchanged sentences

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

March 31, 2021 December 31, 2020

June 30, 2021 December 31, 2020

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

Third party borrowings:

Revolving credit facility:

$ 125 million revolving credit facility expiring August 22, 2022 (1)(2)

$ 53.9 $ 53.9 2 $ — $ —

Total revolving credit facility $ 53.9 $ 53.9 $ — $ —

Third party borrowings:

$ 275 million 4.80 % Senior Notes Due

3 unchanged sentences

121.7 129.7 2 121.5 126.0 2

Total borrowings $ 475.5 $ 509.2 $ 394.3 $ 424.9

Total third party borrowings $ 394.6 $ 426.0 $ 394.3 $ 424.9

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

(2) On February 23, 2021, the Company’s $ 150 million revolving credit facility was assigned to Acadian Asset Management LLC (“Acadian”), an Affiliate within the Quant & Solutions segment, and amended to reduce the facility to $ 125 million.

(2) On February 23, 2021, the Company’s $ 150 million revolving credit facility was assigned to Acadian and amended to reduce the facility to $ 125 million.

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

14 unchanged sentences

The operating leases have remaining lease terms of 1 year to 13 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

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

Three Months Ended March 31,

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

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

2021 2020 2021 2020

Operating lease cost $ 2.9 $ 3.4 $ 5.9 $ 6.6

5 unchanged sentences

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

For the three months ended March 31, 2021 and 2020, the weighted average remaining lease term was 11.6 years and 12.3 years, respectively, and the weighted average discount rate was 3.34 % and 3.38 %, respectively.

For the six months ended June 30, 2021 and 2020, the weighted average remaining lease term was 11.7 years and 12.4 years, respectively, and the weighted average discount rate was 3.35 % and 3.34 %, respectively.

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

1 unchanged sentence

Year Ending December 31,

2021 (excluding the three months ended March 31, 2021)

2021 (excluding the six months ended June 30, 2021)

Thereafter 64.0

4 unchanged sentences

9) Goodwill and Intangible Assets

In connection with the pending divestiture of Landmark, the Company reclassified $ 148.1 million of goodwill to “Affiliate assets held for sale” in the Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020.

The Company also reclassified $ 56.6 million and $ 58.2 million of net intangible assets to “Affiliate assets held for sale” in the Condensed Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020, respectively.

In connection with the divestiture of Landmark, the Company reclassified $ 148.1 million of goodwill to “Assets held for sale” in the Condensed Consolidated Balance Sheet as of December 31, 2020.

The Landmark divestiture was consummated on June 2, 2021.

In connection with the pending divestiture of TSW, the Company reclassified $ 13.7 million of goodwill to “Assets held for sale” in the Condensed Consolidated Balance Sheet as of June 30, 2021 and December 31, 2020.

See Note 3, Divestitures, Held for Sale and Discontinued Operations, in these Notes for additional information.

1 unchanged sentence

Operational commitments

The Company had unfunded commitments to invest up to approximately $ 5 million in co-investments as of March 31, 2021.

The Company had unfunded commitments to invest up to approximately $ 4 million in co-investments at Campbell as of June 30, 2021.

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

The Company also had unfunded commitments to invest up to approximately $ 29 million in co-investments for Landmark as of March 31, 2021.

On March 30 2021, the Company announced the divestiture of all of the Company’s interest in Landmark.

The pending divestiture of Landmark met the discontinued operations criteria.

The commitments will be funded as required through the disposition date, which is expected to occur in the second quarter of 2021.

On June 21, 2021, the Company announced the divestiture of all of the Company’s interests in Campbell.

The pending divestiture of Campbell met the held for sale criteria.

The commitments will be funded as required through the disposition date, which is expected to occur in the third quarter of 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for additional information.

On March 30, 2021, the Company announced the divestiture of all of the Company’s interest in Landmark and funded its commitments as required through the disposition, which consummated on June 2, 2021.

As a result of the disposition, the Company no longer had any unfunded commitments to Landmark as of June 30, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for additional information.

Certain Affiliates operate under regulatory authorities that require that they maintain minimum financial or capital requirements.

3 unchanged sentences

This guaranty expires in 2022.

There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of March 31, 2021 related to this guaranty.

There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of June 30, 2021 related to this guaranty.

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

2 unchanged sentences

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

As of March 31, 2021, there were no material accruals for claims, legal proceedings or other contingencies.

As of June 30, 2021, there were no material accruals for claims, legal proceedings or other contingencies.

BrightSphere Investment Group Inc.

9 unchanged sentences

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

At March 31, 2021, management of the Company has estimated the potential maximum exposure and concluded that it is not material.

No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at March 31, 2021.

At June 30, 2021, management of the Company has estimated the potential maximum exposure and concluded that it is not material.

No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at June 30, 2021.

Considerations of credit risk

4 unchanged sentences

The majority of the Company’s cash equivalents consists of money market funds.

At March 31, 2021, approximately $ 333 million of the Company’s cash and cash equivalents were invested in money market funds.

At June 30, 2021, approximately $ 1.1 billion of the Company’s cash and cash equivalents were invested in money market funds.

Additionally, the Company holds insurance policies which cover historical and future tax benefits relating to certain of its deferred tax assets.

6 unchanged sentences

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

Three Months Ended March 31,

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

2021 2020 2021 2020

Income from continuing operations attributable to controlling interests $ 24.7 $ 21.1 $ 43.2 $ 30.5

Income from discontinued operations attributable to controlling interests (Note 3) 508.0 $ ( 2.2 ) $ 516.5 $ 21.0

Net income attributable to controlling interests $ 532.7 $ 18.9 $ 559.7 $ 51.5

Total income available to participating unvested securities (1)

— — ( 0.1 ) —

Net income attributable to common stock $ 532.7 $ 18.9 $ 559.6 $ 51.5

11 unchanged sentences

Diluted earnings per share of common stock attributable to controlling interests $ 6.42 $ 0.23 $ 6.77 $ 0.62

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

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

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

11) Earnings Per Share (cont.)

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

Management fees

3 unchanged sentences

The Company’s products subject to performance fees earn these fees upon exceeding high-water mark performance thresholds or outperforming a hurdle rate.

Performance fees are recorded in revenues when the contractual performance criteria have been met and when it is probable that a significant reversal of revenue recognized will not occur in future reporting periods.

Other revenue

1 unchanged sentence

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

Revenue from expense reimbursements amounted to $ 1.0 million and $ 1.1 million for the three months ended March 31, 2021 and 2020, respectively, and is recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations.

Revenue from expense reimbursements amounted to $ 1.2 million and $ 1.1 million for the three months ended June 30, 2021 and 2020, respectively.

Revenue from expense reimbursements amounted to $ 2.2 million and $ 2.2 million for the six months ended June 30, 2021 and 2020, respectively, and is recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations.

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

Disaggregation of management fee revenue

The Company classifies its revenue (including only consolidated Affiliates that are included in management fee revenue) among the following asset classes:

equity, which includes small cap through large cap securities and substantially value or blended investment styles;

Global / non-U.S.

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

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

Alternatives, which is mainly comprised of forestry.

BrightSphere Investment Group Inc.

1 unchanged sentence

12) Revenue (cont.)

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

Three Months Ended March 31,

Disaggregation of management fee revenue

The geographic disaggregation of management fee revenue for the three and six months ended June 30 (in millions) are presented below:

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

2021 2020 2021 2020

Quant & Solutions

Global / non-U.S.

equity $ 98.9 $ 85.2

Global / non-U.S.

equity 14.0 18.8

Fixed income 1.2 6.3

equity 6.3 26.8

Alternatives 4.9 5.5

Management fee revenue

$ 80.0 $ 58.9 $ 154.4 $ 120.2

26.0 23.3 50.5 47.2

Liquid Alpha (1)

$ — $ 22.9 $ — $ 47.9

4.1 4.3 7.8 7.9

1.5 1.7 2.7 3.6

Management fee revenue $ 111.6 $ 118.6 $ 215.4 $ 243.1

(1) Prior to March 31, 2021, the Company had the Alternatives reportable segment which consisted of Landmark and Campbell Global operating segments.

On March 30, 2021, the Company entered into an agreement to sell of all of the Company’s interests in Landmark.

As a result of this transaction, Landmark has been reclassified to discontinued operations, and the Alternatives segment no longer constitutes a reportable segment of the Company.

As a result of this transaction, Landmark was reclassified to discontinued operations, and the Alternatives segment no longer constitutes a reportable segment of the Company.

The Campbell Global operating segment was reclassified to “Other” within the Company’s segment reporting.

On June 21, 2021 the Company entered into an agreement to sell all of our equity interests in Campbell Global.

See Note 3, Divestitures, Held for Sale and Discontinued Operations and Note 15, Segments for further discussion.

(2) Prior to June 30, 2021, the Company had a Liquid Alpha reportable segment which was comprised of TSW and ICM.

On February 6, 2021, the Company entered into an agreement to sell all of the Company’s interests in ICM, an equity-accounted Affiliate.

On May 9, 2021, the Company entered into an agreement to sell all of the Company’s interests in TSW.

As a result of this transaction, TSW was reclassified to discontinued operations and the Liquid Alpha no longer constitutes a reportable segment of the Company.

The ICM operating segment was reclassified to “Other” within the Company’s segment reporting for the three and six months ended June 30, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for further discussion and Note 15, Segments for further discussion.

BrightSphere Investment Group Inc.

1 unchanged sentence

13) Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2021 and 2020 were as follows (in millions):

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended June 30, 2021 and 2020 are as follows (in millions):

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of December 31, 2020 $ 4.4 $ ( 18.0 ) $ ( 13.6 )

Balance, as of March 31, 2021

$ 5.5 $ ( 17.4 ) $ ( 11.9 )

Foreign currency translation adjustment 0.1 — 0.1

2 unchanged sentences

Other comprehensive income 0.1 0.6 0.7

Balance, as of June 30, 2021

$ 5.6 $ ( 16.8 ) $ ( 11.2 )

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of March 31, 2020 $ 0.7 $ ( 19.8 ) $ ( 19.1 )

Foreign currency translation adjustment 0.3 — 0.3

Amortization related to derivatives securities, before tax

Tax impact — ( 0.2 ) ( 0.2 )

Other comprehensive income 0.3 0.6 0.9

Balance, as of June 30, 2020

$ 1.0 $ ( 19.2 ) $ ( 18.2 )

For each of the three months ended June 30, 2021 and 2020, the Company reclassified $ 0.8 million from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

The components of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2021 and 2020 are as follows (in millions):

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

3 unchanged sentences

Tax impact — ( 0.4 ) ( 0.4 )

Other comprehensive income 1.2 1.2 2.4

Balance, as of June 30, 2021

$ 5.6 $ ( 16.8 ) $ ( 11.2 )

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

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

Foreign currency translation adjustment ( 1.8 ) — ( 1.8 )

Amortization related to derivatives securities, before tax

Tax impact — ( 0.4 ) ( 0.4 )

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

Balance, as of March 31, 2020

Balance, as of June 30, 2020

$ 1.0 $ ( 19.2 ) $ ( 18.2 )

For the three months ended March 31, 2021 and 2020, the Company reclassified $ 0.8 million and $ 0.7 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

For the six months ended June 30, 2021 and 2020, the Company reclassified $ 1.6 million and $ 1.5 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

14) Derivatives and Hedging

6 unchanged sentences

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

As of March 31, 2021, the balance recorded in accumulated other comprehensive income (loss) was $( 17.4 ) million, net of tax.

As of June 30, 2021, the balance recorded in accumulated other comprehensive income (loss) was $( 16.8 ) million, net of tax.

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

Amounts of $ 0.8 million and $ 0.7 million have been reclassified for the three months ended March 31, 2021 and

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

14) Derivatives and Hedging (cont.)

2020, respectively.

The Company reclassified $ 0.8 million for each of the three months ended June 30, 2021 and 2020, respectively.

Amounts of $ 1.6 million and $ 1.5 million have been reclassified for the six months ended June 30, 2021.

During the next twelve months the Company expects to reclassify approximately $ 3.4 million to interest expense.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

The Company has the following business segments (1)(2) :

• Liquid Alpha —comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S.

equities, as well as fixed income.

The Company has the following reportable segment (1)(2) :

and small-cap equities, as well as managed volatility, ESG, multi-asset, equity alternatives, and long/short strategies.

This segment is comprised of the Company’s interest in Acadian.

Campbell Global, ICM and the corporate head office are included within Other (1)(2) category.

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

(1) Prior to March 31, 2021, the Company had an Alternatives reportable segment which was comprised of Landmark and Campbell Global operating segments.

On March 30, 2021, the Company entered into an agreement to sell of all of the Company’s interests in Landmark.

On March 30, 2021, the Company entered into an agreement to sell all of the Company’s interests in Landmark.

As a result of this transaction, Landmark has been reclassified to discontinued operations, and the Alternatives segment no longer constitutes a reportable segment of the Company.

The reportable segments for all periods presented have been recast to reflect the reporting of Landmark within discontinued operations and the reclassification of Campbell Global to “Other” category.

On June 21, 2021, the Company entered into an agreement to sell all of the Company’s interests in Campbell Global.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for further discussion.

(2) On February 6, 2021, the Company announced the divestiture of all of the Company’s interests in Investment Counselors of Maryland (“ICM”), an equity-accounted Affiliate.

(2) Prior to June 30, 2021, the Company had a Liquid Alpha reportable segment which was comprised of TSW and ICM.

On February 6, 2021, the Company entered into an agreement to sell all of the Company’s interests in ICM, an equity-accounted Affiliate.

On May 9, 2021, the Company entered into an agreement to sell all of the Company’s interests in TSW.

As a result of this transaction, TSW has been reclassified to discontinued operations and Liquid Alpha no longer constitutes a reportable segment of the Company.

The ICM operating segment was reclassified to “Other” category within the Company’s segment reporting for the three and six months ended June 30, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for further discussion.

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

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

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

Performance Measure

6 unchanged sentences

This measure supplements and should be considered in addition to, and not in lieu of, the Condensed Consolidated Statements of Operations prepared in accordance with U.S.

The Company does not disclose total asset information for its reportable segments as the information is not reviewed by the CODM.

The Company does not disclose total asset information for its reportable segment as the information is not reviewed by the CODM.

ENI revenue includes management fees, performance fees and other revenue under U.S.

11 unchanged sentences

Segment Presentation

The following tables set forth summarized operating results for the Company's two segments and related adjustments necessary to reconcile the segment economic net income to arrive at the Company's consolidated U.S.

GAAP net income (loss) for the three months ended March 31, 2021 (in millions):

Three Months Ended March 31, 2021

The following tables set forth summarized operating results for the Company's segments and related adjustments necessary to reconcile the segment economic net income to arrive at the Company's consolidated U.S.

GAAP net income (loss):

The following table presents the financial data for the Company’s segment for the three months ended June 30, 2021 (in millions):

Three Months Ended June 30, 2021

Quant & Solutions Other Reconciling Adjustments Total U.S.

ENI revenue $ 111.1 $ 22.3 $ ( 0.1 ) (a) $ 133.3

ENI operating expenses 38.3 9.5 13.5 (b) 61.3

Earnings before variable compensation

72.8 12.8 ( 13.6 ) 72.0

Variable compensation 22.0 10.4 0.3 (c) 32.7

ENI operating earnings (after variable comp)

50.8 2.4 ( 13.9 ) 39.3

Affiliate key employee distributions

3.1 0.1 — 3.2

Earnings after Affiliate key employee distributions

47.7 2.3 ( 13.9 ) 36.1

Net interest expense — ( 5.4 ) ( 0.8 ) (d) ( 6.2 )

Net investment income — — 4.7 (e) 4.7

Net income attributable to non-controlling interests in consolidated Funds

— — ( 54.6 ) (e) ( 54.6 )

Income tax (expense) benefit — ( 11.7 ) 1.8 (f) ( 9.9 )

Income from discontinued operations, net of tax — — 53.4 (g) 53.4

Gain on disposal of discontinued operations, net of tax — — 509.2 (h) 509.2

Economic net income

$ 47.7 $ ( 14.8 ) $ 499.8 $ 532.7

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

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

15) Segments (cont.)

Three Months Ended June 30, 2020

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

12 unchanged sentences

Net investment income — — — 13.3 (e) 13.3

Net income attributable to non-controlling interests in consolidated Funds

— — — ( 35.0 ) (e) ( 35.0 )

Income tax expense — — ( 8.2 ) ( 0.6 ) (f) ( 8.8 )

Income from discontinued operations, net of tax — — — 26.7 (g) 26.7

Economic net income $ 28.8 $ 10.4 $ ( 19.6 ) $ ( 0.7 ) $ 18.9

The following table presents the financial data for the Company’s segment for the six months ended June 30, 2021 (in millions):

Six Months Ended June 30, 2021

Quant & Solutions Other Reconciling Adjustments Total U.S.

ENI revenue $ 214.6 $ 28.6 $ ( 0.2 ) (a) $ 243.0

ENI operating expenses 77.4 19.2 16.6 (b) 113.2

Earnings before variable compensation

137.2 9.4 ( 16.8 ) 129.8

Variable compensation 44.6 11.3 0.8 (c) 56.7

ENI operating earnings (after variable comp)

92.6 ( 1.9 ) ( 17.6 ) 73.1

Affiliate key employee distributions

4.6 ( 0.1 ) — 4.5

Earnings after Affiliate key employee distributions

88.0 ( 1.8 ) ( 17.6 ) 68.6

Net interest expense — ( 10.8 ) ( 1.6 ) (d) ( 12.4 )

Net investment income — — 7.3 (e) 7.3

Loss on sale of subsidiary — — ( 1.3 ) (e) ( 1.3 )

2 unchanged sentences

Income from discontinued operations, net of tax — — 75.3 (g) 75.3

Gain on disposal of discontinued operations, net of tax — — 509.2 (h) 509.2

Economic net income

3 unchanged sentences

15) Segments (cont.)

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

Three Months Ended March 31, 2020

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

Six Months Ended June 30, 2020

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

48 unchanged sentences

exclude the tax expense or benefits relating to uncertain tax positions, and exclude the tax impact of other unusual items that are not related to current operating results for ENI purposes.

(g) Adjusted to include the results of discontinued operations, which is included in U.S.

(g) Adjusted to include the results of discontinued operations, net of tax, which is included in U.S.

GAAP net income attributable to controlling interests.

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

Three Months Ended March 31,

$ 99.8 $ 107.3

Management fee revenue

$ 125.3 $ 142.6

(h) Adjusted to include the gain on disposal of discontinued operations, net of tax, which is included in U.S.

GAAP net income attributable to controlling interests.

16) Related Party Transactions

Landmark has provided loans to its employees.

At March 31, 2021 and December 31, 2020, the balance of the loans to Affiliate employees was $ 3.9 million and $ 8.4 million, respectively.

These loans will be repaid by 2022.

On March 30 2021, the Company announced the divestiture of all of the Company’s interest in Landmark.

The pending divestiture of Landmark met the discontinued operations criteria.

The balance of the loans to Affiliate employees will be deconsolidated on disposition date, which is expected to occur in the second quarter of 2021.

At December 31, 2020, the balance of the loans to Affiliate employees was $ 8.4 million.

On March 30 2021, the Company announced the divestiture of all of the Company’s interest in Landmark, which occurred on June 2, 2021.

As a result of the disposition, the Company no longer had any related party transactions with Landmark as of June 30, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations for additional information.

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

What changed 10-Q

Item 1. Financial Statements