What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-05 compared with 2021-08-09 · 332 added, 350 removed, 919 unchanged (43% of the section changed)

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References to the holding company or “Center” excluding the Affiliates refer to BrightSphere Inc., or “BSUS,” a Delaware corporation and wholly owned subsidiary of BSIG.

Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to “Affiliates” or an “Affiliate” refer to the asset management firms in which we have an ownership interest.

References in this Quarterly Report on Form 10-Q to “OM plc” refer to Old Mutual plc, our former parent.

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• Overview provides a brief description of our business.

It includes information on our reporting segment and underlying Affiliates, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI.

It includes information on our reporting segment and underlying Affiliate, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI.

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, 2021 and 2020 includes an explanation of changes in our U.S.

GAAP revenue, expense and other items for the three and six months ended June 30, 2021 and 2020, as well as key U.S.

GAAP Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020 includes an explanation of changes in our U.S.

GAAP revenue, expense and other items for the three and nine months ended September 30, 2021 and 2020, 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, 2021 and 2020 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, 2021 and 2020 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.

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

This segment is comprised of our 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 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 our segment.

This segment is comprised of our interest in our sole Affiliate, Acadian Asset Management LLC (“Acadian”).

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

While Acadian maintains autonomy in the investment process and the day-to-day management of their business, our strategy is to work with Acadian to accelerate the growth and profitability of their firm.

The corporate head office is included within the Other category.

As of December 31, 2020, we had three reportable segments that were comprised of five Affiliates.

We entered into agreements to divest our equity interests in four Affiliates during the six months ended June 30, 2021.

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

On March 30, 2021, we entered into an agreement to sell all of our interests in Landmark.

We entered into agreements to divest our equity interests in four Affiliates during the nine months ended September 30, 2021.

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

On March 30, 2021, we entered into an agreement to sell all of our interests in Landmark and completed the sale on June 2, 2021.

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

The Campbell Global operating segment was reclassified to the Other category within our segment reporting.

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

On August 31, 2021, we completed the sale of all of our interests in Campbell Global.

Operational information for Campbell Global is included within the Other category until August 31, 2021, the consummation of the sale.

See “Recent Developments” herein.

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

On February 6, 2021, we entered into an agreement to sell all of our interests in ICM.

On May 9, 2021, we entered into an agreement to sell all of our interests in TSW.

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

On May 9, 2021, we entered into an agreement to sell all of our interests in TSW and completed the sale on July 22, 2021.

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

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

The ICM operating segment was included in the Other category within our segment reporting for the three and nine months ended September 30, 2021.

On July 19, 2021 we completed the sale of all of our interests in ICM.

Operational information for ICM is included within the Other category until July 19, 2021, the consummation of the sale.

See “Recent Developments” herein.

Upon closing of the pending Campbell Global sale, which is expected to be in the third quarter, Acadian will be our sole Affiliate.

GAAP, an Affiliate may be consolidated into operations or may be accounted for under the equity method of accounting.

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.

GAAP, Acadian is consolidated into our financial statements.

We may also be required to consolidate certain of our 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.

Recent Developments

Divestiture of Landmark, Campbell Global, ICM and TSW

On June 2, 2021, we sold all of our equity interests in Landmark to Ares Management Corporation.

The transaction resulted in a $509.2 million gain on disposal of discontinued operations, net of tax which is reflected in our Consolidated Statement of Operations.

On June 21, 2021, we entered into a definitive agreement to sell all of our interests in Campbell Global to J.P.

Divestiture of Campbell Global, TSW, ICM and Landmark

On August 31, 2021, we completed the sale of all of our interests in Campbell Global to J.P.

Morgan Asset Management.

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

On July 22, 2021, we completed the sale of all of our interests in TSW to Pendal Group Limited.

On July 19, 2021, we completed the sale of all our interests in ICM, an equity-accounted Affiliate, to William Blair Investment Management.

On July 22, 2021, we completed the sale of all of our interests in TSW to Pendal Group Limited (“Pendal”) in exchange for approximately $240 million.

On June 2, 2021, we completed the sale of all of our equity interests in Landmark to Ares Management Corporation.

COVID-19 Impact

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The overall extent and duration of COVID-19 on businesses and economic activity generally remains unclear.

We continue to monitor the economic uncertainty and market volatility related to COVID-19, which has impacted the investment management industry in which we and our Affiliates operate.

We continue to monitor the economic uncertainty and market volatility related to COVID-19, which has impacted the investment management industry in which we operate.

The extent of the impact on our business operations and financial results will depend on a number of factors and future developments, including the spread of variants of COVID-19, which are uncertain and cannot be predicted.

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Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure.

Our Affiliates earn management fees based on assets under management.

Approximately 80% of our management fees for the three months ended June 30, 2021 were 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.

We earn management fees based on assets under management.

Approximately 80% of our management fees for the three months ended September 30, 2021 were 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.

Our Affiliates may also earn performance fees, or adjust management fees, when certain accounts differ in relation to relevant benchmarks or exceed or fail to exceed required returns.

Approximately $19.5 billion, or 15%, of our AUM in consolidated Affiliates, are in accounts with incentive fee in which we participate in the performance fee.

The majority of these incentive fees are calculated based on value added over the relevant benchmarks on a rolling one-year and three-year basis.

Our largest expense item is compensation and benefits paid to our and our Affiliates’ employees, which consists of both fixed and variable components.

We may also earn performance fees, or adjust management fees, when certain accounts differ in relation to relevant benchmarks or exceed or fail to exceed required returns.

Approximately $14.0 billion, or 12%, of our AUM, are in accounts in which we participate in the performance fee.

The majority of these performance fees are calculated based on value added over the relevant benchmarks on a rolling one-year and three-year basis.

Our largest expense item is compensation and benefits paid to our employees, which consists of both fixed and variable components.

Fixed compensation and benefits represents base salaries and wages, payroll taxes and the costs of our employee benefit programs.

Variable compensation, calculated as described below, may be awarded in cash, equity, or profit interests.

The arrangements in place with our Affiliates result in the sharing of economics between BSUS and each Affiliate’s key management personnel using a profit-sharing model, except for ICM, which used a revenue share model as a result of a legacy economic arrangement that has not been restructured.

Profit sharing affects two elements within

our earnings:

(i) the calculation of variable compensation and (ii) the level of each Affiliate’s equity or profit interests distribution to its employees.

Variable compensation is the portion of earnings that is contractually allocated to Affiliate employees as a bonus pool, typically representing a fixed percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses.

Profits after variable compensation are shared between us and Affiliate key employee equity holders according to our respective equity or profit interests ownership.

The sharing of profits in this manner ensures that the economic interests of Affiliate key employees and those of BSUS are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term.

We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

Equity or profit interests owned by Affiliate key employees are awarded as part of their variable compensation arrangements.

Over time, Affiliate key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by Affiliate key employees forgoing cash bonuses in exchange for the equivalent value in Affiliate equity or profit interests.

The arrangements in place with Acadian result in the sharing of economics between BSUS and Acadian’s key management personnel using a profit-sharing model.

Profit sharing affects two elements within our earnings:

(i) the calculation of variable compensation and (ii) the level of equity or profit interests distribution to our employees.

Variable compensation is the portion of earnings that is contractually allocated to Acadian employees as a bonus pool, typically representing a fixed percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses.

Profits after variable compensation are shared between us and Acadian key employee equity holders according to our respective equity or profit interests ownership.

The sharing of profits in this manner ensures that the economic interests of Acadian key employees and those of BSUS are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term.

We view profit sharing as an

attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth.

Equity or profit interests owned by Acadian key employees are awarded as part of their variable compensation arrangements.

Over time, key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by key employees forgoing cash bonuses in exchange for the equivalent value in Acadian equity or profit interests.

The recycling of equity or profit interests is often facilitated by BSUS;

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In measuring and monitoring the key components of our earnings, our management uses a non-GAAP financial measure, ENI, to evaluate the financial performance of, and to make operational decisions for, our business.

We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine Affiliate variable compensation and equity distributions, and incentivize management.

We also use ENI to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and equity distributions, and incentivize management.

It is an important measure in evaluating our financial performance because we believe it most accurately represents our operating performance and cash generation capability.

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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 our equity-accounted Affiliate.

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

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GAAP that identifies net components of revenues and expenses that are not attributable to our stockholders.

For example, the portion of the net income (loss) of any consolidated

Fund that is attributable to the outside investors or clients of the consolidated Fund is included in “Non-controlling interests” in our Condensed Consolidated Financial Statements.

For example, the portion of the net income (loss) of any consolidated Fund that is attributable to the outside investors or clients of the consolidated Fund is included in “Non-controlling interests” in our Condensed Consolidated Financial Statements.

Conversely, “controlling interests” is the portion of revenue or expense that is 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, 2021 and 2020:

($ 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, 2021 and 2020:

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

2021 2020 2021 vs.

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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 income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of $2.0 million and costs associated with the transfer of an insurance policy from our former parent of $0.3 million for the three months ended June 30, 2021.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of $3.5 million, costs associated with the transfer of an insurance policy from our former parent of $0.6 million and the loss on sale of subsidiary of $1.3 million for the six months ended June 30, 2021.

Excludes income from

discontinued operations attributable to controlling interests, as well as restructuring costs at the Center of $3.0 million and costs associated with the transfer of an insurance policy from our former parent of $0.3 million for the three months ended June 30, 2020.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center of $3.4 million and costs associated with the transfer of an insurance policy from our former parent of $0.6 million for the six months ended June 30, 2020.

(3) Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of $0.5 million, costs associated with the transfer of an insurance policy from our former parent of $0.3 million and the gain on sale of Affiliates of $34.6 million for the three months ended September 30, 2021.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of $4.0 million, costs associated with the transfer of an insurance policy from our former parent of $0.9 million and the gain on sale of Affiliates of $33.3 million for the nine months ended September 30, 2021.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center of $1.4 million, costs associated with the transfer of an insurance policy from our former parent of $0.4 million, and the gain on sale of Affiliates of $7.2 million for the three months ended September 30, 2020.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center of $4.8 million, costs associated with the transfer of an insurance policy from our former parent of $1.0 million and the gain on sale of Affiliates of $7.2 million for the nine months ended September 30, 2020.

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

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Assets Under Management

In June 2021, we completed the sale of Landmark.

In June 2021, we completed the sale of all our equity interests in Landmark.

As a result, Landmark is reported within discontinued operations and the Alternatives segment no longer constitutes a reportable segment.

In May 2021, we entered into a definitive agreement to sell our equity interests in TSW.

We completed the sale in July 2021.

In July 2021, we completed the sale of all our equity interests in TSW.

As a result, TSW is reported within discontinued operations and the Liquid Alpha segment no longer constitutes a reportable segment.

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

($ in billions) June 30, 2021 December 31, 2020

($ in billions) September 30, 2021 December 31, 2020

Acadian Asset Management $ 113.7 $ 108.1

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*Reported AUM.

(1) In June 2021, we entered into a definitive agreement to sell all our interests in Campbell Global, which is expected to close in the third quarter of 2021, see “Recent Developments” herein.

(2) In February 2021, we announced the divestiture of ICM.

On July 19, 2021, we completed the sale of ICM, see “Recent Developments” herein.

(3) On June 2, 2021, we completed the sale of Landmark, see “Recent Developments” herein.

(4) In May 2021, we entered into a definitive agreement to sell all our equity interests in TSW.

On July 22, 2021, we completed the sale of TSW, see “Recent Developments” herein.

(1) On August 31, 2021, we completed the sale of all our interests in Campbell Global, see “Recent Developments” herein.

(2) On July 19, 2021, we completed the sale of all our interests in ICM, see “Recent Developments” herein.

(3) On June 2, 2021, we completed the sale of all our interests in Landmark, see “Recent Developments” herein.

(4) On July 22, 2021, we completed the sale of all our equity interests in TSW, see “Recent Developments” herein.

Our strategies include:

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Emerging Markets equity, which includes Quant & Solutions equity investments in the emerging and frontier markets;

Other, which is mainly comprised of forestry and U.S.

Other, which was mainly comprised of forestry and U.S.

small cap equities.

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

($ in billions) June 30, 2021 December 31, 2020

($ in billions) September 30, 2021 December 31, 2020

Developed Markets 86.4 81.1

Emerging Markets 27.3 27.0

Other 9.1 7.9

Total assets under management $ 113.7 $ 116.0

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

($ in billions) June 30, 2021 December 31, 2020

($ in billions) September 30, 2021 December 31, 2020

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, 2021 December 31, 2020

($ in billions) September 30, 2021 December 31, 2020

AUM % of total AUM % of total

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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) 2021 2020 2021 2020

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Beginning balance $ — $ 47.8 $ — $ 57.9

Sale of Affiliate — (1.7) — (1.7)

Gross inflows — 1.6 — 5.5

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Beginning balance $ 9.1 $ 5.6 $ 9.0 $ 5.4

Sale of Affiliates (8.9) — (8.9) —

Gross inflows — 0.2 0.7 0.7

Gross outflows — (0.1) (0.2) (0.3)

Reinvested income and distributions — — — —

Net flows — 0.1 0.5 0.4

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Beginning balance $ 126.9 $ 145.1 $ 116.0 $ 164.9

Sale of Affiliate (8.9) (1.7) (8.9) (1.7)

Gross inflows 2.8 4.5 8.4 16.0

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Annualized revenue impact of net flows ($ in millions) $ (1.6) $ (9.8) $ (10.4) $ (23.8)

(1) AUM representing liquid alternative strategies previously excluded from the Quant & Solutions segment has been reclassified in the three and six months ended June 30, 2021 and are included in the current period metrics above.

(1) AUM representing liquid alternative strategies previously excluded from the Quant & Solutions segment has been reclassified as of January 1, 2021 and are included in the current period metrics above.

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

(3) Our reportable segments reflect the sale of Landmark and announced divestiture of TSW.

(3) Our reportable segments reflect the sales of Landmark and TSW.

As a result of the sale, Landmark, previously included in the Alternatives segment, is reported within discontinued operations and Alternatives no longer constitutes a reportable segment.

The remaining portion of the Alternatives segment, including Campbell Global, has been reclassified to “Other” for all periods presented.

TSW, previously included in the Liquid Alpha segment, is now reported within discontinued operations and Liquid Alpha no longer constitutes a reportable segment in the current period.

The remaining portion of the Liquid Alpha segment, including ICM, has been reclassified to “Other” as of the beginning of the first quarter of 2021.

TSW, previously included in the Liquid Alpha segment, is now reported within discontinued operations and Liquid Alpha no longer constitutes a reportable segment as of the beginning of the second quarter of 2021.

The remaining portion of the Liquid Alpha segment, including ICM, has been reclassified to the Other category as of the beginning of the first quarter of 2021.

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,

2021 2020 2021 2020

Beginning balance $ 13.6 $ 24.0 $ 11.5 $ 28.5

Sale of Affiliate (0.4) (0.2) (0.4) (0.2)

Gross inflows 0.2 1.2 2.1 3.9

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Beginning balance $ 105.5 $ 114.0 $ 97.8 $ 128.2

Sale of Affiliate (6.0) (1.4) (6.0) (1.4)

Gross inflows 1.9 2.7 4.9 10.2

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Market appreciation (depreciation) (3.3) 5.8 9.6 (8.2)

(0.1) — (0.1) —

Ending balance $ 95.1 $ 114.6 $ 95.1 $ 114.6

Beginning balance $ 7.8 $ 7.1 $ 6.7 $ 8.2

Sale of Affiliate (2.5) (0.1) (2.5) (0.1)

Gross inflows 0.7 0.6 1.4 1.9

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Beginning balance $ 126.9 $ 145.1 $ 116.0 $ 164.9

Sale of Affiliate (8.9) (1.7) (8.9) (1.7)

Gross inflows 2.8 4.5 8.4 16.0

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Market appreciation (depreciation) (3.6) 7.2 11.8 (12.2)

(0.1) — (0.1) —

Ending balance continuing operations 113.7 147.7 113.7 147.7

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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,

2021 2020 2021 2020

Beginning balance $ 85.9 $ 100.4 $ 77.4 $ 113.4

Sale of Affiliate (7.9) (0.5) (7.9) (0.5)

Gross inflows 1.4 2.7 4.7 10.7

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Beginning balance $ 41.0 $ 44.7 $ 38.6 $ 51.5

Sale of Affiliate (1.0) (1.2) (1.0) (1.2)

Gross inflows 1.4 1.8 3.7 5.3

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Market appreciation (depreciation) (1.2) 2.1 3.2 (4.3)

(0.1) — (0.1) —

Ending balance $ 39.6 $ 44.0 $ 39.6 $ 44.0

Beginning balance $ 126.9 $ 145.1 $ 116.0 $ 164.9

Sale of Affiliate (8.9) (1.7) (8.9) (1.7)

Gross inflows 2.8 4.5 8.4 16.0

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Market appreciation (depreciation) (3.6) 7.2 11.8 (12.2)

(0.1) — (0.1) —

Ending balance continuing operations 113.7 147.7 113.7 147.7

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As a result of the transactions, Landmark and TSW are reported within discontinued operations.

At June 30, 2021, our total assets under management were $126.9 billion, an increase of $6.7 billion, or 5.6%, compared to $120.2 billion at March 31, 2021 and a decrease of $(18.2) billion, or (12.5)%, compared to $145.1 billion at June 30, 2020.

The decrease in assets under management compared to June 30, 2020 is a result of the Barrow, Hanley, Mewhinney & Strauss, LLC ("Barrow Hanley") and Copper Rock Capital Partners ("Copper Rock") dispositions that occurred in the second half of 2020.

The change in assets under management during the three months ended June 30, 2021 reflects net market appreciation of $7.7 billion from continued market recovery, partially offset by net outflows of $(0.9) billion.

The change in assets under management during the six months ended June 30, 2021 reflects net market appreciation of $15.4 billion, realizations and other of $(0.1) billion, and net flows of $(4.4) billion including reinvested income and distributions of $1.3 billion.

For the three months ended June 30, 2021, our net flows were $(0.9) billion compared to $(3.5) billion for the three months ended March 31, 2021 and $(1.8) billion for the three months ended June 30, 2020.

The change in net flows during the three months ended June 30, 2021 compared to the three months ended June 30, 2020 was primarily due to robust sales for non-U.S.

and multi-asset strategies.

Reinvested income and distributions of $0.7 billion, $0.6 billion and $1.0 billion are reflected in the net flows for the three months ended June 30, 2021, March 31, 2021 and June 30, 2020, respectively.

For the three months ended June 30, 2021, the annualized revenue impact of the net flows was $(0.9) million.

This is compared to the annualized revenue impact of net flows of $(7.9) million for the three months ended March 31, 2021 and $(14.0) million for the three months ended June 30, 2020.

Gross inflows of $3.2 billion during the three-month period yielded approximately 48 bps compared to $5.0 billion yielding approximately 33 bps in the year-ago period, and gross outflows in the same period of $(4.8) billion yielded approximately 39 bps compared to (7.8) yielding approximately 44 bps in the year-ago period.

For the six months ended June 30, 2021, our net flows were $(4.4) billion compared to $(0.5) billion for the six months ended June 30, 2020.

The change in net flows during the six months ended June 30, 2021 compared to the six months ended June 30, 2020 was primarily due to re-balancing and asset reallocation in select Quant & Solutions strategies.

Reinvested income and distributions of $1.3 billion and $2.2 billion are reflected in the net flows for the six months ended June 30, 2021 and June 30, 2020, respectively.

For the six months ended June 30, 2021, the annualized revenue impact of the net flows was $(8.8) million compared to $(14.2) million for the six months ended June 30, 2020.

Gross inflows of $5.6 billion in the six months ended June 30, 2021 yielded approximately 49 bps compared to $11.4 billion yielding approximately 33 bps in the year-ago period.

Gross outflows of $(11.3) billion yielded approximately 36 bps in the six months ended June 30, 2021 compared to $(14.1) billion yielding approximately 42 bps in the year-ago period.

GAAP Results of Operations for the Three and Six Months Ended June 30, 2021 and 2020

GAAP results of operations were as follows for the three and six months ended June 30, 2021 and 2020:

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

At September 30, 2021, our total assets under management were $113.7 billion, a decrease of $(13.2) billion, or (10.4)%, compared to $126.9 billion at June 30, 2021 and a decrease of $(34.0) billion, or (23.0)%, compared to $147.7 billion at September 30, 2020.

The decrease in assets under management compared to September 30, 2020 is a result of the dispositions of previous Affiliates, Barrow, Hanley, Mewhinney & Strauss, LLC ("Barrow Hanley"), and Copper Rock Capital Partners ("Copper Rock") that occurred in the second half of 2020 and the dispositions of ICM and Campbell Global that occurred in the three months ended September 30, 2021.

The change in assets under management during the three months ended September 30, 2021 reflects $(8.9) billion disposition of previous Affiliates, ICM and Campbell Global, net market depreciation of $(3.6) billion from market decline, and net outflows of $(0.7) billion.

The change in assets under management during the nine months ended September 30, 2021 reflects $(8.9) billion disposition of previous Affiliates, ICM and Campbell Global, net market appreciation of $11.8 billion, realizations and other of $(0.1) billion, and net flows of $(5.1) billion.

For the three months ended September 30, 2021, our net flows were $(0.7) billion compared to $(0.9) billion for the three months ended June 30, 2021 and $(2.9) billion for the three months ended September 30, 2020.

The change in net flows during the three months ended September 30, 2021 compared to the three months ended September 30, 2020 was primarily due to reduced outflows in non-U.S.

and Global strategies and the impact of dispositions.

Reinvested income and distributions of $0.7 billion, $0.7 billion, and $0.9 billion are reflected in the net flows for the three months ended September 30, 2021, June 30, 2021 and September 30, 2020, respectively.

For the three months ended September 30, 2021, the annualized revenue impact of the net flows was $(1.6) million.

This is compared to the annualized revenue impact of net flows of $(0.9) million for the three months ended June 30, 2021 and $(9.8) million for the three months ended September 30, 2020.

Gross inflows of $2.8 billion during the three-month period yielded approximately 47 bps compared to $4.5 billion yielding approximately 34 bps in the year-ago period, and gross outflows in the same period of $(4.2) billion yielded approximately 41 bps compared to $(8.3) billion yielding approximately 34 bps in the year-ago period.

For the nine months ended September 30, 2021, our net flows were $(5.1) billion compared to $(3.3) billion for the nine months ended September 30, 2020.

The change in net flows during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 was primarily due to re-balancing and asset reallocation in select Quant & Solutions strategies.

Reinvested income and distributions of $2.0 billion and $3.1 billion are reflected in the net flows for the nine months ended September 30, 2021 and September 30, 2020, respectively.

For the nine months ended September 30, 2021, the annualized revenue impact of the net flows was $(10.4) million compared to $(23.8) million for the nine months ended September 30, 2020.

Gross inflows of $8.4 billion in the nine months ended September 30, 2021 yielded approximately 48 bps compared to $16.0 billion yielding approximately 34 bps in the year-ago period.

Gross outflows of $(15.5) billion yielded approximately 38 bps in the nine months ended September 30, 2021 compared to $(22.4) billion yielding approximately 39 bps in the year-ago period.

GAAP Results of Operations for the Three and Nine Months Ended September 30, 2021 and 2020

GAAP results of operations were as follows for the three and nine months ended September 30, 2021 and 2020:

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

($ in millions, unless otherwise noted) 2021 2020 Increase

19 unchanged sentences

Interest expense (6.2) (6.9) 0.7 (18.7) (22.1) 3.4

Loss on sale of Affiliate — — — (1.3) — (1.3)

Gain on sale of Affiliates 34.6 7.2 27.4 33.3 7.2 26.1

Net consolidated Funds’ investment gains (losses) — 2.8 (2.8) — (7.7) 7.7

21 unchanged sentences

($ in millions) Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

GAAP Statement of Operations 2021 2020 2021 2020

Net income attributable to controlling interests $ 229.5 $ 37.2 $ 789.2 $ 88.7

(Income) loss on discontinued operations attributable to controlling interests, net of tax (508.0) 2.2 (516.5) (21.0)

(Income) on discontinued operations attributable to controlling interests, net of tax (186.6) (8.2) (703.1) (29.2)

Net income from continuing operations attributable to controlling interests

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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 37.2 bps and 37.0 bps for the three and six months ended June 30, 2021, and 34.7 bps and 33.6 bps for the three and six months ended June 30, 2020.

The overall weighted average fee rate increased for the three and six months ended June 30, 2021 primarily due to an increase in U.S.

client domicile average fee rates.

The most significant driver of the higher average fee rate in 2021 is the result of changes in the mix of U.S.

client domicile assets under management caused by the Barrow Hanley disposition that occurred in the second half of 2020.

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Management fees decreased $(7.0) million, or (5.9)%, from $118.6 million for the three months ended June 30, 2020 to $111.6 million for the three months ended June 30, 2021.

The decrease was primarily due to a decrease in average assets under management driven by the Barrow Hanley disposition, partially offset by positive market returns at Acadian.

Average assets under management excluding our equity-accounted Affiliate decreased (12.2)%, from $137.4 billion for the three months ended June 30, 2020 to $120.6 billion for the three months ended June 30, 2021, mainly due to the dispositions of Barrow Hanley and Copper Rock in the second half of 2020.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Management fees decreased $(27.7) million, or (11.4)%, from $243.1 million for the six months ended June 30, 2020 to $215.4 million for the six months ended June 30, 2021.

The decrease was primarily attributable to a decrease in average assets under management driven by the Barrow Hanley disposition, partially offset by positive market returns at Acadian.

Average assets under management excluding equity-accounted Affiliate decreased (19.2)%, from $145.4 billion for the six months ended June 30, 2020 to $117.5 billion for the six months ended June 30, 2021, mainly due to the dispositions of Barrow Hanley and Copper Rock in the second half of 2020.

Excluding assets managed by our equity-accounted Affiliate, average basis points earned on average assets under management were 36.8 bps and 37.0 bps for the three and nine months ended September 30, 2021, and 33.6 bps and 33.7 bps for the three and nine months ended September 30, 2020.

The overall weighted average fee rate increase for the three and nine months ended September 30, 2021 is the result of changes in the mix of assets under management caused by the disposition of Barrow Hanley that occurred in the second half of 2020.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Management fees decreased $(11.9) million, or (9.7)%, from $123.3 million for the three months ended September 30, 2020 to $111.4 million for the three months ended September 30, 2021.

The decrease was primarily due to a decrease in average assets under management driven by the disposition of Barrow Hanley partially offset by positive market returns at Acadian.

Average assets under management excluding our equity-accounted Affiliate decreased (17.9)%, from $146.0 billion for the three months ended September 30, 2020 to $119.9 billion for the three months ended September 30, 2021, mainly due to the dispositions of Barrow Hanley and Copper Rock in the second half of 2020.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Management fees decreased $(39.6) million, or (10.8)%, from $366.4 million for the nine months ended September 30, 2020 to $326.8 million for the nine months ended September 30, 2021.

The decrease was primarily attributable to a decrease in average assets under management driven by the disposition of Barrow Hanley, partially offset by positive market returns at Acadian.

Average assets under management excluding equity-accounted Affiliate decreased (19.0)%, from $145.8 billion for the nine months ended September 30, 2020 to $118.1 billion for the nine months ended September 30, 2021, mainly due to the dispositions of Barrow Hanley and Copper Rock in the second half of 2020.

Performance Fees

Approximately $19.5 billion, or 15% of our AUM in consolidated Affiliates, were in accounts with incentive fee features in which we participate.

Approximately $14.0 billion, or 12% of our AUM in consolidated Affiliates, were in accounts with performance fee features in which we participate.

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

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Performance fees improved $20.1 million, from $0.3 million for the three months ended June 30, 2020 to $20.4 million for the three months ended June 30, 2021 due to out-performance in certain timber and non-U.S.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Performance fees improved $2.2 million, from $1.2 million for the three months ended September 30, 2020 to $3.4 million for the three months ended September 30, 2021 due to out-performance in certain non-U.S.

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

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Performance fees improved $23.7 million, from $1.3 million for the six months ended June 30, 2020 to $25.0 million for the six months ended June 30, 2021 due to out-performance in certain timber and non-U.S.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Performance fees improved $25.9 million, from $2.5 million for the nine months ended September 30, 2020 to $28.4 million for the nine months ended September 30, 2021 due to out-performance in certain timber and non-U.S.

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

The liquidation of an alternative product may result in the recognition of a performance fee.

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, 2021.

Other Revenue

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Other revenue decreased $(0.7) million, from $2.0 million for the three months ended June 30, 2020 to $1.3 million for the three months ended June 30, 2021.

The decrease was primarily attributable to a decrease in consulting fees earned by an Affiliate for the three months ended June 30, 2021.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Other revenue decreased $(1.0) million, from $3.6 million for the six months ended June 30, 2020 to $2.6 million for the six months ended June 30, 2021.

The decrease was primarily attributable to a decrease in consulting fees earned by an Affiliate for the six months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Other revenue increased $1.5 million, from $1.6 million for the three months ended September 30, 2020 to $3.1 million for the three months ended September 30, 2021.

The increase was primarily attributable to a decrease in consulting fees earned by an Affiliate for the three months ended September 30, 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Other revenue increased $0.5 million, from $5.2 million for the nine months ended September 30, 2020 to $5.7 million for the nine months ended September 30, 2021.

The increase was primarily attributable to a decrease in consulting fees earned by an Affiliate for the nine months ended September 30, 2021.

GAAP Expenses

7 unchanged sentences

The following table presents the components of U.S.

GAAP compensation expense for the three and six months ended June 30, 2021 and 2020:

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

GAAP compensation expense for the three and nine months ended September 30, 2021 and 2020:

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

($ in millions) 2021 2020 2021 2020

12 unchanged sentences

(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, 2021, $24.2 million and $48.5 million, respectively, of fixed compensation and benefits (of the $25.4 million and $50.6 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, 2020, $31.1 million and $65.3 million, respectively, of fixed compensation and benefits (of the $32.2 million and $67.4 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, 2021, $23.6 million and $72.1 million, respectively, of fixed compensation and benefits (of the $24.5 million and $75.1 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, $31.6 million and $96.9 million, respectively, of fixed compensation and benefits (of the $32.8 million and $100.2 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.

(2) Sales-based compensation is paid to 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.

5 unchanged sentences

Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period.

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) 2021 2020 2021 2020

4 unchanged sentences

$ 27.1 $ 27.9 $ 83.8 $ 85.3

(a) For the three and six months ended June 30, 2021, $32.4 million and $55.9 million, respectively, of variable compensation expense (of the $32.7 million and $56.7 million above) are included within economic net income, which excludes $0.3 million and $0.8 million of variable compensation associated with restructuring at an Affiliate.

For the three and six months ended June 30, 2020, $26.8 million and $54.0 million, respectively, of variable compensation expense (of the $29.8 million and $57.4 million above) are included within economic net income, which excludes $3.0 million and $3.4 million, respectively, of variable compensation associated with restructuring at an Affiliate and the Center.

(a) For the three and nine months ended September 30, 2021, $27.0 million and $82.9 million, respectively, of variable compensation expense (of the $27.1 million and $83.8 million above) are included within economic net income, which excludes $0.1 million and $0.9 million of variable compensation associated with restructuring at an Affiliate.

For the three and nine months ended September 30, 2020, $27.8 million and $81.8 million, respectively, of variable compensation expense (of the $27.9 million and $85.3 million above) are included within economic net income, which excludes $0.1 million and $3.5 million, respectively, of variable compensation associated with restructuring at an Affiliate and 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.

1 unchanged sentence

At certain Affiliates with tiered equity structures, BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold, the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.

Based on current economic arrangements, employee distributions range from approximately 20% to 25% of marginal ENI operating earnings at each of our consolidated Affiliates.

(5) Non-cash Affiliate key employee equity revaluations represent changes in the value of Affiliate equity and profit interests held by Affiliate key employees.

3 unchanged sentences

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

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Compensation and benefits expense increased $6.2 million, or 9.2%, from $67.2 million for the three months ended June 30, 2020 to $73.4 million for the three months ended June 30, 2021.

Fixed compensation and benefits decreased $(6.8) million, or (21.1)%, from $32.2 million for the three months ended June 30, 2020 to $25.4 million for the three months ended June 30, 2021, primarily reflecting dispositions of Affiliates and cost savings from the restructuring at the Center and the Affiliates.

Variable compensation increased $2.9 million, or 9.7%, from $29.8 million for the three months ended June 30, 2020 to $32.7 million for the three months ended June 30, 2021.

The increase was attributable to higher performance fees and earnings before variable compensation.

Sales-based compensation remained unchanged at $1.9 million for the three months ended June 30, 2020 and June 30, 2021, 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 increased $0.6 million, or 23.1%, from $2.6 million for the three months ended June 30, 2020 to $3.2 million for the three months ended June 30, 2021 as a result of higher underlying operating earnings at the consolidated Affiliates.

Revaluations of Affiliate equity increased by $9.5 million reflecting revaluations of key employee ownership interests at our consolidated Affiliates as the value of Affiliate equity increased $0.7 million for the three months ended June 30, 2020 and increased $10.2 million for the three months ended June 30, 2021.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Compensation and benefits expense increased $14.8 million, or 13.3%, from $111.2 million for the six months ended June 30, 2020 to $126.0 million for the six months ended June 30, 2021.

Fixed compensation and benefits decreased $(16.8) million, or (24.9)%, from $67.4 million for the six months ended June 30, 2020 to $50.6 million for the six months ended June 30, 2021, primarily reflecting disposition of Affiliates and cost savings from the restructuring at the Center and Affiliates.

Variable compensation decreased $(0.7) million, or (1.2)%, from $57.4 million for the six months ended June 30, 2020 to $56.7 million for the six months ended June 30, 2021.

The decrease was attributable to lower restructuring costs in the current year, offset partially by higher pre-variable compensation earnings.

Sales-based compensation decreased $(0.3) million, or (7.9)%, from $3.8 million for the six months ended June 30, 2020 to $3.5 million for the six months ended June 30, 2021, 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 $(0.2) million, or (4.3)%, from $4.7 million for the six months ended June 30, 2020 to $4.5 million for the six months ended June 30, 2021, primarily as a result of the mix of earnings at the consolidated Affiliates.

Revaluations of Affiliate equity increased by $32.8 million reflecting the increase in value of of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(22.1) million for the six months ended June 30, 2020 and increased $10.7 million for the six months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Compensation and benefits expense increased $0.3 million, or 0.4%, from $66.9 million for the three months ended September 30, 2020 to $67.2 million for the three months ended September 30, 2021.

Fixed compensation and benefits decreased $(8.3) million, or (25.3)%, from $32.8 million for the three months ended September 30, 2020 to $24.5 million for the three months ended September 30, 2021, primarily reflecting dispositions of Affiliates and cost savings from the restructuring at the Center and the Affiliates.

Variable compensation decreased $(0.8) million, or (2.9)%, from $27.9 million for the three months ended September 30, 2020 to $27.1 million for the three months ended September 30, 2021.

The decrease was attributable to the disposition of Affiliates, partially offset by higher pre-variable compensation earnings in the current period.

Sales-based compensation increased $0.2 million, or 11.8%, from $1.7 million for the three months ended September 30, 2020 to $1.9 million for the three months ended September 30, 2021, 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 increased $3.2 million, or 177.8%, from $1.8 million for the three months ended September 30, 2020 to $5.0 million for the three months ended September 30, 2021 as a result of higher underlying operating earnings at the consolidated Affiliates.

Revaluations of Affiliate equity increased by $6.0 million reflecting revaluations of key employee ownership interests at our consolidated Affiliates as the value of Affiliate equity increased $2.7 million for the three months ended September 30, 2020 and increased $8.7 million for the three months ended September 30, 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Compensation and benefits expense increased $15.1 million, or 8.5%, from $178.1 million for the nine months ended September 30, 2020 to $193.2 million for the nine months ended September 30, 2021.

Fixed compensation and benefits decreased $(25.1) million, or (25.0)%, from $100.2 million for the nine months ended September 30, 2020 to $75.1 million for the nine months ended September 30, 2021, primarily reflecting the disposition of Affiliates and cost savings from the restructuring at the Center and Affiliates.

Variable compensation decreased $(1.5) million, or (1.8)%, from $85.3 million for the nine months ended September 30, 2020 to $83.8 million for the nine months ended September 30, 2021.

The decrease was attributable to disposition of Affiliates and lower restructuring costs in the current year, offset partially by higher pre-variable compensation earnings.

Sales-based compensation decreased $(0.1) million, or (1.8)%, from $5.5 million for the nine months ended September 30, 2020 to $5.4 million for the nine months ended September 30, 2021, 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 increased $3.0 million, or 46.2%, from $6.5 million for the nine months ended September 30, 2020 to $9.5 million for the nine months ended September 30, 2021, primarily as a result of the mix of earnings at the consolidated Affiliates.

Revaluations of Affiliate equity increased by $38.8 million reflecting the increase in value of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(19.4) million for the nine months ended September 30, 2020 and increased $19.4 million for the nine months ended September 30, 2021.

General and Administrative Expense

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

General and administrative expense decreased $(2.4) million, or (11.8)%, from $20.4 million for the three months ended June 30, 2020 to $18.0 million for the three months ended June 30, 2021.

The decrease was primarily due to cost saving initiatives at the Center and Affiliates and the dispositions of Barrow Hanley and Copper Rock in 2020.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

General and administrative expense decreased $(5.7) million, or (13.3)%, from $42.8 million for the six months ended June 30, 2020 to $37.1 million for the six months ended June 30, 2021.

The decrease was primarily due to cost saving initiatives at the Center and Affiliates and the dispositions of Barrow Hanley and Copper Rock in 2020.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

General and administrative expense decreased $(4.9) million, or (22.9)%, from $21.4 million for the three months ended September 30, 2020 to $16.5 million for the three months ended September 30, 2021.

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

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

General and administrative expense decreased $(10.6) million, or (16.5)%, from $64.2 million for the nine months ended September 30, 2020 to $53.6 million for the nine months ended September 30, 2021.

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

Impairment of Goodwill

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

No goodwill impairment charge was recorded in either the three months ended June 30, 2020 or 2021.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Impairment of goodwill was $16.4 million for the six months ended June 30, 2020 and no impairment for the six months ended June 30, 2021.

The change was the result of the impairment charge recorded for the Copper Rock reporting unit in the six months ended June 30, 2020, which was included within the Liquid Alpha segment prior to its disposition in the third quarter of 2020.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

No goodwill impairment charge was recorded in either the three months ended September 30, 2020 or 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Impairment of goodwill was $16.4 million for the nine months ended September 30, 2020 and no impairment for the nine months ended September 30, 2021.

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

Depreciation and Amortization Expense

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Depreciation and amortization expense increased $1.1 million, or 23.4%, from $4.7 million for the three months ended June 30, 2020 to $5.8 million for the three months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Depreciation and amortization expense increased $0.4 million, or 8.0%, from $5.0 million for the three months ended September 30, 2020 to $5.4 million for the three months ended September 30, 2021.

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

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Depreciation and amortization expense increased $1.5 million, or 15.3%, from $9.8 million for the six months ended June 30, 2020 to $11.3 million for the six months ended June 30, 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Depreciation and amortization expense increased $1.9 million, or 12.8%, from $14.8 million for the nine months ended September 30, 2020 to $16.7 million for the nine months ended September 30, 2021.

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

4 unchanged sentences

interest expense;

gain (loss) on sale of subsidiary.

gain (loss) on sale of Affiliates.

Investment Income

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Investment income decreased $(1.9) million, from $6.6 million for the three months ended June 30, 2020 to $4.7 million for the three months ended June 30, 2021, reflecting a decrease in the average balance of seed capital investments as a result of the redemptions of seed capital in 2020.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Investment income increased $14.4 million, from $(7.1) million for the six months ended June 30, 2020 to $7.3 million for the six months ended June 30, 2021.

The increase is primarily due to an increase in returns generated by seed capital investments driven by continued market recovery in 2021 compared to the six months ended June 30, 2020, which included the negative impact of the market decline in the first quarter of 2020.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Investment income decreased $(3.6) million, from $3.9 million for the three months ended September 30, 2020 to $0.3 million for the three months ended September 30, 2021, reflecting a decrease in the average balance of seed capital investments as a result of the redemptions of seed capital in 2020 and 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Investment income increased $10.8 million, from $(3.2) million for the nine months ended September 30, 2020 to $7.6 million for the nine months ended September 30, 2021.

The increase was primarily due to an increase in returns generated by seed capital investments driven by continued market recovery in 2021 compared to the nine months ended September 30, 2020, which included the negative impact of the market decline in the first quarter of 2020.

Interest Income

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Interest income decreased $(0.1) million, from $0.2 million for the three months ended June 30, 2020 to $0.1 million for the three months ended June 30, 2021.

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

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Interest income decreased $(0.4) million, from $0.5 million for the six months ended June 30, 2020 to $0.1 million for the six months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Interest income remained flat at $0.0 million for the three months ended September 30, 2020 compared to $0.0 million for the three months ended September 30, 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Interest income decreased $(0.4) million, from $0.5 million for the nine months ended September 30, 2020 to $0.1 million for the nine months ended September 30, 2021.

The decrease was due to decreases in short-term investment returns in 2021.

Interest Expense

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Interest expense decreased $(1.1) million, or (14.9)%, from $7.4 million for the three months ended June 30, 2020 to $6.3 million for the three months ended June 30, 2021, primarily reflecting a lower balance drawn on the revolving credit facility in 2021 and the pay down of the non-recourse seed capital facility during the third quarter of 2020.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Interest expense decreased $(2.7) million, or (17.8)%, from $15.2 million for the six months ended June 30, 2020 to $12.5 million for the six months ended June 30, 2021, primarily reflecting a lower balance drawn on the revolving credit facility in 2021 and the pay down of the non-recourse seed capital facility during the third quarter of 2020.

Loss on Sale of Subsidiary

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

No gain or loss on sale of Affiliate was recorded in either the three months ended June 30, 2020 or 2021.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

No gain or loss on sale of a subsidiary was recorded in the six months ended June 30, 2020.

Loss on sale of a subsidiary was $(1.3) million for the six months ended June 30, 2021, representing the loss on disposition of a business unit during the six months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Interest expense decreased $(0.7) million, or (10.1)%, from $6.9 million for the three months ended September 30, 2020 to $6.2 million for the three months ended September 30, 2021, primarily reflecting a lower balance drawn on the revolving credit facility in 2021 and the pay down of our non-recourse seed capital facility during the third quarter of 2020.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Interest expense decreased $(3.4) million, or (15.4)%, from $22.1 million for the nine months ended September 30, 2020 to $18.7 million for the nine months ended September 30, 2021, primarily reflecting a lower balance drawn on the revolving credit facility in 2021 and the pay down of our non-recourse seed capital facility during the third quarter of 2020.

Gain on Sale of Affiliates

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Gain on sale of Affiliates increased $27.4 million, or 380.6% from $7.2 million for the three months ended September 30, 2020 to $34.6 million for the three months ended September 30, 2021.

Included in the balance for the three months ended September 30, 2021 is our gain on the sale of our equity interests in ICM and Campbell Global.

Included in the balance for the three months ended September 30, 2020 is our gain on the sale of our equity interests in Copper Rock, a former Affiliate.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Gain on sale of Affiliates increased $26.1 million, or 362.5% from $7.2 million for the nine months ended September 30, 2020 to $33.3 million for the nine months ended September 30, 2021.

Included in the balance for the nine months ended September 30, 2021 is our gain on the sale of our equity interests in ICM and Campbell Global, slightly offset by the loss on disposition of a business unit during the nine months ended September 30, 2021.

Included in the balance for the nine months ended September 30, 2020 is our gain on the sale of our equity interests in Copper Rock, a former Affiliate.

GAAP Income Tax Expense (Benefit)

1 unchanged sentence

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.

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Income tax expense increased $1.1 million, from $8.8 million for the three months ended June 30, 2020 to $9.9 million for the three months ended June 30, 2021.

The increase in income tax expense relates to an increase in income from continuing operations and deferred tax expense in the three months ended June 30, 2021 resulting from the reduction in state tax rates due to the disposition of Landmark.

Six months ended June 30, 2021 compared to six months ended June 30, 2020 :

Income tax expense increased $6.7 million, from $12.3 million for the six months ended June 30, 2020 to $19.0 million for the six months ended June 30, 2021.

The increase in income tax expense relates to an an increase in income from continuing operations

and deferred tax expense during the six months ended June 30, 2021 resulting from the reduction in state tax rates due to the disposition of Landmark.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Income tax expense increased $5.2 million, from $9.3 million for the three months ended September 30, 2020 to $14.5 million for the three months ended September 30, 2021.

The increase in income tax expense relates to an increase in income from continuing operations due to the sale of Campbell and ICM in the three months ended September 30, 2021 and an increase in the state tax rates.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020 :

Income tax expense increased $11.9 million, from $21.6 million for the nine months ended September 30, 2020 to $33.5 million for the nine months ended September 30, 2021.

The increase in income tax expense relates to an increase in income from continuing operations due to the sale of Campbell and ICM during the nine months ended September 30, 2021 and an increase in the state tax rates.

GAAP Consolidated Funds

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Consolidated Funds’ revenue was $1.7 million for the three months ended June 30, 2020.

There was no consolidated Funds’ revenue for the three months ended June 30, 2021.

Net consolidated Funds’ investment gain (loss) was $6.7 million for the three months ended June 30, 2020.

There was no net consolidated Funds’ investment loss for the three months ended June 30, 2021.

As discussed further in Note 3 of our accompanying Consolidated Financial Statements, we sold our equity interests in Landmark on June 2, 2021, which resulted in the de-consolidation of all Landmark Funds as of June 2, 2021, the consummation of the sale.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Consolidated Funds’ revenue was $1.4 million for the three months ended September 30, 2020.

There was no consolidated Funds’ revenue for the three months ended September 30, 2021.

Net consolidated Funds’ investment gain (loss) was $2.8 million for the three months ended September 30, 2020.

There was no net consolidated Funds’ investment loss for the three months ended September 30, 2021.

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.

As a result of the sale of Landmark during the three months ended June 30, 2021, consolidated Funds of Landmark are included in discontinued operations for the three months ended June 30, 2021 and 2020.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Consolidated Funds’ revenue was $3.2 million for the six months ended June 30, 2020.

There was no consolidated Funds’ revenue for the six months ended June 30, 2021.

Net consolidated Funds’ investment loss was $(10.5) million for the six months ended June 30, 2020.

There was no net consolidated Funds’ investment loss for the six months ended June 30, 2021.

As noted above, there were no gains or losses recorded in the three months ended September 30, 2021.

Consolidated Funds of Landmark are included in discontinued operations for the three months ended September 30, 2020.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Consolidated Funds’ revenue was $4.6 million for the nine months ended September 30, 2020.

There was no consolidated Funds’ revenue for the nine months ended September 30, 2021.

Net consolidated Funds’ investment loss was $(7.7) million for the nine months ended September 30, 2020.

There was no net consolidated Funds’ investment loss for the nine months ended September 30, 2021.

As a result of the sale of Landmark during the six months ended June 30, 2021, consolidated Funds of Landmark are included in discontinued operations for the six months ended June 30, 2021 and 2020.

As noted above, consolidated Funds of Landmark are included in discontinued operations for the nine months ended September 30, 2021 and 2020.

Discontinued Operations

In May 2021, we entered into a definitive agreement to sell our equity interests in TSW to Pendal.

We completed the sale in July 2021.

On June 2, 2021, we completed the sale of Landmark to Ares Management Corporation.

As discussed further in Note 3 of our accompanying Consolidated Financial Statements, we completed the sale of all our equity interests in TSW on July 19, 2021, and we completed the sale of all our equity interests in Landmark on June 2, 2021.

As a result, Landmark and TSW are reported within discontinued operations.

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Income from discontinued operations increased $26.7 million from $26.7 million for the three months ended June 30, 2020 to $53.4 million for the three months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Income from discontinued operations decreased $(0.9) million from $2.1 million for the three months ended September 30, 2020 to $1.2 million for the three months ended September 30, 2021.

Income from discontinued operations represents the income from TSW and Landmark, including consolidated Landmark Funds.

The increase is driven by the increase in investment gains from the consolidated Landmark Funds attributable to non-controlling interests.

The gain on disposal of discontinued operations was $509.2 million for the three months ended June 30, 2021 representing the gain on sale of Landmark.

There was no gain on disposal of discontinued operations for the three months ended June 30, 2020.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Income from discontinued operations increased $25.3 million from $50.0 million for the six months ended June 30, 2020 to $75.3 million for the six months ended June 30, 2021.

The decrease is driven by the sale of Landmark and de-consolidation of Landmark Funds during the second quarter of 2021.

The gain on disposal of discontinued operations, net of tax was $185.4 million for the three months ended September 30, 2021 representing our gain on sale of our equity interests in TSW.

There was no gain on disposal of discontinued operations for the three months ended September 30, 2020.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Income from discontinued operations increased $24.4 million from $52.1 million for the nine months ended September 30, 2020 to $76.5 million for the nine months ended September 30, 2021.

Income from discontinued operations represents the income from TSW and Landmark, including consolidated Landmark Funds.

The increase is driven by the increase in investment gains from the consolidated Landmark Funds attributable to non-controlling interests in the current year.

The gain on disposal of discontinued operations was 509.2 million for the six months ended June 30, 2021 representing the gain on sale of Landmark in June 2021.

There was no gain on disposal for the six months ended June 30, 2020.

The gain on disposal of discontinued operations, net of tax was $694.6 million for the nine months ended September 30, 2021 representing our gain on sale of our equity interests in Landmark and TSW.

There was no gain on disposal for the nine months ended September 30, 2020.

GAAP Operating Metrics

The following table shows our key U.S.

GAAP operating metrics for the three and six months ended June 30, 2021 and 2020.

GAAP operating metrics for the three and nine months ended September 30, 2021 and 2020.

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) 2021 2020 2021 2020

Operating income $ 28.7 $ 34.2 $ 97.3 $ 104.8

$ 36.1 $ 29.9 $ 68.6 $ 70.6

Total revenue $ 117.9 $ 127.5 $ 360.9 $ 378.7

$ 133.3 $ 122.6 $ 243.0 $ 251.2

GAAP operating margin (1)

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Management fee revenue $ 111.4 $ 123.3 $ 326.8 $ 366.4

$ 111.6 $ 118.6 $ 215.4 $ 243.1

GAAP operating expense / management fee revenue (3)

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Variable compensation $ 27.1 $ 27.9 $ 83.8 $ 85.3

$ 32.7 $ 29.8 $ 56.7 $ 57.4

Operating income before variable compensation and Affiliate key employee distributions (2)(4)(5)

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Affiliate key employee distributions $ 5.0 $ 1.8 $ 9.5 $ 6.5

$ 3.2 $ 2.6 $ 4.5 $ 4.7

Operating income before Affiliate key employee distributions (2)(4)(5)

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

GAAP operating margin is 27.1% for the three months ended June 30, 2021, 23.4% for the three months ended June 30, 2020, 28.2% for the six months ended June 30, 2021 and 27.2% for the six months ended June 30, 2020.

(2) There was no consolidated Funds’ revenue excluded for both the three and six months ended June 30, 2021.

Excludes consolidated Funds expenses of $0.1 million for both the three and six months ended June 30, 2020.

(3) Excludes the effect of Funds consolidation for the three and six months ended June 30, 2021 and 2020.

(4) There was no consolidated Funds’ revenue excluded for both the three and six months ended June 30, 2021.

Excludes $1.7 million and $3.2 million for the three and six months ended June 30, 2020, respectively.

GAAP operating margin is 26.0% for the three months ended September 30, 2020 and 26.8% for the nine months ended September 30, 2020.

(2) Excludes consolidated Funds expenses of $0.0 million and $0.1 million for the three and nine months ended September 30, 2020, respectively.

(3) Excludes the effect of Funds consolidation for the three and nine months ended September 30, 2021 and 2020.

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

(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) 2021 2020 2021 2020

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Effects of Inflation

For the three and six months ended June 30, 2021 and 2020, inflation did not have a material effect on our consolidated results of operations.

For the three and nine months ended September 30, 2021 and 2020, inflation did not have a material effect on our consolidated results of operations.

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

32 unchanged sentences

Reconciliation of U.S.

GAAP Net Income to Economic Net Income for the Three and Six Months Ended June 30, 2021 and 2020

The following table reconciles net income attributable to controlling interests to economic net income for the three and six months ended June 30, 2021 and 2020:

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, 2021 and 2020

The following table reconciles net income attributable to controlling interests to economic net income for the three and nine months ended September 30, 2021 and 2020:

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

($ in millions) 2021 2020 2021 2020

16 unchanged sentences

$ 23.6 $ 23.9 $ 79.0 $ 65.2

(1) The net return on seed/co-investment (gains) losses and financings for the three and six months ended June 30, 2021 and 2020 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, 2021 and 2020 is shown in the following table:

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

($ in millions) 2021 2020 2021 2020

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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, 2021 includes income from discontinued operations attributable to controlling interests of $511.1 million, restructuring costs at the Center and Affiliates of $2.0 million, and costs associated with the transfer of an insurance policy from our former parent of $0.3 million.

The three months ended June 30, 2020 includes loss from discontinued operations attributable to controlling interests of $(2.2) million, restructuring costs at the Center of $3.0 million and costs associated with the redomicile to the U.S.

of $0.3 million.

The six months ended June 30, 2021 includes income from discontinued operations attributable to controlling interests of $516.5 million,restructuring costs at the Center and Affiliates of $3.5 million, costs associated with the transfer of an insurance policy from our former parent of $0.6 million, and the loss on sale of subsidiary of $1.3 million.

The six months ended June 30, 2020 includes income from discontinued operations attributable to controlling interests of $21.2 million, restructuring costs at the Center of $3.4 million and costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

Seed/Co-investment (gains) losses from discontinued operations are included in item iv.

above for all periods.

(2) The three months ended September 30, 2021 includes income from discontinued operations attributable to controlling interests of $(186.6) million, restructuring costs at the Center and Affiliates of $0.5 million, costs associated with the transfer of an insurance policy from our former parent of $0.3 million, and the gain on sale of Affiliates of $34.6 million.

The three months ended September 30, 2020 includes income from discontinued operations attributable to controlling interests of $8.2 million, restructuring costs at the Center of $1.4 million, costs associated with the redomicile to the U.S.

of $0.4 million, and the gain on sale of Affiliates of $7.2 million.

The nine months ended September 30, 2021 includes income from discontinued operations attributable to controlling interests of $703.1 million, restructuring costs at the Center and Affiliates of $4.0 million, costs associated with the transfer of an insurance policy from our former parent of $0.9 million, and the gain on sale of Affiliates of $33.3 million.

The nine months ended September 30, 2020 includes income from discontinued operations attributable to controlling interests of $29.2 million, restructuring costs at the Center of $4.8 million, costs associated with the transfer of an insurance policy from our former parent of $1.0 million, and the gain on sale of Affiliates of $7.2 million.

(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, 2021 and 2020:

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

GAAP revenue to ENI revenue for the three and nine months ended September 30, 2021 and 2020:

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

($ in millions) 2021 2020 2021 2020

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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) 2021 2020 2021 2020

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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 $1.3 million and $0.6 million for the three months ended June 30, 2021 and June 30, 2020, respectively.

For the six months ended June 30, 2021 and June 30, 2020, our earnings from our equity-accounted Affiliate were $2.4 million and $1.2 million, respectively.

GAAP, plus our earnings from our equity-accounted Affiliate of $0.2 million and $0.9 million for the three months ended September 30, 2021 and September 30, 2020, respectively.

For the nine months ended September 30, 2021 and September 30, 2020, our earnings from our equity-accounted Affiliate were $2.6 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) 2021 2020 2021 2020

11 unchanged sentences

The following table reconciles U.S.

GAAP operating expense to ENI operating expense for the three and six months ended June 30, 2021 and 2020.

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, 2021 and 2020.

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

($ in millions) 2021 2020 2021 2020

1 unchanged sentence

items excluded from economic net income

Amortization of pre-acquisition employee equity

Non-cash key employee equity and profit interest revaluations

11 unchanged sentences

ENI operating expense $ 47.0 $ 58.1 $ 143.6 $ 178.8

(1) The three months ended June 30, 2021 includes $2.0 million of restructuring costs at the Center and Affiliates and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended June 30, 2020 includes $3.0 million of restructuring costs at the Center and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The six months ended June 30, 2021 includes $3.5 million of restructuring costs at the Center and Affiliates and $0.6 million costs associated with the transfer of an insurance policy from our former parent.

The six months ended June 30, 2020 includes $3.4 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

(1) The three months ended September 30, 2021 includes $0.5 million of restructuring costs at the Center and Affiliates and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and $0.4 million costs associated with the transfer of an insurance policy from our former parent.

The nine months ended September 30, 2021 includes $4.0 million of restructuring costs at the Center and Affiliates and $0.9 million costs associated with the transfer of an insurance policy from our former parent.

The nine months ended September 30, 2020 includes $4.8 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $1.0 million.

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) 2021 2020 2021 2020

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The following table reconciles U.S.

GAAP compensation and benefits expense for the three and six months ended June 30, 2021 and 2020 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, 2021 and 2020 to ENI fixed compensation and benefits expense:

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

($ in millions) 2021 2020 2021 2020

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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) 2021 2020 2021 2020

6 unchanged sentences

Key Non-GAAP Operating Metrics

The following table shows our key non-GAAP operating metrics for the three and six months ended June 30, 2021 and 2020.

The following table shows our key non-GAAP operating metrics for the three and nine months ended September 30, 2021 and 2020.

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.

1 unchanged sentence

GAAP measure:

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

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

($ in millions) 2021 2020 2021 2020

26 unchanged sentences

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) 2021 2020 2021 2020

1 unchanged sentence

Include earnings from equity-accounted Affiliate 0.2 0.9 2.6 2.1

1.3 0.6 2.4 1.2

Exclude the impact of:

Affiliate key employee-owned equity and profit interest revaluations 8.7 2.7 19.4 (19.4)

10.3 0.7 10.7 (22.1)

Goodwill impairment and amortization of acquired intangible assets and pre-acquisition employee equity 0.1 — 0.1 16.7

4 unchanged sentences

Variable compensation 27.0 27.8 82.9 81.8

32.4 26.8 55.9 54.0

Funds’ operating (income) loss — (1.4) — (4.5)

ENI earnings before variable compensation 70.4 67.8 217.0 194.1

85.6 62.8 146.6 126.3

ENI variable compensation (27.0) (27.8) (82.9) (81.8)

1 unchanged sentence

ENI Affiliate key employee distributions (5.0) (1.8) (9.5) (6.5)

(3.2) (2.6) (4.5) (4.7)

ENI earnings after Affiliate key employee distributions $ 38.4 $ 38.2 $ 124.6 $ 105.8

$ 50.0 $ 33.4 $ 86.2 $ 67.6

(a) The three months ended June 30, 2021 includes $2.0 million of restructuring costs at the Center and Affiliates and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended June 30, 2020 includes $3.0 million of restructuring costs at the Center and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The six months ended June 30, 2021 includes $3.5 million of restructuring costs at the Center and Affiliates and $0.6 million of costs associated with the transfer of an insurance policy from our former parent.

The six months ended June 30, 2020 includes $3.4 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

(a) The three months ended September 30, 2021 includes $0.5 million of restructuring costs at the Center and Affiliates and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended September 30, 2020 includes $1.4 million of restructuring costs at the Center and $0.4 million costs associated with the transfer of an insurance policy from our former parent.

The nine months ended September 30, 2021 includes $4.0 million of restructuring costs at the Center and Affiliates and $0.9 million of costs associated with the transfer of an insurance policy from our former parent.

The nine months ended September 30, 2020 includes $4.8 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $1.0 million.

(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.

1 unchanged sentence

GAAP operating margin.

GAAP operating margin, excluding the effect of consolidated Funds, is 27.1% for the three months ended June 30, 2021, 23.4% for the three months ended June 30, 2020, 28.2% for the six months ended June 30, 2021, and 27.2% for the six months ended June 30, 2020.

GAAP operating margin, excluding the effect of consolidated Funds, is 24.3% for the three months ended September 30, 2021, 26.0% for the three months ended September 30, 2020, 27.0% for the nine months ended September 30, 2021, and 26.8% for the nine months ended September 30, 2020.

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.

3 unchanged sentences

(4) The ENI operating expense ratio is used by management and is useful to investors to evaluate the level of operating expense as measured against our recurring management fee revenue.

We have provided this ratio

since many operating expenses, including fixed compensation and benefits and general and administrative expense, are generally linked to the overall size of the business.

We have provided this ratio since many operating expenses, including fixed compensation and benefits and general and administrative expense, are generally linked to the overall size of the business.

We track this ratio as a key measure of scale economies because in our profit-sharing economic model, scale benefits both the Affiliate employees and our stockholders.

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Non-cash variable compensation awards typically vest over several years and are recognized as compensation expense over that service period.

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%.

The variable compensation ratio at each Affiliate is calculated as variable compensation divided by ENI earnings before variable compensation.

The ENI variable compensation ratio is most comparable to the U.S.

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At certain Affiliates, with tiered equity structures, BSUS and other classes of employee equity holders are entitled to an initial proportionate preference over profits after variable compensation, structured such that before a preference threshold is reached, there would be no required key employee distributions to the tiered equity holders, whereas for profits above the threshold the key employee distribution amount to the tiered equity holders would be calculated based on the tiered key employee ownership percentages.

Based on current economic arrangements, employee distributions range from approximately 20% to 30% of marginal ENI operating earnings at each of our consolidated Affiliates.

The ENI Affiliate key employee distributions ratio is most comparable to the U.S.

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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) 2021 2020 2021 2020

10 unchanged sentences

(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) 2021 2020 2021 2020

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This segment is comprised of our interest in Acadian.

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

The corporate head office is included within Other (1)(2) category.

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

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

On March 30, 2021, we entered into an agreement to sell all of our interests in Landmark.

On June 2, 2021, we sold all of our 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.

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”.

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 August 31, 2021,we completed the sale of all our interests in Campbell Global.

The financial results of Campbell Global are included in the “Other” category until August 30, 2021, the consummation of the sale.

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

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

On May 9, 2021, we entered into an agreement to sell all of the our interests in TSW.

On February 6, 2021, we entered into an agreement to sell all of our interests in ICM, an equity-accounted Affiliate.

On July 19, 2021, we completed the sale of all our 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.

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

The ICM operating segment was reclassified to “Other” within our segment reporting for the three and nine months ended September 30, 2021.

On July 19, 2021 the Company completed the sale of all its interests in ICM, an equity-accounted Affiliate.

The financial results of ICM are included in the “Other” category until July 19, 2021, the consummation of the sale.

The primary measure used by the CODM in measuring performance and allocating resources to the segments is ENI.

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Segment ENI Revenue

The following table identifies the components of segment ENI revenue for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

The following table identifies the components of segment ENI revenue for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

($ in millions) 2021 2020

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ENI revenue $ 110.6 $ 6.8 $ 117.4 $ 89.0 $ 30.3 $ 6.6 $ 125.9

The following table identifies the components of segment ENI revenue for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

The following table identifies the components of segment ENI revenue for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

($ in millions) 2021 2020

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Quant & Solutions Segment ENI Revenue

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Quant & Solutions ENI revenue increased $28.3 million, or 34.2%, from $82.8 million for three months ended June 30, 2020 to $111.1 million for the three months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Quant & Solutions ENI revenue increased $21.6 million, or 24.3%, from $89.0 million for three months ended September 30, 2020 to $110.6 million for the three months ended September 30, 2021.

The increase was attributable to 22.9% higher management fees driven by higher average AUM primarily resulting from the equity market increase in the last twelve months, as well as an increase in performance fees.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Quant & Solutions ENI revenue increased $45.7 million, or 27.1%, from $168.9 million for the six months ended June 30, 2020 to $214.6 million for the six months ended June 30, 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Quant & Solutions ENI revenue increased $67.3 million, or 26.1%, from $257.9 million for the nine months ended September 30, 2020 to $325.2 million for the nine months ended September 30, 2021.

The increase was attributable to 22.6% higher management fees, driven by higher average AUM primarily resulting from the equity market increase over the last twelve months, as well as increase in performance fees.

Liquid Alpha Segment ENI Revenue

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Liquid Alpha ENI revenue was $30.8 million for three months ended June 30, 2020 and was comprised of the ENI revenue from Barrow Hanley, Copper Rock and ICM.

There was no Liquid Alpha ENI revenue for the three months ended June 30, 2021 as the Liquid Alpha segment no longer constitutes a reportable segment of the Company in the current period.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Liquid Alpha ENI revenue was $65.2 million for the six months ended June 30, 2020 and was comprised of the ENI revenue from Barrow Hanley, Copper Rock and ICM.

There was no Liquid Alpha ENI revenue six months ended June 30, 2021 as the Liquid Alpha segment no longer constitutes a reportable segment of the Company in the current period.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Liquid Alpha ENI revenue was $30.3 million for three months ended September 30, 2020 and was comprised of the ENI revenue from Barrow Hanley, Copper Rock and ICM.

There was no Liquid Alpha ENI revenue for the three months ended September 30, 2021 as the Liquid Alpha segment no longer constitutes a reportable segment of the Company in the current period.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Liquid Alpha ENI revenue was $95.5 million for the nine months ended September 30, 2020 and was comprised of the ENI revenue from Barrow Hanley, Copper Rock and ICM.

There was no Liquid Alpha ENI revenue nine months ended

September 30, 2021 as the Liquid Alpha segment no longer constitutes a reportable segment of the Company in the current period.

Other ENI Revenue

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Other ENI revenue increased $15.5 million, or 227.9%, from $6.8 million for the three months ended June 30, 2020 to $22.3 million for the for the three months ended June 30, 2021.

The increase was primarily driven by a large incentive fee reported in the second quarter of 2021.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Other ENI revenue increased $15.7 million, or 121.7%, from $12.9 million for the six months ended June 30, 2020 to $28.6 million for the six months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Other ENI revenue increased $0.2 million, or 3.0%, from $6.6 million for the three months ended September 30, 2020 to $6.8 million for the for the three months ended September 30, 2021.

The increase was primarily driven by other income reported in the third quarter of 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Other ENI revenue increased $15.9 million, or 81.5%, from $19.5 million for the nine months ended September 30, 2020 to $35.4 million for the nine months ended September 30, 2021.

The increase was primarily driven by a large incentive fee reported in the second quarter of 2021.

Segment ENI Expense

The following table identifies the components of segment ENI expense for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

The following table identifies the components of segment ENI expense for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

($ in millions) 2021 2020

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Total Expenses $ 66.7 $ 12.3 $ 79.0 $ 56.0 $ 19.2 $ 12.5 $ 87.7

The following table identifies the components of segment ENI expense for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

The following table identifies the components of segment ENI expense for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

($ in millions) 2021 2020

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Quant & Solutions Segment ENI Expense

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Quant & Solutions ENI operating expense increased $3.3 million, or 9.4%, from $35.0 million for the three months ended June 30, 2020 to $38.3 million for the three months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Quant & Solutions ENI operating expense increased $2.2 million, or 5.9%, from $37.2 million for the three months ended September 30, 2020 to $39.4 million for the three months ended September 30, 2021.

The increase was driven by 4.3% higher ENI fixed compensation and benefits expense resulting from higher headcount and payroll taxes and 4.2% higher ENI general and administrative expense resulting from higher portfolio administrative and systems costs.

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Affiliate key employee distributions attributable to Quant & Solutions increased 375.0%, primarily due to higher ENI earnings after variable compensation and the leveraged nature of the profit-sharing agreement.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Quant & Solutions ENI operating expense increased $5.3 million, or 7.4%, from $72.1 million for the six months ended June 30, 2020 to $77.4 million for the six months ended June 30, 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Quant & Solutions ENI operating expense increased $7.5 million, or 6.9%, from $109.3 million for the nine months ended September 30, 2020 to $116.8 million for the nine months ended September 30, 2021.

The increase was driven by 5.4% higher ENI fixed compensation and benefits expense resulting from higher headcount and 6.0% higher ENI general and administrative expense primarily due to increased portfolio administrative and systems costs.

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Liquid Alpha Segment ENI Expense

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Liquid Alpha ENI expense was $20.4 million for the three months ended June 30, 2020 and was comprised of the ENI expense from Barrow Hanley and Copper Rock.

There was no Liquid Alpha ENI expense for the three months ended June 30, 2021 as the Liquid Alpha no longer constitutes a reportable segment of the Company in the current period.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Liquid Alpha ENI expense was $43.5 million for the six months ended June 30, 2020, and was comprised of the ENI expense from Barrow Hanley and Copper Rock.

There was no Liquid Alpha ENI expense for the six months ended June 30, 2021 as the Liquid Alpha no longer constitutes a reportable segment of the Company in the current period.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Liquid Alpha ENI expense was $19.2 million for the three months ended September 30, 2020 and was comprised of the ENI expense from Barrow Hanley and Copper Rock.

There was no Liquid Alpha ENI expense for the three months ended September 30, 2021 as the Liquid Alpha no longer constitutes a reportable segment of the Company in the current period.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Liquid Alpha ENI expense was $62.7 million for the nine months ended September 30, 2020, and was comprised of the ENI expense from Barrow Hanley and Copper Rock.

There was no Liquid Alpha ENI expense for the nine months ended September 30, 2021 as the Liquid Alpha no longer constitutes a reportable segment of the Company in the current period.

Other ENI Expense

Three months ended June 30, 2021 compared to three months ended June 30, 2020:

Other ENI operating expense decreased $(1.4) million, or (12.8)%, from $10.9 million for the three months ended June 30, 2020 to $9.5 million for the three months ended June 30, 2021.

The decrease was driven by (13.6)% lower fixed compensation and benefit expense resulting from a reduction in headcount and (18.4)% lower general and administrative expense resulting from cost-saving initiatives at the Center.

Other ENI variable compensation expense increased 593.3% which was driven by the variable compensation earned on the Campbell Global performance fee in the second quarter of 2021.

Six months ended June 30, 2021 compared to six months ended June 30, 2020:

Other ENI operating expense decreased $(4.7) million, or (19.7)%, from $23.9 million for the six months ended June 30, 2020 to $19.2 million for the six months ended June 30, 2021.

Three months ended September 30, 2021 compared to three months ended September 30, 2020:

Other ENI operating expense decreased $(3.3) million, or (30.3)%, from $10.9 million for the three months ended September 30, 2020 to $7.6 million for the three months ended September 30, 2021.

The decrease was driven by (28.3)% lower fixed compensation and benefit expense resulting from dispositions, cost-saving initiatives at the Center, and (29.5)% lower general and administrative expense resulting from cost-saving initiatives at the Center.

Other ENI variable compensation expense increased 150.0% which was driven by an increase in variable compensation at Campbell Global as a result of higher earnings during the period, as well as an adjustment to Center variable compensation during the three months ended September 30, 2021.

Nine months ended September 30, 2021 compared to nine months ended September 30, 2020:

Other ENI operating expense decreased $(8.0) million, or (23.0)%, from $34.8 million for the nine months ended September 30, 2020 to $26.8 million for the nine months ended September 30, 2021.

The decrease was driven by (21.8)% lower fixed compensation and benefit expense and (25.5)% lower general and administrative expense resulting from restructuring at the Center in the first half of 2020.

Other ENI variable compensation expense increased 289.7% due to the variable compensation earned on the Campbell Global performance fee in the second quarter of 2021.

Other ENI variable compensation expense increased 244.2% due to the variable compensation earned on the Campbell Global performance fee during the nine months ended September 30, 2021.

Capital Resources and Liquidity

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All amounts presented exclude consolidated Funds:

Six Months Ended June 30,

Nine Months Ended September 30,

($ in millions) 2021 2020

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

Comparison for the six months ended June 30, 2021 and 2020

Net cash from operating activities from continuing operations decreased $(24.9) million, from net cash provided of $71.9 million for the six months ended June 30, 2020 to net cash provided of $47.0 million for the six months ended June 30, 2021, driven by changes in net income offset by changes in operating assets and liabilities period over period.

In the six months ended June 30, 2021, net cash provided by investing activities of continuing operations increased $699.9 million, from $12.3 million provided in the six months ended June 30, 2020 to $712.2 million provided in the six months ended June 30, 2021, driven by proceeds from the sale of Landmark in the six months ended June 30, 2021.

Net cash provided by financing activities from continuing operations increased $118.7 million, from $68.2 million used in the six months ended June 30, 2020 to $50.5 million provided in the six months ended June 30, 2021, primarily due to higher drawdowns on the revolving credit facility in the six months ended June 30, 2021 compared to a net repayment on the revolving credit facility and share repurchases in the six months ended June 30, 2020.

Comparison for the nine months ended September 30, 2021 and 2020

Net cash from operating activities from continuing operations decreased $(112.7) million, from net cash provided of $135.0 million for the nine months ended September 30, 2020 to net cash provided of $22.3 million for the nine months ended September 30, 2021, driven by changes in net income offset by changes in operating assets and liabilities period over period.

In the nine months ended September 30, 2021, net cash provided by investing activities of continuing operations increased $979.9 million, from $29.1 million provided in the nine months ended September 30, 2020 to $1,009.0 million provided in the nine months ended September 30, 2021, driven by proceeds from the sale of Landmark, TSW, Campbell Global and ICM in the nine months ended September 30, 2021.

Net cash provided by financing activities from continuing operations increased $160.6 million, from $140.6 million used in the nine months ended September 30, 2020 to $20.0 million provided in the nine months ended September 30, 2021, primarily due to higher drawdowns on the revolving credit facility in the nine months ended September 30, 2021 compared to a net repayment on the revolving credit facility and share repurchases in the nine months ended September 30, 2020.

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, 2021 and 2020.

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, 2021 and 2020.

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

($ in millions) 2021 2020 2021 2020

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9.1 3.2 20.7 (17.2)

Amortization of pre-acquisition employee equity — — — —

EBITDA of discontinued operations attributable to controlling interests (261.1) (8.1) (961.1) (41.7)

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$ 23.6 $ 23.9 $ 79.0 $ 65.2

The six months ended June 30, 2021 includes $3.5 million of restructuring costs at the Center and Affiliates, $0.6 million costs associated with the transfer of an insurance policy from our former parent, and the loss on sale of subsidiary of $1.3 million.

The three months ended June 30, 2020 includes $3.0 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $0.3 million.

The six months ended June 30, 2020 includes $3.4 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $0.6 million.

(1) The three months ended September 30, 2021 includes $0.5 million of restructuring costs at the Center and Affiliates, $0.3 million costs associated with the transfer of an insurance policy from our former parent, and the gain on sale of Affiliates of $34.6 million.

The nine months ended September 30, 2021 includes $4.0 million of restructuring costs at the Center and Affiliates, $0.9 million costs associated with the transfer of an insurance policy from our former parent, and the gain on sale of Affiliates of $33.3 million.

The three months ended September 30, 2020 includes $1.4 million of restructuring costs, costs associated with the transfer of an insurance policy from our former parent of $0.4 million, and the gain on sale of Affiliates of $7.2 million.

The nine months ended September 30, 2020 includes $4.8 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $1.0 million, and the gain on sale of Affiliates of $7.2 million.

(2) Includes non-cash equity-based award amortization expense.

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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.

Following the end of the second quarter of 2021, we received proceeds from the sales of our equity interest in TSW and ICM and we also expect to realize future proceeds from the sale of our equity interests in Campbell Global during the third quarter of 2021, as well as make tax payments on the associated gains in the second half of the year.

Following the end of the third quarter of 2021, we received proceeds from the sale of our equity interest in Barrow Hanley upon settlement of contingency, and we commenced a tender offer to purchase up to 33.3 million shares of our common stock at a price of $31.50 per share.

We expect to make tax payments on the associated gain on sales of Affiliates in the fourth quarter of 2021.

We also expect to pay down our 5.125% Senior Notes in the near term.

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,

2021 December 31,

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Under the Acadian Credit Agreement, the ratio of Acadian’s third-party borrowings to Acadian’s trailing twelve months Adjusted EBITDA, as defined by the Acadian Credit Agreement (the “Leverage Ratio”), cannot exceed 2.5x and the ratio of Acadian’s trailing twelve months Adjusted EBITDA to Acadian’s interest expense (the “Interest Coverage Ratio”) must be not less than 4.0x.

At June 30, 2021, Acadian’s Leverage Ratio was 0.4x and Acadian’s Interest Coverage Ratio was 235.6x.

At September 30, 2021, Acadian’s Leverage Ratio was 0.2x and Acadian’s Interest Coverage Ratio was 249.4x.

Other Compensation Liabilities

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The following table summarizes our other long-term liabilities:

September 30,

2021 December 31,

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Voluntary deferral plan liability 45.4 48.0

$ 81.9 $ 73.8

(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, Held for Sale and Discontinued Operations in Note 3 of the accompanying Condensed Consolidated Financial Statements.

Total $ 89.5 $ 73.8

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 Campbell Global, 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 Affiliate, 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 anticipated revenues, margins, cash flows or earnings, anticipated future performance of our business and our Affiliate, anticipated composition of the Company’s business going forward, our expected future net cash flows, expected return of capital to shareholders, expected repayment of retail notes, 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.

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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