What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-09 compared with 2021-11-05 · 175 added, 538 removed, 459 unchanged (61% of the section changed)

3 unchanged sentences

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

September 30,

2022 December 31,

Cash and cash equivalents $ 88.8 $ 252.1

Restricted cash 1.6 1.6

Investment advisory fees receivable 114.3 167.1

2 unchanged sentences

Right of use assets 63.3 65.1

Investments (includes balances reported at fair value of $ 54.8 and $ 88.0 )

Acquired intangibles, net 0.1 0.2

Investments 53.4 54.5

Goodwill 20.3 20.3

1 unchanged sentence

Deferred tax assets 70.9 72.4

Assets held for sale 14.1 326.8

Consolidated Funds’ assets held for sale — 114.3

Total assets $ 494.1 $ 714.8

2 unchanged sentences

Accrued incentive compensation 28.9 117.4

Due to OM plc 1.9 3.4

Other compensation liabilities 94.7 103.7

4 unchanged sentences

Third party borrowings 273.2 394.9

Liabilities held for sale — 313.3

Total liabilities 592.0 732.4

3 unchanged sentences

Additional paid-in capital — —

Retained earnings (deficit) 610.4 ( 176.5 )

Retained deficit ( 88.0 ) ( 6.8 )

Accumulated other comprehensive loss ( 9.9 ) ( 10.8 )

Non-controlling interests — 1.7

Non-controlling interests in consolidated Funds — —

Total equity and non-controlling interests 1,084.0 384.4

Total equity ( 97.9 ) ( 17.6 )

Total liabilities and equity $ 494.1 $ 714.8

4 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Management fees $ 102.2 $ 103.8

1 unchanged sentence

Other revenue — 1.3

Consolidated Funds’ revenue — 1.4 — 4.6

Total revenue 112.2 109.7

2 unchanged sentences

General and administrative expense 16.9 19.1

Impairment of goodwill — — — 16.4

Amortization of acquired intangibles 0.1 — 0.1 0.3

Depreciation and amortization 5.3 5.5

Consolidated Funds’ expense — — — 0.1

Amortization of acquired intangibles — —

Total operating expenses 69.0 77.2

4 unchanged sentences

Interest expense ( 6.5 ) ( 6.2 )

Gain on sale of subsidiaries 34.6 7.2 33.3 7.2

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

Loss on extinguishment of debt ( 3.2 ) —

Loss on sale of subsidiary — ( 1.3 )

Total non-operating income (loss) ( 9.8 ) ( 4.9 )

3 unchanged sentences

Income from discontinued operations, net of tax — 21.9

Gain on disposal of discontinued operations, net of tax 185.4 — 694.6 —

Net income 23.8 40.4

Net income (loss) attributable to non-controlling interests in consolidated Funds — ( 3.2 ) 68.0 21.3

Net income attributable to non-controlling interests in consolidated Funds — 13.4

Net income attributable to controlling interests $ 23.8 $ 27.0

10 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

Net income $ 23.8 $ 40.4

1 unchanged sentence

Amortization related to derivative securities, net of tax

0.6 0.6 1.8 1.7

Foreign currency translation adjustment ( 0.7 ) 1.1

Total other comprehensive income (loss) ( 0.3 ) 2.0 2.1 1.3

Comprehensive income (loss) attributable to non-controlling interests in consolidated Funds — ( 3.2 ) 68.0 21.3

Total other comprehensive income 0.9 1.7

Comprehensive income attributable to non-controlling interests in consolidated Funds — 13.4

Total comprehensive income attributable to controlling interests $ 24.7 $ 28.7

2 unchanged sentences

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the three months ended September 30, 2021 and 2020

($ in millions except share data, unaudited)

(millions) Common stock,

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

comprehensive

income (loss) Total

stockholders’

interests Non-controlling

equity Redeemable non-controlling interests in consolidated

Funds Total equity and

non-controlling

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

Issuance of common stock — — 0.2 — — 0.2 — — 0.2 — 0.2

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

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

Foreign currency translation adjustment

— — — — 1.4 1.4 — — 1.4 — 1.4

Amortization related to derivatives securities, net of tax

— — — — 0.6 0.6 — — 0.6 — 0.6

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

Dividends ($ 0.01 per share)

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

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

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

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

Issuance of common stock 0.4 — 0.1 — — 0.1 — — 0.1 — 0.1

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

Foreign currency translation adjustment

— — — — ( 0.9 ) ( 0.9 ) — — ( 0.9 ) — ( 0.9 )

Amortization related to derivatives securities, net of tax

— — — — 0.6 0.6 — — 0.6 — 0.6

Withholding tax related to stock option exercise — — ( 8.9 ) — — ( 8.9 ) — — ( 8.9 ) — ( 8.9 )

Dividends ($ 0.01 per share)

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

Net income — — — 229.5 — 229.5 — — 229.5 — 229.5

September 30, 2021 79.8 $ 0.1 $ 485.0 $ 610.4 $ ( 11.5 ) $ 1,084.0 $ — $ — $ 1,084.0 $ — $ 1,084.0

See Notes to Condensed Consolidated Financial Statements

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the nine months ended September 30, 2021 and 2020

For the three months ended March 31, 2022 and 2021

($ in millions except share data, unaudited)

5 unchanged sentences

interests Non-controlling

equity Redeemable non-controlling interests in consolidated

Funds Total equity and

equity Total equity and

non-controlling

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

Issuance of common stock 0.1 — 0.2 — — 0.2 — — 0.2 — 0.2

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

Repurchase of common stock ( 5.7 ) — ( 35.3 ) — — ( 35.3 ) — — ( 35.3 ) — ( 35.3 )

Capital contributions — — — — — — 3.8 — 3.8 3.8

6 unchanged sentences

— — — — — — 0.1 — 0.1 0.1

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

Dividends ($ 0.01 per share)

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

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

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

Net income — — — 27.0 — 27.0 — 13.4 40.4 40.4

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

December 31, 2021 45.4 $ — $ — $ ( 6.8 ) $ ( 10.8 ) $ ( 17.6 ) $ — $ — $ ( 17.6 ) $ ( 17.6 )

Issuance of common stock 0.2 — — — — — — — — —

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

Repurchase of common stock ( 4.2 ) — — ( 103.2 ) — ( 103.2 ) — — ( 103.2 ) ( 103.2 )

Equity-based compensation — — 0.9 — — 0.9 — — 0.9 0.9

4 unchanged sentences

Withholding tax related to stock option exercise — — ( 0.9 ) ( 1.4 ) — ( 2.3 ) — — ( 2.3 ) ( 2.3 )

Other changes in non-controlling interests

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

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

Dividends ($ 0.01 per share)

1 unchanged sentence

Net income — — — 23.8 — 23.8 — — 23.8 23.8

September 30, 2021 79.8 $ 0.1 $ 485.0 $ 610.4 $ ( 11.5 ) $ 1,084.0 $ — $ — $ 1,084.0 $ — $ 1,084.0

March 31, 2022 41.4 $ — $ — $ ( 88.0 ) $ ( 9.9 ) $ ( 97.9 ) $ — $ — $ ( 97.9 ) $ ( 97.9 )

See Notes to Condensed Consolidated Financial Statements

2 unchanged sentences

(in millions, unaudited)

Nine Months Ended

September 30,

Three Months Ended

Cash flows from operating activities:

1 unchanged sentence

Income from discontinued operations, net of tax — ( 21.9 )

Net (income) loss attributable to non-controlling interests in consolidated Funds from continuing operations — 1.6

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

Impairment of goodwill — 16.4

Amortization of acquired intangibles 0.1 0.3

Gain on sale of discontinued operations, net of tax ( 694.6 ) —

Gain on sale of subsidiaries ( 33.3 ) ( 7.2 )

Loss on extinguishment of debt 3.2 —

Loss on sale of subsidiary — 1.3

Depreciation and other amortization 5.3 5.5

8 unchanged sentences

(Increase) decrease in investment advisory fees receivable 52.7 ( 6.0 )

Increase in other receivables, prepayments, deposits and other assets ( 0.1 ) ( 3.4 )

Decrease in other receivables, prepayments, deposits and other assets 0.4 11.2

Decrease in accrued incentive compensation, operating lease liabilities and other liabilities ( 92.2 ) ( 49.2 )

Decrease in accounts payable, accrued expenses and accrued income taxes ( 8.1 ) ( 11.2 )

Net cash flows from operating activities of continuing operations, excluding consolidated Funds 22.3 135.0

Net income (loss) attributable to non-controlling interests in consolidated Funds from continuing operations — ( 1.6 )

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

Losses on other investments — 6.2

Purchase of investments — ( 98.2 )

Sale of investments — 66.7

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

Increase in accounts payable and other liabilities — 3.0

Net cash flows from operating activities of continuing operations of consolidated Funds — ( 52.6 )

Net cash flows from operating activities of continuing operations ( 14.4 ) ( 7.3 )

3 unchanged sentences

Additions of fixed assets, excluding discontinued operations ( 4.0 ) ( 3.5 )

Cash proceeds from sale of discontinued operations 950.2 —

Cash proceeds from sale of subsidiaries 46.2 —

Purchase of investment securities ( 4.8 ) ( 2.0 )

Sale of investment securities 4.8 6.1

Cash flows from investing activities of consolidated Funds

Deconsolidation of Funds — ( 86.0 )

Net cash flows from investing activities of continuing operations ( 4.0 ) 0.6

See Notes to Condensed Consolidated Financial Statements

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Cash Flows

(in millions, unaudited)

Nine Months Ended

September 30,

Net cash flows from investing activities of discontinued operations — 2.2

1 unchanged sentence

Cash flows from financing activities:

Proceeds from third party and non-recourse borrowings 176.0 80.0

Repayment of third party and non-recourse borrowings ( 143.0 ) ( 175.0 )

Proceeds from revolving credit facility 125.0 95.0

Repayment of third party borrowings and revolving credit facility ( 162.0 ) ( 14.0 )

Payment for debt issuance costs ( 0.9 ) ( 0.4 )

Proceeds from stock issuance 0.2 —

Payment to OM plc for co-investment redemptions ( 1.1 ) ( 1.3 )

3 unchanged sentences

Withholding tax payments related to stock option exercise ( 2.3 ) —

Cash flows from financing activities of consolidated Funds

Redeemable non-controlling interest capital raised — 131.2

Redeemable non-controlling interest capital redeemed — ( 1.1 )

Net cash flows from financing activities of continuing operations ( 144.9 ) 78.4

2 unchanged sentences

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

Net increase in cash and cash equivalents 1,020.0 22.9

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

Net increase (decrease) in cash and cash equivalents ( 163.3 ) 61.3

See Notes to Condensed Consolidated Financial Statements

BrightSphere Investment Group Inc.

Condensed Consolidated Statements of Cash Flows

(in millions, unaudited)

Three Months Ended

Cash and cash equivalents at beginning of period 252.1 372.9

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

1 unchanged sentence

cash and cash equivalents at end of period classified within assets held for sale — ( 20.7 )

Cash and cash equivalents at end of period from continuing operations (including restricted cash) $ 1,424.1 84.2

Cash and cash equivalents at end of period from continuing operations $ 88.8 444.7

Supplemental disclosure of cash flow information:

Interest paid (excluding consolidated Funds) $ 18.0 $ 22.3

Interest paid $ 8.0 $ 8.2

Income taxes paid 3.0 0.3

6 unchanged sentences

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

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

The Company completed the disposition of certain Affiliates and currently operates the business through one Affiliate, Acadian Asset Management LLC (“Acadian”), within its Quant & Solutions segment.

The Company’s Affiliate is organized as a limited liability company.

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

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

Variable compensation is based on the firm’s profitability.

BSIG and Affiliate key employees share in profits after variable compensation according to their respective ownership interests.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Acadian is organized as a limited liability company.

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

Variable compensation is based on the firm’s profitability.

BSIG and Acadian key employees share in profits after variable compensation according to their respective ownership interests.

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

The corporate head office is included within the Other category, along with the Company’s previously disposed affiliates, Campbell Global, LLC (“Campbell Global”) and Investment Counselors of Maryland (“ICM”), for the prior year period.

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

On October 15, 2014, the

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

Company completed the initial public offering (the “Offering”) by OM plc pursuant to the Securities Act of 1933, as amended.

On October 15, 2014, the Company completed the initial public offering (the “Offering”) by OM plc pursuant to the Securities Act of 1933, as amended.

Additionally, between the Offering and February 25, 2019, the Company, OM plc and/or HNA Capital U.S.

2 unchanged sentences

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

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

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

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

For the three months ended March 31, 2022, the Company repurchased 4,147,450 shares of common stock at an average price of $ 24.09 per share, or approximately $ 100 million in total, including commissions.

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

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

2) Basis of Presentation and Significant Accounting Policies

1 unchanged sentence

Basis of presentation

These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations and of comprehensive income, statements of changes in stockholders’ equity and statements of cash flows of the Company.

These unaudited Condensed Consolidated Financial Statements reflect the historical balance sheets, statements of operations, comprehensive income, changes in stockholders’ equity and cash flows of the Company.

Within these Condensed Consolidated Financial Statements, Paulson and its related entities, as defined above, are referred to as “related parties.”

3 unchanged sentences

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

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

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

The transaction closed on July 19, 2021.

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

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

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

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

The transaction closed on June 2, 2021.

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

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

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

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

The transaction closed on July 22, 2021.

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

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

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

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

The transaction closed on August 31, 2021.

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

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

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

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

See Note 3, Discontinued Operations for additional information.

Certain disclosures included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (annual report on Form 10-K) are not required to be included on an interim basis in the Company’s quarterly reports on Form 10-Q.

The Company has condensed or omitted these disclosures.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2020 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on March 1, 2021.

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K as filed with the Securities and Exchange Commission (“SEC”) on February 28, 2022.

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

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

Use of estimates

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

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

The three months ended March 31, 2022 were characterized by continued uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management.

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

Recently adopted accounting standards

In December 2019, the FASB issued Accounting Standard Update (“ASU”) 2019-12, ASC 740, “ Income Taxes (ASC 740):

Simplifying the Accounting for Income Taxes ”, which is intended to simplify various aspects related to accounting for income taxes.” ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application.

The guidance is effective for all public business entities for fiscal years beginning after December 15, 2020, including interim periods therein.

The Company adopted the standard on January 1, 2020.

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

New accounting standards not yet adopted

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

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

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

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

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

The Company does not believe that any such guidance has or will have a material effect on its Condensed Consolidated Financial Statements and related disclosures.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

3) Divestitures, Held for Sale and Discontinued Operations

3) Discontinued Operations

Landmark Partners

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

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

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

On June 2, 2021, the Company completed the sale of all its interests in Landmark to Ares for cash consideration of $ 690.0 million, adjusted for customary closing adjustments.

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

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

The Company utilized $ 87.9 million of its deferred tax asset in connection with the sale of all its interests in Landmark.

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

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

Thompson, Siegel & Walmsley, LLC

On May 9, 2021, the Company entered into an agreement with Pendal to sell all of the Company’s interests in TSW and the Company’s seed investment in TSW strategies.

On May 9, 2021, the Company entered into an agreement with Pendal Group Limited (“Pendal”), to sell all of the Company’s interests in Thompson, Siegel & Walmsley, LLC (“TSW”) and the Company’s seed investment in TSW strategies.

On July 22, 2021, the Company completed the sale of all its interests in TSW to Pendal for cash consideration of $ 240.0 million.

The Company recognized a gain on disposal of discontinued operations of $ 185.4 million net of tax of $ 74.0 million for the three and nine months ended September 30, 2021.

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

The Company utilized $ 6.9 million of its deferred tax asset in connection with the sale of all its interests in TSW.

Campbell Global

On June 21, 2021, the Company entered into a definitive agreement with J.P.

Morgan to sell all of the Company’s interests in Campbell and the Company’s co-investments in Campbell funds.

On August 31, 2021, the Company completed the sale of all its interests in Campbell to J.P.

Financial and operational results for Campbell are included within the “Other” category until August 31, 2021, the consummation of the sale.

The divestiture of Campbell did not meet the criteria for discontinued operations.

The Company also redeemed co-investments in Campbell’s funds as of August 31, 2021 upon consummation of the sale.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

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

September 30,

2021 December 31,

Cash and cash equivalents $ — $ 30.6

Investment advisory fees receivable — 12.2

Fixed assets, net — 8.8

Right of use assets — 12.1

Investments — 25.1

Intangible assets, net — 58.2

Goodwill — 161.8

Other assets — 17.5

Deferred tax assets — 0.5

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

Other assets held for sale (2)

Assets held for sale $ 14.1 $ 326.8

Accounts payable and accrued expenses $ — $ 2.2

Accrued incentive compensation — 42.5

Other compensation liabilities — 254.2

Operating lease liabilities — 13.1

Other liabilities — 1.3

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

(1) Includes assets and liabilities of discontinued operations of Landmark and TSW as of December 31, 2020.

(2) Includes seed investments in TSW strategies as of September 30, 2021.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

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

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

2021 2020 2021 2020

The major classes of revenue and expenses constituting net income from discontinued operations attributable to controlling interests for Landmark and TSW in the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021 are as follows (in millions):

Three Months Ended March 31,

Revenues $ — $ 58.2

7 unchanged sentences

Operating income (loss) — 8.0

Investment income (loss) of consolidated Funds — ( 0.7 ) 68.1 28.2

Investment gains of consolidated Funds — 16.6

Income from discontinued operations before taxes — 24.6

1 unchanged sentence

Income from discontinued operations, net of tax — 21.9

Gain on disposal, net of tax of $ 74.0 , and $ 250.6

185.4 — 694.6 —

Total discontinued operations 186.6 2.1 771.1 52.1

Income (loss) from discontinued operations attributable to non-controlling interests — ( 6.1 ) 68.0 22.9

Income from discontinued operations attributable to non-controlling interests — 13.4

Net income from discontinued operations attributable to controlling interests $ — $ 8.5

1 unchanged sentence

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

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

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

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

The consolidated Funds’ investments gains/(losses) from discontinued operations, net of tax, attributable to controlling interests was $ 5.4 million and $ 5.2 million in the Company’s Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2020, respectively.

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

The redemption resulted in the de-consolidation of consolidated Funds

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

September 30,

2021 December 31,

Cash and cash equivalents $ — $ 0.6

Equity-accounted investments (1)

Consolidated Funds’ assets held for sale $ — $ 114.3

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

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

Other divestitures

Investment Counselors of Maryland

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

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

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

BrightSphere International Ltd.

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

to Perpetual U.S.

Holdings Company Inc.

(“Perpetual”).

Barrow, Hanley, Mewhinney & Strauss LLC

On October 14, 2021 the Company received $ 15.8 million of cash proceeds from the sale of a previously disposed of Affiliate, Barrow, Hanley, Mewhinney & Strauss LLC.

3) Discontinued Operations (cont.)

that were considered to be variable interest entities (“VIEs”) as of June 2, 2021 upon consummation of the sale.

The criteria for discontinued operations accounting treatment were met.

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

4) Investments

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

September 30,

2022 December 31,

Other investments held at fair value 9.2 40.0

Investments related to long-term incentive compensation plans held at fair value 45.6 48.0

Total investments held at fair value 54.8 88.0

Equity-accounted investment in Affiliate — 2.0

Other investments 9.0 9.5

Investments related to long-term incentive compensation plans 44.4 45.0

Total investments per Condensed Consolidated Balance Sheets 53.4 54.5

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

4) Investments (cont.)

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

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

2021 2020 2021 2020

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

Three Months Ended March 31,

Realized and unrealized gains (losses) on other investments held at fair value $ ( 0.1 ) $ 1.5

2 unchanged sentences

$ ( 0.1 ) $ 2.6

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

5) Fair Value Measurements

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

The following table summarizes the Company’s assets that are measured at fair value on a recurring basis at March 31, 2022 (in millions):

Quoted prices

2 unchanged sentences

(Level III) Uncategorized Total value,

September 30, 2021

March 31, 2022

Investments in separate accounts (2)

20 unchanged sentences

To the extent these securities are actively traded and valuation adjustments are not applied, they are classified as Level I.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

5) Fair Value Measurements (cont.)

The securities that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs obtained by the Company from independent pricing services are classified as Level II.

4 unchanged sentences

In either case, such securities are classified as Level III.

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

(2) Investments in separate accounts of $ 4.2 million at September 30, 2021 consist of approximately 100 % of equity securities and other investments.

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

The Company performs due diligence

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

5) Fair Value Measurements (cont.)

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

(2) Investments in separate accounts of $ 4.5 million at March 31, 2022 consist of approximately 100 % of equity securities and other investments.

Investments in separate accounts of $ 4.6 million at December 31, 2021 consist of approximately 100 % of equity securities and other investments.

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

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

(3) Investments related to long-term incentive compensation plans of $ 44.4 million and $ 45.0 million at March 31, 2022 and December 31, 2021, respectively, were investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates.

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

(4) The uncategorized amounts of $ 5.0 million and $ 16.2 million at September 30, 2021 and December 31, 2020, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

(4) The uncategorized amounts of $ 4.5 million and $ 4.9 million at March 31, 2022 and December 31, 2021, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

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

2 unchanged sentences

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

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

5) Fair Value Measurements (cont.)

The real estate investment Funds of $ 4.7 million and $ 6.2 million at September 30, 2021 and December 31, 2020, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds.

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

The real estate investment Funds of $ 4.4 million and $ 4.8 million at March 31, 2022 and December 31, 2021, respectively, are subject to longer than quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds.

The range of time over which the underlying assets are expected to be liquidated by the investees is approximately one year from March 31, 2022.

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

2 unchanged sentences

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

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

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

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

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

Investments in unconsolidated Funds 2021 2020 2021 2020

Level III financial assets

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

Redemptions — ( 0.3 ) ( 0.1 ) ( 0.3 )

Disposals — — ( 2.7 ) —

Total net fair value gains/losses recognized in net income

Total Level III financial assets

$ — $ 2.7 $ — $ 2.7

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

There were no significant transfers of financial assets or liabilities between Levels II or III during the three months ended March 31, 2022 and 2021, respectively.

BrightSphere Investment Group Inc.

1 unchanged sentence

6) Variable Interest Entities

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

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

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

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

These VIEs are primarily Funds managed by the Company’s Affiliate and other partnership interests typically owned entirely by third party investors.

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

1 unchanged sentence

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

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

September 30,

2021 December 31,

Consolidated Funds’ assets held for sale (Note 3) — 114.3

Total Assets $ — $ 114.3

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

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

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

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

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

The assets of consolidated VIEs presented in the table above belong to the investors in those Funds, are available for use only by the Fund to which they belong, and are not available for use by the Company to the extent they are held by non-controlling interests.

The Company did not consolidate any funds that are VIEs as of March 31, 2022 and December 31, 2021.

The Company’s involvement with Funds that are VIEs and not consolidated by the Company is generally limited to that of an investment manager and its investment in the unconsolidated VIE, if any.

2 unchanged sentences

The Company has not issued any investment performance guarantees to these VIEs or their investors.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

6) Variable Interest Entities (cont.)

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

September 30,

2022 December 31,

3 unchanged sentences

Maximum risk of loss (1)

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

The Company does not record performance or incentive allocations until it is probable that a significant reversal will not occur.

(1) Includes equity investments the Company has made or is required to make.

BrightSphere Investment Group Inc.

2 unchanged sentences

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

September 30, 2021 December 31, 2020

March 31, 2022 December 31, 2021

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

Revolving credit facility:

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

$ 125 million revolving credit facility expiring March 7, 2025 (1)

$ 88.0 $ 88.0 2 $ — $ —

8 unchanged sentences

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

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

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

(3) On January 18, 2022, the Company completed the full redemption of the $ 125 million aggregate principal amount outstanding of its 5.125 % Senior Notes due August 1, 2031.

As a result of this transaction, the Company recorded a $ 3.2 million loss on extinguishment of debt within the Condensed Consolidated Statements of Operations for the three months ended March 31, 2022.

Revolving Credit Facility

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

On February 23, 2021, the Company, along with the Lenders, entered into an assignment and assumption and amendment agreement (the “Assignment”) to the Amended Credit Agreement.

Pursuant to the Assignment, the Amended Credit Agreement was assigned to and assumed by Acadian and the Amended Credit Agreement was amended (the Amended Credit Agreement, as amended by the Assignment, the “Acadian Credit Agreement”) to, among other things, reduce the Lenders’ commitments thereunder to $ 125 million.

The Acadian Credit Agreement has a maturity date of August 22, 2022.

Borrowings under the Acadian Credit Agreement bear interest, at Acadian’s option, at either the per annum rate equal to (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5 % and (iii) the one month Adjusted LIBOR Rate plus 1.0 %, plus, in each case an additional amount based on its credit rating or (b) the London interbank offered rate for a period, at the Company’s election equal to one, three or six months plus an additional

On March 7, 2022, the Company, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (the “Acadian Credit Agreement”), which replaced the Company’s revolving credit facility dated as of August 20, 2019 (as amended by an amendment dated September 3, 2020 and an assignment and assumption and amendment agreement dated February 23, 2021, the “Original Credit Agreement”).

The maturity date of this Original Credit Agreement was August 22, 2022, and the maturity date of the Acadian Credit Agreement is March 7, 2025.

BrightSphere Investment Group Inc.

1 unchanged sentence

7) Borrowings and Debt (cont.)

amount ranging from 1.5 % to 2.0 %, with such additional amount based on Acadian’s Leverage Ratio (as defined below).

Borrowings under the Acadian Credit Agreement bear interest, at Acadian’s option, at the per annum rate equal to either (a) the greatest of (i) the prime rate, (ii) the federal funds effective rate plus 0.5 % and (iii) the secured overnight financing rate for a one month period plus a credit spread adjustment of 0.10% (“Adjusted Term SOFR”) plus 1 %, plus, in each case, an additional amount ranging from 0.5% to 1.0%, with such additional amount based on Acadian’s Leverage Ratio (as defined below) or (b) Adjusted Term SOFR for plus an additional amount ranging from 1.5 % to 2.0 %, with such additional amount based on Acadian’s Leverage Ratio.

In addition, Acadian is charged a commitment fee based on the average daily unused portion of the revolving credit facility under the Acadian Credit Agreement at a per annum rate ranging from 0.25 % to 0.375 %, with such amount based on Acadian’s Leverage Ratio.

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 Acadian interest coverage ratio must not be less than 4.0 x.

The Company has operating leases for corporate offices, data centers, vehicles, and certain equipment.

The operating leases have remaining lease terms of 1 year to 12 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

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

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

2021 2020 2021 2020

The Company has operating leases for corporate offices, data centers and certain equipment.

The operating leases have remaining lease terms of less than 1 year to 12 years, some of which include options to extend the leases for up to 5 years.

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

Three Months Ended March 31,

Operating lease cost $ 2.5 $ 2.9

Variable lease cost — — 0.1 0.1

Sublease income ( 0.1 ) —

Total operating lease expense $ 2.4 $ 2.9

1 unchanged sentence

Operating cash flows from operating leases $ 2.2 $ 2.6

Right of use assets obtained in exchange for new operating lease liabilities — 0.3 1.6 74.8

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

For the nine months ended September 30, 2021 and 2020, the weighted average remaining lease term was 11.6 years and 12.3 years, respectively, and the weighted average discount rate was 3.34 % and 3.34 %, respectively.

For the three months ended March 31, 2022 and 2021, the weighted average remaining lease term was 11.2 years and 11.1 years, respectively, and the weighted average discount rate was 3.35 % and 3.34 %, respectively.

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

BrightSphere Investment Group Inc.

1 unchanged sentence

8) Leases (cont.)

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

Operating Leases

Year Ending December 31,

2021 (excluding the nine months ended September 30, 2021)

2022 (excluding the three months ended March 31, 2022)

Thereafter 56.4

1 unchanged sentence

Less imputed interest ( 16.2 )

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

9) Goodwill and Intangible Assets

In connection with the divestitures of Landmark and TSW, the Company disposed of goodwill of $ 148.1 million and $ 13.7 million respectively, during the nine months ended September 30, 2021.

The Landmark divestiture was consummated on June 2, 2021 and the TSW divestiture was consummated on July 22, 2021.

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

10) Commitments and Contingencies

Operational commitments

The Company had unfunded commitments to invest up to approximately $ 1 million in co-investments at a former Affiliate as of September 30, 2021.

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

During 2021, the Company divested of all of its interests in Landmark and Campbell and funded its commitments as required through the transaction dates.

As a result of these dispositions, the Company no longer had any unfunded commitments to Landmark or Campbell as of September 30, 2021.

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

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

The Company had an unfunded commitment to invest up to approximately $ 0.2 million in co-investments at a former Affiliate as of March 31, 2022.

These commitments will be funded as required through the end of the investment period through 2022.

Included in cash and cash equivalents is $ 1.5 million pertaining to the wind-down of BrightSphere Investment UK, Ltd.

A number of our subsidiaries operate under regulatory authorities that require that they maintain minimum financial or capital requirements.

Management is not aware of any violations of such financial requirements occurring during the period.

The Company entered into a guaranty for an office space security deposit on behalf of an Affiliate in the amount of $ 2.5 million in January 2020.

The Company entered into a guaranty for an office space security deposit in the amount of $ 2.5 million in January 2020.

This represents the maximum potential amount of future (undiscounted) payments that the Company could be required to make under the guaranty in the event of default by the guaranteed parties.

This guaranty expires in 2022.

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

There are no liabilities recorded on the Condensed Consolidated Balance Sheet as of March 31, 2022 related to this guaranty.

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

2 unchanged sentences

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

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

Indemnifications

In the normal course of business, such as through agreements to enter into business combinations and divestitures of Affiliates, the Company enters into contracts that contain a variety of representations and warranties and which provide general indemnifications.

The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred.

As of March 31, 2022, there were no material accruals for claims, legal proceedings, or other contingencies.

BrightSphere Investment Group Inc.

1 unchanged sentence

9) Commitments and Contingencies (cont.)

Indemnifications

The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred.

Foreign tax contingency

3 unchanged sentences

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

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

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

At March 31, 2022, management of the Company has estimated the potential maximum exposure and concluded that it is not material.

No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at March 31, 2022.

Considerations of credit risk

3 unchanged sentences

For the Company and certain Affiliates, cash deposits at a financial institution may exceed Federal Deposit Insurance Corporation insurance limits.

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

At September 30, 2021, approximately $ 1.4 billion of the Company’s cash and cash equivalents were invested in money market funds.

At March 31, 2022, approximately $ 20.5 million of the Company’s cash and cash equivalents were invested in money market funds.

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

6 unchanged sentences

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

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

2021 2020 2021 2020

Three Months Ended March 31,

Income from continuing operations attributable to controlling interests $ 23.8 $ 18.5

Income from discontinued operations attributable to controlling interests (Note 3) — 8.5

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

Total income available to participating unvested securities (1)

— — ( 0.1 ) —

Net income attributable to common stock $ 23.8 $ 27.0

11 unchanged sentences

Diluted earnings per share of common stock attributable to controlling interests $ 0.53 $ 0.33

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

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

11) Revenue (cont.)

Management fees

7 unchanged sentences

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

Revenue from expense reimbursements amounted to $ 0.7 million and $ 1.1 million for the three months ended September 30, 2021 and 2020, respectively.

Revenue from expense reimbursements amounted to $ 2.9 million and $ 3.3 million for the nine months ended September 30, 2021 and 2020, respectively, and is recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations.

There was no revenue from expense reimbursements for the three months ended March 31, 2022.

Revenue from expense reimbursements amounted to $ 1.0 million for the three months ended March 31, 2021.

Revenue is recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations.

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

Disaggregation of management fee revenue

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

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

2021 2020 2021 2020

The geographic disaggregation of management fee revenue for the three months ended March 31 (in millions) are presented below:

Three Months Ended March 31,

Quant & Solutions

$ 77.0 $ 74.4

27.7 24.2 78.2 71.4

Liquid Alpha (1)

$ — $ 22.8 $ — $ 70.7

2.4 4.2 10.2 12.1

1.0 1.7 3.7 5.3

Management fee revenue $ 102.2 $ 103.8

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

12) Revenue (cont.)

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

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

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

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

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

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

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

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

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

On August 31, 2021 the Company sold all of its equity interests in Campbell Global.

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

(1) The Company’s previously disposed affiliates, Campbell Global and ICM, are included within the Other category for the three months ended March 31, 2021.

BrightSphere Investment Group Inc.

1 unchanged sentence

12) Accumulated Other Comprehensive Income (Loss)

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

The components of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2022 and 2021 are as follows (in millions):

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of June 30, 2021

Balance, as of December 31, 2021

$ 4.8 $ ( 15.6 ) $ ( 10.8 )

3 unchanged sentences

Other comprehensive income (loss) ( 0.7 ) 1.6 0.9

Balance, as of September 30, 2021

$ 4.7 $ ( 16.2 ) $ ( 11.5 )

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

Balance, as of June 30, 2020 $ 1.0 $ ( 19.2 ) $ ( 18.2 )

Foreign currency translation adjustment 1.4 — 1.4

Amortization related to derivatives securities, before tax

Tax impact — ( 0.2 ) ( 0.2 )

Other comprehensive income 1.4 0.6 2.0

Balance, as of September 30, 2020

Balance, as of March 31, 2022

$ 4.1 $ ( 14.0 ) $ ( 9.9 )

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

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

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

4 unchanged sentences

Other comprehensive income 1.1 0.6 1.7

Balance, as of September 30, 2021

$ 4.7 $ ( 16.2 ) $ ( 11.5 )

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

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

Foreign currency translation adjustment Valuation and amortization of derivative securities Total

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

Foreign currency translation adjustment ( 0.4 ) — ( 0.4 )

Amortization related to derivatives securities, before tax

Tax impact — ( 0.6 ) ( 0.6 )

Other comprehensive income (loss) ( 0.4 ) 1.7 1.3

Balance, as of September 30, 2020

Balance, as of March 31, 2021

$ 5.5 $ ( 17.4 ) $ ( 11.9 )

For the nine months ended September 30, 2021 and 2020, the Company reclassified $ 2.4 million and $ 2.3 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

(1) On January 18, 2022, the Company completed the full redemption of the $ 125 million aggregate principal amount outstanding of its 5.125 % Senior Notes due August 1, 2031.

As a result of this transaction, the Company recorded $ 1.3 million of amortization expense included in Amortization related to derivatives securities, before tax.

For the three months ended March 31, 2022 and 2021, the Company reclassified $ 2.2 million and $ 0.8 million, respectively, from accumulated other comprehensive income (loss) to interest expense on the Condensed Consolidated Statements of Operations.

13) Derivatives and Hedging

3 unchanged sentences

The Treasury rate lock contract eliminated the impact of fluctuations in the underlying benchmark interest rate for future forecasted debt issuances.

The Company assessed the effectiveness of the hedging contract at inception and on a quarterly basis thereafter.

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

13) Derivatives and Hedging (cont.)

assessed the effectiveness of the hedging contract at inception and on a quarterly basis thereafter.

The forecasted debt issuances occurred in July 2016 and the Treasury rate lock, which had an accumulated fair value of $( 34.4 ) million, was settled.

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

As of September 30, 2021, the balance recorded in accumulated other comprehensive income (loss) was $( 16.2 ) million, net of tax.

As of March 31, 2022, the balance recorded in accumulated other comprehensive income (loss) was $( 14.0 ) million, net of tax.

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

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

Amounts of $ 2.4 million and $ 2.3 million have been reclassified for the nine months ended September 30, 2021 and 2020, respectively.

Amounts of $ 2.2 million and $ 0.8 million have been reclassified for the three months ended March 31, 2022 and 2021, respectively.

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

On January 18, 2022, the Company completed the full redemption of the $ 125 million aggregate principal amount outstanding of its 5.125 % Senior Notes due August 1, 2031.

As a result of this transaction, amortization expense of $ 1.3 million (of the $ 2.2 million interest expense reclassified to earnings for the three months ended March 31, 2022) was reclassified to earnings as interest expense .

BrightSphere Investment Group Inc.

4 unchanged sentences

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

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

The corporate head office is included within the Other category, along with our previously disposed Affiliates, Campbell Global, ICM for the three months ended March 31, 2021.

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

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

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

On June 2, 2021, the Company completed the sale of all the Company’s interests in Landmark.

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

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

On August 31, 2021, the Company completed the sale of all its 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.

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

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

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

On July 19, 2021, the Company completed the sale of all the Company’s interest in TSW.

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

The ICM operating segment was reclassified to “Other” category within the Company’s segment reporting for the three and 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.

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

Performance Measure

8 unchanged sentences

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

GAAP, adjusted to include management fees paid to Affiliates by consolidated Funds and the Company’s share of earnings from equity-

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

15) Segments (cont.)

accounted Affiliate.

GAAP, adjusted to include management fees paid to Affiliates by consolidated Funds and the Company’s share of earnings from equity-accounted Affiliate.

ENI revenue is also adjusted to exclude the separate revenues recorded under U.S.

8 unchanged sentences

GAAP net income (loss):

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

Three Months Ended September 30, 2021

Quant & Solutions Other Reconciling Adjustments Total U.S.

ENI revenue $ 110.6 $ 6.8 $ 0.5 (a) $ 117.9

ENI operating expenses 39.4 7.6 10.1 (b) 57.1

Earnings before variable compensation 71.2 ( 0.8 ) ( 9.6 ) 60.8

Variable compensation 23.5 3.5 0.1 (c) 27.1

ENI operating earnings (after variable comp) 47.7 ( 4.3 ) ( 9.7 ) 33.7

Affiliate key employee distributions 3.8 1.2 — 5.0

Earnings after Affiliate key employee distributions 43.9 ( 5.5 ) ( 9.7 ) 28.7

Net interest expense — ( 5.8 ) ( 0.4 ) (d) ( 6.2 )

Net investment income — — 0.3 (e) 0.3

Gain on sale of Affiliates — — 34.6 (e) 34.6

Income tax expense — ( 9.0 ) ( 5.5 ) (f) ( 14.5 )

Income from discontinued operations, net of tax — — 1.2 (g) 1.2

Gain on disposal of discontinued operations, net of tax — — 185.4 (h) 185.4

Economic net income $ 43.9 $ ( 20.3 ) $ 205.9 $ 229.5

BrightSphere Investment Group Inc.

1 unchanged sentence

14) Segments (cont.)

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

Three Months Ended September 30, 2020

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

ENI revenue $ 89.0 $ 30.3 $ 6.6 $ 1.6 (a) $ 127.5

ENI operating expenses 37.2 10.0 10.9 5.5 (b) 63.6

Earnings before variable compensation 51.8 20.3 ( 4.3 ) ( 3.9 ) 63.9

Variable compensation 18.0 8.4 1.4 0.1 (c) 27.9

ENI operating earnings (after variable comp) 33.8 11.9 ( 5.7 ) ( 4.0 ) 36.0

Affiliate key employee distributions 0.8 0.8 0.2 — 1.8

Earnings after Affiliate key employee distributions 33.0 11.1 ( 5.9 ) ( 4.0 ) 34.2

Net interest expense — — ( 5.3 ) ( 1.6 ) (d) ( 6.9 )

Net investment income — — — 6.7 (e) 6.7

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

Net income attributable to non-controlling interests in consolidated Funds — — — 3.2 (e) 3.2

Income tax expense — — ( 9.0 ) ( 0.3 ) (f) ( 9.3 )

Income from discontinued operations, net of tax — — — 2.1 (g) 2.1

Economic net income $ 33.0 $ 11.1 $ ( 20.2 ) $ 13.3 $ 37.2

BrightSphere Investment Group Inc.

Notes to Condensed Consolidated Financial Statements

15) Segments (cont.)

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

Nine Months Ended September 30, 2021

The following table presents the financial data for the Company’s segment for the three months ended March 31, 2022 (in millions):

Three Months Ended March 31, 2022

Quant & Solutions Other Reconciling Adjustments Total U.S.

ENI revenue $ 325.2 $ 35.4 $ 0.3 (a) $ 360.9

ENI operating expenses 116.8 26.8 26.7 (b) 170.3

ENI revenue $ 112.2 $ — $ — $ 112.2

ENI operating expenses 41.1 4.5 ( 6.4 ) (a) 39.2

Earnings before variable compensation 71.1 ( 4.5 ) 6.4 73.0

Variable compensation 68.1 14.8 0.9 (c) 83.8

Variable compensation 26.3 1.6 — 27.9

ENI operating earnings (after variable comp) 44.8 ( 6.1 ) 6.4 45.1

1 unchanged sentence

Earnings after Affiliate key employee distributions 42.9 ( 6.1 ) 6.4 43.2

Net interest expense — ( 16.6 ) ( 2.0 ) (d) ( 18.6 )

Net investment income — — 7.6 (e) 7.6

Gain on sale of Affiliates — — 33.3 (e) 33.3

Net loss attributable to non-controlling interests in consolidated Funds — — ( 68.0 ) (e) ( 68.0 )

Income tax expense — ( 29.0 ) ( 4.5 ) (f) ( 33.5 )

Income from discontinued operations, net of tax — — 76.5 (g) 76.5

Gain on disposal of discontinued operations, net of tax — — 694.6 (h) 694.6

Net interest expense — ( 4.6 ) ( 1.9 ) (b) ( 6.5 )

Net investment income — — ( 0.1 ) (c) ( 0.1 )

Loss on extinguishment of debt — — ( 3.2 ) (c) ( 3.2 )

Income tax expense — ( 8.8 ) ( 0.8 ) (d) ( 9.6 )

Economic net income $ 42.9 $ ( 19.5 ) $ 0.4 $ 23.8

2 unchanged sentences

14) Segments (cont.)

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

Nine Months Ended September 30, 2020

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

ENI revenue $ 257.9 $ 95.5 $ 19.5 $ 5.8 (a) $ 378.7

ENI operating expenses 109.3 34.7 34.8 3.3 (b) 182.1

The following table presents the financial data for the Company’s segments for the three months ended March 31, 2021 (in millions):

Three Months Ended March 31, 2021

Quant & Solutions Other Reconciling Adjustments Total U.S.

ENI revenue $ 103.5 $ 6.3 $ ( 0.1 ) (e) $ 109.7

ENI operating expenses 39.1 9.7 3.1 (a) 51.9

Earnings before variable compensation 64.4 ( 3.4 ) ( 3.2 ) 57.8

Variable compensation 52.7 24.8 4.3 3.5 (c) 85.3

Variable compensation 22.6 0.9 0.5 (f) 24.0

ENI operating earnings (after variable comp) 41.8 ( 4.3 ) ( 3.7 ) 33.8

1 unchanged sentence

Earnings after Affiliate key employee distributions 40.3 ( 4.1 ) ( 3.7 ) 32.5

Net interest expense — — ( 16.5 ) ( 5.1 ) (d) ( 21.6 )

Net investment income (loss) — — — ( 10.9 ) (e) ( 10.9 )

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

Net income attributable to non-controlling interests in consolidated Funds — — — ( 21.3 ) (e) ( 21.3 )

Income tax (expense) benefit — — ( 24.1 ) 2.5 (f) ( 21.6 )

Income from discontinued operations, net of tax — — — 52.1 (g) 52.1

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

Net investment income — — 2.6 (c) 2.6

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

Net income attributable to non-controlling interests in consolidated Funds — — ( 13.4 ) (c) ( 13.4 )

Income tax expense — ( 8.3 ) ( 0.8 ) (d) ( 9.1 )

Income from discontinued operations, net of tax — — 21.9 (c) 21.9

Economic net income $ 40.3 $ ( 17.8 ) $ 4.5 $ 27.0

12 unchanged sentences

Reconciling Adjustments:

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

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

GAAP revenue.

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

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

GAAP operating expenses.

GAAP compensation expense.

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

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

GAAP interest expense.

(c) Adjusted to include net investment income (loss), the loss on extinguishment of debt, net income (loss) attributable to non-controlling interests in consolidated Funds, and the loss on sale of subsidiary, and the results of discontinued operations, net of tax, all of which are included in U.S.

GAAP net income attributable to controlling interests.

(d) Adjusted to include the impact of deferred tax attributable to the amortization of goodwill and acquired intangibles.

Also adjusted to include the tax impact of certain ENI adjustments;

exclude the tax expense

BrightSphere Investment Group Inc.

1 unchanged sentence

14) Segments (cont.)

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

GAAP net income attributable to controlling interests.

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

Also adjusted to include the tax impact of certain ENI adjustments;

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

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

GAAP net income attributable to controlling interests.

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

GAAP net income attributable to controlling interests.

16) Related Party Transactions

Certain Affiliates have provided loans to Affiliate employees.

There are no loans outstanding as of September 30, 2021.

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

17) Subsequent Events

Commencement of Common Stock Cash Tender Offer

On November 4, 2021, the Company commenced a tender offer (the “Tender Offer”) to purchase up to 33.3 million shares of the Company’s common stock, that are properly tendered and not properly withdrawn, at a price of $ 31.50 per share to the seller in cash, less any applicable withholding taxes and without interest.

The Tender Offer is scheduled to expire at 5:00 p.m.

on December 6, 2021 and is subject to certain conditions.

Repurchase of 5.125 % Senior Notes

Subsequent to September 30, 2021, the Company’s Board approved the repurchase of 5.125 % Senior Notes in the near term up to the maximum aggregate principal amount of $ 125 million.

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

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

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

GAAP revenue.

(f) Adjusted to include restructuring costs which are included in U.S.

GAAP compensation expense.

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

What changed 10-Q

Item 1. Financial Statements