What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-28 compared with 2022-02-28 · 224 added, 430 removed, 1342 unchanged (33% of the section changed)

32 unchanged sentences

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the fair value measurement of the cash-settled affiliate awards liability

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company completed the sale of all its interests in Landmark Partners, LLC (Landmark) on June 2, 2021.

The Company recognized a gain on disposal of discontinued operations of $505.8 million.

Prior to the sale, the Company recorded liabilities for cash-settled equity awards made to certain affiliate key employees.

The liability for these awards was revalued each reporting period to its fair value.

Report of Independent Registered Public Accounting Firm

We identified the assessment of the fair value measurement of the cash-settled affiliate awards liability, which was one of the inputs used in determining the gain on disposal, as a critical audit matter.

Complex and subjective auditor judgment was required in evaluating the methodologies and key assumptions used in determining the fair value of the liability related to the cash-settled affiliate awards.

The significant assumptions that required complex and subjective auditor judgment included forecasted earnings, market risk adjustments, discount rates, and adjustments to reflect the impact of post-vesting restrictions.

Minor changes to these assumptions could have had an effect on the Company’s determination of the fair value of the cash-settled affiliate awards liability and impact the gain on disposal of discontinued operations related to Landmark.

Assessment of the fair value measurement of the cash-settled affiliate awards liability

As discussed in Notes 2, 12 and 19 to the consolidated financial statements, the Company has issued cash-settled equity awards to certain key employees of an affiliate which are liability classified.

The total liability for these awards was $19.4 million at December 31, 2022.

The liability is remeasured each reporting period to its fair value.

The fair value is determined using discounted cash flow analysis which incorporate assumptions for the forecasted earnings information, growth rates, market risk adjustments, discount rates, and when award holders maximize value subject to post-vesting restrictions.

We identified the assessment of the fair value measurement of the cash-settled affiliate awards liability as a critical audit matter.

Complex and subjective auditor judgment was required in evaluating the methodology and key assumptions used in determining the fair value of the liability related to the cash-settled affiliate awards.

The significant assumptions that required complex and subjective auditor judgment include forecasted earnings, growth rates, market risk adjustments, discount rates, and adjustments to reflect the impact of post-vesting restrictions and when award holders will maximize value.

Changes to these assumptions could have had an effect on the Company’s determination of the fair value of the cash-settled affiliate awards liability.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls over the Company’s process related to the fair value measurement of the cash-settled affiliate awards liability, including controls over the significant assumptions noted above.

We compared forecasted earnings to internal financial forecasts and historical results.

We also compared revenue growth rates used in developing the forecasted earnings to third-party data.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process to determine the fair value of the cash-settled affiliate awards liability, including controls over the significant assumptions noted above.

We compared forecasted earnings and growth rates to internal financial forecasts and historical results.

We also compared certain inputs used in developing the forecasted earnings and growth rates to third party data.

We held discussions with finance personnel of the Company to further evaluate the forecasted earnings used in the discounted cash flow models.

We evaluated adjustments to reflect the impact of post-vesting restrictions on awards by comparing the restrictions to underlying plan documents and assessing when award holders maximize value.

We evaluated the mathematical accuracy of the computations used to determine the fair value of the liability and compared the calculated fair values to the amounts recorded.

We evaluated adjustments to reflect the impact of post-vesting restrictions on awards by comparing the restrictions to underlying plan documents and also assess that puts occur when award holders maximize value.

We involved valuation professionals with specialized skills and knowledge, who assisted in:

• evaluating whether the methodology used to calculate the fair value of the awards was appropriate

• performing independent calculations of market risk adjustments using a combination of data that was independently obtained from third-party sources and data obtained from the previous transaction involving Landmark

• performing calculations of market risk adjustments using data that was independently obtained or otherwise corroborated

• evaluating the discount rates used by the Company by comparing them against a discount rate range that was developed using publicly available market data

• performing independent calculations of the fair value of the liability using the Company’s forecasted earnings and a combination of independent assumptions and Company assumptions and comparing the result to the amount recorded by the Company.

• performing calculations of the fair value of the liability using the Company’s forecasted earnings and a combination of independent assumptions and Company assumptions and comparing the result to the amount recorded by the Company.

We have served as the Company’s auditor since 2014.

33 unchanged sentences

Cash and cash equivalents $ 108.4 $ 252.1

Restricted cash — 1.6

Investment advisory fees receivable 122.5 167.1

2 unchanged sentences

Right of use assets 59.9 65.1

Investments (includes balances reported at fair value of $ 54.5 and $ 88.0 )

Investments 48.4 54.5

Goodwill 20.3 20.3

1 unchanged sentence

Deferred tax assets 64.7 72.4

Assets held for sale — 326.8

Consolidated Funds’ assets held for sale — 114.3

Assets of consolidated Funds:

Cash and cash equivalents, restricted 12.8 —

Investments 1.9 —

Other assets 2.4 —

Total assets $ 518.7 $ 714.8

6 unchanged sentences

Other liabilities 1.1 2.5

Revolving credit facility — —

Third party borrowings 273.5 394.9

Liabilities held for sale — 313.3

Liabilities of consolidated Funds:

Accounts payable and accrued expenses 0.3 —

Derivative liabilities at fair value 2.2 —

Total liabilities 540.3 732.4

Commitments and contingencies

Redeemable non-controlling interests in consolidated Funds — —

Common stock (par value $ 0.001 ;

3 unchanged sentences

Accumulated other comprehensive loss ( 10.6 ) ( 10.8 )

Non-controlling interests — 1.7

Non-controlling interests in consolidated Funds — —

22 unchanged sentences

Non-operating income and (expense):

Investment income 8.3 4.9 16.8

Investment income (loss) 0.2 8.3 4.9

Interest income 0.8 0.2 0.6

Interest expense ( 20.5 ) ( 24.8 ) ( 28.5 )

Loss on extinguishment of debt ( 3.2 ) — —

Gain on sale of subsidiaries — 48.6 241.3

45 unchanged sentences

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

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

Repurchase of common stock ( 6.4 ) — ( 46.0 ) — — ( 46.0 ) — — ( 46.0 ) — ( 46.0 )

4 unchanged sentences

Other changes in non-controlling interests — — — — — — 0.4 — 0.4 — 0.4

Net consolidation (de-consolidation) of Funds — — — — — — — — — ( 236.0 ) ( 236.0 )

Other movements — — 1.4 — — 1.4 — — 1.4 — 1.4

Dividends ($ 0.13 per share)

3 unchanged sentences

Issuance of common stock 1.6 — 2.7 — — 2.7 — — 2.7 — 2.7

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

Repurchase of common stock ( 35.6 ) ( 0.1 ) ( 465.7 ) ( 655.9 ) — ( 1,121.7 ) — — ( 1,121.7 ) — ( 1,121.7 )

3 unchanged sentences

Amortization related to derivative securities, net of tax — — — — 2.4 2.4 — — 2.4 — 2.4

Withholding tax related to stock option exercise ( 31.3 ) ( 31.3 ) ( 31.3 ) ( 31.3 )

Other changes in non-controlling interests — — — — — — ( 5.5 ) — ( 5.5 ) — ( 5.5 )

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

Other movements — — 1.4 — — 1.4 — — 1.4 — 1.4

Dividends ($ 0.04 per share)

4 unchanged sentences

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

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

Equity-based compensation — — 2.4 — — 2.4 — — 2.4 — 2.4

2 unchanged sentences

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

Other changes in non-controlling interests — — — — — — ( 5.5 ) — ( 5.5 ) — ( 5.5 )

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

Dividends ($ 0.04 per share)

16 unchanged sentences

Gain on sale of discontinued operations — ( 691.0 ) —

Loss on extinguishment of debt 3.2 — —

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

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Proceeds from stock issuance — 2.7 —

Payment to OM plc for DTA Deed — — ( 32.7 )

Payment to OM plc for co-investment redemptions ( 1.1 ) ( 1.5 ) ( 0.3 )

23 unchanged sentences

Consolidation (de-consolidation) of Funds $ — $ — $ ( 236.0 )

Payable for securities purchased by a consolidated Fund $ — $ — $ 4.0

See Notes to Consolidated Financial Statements

7 unchanged sentences

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

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

The Company completed the disposition of certain Affiliates in 2021 and currently operates the business through one Affiliate, Acadian Asset Management LLC (“Acadian”).

Acadian comprises the Company’s Quant & Solutions reportable segment:

1 unchanged sentence

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

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

Acadian is organized as a limited liability company.

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

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

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

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

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

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

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

See Note 3, Divestitures, Held for Sale and Discontinued Operations and Note 23, Segments for further discussion.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

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

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

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

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

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

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

Also, the ICM operating segment has been reclassified to “Other” within the Company’s segment reporting for the year ended December 31, 2021.

See Note 3, Divestitures, Held for Sale and Discontinued Operations and Note 23, Segments for further discussion.

The corporate head office is included within the Other category, along with the Company’s previously disposed affiliates, Campbell Global, LLC (“Campbell Global”) for the years ended December 31, 2021 and 2020, and Investment Counselors of Maryland (“ICM”) for the year ended December 31, 2021.

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

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

On July 12, 2019, the BrightSphere corporate group, which consisted of BrightSphere Investment Group plc, a public company limited by shares incorporated under the laws of England and Wales and its operating subsidiaries (such operating subsidiaries and the holding company collectively, the “BrightSphere Group”), completed a redomestication, resulting in BrightSphere Investment Group Inc., a Delaware corporation, becoming the publicly traded parent company of BrightSphere Group (the “Redomestication”).

The scheme of arrangement pursuant to which the Redomestication was effected was approved by the Company’s shareholders and the High Court of Justice of England and Wales.

Effective as of the close of business on July 12, 2019, all issued ordinary shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc.

As a result, all outstanding shareholders of BrightSphere Investment Group plc became common stockholders of BrightSphere Investment Group Inc.

The common stock of BrightSphere Investment Group Inc.

began trading on July 15, 2019, and the Company’s trading symbol on the NYSE remained unchanged as “BSIG.”

BrightSphere Investment Group Inc.

10 unchanged sentences

In accordance therewith, on December 21, 2021, the Company consummated its repurchase of 690,000 shares of common stock from Paulson and its affiliates at $ 31.50 per share, following which Paulson and its affiliates owned 19.99 % of the Company’s total outstanding shares of common stock.

For the year ended December 31, 2022, a reduction to retained deficit in the amount of $ 103.2 million was recorded for share repurchases.

For the year ended December 31, 2021, a reduction to additional paid-in capital in the amount of $ 465.7 million was recorded for share repurchases until it was depleted, with the remaining $ 655.9 million of share repurchases recorded to retained deficit.

For the year ended December 31, 2021, the Company did not repurchase any shares of common stock in the open market under the share repurchase program.

For the year ended December 31, 2020, the Company repurchased 6,412,663 shares at a weighted average price of $ 7.15 per share, or approximately $ 46.0 million in total, including commissions.

For the year ended December 31, 2020, a reduction to additional paid-in capital in the amount of $ 46.0 million was recorded for share repurchases.

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

For the year ended December 31, 2021, the Company did not repurchase any shares of common stock in the open market other than the tender offer noted above.

In 2020, the Company repurchased 6,412,663 shares at a weighted average price of $ 7.15 per share, or approximately $ 46.0 million in total, including commissions.

12 unchanged sentences

however, material intercompany balances and transactions among the Company, its consolidated Affiliates and consolidated Funds are eliminated in consolidation.

As a result of the Redomestication on July 12, 2019, discussed in Note 1, the Company revised its equity accounts to reflect a U.S.

domiciled company presentation on the Consolidated Statements of Changes in Shareholders’ equity and the Consolidated Balance Sheets for all periods presented.

The previously issued ordinary shares of BrightSphere Investment Group plc were exchanged on a one-for-one basis for newly issued shares of common stock of BrightSphere Investment Group Inc.

The Redomestication and related internal reorganization was accounted for consistent with a reorganization of entities under common control in accordance with Accounting Standards Codification (“ASC”) 805 Business Combinations .

Accordingly, the transfer of the assets and liabilities and exchange of shares was recorded in the new entity (BrightSphere Investment Group Inc.) at their carrying amounts from the transferring entity (BrightSphere Investment Group plc) at the date of transfer.

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

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

The transaction closed on July 19, 2021.

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

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

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

The transaction closed on June 2, 2021.

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

As a result, the Company has reclassified the financial results of Landmark and consolidated Landmark Funds to income from discontinued operations, net of tax in the Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019.

Cash flows from discontinued operations are presented in the Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

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

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

The transaction closed on July 22, 2021.

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

As a result, the Company has reclassified the financial results of TSW to income from discontinued operations, net of tax in the Consolidated Statements of Operations for the years ended December 31, 2021, 2020, and 2019.

Cash flows from discontinued operations are presented in the Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020, and 2019.

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

The transaction closed on August 31, 2021.

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

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

Revenue recognition

18 unchanged sentences

Performance fees are generally assessed as a percentage of the investment performance realized on a client’s account.

Additionally, separate accounts or other products which primarily earn management fees are potentially subject to performance adjustments up or down based on investment performance versus benchmark.

Performance fees, including those that are subject to clawback, are recognized when they (i) become billable to customers (based on contractual terms of agreements) and (ii) are not subject to contingent repayment.

36 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.

The fair value 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 value 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.

The liabilities are revalued at each reporting period, with any movements recorded within compensation expense.

29 unchanged sentences

Valuation of investments held at fair value

Valuation of Fund investments, including Timber Funds, is evaluated pursuant to the fair value methodology discussed below.

Valuation of Fund investments is evaluated pursuant to the fair value methodology discussed below.

Other investments are categorized as trading and recorded at estimated fair value.

8 unchanged sentences

Expenses are recorded on an accrual basis.

Certain Funds may sell a security they do not own in anticipation of a decline in the fair value of that security.

When a Fund sells a security short, it must borrow the security sold short and deliver it to the broker-dealer through which it made the short sale.

The short sales are secured by the long portfolio and available cash.

The Fund records a gain, limited to the price at which the Fund sold the security short, or a loss, unlimited in size, upon the termination of a short sale.

The amount of the gain or loss will be equal to the proceeds received in entering into the short sale less the cost of buying back the short security to close the short position.

While the transaction is open, the Fund will incur an expense for any accrued dividends or interest which is paid to the lender of the securities.

These short sales may involve a level of risk in excess of the liability recognized in the accompanying Consolidated Balance Sheets.

The extent of such risk cannot be quantified.

Funds’ Derivatives

Certain Funds may use derivative instruments.

The Funds’ derivative instruments may include foreign currency exchange contracts, credit default swaps, equity swaps, interest rate swaps, financial futures contracts and warrants.

The fair values of derivative instruments are recorded as other assets of consolidated Funds or other liabilities of consolidated Funds on the Company’s Consolidated Balance Sheets.

The Funds have used foreign exchange forwards to hedge the risk of movement in exchange rates on financial assets on a limited basis.

The Company’s Funds have not designated any financial instruments for hedge accounting, as defined in the accounting literature, during the periods presented.

The gains or losses on Fund’s derivative instruments not designated for hedge accounting are included as net consolidated Funds gains or losses in the Company’s Consolidated Statements of Operations.

BrightSphere Investment Group Inc.

11 unchanged sentences

Equity method investments includes the Company’s former Affiliate, ICM, as well as all unconsolidated Funds over which the Company exercises significant influence.

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

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

The Company’s share of earnings from equity method investments is included in investment income in the Consolidated Statements of Operations.

The carrying amounts of equity method investments are reflected in Investments and assets of consolidated Funds in the Consolidated Balance Sheets.

The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

The difference between the carrying value and its estimated fair value is recognized as impairment when the loss is deemed other than temporary.

Fair value measurements

10 unchanged sentences

GAAP, the Company does not adjust the quoted price for these investments.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

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

• Level II—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies utilizing observable market inputs other than quoted prices.

3 unchanged sentences

Investments that are included in this category generally include general and limited partner interests in timber funds.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

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

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

4 unchanged sentences

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

The years ended December 31, 2021 and 2020 were characterized by heightened uncertainty due to the COVID-19 pandemic which could impact estimates and assumptions made by management.

Actual results could differ significantly from those estimates.

8 unchanged sentences

The ineffective portion of the gain or loss is recognized in earnings immediately.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

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

Cash and cash equivalents

1 unchanged sentence

Cash equivalents are stated at cost, which approximates market value due to the short-term maturity of these investments.

Restricted cash at December 31, 2020 represents amounts held in escrow related to the Company's disposition of a former affiliate, Barrow, Hanley, Mewhinney & Strauss (“Barrow Hanley”).

Cash held by consolidated Funds is not available to fund general liquidity needs of the Company and is therefore also classified as restricted cash.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

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

Investment advisory fees receivable

46 unchanged sentences

Unless otherwise noted, discussion in the Notes to Consolidated Financial Statements refers to the Company's continuing operations.

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

See Note 3, Discontinued Operations for additional information.

Contracts are evaluated at inception to determine whether such contract is or contains a lease.

32 unchanged sentences

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

The Company’s deferred tax assets have been attributable to interest deductions, investment in partnerships, and employee compensation.

The Company’s deferred tax assets have been attributable to investment in partnerships and employee compensation.

Deferred income tax assets are subject to a valuation allowance if, in management’s opinion, it is not more-likely-than-not that these benefits will be realized.

29 unchanged sentences

The costs included in a restructuring liability are those costs that are either incremental or incurred as a direct result of the plan, or are the result of a continuing contractual obligation with no continuing economic benefit to the Company, or a penalty incurred to cancel the contractual obligation.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

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

Recently adopted accounting standards

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

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

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

The Company adopted the standard on January 1, 2021.

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

New accounting standards not yet adopted

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

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

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

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

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

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

2 unchanged sentences

December 31, 2022 and 2021

3) Divestitures, Held for Sale and Discontinued Operations

3) Discontinued Operations

Landmark Partners

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

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

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

1 unchanged sentence

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

The Company utilized $ 88.2 million of its deferred tax asset in connection with the sale of all its interests in Landmark.

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

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

Thompson Siegel & Walmsley, LLC

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

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

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

1 unchanged sentence

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

The Company utilized $ 10.2 million of its deferred tax asset in connection with the sale of all its interests in TSW.

Campbell Global

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

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

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

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

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

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

BrightSphere Investment Group Inc.

1 unchanged sentence

December 31, 2022 and 2021

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

The major classes of assets and liabilities held for sale consisted of the following at December 31 (in millions):

Cash and cash equivalents $ — $ 30.6

Investment advisory fees receivable — 12.2

Fixed assets, net — 8.8

Right of use assets — 12.1

Investments — 25.1

Intangible assets, net — 58.2

Goodwill — 161.8

Other assets — 17.5

Deferred tax assets — 0.5

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

Accounts payable and accrued expenses $ — $ 2.2

Accrued incentive compensation — 42.5

Other compensation liabilities — 254.2

Operating lease liabilities — 13.1

Other liabilities — 1.3

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

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

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

3) Discontinued Operations (cont.)

The major classes of revenue and expenses constituting net income from discontinued operations attributable to controlling interests for Landmark and TSW in the Consolidated Statements of Operations for the years ended December 31 are as follows (in millions):

13 unchanged sentences

Income from discontinued operations, net of tax — 77.3 67.8

Gain on disposal, net of tax of $ 253.4

Gain on disposal, net of tax of $ 0.0 , $ 253.4 , and $ 0.0

Total discontinued operations — 768.3 67.8

4 unchanged sentences

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

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

The criteria for discontinued operations accounting treatment were met.

The consolidated Funds’ investments gains from discontinued operations, net of tax, attributable to controlling interests was $ 0.0 million , $ 0.0 million , and $ 6.6 million in the Company’s Consolidated Statement of Operations for the years ended December 31, 2022, 2021 and 2020, respectively.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements

December 31, 2021 and 2020

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

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

Cash and cash equivalents $ — $ 0.6

Equity-accounted investments (1)

Consolidated Funds’ assets held for sale $ — $ 114.3

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

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

Other divestitures

Investment Counselors of Maryland

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

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

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

BrightSphere International Ltd.

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

to Perpetual U.S.

Holdings Company Inc.

Barrow, Hanley, Mewhinney & Strauss LLC

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

2 unchanged sentences

Investments are comprised of the following at December 31 (in millions):

Other investments held at fair value 9.5 40.0

Investments related to long-term incentive compensation plans held at fair value 45.0 48.0

Total investments held at fair value $ 54.5 $ 88.0

Equity-accounted investment in Affiliate — 2.0

Investments of consolidated Funds held at fair value

Other investments 8.4 9.5

Investments related to long-term incentive compensation plans 40.0 45.0

Total investments per Consolidated Balance Sheets $ 50.3 $ 54.5

2 unchanged sentences

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

$ 0.2 $ 5.7 $ 2.0

Earnings from equity-accounted investment in Affiliate — 2.6 2.9

1 unchanged sentence

$ 0.2 $ 8.3 $ 4.9

Investment gains (losses) on net consolidated funds is comprised of the following for the years ended December 31 (in millions):

2022 2021 2020

Realized and unrealized gains (losses) on consolidated Funds held at fair value

$ ( 0.4 ) $ — $ ( 5.2 )

Total net consolidated Funds’ investment gains (losses) per Consolidated Statements of Operations

$ ( 0.4 ) $ — $ ( 5.2 )

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

5) Fair Value Measurements

4 unchanged sentences

(Level III) Uncategorized Total value,

Assets of BSIG and consolidated Funds (1)

Derivatives $ 0.3 $ 1.6 $ — $ — $ 1.9

Consolidated Funds total 0.3 1.6 — — 1.9

Investments in separate accounts (2)

4 unchanged sentences

— — — 4.2 4.2

BSIG total 44.2 — — 4.2 48.4

Total fair value assets $ 44.5 $ 1.6 $ — $ 4.2 $ 50.3

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

5) Fair Value Measurements (cont.)

Liabilities of consolidated Funds (1)

Derivatives $ ( 0.2 ) $ ( 2.0 ) $ — $ — $ ( 2.2 )

Consolidated Funds total ( 0.2 ) ( 2.0 ) — — ( 2.2 )

Total fair value liabilities $ ( 0.2 ) $ ( 2.0 ) $ — $ — $ ( 2.2 )

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

10 unchanged sentences

Total fair value assets $ 49.6 $ — $ — $ 4.9 $ 54.5

(1) Assets measured at fair value are comprised of financial investments managed by the Company’s Affiliates.

Equity securities, including common and preferred stock, and short-term investment funds which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation.

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

(1) Assets and liabilities measured at fair value are comprised of financial investments managed by the Company’s Affiliates.

Derivatives which are traded on a national securities exchange are stated at the last reported sales price on the day of valuation.

To the extent these securities are actively traded and valuation adjustments are not

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

5) Fair Value Measurements (cont.)

applied, they are classified as Level I.

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

6 unchanged sentences

(2) Investments in separate accounts of $ 4.2 million at December 31, 2022 consist of approximately 100 % of e quity securities and other investments.

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

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

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

5) Fair Value Measurements (cont.)

(3) Investments related to long-term incentive compensation plans of $ 40.0 million and $ 45.0 million at December 31, 2022 and December 31, 2021, respectively, are investments in publicly registered daily redeemable funds (some managed by Affiliates), which the Company has classified as trading securities and valued using the published price as of the measurement dates.

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

(4) The uncategorized amounts of $ 4.9 million and $ 16.1 million at December 31, 2021 and December 31, 2020, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds advised by Affiliates and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

(4) The uncategorized amounts of $ 4.2 million and $ 4.9 million at December 31, 2022 and December 31, 2021, respectively, relate to investments in unconsolidated Funds which consist primarily of investments in Funds and are valued using NAV which the Company relies on to determine their fair value as a practical expedient and has therefore not classified these investments in the fair value hierarchy.

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

3 unchanged sentences

The real estate investment Funds of $ 4.1 million and $ 4.8 million at December 31, 2022 and December 31, 2021, respectively, are subject to longer than monthly or quarterly redemption restrictions, and due to their nature, distributions are received only as cash flows are generated from underlying assets over the life of the Funds.

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

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

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

1 unchanged sentence

For certain properties and loans, the valuation process may also include a valuation by independent appraisers.

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

Investments in unconsolidated Funds categorized as Level III of $ 0.0 million and $ 2.6 million at December 31, 2021 and December 31, 2020, respectively, related to investments in Forestry Funds advised by Affiliates and are valued by the general partner of those Funds.

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

BrightSphere Investment Group Inc.

2 unchanged sentences

5) Fair Value Measurements (cont.)

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

The following table reconciles the opening balances of Level III financial assets to closing balances at December 31 (in millions):

8 unchanged sentences

6) Variable Interest Entities

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

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

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

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

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

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

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

1 unchanged sentence

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

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

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

Total Assets $ — $ 114.3

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

BrightSphere Investment Group Inc.

2 unchanged sentences

6) Variable Interest Entities (cont.)

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

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

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

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

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

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

Investments at fair value $ 1.9 $ —

Other assets of consolidated Funds 15.2 —

Total Assets $ 17.1 $ —

Liabilities of consolidated Funds $ 2.5 $ —

Total Liabilities $ 2.5 $ —

“Investments at fair value” consist of investments in derivative securities.

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

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

Any debt or liabilities held by consolidated Funds have no recourse to the Company's general credit.

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

7 unchanged sentences

Maximum risk of loss (1)

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

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

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

BrightSphere Investment Group Inc.

12 unchanged sentences

The Company disposed of property, plant, and equipment with a cost basis of $ 9.7 million and accumulated depreciation of $( 9.7 ) million during the year ended December 31, 2022.

These disposals included leasehold improvements and other assets.

There was no gain or loss on disposals recorded.

The Company also disposed of property, plant, and equipment related to divestitures with a cost basis of $ 8.1 million and accumulated depreciation of $( 2.6 ) million during the year ended December 31, 2021.

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

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

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

These disposals included leasehold improvements, office equipment, furniture and fixtures and software.

There were no gains or losses on disposals recorded.

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

The operating leases have remaining lease terms of 1 to 11 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate leases within 1 year.

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

6 unchanged sentences

ROU asset obtained in exchange for new operating lease liabilities

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

For the years ended December 31, 2022 and 2021, the weighted average remaining lease term was 10.5 years and 11.3 years, respectively, and the weighted average discount rate was 3.40 % and 3.35 %, respectively.

BrightSphere Investment Group Inc.

2 unchanged sentences

8) Leases (cont.)

For the years ended December 31, 2021 and 2020, the weighted average remaining lease term was 11.3 years and 10.0 years, respectively, and the weighted average discount rate was 3.35 % and 3.35 %, respectively.

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

4 unchanged sentences

Less imputed interest ( 14.5 )

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

9) Goodwill and Intangible Assets

The following table presents the changes in goodwill in 2022 and 2021 (in millions):

Quant & Solutions Alternatives Liquid Alpha Total

Quant & Solutions Other (1)

Goodwill $ 22.1 $ 5.0 $ 27.1

4 unchanged sentences

Disposals — — —

— — ( 76.1 ) ( 76.1 )

Goodwill 22.1 — 22.1

7 unchanged sentences

December 31, 2022 $ 20.3 $ — $ 20.3

(1) The disposal of $ 76.1 million pertains to the goodwill assigned to the Barrow Hanley reporting unit that was divested in November 2020.

Due to the decline in the Company’s assets under management for the three months ended March 31, 2020, management determined that an interim impairment assessment was necessary as of March 31, 2020 with respect to the Copper Rock Capital Partners, LLC (“Copper Rock”) reporting unit.

In the first quarter of 2020, the Company performed a quantitative impairment test for the Copper Rock reporting unit which was included within the Liquid Alpha segment prior to its disposition in July 2020.

The quantitative impairment test concluded that the fair value of the reporting unit did not exceed its carrying value.

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

The 2021 annual impairment assessment determined that no impairment existed at the annual assessment date.

(1) Comprised of goodwill allocated to Campbell Global, a former affiliate that was divested in August 2021.

BrightSphere Investment Group Inc.

1 unchanged sentence

December 31, 2022 and 2021

9) Goodwill and Intangible Assets (cont.)

The fair value of the reporting unit was estimated using the income approach, which calculates the fair value based on the present value of estimated future cash flows.

Cash flow projections are based on management’s estimates of Assets Under Management (“AUM”) growth rates, product mix and effective fee rates, taking into consideration industry and market conditions.

The discount rates used are based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics.

The Company’s quantitative impairment analysis at March 31, 2020 incorporated revised forecasts that took into account the market disruptions during the quarter and its impact on the results in future periods.

Given the significant level of uncertainty that currently exists, management also considered alternative scenarios for market and reporting unit performance over the next several years.

If the Company’s AUM are further impacted by the global economic conditions caused by COVID-19, such as adverse and significant declines in the value of global financial markets, additional impairments of goodwill or intangible assets are possible in future periods.

In connection with the divestitures of Landmark and TSW, the Company disposed of goodwill of $ 148.1 million and $ 13.7 million, respectively, during the year ended December 31, 2021.

The Company also reclassified goodwill pertaining to Landmark and TSW of $ 148.1 million and $ 13.7 million, respectively, within “Assets held for sale” as of December 31, 2020.

In connection with the divestiture of Landmark, the Company disposed of $ 55.5 million of intangible assets during the year ended December 31, 2021.

The Company also reclassified intangible assets of $ 58.2 million pertaining to Landmark within “Assets held for sale” as of December 31, 2020.

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

10) Related Party Transactions

1 unchanged sentence

Investment advisory fee receivable from unconsolidated Funds (1)

$ 23.4 $ 14.1

Total amounts due for investment advisory fee receivables from related parties $ 23.4 $ 14.1

7 unchanged sentences

These transactions are comprised of fees for advisory services and investments in unconsolidated funds.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

10) Related Party Transactions (cont.)

Other related party arrangements

6 unchanged sentences

Total accounts payable and accrued expenses $ 31.0 $ 35.2

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

12) Other Compensation Liabilities

6 unchanged sentences

Redemptions of profit sharing interests from Affiliate key employees for cash were $ 2.7 million in 2022, $ 0.0 million in 2021, and $ 4.3 million in 2020.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

13) Borrowings and Debt

3 unchanged sentences

Revolving credit facility:

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

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

$ — $ — $ — $ —

8 unchanged sentences

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

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

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

Revolving credit facility

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

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 the Company's 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.

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

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

BrightSphere Investment Group Inc.

2 unchanged sentences

13) Borrowings and Debt (cont.)

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

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

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

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

Revolving credit facility

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

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

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

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

The weighted average interest rate for the revolving credit facility was 2.64 %, 1.60 % and 2.27 % in 2022, 2021 and 2020, respectively.

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

At December 31, 2021, the Company is in compliance with these debt covenants.

In July 2016, the Company 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 (the “2031 Notes”).

4.80 % Senior Notes Due July 2026

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

In July 2016, the Company 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 the Company 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 the 100 % principal amount at that time or the sum of the remaining scheduled payments discounted at the treasury rate plus 0.5 %, together with any related accrued and unpaid interest.

5.125 % Senior Notes Due August 2031

The Company incurred debt issuance costs of $( 4.3 ) million in connection with the issuance of the $ 125.0 million 2031 Notes, 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.

The fair value of the senior notes was determined using broker quotes and any recent trading activity for each of the notes listed above, which are considered Level II inputs.

BrightSphere Investment Group Inc.

2 unchanged sentences

13) Borrowings and Debt (cont.)

The fair value of the senior notes was determined using broker quotes and any recent trading activity for each of the notes listed above, which are considered Level II inputs.

As of December 31, 2022, the aggregate maturities of debt commitments, based on their contractual terms, are as follows:

1 unchanged sentence

debt commitments

Thereafter 125.0

Total $ 275.0

1 unchanged sentence

Subsequent Events

On December 17, 2021, the Company issued a notice for the full redemption of the $ 125 million aggregate principal amount outstanding of its 5.125 % Senior Notes due August 1, 2031.

On January 18, 2022 the Company 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.

In February 2022, the Company drew down $ 125 million on the revolving credit facilit y.

In February 2023, the Company drew down $ 90 million on the revolving credit facility.

BrightSphere Investment Group Inc.

18 unchanged sentences

Total tax expense (benefit) $ 44.2 $ 50.0 $ 97.1

The Company has recognized income tax expense (benefit) related to derivative securities within other comprehensive income of $ 0.9 million, $ 0.8 million and $ 0.6 million in the years ended December 31, 2021, 2020 and 2019, respectively.

The Company has recognized income tax expense related to derivative securities within other comprehensive income of $ 1.3 million, $ 0.9 million and $ 0.8 million in the years ended December 31, 2022, 2021 and 2020, respectively.

The provision for income taxes in 2022, 2021 and 2020 included benefits of $ 0.1 million, $ 0.5 million and $ 0.4 million, respectively, related to the utilization of net operating loss carryforwards.

12 unchanged sentences

Effect of foreign operations 0.7 % 0.7 % 0.2 %

Effect of changes in tax law — % — % ( 0.4 ) %

Effect of disposal of Affiliates — % ( 0.1 ) % 3.6 %

Effect of income from non-controlling interest — % — % ( 0.6 ) %

Impact of increased state tax obligations to deferred tax assets ( 0.5 ) % ( 0.4 ) % ( 0.4 ) %

Impact of Redomestication to deferred tax assets — % — % ( 1.1 ) %

Other 1.1 % — % ( 0.4 ) %

Effective income tax rate for continuing operations 30.5 % 28.1 % 28.2 %

The Company’s effective income tax rate is higher than the US federal tax rate of 21% primarily due to its state tax obligations, non-deductible executive compensation and the effects of foreign operations.

In connection with the sale of its Affiliates, the Company recorded tax expense of $ 9.4 million, $ 77.6 million, and $ 0.0 million , including tax impacts of non-deductible tax items, during the years ended December 31, 2021, 2020 and 2019, respectively.

In addition, during the year ended December 31, 2021, the Company recorded income tax expense of $ 256.7 million in discontinued operations.

The Company’s effective income tax rate is higher than the US federal tax rate of 21% primarily due to its state tax obligations.

The Company reduced its liability for uncertain tax positions by $ 0.9 million, $ 3.4 million and $ 9.1 million during the years ended December 31, 2022, 2021 and 2020, respectively, due to the lapse of statute of limitations.

The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) included a provision that increased the business interest limitation under IRC Section 163(j) from 30% to 50% for tax years 2019 and 2020.

This provision allowed the Company to utilize more of the deferred tax asset related to interest expense.

In connection with the Redomestication in 2019, the Company revalued certain deferred tax assets that were transferred to the U.S.

parent from the former U.K.

These deferred tax assets are measured using applicable U.S.

and state income tax rates.

The Company’s state tax filing obligations have increased in the normal course of business and in connection with states tax law changes regarding apportionment of income.

These changes have resulted in an increase to the state income tax rate and accordingly to the state deferred tax assets.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

14) Income Taxes (cont.)

The Company has elected to treat global intangible low-taxed income (“GILTI”) taxes as period costs in the accounting and tax periods in which they are incurred.

7 unchanged sentences

It is not practical for the Company to determine the potential unrecognized deferred tax liability related to unremitted earnings due to numerous assumptions associated with the determination.

In connection with the sale of its Affiliates, the Company recorded tax expense of $ 0.0 million, $ 9.4 million, and $ 77.6 million, including tax impacts of non-deductible tax items, during the years ended December 31, 2022, 2021 and 2020, respectively.

In addition, during the year ended December 31, 2021, the Company recorded income tax expense of $ 256.7 million in discontinued operations.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

14) Income Taxes (cont.)

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes a 15% minimum tax on the adjusted financial statement income of corporations with a three taxable year average annual adjusted financial statement income in excess of $1 billion, a 1% excise tax on net stock repurchases made by publicly traded US corporations and several tax incentives to promote clean energy.

The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022.

While these tax law changes have no immediate effect and are not expected to have a material adverse effect on the Company’s results of operations going forward, the Company plans to continue to evaluate its impact as further information becomes available.

This provision allowed the Company to utilize more of the deferred tax asset related to interest expense.

Deferred tax assets and liabilities reflect the expected future tax consequences of temporary differences between the book carrying amounts and tax bases of the Company’s assets and liabilities.

4 unchanged sentences

Investment in partnerships 56.9 62.4

Intangible assets — 0.1

Employee compensation 2.4 2.7

6 unchanged sentences

Right of use assets 0.1 0.5

Investments — 3.0

Total deferred tax liabilities 0.1 0.5

Net deferred tax assets $ 64.7 $ 72.4

At December 31, 2021, the Company’s net deferred tax assets decreased as compared to December 31, 2020 primarily due to the divestitures of Landmark, TSW, Campbell, and ICM, and the redemptions of the co-investment funds.

At December 31, 2022 and 2021, the Company’s net deferred tax asset primarily relates to its basis difference in its investment in Acadian Asset Management LLC, which is treated as a partnership for federal income tax purposes.

At December 31, 2022 and 2021, the Company had available federal net operating loss carryforwards of $ 0.0 million and $ 0.1 million, respectively, which begin to expire in the next two to four-year period.

BrightSphere Investment Group Inc.

2 unchanged sentences

14) Income Taxes (cont.)

At December 31, 2021, the Company has tax attributes that carry forward for varying periods.

The Company’s federal net operating loss carryforward of $ 0.3 million originated during 2004 and 2006 and will expire over a three to five-year period.

The Company assesses whether a valuation allowance should be established against its deferred income tax assets based on consideration of all available evidence, both positive and negative, using a more likely than not standard.

In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence including the existence of cumulative income in the most recent fiscal years, changes in the business in which the Company operates, and the Company’s ability to forecast future taxable income.

13 unchanged sentences

The Company’s liability for uncertain tax positions at December 31, 2022, 2021 and 2020 includes accrued interest and penalties of $ 0.1 million, $ 0.1 million and $ 0.5 million, respectively.

The Company believes that it is reasonably possible that a decrease of up to $ 0.4 million in unrecognized tax benefits may be necessary within the next twelve months, as the result of a lapse of statute of limitations.

The Company is periodically under examination by various taxing authorities.

Examinations are inherently uncertain, may result in payment of additional taxes or the recognition of tax benefits and may be in process for extended periods of time.

At December 31, 2021, 2020 and 2019, the Company is subject to examination in two jurisdictions.

At December 31, 2022 the Company is subject to examination in two jurisdictions.

The Company and its subsidiaries file tax returns in the U.S., U.K., state, local, and other foreign jurisdictions.

1 unchanged sentence

federal, state, local, or foreign tax authorities for calendar years prior to 2018.

In the U.K., as of December 31, 2021, the Company continues to be subject to an income tax examination for calendar year 2017 but otherwise is generally no longer subject to income tax examinations for tax years before 2020.

At December 31, 2022, it is reasonably possible that the total amounts of unrecognized tax benefits will change within the next twelve months due to the expiration of statutes of limitations.

The Company estimates a decrease of up to $ 0.1 million within the next twelve months.

BrightSphere Investment Group Inc.

3 unchanged sentences

Operational commitments

The Company had unfunded commitments to invest up to approximately $ 0.2 million in co-investments as of December 31, 2021.

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

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

As a result of these dispositions, the Company no longer had any unfunded commitments to Landmark or Campbell as of December 31, 2021.

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

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

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

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

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

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

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

10 unchanged sentences

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

15) Commitments and Contingencies (cont.)

Foreign tax contingency

5 unchanged sentences

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

15) Commitments and Contingencies (cont.)

Considerations of credit risk

3 unchanged sentences

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

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

At December 31, 2021, approximately $ 176 million of the Company’s cash and cash equivalents were invested in money market funds.

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

30 unchanged sentences

December 31, 2022 and 2021

16) Earnings Per Share (cont.)

Employee options to purchase 8,970,000 shares were not included in the computation of diluted EPS for the year ended December 31, 2019 because the assumed proceeds from exercising such options exceed the average price of the common stock for the period and, therefore, the options were deemed antidilutive.

Management fees

7 unchanged sentences

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

Revenue from expense reimbursements amounted to $ 2.9 million, $ 4.6 million and $ 4.4 million for the years ended December 31, 2021, 2020 and 2019, respectively, and is recorded in other revenue in the Company’s Consolidated Statements of Operations.

There was no revenue from expense reimbursements for the year ended December 31, 2022.

Revenue from expense reimbursements amounted to $ 2.9 million and $ 4.6 million for the years ended December 31, 2021 and 2020, respectively, and is recorded in other revenue in the Company’s Consolidated Statements of Operations.

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

17) Revenue (cont.)

Disaggregation of management fee revenue

5 unchanged sentences

Liquid Alpha (1)

10.2 17.1 18.2

Management fee revenue $ 367.4 $ 433.3 $ 478.9

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

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

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

17) Revenue (cont.)

(1) The Company’s previously divested Affiliates, Barrow Hanley, Mewhinney & Strauss LLC (“Barrow”), Copper Rock Capital Partners (“Copper Rock”), and ICM are included within the Liquid Alpha segment for year ended December 31, 2020.

The ICM operating segment was reclassified to “Other” within the Company’s segment reporting for the year ended December 31, 2021.

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

See Note 3, Divestitures, Held for Sale and Discontinued Operations for further discussion and Note 23, Segments for further discussion.

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

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

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

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

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

See Note 3, Divestitures, Held for Sale and Discontinued Operations and Note 23, Segments for further discussion.

(2) The Company’s previously divested Affiliates, Campbell Global and ICM, are included within the Other category for year ended December 31, 2021.

The Company’s previously divested Affiliate, Campbell Global is included within the Other category for year ended December 31, 2020.

BrightSphere Investment Group Inc.

21 unchanged sentences

The Company accounts for these arrangements as “cash-settled” share-based payments, and accordingly a corresponding share-based payment liability is recorded.

The fair value 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.

Vested Affiliate equity liabilities are revalued at each period end until settlement date, with changes in the liabilities included within compensation expense.

25 unchanged sentences

awards Shares granted Weighted average fair value Shares granted Weighted average fair value Shares granted Weighted average fair value

RSAs — $ — — $ — 18,000 $ 10.09

RSUs 59,999 22.62 15,548 22.06 105,678 10.20

Performance-based RSUs — — — — 9,013 14.62

Stock options — — — — 2,820,000 0.65

12 unchanged sentences

The grant date fair value per share, calculated based on the closing price as quoted on the New York Stock Exchange on the measurement date, is used to determine the fair value of restricted stock awards granted to employees.

There were no RSAs granted by the Company during the year ended December 31, 2021.

There were no RSAs granted by the Company during the years ended December 31, 2022, 2021 and 2020, respectively.

Restricted stock awards under the plan generally have a vesting period of one to three years .

28 unchanged sentences

— $ — — $ — 83,092 $ 9.78

Other movements includes performance-based RSAs that did not meet the market vesting condition and did not vest during the year ended December 31, 2021.

There were no performance-based RSAs granted by the Company during the years ended December 31, 2021, 2020, and 2019, respectively.

Other movements includes performance-based RSAs that did not meet the market vesting condition and did not vest during the years ended December 31, 2021 and 2020, respectively.

There were no performance-based RSAs granted by the Company during the years ended December 31, 2022, 2021, and 2020.

BrightSphere Investment Group Inc.

9 unchanged sentences

9,013 $ 14.62 9,013 $ 14.62 9,013 $ 14.62

Granted during the year — — — — 9,013 14.62

Vested during the year ( 7,932 ) 14.62 — — — —

1 unchanged sentence

Outstanding at end of the year — $ — 9,013 $ 14.62 9,013 $ 14.62

There were no performance-based RSUs granted by the Company during the years ended December 31, 2021 and 2020, respectively.

The Performance-based RSUs granted in 2019 by the Company have a market vesting condition;

therefore a Monte-Carlo simulation model has been used to determine the fair value of the restricted units granted to employees.

Significant assumptions utilized in the Monte-Carlo simulation model include assumed reinvestment of dividends, the risk-free interest rate of 2.48 %, and expected volatility of 26.11 %, which is based on an average volatility of the Company’s peer group.

There were no performance-based RSUs granted by the Company during the years ended December 31, 2022 and 2021, and 2020, respectively.

Performance-based RSUs under the plan have a vesting period of three years .

3 unchanged sentences

Outstanding at beginning of the year 2,969,963 $ 11.09 2.5

Granted during the year

Forfeited during the year

Exercised during the year

11 unchanged sentences

7,375,000 $ 11.38 3.4

Granted during the year

2,820,000 10.37 4.8

Forfeited during the year

( 4,396,000 ) 12.00

Exercised during the year

10 unchanged sentences

Forfeited during the year

( 4,396,000 ) 12.00

Exercised during the year

( 19,000 ) 12.00

Outstanding at end of the year

2 unchanged sentences

4,288,000 $ 11.73 3.2 $ 32,366,640

There were no stock options granted by the Company during the year ended December 31, 2021.

The Company granted stock options with a fair value of $ 1.8 million and $ 5.1 million during the years ended December 31, 2020 and 2019, respectively.

There were no stock options granted by the Company during the year ended December 31, 2022 and 2021, respectively.

The Company granted stock options with a fair value of $ 1.8 million during the year ended December 31, 2020.

The total fair value of options vested during the years ended December 31, 2022, 2021 and 2020 was $ 1.3 million, $ 1.3 million and $ 1.5 million, respectively.

The Company received $ 2.7 million and $ 0.2 million related to the exercise of options for the year ended December 31, 2021, and 2020, respectively.

The Company realized tax benefits of $ 0.6 million and $ 0.0 million related to the exercise of options for the year ended December 31, 2021, and 2020, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $ 6.0 million, $ 75.5 million and $ 0.0 million , respectively.

The Company received $ 0.0 million , $ 2.7 million and $ 0.2 million related to the exercise of options for the year ended December 31, 2022, 2021, and 2020, respectively.

The Company realized tax benefits of $ 0.3 million, $ 0.6 million, and $ 0.0 million related to the exercise of options for the year ended December 31, 2022, 2021, and 2020, respectively.

Shares issued upon exercise of the options represent newly issued shares.

The fair value of the stock options grant was estimated on the grant date using a Monte-Carlo simulation valuation model.

The weighted average fair value of stock options granted during the years ended December 31, 2020 and 2019 was $ 0.65 and $ 2.48 per option, respectively, based on the grant date assumptions stated below.

The weighted average fair value of stock options granted during the year ended December 31, 2020 was $ 0.65 per option based on the grant date assumptions stated below.

BrightSphere Investment Group Inc.

32 unchanged sentences

Tax impact — ( 0.9 ) ( 0.9 )

Other comprehensive income (loss) 1.6 2.3 3.9

Other comprehensive income 0.4 2.4 2.8

Balance, as of December 31, 2021 $ 4.8 ( 15.6 ) $ ( 10.8 )

2 unchanged sentences

Tax impact — ( 1.3 ) ( 1.3 )

Other comprehensive income 0.4 2.4 2.8

Other comprehensive income (loss) ( 3.1 ) 3.3 0.2

Balance, as of December 31, 2022 $ 1.7 $ ( 12.3 ) $ ( 10.6 )

The Company reclassified $ 3.3 million, $ 3.1 million, and $ 3.0 million from accumulated other comprehensive income (loss) to interest expense on the Consolidated Statements of Operations for the twelve months ended December 31, 2021, 2020 and 2019, respectively.

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

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

BrightSphere Investment Group Inc.

2 unchanged sentences

21) Non-controlling Interests

Non-controlling interests on the Consolidated Balance Sheets include capital and undistributed profits of certain entities that are consolidated, but not 100% owned, which amounted to $ 0.0 million at December 31, 2021 and $ 1.7 million at December 31, 2020.

Non-controlling interests in consolidated Funds

15 unchanged sentences

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

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

As a result of this transaction, amortization expense of $ 1.3 million (of the $4.6 million interest expense reclassified to earnings for the year ended December 31, 2022) was reclassified to earnings as interest expense.

BrightSphere Investment Group Inc.

6 unchanged sentences

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

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

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

The Company completed the sale of its equity interests in Campbell Global in August 2021.

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

The Company completed the sale of its 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 the segment.

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

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

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

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

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

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

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

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

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

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

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

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

The ICM operating segment was reclassified to “Other” within the Company’s segment reporting for the year ended December 31, 2021.

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

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

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

The Company’s previously divested Affiliates, Barrow, Copper Rock, and ICM are included within the Liquid Alpha segment for year ended December 31, 2020.

Performance Measure

8 unchanged sentences

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

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

23) Segment Information (cont.)

accounted Affiliate.

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

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

5 unchanged sentences

ENI segment results are also adjusted to exclude the portion of consolidated Fund revenues, expenses and investment return recorded under U.S.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

23) Segment Information (cont.)

Segment Presentation

5 unchanged sentences

Earnings before variable compensation 251.3 ( 16.6 ) 38.6 273.3

Variable compensation 100.8 28.8 0.9 (c) 130.5

Variable compensation 96.0 4.3 — 100.3

ENI operating earnings (after variable comp) 155.3 ( 20.9 ) 38.6 173.0

1 unchanged sentence

Earnings after Affiliate key employee distributions 150.2 ( 20.9 ) 38.6 167.9

Net interest expense — ( 22.3 ) ( 2.3 ) (d) ( 24.6 )

Net investment income — — 8.3 (e) 8.3

Gain on sale of subsidiaries — — 48.6 (e) 48.6

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

Income tax expense — ( 47.1 ) ( 2.9 ) (f) ( 50.0 )

Income from discontinued operations, net of tax — — 77.3 (g) 77.3

Gain on disposal of discontinued operations, net of tax — — 691.0 (h) 691.0

Net interest expense — ( 17.3 ) ( 2.4 ) (c) ( 19.7 )

Net investment loss — — ( 0.2 ) (d) ( 0.2 )

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

Income tax expense — ( 30.4 ) ( 13.8 ) (e) ( 44.2 )

Economic net income $ 150.2 $ ( 68.6 ) $ 19.0 $ 100.6

4 unchanged sentences

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

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

Quant & Solutions Other Reconciling Adjustments Total U.S.

ENI revenue $ 488.1 $ 35.4 $ 0.3 (a) $ 523.8

1 unchanged sentence

Earnings before variable compensation 327.3 3.4 ( 41.0 ) 289.7

Variable compensation 72.8 29.0 6.1 4.2 (c) 112.1

Variable compensation 100.8 28.8 0.9 (f) 130.5

ENI operating earnings (after variable comp) 226.5 ( 25.4 ) ( 41.9 ) 159.2

1 unchanged sentence

Earnings after Affiliate key employee distributions 214.1 ( 26.4 ) ( 41.9 ) 145.8

Net interest income expense — — ( 21.6 ) ( 6.3 ) (d) ( 27.9 )

Net investment income — — — ( 0.3 ) (e) ( 0.3 )

Gain on sale of Affiliates — — — 241.3 (e) 241.3

Net income attributable to non-controlling interests in consolidated Funds — — — ( 28.8 ) (e) ( 28.8 )

Income tax (expense) benefit — — ( 32.5 ) ( 64.6 ) (f) ( 97.1 )

Net interest expense — ( 22.3 ) ( 2.3 ) (c) ( 24.6 )

Net investment income — — 8.3 (d) 8.3

Gain on sale of subsidiaries — — 48.6 (d) 48.6

Net income attributable to non-controlling interests in consolidated Funds — — ( 68.0 ) (d) ( 68.0 )

Income tax expense — ( 47.1 ) ( 2.9 ) (e) ( 50.0 )

Income from discontinued operations, net of tax — — 77.3 (g) 77.3

Gain on disposal of discontinued operations, net of tax — — 691.0 (h) 691.0

Economic net income $ 214.1 $ ( 95.8 ) $ 710.1 $ 828.4

8 unchanged sentences

Earnings before variable compensation 205.8 71.7 ( 18.7 ) ( 6.5 ) 252.3

Variable compensation 75.6 43.7 12.0 6.7 (c) 138.0

Variable compensation 72.8 29.0 6.1 4.2 (f) 112.1

ENI operating earnings (after variable comp) 133.0 42.7 ( 24.8 ) ( 10.7 ) 140.2

1 unchanged sentence

Earnings after Affiliate key employee distributions 128.7 38.8 ( 25.1 ) ( 10.7 ) 131.7

Net interest income (expense) — — ( 21.0 ) ( 9.0 ) (d) ( 30.0 )

Net investment income — — — 21.0 (e) 21.0

Net income attributable to non-controlling interests in consolidated Funds — — — ( 16.1 ) (e) ( 16.1 )

Income tax (expense) benefit — — ( 37.7 ) 27.2 (f) ( 10.5 )

Net interest expense — — ( 21.6 ) ( 6.3 ) (c) ( 27.9 )

Net investment loss — — — ( 0.3 ) (d) ( 0.3 )

Gain on sale of subsidiaries — — — 241.3 (d) 241.3

Net income attributable to non-controlling interests in consolidated Funds — — — ( 28.8 ) (d) ( 28.8 )

Income tax expense — — ( 32.5 ) ( 64.6 ) (e) ( 97.1 )

Income from discontinued operations, net of tax — — — 67.8 (g) 67.8

22 unchanged sentences

23) Segment Information (cont.)

GAAP compensation expense.

(d) Adjusted to include the cost of seed financing, and amortization of debt issuance costs, which is included in U.S.

GAAP interest expense.

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

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

GAAP net income attributable to controlling interests.

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

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

Adjusted to include tax expense or benefits relating to uncertain tax positions, the tax impact of certain ENI adjustments and other unusual items that are not included in current operating results for ENI purposes.

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

GAAP compensation expense.

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

5 unchanged sentences

December 31, 2022 and 2021

24) Selected Quarterly Financial Data

24) Selected Quarterly Financial Data (unaudited)

The following is a summary of the quarterly results of operations of the Company for the years ended December 31, 2022 and 2021 ($ in millions, unless otherwise noted):

4 unchanged sentences

33.4 41.3 25.3 44.8

Income from discontinued operations, net of tax 21.9 53.4 1.2 0.8

Gain (Loss) on disposal of discontinued operations, net of tax — 509.2 185.4 ( 3.6 )

Net income 23.8 28.6 17.8 30.4

3 unchanged sentences

Diluted earnings per share ($) $ 0.53 $ 0.67 $ 0.42 $ 0.72

Continuing operations basic earnings per share ($) $ 0.23 $ 0.31 $ 0.54 $ 0.59

Continuing operations diluted earnings per share ($) $ 0.22 $ 0.29 $ 0.52 $ 0.57

Basic shares outstanding (in millions) 44.0 41.4 41.4 41.4

6 unchanged sentences

Income from discontinued operations, net of tax 21.9 53.4 1.2 0.8

Gain (Loss) on disposal of discontinued operations, net of tax — 509.2 185.4 ( 3.6 )

Net income 40.4 587.3 229.5 39.2

6 unchanged sentences

Diluted shares outstanding (in millions) 82.3 82.9 83.2 73.5

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2021 and 2020

25) Subsequent Events

During the period from January 1, 2022 through February 24, 2022, the Company repurchased 1,630,691 shares at a weighted average price of $ 24.51 per share, or approximately $ 40.0 million in total, including commissions.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

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 8. Financial Statements and Supplementary Data