What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-05-09 compared with 2021-11-05 · 197 added, 490 removed, 761 unchanged (47% of the section changed)

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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 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.

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

GAAP Results of Operations for the Three Months Ended March 31, 2022 and 2021 includes an explanation of changes in our U.S.

GAAP revenue, expense and other items for the three months ended March 31, 2022 and 2021, 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 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.

GAAP net income attributable to controlling interests and ENI for the three months ended March 31, 2022 and 2021 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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Through Acadian, we offer a diverse range of actively-managed investment strategies and products to institutional investors around the globe.

The corporate head office is included within the Other category.

The corporate head office is included within the Other category, along with our previously disposed Affiliates, Campbell Global, LLC (“Campbell Global”) and Investment Counselors of Maryland (“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 our segment.

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 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 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 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 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.

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.

We may also be required to consolidate Acadian’s 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 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.

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

COVID-19 Impact

Beginning in the first quarter of 2020, the outbreak of COVID-19 had a significant impact on the global economy and the financial and securities markets, which may continue for months to come.

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 operate.

The COVID-19 pandemic has had a significant impact on the global economy and the financial and securities markets.

Ongoing global health concerns and uncertainty regarding the impact of COVID-19 could lead to further market volatility.

As the pandemic continues to evolve, 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.

See Item 1A to our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities Exchange Commission on March 1, 2021.

See Item 1A to our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the Securities Exchange Commission on February 28, 2022.

Russia Invasion of Ukraine

Russia’s military invasion of Ukraine in February 2022, the resulting responses by the U.S.

and other countries (including the imposition of broad-ranging economic sanctions), and the potential for wider conflict has increased volatility and uncertainty in global financial markets and adversely affected regional and global economies.

Although our overall exposure to Russian securities is limited, the extent and duration of Russia’s military actions and the repercussions of such actions (including any retaliatory actions or countermeasures that may be taken by those subject to sanctions, such as cyber attacks) are impossible to predict, but could result in significant market disruptions, including in certain industries or sectors, and may negatively affect global supply chains, inflation and global growth.

The Economics of Our Business

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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.

Approximately 80% of our management fees for the three months ended March 31, 2022 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.

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Approximately $14.0 billion, or 13%, 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.

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

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

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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.

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.

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GAAP as a result of both the reclassification of certain income statement items and the exclusion of certain non-cash or non-recurring income statement items.

In particular, ENI excludes non-cash charges representing the changes in the value of Affiliate equity and profit interests held by Affiliate key employees, the results of discontinued operations which are no longer part of our business, restructuring costs, capital transaction costs, seed capital and co-investment gains, losses and related financing costs and that portion of consolidated Funds which are not attributable to our stockholders.

ENI revenue is primarily comprised of the fee revenues paid to us by our clients for our advisory services and earnings from our equity-accounted Affiliate.

In particular, ENI excludes non-cash charges representing the changes in the value of Affiliate equity and profit

interests held by Affiliate key employees, the results of discontinued operations which are no longer part of our business, restructuring costs, capital transaction costs, seed capital and co-investment gains, losses and related financing costs and that portion of consolidated Funds which are not attributable to our stockholders.

ENI revenue is primarily comprised of the fee revenues paid to us by our clients for our advisory services and earnings from our former equity-accounted Affiliate.

Revenue included within ENI differs from U.S.

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Summary Results of Operations

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.

The following table summarizes our unaudited results of operations for the three months ended March 31, 2022 and 2021:

($ in millions, unless otherwise noted) Three Months Ended March 31,

2022 2021 2022 vs.

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GAAP operating margin (1)

24.3 % 26.8 % (248) bps 27.0 % 27.7 % (71) bps

38.5 % 29.6 % 888 bps

Earnings per share, basic ($) $ 0.54 $ 0.34 $ 0.20

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ENI operating margin (6)

37.0 % 31.8 % 520 bps 37.2 % 30.1 % 707 bps

34.5 % 34.2 % 34 bps

Economic net income (7)

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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 $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.

(3) Excludes restructuring costs at Acadian of $0.1 million and costs associated with the transfer of an insurance policy from our former parent of $0.3 million for the three months ended March 31, 2022.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of $1.5 million, costs associated with the transfer of an insurance policy from our former parent of $0.3 million, and the loss on sale of subsidiary of $1.3 million for the three months ended March 31, 2021.

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

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

Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account with the inflow or the outflow, including our equity-accounted Affiliate.

Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account by the net assets gained in the account in the event of a positive flow, excluding any current or future market appreciation or depreciation, or the net assets lost in the account in the event of an outflow, excluding any current or future market appreciation or depreciation.

In addition, reinvested income and distribution for each segment is multiplied by average fee rate for the respective segment to compute the revenue impact.

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Assets Under Management

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 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.

AUM and flow information from Landmark and TSW is excluded from all periods presented.

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

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

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

($ in billions) March 31, 2022 December 31, 2021

Acadian Asset Management $ 110.2 $ 117.2

Campbell Global (1)

Investment Counselors of Maryland (2)

Total assets under management excluding discontinued operations 113.7 * 116.0

Landmark Partners (3)

Thompson, Siegel & Walmsley (4)

Total assets under management including discontinued operations $ 113.7 $ 156.7 *

*Reported AUM.

(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 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) September 30, 2021 December 31, 2020

($ in billions) March 31, 2022 December 31, 2021

Developed Markets 83.0 89.3

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

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

($ in billions) March 31, 2022 December 31, 2021

AUM % of total AUM % of total

Sub-advisory $ 13.1 11.5 % $ 11.5 9.9 %

Corporate/Union 15.6 13.7 % 16.9 14.6 %

Public/Government 47.6 43.2 % 52.6 44.9 %

Endowment/Foundation 2.8 2.5 % 2.5 2.2 %

Commingled Trust/UCITS 25.3 23.0 % 26.1 22.3 %

Corporate/Union 15.2 13.8 % 15.8 13.5 %

Sub-advisory $ 13.7 12.4 % $ 14.1 12.0 %

Endowment/Foundation 3.2 2.9 % 3.3 2.8 %

Mutual Fund 1.0 0.9 % 1.0 0.9 %

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

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

($ in billions) March 31, 2022 December 31, 2021

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

($ in billions, unless otherwise noted) 2022 2021

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Beginning balance $ — $ 9.0

Sale of Affiliate — (1.7) — (1.7)

Gross inflows — 0.2

Gross outflows — (0.1)

Reinvested income and distributions — 0.3 — 0.9

Net flows — 0.1

Market appreciation (depreciation) — 1.4 — (6.1)

Ending balance $ — $ 46.9 $ — $ 46.9

Average AUM $ — $ 47.2 $ — $ 49.5

Average AUM of consolidated Affiliates $ — $ 45.0 $ — $ 47.4

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)

Net flows — 0.1 0.5 0.4

Market appreciation (depreciation) (0.2) — 0.6 (0.1)

Market appreciation — 0.7

Other — (1.1)

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Beginning balance $ 117.2 $ 116.0

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

Gross inflows 3.5 2.4

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Market appreciation (depreciation) (4.8) 7.7

Other — — (0.1) —

Ending balance continuing operations $ 110.2 $ 120.2

Discontinued operations (2)

$ — $ 37.1 $ — $ 37.1

Ending balance including discontinued operations $ 110.2 $ 163.3

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Annualized revenue impact of net flows ($ in millions) $ (1.1) $ (7.9)

(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.

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

(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 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.

(2) Our reportable segments reflect the sales of Landmark Partners (“Landmark”) and Thompson, Siegel & Walmsley LLC (“TSW”) and the reclassification of their AUM, asset flows and market appreciation (depreciation) to discontinued operations.

The Other category consists of our previously disposed affiliates, Campbell Global and ICM, for the three months ended March 31, 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 September 30, Nine Months Ended September 30,

2021 2020 2021 2020

($ in billions) Three Months Ended March 31,

Beginning balance $ 14.1 $ 11.5

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

Gross inflows 0.5 0.5

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Beginning balance $ 97.8 $ 97.8

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

Gross inflows 2.6 1.4

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Beginning balance $ 5.3 $ 6.7

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

Gross inflows 0.4 0.5

Gross outflows (0.3) (0.4)

Reinvested income and distributions — 0.1 0.1 0.1

Net flows 0.1 0.1

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Beginning balance $ 117.2 $ 116.0

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

Gross inflows 3.5 2.4

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Discontinued operations (1)

— 37.1 — 37.1

Ending balance including discontinued operations $ 110.2 $ 163.3

(1) Other movements related to billable assets adjustment.

(2) Reflects the sales of Landmark and TSW.

(1) Reflects the disposition of Landmark and TSW.

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

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Our categorization by client location includes:

U.S.-based clients, where the client is based in the United States, and

Non-U.S.-based clients, where the client is based outside the United States.

U.S.-based clients, where the contracting client is based in the United States, and

Non-U.S.-based clients, where the contracting client is based outside the United States.

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

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

2021 2020 2021 2020

($ in billions) Three Months Ended March 31,

Beginning balance $ 77.1 $ 80.4

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

Gross inflows 2.4 1.8

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Beginning balance $ 40.1 $ 35.6

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

Gross inflows 1.1 0.6

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Beginning balance $ 117.2 $ 116.0

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

Gross inflows 3.5 2.4

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Discontinued operations (1)

— 37.1 — 37.1

Adjusted ending balance including discontinued operations $ 110.2 $ 163.3

(1) Other movements related to billable assets adjustment.

(2) Reflects the sales of Landmark and TSW.

(1) Reflects the disposition of Landmark and TSW.

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

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.

At March 31, 2022, our total assets under management were $110.2 billion, a decrease of $(7.0) billion, or (6.0)%, compared to $117.2 billion at December 31, 2021 and a decrease of $(10.0) billion, or (8.3)%, compared to $120.2 billion at March 31, 2021.

The decrease in assets under management compared to March 31, 2021 is a result of the dispositions of previous Affiliates, 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 March 31, 2022 reflects net market depreciation of $(4.8) billion, and net outflows of $(2.2) billion.

For the three months ended March 31, 2022, our net flows were $(2.2) billion compared to $(0.8) billion for the three months ended December 31, 2021 and $(3.5) billion for the three months ended March 31, 2021.

The change in net flows during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 was primarily due to reduced outflows in Global managed volatility strategies and higher gross sales in non-U.S.

equity strategies.

Reinvested income and distributions of $0.9 billion, $0.7 billion, and $0.6 billion are reflected in the net flows for the three months ended March 31, 2022, December 31, 2021 and March 31, 2021, respectively.

For the three months ended March 31, 2022, the annualized revenue impact of the net flows was $(1.1) million.

This is compared to the annualized revenue impact of net flows of $0.1 million for the three months ended December 31, 2021 and $(7.9) million for the three months ended March 31, 2021.

Gross inflows of $3.5 billion during the three-month period yielded approximately 50 bps compared to $2.4 billion yielding approximately 49 bps in the year-ago period, and gross outflows in the same period of $(6.6) billion yielded approximately 33 bps compared to $(6.5) 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,

GAAP Results of Operations for the Three Months Ended March 31, 2022 and 2021

GAAP results of operations were as follows for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in millions, unless otherwise noted) 2022 2021 Increase

(Decrease) 2021 2020 Increase

GAAP Statement of Operations

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Other revenue — 1.3 (1.3)

Consolidated Funds’ revenue — 1.4 (1.4) — 4.6 (4.6)

Total revenue 112.2 109.7 2.5

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General and administrative expense 16.9 19.1 (2.2)

Impairment of goodwill

— — — — 16.4 (16.4)

Amortization of acquired intangibles

0.1 — 0.1 0.1 0.3 (0.2)

Depreciation and amortization 5.3 5.5 (0.2)

Consolidated Funds’ expense — — — — 0.1 (0.1)

Total operating expenses 69.0 77.2 (8.2)

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Investment income (loss) (0.1) 2.6 (2.7)

Interest income — — — 0.1 0.5 (0.4)

Interest expense (6.5) (6.2) 0.3

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

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

Loss on sale of subsidiary — (1.3) 1.3

Income from continuing operations before taxes

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

Gain (loss) on disposal of discontinued operations, net of tax

23.8 40.4 (16.6)

229.5 34.0 195.5 857.2 110.0 747.2

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

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($ in millions) Three Months Ended

September 30, Nine Months Ended

September 30,

GAAP Statement of Operations 2022 2021

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Net income from continuing operations attributable to controlling interests

42.9 29.0 86.1 59.5

Income tax expense 9.6 9.1

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other revenue, consisting primarily of consulting services as well as reimbursement of certain Fund expenses our Affiliates paid on behalf of our Funds.

revenue from consolidated Funds, a portion of which is attributable to the holders of non-controlling interests in consolidated Funds.

Management Fees

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 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.

Excluding assets managed by our equity-accounted Affiliate, average basis points earned on average assets under management were 37.3 bps for the three months ended March 31, 2022, and 37.0 bps for the three months ended March 31, 2021.

The overall weighted average fee rate increase for the three months ended March 31, 2022 is the result of changes in the mix of assets under management caused by market movements and client flows.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Management fees decreased $(1.6) million, or (1.5)%, from $103.8 million for the three months ended March 31, 2021 to $102.2 million for the three months ended March 31, 2022.

The decrease was primarily attributable to the disposition of Campbell Global, partially offset by positive market return at Acadian.

Average assets under management excluding equity-accounted Affiliate decreased (2.4)%, from $114.0 billion for the three months ended March 31, 2021 to $111.3 billion for the three months ended March 31, 2022, mainly due to the dispositions of Campbell Global, partially offset by positive market returns at Acadian over the last twelve months.

Performance Fees

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

Three months ended 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.

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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Performance fees improved $5.4 million, from $4.6 million for the three months ended March 31, 2021 to $10.0 million for the three months ended March 31, 2022 due to out-performance in certain non-U.S.

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

Other Revenue

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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Other revenue decreased $(1.3) million, from $1.3 million for the three months ended March 31, 2021 to $0.0 million for the three months ended March 31, 2022.

The decrease was primarily attributable to the disposition of ICM in 2021.

GAAP Expenses

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general and administrative expenses;

impairment of goodwill;

depreciation and amortization charges.

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The following table presents the components of U.S.

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,

GAAP compensation expense for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in millions) 2022 2021

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Sales-based compensation (2)

1.9 1.7 5.4 5.5

Variable compensation (3)

27.1 27.9 83.8 85.3

Affiliate key employee distributions (4)

5.0 1.8 9.5 6.5

Non-cash Affiliate key employee equity revaluations (5)

8.7 2.7 19.4 (19.4)

GAAP compensation and benefits expense

$ 46.8 $ 52.6

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

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.

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

For the three months ended March 31, 2022 and 2021, $21.9 million and $24.3 million, respectively, of fixed compensation and benefits (of the $21.9 million and $25.2 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.

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(3) Variable compensation is contractually set and calculated individually at each Affiliate, plus Center bonuses and compensation paid by our Affiliates on behalf of their Funds that are subsequently reimbursed.

Variable compensation is usually awarded based on a contractual percentage of each Affiliate’s ENI profits before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests.

Variable compensation is awarded based on a contractual percentage of Affiliate ENI profits before variable compensation and may be paid in the form of cash or non-cash Affiliate equity or profit interests.

In Affiliates with an agreed split of performance fees between Affiliate employees and BSUS, the Affiliates’ share of performance fees is allocated entirely to variable compensation.

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

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

Three Months Ended March 31,

($ in millions) 2022 2021

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Non-cash equity-based award amortization

1.9 3.1 4.3 10.1

Total variable compensation (a)

$ 27.9 $ 24.0

(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.

(a) For the three months ended March 31, 2022, $27.9 million of variable compensation expense (of the $27.9 million above) are included within economic net income.

For the three months ended March 31, 2021, $23.5 million of variable compensation expense (of the $24.0 million above) are included within economic net income, which excludes $0.5 million of variable compensation associated with restructuring at the Center and Affiliates.

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

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

Three months ended 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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Compensation and benefits expense decreased $(5.8) million, or (11.0)%, from $52.6 million for the three months ended March 31, 2021 to $46.8 million for the three months ended March 31, 2022.

Fixed compensation and benefits decreased $(3.3) million, or (13.1)%, from $25.2 million for the three months ended March 31, 2021 to $21.9 million for the three months ended March 31, 2022, primarily reflecting the Affiliate disposition and cost savings at the Center.

Variable compensation increased $3.9 million, or 16.3%, from $24.0 million for the three months ended March 31, 2021 to $27.9 million for the three months ended March 31, 2022.

The increase was attributable to higher pre-variable compensation earnings and the contractual share of variable compensation earned on performance fees.

Sales-based compensation increased $0.3 million, or 18.8%, from $1.6 million for the three months ended March 31, 2021 to $1.9 million for the three months ended March 31, 2022, 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 46.2%, from $1.3 million for the three months ended March 31, 2021 to $1.9 million for the three months ended March 31, 2022, primarily as a result of higher earnings.

Revaluations of Affiliate equity decreased by $(7.3) million reflecting the change in value of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity increased $0.5 million for the three months ended March 31, 2021 and decreased $(6.8) million for the three months ended March 31, 2022.

General and Administrative Expense

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 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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

General and administrative expense decreased $(2.2) million, or (11.5)%, from $19.1 million for the three months ended March 31, 2021 to $16.9 million for the three months ended March 31, 2022.

The decrease was primarily due to the disposition of Affiliate.

Depreciation and Amortization Expense

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.

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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Depreciation and amortization expense decreased $(0.2) million, or (3.6)%, from $5.5 million for the three months ended March 31, 2021 to $5.3 million for the three months ended March 31, 2022.

The decrease was primarily due to the disposition of Affiliate.

GAAP Other Non-Operating Items of Income and Expense

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investment income;

interest income;

interest expense;

gain (loss) on sale of Affiliates.

loss on extinguishment of debt;

loss on sale of subsidiary.

Investment Income

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 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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Investment income decreased $(2.7) million, from $2.6 million for the three months ended March 31, 2021 to $(0.1) million for the three months ended March 31, 2022.

The decrease was primarily due to lower amounts of seed capital deployed following the disposition of previously disposed Affiliates and lower returns on seed capital investments.

Interest Expense

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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Interest expense increased $0.3 million, or 4.8%, from $6.2 million for the three months ended March 31, 2021 to $6.5 million for the three months ended March 31, 2022, primarily reflecting the amortization of the cash flow hedge associated with the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 that were redeemed on January 18, 2022.

Loss on Extinguishment of Debt

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

There was no loss on extinguishment of debt in the three months ended March 31, 2021.

Loss on extinguishment of debt was $(3.2) million for the three months ended March 31, 2022 as a result of the full redemption of the $125 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031 that we completed on January 18, 2022.

Loss on Sale of Subsidiary

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Loss on sale of subsidiary was $(1.3) million for the three months ended March 31, 2021, representing the loss on disposition of a business unit during the three months ended March 31, 2021.

There was no loss on sale of subsidiary in the three months ended March 31, 2022.

GAAP Income Tax Expense (Benefit)

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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 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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021 :

Income tax expense increased $0.5 million, from $9.1 million for the three months ended March 31, 2021 to $9.6 million for the three months ended March 31, 2022.

The increase in income tax expense relates to an increase in income from continuing operations during the three months ended March 31, 2022.

GAAP Consolidated Funds

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

There were no consolidated Funds for the three months ended March 31, 2022.

As previously noted, consolidated Landmark Funds are included in discontinued operations for the three months ended March 31, 2021.

Discontinued Operations

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

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 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, 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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Income from discontinued operations was $21.9 million for the three months ended March 31, 2021, representing the net income from TSW and Landmark, including consolidated Landmark Funds.

The sales of TSW and Landmark were completed in 2021;

therefore, there was no income from discontinued operations during the three months ended March 31, 2022.

GAAP Operating Metrics

The following table shows our key U.S.

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 September 30, Nine Months Ended September 30,

GAAP operating metrics for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

($ in millions) 2022 2021

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GAAP operating margin 38.5 % 29.6 %

24.3 % 26.8 % 27.0 % 27.7 %

Total operating expenses $ 69.0 $ 77.2

$ 89.2 $ 93.3 $ 263.6 $ 273.8

Management fee revenue $ 102.2 $ 103.8

GAAP operating expense / management fee revenue 67.5 % 74.4 %

80.1 % 75.7 % 80.7 % 74.7 %

Variable compensation $ 27.9 $ 24.0

2 unchanged sentences

GAAP variable compensation ratio 38.2 % 41.5 %

44.6 % 44.6 % 44.0 % 44.4 %

Affiliate key employee distributions $ 1.9 $ 1.3

2 unchanged sentences

GAAP Affiliate key employee distributions ratio 4.2 % 3.8 %

14.8 % 5.2 % 8.9 % 6.1 %

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

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.

(1) 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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2022 2021

2 unchanged sentences

Affiliate key employee distributions

5.0 1.8 9.5 6.5

Operating (income) loss of consolidated Funds — (1.4) — (4.5)

Operating income before Affiliate key employee distributions

33.7 34.6 106.8 106.8

Variable compensation 27.9 24.0

2 unchanged sentences

Effects of Inflation

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.

Our financial results may be impacted by changes in the total level of our assets under management.

The value of the assets that we manage may be negatively impacted when inflationary expectations result in a rising interest rate environment.

Declines in the values of these AUM could lead to reduced revenues as management fees are generally calculated based upon the size of AUM.

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

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Reconciliation of U.S.

GAAP Net Income to Economic Net Income for the Three and 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,

GAAP Net Income to Economic Net Income for the Three Months Ended March 31, 2022 and 2021

The following table reconciles net income attributable to controlling interests to economic net income for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in millions) 2022 2021

2 unchanged sentences

Non-cash key employee-owned equity and profit interest revaluations (6.8) 0.4

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

Amortization of acquired intangible assets — —

Capital transaction costs

0.1 0.1 0.8 0.6

Seed/Co-investment (gains) losses and financings (1)

0.2 (3.0) (3.5) 11.6

Tax benefit of goodwill and acquired intangibles deductions 0.3 0.3

Discontinued operations and restructuring (2)

(220.5) (13.4) (731.5) (30.5)

Discontinued operations attributable to controlling interests and restructuring (2)

ENI tax normalization

(1.6) (1.5) 0.5 (1.3)

Tax effect of above adjustments, as applicable (3)

6.8 1.5 3.2 (2.2)

Economic net income

$ 23.4 $ 22.5

(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,

(1) The net return on seed/co-investment (gains) losses and financings for the three months ended March 31, 2022 and 2021 is shown in the following table:

Three Months Ended March 31,

($ in millions) 2022 2021

6 unchanged sentences

* 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 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.

(2) The three months ended March 31, 2022 includes restructuring costs at the Affiliate of $0.1 million, and costs associated with the transfer of an insurance policy from our former parent of $0.3 million.

The three months ended March 31, 2021 includes income from discontinued operations attributable to controlling interests of $(5.4) million, restructuring costs at the Center and Affiliate of $1.5 million, costs associated with the redomicile to the U.S.

of $0.3 million, and the loss on sale of subsidiary of $1.3 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.

7 unchanged sentences

The following table reconciles U.S.

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,

GAAP revenue to ENI revenue for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in millions) 2022 2021

1 unchanged sentence

Include investment return on equity-accounted Affiliate

0.2 0.9 2.6 2.1

Exclude revenue from consolidated Funds attributable to non-controlling interests

— (1.4) — (4.6)

Exclude Fund expenses reimbursed by customers

(0.7) (1.1) (2.9) (3.3)

ENI revenue $ 112.2 $ 109.8

The following table identifies the components of ENI revenue:

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

Three Months Ended March 31,

($ in millions) 2022 2021

2 unchanged sentences

Performance fees (2)

3.4 1.2 28.4 2.5

Other income, including equity-accounted Affiliate (3)

2.6 1.4 5.4 4.0

ENI revenue $ 112.2 $ 109.8

4 unchanged sentences

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

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.

GAAP, plus our earnings from our previously disposed equity-accounted Affiliate of $1.1 million for the three months ended March 31, 2021.

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2022 2021

2 unchanged sentences

Exclude Fund expenses reimbursed by customers

(0.7) (1.1) (2.9) (3.3)

ENI other income $ — $ 1.4

6 unchanged sentences

The following table reconciles U.S.

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,

GAAP operating expense to ENI operating expense for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

($ in millions) 2022 2021

1 unchanged sentence

items excluded from economic net income

Amortization of pre-acquisition employee equity

Non-cash key employee equity and profit interest revaluations

(8.7) (2.7) (19.4) 19.4

Goodwill impairment and amortization of acquired intangible assets (0.1) — (0.1) (16.6)

Capital transaction costs — (0.4)

Restructuring costs (1)

(0.8) (1.8) (4.9) (5.9)

Fund expenses reimbursed by customers — (1.0)

Funds’ operating expense — — — (0.2)

items segregated out of U.S.

3 unchanged sentences

ENI operating expense $ 45.6 $ 48.8

(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.

(1) The three months ended March 31, 2022 includes $0.1 million of restructuring costs at the Affiliate and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended March 31, 2021 includes $1.5 million of restructuring costs at the Center and Affiliate and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The following table identifies the components of ENI operating expense:

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

Three Months Ended March 31,

($ in millions) 2022 2021

2 unchanged sentences

General and administrative expenses (2)

18.0 21.5 54.8 67.1

Depreciation and amortization 5.3 5.5

2 unchanged sentences

The following table reconciles U.S.

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,

GAAP compensation and benefits expense for the three months ended March 31, 2022 and 2021 to ENI fixed compensation and benefits expense:

Three Months Ended March 31,

($ in millions) 2022 2021

GAAP compensation and benefits expense $ 46.8 $ 52.6

$ 67.2 $ 66.9 $ 193.2 $ 178.1

Non-cash key employee equity and profit interest revaluations excluded from ENI

(8.7) (2.7) (19.4) 19.4

Sales-based compensation reclassified to ENI general & administrative expenses

(1.9) (1.7) (5.4) (5.5)

Affiliate key employee distributions

(5.0) (1.8) (9.5) (6.5)

Restructuring expenses — (0.5)

2 unchanged sentences

Fund expenses reimbursed by customers

(0.8) (1.1) (3.0) (3.3)

ENI fixed compensation and benefits $ 21.9 $ 24.3

1 unchanged sentence

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

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

Three Months Ended March 31,

($ in millions) 2022 2021

6 unchanged sentences

Key Non-GAAP Operating Metrics

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

The following table shows our key non-GAAP operating metrics for the three months ended March 31, 2022 and 2021.

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 September 30, Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2022 2021

17 unchanged sentences

Affiliate key employee distributions

$ 5.0 $ 1.8 $ 9.5 $ 6.5

ENI operating earnings (1)

1 unchanged sentence

ENI Affiliate key employee distributions ratio (7)

11.5 % 4.5 % 7.1 % 5.8 %

(1) ENI operating earnings represents ENI earnings before Affiliate key employee distributions and is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation.

2 unchanged sentences

GAAP operating income to ENI operating earnings:

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

Three Months Ended March 31,

($ in millions) 2022 2021

3 unchanged sentences

Affiliate key employee-owned equity and profit interest revaluations (6.8) 0.4

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

Capital transaction costs — 0.4

Restructuring costs (a)

0.8 1.8 4.9 5.9

Affiliate key employee distributions 1.9 1.3

Variable compensation 27.9 23.5

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

ENI earnings before variable compensation 66.6 61.0

3 unchanged sentences

ENI earnings after Affiliate key employee distributions $ 36.8 $ 36.2

(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.

(a) The three months ended March 31, 2022 includes $0.1 million of restructuring costs at the Affiliate and $0.3 million costs associated with the transfer of an insurance policy from our former parent.

The three months ended March 31, 2021 includes $1.5 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.

(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 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.

GAAP operating margin, excluding the effect of consolidated Funds, is 38.5% for the three months ended March 31, 2022 and 29.6% for the three months ended March 31, 2021.

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.

24 unchanged sentences

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

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

Three Months Ended March 31,

($ in millions) 2022 2021

1 unchanged sentence

$ 32.2 $ 30.8

Intercompany interest expense deductible for U.S.

tax purposes — —

Taxable economic net income 32.2 30.8

Taxes at the U.S.

federal and state statutory rates (2)

(8.9) (10.7) (29.5) (29.9)

Other reconciling tax adjustments — 0.1

4 unchanged sentences

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

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

Three Months Ended March 31,

($ in millions) 2022 2021

3 unchanged sentences

Other ENI interest expense exclusions (a)

0.4 1.6 2.0 5.1

ENI net interest expense (4.6) (5.4)

ENI earnings after Affiliate key employee distributions (b)

38.4 38.2 124.6 105.8

Pre-tax economic net income $ 32.2 $ 30.8

11 unchanged sentences

This segment is comprised of our 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 and 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 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 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” 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 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 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.

17 unchanged sentences

Segment ENI Revenue

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

Quant & Solutions Other Total Quant & Solutions Liquid Alpha Other Total

Management fees $ 108.0 $ 3.4 $ 111.4 $ 87.9 $ 29.5 $ 5.9 $ 123.3

Performance fees

2.6 0.8 3.4 1.2 — — 1.2

Other income, including equity-accounted affiliate — 2.6 2.6 (0.1) 0.8 0.7 1.4

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 nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

The following table identifies the components of segment ENI revenue for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in millions) 2022 2021

Quant & Solutions Other Total Quant & Solutions Liquid Alpha Other Total

Quant & Solutions Total Quant & Solutions Other Total

Management fees $ 102.2 $ 102.2 $ 98.9 $ 4.9 $ 103.8

4 unchanged sentences

Quant & Solutions Segment ENI Revenue

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.

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 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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Quant & Solutions ENI revenue increased $8.7 million, or 8.4%, from $103.5 million for the three months ended March 31, 2021 to $112.2 million for the three months ended March 31, 2022.

The increase was attributable to 3.3% higher management fees, driven by higher average AUM, as well as an increase in performance fees due to out-performance in certain non-U.S.

Other ENI Revenue

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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Other ENI revenue was $6.3 million for the three months ended March 31, 2021 representing the revenue from our previously disposed Affiliates, Campbell Global and ICM.

The sales of Campbell Global and ICM were completed in 2021, therefore there was no Other ENI revenue for the three months ended March 31, 2022.

Segment ENI Expense

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

Quant & Solutions Other Total Quant & Solutions Liquid Alpha Other Total

Fixed compensation & benefits

$ 19.3 $ 4.3 $ 23.6 $ 18.5 $ 7.1 $ 6.0 $ 31.6

General and administrative expense 14.9 3.1 18.0 14.3 2.8 4.4 21.5

Depreciation and amortization

5.2 0.2 5.4 4.4 0.1 0.5 5.0

Total ENI Operating Expenses

$ 39.4 $ 7.6 $ 47.0 $ 37.2 $ 10.0 $ 10.9 $ 58.1

Variable compensation

23.5 3.5 27.0 18.0 8.4 1.4 27.8

Affiliate key employee distributions

3.8 1.2 5.0 0.8 0.8 0.2 1.8

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 nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

The following table identifies the components of segment ENI expense for the three months ended March 31, 2022 and 2021:

Three Months Ended March 31,

($ in millions) 2022 2021

Quant & Solutions Other Total Quant & Solutions Liquid Alpha Other Total

Quant & Solutions Other Total Quant & Solutions Other Total

Fixed compensation & benefits

4 unchanged sentences

Total ENI operating expenses $ 41.1 $ 4.5 $ 45.6 $ 39.1 $ 9.7 $ 48.8

$ 116.8 $ 26.8 $ 143.6 $ 109.3 $ 34.7 $ 34.8 $ 178.8

Variable compensation

4 unchanged sentences

Quant & Solutions Segment ENI Expense

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.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, increased 30.6%, as a result of higher profit before variable compensation.

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.

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.

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Quant & Solutions ENI operating expense increased $2.0 million, or 5.1%, from $39.1 million for the three months ended March 31, 2021 to $41.1 million for the three months ended March 31, 2022.

The increase was driven by 6.5% higher ENI fixed compensation and benefits expense resulting from higher headcount and 5.2% higher ENI general and administrative expense primarily due to increased portfolio administrative and systems costs.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, increased 29.2%, as a result of higher earnings before variable compensation.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, increased 16.4%, as a result of higher earnings before variable compensation and the contractual share of variable compensation earned on performance fees.

Affiliate key employee distributions attributable to Quant & Solutions increased 26.7%, primarily due to higher ENI earnings after variable compensation.

Liquid Alpha Segment ENI Expense

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

Three months ended March 31, 2022 compared to three months ended March 31, 2021:

Other ENI operating expense decreased $(5.2) million, or (53.6)%, from $9.7 million for the three months ended March 31, 2021 to $4.5 million for the three months ended March 31, 2022.

The decrease was driven by (63.2)% lower fixed compensation and benefit expense and (37.8)% lower general and administrative expense resulting from disposition of Affiliates in 2021.

Other ENI variable compensation expense increased 77.8% due to higher non-cash equity compensation amortization at the Center.

Capital Resources and Liquidity

1 unchanged sentence

All amounts presented exclude consolidated Funds:

Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2022 2021

3 unchanged sentences

Financing activities (144.9) 78.4

(1) Excludes consolidated Funds.

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

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.

Comparison for the three months ended March 31, 2022 and 2021

Net cash from operating activities from continuing operations decreased $(7.1) million, from net cash used of $7.3 million for the three months ended March 31, 2021 to net cash used of $14.4 million for the three months ended March 31, 2022, driven by the disposition of Affiliates in 2021, as well as changes in net income offset by changes in operating assets and liabilities period over period.

In the three months ended March 31, 2022, net cash from investing activities of continuing operations decreased $(4.6) million, from $0.6 million provided in the three months ended March 31, 2021 to $4.0 million used in the three months ended March 31, 2022, driven by higher sales of investment securities in the three months ended March 31, 2021 and higher purchases of investment securities in the three months ended March 31, 2022.

Net cash from financing activities from continuing operations decreased $223.3 million, from $78.4 million provided in the three months ended March 31, 2021 to $144.9 million used in the three months ended March 31, 2022, primarily due to the repayment of third party borrowings and revolving credit facility, as well as higher share repurchases in the three months ended March 31, 2022.

Supplemental Liquidity Measure — Adjusted EBITDA

4 unchanged sentences

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 nine months ended September 30, 2021 and 2020.

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

GAAP net income attributable to controlling interests to EBITDA to Adjusted EBITDA to economic net income for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

($ in millions) 2022 2021

2 unchanged sentences

Income tax expense (including tax expenses related to discontinued operations)

89.0 12.8 288.4 33.7

Depreciation and amortization (including intangible assets and discontinued operations) and goodwill impairment 5.4 7.5

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Non-cash compensation costs, including revaluation of Affiliate key employee-owned equity and profit interests

9.1 3.2 20.7 (17.2)

Amortization of pre-acquisition employee equity — — — —

EBITDA of discontinued operations attributable to controlling interests — (10.0)

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Restructuring expenses (1)

(33.7) (5.4) (28.4) (1.3)

Capital transaction costs 3.2 0.4

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Depreciation and amortization (2)

(5.8) (5.5) (18.0) (17.0)

Tax on economic net income (8.8) (8.3)

1 unchanged sentence

$ 23.4 $ 22.5

(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.

The three months ended March 31, 2021 includes $1.5 million of restructuring costs and costs associated with the transfer of an insurance policy from our former parent of $0.3 million, and the loss on sale of subsidiary of $1.3 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 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) September 30,

($ in millions) March 31,

2022 December 31,

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Revolving credit facility:

Revolving credit facility (1)

$ 33.0 $ — LIBOR + 1.0% plus 0.25% commitment fee August 22, 2022

Revolving credit facility $ 88.0 $ — SOFR + 1.0% plus 0.25% commitment fee March 7, 2025

Total revolving credit facility $ 88.0 $ —

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4.80% Senior Notes Due 2026 $ 273.2 $ 273.1 4.80% July 27, 2026

5.125% Senior Notes Due 2031 121.8 121.5 5.125% August 1, 2031

5.125% Senior Notes Due 2031 (1)

— 121.8 5.125% August 1, 2031

Total third party borrowings $ 273.2 $ 394.9

(1) 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.

(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 $3.2 million of 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, we 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 LIBO 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 our election equal to one, three or six months plus an additional amount ranging from 1.5% to 2.0%, with such additional amount based on Acadian’s Leverage Ratio (as defined below).

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

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

At March 31, 2022, Acadian’s Leverage Ratio was 0.4x and Acadian’s Interest Coverage Ratio was 304.7x.

Other Compensation Liabilities

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The following table summarizes our other long-term liabilities:

September 30,

2022 December 31,

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Forward Looking Statements

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.

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, our anticipated expense levels, capital management, expected impact of the COVID-19 pandemic on our business, financial condition, results of operations and cash flows, and/or expectations regarding market conditions.

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

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

Actual results may differ materially from those in forward-looking information as a result of various factors, some of which are beyond our control, including but not limited to those discussed above and elsewhere in this Quarterly Report on Form 10-Q, in our most recent Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 1, 2021, and subsequent SEC filings.

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis