What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-02-28 compared with 2022-02-28 · 224 added, 288 removed, 1104 unchanged (32% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Unless we state otherwise or the context otherwise requires, references in this Annual Report on Form 10-K to “BrightSphere” or “BSIG” refer to BrightSphere Investment Group Inc., references to the “Company” refer to BSIG, and references to “we,” “our” and “us” refer to BSIG and its consolidated subsidiaries and previously disposed equity-accounted Affiliate, excluding discontinued operations.

Unless we state otherwise or the context otherwise requires, references in this Annual Report on Form 10-K to the “Company”, “BrightSphere” or “BSIG” refer to BrightSphere Investment Group Inc., and references to “we,” “our” and “us” refer to BSIG and its consolidated subsidiaries and previously disposed equity-accounted Affiliate, excluding discontinued operations.

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

5 unchanged sentences

See “Special Note Regarding Forward-Looking Statements” for more information.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report on Form 10-K, particularly under Item 1A, Risk Factors.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.

2 unchanged sentences

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 client location, and net flows by segment.

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

GAAP Results of Operations for the years ended December 31, 2022, 2021 and 2020 includes an explanation of changes in our U.S.

17 unchanged sentences

These accounting policies and estimates require complex management judgment regarding matters that are highly uncertain at the time policies were applied and estimates were made.

We are a global asset management company headquartered in Boston, Massachusetts.

We are a global asset management holding company headquartered in Boston, Massachusetts.

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

2 unchanged sentences

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

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

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

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

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 Affiliate, Campbell Global, LLC (“Campbell Global”) for the years ended December 31, 2021 and 2020.

We completed the sale of our equity interest in Campbell Global in August 2021.

Investment Counselors of Maryland, LLC (“ICM”) is also included in the Other category for the year ended December 31, 2021.

We completed the sale of our equity interests in ICM in July 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 year ended December 31, 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 year ended December 31, 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.

The following previously divested Affiliates are included in the Liquid Alpha segment for the year ended December 31, 2020:

Barrow Hanley, Mewhinney & Strauss LLC (“Barrow”), Copper Rock Capital Partners (“Copper Rock”) and ICM.

GAAP, Acadian is consolidated into our financial statements.

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 will likely to continue for months to come.

Because most of the revenue we earn is based on the market value of our assets under management, fluctuations in global markets impact our revenues and earnings.

The COVID-19 pandemic continues to impact the manner in which we operate.

As of the date of this filing, the majority of our employees are working from home and our employees have significantly reduced business travel.

Additionally, many third-party vendors on whom we rely for certain critical functions are also operating in remote environments.

Given the continued uncertainty surrounding the COVID-19 pandemic, it is difficult to predict how long such remote working conditions and travel restrictions will last.

We expect most operating costs to return to pre-COVID-19 levels when employees return to the office and resume business travel.

We believe we are operating well under these circumstances, benefiting from the flexible and highly mobile operating environment.

However, market volatility, as well as changes in our operations and those of our key vendors, may result in increased client redemptions;

inefficiencies, delays and decreased communication;

and an increase in the number and significance of operational and trade errors.

In addition, we do not know what, if any, longer-term impact the current operating circumstances (and/or the extension of them) will have on our business and results.

The extent of the impact on our business operations, assets under management and financial results will depend on a number of factors and future developments, which are uncertain and cannot be predicted.

See Item 1A, Risk Factors.

The Economics of Our Business

2 unchanged sentences

We earn management fees based on assets under management.

Approximately 80% of our management fees are calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM or other measuring methods.

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

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

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

Approximately $15.0 billion, or 13.0% of our AUM are in accounts with incentive fee in which we participate in the performance fee.

Approximately $11.9 billion, or 13%, of our AUM are in accounts with incentive fee features 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 basis.

25 unchanged sentences

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 is also adjusted for amortization of acquisition-related contingent consideration and pre-acquisition retained equity with service components.

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.

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

GAAP revenue in that it excludes amounts from consolidated Funds which are not attributable to our stockholders, and it includes our share of earnings from our former equity-accounted Affiliate.

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

Expenses included within ENI differ from U.S.

GAAP expenses in that they exclude amounts from consolidated Funds which are not attributable to our stockholders, revaluations of Affiliate key employee owned equity and profit interests, amortization and impairment of acquired intangibles and other acquisition-related items, costs we paid on behalf of our customers which were subsequently reimbursed and certain other non-cash expenses.

“Non-controlling interests” is a concept under U.S.

43 unchanged sentences

GAAP financial information and a further discussion of economic net income refer to “—Non-GAAP Supplemental Performance Measures—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 $3.8 million, costs associated with the transfer of an insurance policy from our former Parent of $1.2 million, and the gain on sale of subsidiaries of $48.6 million for the year ended December 31, 2021.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring at the Center and subsidiaries of $9.4 million, costs associated with the transfer of an insurance policy from our former Parent of $1.6 million, and the gain on sale of subsidiaries of $241.3 million for the year ended December 31, 2020.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of $6.7 million, costs associated with the transfer of an insurance policy from our former Parent of $0.9 million, and costs associated with the redomicile to the U.S.

of $1.6 million for the year ended December 31, 2019.

(3) Excludes restructuring costs of $0.1 million and costs associated with the transfer of an insurance policy from our former Parent of $1.2 million for the year ended December 31, 2022.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring at the Center and Affiliate of $3.8 million, costs associated with the transfer of an insurance policy from our former Parent of $1.2 million, and the gain on sale of subsidiaries of $48.6 million for the year ended December 31, 2021.

Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and subsidiaries of $9.4 million, costs associated with the transfer of an insurance policy from our former Parent of $1.6 million, and the gain on sale of subsidiaries of $241.3 million for the year ended December 31, 2020.

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

8 unchanged sentences

GAAP net income from continuing operations attributable to controlling interests.

(8) Annualized revenue impact of net flows represents the difference between annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts, less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts, plus revenue impact from reinvested income and distributions, including equity-accounted Affiliate.

The annualized management fees are 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.

6 unchanged sentences

Acadian Asset Management $ 93.6 $ 117.2 $ 108.1

Barrow, Hanley, Mewhinney & Strauss (1)

Campbell Global (1)

Copper Rock Capital Partners (3)

Investment Counselors of Maryland (2)

3 unchanged sentences

Total assets under management $ 93.6 $ 117.2 $ 156.7

(1) On November 17, 2020, we completed the sale of all our interests in Barrow, Hanley, Mewhinney & Strauss LLC (“Barrow”).

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

(3) On July 24, 2020, we completed the sale of all our interests in Copper Rock Capital Partners LLC (“Copper Rock”).

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

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

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

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

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

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

(4) On July 22, 2021, we completed the sale of all our equity interests in Thompson, Siegel & Walmsley LLC (“TSW”).

Our strategies include:

Developed Markets equity, which includes Quant & Solutions, global, international and U.S.

Developed Markets equity, which includes Quant & Solutions U.S., global, and international equities;

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

32 unchanged sentences

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 distributions.

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 equity-accounted Affiliate.

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

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.

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

The annualized revenue impact of net flows metric is designed to provide investors with a better indication of the potential financial impact of net client cash flows, however it has certain limitations.

11 unchanged sentences

Net flows (3.1) (6.4) (1.8)

Market appreciation 15.5 7.2 13.9

Market appreciation (depreciation) (20.5) 15.5 7.2

Ending balance $ 93.6 $ 117.2 $ 107.0

8 unchanged sentences

Net flows — — (3.8)

Market appreciation — (0.7) 14.8

Market depreciation — — (0.7)

Ending balance $ — $ — $ 3.2

6 unchanged sentences

Net flows — 0.5 0.7

Market appreciation 0.6 (0.3) 0.1

Market appreciation (depreciation) — 0.6 (0.3)

Ending balance $ — $ — $ 5.8

7 unchanged sentences

Net flows (3.1) (5.9) (4.9)

Market appreciation 16.1 6.2 28.8

Other (0.1) — —

Market appreciation (depreciation) (20.5) 16.1 6.2

Ending balance continuing operations 93.6 117.2 116.0

10 unchanged sentences

(2) 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.

(3) Our reportable segments reflect the sale of Landmark and TSW and the reclassification of their AUM, asset flows and market appreciation (depreciation) to discontinued operations.

ICM has been reclassified to the Other category as of the beginning of the first quarter of 2021.

The Other category includes movements of our previously disposed affiliates, Campbell Global and ICM, for the years ended December 31, 2021 and 2020.

(4) Other movements related to billable assets adjustment for our previous Affiliate.

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

15 unchanged sentences

Net flows — 1.4 (0.3)

Market appreciation 1.6 0.1 8.2

Market appreciation (depreciation) (2.3) 1.6 0.1

Ending balance $ 11.8 $ 14.1 $ 11.5

6 unchanged sentences

Net flows (3.7) (7.2) (5.7)

Market appreciation 13.3 5.8 19.3

Market appreciation (depreciation) (16.9) 13.3 5.8

Ending balance $ 77.2 $ 97.8 $ 97.8

6 unchanged sentences

Net flows 0.6 (0.1) 1.1

Market appreciation 1.2 0.3 1.3

Market appreciation (depreciation) (1.3) 1.2 0.3

Ending balance $ 4.6 $ 5.3 $ 6.7

5 unchanged sentences

Net flows (3.1) (5.9) (4.9)

Market appreciation 16.1 6.2 28.8

Other (0.1) — —

Market appreciation (depreciation) (20.5) 16.1 6.2

Ending balance continuing operations 93.6 117.2 116.0

1 unchanged sentence

Ending balance including discontinued operations $ 93.6 $ 117.2 $ 156.7

(1) Other movements related to billable assets adjustment.

(2) Reflects the sales of Landmark and TSW.

(1) Other movements related to billable assets adjustment for our previous Affiliate.

(2) Reflects the sale of Landmark and TSW.

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

12 unchanged sentences

Net flows (0.4) (3.4) (1.8)

Market appreciation 11.0 5.7 18.6

Market appreciation (depreciation) (14.0) 11.0 5.7

Ending balance $ 62.7 $ 77.1 $ 77.4

5 unchanged sentences

Net flows (2.7) (2.5) (3.1)

Market appreciation 5.1 0.5 10.2

Market appreciation (depreciation) (6.5) 5.1 0.5

Ending balance $ 30.9 $ 40.1 $ 38.6

5 unchanged sentences

Net flows (3.1) (5.9) (4.9)

Market appreciation 16.1 6.2 28.8

Other (0.1) — —

Market appreciation (depreciation) (20.5) 16.1 6.2

Ending balance continuing operations 93.6 117.2 116.0

1 unchanged sentence

Ending balance including discontinued operations $ 93.6 $ 117.2 $ 156.7

(1) Other movements related to billable assets adjustment.

(2) Reflects the sales of Landmark and TSW.

(1) Other movements related to billable assets adjustment for our previous Affiliate.

(2) Reflects the sale of Landmark and TSW.

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

At December 31, 2021, our total assets under management were $117.2 billion, an increase of $1.2 billion or 1.0%, compared to $116.0 billion excluding discontinued operations at December 31, 2020.

The assets under management at December 31, 2020 represented a decrease of $(49.0) billion or (29.7)% compared to $165.0 billion excluding discontinued operations at December 31, 2019.

The change in assets under management during the year ended December 31, 2021 reflects the sale of Campbell Global and ICM of $(8.9) billion, net flows of $(5.9) billion including reinvested income and distributions of $2.7 billion, and realizations and other of $(0.1) billion, offset by net market appreciation of $16.1 billion from continued market recovery.

The change in assets under management during the year ended December 31, 2020 reflects the sales of Barrow Hanley Mewhinney & Strauss, LLC (“Barrow Hanley”) and Copper Rock Capital Partners, LLC (“Copper Rock”) of $(50.3) billion, net flows of $(4.9) billion including reinvested income and distributions of $3.9 billion, partially offset by net market appreciation of $6.2 billion.

The change in assets under management during the year ended December 31, 2019 reflects net market appreciation of $28.8 billion and net flows of $(32.4) billion including reinvested income and distributions of $4.8 billion.

At December 31, 2022, our total assets under management were $93.6 billion, a decrease of $(23.6) billion or (20.1)%, compared to $117.2 billion at December 31, 2021.

The assets under management at December 31, 2021 represented an increase of $1.2 billion or 1.0% compared to $116.0 billion excluding discontinued operations at December 31, 2020.

The change in assets under management during the year ended December 31, 2022 reflects net market depreciation of $(20.5) billion and net flows of $(3.1) billion, including reinvested income and distributions of $3.8 billion.

The change in assets under management during the year ended December 31, 2021 reflects the sale of Campbell Global and ICM of $(8.9) billion, net flows of $(5.9) billion, including reinvested income and distributions of $2.7 billion, and realizations and other of $(0.1) billion, offset by net market appreciation of $16.1 billion.

The change in assets under management during the year ended December 31, 2020 reflects the sale of Barrow and Copper Rock of $(50.3) billion, net flows of $(4.9) billion, including reinvested income and distributions of $3.9 billion, partially offset by net market appreciation of $6.2 billion.

For the year ended December 31, 2022, our net outflows were $(3.1) billion compared to net outflows of $(5.9) billion for the year ended December 31, 2021 and net outflows of $(4.9) billion for the year ended December 31, 2020.

The change in net outflows for the year ended December 31, 2022 was primarily due to lower outflows in certain Acadian strategies, partly as the result of improved relative investment performance in the year ended December 31, 2022.

The change in net outflows for the year ended December 31, 2021 was primarily due to re-balancing and asset reallocation in certain Quant & Solutions strategies.

The change in net outflows for the year ended December 31, 2020 was primarily due to the $(22.8) billion reallocation of several Vanguard sub-advisory strategies at our previously disposed Affiliate, Barrow Hanley, for the year ended December 31, 2019 that did not occur in the year ended December 31, 2020.

Reinvested income and distributions of $3.8 billion, $2.7 billion, and $3.9 billion are reflected in the net flows for the years ended December 31, 2022, 2021 and 2020, respectively.

24 unchanged sentences

Interest expense (20.5) (24.8) (28.5) 4.3 (3.7)

Gain on sale of Affiliates 48.6 241.3 — (192.7) 241.3

Net consolidated Funds’ investment gain (loss) — (5.2) 4.2 5.2 (9.4)

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

Gain on sale of subsidiaries — 48.6 241.3 (48.6) (192.7)

Net consolidated Funds’ investment loss (0.4) — (5.2) (0.4) 5.2

Income from continuing operations before taxes

30 unchanged sentences

management fees earned based on our overall weighted average fee rate charged to our clients and the level of assets under management;

performance fees earned or management fee adjustments when our Affiliates’ investment performance over agreed time periods for certain clients has differed from pre-determined hurdles;

performance fees earned when our Affiliates’ investment performance over agreed time periods for certain clients has differed from pre-determined hurdles;

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

2 unchanged sentences

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 previous equity-accounted Affiliate, average basis points earned on average assets under management were 37.1 bps for the year ended December 31, 2021, 34.1 bps for the year ended December 31, 2020 and 33.2 bps for the year ended December 31, 2019.

Average basis points earned on average assets under management were 37.2 bps for the year ended December 31, 2022, 37.1 bps for the year ended December 31, 2021 and 34.1 bps for the year ended December 31, 2020.

The greatest driver of increases or decreases in this average fee rate is changes in the mix of our assets under management caused by net inflows or outflows in certain asset classes, dispositions, and disproportionate market movements.

1 unchanged sentence

Management fees decreased $(65.9) million, or (15.2)%, from $433.3 million for the year ended December 31, 2021 to $367.4 million for the year ended December 31, 2022.

The decrease was primarily due to the disposition of Barrow Hanley, which was included for the majority of 2020, but had no impact on 2021, and lower overall level of average assets under management.

Average assets under management excluding our previous equity-accounted Affiliate decreased (16.7)%, from $140.2 billion for the year ended December 31, 2020 to $116.8 billion for the year ended December 31, 2021, primarily due to the sale of Campbell Global in the third quarter of 2021 and the sale of Barrow Hanley that occurred in the fourth quarter of 2020.

The decrease was primarily due to a decrease in average assets under management, a decrease in performance fees, as well as the disposition of Campbell Global in the third quarter of 2021.

Average assets under management excluding our previous equity-accounted Affiliate decreased (15)%, from $116.8 billion for the year ended December 31, 2021 to $98.7 billion for the year ended December 31, 2022, primarily due to the negative market and net outflows over the past twelve months, as well as the disposition of Campbell Global in the third quarter of 2021.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Management fees decreased $(45.6) million, or (9.5)%, from $478.9 million for the year ended December 31, 2020 to $433.3 million for the year ended December 31, 2021.

The decrease was primarily due to the disposition of Barrow Hanley and Copper Rock and lower overall level of average assets under management.

Average assets under management excluding our previous equity-accounted Affiliate decreased (20.0)%, from $175.2 billion for the year ended December 31, 2019 to $140.2 billion for the year ended December 31, 2020, mainly due to the sale of Barrow Hanley and Copper Rock and the equity market decline during the first quarter of 2020 driven by the COVID-19 pandemic.

The decrease was primarily due to the disposition of Barrow, which was included for the majority of 2020, but had no impact on 2021, and lower overall level of average assets under management.

Performance Fees

2 unchanged sentences

Year ended December 31, 2022 compared to year ended December 31, 2021:

Performance fees decreased $(35.4) million, from $84.8 million for the year ended December 31, 2021 to $49.4 million for the year ended December 31, 2022.

The decrease is partially driven by the reduction in assets under management, changes in outperformance during the year, and the disposition of Campbell Global in the third quarter of 2021.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Performance fees increased $77.0 million, from $7.8 million for the year ended December 31, 2020 to $84.8 million for the year ended December 31, 2021.

Included in the increase is $16 million of performance fees earned by a timber investment from our previous Affiliate, Campbell Global.

Included in the increase is $16 million of performance fees earned by a timber investment from our previously divested Affiliate, Campbell Global.

Acadian contributed approximately $61 million of the increase due to out-performance in a wide range of strategies in 2021, such as long/short and emerging markets equities.

Many of Acadian’s performance fee-eligible accounts posted strong absolute and relative returns and crystallized performance fees during 2021.

Year ended December 31, 2020 compared to year ended December 31, 2019:

Performance fees improved $7.9 million, from $(0.1) million for the year ended December 31, 2019 to $7.8 million for the year ended December 31, 2020.

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

Other Revenue

Year ended December 31, 2022 compared to year ended December 31, 2021:

Other revenue was $5.7 million for the year ended December 31, 2021.

There was no other revenue for the year ended December 31, 2022.

The decrease was attributable to the sale of Campbell Global during the year ended December 31, 2021.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Other revenue decreased $(1.6) million, or (21.9)%, from $7.3 million for the year ended December 31, 2020 to $5.7 million for the year ended December 31, 2021.

The decrease was primarily attributable to the sale of Campbell Global during the year ended December 31, 2021.

Year ended December 31, 2020 compared to year ended December 31, 2019:

Other revenue increased $1.3 million, or 21.7%, from $6.0 million for the year ended December 31, 2019 to $7.3 million for the year ended December 31, 2020.

The increase was primarily attributable to an increase in consulting performed by an Affiliate for the year ended December 31, 2020.

GAAP Expenses

18 unchanged sentences

Affiliate key employee distributions (4)

13.4 8.5 20.1

Non-cash Affiliate key employee equity revaluations (5)

2 unchanged sentences

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

For the year ended December 31, 2021, $97.2 million of fixed compensation and benefits (of the $100.2 million above) is included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed.

For the year ended December 31, 2022, $86.1 million of fixed compensation and benefits (of the $86.1 million above) is included within economic net income.

For the year ended December 31, 2020, $125.7 million of fixed compensation and benefits (of the $130.0 million above) is included within economic net income, which excludes Fund expenses initially paid by our Affiliates on the Fund’s behalf and subsequently reimbursed.

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

The years ended December 31, 2021 and 2020 reflect the recategorization of Fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.

This recategorization is not applicable for the year ended December 31, 2022.

(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.

Its variability is based upon the structure of sales-based compensation due on inflows of assets under management and market-based movement in both current and prior periods.

(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.

(3) Variable compensation is contractually set and calculated individually at each Affiliate, plus Center bonuses.

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.

9 unchanged sentences

$ 100.3 $ 130.5 $ 112.1

(a) For the year ended December 31, 2021, $129.6 million of variable compensation expense (of the $130.5 million above) is included within economic net income, which excludes $0.9 million of variable compensation associated with restructuring at an Affiliate.

(a) For the year ended December 31, 2022, $100.3 million of variable compensation expense (of the $100.3 million above) is included within economic net income.

For the year ended December 31, 2021, $129.6 million of variable compensation expense (of the $130.5 million above) is included within economic net income, which excludes $0.9 million of variable compensation associated with restructuring at an Affiliate.

For the year ended December 31, 2020, $107.9 million of variable compensation expense (of the $112.1 million above) is included within economic net income, which excludes the variable compensation associated with restructuring at the Center and the Affiliates of $3.8 million, and variable compensation subsequently reimbursed by Funds of $0.3 million.

For the year ended December 31, 2019, $131.3 million of variable compensation expense (of the $138.0 million above) is included within economic net income, which excludes $6.7 million of variable compensation associated with restructuring at the Center and the Affiliates, as well as variable compensation subsequently reimbursed by Funds.

The year ended December 31, 2020 reflects the recategorization of variable compensation reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.

This recategorization is not applicable for the year ended December 31, 2022.

(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.

7 unchanged sentences

Year ended December 31, 2022 compared to year ended December 31, 2021:

Compensation and benefits expense increased $41.5 million, or 17.1%, from $243.1 million for the year ended December 31, 2020 to $284.6 million for the year ended December 31, 2021.

Compensation and benefits expense decreased $(125.4) million, or (44.1)%, from $284.6 million for the year ended December 31, 2021 to $159.2 million for the year ended December 31, 2022.

Fixed compensation and benefits decreased $(14.1) million, or (14.1)%, from $100.2 million for the year ended December 31, 2021 to $86.1 million for the year ended December 31, 2022, primarily reflecting the disposition of Affiliates.

Variable compensation decreased $(30.2) million, or (23.1)%, from $130.5 million for the year ended December 31, 2021 to $100.3 million for the year ended December 31, 2022.

The decrease was primarily attributable to lower pre-bonus profits in the year ended December 31, 2022 and the disposition of Campbell Global.

The decrease was partially offset by the inclusion of deferred compensation expense earned on prior year performance fee revenues, of which the Affiliate’s share is determined by a contractual split and recognized as compensation expense over a vesting period.

Sales-based compensation increased $0.1 million, or 1.3%, from $7.6 million for the year ended December 31, 2021 to $7.7 million for the year ended December 31, 2022.

Affiliate key employee distributions decreased $(8.3) million, or (61.9)%, from $13.4 million for the year ended December 31, 2021 to $5.1 million for the year ended December 31, 2022 as a result of lower underlying operating earnings at the consolidated Affiliates.

Revaluations of Affiliate key employee equity changed $(72.9) million in 2022, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity increased $32.9 million for the year ended December 31, 2021 and decreased $(40.0) million for the year ended December 31, 2022.

The changes in value year over year reflect changes in earnings, as well as changes in inputs used in the valuation model, including market risk assumptions and discount rates.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Compensation and benefits expense increased $41.5 million, from $243.1 million for the year ended December 31, 2020 to $284.6 million for the year ended December 31, 2021.

Fixed compensation and benefits decreased $(29.8) million, or (22.9)%, from $130.0 million for the year ended December 31, 2020 to $100.2 million for the year ended December 31, 2021, primarily reflecting the disposition of Affiliates and cost savings from the restructuring at the Center and Affiliates.

3 unchanged sentences

Affiliate key employee distributions increased $4.9 million, or 57.6%, from $8.5 million for the year ended December 31, 2020 to $13.4 million for the year ended December 31, 2021 as a result of higher post-variable compensation earnings and the change in the mix of earnings at the consolidated Affiliates.

Revaluations of Affiliate key employee equity changed $48.0 million in 2021, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(15.1) million for the year ended December 31, 2020 and increased $32.9 million for the year ended December 31, 2021.

Year ended December 31, 2020 compared to year ended December 31, 2019:

Compensation and benefits expense decreased $(5.5) million, from $248.6 million for the year ended December 31, 2019 to $243.1 million for the year ended December 31, 2020.

Fixed compensation and benefits decreased $(18.7) million, or (12.6)%, from $148.7 million for the year ended December 31, 2019 to $130.0 million for the year ended December 31, 2020.

This decrease reflects the cost savings from the restructuring at the Center and Affiliates, as well as the disposition of Barrow Hanley and Copper Rock in 2020.

Variable compensation decreased $(25.9) million, or (18.8)%, from $138.0 million for the year ended December 31, 2019 to $112.1 million for the year ended December 31, 2020.

The decrease was attributable to lower pre-variable compensation earnings in 2020.

Sales-based compensation decreased $(2.1) million, or (21.6)%, from $9.7 million for the year ended December 31, 2019 to $7.6 million for the year ended December 31, 2020, as a result of the structure of sales-based compensation programs, driven by the timing of asset inflows triggering sales-based compensation in both current and prior periods.

Affiliate key employee distributions decreased $(11.6) million, or (57.7)%, from $20.1 million for the year ended December 31, 2019 to $8.5 million for the year ended December 31, 2020, as a result of lower earnings before Affiliate key employee distributions at the consolidated Affiliates.

Revaluations of Affiliate key employee equity changed by $52.8 million in 2020, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(67.9) million for the year ended December 31, 2019 and decreased $(15.1) million for the year ended December 31, 2020.

Revaluations of Affiliate key employee equity changed by $48.0 million in 2021, reflecting revaluations of key employee ownership interests at our consolidated Affiliates, as the value of Affiliate equity decreased $(15.1) million for the year ended December 31, 2020 and increased $32.9 million for the year ended December 31, 2021.

General and Administrative Expense

1 unchanged sentence

General and administrative expense decreased $(0.1) million, or (0.1)%, from $71.2 million for the year ended December 31, 2021 to $71.1 million for the year ended December 31, 2022.

The decrease was primarily due to cost saving initiatives at the Center and Affiliates and the disposition of Campbell Global in the third quarter of 2021 and Barrow Hanley in the fourth quarter of 2020.

The decrease was primarily due to the disposition of Affiliates, offset partially by an increase in travel and entertainment, consulting, and system costs in the year ended December 31, 2022.

Year ended December 31, 2021 compared to year ended December 31, 2020:

General and administrative expense decreased $(16.8) million, or (19.1)%, from $88.0 million for the year ended December 31, 2020 to $71.2 million for the year ended December 31, 2021.

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

The decrease was primarily due to cost saving initiatives at the Center and Affiliates and the disposition of Campbell Global in the third quarter of 2021 and Barrow in the fourth quarter of 2020.

Impairment of Goodwill

Year ended December 31, 2022 compared to year ended December 31, 2021:

There was no impairment of goodwill recorded for the year ended December 31, 2022 or for the year ended December 31, 2021.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Impairment of goodwill was $16.4 million for the year ended December 31, 2020 and there was no impairment for the year ended December 31, 2021.

The change was the result of the impairment charge recorded for the Copper Rock reporting unit during the year ended December 31, 2020, which was included within the Liquid Alpha segment prior to its disposition in the third quarter of 2020.

Year ended December 31, 2020 compared to year ended December 31, 2019:

No goodwill impairment charge was recorded in the year ended December 31, 2019.

A goodwill impairment charge of $16.4 million was recorded for the year ended December 31, 2020 with respect to the Copper Rock reporting unit which was included within the Liquid Alpha segment prior to its disposition in July 2020.

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

Accordingly, we recognized a goodwill impairment charge of $16.4 million for the year ended December 31, 2020.

Amortization of Acquired Intangibles Expense

Year ended December 31, 2022 compared to year ended December 31, 2021:

Amortization of acquired intangibles expense decreased $(0.2) million, or (66.7)%, from $0.3 million for the year ended December 31, 2020 to $0.1 million for the year ended December 31, 2021.

The change is due to the disposition of Copper Rock in 2020.

Amortization of acquired intangibles expense was unchanged at $0.1 million for the years ended December 31, 2021 and 2022, respectively.

This account reflects the amortization of intangible assets acquired by Acadian.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Amortization of acquired intangibles expense increased $0.1 million, or 50.0%, from $0.2 million for the year ended December 31, 2019 to $0.3 million for the year ended December 31, 2020.

Amortization of acquired intangibles expense decreased $(0.2) million, or (66.7)%, from $0.3 million for the year ended December 31, 2020 to $0.1 million for the year ended December 31, 2021.

The change is due to the disposition of Copper Rock in 2020.

1 unchanged sentence

Year ended December 31, 2022 compared to year ended December 31, 2021:

Depreciation and amortization expense increased $2.3 million, or 11.6%, from $19.8 million for the year ended December 31, 2020 to $22.1 million for the year ended December 31, 2021.

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

Depreciation and amortization expense decreased $(3.6) million, or (16.3)%, from $22.1 million for the year ended December 31, 2021 to $18.5 million for the year ended December 31, 2022.

The decrease was primarily attributable to the effect of certain assets becoming fully depreciated and the disposition of Affiliates in 2021.

Year ended December 31, 2021 compared to year ended December 31, 2020:

6 unchanged sentences

interest expense;

loss on extinguishment of debt;

gain on sale of subsidiaries

1 unchanged sentence

Year ended December 31, 2022 compared to year ended December 31, 2021:

Investment income decreased $(8.1) million, or (97.6)%, from $8.3 million for the year ended December 31, 2021 to $0.2 million for the year ended December 31, 2022.

The decrease is due to lower returns generated by seed capital investments in the current year driven by the market decline in the year ended December 31, 2022.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Investment income increased $3.4 million, or 69.4%, from $4.9 million for the year ended December 31, 2020 to $8.3 million for the year ended December 31, 2021.

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

Year ended December 31, 2020 compared to year ended December 31, 2019:

Investment income decreased $(11.9) million, or (70.8)%, from $16.8 million for the year ended December 31, 2019 to $4.9 million for the year ended December 31, 2020.

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

Interest Income

Year ended December 31, 2022 compared to year ended December 31, 2021:

Interest income decreased $(0.4) million, or (66.7)%, from $0.6 million for the year ended December 31, 2020 to $0.2 million for the year ended December 31, 2021, principally due to a decrease in short-term investment returns in 2021.

Interest income increased $0.6 million, or 300.0%, from $0.2 million for the year ended December 31, 2021 to $0.8 million for the year ended December 31, 2022.

The increase was due to an increase in short-term investment returns in 2022.

Year ended December 31, 2021 compared to year ended December 31, 2020:

2 unchanged sentences

Year ended December 31, 2022 compared to year ended December 31, 2021:

Interest expense decreased $4.3 million, or 17.3%, from $24.8 million for the year ended December 31, 2021 to $20.5 million for the year ended December 31, 2022, primarily reflecting a lower balance of third party borrowings in 2022, slightly offset by $1.3 million of additional interest expense related to 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 we redeemed in January 2022.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Interest expense decreased $(3.7) million, or (13.0)%, from $28.5 million for the year ended December 31, 2020 to $24.8 million for the year ended December 31, 2021, primarily reflecting a lower balance drawn on our revolving credit facilities during 2021.

We paid down the balance in full on our revolving credit facility in the year ended December 31, 2021.

Loss on Extinguishment of Debt

Year ended December 31, 2022 compared to year ended December 31, 2021:

Interest expense decreased $(3.7) million, or (11.5)%, from $32.2 million for the year ended December 31, 2019 to $28.5 million for the year ended December 31, 2020, primarily reflecting a lower balance drawn on our non-recourse seed capital and revolving credit facilities during 2020.

We paid down the balance on our non-recourse seed capital facility, and paid down the balance on our revolving credit facility in the year ended December 31, 2020.

There was no loss on extinguishment of debt for the year ended December 31, 2021.

Loss on extinguishment of debt was $3.2 million for the year ended December 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 redeemed in January 2022.

Year ended December 31, 2021 compared to year ended December 31, 2020:

There was no loss on extinguishment of debt for the year ended December 31, 2021 or for the year ended December 31, 2020.

Gain on Sale of Subsidiaries

Year ended December 31, 2022 compared to year ended December 31, 2021:

Gain on sale of subsidiaries decreased $(192.7) million from $241.3 million for the year ended December 31, 2020 to $48.6 million for the year ended December 31, 2021, representing our gain on sale of our equity interest in ICM and Campbell Global, slightly offset by the loss on disposition of a business unit during the year ended December 31, 2021.

Included in the balance for the year ended December 31, 2020 is a gain of $7.2 million on the sale of our equity interests in Copper Rock, a gain of $231.2 million on the sale of our equity interests in Barrow Hanley and a gain of $2.9 million on a previously disposed Affiliate.

Gain on sale of subsidiaries was $48.6 million for the year ended December 31, 2021 representing our gain on sale of our equity interest in ICM and Campbell Global, slightly offset by the loss on disposition of a business unit during the year ended December 31, 2021.

There was no gain on sale of subsidiaries in the year ended December 31, 2022.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Gain on sale of subsidiaries was $241.3 million for the year ended December 31, 2020 representing a gain of $7.2 million on the sale of our equity interests in Copper Rock, a gain of $231.2 million on the sale of our equity interests in Barrow Hanley and a gain of $2.9 million on a previously disposed Affiliate.

No gain on sale of subsidiaries was recorded in the year ended December 31, 2019.

Included in the balance for the year ended December 31, 2020 is a gain of $7.2 million on the sale of our equity interests in Copper Rock, a gain of $231.2 million on the sale of our equity interests in Barrow and a gain of $2.9 million on a previously disposed Affiliate.

GAAP Income Tax Expense

3 unchanged sentences

Income tax expense decreased $(5.8) million, from $50.0 million for the year ended December 31, 2021 to $44.2 million for the year ended December 31, 2022.

The decrease in income tax expense relates to the decrease in income from continuing operations for the year ended December 31, 2021, primarily related to the sale of certain Affiliates that occurred during 2021.

The decrease in income tax expense from the sale was partially offset by an increase to the permanent disallowance of executive compensation in 2021, a lower tax benefit recognized in 2021 from changes in uncertain tax positions that resulted from the lapse in statute of limitations, and an increase of state tax obligations.

The decrease in income tax expense is primarily related to the decrease in income from continuing operations for the year ended December 31, 2022.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Income tax expense increased $86.6 million, from $10.5 million for the year ended December 31, 2019 to $97.1 million for the year ended December 31, 2020, primarily due to the increase in the income from continuing operations before taxes which was driven by the gain on sale of Affiliates, in addition to the reductions to liabilities for uncertain tax positions due to the lapse of statutes of limitation and adjustments to deferred tax assets in 2020 compared to 2019.

Deferred tax assets have been adjusted primarily for changes in the Company's state tax rates and an increase in state tax obligations.

Income tax expense decreased $(47.1) million, from $97.1 million for the year ended December 31, 2020 to $50.0 million for the year ended December 31, 2021.

The decrease in income tax expense is primarily related to the decrease in the income from continuing operations before taxes for the year ended December 31, 2021, driven by the sale of certain Affiliates that occurred during 2021.

GAAP Consolidated Funds

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 Consolidated Financial Statements and is not included in net income attributable to controlling interests or in management fees.

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.

The discontinued operations accounting treatment was applied for the consolidated Landmark Funds.

Year ended December 31, 2022 compared to year ended December 31, 2021:

As noted above, the gains and losses related to the Landmark funds are included with discontinued operations.

There were no consolidated Funds in 2021.

Consolidated Funds’ revenue was $0.4 million for the year ended December 31, 2022.

Consolidated Funds’ expense was $0.4 million for the year ended December 31, 2022.

There were no consolidated Funds during the year ended December 31, 2021.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Consolidated Funds’ revenue decreased $(1.1) million, from $6.6 million for the year ended December 31, 2019 to $5.5 million for the year ended December 31, 2020.

Consolidated Funds’ expense decreased $(0.1) million, from $0.3 million for the year ended December 31, 2019 to $0.2 million for the year ended December 31, 2020.

The decrease in Consolidated Funds’ revenue and decrease in Consolidated Funds’ expense is due to changes in the number of Consolidated Funds during the year ended December 31, 2019, including the deconsolidation of Funds due to redemption of seed investments in Barrow Hanley Consolidated Funds following the sale of our equity interests in Barrow Hanley in November 2020.

Consolidated Funds’ investment gain (loss) decreased $(9.4) million from $4.2 million for the year ended December 31, 2019 to $(5.2) million for the year ended December 31, 2020.

There were no consolidated Funds during the year ended December 31, 2021.

Consolidated Funds’ revenue was $5.5 million for the year ended December 31, 2020.

Consolidated Funds’ expense was $0.2 million for the year ended December 31, 2020.

The decrease in consolidated Funds’ revenue and decrease in consolidated Funds’ expense is due to the deconsolidation of Funds due to redemption of seed investments in Barrow consolidated Funds following the sale of our equity interests in Barrow in November 2020.

Discontinued Operations

2 unchanged sentences

Year ended December 31, 2022 compared to year ended December 31, 2021:

Income from discontinued operations increased $9.5 million from $67.8 million for the year ended December 31, 2020 to $77.3 million for the year ended December 31, 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.

Income from discontinued operations was $77.3 million for the year ended December 31, 2021, representing the income from TSW and Landmark, including consolidated Landmark Funds.

There was no income from discontinued operations for the year ended December 31, 2022.

The gain on disposal of discontinued operations, net of tax was $691.0 million for the year ended December 31, 2021 representing our gain on sale of our equity interests in Landmark and TSW.

1 unchanged sentence

Year ended December 31, 2021 compared to year ended December 31, 2020:

Income from discontinued operations increased $30.5 million from $37.3 million for the year ended December 31, 2019 to $67.8 million for the for the year ended December 31, 2020.

Income from discontinued operations increased $9.5 million from $67.8 million for the year ended December 31, 2020 to $77.3 million for the year ended December 31, 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 $691.0 million for the year ended December 31, 2021 representing our gain on sale of our equity interests in Landmark and TSW.

There was no gain on disposal of discontinued operations for the year ended December 31, 2020.

GAAP Operating Metrics

39 unchanged sentences

Affiliate key employee distributions

13.4 8.5 20.1

Operating (income) loss of consolidated Funds

— (5.3) (6.3)

Operating income before Affiliate key employee distributions

3 unchanged sentences

$ 273.3 $ 289.7 $ 247.0

Effects of Inflation

For the years ended December 31, 2021, 2020 and 2019, inflation did not have a material effect on our consolidated results of operations.

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

5 unchanged sentences

GAAP results, primarily to exclude non-cash, non-economic expenses, or to reflect cash benefits not recognized under U.S.

ENI is an important measure to investors because it is used by the Company to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine Affiliate variable compensation and equity distributions, and incentivize management.

ENI is an important measure to investors because it is used by us to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine Affiliate variable compensation and equity distributions, and incentivize management.

It is also an important measure because it assists management in evaluating our operating performance and is presented in a way that most closely reflects the key elements of our profit share operating model with our Affiliates.

6 unchanged sentences

• We identify separately from operating expenses variable compensation and Affiliate key employee distributions, which represent Affiliate earnings shared with Affiliate key employees.

• We net the separate revenue and expenses under U.S.

GAAP for certain Fund expenses initially paid by our Affiliates on the Funds’ behalf and subsequently reimbursed, to better reflect the economics of our business.

We also make the following adjustments to U.S.

6 unchanged sentences

We exclude non-cash amortization or impairment expenses related to acquired goodwill and other intangibles as these are non-cash charges that do not result in an outflow of tangible economic benefits from the business.

We also exclude the amortization of acquisition-related contingent consideration, as well as the value of employee equity owned pre-acquisition.

Please note that the revaluations related to these acquisition-related items are included in (i) above.

We exclude capital transaction costs, including the costs of raising debt or equity, gains or losses realized as a result of redeeming debt or equity and direct incremental costs associated with acquisitions of businesses or assets.

14 unchanged sentences

Non-cash key employee-owned equity and profit interest revaluations (40.0) 32.9 (15.1)

Goodwill impairment and amortization of acquired intangible assets, acquisition-related consideration and pre-acquisition employee equity 0.1 16.8 0.2

Goodwill impairment and amortization of acquired intangible assets 0.1 0.1 16.8

Capital transaction costs 5.2 1.8 0.8

2 unchanged sentences

Tax benefit of goodwill and acquired intangibles deductions 1.5 1.1 1.6

Discontinued operations and restructuring (2)

Discontinued operations attributable to controlling interests and restructuring (2)

1.3 (743.8) (269.6)

1 unchanged sentence

3.3 (1.7) 2.2

Tax effect of above adjustments (4)

3.5 60.8 17.8

Tax effect of above adjustments, as applicable (4)

Economic net income $ 81.6 $ 118.3 $ 88.3

8 unchanged sentences

Net seed/co-investment (gains) losses and financing $ 0.6 $ (4.0) $ 4.1

* 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) For the year ended December 31, 2021, includes net income from discontinued operations attributable to controlling interest of $700.3 million, restructuring costs at the Center and Affiliates of $3.8 million, costs associated with the transfer of an insurance policy from our former Parent of $1.2 million, and the gain on sale of Affiliates of $48.6 million.

For the year ended December 31, 2020, includes net income from discontinued operations attributable to controlling interest of $39.4 million, restructuring costs at the Center and Affiliates of $9.4 million, costs associated with the transfer of an insurance policy from our former Parent of $1.6 million, and the gain on sale of Affiliates of $241.3 million.

For the year ended December 31, 2019, includes net income from discontinued operations attributable to controlling interest of $27.0 million, restructuring costs at the Center of $6.7 million, costs associated with the transfer of an insurance policy from our former Parent of $0.9 million, and costs associated with the redomicile to the U.S.

of $1.6 million.

* The blended rate is based on the weighted average rate of the long-term debt.

(2) For the year ended December 31, 2022, includes restructuring costs of $0.1 million and costs associated with the transfer of an insurance policy from our former Parent of $1.2 million.

For the year ended December 31, 2021, includes net income from discontinued operations attributable to controlling interest of $700.3 million, restructuring costs at the Center and Affiliates of $3.8 million, costs associated with the transfer of an insurance policy from our former Parent of $1.2 million, and the gain on sale of subsidiaries of $48.6 million.

(3) Includes adjustments of $0.2 million, $3.0 million and $8.7 million to remove the tax benefit resulting from the reduction in liabilities for uncertain tax positions recorded during the years ended December 31, 2022, 2021 and 2020, respectively.

8 unchanged sentences

Non-cash key employee-owned equity and profit interest revaluations (0.92) 0.41 (0.18)

Goodwill impairment and amortization of acquired intangible assets, acquisition-related consideration and pre-acquisition employee equity — 0.20 —

Goodwill impairment and amortization of acquired intangible assets — — 0.20

Capital transaction costs 0.12 0.02 0.01

20 unchanged sentences

Exclude Fund expenses reimbursed by customers (1)

— (2.9) (4.6)

ENI Revenue $ 416.8 $ 523.5 $ 492.3

(1) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.

This recategorization is not applicable for the year ended December 31, 2022.

The following table identifies the components of ENI revenue:

12 unchanged sentences

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

GAAP, plus our earnings from equity-accounted Affiliate of $2.6 million for the year ended December 31, 2021, $2.9 million for the year ended December 31, 2020 and $2.8 million for the year ended December 31, 2019.

Other income also excludes certain Fund expenses initially paid by our Affiliates on the Funds’ behalf that are subsequently reimbursed.

GAAP, plus our earnings from our equity-accounted Affiliate of $2.6 million for the year ended December 31, 2021 and $2.9 million for the year ended December 31, 2020.

For the years ended December 30, 2021 and 2020, other income excludes certain Fund expenses initially paid by our previously divested Affiliate, Campbell Global, on the Funds’ behalf that are subsequently reimbursed.

This recategorization is not applicable for the year ended December 31, 2022.

Refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis” for a full discussion regarding the items excluded from the calculation of economic net income.

4 unchanged sentences

Exclude Fund expenses reimbursed by customers (1)

— (2.9) (4.6)

ENI other income $ — $ 5.4 $ 5.6

(1) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.

This recategorization is not applicable for the year ended December 31, 2022.

ENI Operating Expenses

2 unchanged sentences

As shown in the following reconciliation, the Company excludes the impact of key employee equity revaluations.

We also exclude the amortization of contingent purchase price and pre-acquisition equity owned by employees, both with a service requirement.

Variable compensation and Affiliate key employee distributions are also segregated out of U.S.

12 unchanged sentences

Fund expenses reimbursed by customers (2)

— (2.9) (4.6)

Funds’ operating expenses (0.4) — (0.2)

5 unchanged sentences

ENI operating expense $ 182.1 $ 192.8 $ 233.5

(1) For the year ended December 31, 2021, includes $3.8 million of restructuring costs at the Center and Affiliates and $1.2 million costs associated with the transfer of an insurance policy from our former Parent.

(1) For the year ended December 31, 2022, includes $0.1 million of restructuring costs and $1.2 million costs associated with the transfer of an insurance policy from our former Parent.

For the year ended December 31, 2021, includes $3.8 million of restructuring costs at the Center and Affiliates and $1.2 million costs associated with the transfer of an insurance policy from our former Parent.

For the year ended December 31, 2019, includes restructuring costs at the Center and the Affiliates of $6.7 million.

(2) For the year ended December 31, 2021, excludes variable compensation related to restructuring at the Affiliates of $0.9 million that is included within Restructuring costs.

For the year ended December 31, 2020, excludes variable compensation related to restructuring at the Center and the Affiliates of $3.8 million that is included within Restructuring costs, and Fund expenses reimbursed by customers of $0.3 million.

For the year ended December 31, 2020, includes restructuring costs at the Center and the Affiliates of $9.4 million and $1.6 million costs associated with the transfer of an insurance policy from our former Parent.

(2) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.

This recategorization is not applicable for the year ended December 31, 2022.

(3) For the year ended December 31, 2021, excludes variable compensation related to restructuring at the Center and the Affiliates of $0.9 million that is included within Restructuring costs.

The following table identifies the components of ENI operating expense:

20 unchanged sentences

Variable compensation (100.3) (129.6) (107.9)

Fund expenses reimbursed by customers (3.0) (4.6) (4.4)

Fund expenses reimbursed by customers (a)

— (3.0) (4.6)

ENI fixed compensation and benefits $ 86.1 $ 97.2 $ 125.7

(a) Reflects the recategorization of fund expenses reimbursed by customers of Campbell Global, a former Affiliate that was divested in August 2021.

This recategorization is not applicable for the year ended December 31, 2022.

(2) The following table reconciles U.S.

9 unchanged sentences

ENI general and administrative expense $ 77.5 $ 73.5 $ 88.0

(a) Reflects $2.9 million related to restructuring at the Center and Affiliates and $1.2 million of costs associated with the transfer of an insurance policy from our former Parent for the year ended December 31, 2021.

Reflects $5.6 million related to restructuring at the Center and Affiliates, and $1.6 million costs associated with the transfer of an insurance policy from our former Parent in the year ended December 31, 2020.

Reflects $2.5 million related to our redomicile to the U.S.

in the year ended December 31, 2019.

(a) Reflects $0.1 million related to restructuring and $1.2 million of costs associated with the transfer of an insurance policy from our former Parent for the year ended December 31, 2022.

Reflects $2.9 million related to restructuring at the Center and Affiliates, and $1.2 million of costs associated with the transfer of an insurance policy from our former Parent in the year ended December 31, 2021.

Reflects $5.6 million related to restructuring at the Center and Affiliates, and $1.6 million of costs associated with the transfer of an insurance policy from our former Parent in the year ended December 31, 2020.

Key Non-GAAP Operating Metrics

53 unchanged sentences

$ 129.3 $ 187.7 $ 142.4

(a) For the year ended December 31, 2021, includes restructuring costs of $1.2 million associated with the transfer of an insurance policy from our former Parent and $3.8 million of restructuring costs at the Center and Affiliates.

(a) For the year ended December 31, 2022, includes $1.2 million associated with the transfer of an insurance policy from our former Parent and $0.1 million of restructuring costs.

For the year ended December 31, 2021, includes restructuring costs of $1.2 million associated with the transfer of an insurance policy from our former Parent and $3.8 million of restructuring costs at the Center and Affiliates.

For the year ended December 31, 2019, includes $6.7 million of restructuring costs at the Center and the Affiliates, $2.5 million of costs incurred in connection with the redomicile to the U.S.

For the year ended December 31, 2020, includes restructuring costs of $1.6 million associated with the transfer of an insurance policy from our former Parent and $9.4 million of restructuring costs at the Center and the Affiliates.

(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.

31 unchanged sentences

$ 112.0 $ 165.4 $ 120.8

Intercompany interest expense deductible for U.S.

tax purposes — — (35.5)

Taxable economic net income 165.4 120.8 106.4

Taxes at the U.S.

3 unchanged sentences

Tax on economic net income (30.4) (47.1) (32.5)

Add back intercompany interest expense previously excluded

Economic net income $ 81.6 $ 118.3 $ 88.3

14 unchanged sentences

(a) Other ENI interest expense exclusions represent cost of financing on seed capital and co-investments and amortization of debt issuance costs.

Other ENI interest expense includes $1.7 million related to the cost of seed and co-investment financing and $0.6 million related to the amortization of debt issuance costs for the year ended December 31, 2021.

Includes $0.4 million related to the cost of seed and co-investment financing and $2.0 million related to the amortization of debt issuance costs for the year ended December 31, 2022.

Includes $1.7 million related to the cost of seed and co-investment financing and $0.6 million related to the amortization of debt issuance costs for the year ended December 31, 2021.

Includes $5.7 million related to the cost of seed and co-investment financing and $0.6 million related to the amortization of debt issuance costs for the year ended December 31, 2020.

(b) ENI earnings after Affiliate key employee distributions is calculated as ENI operating income (ENI revenue, less ENI operating expense, less ENI variable compensation), less Affiliate key employee distributions.

9 unchanged sentences

This segment is comprised of our interest in Acadian.

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

The corporate head office is included within the Other category, along with our previously disposed Affiliate, Campbell Global for the years ended December 31, 2021 and 2020.

We completed the sale of our equity interest in Campbell Global in August 2021.

ICM is also included in the Other category for the year ended December 31, 2021.

We completed the sale of our equity interests in ICM in July 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”.

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.

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 twelve months ended months ended December 31, 2021.

On July 19, 2021 we completed the sale of all our 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 Economic Net Income ("ENI").

ICM is included in the Liquid Alpha segment for the year ended December 31, 2020.

On July 19, 2021, we completed the sale of our equity interests in TSW.

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

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

We define economic net income for the segments as ENI revenue less (i) ENI operating expenses, (ii) variable compensation and (iii) key employee distributions.

4 unchanged sentences

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

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

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

GAAP for certain Fund expenses reimbursed to our Affiliates.

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

ENI operating expenses include compensation and benefits, general and administrative expense, and depreciation and amortization under U.S.

GAAP, adjusted to exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees, goodwill impairment and amortization of acquired intangible assets, capital transaction costs, restructuring costs, and the separate expenses recorded under U.S.

GAAP for certain Fund expenses reimbursed to our Affiliates.

GAAP, adjusted to exclude non-cash expenses representing changes in the value of Affiliate equity and profit interests held by Affiliate key employees and the impairment of goodwill.

Additionally, variable compensation and Affiliate key employee distributions are segregated from ENI operating expenses.

7 unchanged sentences

($ in millions) 2022 2021

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

Quant & Solutions Total Quant & Solutions Other Total

Management fees $ 367.4 $ 367.4 $ 419.4 $ 13.9 $ 433.3

13 unchanged sentences

Year ended December 31, 2022 compared to year ended December 31, 2021:

Quant & Solutions ENI revenue increased $133.3 million, or 37.6%, from $354.8 million for the year ended December 31, 2020 to $488.1 million for the year ended December 31, 2021.

The $61 million increase in performance fees was primarily due to higher performance fees earned during the fourth quarter of 2021 as a result of out-performance in a wide range of strategies in 2021, such as long/short and emerging markets equities, as well as 20.9% higher management fees driven by higher average AUM primarily resulting from the equity market increase in the last twelve months.

Year ended December 31, 2020 compared to year ended December 31, 2019:

Quant & Solutions ENI revenue decreased $(71.3) million, or (14.6)%, from $488.1 million for the year ended December 31, 2021 to $416.8 million for the year ended December 31, 2022.

The decrease was attributable to (6.5)% lower management fees driven by lower average AUM primarily resulting from the equity market decline in the first quarter of 2020.

The decrease was due to (28.1)% lower performance fees in the year ended December 31, 2022, as well as (12.4)% lower management fees driven by lower average AUM resulting from equity market decline and net outflows in the last twelve months.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Quant & Solutions ENI revenue increased $133.3 million, or 37.6%, from $354.8 million for the year ended December 31, 2020 to $488.1 million for the year ended December 31, 2021.

The $61 million increase in performance fees was primarily due to significant out-performance in a wide range of strategies in 2021, such as long/short and emerging markets equities.

The 20.9% increase in management fees was driven by higher average AUM primarily resulting from the equity market increase in 2021.

Liquid Alpha Segment ENI Revenue

Year ended December 31, 2021 compared to year ended December 31, 2020:

Liquid Alpha ENI revenue was $111.1 million for the year ended December 31, 2020 and was comprised of the ENI revenue from Barrow Hanley, Copper Rock and ICM.

Liquid Alpha ENI revenue was $111.1 million for the year ended December 31, 2020 and was comprised of the ENI revenue from Barrow, Copper Rock and ICM.

There was no Liquid Alpha ENI revenue for the year ended December 31, 2021 as the Liquid Alpha segment no long constituted a reportable segment.

Year ended December 31, 2020 compared to year ended December 31, 2019:

Liquid Alpha ENI revenue decreased $(69.2) million, or (38.4)%, from $180.3 million for the year ended December 31, 2019 to $111.1 million for the year ended December 31, 2020.

The decrease was attributable to (42.3)% lower management fees driven by lower average AUM resulting from the disposition of Barrow Hanley and Copper Rock, the equity market decline in the first quarter of 2020, and net outflows in 2020.

The change in performance fees was primarily due to higher fulcrum fees recorded in the year ended December 31, 2020 compared to the year ended December 31, 2019.

Segment ENI Expense

2 unchanged sentences

($ 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

30 unchanged sentences

Quant & Solutions ENI operating expense increased $4.7 million, or 2.9%, from $160.8 million for the year ended December 31, 2021 to $165.5 million for the year ended December 31, 2022.

The increase was driven by 13.1% higher ENI general and administrative expense primarily due to higher travel and entertainment, consultant, and system costs.

Quant & Solutions ENI variable compensation expense is based on contractual percentage of earnings before variable compensation, and also includes a formulaic split of performance fee revenue that gets deferred and recognized as variable compensation expense over a three-year vesting period.

Quant & Solutions ENI variable compensation expense decreased (4.8)% as a result of lower earnings before variable compensation, including performance fees.

Affiliate key employee distributions attributable to Quant & Solutions decreased (58.9)%, impacted by lower ENI earnings after variable compensation and the leveraged nature of the distribution share.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Quant & Solutions ENI operating expense increased $11.8 million, or 7.9%, from $149.0 million for the year ended December 31, 2020 to $160.8 million for the year ended December 31, 2021.

The increase was driven by 7.3% higher ENI fixed compensation and benefits expense resulting from higher headcount and 6.3% higher ENI general and administrative expense primarily due to increased portfolio administrative and systems costs.

Quant & Solutions ENI variable compensation expense increased 38.5% as a result of higher earnings before variable compensation, including performance fees.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, increased 38.5%, as a result of higher earnings before variable compensation.

Affiliate key employee distributions attributable to Quant & Solutions increased 188.4%, primarily due to higher Quant & Solutions ENI earnings after variable compensation as well as the leveraged nature of the sharing agreement.

Year ended December 31, 2020 compared to year ended December 31, 2019:

Quant & Solutions ENI operating expense decreased $(11.6) million, or (7.2)%, from $160.6 million for the year ended December 31, 2019 to $149.0 million for the year ended December 31, 2020.

The decrease was driven by (7.2)% lower ENI fixed compensation and benefits expense resulting from headcount reduction and (13.8)% lower ENI general and administrative expense such as travel reflecting the impact of COVID-19 and cost-saving initiatives.

Quant & Solutions ENI variable compensation expense, which is based on contractual arrangements, decreased (3.7)%, as a result of lower earnings before variable compensation.

Affiliate key employee distributions attributable to Quant & Solutions decreased (32.8)%, primarily due to lower Quant & Solutions ENI earnings after variable compensation.

Liquid Alpha Segment ENI Expense

Year ended December 31, 2021 compared to year ended December 31, 2020:

Liquid Alpha ENI operating expense was $39.4 million for the year ended December 31, 2020 and was comprised of the ENI expense from Barrow Hanley and Copper Rock.

Liquid Alpha ENI operating expense was $39.4 million for the year ended December 31, 2020 and was comprised of the ENI expense from Barrow and Copper Rock.

There was no Liquid Alpha ENI expense for the year ended December 31, 2021 as the Liquid Alpha segment no longer constituted as a reportable segment.

Year ended December 31, 2020 compared to year ended December 31, 2019:

Liquid Alpha ENI operating expense decreased $(14.7) million, or (27.2)%, from $54.1 million for the year ended December 31, 2019 to $39.4 million for the year ended December 31, 2020.

The decrease was driven by (21.3)% lower ENI fixed compensation and benefits expense and (37.1)% lower ENI general and administrative expense driven by the Barrow Hanley and Copper Rock dispositions.

Liquid Alpha ENI variable compensation expense, which is based on contractual arrangements, decreased (33.6)%, as a result of lower pre-variable compensation earnings.

Affiliate key employee distributions attributable to Liquid Alpha decreased (71.5)%, primarily driven by dispositions and lower Liquid Alpha ENI earnings after variable compensation.

Other ENI Expense

1 unchanged sentence

Other ENI operating expense decreased $(15.4) million, or (48.1)%, from $32.0 million for the year ended December 31, 2021 to $16.6 million for the year ended December 31, 2022.

The decrease was driven by (27.9)% lower ENI fixed compensation and benefits expense resulting from dispositions, and (30.5)% lower ENI general and administrative expense resulting from cost-saving initiatives.

Other ENI variable compensation expense increased 372.1% due to an increase in variable compensation at Campbell Global as a result of higher earnings, and an increase in Center variable compensation.

The decrease was driven by (60.8)% lower ENI fixed compensation and benefits and (30.0)% lower ENI general and administrative expense, both driven by the disposition of Affiliates during 2021.

Other ENI variable compensation expense decreased (85.1)%, primarily due to the disposition of Campbell Global in 2021.

Year ended December 31, 2021 compared to year ended December 31, 2020:

Other ENI operating expense decreased $(13.1) million, or (29.0)%, from $45.1 million for the year ended December 31, 2020 to $32.0 million for the year ended December 31, 2021.

The decrease was driven by (18.2)% lower ENI fixed compensation and benefits expense resulting from a reduction in headcount and (27.8)% lower ENI general and administrative expense resulting from cost-saving initiatives.

Other ENI variable compensation expense decreased (49.2)% due to a reduction in headcount.

Capital Resources and Liquidity

11 unchanged sentences

Comparison for the Years Ended December 31, 2022, 2021 and 2020

Net cash provided by operating activities of continuing operations excluding consolidated Funds increased $123.4 million, from net cash used of $(4.4) million during the year ended December 31, 2021 to net cash provided of $119.0 million during the year ended December 31, 2022.

The increase was primarily driven by taxes paid on the gain on sales of Affiliates and discontinued operations of $163.0 million in 2021, as well as changes in operating assets and liabilities offset by changes in net income period over period.

Net cash provided by operating activities of continuing operations excluding consolidated Funds decreased $(175.0) million, from net cash provided of $170.6 million during the year ended December 31, 2020 to net cash used of $(4.4) million during the year ended December 31, 2021.

The decrease was primarily driven by taxes paid on the gain on sales of Affiliates and discontinued operations of $163.0 million in 2021, as well as changes in operating assets and liabilities offset by changes in net income period over period.

Net cash provided by operating activities of continuing operations excluding consolidated Funds increased $253.9 million, from net cash used of $(83.3) million during the year ended December 31, 2019 to net cash provided of $170.6 million during the year ended December 31, 2020.

The increase was primarily driven by changes in operating assets and liabilities period over period, driven largely by the Landmark earnout that was settled in the year ended December 31, 2019.

Net cash provided by investing activities of continuing operations increased $674.4 million, from $361.6 million provided in the year ended December 31, 2020 to $1,036.0 million provided in the year ended December 31, 2021.

The increase was driven by sale proceeds received from the sales of Landmark, TSW, Campbell Global and ICM in 2021.

Net cash provided by investing activities of continuing operations increased $343.2 million, from $18.4 million provided in the year ended December 31, 2019 to $361.6 million provided in the year ended December 31, 2020.

The increase was driven by sale proceeds received from the sale of Barrow Hanley in 2020.

Net cash provided by (used in) investing activities of continuing operations was $(13.0) million, $1,036.0 million and $361.6 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Fluctuations are principally due to the timing of sale proceeds received from the sales of Landmark, TSW, Campbell Global and ICM totaling $1,010.9 million in 2021 and the sale of Barrow totaling $295.2 million in 2020.

Fluctuations are also impacted by the timing of investments or redemptions of seed capital.

Net cash (used in) received from the (purchase) and sale of investments was $3.1 million, $40.2 million and $92.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Net cash used in financing activities, excluding consolidated Funds, consists of share repurchases, third-party borrowings, payments made to OM plc, withholding tax payments on stock option exercises and dividend payments.

2 unchanged sentences

We paid $(103.2) million for share repurchases in 2022 compared to $(1,121.7) million in 2021 and $(46.0) million in 2020.

In 2020, we paid down net $(175.0) million against third party borrowings compared to a net draw on third party borrowings of $175.0 million in 2019.

In 2022, we paid down net $(125.0) million against third party borrowings compared to $0.0 million in 2021 and $(175.0) million in 2020.

Working Capital and Long-Term Debt

8 unchanged sentences

Investments 18.8 4.6 24.7

Other current assets (2)

Total current assets $ 251.7 $ 428.7 $ 505.9

9 unchanged sentences

(1) Excludes the non-controlling interest portion of consolidated Funds.

(2) Includes income taxes receivable.

(3) Includes the short-term portion of our third-party borrowings.

1 unchanged sentence

On January 18, 2022 we completed the full redemption of the 2031 Notes.

(4) Includes the short-term portion of our lease liability and accrued income taxes payable.

Excluded from other short-term liabilities for each of the years presented is an income tax reserve relating to net operating losses that does not represent a current obligation of the Company.

11 unchanged sentences

2021 Interest rate Maturity

Revolving credit facility:

Revolving credit facility $ — $ — Variable rate March 7, 2025

Total revolving credit facility $ — $ —

Third party borrowings:

3 unchanged sentences

Total third party borrowings $ 273.5 $ 394.9

(1) On December 17, 2021, we issued a notice for the full redemption of the $125 million aggregate principal amount outstanding for the 5.125% Senior Notes Due 2031.

On January 18, 2022 we completed the full redemption of the 2031 Notes.

(1) On January 18, 2022, we completed the full redemption of the $125.0 million aggregate principal amount outstanding of our 5.125% Senior Notes due August 1, 2031.

As a result of this transaction, we recorded $(3.2) million of loss on extinguishment of debt within the Consolidated Statements of Operations for the year ended December 31, 2022.

Third party borrowings

Revolving Credit Facility

On September 3, 2020, we along with 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”).

The Amendment included changes to the Original Credit Agreement to permit the sale of the Company's equity interests in Barrow Hanley (the “Barrow Hanley Sale”).

Under the Original Credit Agreement, the Barrow Hanley Sale required consent of the Lenders given that Barrow Hanley accounted for more than 10% of our consolidated Adjusted EBITDA.

The Amendment provided that, effective immediately upon the consummation of the Barrow Hanley Sale, the Lenders commitments under the Credit Agreement would be $150 million.

The Barrow Hanley Sale was consummated on November 17, 2020 and the Lenders’ commitments under the Amended Credit Agreement were reduced to $150 million from thereon.

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, we, Royal Bank of Canada, BMO Harris Bank, N.A., Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., Bank of America N.A., the Bank of New York Mellon and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (the “Acadian Credit Agreement”), which replaced our 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.

1 unchanged sentence

At December 31, 2022, Acadian’s Leverage Ratio was 0x and Acadian’s Interest Coverage Ratio was 107x.

In July 2016, we issued $275.0 million of 4.80% Senior Notes due 2026 (the “2026 Notes”) and $125.0 million of 5.125% Senior Notes due 2031.

We used the net proceeds of these offerings to finance the acquisition of Landmark in August 2016, purchase seed capital from OM plc, settle a Treasury rate lock contract and pay down the balance of the previous revolving credit facility.

4.80% Senior Notes Due July 2026

In July 2016, we issued $275.0 million of 4.80% Senior Notes due 2026 (the “2026 Notes”).

The $275.0 million 2026 Notes were sold at a discount of $(0.5) million and we incurred debt issuance costs of $(3.0) million, which are being amortized to interest expense over the ten-year term.

The 2026 Notes can be redeemed at any time prior to the scheduled maturity in part or in aggregate, at the greater of 100% of the principal amount at that time or the sum of the remaining scheduled payments discounted at the treasury rate (as defined) plus 0.5%, together with any related accrued and unpaid interest.

5.125% Senior Notes Due August 2031

The $125.0 million 2031 Notes incurred debt issuance costs of $(4.3) million, which are being amortized to interest expense over the fifteen-year term.

The 2031 Notes can be redeemed at any time, on or after August 1, 2019, at a redemption price equal to 100.0% of the principal amount together with any related accrued and unpaid interest.

On December 17, 2021, we issued a notice for the full redemption of the $125 million aggregate principal amount outstanding.

On January 18, 2022 we completed the full redemption of the 2031 Notes.

The redemption price for the 2031 Notes was $1,011.53 per $1,000.00 of principal amount of the 2031 Notes, which is equal to 100% of the principal amount, plus accrued and unpaid interest on the principal amount being redeemed up to, but excluding, the date of redemption.

The aggregate interest paid upon redemption was approximately $1.4 million.

As of December 31, 2022, we were in compliance with the required covenants related to borrowings and debt facilities.

11 unchanged sentences

GAAP based on the terms and conditions attached to these interests.

Profit interests represent the value of Affiliate key employee-owned equity that may under certain circumstances be repurchased by us that is not considered an equity award under U.S.

Affiliate profit interests liability represent the value of Affiliate key employee-owned equity that may under certain circumstances be repurchased by us that is not considered an equity award under U.S.

GAAP, but rather a form of compensation arrangement, based on the terms and conditions attached to these interests.

Our obligation in any given period in respect of funding these potential repurchases of Affiliate equity is limited to only that portion that may be put to us by Affiliate key employees, which is typically capped annually under the terms of these arrangements such that we are not required to repurchase more than we can reasonably recycle by re-granting the interests in lieu of cash variable compensation owed to Affiliate key employees.

Certain of our key employees are eligible to participate in our voluntary deferral plan, or VDP, which provides our senior personnel the opportunity to voluntarily defer a portion of their compensation.

Certain of our and our Affiliate’s key employees are eligible to participate in our voluntary deferral plan, or VDP, which provides our senior personnel the opportunity to voluntarily defer a portion of their compensation.

There is a voluntary deferral plan investment balance included in investments on the Consolidated Balance Sheets that corresponds to this deferral liability.

32 unchanged sentences

Economic net income $ 81.6 $ 118.3 88.3

(1) Included in restructuring for the year ended December 31, 2021 are $3.8 million of restructuring costs at the Center and Affiliates, $1.2 million costs associated with the transfer of an insurance policy from our former Parent, and the gain on sale of Affiliates of $48.6 million.

(1) Included in restructuring for the year ended December 31, 2022 are $0.1 million of restructuring costs and $1.2 million costs associated with the transfer of an insurance policy from our former Parent.

Included in restructuring for the year ended December 31, 2021 are $3.8 million of restructuring costs at the Center and Affiliates, $1.2 million costs associated with the transfer of an insurance policy from our former Parent and the gain on sale of Affiliates of $48.6 million.

Included in restructuring for the year ended December 31, 2019 are $6.7 million of restructuring costs at the Center and Affiliates and $2.5 million of costs incurred in connection with our redomicile to the U.S.

(2) The years ended December 31, 2021 and 2020 include non-cash equity-based award amortization expense.

Included in restructuring for the year ended December 31, 2020 are $9.4 million of restructuring costs at the Center and Affiliates and $1.6 million of costs associated with the transfer of an insurance policy from our former Parent and the gain on sale of Affiliates of $241.3 million.

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

For a full discussion regarding the items excluded from Adjusted EBITDA above and the calculation of economic net income, refer to “—Non-GAAP Supplemental Performance Measure—Economic Net Income and Segment Analysis.”

22 unchanged sentences

Third party borrowings $ 275.0 $ — $ — $ 275.0 $ —

$ 400.0 $ 125.0 $ — $ 275.0 $ —

Lease obligations 90.3 9.2 16.5 15.8 48.8

Co-investment obligations 0.2 0.2 — — —

Other liabilities (1)

1.1 1.1 — — —

Maximum Affiliate equity and profits interests repurchase obligations (2)

1 unchanged sentence

Total contractual obligations $ 385.8 $ 13.8 $ 21.9 $ 294.7 $ 55.4

(1) Represents amounts due to OM plc under the co-investment deed and related taxes.

(2) Represents amortized amounts held by Acadian key employees.

1 unchanged sentence

Any equity or profits interests repurchased by us are used to fund a portion of variable compensation awards resulting in savings in cash variable compensation that offset the negative cash effect of repurchasing the equity.

(2) On December 17, 2021, we issued a notice for the full redemption of the $125 million aggregate principal amount outstanding for the 5.125% Senior Notes Due 2031.

On January 18, 2022 we completed the full redemption of these Senior Notes.

Critical Accounting Policies and Estimates

15 unchanged sentences

Awards of equity made to Affiliate key employees are accounted for as cash-settled, with the fair value recognized as compensation expense over the requisite service period, with a corresponding liability carried within other compensation liabilities on the Consolidated Balance Sheets until the award is settled by us.

The fair values of the liabilities are determined with the assistance of third party valuation specialists using discounted cash flow analyses which incorporate assumptions for the forecasted earnings information, market risk adjustments, discount rates and post-vesting restrictions.

The fair values of the liabilities are determined with the assistance of third party valuation specialists using discounted cash flow analyses which incorporate assumptions for the forecasted earnings information, growth rates, market risk adjustments, discount rates, when award holders maximize value and post-vesting restrictions.

While we believe all assumptions used in determining the fair value of the liabilities are reasonable and appropriate, certain assumptions are subjective and changes in these assumptions could result in different fair value amounts.

7 unchanged sentences

In assessing whether a valuation allowance should be established against a deferred tax asset, we consider the nature, frequency and severity of recent losses, forecasts of future profitability, the duration of statutory carryback and carry forward periods, among other factors.

The deferred tax assets decreased by $98.5 million during the year due to the utilization of deferred tax assets in connection with the sale of the Company’s interests in Landmark and TSW.

We utilize a specific recognition threshold and measurement attribute for the Consolidated Financial Statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

5 unchanged sentences

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-K

Item 7. Management’s Discussion and Analysis