What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-28 compared with 2023-02-28 · 230 added, 280 removed, 1286 unchanged (28% of the section changed)

5 unchanged sentences

Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021

5 unchanged sentences

We have audited the accompanying consolidated balance sheets of BrightSphere Investment Group Inc.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S.

16 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.

Report of Independent Registered Public Accounting Firm

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

16 unchanged sentences

• 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

• evaluating the discount rates used by the Company by comparing them against discount rates that were developed using publicly available market data

• 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.

9 unchanged sentences

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements), and our report dated February 28, 2023 expressed an unqualified opinion on those consolidated financial statements.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our report dated February 28, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

47 unchanged sentences

Derivative liabilities at fair value 0.1 2.2

Securities sold short at fair value

Total liabilities 561.9 540.3

4 unchanged sentences

Additional paid-in capital — 1.5

Retained deficit ( 12.5 ) ( 6.8 )

Retained earnings (deficit)

46.9 ( 12.5 )

Accumulated other comprehensive loss ( 6.7 ) ( 10.6 )

Non-controlling interests in consolidated Funds — —

Total equity and non-controlling interests in consolidated Funds ( 21.6 ) ( 17.6 )

Total equity and redeemable non-controlling interests in consolidated Funds

49.5 ( 21.6 )

Total liabilities and equity $ 611.4 $ 518.7

13 unchanged sentences

General and administrative expense 82.6 71.1 71.2

Impairment of goodwill — — 16.4

Amortization of acquired intangibles — 0.1 0.1

5 unchanged sentences

Investment income (loss)

( 0.1 ) 0.2 8.3

Interest income 6.1 0.8 0.2

3 unchanged sentences

Net consolidated Funds’ investment gains (losses) 4.1 ( 0.4 ) —

Total non-operating income ( 23.1 ) 32.3 213.1

Total non-operating income (loss)

( 9.5 ) ( 23.1 ) 32.3

Income from continuing operations before taxes 96.5 144.8 178.1

21 unchanged sentences

Amortization related to derivative securities, net of tax 2.5 3.3 2.4

Foreign currency translation adjustment ( 3.1 ) 0.4 1.6

Foreign currency translation adjustment, net of tax

1.4 ( 3.1 ) 0.4

Total other comprehensive income 3.9 0.2 2.8

4 unchanged sentences

BrightSphere Investment Group Inc.

Consolidated Statements of Changes in Shareholders’ Equity

Consolidated Statements of Changes in Stockholders’ Equity

For the Years Ended December 31, 2023, 2022 and 2021

4 unchanged sentences

income (loss) Total

shareholders’

stockholders’

interests Non-controlling

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

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

Net de-consolidation of Funds

— — — — — — — ( 178.0 ) ( 178.0 ) — ( 178.0 )

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)

4 unchanged sentences

Repurchase of common stock ( 0.3 ) — ( 0.3 ) ( 4.8 ) — ( 5.1 ) — — ( 5.1 ) — ( 5.1 )

Capital contributions — — — — — — — — — 9.9 9.9

Equity-based compensation — — 1.2 — — 1.2 — — 1.2 — 1.2

Foreign currency translation adjustment — — — — ( 3.1 ) ( 3.1 ) — — ( 3.1 ) — ( 3.1 )

Foreign currency translation adjustment, net of tax

— — — — 1.4 1.4 — — 1.4 — 1.4

Amortization related to derivative securities, net of tax — — — — 2.5 2.5 — — 2.5 — 2.5

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

Withholding tax related to stock option exercise and restricted stock vesting

— — ( 2.4 ) — — ( 2.4 ) — — ( 2.4 ) — ( 2.4 )

De-consolidation of Funds

— — — — — — — — — ( 1.9 ) ( 1.9 )

Dividends ($ 0.04 per share)

11 unchanged sentences

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

Net (income) loss attributable to non-controlling interests in consolidated Funds from continuing operations — — ( 0.4 )

Net income attributable to non-controlling interests in consolidated Funds from continuing operations

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

Impairment of goodwill — — 16.4

Amortization of acquired intangibles — 0.1 0.1

17 unchanged sentences

77.7 119.0 ( 4.4 )

Net income (loss) attributable to non-controlling interests in consolidated Funds from continuing operations — — 0.4

Net income attributable to non-controlling interests in consolidated Funds from continuing operations

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

21 unchanged sentences

Cash flows from investing activities of consolidated Funds:

Consolidation (de-consolidation) of Funds — — ( 85.7 )

De-consolidation of Funds

Net cash flows from investing activities of continuing operations

3 unchanged sentences

Cash flows from financing activities:

Proceeds from third party and non-recourse borrowings 214.0 176.0 80.0

Repayment of third party and non-recourse borrowings ( 339.0 ) ( 176.0 ) ( 255.0 )

Proceeds from revolving credit facility

113.5 214.0 176.0

Repayment of third party borrowings and revolving credit facility

( 113.5 ) ( 339.0 ) ( 176.0 )

Payment of debt issuance costs — ( 0.9 ) ( 0.4 )

5 unchanged sentences

Dividends paid to related parties ( 0.6 ) ( 0.4 ) ( 1.0 )

Withholding tax payments related to stock option exercise ( 2.3 ) ( 28.6 ) —

Withholding tax payments related to stock option exercise and restricted stock vesting

( 2.4 ) ( 2.3 ) ( 28.6 )

Cash flows from financing activities of consolidated Funds:

Redeemable non-controlling interest capital raised 9.9 — —

Redeemable non-controlling interest capital redeemed — — ( 1.1 )

Net cash flows from financing activities of continuing operations

13 unchanged sentences

Supplemental disclosure of non-cash investing and financing transactions:

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

Payable for repurchases of common stock

$ 1.8 $ — $ —

De-consolidation of Funds

$ ( 1.9 ) $ — $ —

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 in 2021 and currently operates the business through one Affiliate, Acadian Asset Management LLC (“Acadian”).

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

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

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

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

and small-cap equities, as well as managed volatility, systematic macro, equity alternatives, and credit strategies.

Acadian is organized as a limited liability company.

4 unchanged sentences

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

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

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

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

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

(“HNA”) completed a series of transactions in the Company’s shares, including a two-step transaction announced on March 25, 2017 for a sale by OM plc of a 24.95 % shareholding in the Company to HNA and a two-step transaction announced on November 19, 2018 for a sale of the substantial majority of the ordinary shares held by HNA of the Company to Paulson & Co.

On February 25, 2019, this transaction was completed and Paulson held approximately 21.7 % of the ordinary shares of the Company.

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

As of December 31, 2023, Paulson & Co.

(“Paulson”) held approximately 21.6 % of the common stock of the Company.

BrightSphere Investment Group Inc.

4 unchanged sentences

Under the terms of the tender offer, stockholders who tender their shares would receive a fixed price of $ 31.50 for each share, subject to proration if the tender offer was oversubscribed.

The tender offer expired at 5:00 p.m., New York City Time, on December 6, 2021.

On December 7, 2021, the Company accepted for purchase 34,917,532 shares of common stock in the tender offer for a total cost of approximately $ 1.1 billion excluding fees and expenses relating to the tender offer.

3 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, 2020, a reduction to additional paid-in capital in the amount of $ 46.0 million was recorded for share repurchases.

In December 2023, the Company’s Board of Directors authorized a $ 100 million share repurchase program.

For the year ended December 31, 2023, the Company repurchased 268,800 shares of common stock at an average price of $ 19.03 per share, or approximately $ 5.1 million in total, including commissions.

In connection with these repurchases, a reduction to additional paid-in capital in the amount of $ 0.3 million was recorded until it was depleted, with the remaining $ 4.8 million of share repurchases recorded to retained earnings.

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.

A reduction to retained deficit was recorded for the full amount of these share repurchases.

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.

In connection with the shares repurchased in the tender offer, a reduction to additional paid-in capital in the amount of $ 465.7 million was recorded until it was depleted, with the remaining of $ 655.9 million of share repurchases recorded to retained deficit.

All shares of common stock repurchased by the Company were retired.

5 unchanged sentences

Basis of presentation

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

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

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

23 unchanged sentences

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

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.

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

The Company is required to capitalize certain costs directly related to the acquisition or fulfillment of a contract with a customer.

6 unchanged sentences

Revenue from other sources

Other revenue also includes interest income on cash and cash equivalents and revenue from administration and consulting services.

Revenue from other sources also includes interest income on cash and cash equivalents and revenue from administration and consulting services.

Compensation arrangements

26 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, 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.

The fair value of the liability is determined with the assistance of third party valuation specialists using a discounted cash flow analysis 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 liability is revalued at each reporting period, with any movements recorded within compensation expense.

BrightSphere Investment Group Inc.

39 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

3 unchanged sentences

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.

2 unchanged sentences

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

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

Foreign currency translation and transactions

6 unchanged sentences

The Company uses the equity method of accounting for investments that provide the Company with the ability to exercise significant influence over an entity, but that do not meet the requirements for consolidation.

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

Equity method investments includes the Company’s former Affiliate, ICM.

Fair value measurements

12 unchanged sentences

Investments which are generally included in this category include corporate bonds and loans, less liquid and restricted equity securities and certain over-the-counter derivatives.

• Level III—Pricing inputs are unobservable for the asset or liability and include assets and liabilities where there is little, if any, market activity for the investment.

The inputs into the determination of fair value require significant management judgment or estimation.

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

BrightSphere Investment Group Inc.

2 unchanged sentences

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

• Level III—Pricing inputs are unobservable for the asset or liability and include assets and liabilities where there is little, if any, market activity for the investment.

The inputs into the determination of fair value require significant management judgment or estimation.

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.

Actual results could differ significantly from those estimates.

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

Operating segment

21 unchanged sentences

Fixed assets are recorded at historical cost and depreciated using the straight-line method over their estimated useful lives.

The estimated useful lives of office equipment and furniture and fixtures range from three to five years .

The estimated useful lives of office equipment and furniture and fixtures range from three to ten years .

Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining term of the lease.

79 unchanged sentences

These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimates the Company is using to manage the underlying businesses.

The Company’s accounting policy is to treat the global intangible low-taxed income taxes which became effective January 1, 2018 as a result of the Tax Cuts and Jobs Act as period costs in the accounting and tax periods in which they are incurred.

The Company’s accounting policy is to treat the global intangible low-taxed income taxes as period costs in the accounting and tax periods in which they are incurred.

A tax benefit should only be recognized if it is more-likely-than-not that the position will be sustained based on its technical merits.

20 unchanged sentences

Other comprehensive income (loss) is defined as the change in equity of a business enterprise during a period from transactions and other events and circumstances, excluding those resulting from investments by and distributions to owners.

For the Company’s purposes, comprehensive income (loss) represents net income (loss), as presented in the accompanying Consolidated Statements of Operations, adjusted for net foreign currency translation adjustments and adjustments to the valuation and amortization of certain derivative securities, net of tax.

Restructuring costs

A liability for restructuring is recognized only after management has developed a formal plan, approved by the Board of Directors, to which it has committed.

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.

For the Company’s purposes, comprehensive income (loss) represents net income (loss), as presented in the accompanying Consolidated Statements of Operations, adjusted for foreign currency translation adjustments, net of tax and adjustments to the valuation and amortization of certain derivative securities, net of tax.

New accounting standards not yet 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.

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No.

2023-07 - Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures.

The amendment requires annual and interim disclosures of significant segment expenses that are regularly provided to the chief operating decision maker by reportable segment and clarifies that single reportable segment entities are required to apply all existing segment disclosures in the guidance.

The amendment is effective for fiscal year beginning after December 15, 2023 and is retrospectively applicable to all prior periods presented in its consolidated financial statements.

We are currently evaluating the impact of adopting this standard, however, we expect the standard to result in additional segment footnote disclosures.

In December 2023, the FASB issued Accounting Standards Update No.

2023-09 - Income Taxes (Topic 740) - Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by

BrightSphere Investment Group Inc.

1 unchanged sentence

December 31, 2023 and 2022

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

jurisdiction.

This amendment is effective for fiscal year beginning after December 15, 2024.

We are currently evaluating the impact of adopting this standard and have not yet determined our transition approach.

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

3) Discontinued Operations

9 unchanged sentences

The Company recognized a gain on disposal of discontinued operations of $ 185.2 million, net of tax of $ 73.9 million for the year ended December 31, 2021.

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

The 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.

BrightSphere Investment Group Inc.

25 unchanged sentences

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.

3 unchanged sentences

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

Investments of consolidated Funds held at fair value

Investments of consolidated Funds

Other investments 20.0 8.4

3 unchanged sentences

2023 2022 2021

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

Realized and unrealized gains (losses) on other investments

$ ( 0.1 ) $ 0.2 $ 5.7

4 unchanged sentences

2023 2022 2021

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

Realized and unrealized gains (losses) on consolidated Funds

$ 4.1 $ ( 0.4 ) $ —

11 unchanged sentences

Assets of BSIG and consolidated Funds (1)

Common and preferred stock $ 19.0 $ — $ — $ — $ 19.0

Corporate bonds

— 14.8 — — 14.8

Derivatives $ — $ 0.1 $ — $ — $ 0.1

9 unchanged sentences

Liabilities of consolidated Funds (1)

Securities sold short

$ ( 4.0 ) $ — $ — $ — $ ( 4.0 )

Derivatives $ — $ ( 0.1 ) $ — $ — $ ( 0.1 )

2 unchanged sentences

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

5) Fair Value Measurements (cont.)

Quoted prices

2 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

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 )

(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.

Equity securities and 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 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.

1 unchanged sentence

The Company has not made adjustments to the prices provided.

If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model, such securities are classified as Level III.

If the pricing services are only able to (a) obtain a single broker quote or (b) utilize a pricing model with unobservable inputs, such securities are classified as Level III.

If the pricing services are unable to provide prices, the Company attempts to obtain one or more broker quotes directly from a dealer or values such securities at the last bid price obtained.

1 unchanged sentence

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

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

5) Fair Value Measurements (cont.)

(2) Investments in separate accounts of $ 2.1 million at December 31, 2023 are composed of approximately 1 % cash equivalents and 99 % equity securities.

Investments in separate accounts of $ 4.2 million at December 31, 2022, consist of approximately 100 % of equity securities and other investments.

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

(3) Investments related to long-term incentive compensation plans of $ 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.

(3) Investments related to long-term incentive compensation plans of $ 44.7 million and $ 40.0 million at December 31, 2023 and December 31, 2022, respectively, are investments in publicly registered daily redeemable funds (some managed by Acadian), 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.

1 unchanged sentence

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.

These unconsolidated Funds consist primarily of real estate investments Funds, UCITS and other investment vehicles.

These unconsolidated Funds consist primarily of real estate investment Funds and other investment vehicles.

The NAVs that have been provided by investees have been derived from the fair values of the underlying investments as of the measurement dates.

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

Other investment vehicles are not subject to redemption restrictions.

The real estate investment Funds of $ 3.6 million and $ 4.1 million at December 31, 2023 and December 31, 2022, 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.

1 unchanged sentence

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.

The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, acquisitions, and research teams.

The valuations are then reviewed and approved by the valuation committee, which consists of senior members of the portfolio management, finance, and research teams.

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.

There were no significant transfers of financial assets or liabilities between Levels II or III during the year ended December 31, 2023.

BrightSphere Investment Group Inc.

1 unchanged sentence

December 31, 2023 and 2022

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):

Investments in unconsolidated Funds 2022 2021

Level III financial assets

At beginning of the period $ — $ 2.6

Redemptions — ( 0.1 )

Disposals — ( 2.8 )

Total net fair value gains/(losses) recognized in net income — 0.3

Total Level III financial assets

There were no significant transfers of financial assets or liabilities between Levels II or III during the year ended December 31, 2022.

6) Variable Interest Entities

1 unchanged sentence

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.

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

6) Variable Interest Entities (cont.)

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 1.3 15.2

2 unchanged sentences

Total Liabilities $ 4.3 $ 2.5

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

“Investments” consist of investments in equities, corporate bonds and 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.

5 unchanged sentences

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

6) Variable Interest Entities (cont.)

The following information pertains to unconsolidated VIEs for which the Company holds a variable interest at December 31 (in millions):

4 unchanged sentences

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

7) Fixed Assets

13 unchanged sentences

The operating leases have remaining lease terms of 1 to 10 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.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

8) Leases (cont.)

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

2023 2022 2021

Operating lease cost $ 8.6 $ 10.0 $ 11.2

6 unchanged sentences

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.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

8) Leases (cont.)

For the years ended December 31, 2023 and 2022, the weighted average remaining lease term was 9.5 and 10.5 years, respectively, and the weighted average discount rate was 3.53 % and 3.40 %, respectively.

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

4 unchanged sentences

Less imputed interest ( 12.7 )

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

The following table presents the changes in goodwill in 2023 and 2022 (in millions):

Quant & Solutions Other (1)

Quant & Solutions

Goodwill $ 22.1

1 unchanged sentence

December 31, 2021 $ 20.3

Additions — — —

Impairments —

Disposals — — —

Goodwill 22.1

1 unchanged sentence

December 31, 2022 $ 20.3

Additions — — —

Impairments —

Disposals — — —

Goodwill 22.1

1 unchanged sentence

December 31, 2023 $ 20.3

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

10) Related Party Transactions

9 unchanged sentences

Total related party revenues $ 87.5 $ 97.2 $ 54.7

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

10) Related Party Transactions (cont.)

(1) Transactions with unconsolidated Affiliate-sponsored Funds are considered related party items on the basis of the Company’s significant influence over the activities of such entities in its capacity as investment advisor thereto.

8 unchanged sentences

Total accounts payable and accrued expenses $ 39.1 $ 31.0

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 $ 0.0 million in 2023, $ 2.7 million in 2022, and $ 0.0 million in 2021.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

13) Borrowings and Debt

The Company’s borrowings were comprised of the following as of the dates indicated (in millions):

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

December 31, 2023 December 31, 2022

8 unchanged sentences

$ 125 million 5.125 % Senior Notes Due August 1, 2031 (2)(3)

— — 121.8 126.4 2

Total third party borrowings

4 unchanged sentences

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.

Revolving credit facility

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

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

BrightSphere Investment Group Inc.

2 unchanged sentences

13) Borrowings and Debt (cont.)

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.

5 unchanged sentences

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.

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.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

13) Borrowings and Debt (cont.)

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

As of December 31, 2023, the aggregate maturities of debt commitments, based on their contractual terms, are as follows:

3 unchanged sentences

The Company was in compliance with the required covenants related to borrowings and debt facilities as of December 31, 2023.

Subsequent Events

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

BrightSphere Investment Group Inc.

29 unchanged sentences

State income taxes, net of federal benefit 7.3 % 8.0 % 6.8 %

Non-deductible expenses 0.1 % 0.2 % 0.2 %

Other permanent tax items

( 0.2 ) % 0.1 % 0.2 %

Executive Compensation 0.1 % 0.2 % 1.6 %

1 unchanged sentence

Effect of foreign operations 0.8 % 0.7 % 0.7 %

Effect of changes in tax law 3.5 % — % — %

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

Effect of income from non-controlling interest ( 0.3 ) % — % — %

Impact of increased state tax obligations to deferred tax assets ( 1.5 ) % ( 0.5 ) % ( 0.4 ) %

2 unchanged sentences

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

During the quarter ended December 31, 2023, Massachusetts enacted a change in the state’s apportionment formula for corporations.

The Company measures its deferred tax assets and liabilities at the enacted rates for the period in which these items would reverse.

As a result, the Company recorded the discrete tax impact due to the effect of the change in tax law.

The Company reduced its liability for uncertain tax positions by $ 0.5 million, $ 0.9 million and $ 3.4 million during the years ended December 31, 2023, 2022 and 2021, respectively, due to the lapse of statute of limitations.

1 unchanged sentence

The Company has recognized tax expense of $ 0.6 million, $ 0.9 million and $ 0.9 million during the years ended December 31, 2023, 2022 and 2021, respectively, related to the GILTI tax.

In general, it is the practice and intention of the Company to reinvest earnings of its non-U.S.

subsidiaries in those operations.

Management has no intention of repatriating earnings of its non-U.S.

subsidiaries in the foreseeable future.

At December 31, 2022, the Company has not recorded any deferred tax liabilities relating to additional taxes such as foreign withholding and state taxes which could arise on the repatriation of unremitted earnings of its non-U.S.

subsidiaries.

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.

During the year ending December 31, 2023, the Company removed its indefinite reinvestment of foreign unremitted earnings assertion for multiple foreign subsidiaries.

For foreign subsidiaries whose investments are permanent in duration, income and foreign withholding taxes have not been provided on the unremitted earnings of those subsidiaries.

This amount may become taxable upon repatriation from the subsidiary or a sale or liquidation of the subsidiary.

The amount of such unremitted earnings and the amount of any unrecognized deferred income tax liability on these unremitted earnings is immaterial at December 31, 2023.

In connection with the sale of its Affiliates, the Company recorded tax expense of $ 0.0 million , $ 0.0 million , and $ 9.4 million, including tax impacts of non-deductible tax items, during the years ended December 31, 2023, 2022 and 2021, respectively.

4 unchanged sentences

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.

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.

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.

1 unchanged sentence

Deferred tax assets:

Interest expense $ — $ 0.2

Federal net operating loss — 0.1

Investment in partnerships 63.6 56.9

7 unchanged sentences

Right of use assets 0.1 0.1

Investments 0.1 —

Total deferred tax liabilities 0.2 0.1

1 unchanged sentence

At December 31, 2023 and 2022, 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.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

14) Income Taxes (cont.)

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.

4 unchanged sentences

As of December 31, 2023, management believes it is more likely than not that the balance of the deferred tax assets will be realized based on forecasted taxable income.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

14) Income Taxes (cont.)

A reconciliation of the change in gross unrecognized tax benefits for the years ended December 31 is as follows (in millions):

10 unchanged sentences

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

At December 31, 2023 the Company is subject to examination in three jurisdictions.

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

10 unchanged sentences

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.

2 unchanged sentences

There are no liabilities recorded on the Consolidated Balance Sheet as of December 31, 2023 and 2022, related to this guaranty.

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

Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company or its Affiliates.

The Company and its Affiliates establish accruals for matters for which the outcome is probable and can be reasonably estimated.

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

Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved in a manner unfavorable to the Company or its Affiliate.

The Company and its Affiliate establish accruals for matters for which the outcome is probable and can be reasonably estimated.

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

17 unchanged sentences

The Company maintains cash and cash equivalents and short term investments with various financial institutions.

These financial institutions are typically located in cities in which the Company and its Affiliates operate.

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

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

These financial institutions are typically located in cities in which the Company and its Affiliate operate.

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

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

The insurers of the policies are considered a significant counterparty to the Company.

11 unchanged sentences

Total income available to participating unvested securities (1)

— ( 0.1 ) ( 0.1 )

Total net income attributable to common stock $ 65.8 $ 100.6 $ 828.3

24 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.

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.

There was no revenue from expense reimbursements for the year ended December 31, 2023 and 2022.

Revenue from expense reimbursements amounted to $ 2.9 million for the year ended December 31, 2021, 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.

5 unchanged sentences

91.3 88.3 106.3

Liquid Alpha (1)

Management fee revenue $ 373.2 $ 367.4 $ 433.3

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.

(1) 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.

19 unchanged sentences

The Company maintains compensation arrangements with certain of its Affiliates whereby in exchange for continued service, Affiliate equity is either purchased by, or granted to Affiliate key employees subject to a limit imposed by the Company, and may be repurchased either by Affiliate key employees or by the Company at a future date at the then applicable fair value, subject to service requirements having been met.

Compensation expense is recognized over the requisite service period equal to the cumulative vested fair value of the award at the end of each period up to vesting date.

Compensation expense is recognized over the requisite service period equal to the cumulative vested fair value of the award at the end of each period up to the vesting date.

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

20 unchanged sentences

The related income tax benefit recognized for years ended December 31, 2023, 2022 and 2021 was $ 0.2 million, $ 0.3 million and $ 0.3 million respectively.

Unamortized compensation expense related to unvested RSAs, RSUs, Performance-based RSAs, Performance-based RSUs and stock options at December 31, 2022 of $ 1.5 million is expected to be recognized over a weighted-average period of 1.5 years.

Unamortized compensation expense related to unvested RSUs at December 31, 2023 of $ 1.0 million is expected to be recognized over a weighted-average period of 1.6 years.

The service inception date for annual awards granted in 2023 is deemed to be January 1, 2022.

5 unchanged sentences

RSUs 49,494 24.04 59,999 22.62 15,548 22.06

Stock options — — — — 2,820,000 0.65

Grants of restricted stock in BrightSphere Investment Group Inc.

11 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 years ended December 31, 2022, 2021 and 2020, respectively.

There were no RSAs granted by the Company during the years ended December 31, 2023, 2022 and 2021.

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

28 unchanged sentences

— $ — — $ — — $ —

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.

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, 2023, 2022, and 2021.

13 unchanged sentences

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

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

Other movements includes performance-based RSUs that did not meet the market vesting condition and did not vest during the year ended December 31, 2022.

There were no performance-based RSUs granted by the Company during the years ended December 31, 2023, 2022, and 2021.

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

3 unchanged sentences

Outstanding at beginning of the year 2,470,463 $ 10.97 1.6

Granted during the year

Forfeited during the year

( 75,000 ) 10.00

Exercised during the year

20 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

4 unchanged sentences

911,963 $ 11.56 2.3 $ 12,802,697

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.

There were no stock options granted by the Company during the year ended December 31, 2023, 2022, and 2021.

The total fair value of options vested during the years ended December 31, 2023, 2022 and 2021 was $ 1.3 million, $ 1.3 million and $ 1.3 million, respectively.

3 unchanged sentences

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 year ended December 31, 2020 was $ 0.65 per option based on the grant date assumptions stated below.

BrightSphere Investment Group Inc.

1 unchanged sentence

December 31, 2023 and 2022

19) Equity-based Compensation (cont.)

2022 2021 2020

Weighted-average grant date fair value per option $ — $ — $ 0.65

Dividend yield (1)

3.9 % to 7.4 %

Expected volatility (2)

29.7 % to 41.3 %

Risk-free interest rate (3)

1.4 % to 0.3 %

Expected life of options (4)

4.7 years to 5.0 years

(1) Dividend yield assumption represents the Company’s expected dividend yield based on its historical dividend payouts and the stock price at the date of grant.

(2) Expected volatility is based upon historical BSIG stock price volatility.

(3) The risk-free rate for periods within the contractual life of the option is based on the U.S.

Treasury yield curve at the time of grant.

(4) Expected life of options is based on the contractual term and the expected exercise behavior .

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

20) Accumulated Other Comprehensive Income (Loss)

2 unchanged sentences

Balance, as of December 31, 2020 $ 4.4 $ ( 18 ) $ ( 13.6 )

Foreign currency translation adjustment 1.6 — 1.6

Foreign currency translation adjustment before tax

Amortization related to derivatives securities, before tax

2 unchanged sentences

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

Foreign currency translation adjustment 0.4 — 0.4

Foreign currency translation adjustment before tax

( 3.1 ) — ( 3.1 )

Amortization related to derivatives securities, before tax (1)

2 unchanged sentences

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

Foreign currency translation adjustment ( 3.1 ) — ( 3.1 )

Foreign currency translation adjustment before tax

Amortization related to derivatives securities, before tax

2 unchanged sentences

Balance, as of December 31, 2023

$ 3.1 $ ( 9.8 ) $ ( 6.7 )

(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.

1 unchanged sentence

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

21) Non-controlling Interests

Non-controlling interests in consolidated Funds

Net income (loss) attributable to non-controlling interests in consolidated Funds in the Consolidated Statements of Operations is comprised of the net income or loss and net gains and losses allocated to equity-holders, other than BSIG, of consolidated Funds.

For the years ended December 31, 2022, 2021 and 2020 this net income was $ 0.0 million , $ 68.0 million, and $ 28.8 million, respectively.

Non-controlling interests in consolidated Funds on the Consolidated Balance Sheets represents the share of net assets of the Funds attributable to those equity holders who are restricted in their ability to redeem their interests, which amounted to $ 0.0 million at December 31, 2022, and $ 0.0 million at December 31, 2021.

21) Derivatives and Hedging

5 unchanged sentences

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

Refer to Note 13, Borrowings and Debt, for additional information on the debt issuances.

Amounts recorded in accumulated other comprehensive income in connection with the settled Treasury rate lock were $ 2.5 million, net of tax of $( 0.9 ) million for the year ended December 31, 2023.

5 unchanged sentences

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.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

22) Segment Information

1 unchanged sentence

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

and small-cap equities, as well as managed volatility, systematic macro, equity alternatives, and credit strategies.

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

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

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

2 unchanged sentences

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.

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

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2023 and 2022

22) Segment Information (cont.)

Performance Measure

12 unchanged sentences

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

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

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

GAAP for certain Fund expenses reimbursed to Affiliates.

7 unchanged sentences

The following tables set forth summarized operating results for the Company’s segments and related adjustments necessary to reconcile the segment economic net income to arrive at the Company's consolidated U.S.

GAAP net income (loss) for the year ended December 31, 2022 (in millions):

GAAP net income (loss).

The following table presents the financial data for the Company’s segment for the year ended December 31, 2023 (in millions):

Quant & Solutions Other Reconciling Adjustments Total U.S.

2 unchanged sentences

Earnings before variable compensation 239.4 ( 14.2 ) ( 1.9 ) 223.3

Variable compensation 96.0 4.3 — 100.3

Variable compensation 102.2 2.7 7.3 (c)

ENI operating earnings (after variable comp) 137.2 ( 16.9 ) ( 9.2 ) 111.1

1 unchanged sentence

Earnings after Affiliate key employee distributions 132.1 ( 16.9 ) ( 9.2 ) 106.0

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 )

Net interest expense — ( 11.8 ) ( 1.7 ) (d)

Net investment income

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

— — ( 1.3 ) (e)

Income tax expense — ( 27.7 ) ( 1.7 ) (f)

Economic net income $ 132.1 $ ( 56.4 ) $ ( 9.9 ) $ 65.8

8 unchanged sentences

Earnings before variable compensation 251.3 ( 16.6 ) 38.6 273.3

Variable compensation 100.8 28.8 0.9 (f) 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 ) (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

Net interest expense — ( 17.3 ) ( 2.4 ) (d)

Net investment loss

— — ( 0.2 ) (e)

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

Income tax expense — ( 30.4 ) ( 13.8 ) (f)

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

8 unchanged sentences

Earnings before variable compensation 327.3 — 3.4 ( 41.0 ) 289.7

Variable compensation 72.8 29.0 6.1 4.2 (f) 112.1

Variable compensation 100.8 — 28.8 0.9 (c)

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 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 )

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

Net investment income

— — — 8.3 (e)

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

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

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

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

Gain on disposal of discontinued operations, net of tax

— — — 691.0 (h)

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

15 unchanged sentences

GAAP revenue.

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

GAAP operating expenses.

BrightSphere Investment Group Inc.

2 unchanged sentences

22) Segment Information (cont.)

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

GAAP operating expenses.

GAAP compensation expense.

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

GAAP interest expense.

(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.

(e) 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.

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

(f) 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.

2 unchanged sentences

GAAP net income attributable to controlling interests.

BrightSphere Investment Group Inc.

Notes to Consolidated Financial Statements (Continued)

December 31, 2022 and 2021

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):

First Quarter Second Quarter Third Quarter Fourth Quarter

Revenue $ 112.2 $ 95.5 $ 86.8 $ 122.7

Operating income 43.2 46.7 30.1 47.9

Income from continuing operations before income taxes

33.4 41.3 25.3 44.8

Net income 23.8 28.6 17.8 30.4

Net income attributable to controlling interests

23.8 28.6 17.8 30.4

Basic earnings per share ($) $ 0.54 $ 0.69 $ 0.43 $ 0.73

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

Basic shares outstanding (in millions) 44.0 41.4 41.4 41.4

Diluted shares outstanding (in millions) 45.3 42.5 42.4 42.5

First Quarter Second Quarter Third Quarter Fourth Quarter

Revenue $ 109.7 $ 133.3 $ 117.9 $ 162.9

Operating income 32.5 36.1 28.7 48.5

Income from continuing operations before income taxes

27.6 34.6 57.4 58.5

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

Net income attributable to controlling interests 27.0 532.7 229.5 39.2

Basic earnings per share ($) $ 0.34 $ 6.71 $ 2.88 $ 0.55

Diluted earnings per share ($) $ 0.33 $ 6.42 $ 2.76 $ 0.53

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) 79.3 79.4 79.6 70.6

Diluted shares outstanding (in millions) 82.3 82.9 83.2 73.5

23) Subsequent Events

During the period from January 1, 2024 through February 26, 2024, the Company repurchased 3.3 million shares of common stock at a weighted average price of $ 20.93 per share, or approximately $ 68.9 million in total, including commissions.

As of February 27, 2024, the outstanding balance on Acadian’s revolving credit facility was $ 84 million.

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