Acadian Asset Management Inc. 10-K

Item 8. Financial Statements and Supplementary Data. Page Index to financial statements Reports of Independent Registered Public Accounting Firm (PCAOB ID: 185) 73 Consolidated Balance Sheets as of December 31, 2024 and 2023 76 Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 77 Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022 78 Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2024, 2023 and 2022 79 Consolidated Statements of Cash Flows for the years ended December 31, 2024, 2023 and 2022 80 Notes to Consolidated Financial Statements 82 72 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Acadian Asset Management Inc.: Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Acadian Asset Management Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 27, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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. 73 Assessment of the fair value measurement of the cash-settled subsidiary awards liability As discussed in Notes 2, 11 and 18 to the consolidated financial statements, the Company has issued cash-settled equity awards to certain key employees of the subsidiary which are liability classified. The total liability for these awards was $25.4 million at December 31, 2024. 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 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 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 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 related to the Company’s process to determine the fair value of the cash-settled 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 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 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 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. /s/ KPMG LLP We have served as the Company’s auditor since 2014. Boston, Massachusetts February 27, 2025 74 Report of Independent Registered Public Accounting Firm To the Stockholders and Board of Directors Acadian Asset Management Inc.: Opinion on Internal Control Over Financial Reporting We have audited Acadian Asset Management Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, 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, 2024 and 2023, 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, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated February 27, 2025 expressed an unqualified opinion on those consolidated financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ KPMG LLP Boston, Massachusetts February 27, 2025 75 Acadian Asset Management Inc. Consolidated Balance Sheets (in millions, except for share and per share data) December 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 94.8 $ 146.8 Investment advisory fees receivable 164.7 143.4 Income taxes receivable 3.0 2.7 Fixed assets, net 35.7 44.2 Right of use assets 52.5 57.2 Investments 67.9 64.7 Goodwill 20.3 20.3 Other assets 26.7 27.2 Deferred tax assets 78.3 69.7 Assets of consolidated Funds: Cash and cash equivalents, restricted 3.7 0.8 Investments 154.0 33.9 Other assets 1.6 0.5 Total assets $ 703.2 $ 611.4 Liabilities and stockholders’ equity Accounts payable and accrued expenses $ 37.9 $ 39.1 Accrued incentive compensation 119.6 101.3 Other compensation liabilities 92.5 67.5 Accrued income taxes 3.3 2.6 Operating lease liabilities 67.3 72.4 Other liabilities — 0.8 Revolving credit facility — — Third party borrowings 274.3 273.9 Liabilities of consolidated Funds: Accounts payable and accrued expenses 0.5 0.2 Other liabilities 0.3 0.1 Securities sold short 20.4 4.0 Total liabilities 616.1 561.9 Commitments and contingencies Redeemable non-controlling interests in consolidated Funds 67.1 9.3 Equity: Common stock (par value $ 0.001 ; 37,477,707 and 41,372,291 shares, respectively, issued) — — Additional paid-in capital — — Retained earnings 24.4 46.9 Accumulated other comprehensive loss ( 4.4 ) ( 6.7 ) Total equity and redeemable non-controlling interests in consolidated Funds 87.1 49.5 Total liabilities and equity $ 703.2 $ 611.4 See Notes to Consolidated Financial Statements 76 Acadian Asset Management Inc. Consolidated Statements of Operations (in millions except for per share data) For the Years Ended December 31, 2024 2023 2022 Revenue: Management fees $ 431.1 $ 373.2 $ 367.4 Performance fees 71.4 50.4 49.4 Consolidated Funds’ revenue 3.1 3.0 0.4 Total revenue 505.6 426.6 417.2 Operating expenses: Compensation and benefits 265.5 217.9 159.2 General and administrative expense 85.2 82.6 71.1 Amortization of acquired intangibles — — 0.1 Depreciation and amortization 18.5 17.3 18.5 Consolidated Funds’ expense 0.9 2.8 0.4 Total operating expenses 370.1 320.6 249.3 Operating income 135.5 106.0 167.9 Non-operating income and (expense): Investment income (loss) 2.2 ( 0.1 ) 0.2 Interest income 3.5 6.1 0.8 Interest expense ( 19.4 ) ( 19.6 ) ( 20.5 ) Loss on extinguishment of debt — — ( 3.2 ) Net consolidated Funds’ investment gains (losses) 3.9 4.1 ( 0.4 ) Total non-operating income (loss) ( 9.8 ) ( 9.5 ) ( 23.1 ) Income before taxes 125.7 96.5 144.8 Income tax expense 38.9 29.4 44.2 Net income 86.8 67.1 100.6 Net income attributable to non-controlling interests in consolidated Funds 1.8 1.3 — Net income attributable to controlling interests $ 85.0 $ 65.8 $ 100.6 Earnings per share (basic) attributable to controlling interests $ 2.25 $ 1.59 $ 2.39 Earnings per share (diluted) attributable to controlling interests 2.22 1.55 2.33 Weighted average shares outstanding 37.8 41.5 42.1 Weighted average diluted shares outstanding 38.3 42.5 43.2 See Notes to Consolidated Financial Statements 77 Acadian Asset Management Inc. Consolidated Statements of Comprehensive Income (in millions) For the Years Ended December 31, 2024 2023 2022 Net income $ 86.8 $ 67.1 $ 100.6 Other comprehensive income: Amortization related to derivative securities, net of tax 2.7 2.5 3.3 Foreign currency translation adjustment, net of tax ( 0.4 ) 1.4 ( 3.1 ) Total other comprehensive income 2.3 3.9 0.2 Total comprehensive income 89.1 71.0 100.8 Comprehensive income attributable to non-controlling interests in consolidated Funds 1.8 1.3 — Total comprehensive income attributable to controlling interests $ 87.3 $ 69.7 $ 100.8 See Notes to Consolidated Financial Statements 78 Acadian Asset Management Inc. Consolidated Statements of Changes in Stockholders’ Equity For the Years Ended December 31, 2024, 2023 and 2022 ($ in millions, except share data) Common stock (millions) Common stock, par value Additional paid-in capital Retained earnings (deficit) Accumulated other comprehensive income (loss) Total stockholders’ equity Redeemable non-controlling interests in consolidated Funds Total equity and redeemable non-controlling interests in consolidated Funds December 31, 2021 45.4 $ — $ — $ ( 6.8 ) $ ( 10.8 ) $ ( 17.6 ) $ — $ ( 17.6 ) Issuance of common stock 0.2 — — — — — — — Repurchase of common stock ( 4.2 ) — — ( 103.2 ) — ( 103.2 ) — ( 103.2 ) Equity-based compensation — — 2.4 — — 2.4 — 2.4 Foreign currency translation adjustment — — — — ( 3.1 ) ( 3.1 ) — ( 3.1 ) Amortization related to derivative securities, net of tax — — — — 3.3 3.3 — 3.3 Withholding tax related to stock option exercise — — ( 0.9 ) ( 1.4 ) — ( 2.3 ) — ( 2.3 ) Dividends ($ 0.04 per share) — — — ( 1.7 ) — ( 1.7 ) — ( 1.7 ) Net income — — — 100.6 — 100.6 — 100.6 December 31, 2022 41.4 $ — $ 1.5 $ ( 12.5 ) $ ( 10.6 ) $ ( 21.6 ) $ — $ ( 21.6 ) Issuance of common stock 0.3 — — — — — — — Repurchase of common stock ( 0.3 ) — ( 0.3 ) ( 4.8 ) — ( 5.1 ) — ( 5.1 ) Capital contributions — — — — — — 9.9 9.9 Equity-based compensation — — 1.2 — — 1.2 — 1.2 Foreign currency translation adjustment, net of tax — — — — 1.4 1.4 — 1.4 Amortization related to derivative securities, net of tax — — — — 2.5 2.5 — 2.5 Withholding tax related to stock option exercise and restricted stock vesting — — ( 2.4 ) — — ( 2.4 ) — ( 2.4 ) De-consolidation of Funds — — — — — — ( 1.9 ) ( 1.9 ) Dividends ($ 0.04 per share) — — — ( 1.6 ) — ( 1.6 ) — ( 1.6 ) Net income — — — 65.8 — 65.8 1.3 67.1 December 31, 2023 41.4 $ — $ — $ 46.9 $ ( 6.7 ) $ 40.2 $ 9.3 $ 49.5 Issuance of common stock 0.5 — 0.1 — — 0.1 — 0.1 Repurchase of common stock including excise taxes ( 4.4 ) — ( 0.4 ) ( 95.2 ) — ( 95.6 ) — ( 95.6 ) Capital contributions — — — — — — 56.0 56.0 Equity-based compensation — — 0.9 — — 0.9 — 0.9 Foreign currency translation adjustment, net of tax — — — — ( 0.4 ) ( 0.4 ) — ( 0.4 ) Amortization related to derivative securities, net of tax — — — — 2.7 2.7 — 2.7 Withholding tax related to stock option exercise and restricted stock vesting — — ( 0.6 ) ( 10.8 ) — ( 11.4 ) — ( 11.4 ) Dividends ($ 0.04 per share) — — — ( 1.5 ) — ( 1.5 ) — ( 1.5 ) Net income — — — 85.0 — 85.0 1.8 86.8 December 31, 2024 37.5 $ — $ — $ 24.4 $ ( 4.4 ) $ 20.0 $ 67.1 $ 87.1 See Notes to Consolidated Financial Statements 79 Acadian Asset Management Inc. Consolidated Statements of Cash Flows (in millions) For the Years Ended December 31, 2024 2023 2022 Cash flows from operating activities: Net income $ 86.8 $ 67.1 $ 100.6 Less: Net income attributable to redeemable non-controlling interests in consolidated Funds ( 1.8 ) ( 1.3 ) — Adjustments to reconcile net income to net cash flows from operating activities: Amortization of acquired intangibles — — 0.1 Loss on extinguishment of debt — — 3.2 Depreciation and amortization 18.5 17.3 18.5 Amortization of debt-related costs 4.4 4.1 5.6 Amortization and revaluation of non-cash compensation awards 30.5 7.4 ( 30.3 ) Deferred income taxes ( 10.2 ) ( 6.0 ) 6.4 (Gains) losses on other investments ( 12.5 ) ( 5.6 ) 3.4 Changes in operating assets and liabilities: (Increase) decrease in investment advisory fees receivable ( 21.3 ) ( 20.9 ) 44.6 (Increase) decrease in other receivables, prepayments, deposits and other assets 0.6 0.2 ( 2.1 ) Increase (decrease) in accrued incentive compensation, operating lease liabilities and other liabilities 15.1 10.2 ( 33.4 ) Increase (decrease) in accounts payable, accrued expenses and accrued income taxes ( 1.2 ) 5.2 2.4 Net cash flows from operating activities, excluding consolidated Funds 108.9 77.7 119.0 Net income attributable to redeemable non-controlling interests in consolidated Funds 1.8 1.3 — Adjustments to reconcile net income (loss) attributable to redeemable non-controlling interests of consolidated Funds to net cash flows from operating activities of consolidated Funds: Purchase of investments ( 167.1 ) ( 19.7 ) ( 0.2 ) Sale of investments 112.3 13.6 0.1 (Gains) losses on other investments 0.4 ( 1.1 ) — (Increase) decrease in receivables and other assets ( 0.9 ) ( 3.5 ) ( 2.4 ) Increase (decrease) in accounts payable and other liabilities 0.4 — 0.3 Net cash flows from operating activities of consolidated Funds ( 53.1 ) ( 9.4 ) ( 2.2 ) Net cash flows from operating activities 55.8 68.3 116.8 80 Acadian Asset Management Inc. Consolidated Statements of Cash Flows (Continued) (in millions) For the Years Ended December 31, 2024 2023 2022 Cash flows from investing activities: Additions of fixed assets ( 9.9 ) ( 13.8 ) ( 16.1 ) Purchase of investment securities ( 47.7 ) ( 25.8 ) ( 5.5 ) Sale of investment securities 7.5 8.2 8.6 Cash flows from investing activities of consolidated Funds: Deconsolidation of Funds — ( 12.5 ) — Net cash flows from investing activities ( 50.1 ) ( 43.9 ) ( 13.0 ) Cash flows from financing activities: Proceeds from revolving credit facility 139.0 113.5 214.0 Repayment of third party borrowings and revolving credit facility ( 139.0 ) ( 113.5 ) ( 339.0 ) Payment of debt issuance costs ( 0.7 ) — ( 0.9 ) Proceeds from stock issuance 0.1 — — Payment to OM plc for co-investment redemptions ( 0.2 ) ( 0.4 ) ( 1.1 ) Repurchases of common stock ( 96.7 ) ( 3.3 ) ( 103.2 ) Dividends paid to stockholders ( 0.9 ) ( 1.4 ) ( 0.8 ) Dividends paid to related parties ( 0.6 ) ( 0.6 ) ( 0.4 ) Withholding tax payments related to stock option exercise and restricted stock vesting ( 11.4 ) ( 2.4 ) ( 2.3 ) Cash flows from financing activities of consolidated Funds: Redeemable non-controlling interest capital raised 56.0 9.9 — Net cash flows from financing activities ( 54.4 ) 1.8 ( 233.7 ) Effect of foreign exchange rate changes on cash and cash equivalents ( 0.4 ) 0.2 ( 1.0 ) Net increase (decrease) in cash and cash equivalents ( 49.1 ) 26.4 ( 130.9 ) Cash and cash equivalents at beginning of period (including restricted cash) 147.6 121.2 252.1 Cash and cash equivalents at end of period (including restricted cash) $ 98.5 $ 147.6 $ 121.2 Supplemental disclosure of cash flow information: Interest paid (excluding consolidated Funds) $ 15.0 $ 15.5 $ 16.0 Income taxes paid $ 48.5 $ 37.8 $ 36.8 Supplemental disclosure of non-cash investing and financing transactions: Excise tax on repurchases of common stock $ 0.7 $ — $ — Payable for repurchases of common stock $ — $ ( 1.8 ) $ — Deconsolidation of Funds $ — $ ( 1.9 ) $ — See Notes to Consolidated Financial Statements 81 Acadian Asset Management Inc. Notes to Consolidated Financial Statements December 31, 2024 and 2023 1) Organization and Description of the Business Acadian Asset Management Inc. (“Acadian”, “AAMI” or the “Company”), is a holding company that operates a systematic investment management business through its majority owned subsidiary, Acadian Asset Management LLC (“Acadian LLC”). Acadian LLC offers institutional investors across the globe access to a diversified array of systematic investment strategies designed to meet a range of risk and return objectives. Acadian LLC is a leading systematic investment manager of active equity products, including global, emerging market, international, and small cap equities, as well as credit and alternative strategies. Acadian LLC comprises the Company’s Quant & Solutions reportable segment: • Quant & Solutions —comprised of strategies that leverage cutting-edge technology to gather and analyze data to identify mispriced assets to deliver attractive risk-adjusted returns for investors; portfolios include developed and developing markets for equity, credit and alternative strategies. Acadian LLC is organized as a limited liability company. Fees for services are largely asset-based and, as a result, revenues fluctuate based on the performance of financial markets and investors’ asset flows in and out of Acadian LLC’s products. The Company utilizes a profit-sharing model in structuring its compensation and ownership arrangements with Acadian LLC. Variable compensation is based on the firm’s profitability. The Company and Acadian LLC key employees share in profits after variable compensation according to their respective ownership interests. The profit-sharing model results in the alignment of the Company and Acadian LLC key employee economic interests, which is critical to the Company’s talent management strategy and long-term growth of the business. The corporate holding company (“Hold Co”) is included within the Unallocated Corporate expenses category. 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. As of December 31, 2024, Paulson & Co. Inc. (“Paulson”) and related parties thereof held approximately 23.9 % of the common stock of the Company. 82 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 1) Organization and Description of the Business (cont.) In December 2023, the Company’s Board of Directors authorized a $ 100 million share repurchase program. For the year ended December 31, 2024, the Company repurchased 4,445,534 shares of common stock at an average price of $ 21.32 per share, or approximately $ 94.9 million in total, including commissions. In connection with these repurchases, a reduction to additional paid-in capital in the amount of $ 0.4 million was recorded until it was depleted, with the remaining $ 94.5 million of share repurchases recorded to retained earnings. 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 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. All shares of common stock repurchased by the Company were retired. 83 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies The Company’s significant accounting policies are as follows: Basis of presentation 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 considered “related parties.” The Consolidated Financial Statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). All dollar amounts, except per-share data in the text and tables herein, are stated in millions unless otherwise indicated. Transactions between the Company and its related parties are included in the Consolidated Financial Statements; however, material intercompany balances and transactions among the Company, Acadian LLC and consolidated Funds are eliminated in consolidation. Revenue recognition Revenue from contracts with customers The Company recognizes revenue when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services. A performance obligation is a promise in a contract to transfer a distinct good or service to the customer, and is the unit of account in accordance with the revenue recognition guidance. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of the Company’s contracts have a single performance obligation, as the promise to transfer the individual goods or services is not separately identifiable from other promises in the contracts and, therefore, not distinct. The Company’s management fee revenue is calculated based upon levels of assets under management multiplied by a fee rate. Management fee revenue is typically calculated on a monthly or quarterly basis, but is earned continuously as performance obligations are fulfilled. The transaction price is variable in contracts which calculate AUM on an average basis over a specified period and this variability is resolved at the end of the period, when the actual average AUM for the contract period may be calculated. The Company is able to resolve the variability and calculate the most likely amount to be recognized for any given period by estimating revenue based upon a daily average AUM. All of the Company’s performance obligations are satisfied ratably over time and there is no distinction in the methodology used to recognize management fee revenue in instances where there is more than one performance obligation. Typically, revenue is recognized over time using a time-based output measure to measure progress. Management fees are recognized monthly as services are rendered. Performance fees are generally assessed as a percentage of the investment performance realized on a client’s account. 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. 84 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) The Company is required to capitalize certain costs directly related to the acquisition or fulfillment of a contract with a customer. The Company has noted no instances where sales-based compensation or similar costs met the definition of an incremental cost to acquire a contract with a customer in accordance with revenue recognition guidance. There are no instances where the Company has incurred costs to fulfill a contract with a customer, therefore no assets related to contract acquisition or fulfillment have been recognized. For each one of its contracts with customers, the Company identifies one or more performance obligations within the contract and then, for each performance obligation, determines if it is a principal (where the nature of its promise is to provide a specified good or service itself) or an agent (where the nature of its promise is to arrange for a good or service to be provided by another party). In instances where a customer reimburses the Company for a cost paid on the customer’s behalf, if the Company is acting as a principal, the reimbursement is recorded on a gross basis and if the Company is acting as an agent, the reimbursement is recorded on a net basis. Revenue from other sources Revenue from other sources also includes interest income on cash and cash equivalents. Dividend income received is recorded on the ex-dividend date. Compensation arrangements The Company operates a short term variable compensation arrangement where generally, a percentage of Acadian LLC’s annual pre-variable compensation earnings, as defined in the arrangement, is allocated to a “pool” of Acadian LLC’s key employees, and subsequently distributed to individuals subject to recommendation and approval of a remuneration committee comprised of both the Company’s and Acadian LLC’s management. Additionally, a contractual percentage of Acadian LLC performance fee revenues and post-bonus profits are included in a deferred compensation pool. The deferred compensation pool is allocated to Acadian LLC key employees and is subject to a three-year vesting period. Variable compensation expense is accrued and recognized in the Consolidated Statements of Operations as services are provided by individual employees. Variable compensation also includes discretionary annual bonuses at the Hold Co, which may be paid in the form of cash or AAMI equity. The Company operates a longer term profit-interest plan whereby certain Acadian LLC key employees are granted (or have a right to purchase) awards representing a profits interest in Acadian LLC, as distinct from an equity interest due to the lack of pari passu voting rights. Under this plan, the Company may award a portion of the aforementioned variable compensation arrangement through issuance of a profits interest in Acadian LLC. The awards generally have a three-year vesting period from the grant date, and the service period begins at the commencement of the financial period to which the variable compensation relates. Under this plan, Acadian LLC key employees are eligible to share in the profits of Acadian LLC based on their respective percentage interest held. In addition, under certain circumstances, Acadian LLC key employees are eligible to receive repurchase payments upon exiting the plan based on a multiple of the last twelve months profits of Acadian LLC, as defined. Profits allocated and movements in the potential repurchase value, determined based on a fixed multiple times trailing twelve month profits, as defined, are recognized as compensation expense. Profit interests compensation liabilities are re-measured at each reporting date at the twelve month earnings multiple, with movements treated as compensation expense in the Company’s Consolidated Statements of Operations. 85 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Share-based compensation plans The Company recognizes the cost of all share-based payments to directors, senior management and employees, including grants of restricted stock and stock options, as compensation expense in the Consolidated Statements of Operations over the respective vesting periods. Awards made under the Company’s equity plans are accounted for as equity settled, and the grant date fair value is recognized as compensation expense over the requisite service period, with a corresponding contribution to additional paid-in capital. Valuation of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) is determined based on the Company’s closing share price as quoted on the New York Stock Exchange on the measurement date. For performance-based awards and stock options, a Monte-Carlo simulation model is used to determine the fair value. Key inputs for the model include: assumed reinvestment of dividends, risk-free interest rate, expected volatility and term. All excess tax benefits and deficiencies on share-based payment awards are recognized as income tax expense or benefit in the Consolidated Statements of Operations. In addition, the tax effects of exercised or vested awards are treated as discrete items in the reporting period in which they occur and excess tax benefits or deficiencies are classified with other income tax cash flows as an operating activity in the Consolidated Statements of Cash Flows. The Company recognizes forfeitures as they occur. The Company has compensation arrangements with Acadian LLC whereby in exchange for continued service, Acadian LLC equity is either purchased by, or granted to Acadian LLC key employees and may be repurchased by the Company at a future date, subject to service requirements having been met. Awards of equity made to Acadian LLC 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 liability is determined with the assistance of third party valuation specialists using a discounted cash flow analysis which incorporates 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. Consolidation The Company evaluates each of its subsidiaries and other operating entities to determine the appropriate method of accounting. Generally, majority-owned entities or otherwise controlled investments in which the Company holds a controlling financial interest as the principal shareholder, managing member, or general partner are consolidated. Funds In the normal course of business, Acadian LLC sponsors and manages certain investment vehicles (the “Funds”). The Company assesses consolidation requirements with respect to its Funds. 86 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) In evaluating whether or not a legal entity must be consolidated, the Company determines if such entity is a variable interest entity (“VIE”) or a voting interest entity (“VOE”). A VOE is considered an entity in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders at risk have the obligation to absorb losses, the right to receive residual returns, and the right to direct the activities of the entity that most significantly impact the entity’s economic performance. A VIE is an entity that lacks one or more of the characteristics of a VOE. Assessing whether an entity is a VIE or VOE involves judgment and analysis. Factors considered in this assessment include the entity’s legal organization, the entity’s capital structure and equity ownership and any related party or de-facto agent implications of the Company’s involvement with the entity. Investments that are determined to be VIEs are consolidated if the Company or Acadian LLC is the primary beneficiary of the investment. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly by the Company or indirectly through related parties on a proportional basis. The primary beneficiary of the VIE is defined as the variable interest holder that has a controlling financial interest. A controlling financial interest is defined as (i) the power to direct the activities of the VIE that most significantly impacts its economic performance and (ii) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. If no single party satisfies both criteria, but the Company and its related parties satisfy the criteria on a combined basis, then the primary beneficiary is the entity out of the related party group that is most closely associated to the VIE. The consolidation analysis can generally be performed qualitatively, however, if it is not readily apparent that the Company is not the primary beneficiary, a quantitative analysis may also be performed. The Company generally is not the primary beneficiary of Fund VIEs created to manage assets for clients unless the Company’s ownership interest in the fund, including interests of related parties on a proportional basis, is significant. The Company consolidates VOEs when it has control over significant operating, financial and investing decisions of the entity or holds the majority voting interest. Upon the occurrence of certain events (such as contributions and redemptions, either by the Company, Acadian LLC, or third parties, or amendments to the governing documents of the Company’s investees or sponsored Funds) management reviews and reconsiders its previous conclusion regarding the status of an entity as a VIE or a VOE. Additionally, management continually reconsiders whether the Company is deemed to be a VIE’s primary beneficiary who consolidates such entity. Investments and Investment Transactions Valuation of investments held at fair value 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. Realized and unrealized gains and losses arising from changes in fair value of investments are reported within net consolidated funds’ investment gains and losses in the Consolidated Statements of Operations. See Note 4 for a summary of the inputs utilized to determine the fair value of other investments held at fair value. 87 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Security transactions The Company generally records securities transactions on a trade-date basis. Realized gains and losses on securities transactions are generally determined on the average-cost method (net of foreign capital gain taxes) and for certain transactions determined based on the specific identification method. Income and expense recognition The Company records interest income on an accrual basis and includes amortization of premiums and accretion of discounts. Dividend income is recorded on the ex-dividend date, net of applicable withholding taxes. Expenses are recorded on an accrual basis. Short sales 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 dollar value of which is at least equal to the market value of the security at the time of the short sale. 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. 88 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Foreign currency translation and transactions Assets and liabilities of non-U.S. entities for which the local currency is the functional currency are translated at current exchange rates as of the end of the accounting period. The related revenues and expenses are translated at average exchange rates in effect during the period. Net exchange gains and losses resulting from translation are excluded from income and are recorded as part of accumulated other comprehensive income (loss). Transactions denominated in a foreign currency are revalued at the current exchange rate at the transaction date and any related gains and losses are recognized in earnings. Fair value measurements In accordance with the accounting standards for fair value measurements, fair value is the price that the Company expects to be paid upon the sale of an asset or expects to pay upon the transfer of a liability in an orderly transaction between market participants. There is a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset or liability. Observable inputs reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect the Company’s own conclusions about the assumptions that market participants would use in pricing the asset or liability based on the best information available in the circumstances. Each investment is assigned a level based upon the observability of the inputs which are significant to the overall valuation. Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: • Level I—Quoted prices are available in active markets for identical investments as of the reporting date. The type of investments included in Level I include listed equities and listed derivatives. As required by U.S. GAAP, the Company does not adjust the quoted price for these investments. • 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. Investments which are generally included in this category include corporate bonds, 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. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the investment. In cases in which the fair value of an investment is established using the net asset value (or its equivalent) as a practical expedient, the investment is not categorized within the fair value hierarchy. 89 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Use of estimates 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 from such estimates, and the differences may be material to the Consolidated Financial Statements. Operating segment The Company currently operates in one reportable segment that provides investment management services and products primarily to institutional clients. See Note 21 for further information regarding the Company’s segment. Derivatives and Hedging The Company may utilize derivative financial instruments to hedge the risk of movement of interest rates and foreign currency on financial assets and liabilities. These derivative financial instruments may or may not qualify as hedges for accounting purposes. The Company records all derivative financial instruments as either assets or liabilities on its Consolidated Balance Sheets and measures these instruments at fair value. For a derivative financial instrument that qualifies as a hedge for accounting purposes and is designated as a hedging instrument, the effective portion of the derivative’s gain or loss is initially reported as a component of other comprehensive income (loss) and subsequently reclassified into earnings over the life of the hedge. The ineffective portion of the gain or loss is recognized in earnings immediately. Cash and cash equivalents The Company considers all highly liquid investments, including money market mutual funds, with original maturities of three months or less to be cash equivalents. Cash equivalents are stated at cost, which approximates market value due to the short-term maturity of these investments. Cash held by consolidated Funds is not available to fund general liquidity needs of the Company and is therefore also classified as restricted cash. Investment advisory fees receivable The Company earns management and performance fees which are billed monthly, quarterly and annually, according to the terms of the relevant investment management agreement. Management and performance fees that have been earned but have not yet been collected are presented as investment advisory fees receivable on the Consolidated Balance Sheets. Due to the short-term nature and liquidity of these receivables, the carrying amounts approximate their fair values. The Company typically does not record an allowance for doubtful accounts or bad debt expense, or any amounts recorded have been immaterial. 90 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Fixed assets 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 ten years . Leasehold improvements are amortized over the shorter of their estimated useful lives or the remaining term of the lease. Computer software developed or obtained for internal use capitalized during the application development stage is amortized using the straight-line method over the estimated useful life of the software, which is generally five years or less. The costs of improvements that extend the life of a fixed asset are capitalized, while the costs of repairs and maintenance are expensed as incurred. Goodwill The Company records goodwill when the consideration paid in a business acquisition exceeds the fair value of the net total of tangible assets acquired, identifiable intangible assets acquired and liabilities assumed. Goodwill is not amortized, but rather is tested for impairment annually or more frequently if events or circumstances occur that indicate impairment may exist. Factors that could trigger an impairment review include significant underperformance relative to historical or projected future operating results, significant changes in the Company’s use of the acquired assets in a business combination or the strategy for the Company’s overall business, and significant negative industry or economic trends. The Company performs its assessment for impairment of goodwill annually as of the first business day of the fourth quarter, or as necessary. The Company has determined that it had one reporting unit, consisting of Acadian LLC, as of the annual goodwill impairment test date. The Company first considers various qualitative factors to determine if it is more likely than not that the fair value of the reporting unit is greater than its respective carrying amount, including goodwill. If based on the qualitative assessment it is determined that it is more likely than not that the fair value of the reporting unit is below its respective carrying amount, therefore indicating that impairment may exist, the impact would be determined at that point through a quantitative assessment. For purposes of assessing potential impairment, the fair value of the reporting unit is estimated and compared to the carrying value of the reporting unit. The fair value of a reporting unit is based on discounted estimated future cash flows. The assumptions used to estimate fair value include management’s estimates of future growth rates, operating cash flows, discount rates and terminal value. These assumptions and estimates can change in future periods based on market movement and factors impacting the expected business performance. Changes in assumptions or estimates could materially affect the determination of the fair value of the reporting unit. If it is determined that the carrying value of the reporting unit exceeds its fair value, an impairment charge is recognized in the amount equal to that excess; not to exceed the total amount of goodwill allocated to that reporting unit. Based on the Company’s most recent annual goodwill impairment test, the Company concluded that the fair value of its reporting unit was more likely than not in excess of their carrying value. At the close of each year, management assessed whether there were any conditions present during the fourth quarter that would indicate impairment subsequent to the initial assessment date and concluded that no such conditions were present. 91 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Leases Contracts are evaluated at inception to determine whether such contract is or contains a lease. The Company leases certain office space and equipment under non-cancelable operating leases. As leases expire, they are normally renewed or replaced in the ordinary course of business. Lease agreements may contain renewal options exercisable by the Company, rent escalation clauses and/or other incentives provided by the landlord. Renewal options that have been determined to be reasonably certain to be exercised are included in the lease term. Rights and obligations attributable to identified leases with a term in excess of twelve months are recognized on the Company’s Consolidated Balance Sheets in the form of right‐of‐use (ROU) assets and operating lease liabilities are recognized as of the date the underlying assets are available for use, which may be the date the Company gains access to begin leasehold improvements. Lease payments related to short‐term leases with a term of twelve months or less are recognized on a straight‐line basis as short‐term lease expense. Operating lease liabilities are initially and subsequently measured as the present value of future lease payments over the lease term. For the purposes of this calculation, lease payments consist of fixed monthly lease payments related to use of the underlying assets. As the Company's leases generally do not have a readily determinable implicit rate, the company uses its incremental borrowing rate to determine the present value of fixed lease payments based on information available at the lease commencement date. ROU assets are initially valued equal to the corresponding lease liabilities, adjusted for any lease incentives payable to the Company. Subsequently, the amortization of ROU assets is recognized as a component of operating lease expense. The total cost of operating leases is recognized on a straight‐line basis over the life of the related leases, and is composed of imputed interest on lease liabilities measured using the effective interest method and amortization of the ROU asset. Variable lease payments are primarily related to services such as common‐area maintenance and utilities, property taxes and insurance, and are recognized as variable lease expense when incurred. ROU assets are tested for impairment whenever changes in facts or circumstances indicate that the carrying amount of an asset may not be recoverable. Modification of a lease term would result in re‐measurement of the lease liability and a corresponding adjustment to the ROU asset. Earnings per share The Company calculates basic and diluted earnings per share (“EPS”) by dividing net income by its shares outstanding as outlined below. Basic EPS attributable to the Company’s stockholders is calculated by dividing “Net income attributable to controlling interests” by the weighted-average number of shares outstanding. Diluted EPS is similar to basic EPS, but adjusts for the effect of potential shares of common stock unless they are antidilutive. For periods with a net loss, potential shares of common stock are considered antidilutive. The Company considers two ways to measure dilution to earnings per share: (a) calculate the net number of shares that would be issued assuming any related proceeds are used to buy back outstanding shares (the treasury stock method), or (b) assume the gross number of shares are issued and calculate any related effects on net income available for stockholders (the if-converted or two-class method). As appropriate, the Company’s policy is to apply the more dilutive methodology upon issuance of such instruments. 92 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Deferred financing costs The Company records debt issuance costs of term loans as a direct deduction from the carrying amount of the associated debt liability. For debt issuance costs of revolving credit loans, the Company presents debt issuance costs as an asset and subsequently amortizes the deferred costs ratably over the term of the agreement. Income taxes Deferred income taxes are recognized for the effects of temporary differences between the tax basis of an asset or liability and its reported amount in the Consolidated Financial Statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. 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 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. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence including its past operating results, the existence of cumulative earnings or losses in the most recent years and its forecast of future taxable income. In estimating future taxable income, the Company develops assumptions including the amount of future pre-tax operating income and the reversal of temporary differences. 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 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. The Company recognizes the financial statement benefit of a tax position only after considering the probability that a tax authority would uphold the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the largest cumulative amount of benefit greater than 50% likely of being sustained. The more-likely-than-not threshold must continue to be met in each reporting period to support continued recognition of the benefit. Unrecognized tax benefits and related interest and penalties are adjusted periodically to reflect changing facts and circumstances. The Company’s accounting policy is to classify interest and related charges as a component of income tax expense. Non-controlling interests For certain entities that are consolidated, but not 100% owned, the Company reports non-controlling interests as equity on its Consolidated Balance Sheets. The Company's consolidated net income on the Consolidated Statements of Operations includes the income (loss) attributable to non-controlling interest holders of Funds. Ownership interests held by Acadian LLC key employees are categorized as liabilities on the Consolidated Balance Sheets and are revalued each reporting date, with movements treated as compensation expense in the Consolidated Statements of Operations. 93 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) Non-controlling interests in consolidated Funds on the Consolidated Balance Sheets include undistributed income owned by the investors in the respective Funds. The Company’s consolidated net income on the Consolidated Statements of Operations includes the income (loss) attributable to non-controlling interest holders of these consolidated entities. Redeemable non-controlling interests The Company includes redeemable non-controlling interests related to certain consolidated Funds as temporary equity on the Consolidated Balance Sheets. Non-controlling interests in certain consolidated Funds are subject to monthly or quarterly redemption by the investors. When redeemable amounts become legally payable to investors, they are classified as a liability and included in total liabilities of consolidated Funds on the Consolidated Balance Sheets. Other comprehensive income (loss) 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 foreign currency translation adjustments, net of tax and adjustments to the valuation and amortization of certain derivative securities, net of tax. Recently adopted accounting standards In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures. This 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. This amendment is effective for annual periods beginning after December 15, 2023 and for interim periods beginning after December 15, 2024. The Company adopted the updated guidance for the annual reporting period beginning January 1, 2024, which did not result in a material impact to our Consolidated Financial Statements. Refer to Note 21 for related disclosures about our reportable operating segments. New accounting standards not yet adopted In December 2023, the FASB issued ASU 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 jurisdiction. This amendment is effective for annual periods beginning after December 15, 2024. The Company does not expect the additional disclosure requirements under ASU 2023-09 to have a material impact on the Consolidated Financial Statements. 94 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 2) Basis of Presentation and Significant Accounting Policies (cont.) In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), Scope Application of Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification. This amendment is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption of ASU 2024-01 to have a material impact on the Consolidated Financial Statements. In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-4): Disaggregation of Income Statement Expenses, which requires disclosures of additional information and disaggregation of certain expenses included in the income statement. This amendment is for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is evaluating the impact that the adoption will have on the Consolidated Financial Statements and have not yet determined the 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) Investments Investments are comprised of the following at December 31 (in millions): 2024 2023 Investments of consolidated Funds $ 154.0 $ 33.9 Other investments 19.4 20.0 Investments related to long-term incentive compensation plans 48.5 44.7 Total investments per Consolidated Balance Sheets $ 221.9 $ 98.6 95 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 4) Fair Value Measurements The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2024 (in millions): Quoted prices in active markets (Level I) Significant other observable inputs (Level II) Significant unobservable inputs (Level III) Uncategorized Total value, December 31, 2024 Assets of AAMI and consolidated Funds (1) Common and preferred stock $ 94.2 $ — $ — $ — $ 94.2 Corporate bonds — 59.1 — — 59.1 Derivatives — 0.7 — — 0.7 Consolidated Funds total 94.2 59.8 — — 154.0 Investments related to long-term incentive compensation plans (3) 48.5 — — — 48.5 Investments in unconsolidated Funds (4) — — — 19.4 19.4 AAMI total 48.5 — — 19.4 67.9 Total fair value assets $ 142.7 $ 59.8 $ — $ 19.4 $ 221.9 Liabilities of consolidated Funds (1) Securities sold short $ ( 20.4 ) $ — $ — $ — $ ( 20.4 ) Derivatives — ( 0.3 ) — — ( 0.3 ) Consolidated Funds total ( 20.4 ) ( 0.3 ) — — ( 20.7 ) Total fair value liabilities $ ( 20.4 ) $ ( 0.3 ) $ — $ — $ ( 20.7 ) The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis at December 31, 2023 (in millions): 96 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 4) Fair Value Measurements (cont.) Quoted prices in active markets (Level I) Significant other observable inputs (Level II) Significant unobservable inputs (Level III) Uncategorized Total value, December 31, 2023 Assets of AAMI and consolidated Funds Common and preferred stock $ 19.0 $ — $ — $ — $ 19.0 Corporate bonds — 14.8 — — 14.8 Derivatives — 0.1 — — 0.1 Consolidated Funds total (1) 19.0 14.9 — — 33.9 Investments in separate accounts (2) $ 2.1 $ — $ — $ — $ 2.1 Investments related to long-term incentive compensation plans (3) 44.7 — — — 44.7 Investments in unconsolidated Funds (4) — — — 17.9 17.9 AAMI total 46.8 — — 17.9 64.7 Total fair value assets $ 65.8 $ 14.9 $ — $ 17.9 $ 98.6 Liabilities of consolidated Funds Securities sold short $ ( 4.0 ) $ — $ — $ — $ ( 4.0 ) Derivatives — ( 0.1 ) — — ( 0.1 ) Consolidated Funds total (1) ( 4.0 ) ( 0.1 ) — — ( 4.1 ) Total fair value liabilities $ ( 4.0 ) $ ( 0.1 ) $ — $ — $ ( 4.1 ) (1) Assets and liabilities measured at fair value are comprised of financial investments managed by Acadian LLC. 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. The Company obtains prices from independent pricing services that may utilize broker quotes, but generally the independent pricing services will use various other pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data. The Company has not made adjustments to the prices provided. Assets of consolidated Funds also include investments in Corporate bonds. 97 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 4) Fair Value Measurements (cont.) 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. In either case, such securities are classified as Level III. The Company performs due diligence procedures over third party pricing vendors to understand their methodology and controls to support their use in the valuation process to ensure compliance with required accounting disclosures. (2) Investments in separate accounts of $ 2.1 million at December 31, 2023, were composed of approximately 1 % cash equivalents and 99 % equity securities. 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 $ 48.5 million and $ 44.7 million at December 31, 2024 and December 31, 2023, respectively, were investments in publicly registered daily redeemable funds (some managed by Acadian LLC), 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 $ 19.4 million and $ 17.9 million at December 31, 2024 and December 31, 2023, 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. 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. Other investment vehicles are not subject to redemption restrictions. The real estate investment Funds of $ 2.9 million and $ 3.6 million at December 31, 2024 and December 31, 2023, respectively, were 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 from December 31, 2024. 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, 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, 2024. 98 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 5) Variable Interest Entities The Company, through Acadian LLC, sponsors the formation of various entities considered to be variable interest entities (“VIEs”). These VIEs are primarily Funds managed by Acadian LLC 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 Acadian LLC key employees and/or individuals that have ownership interests in Acadian LLC. 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. Typically, the Fund’s investors are entitled to substantially all of the economics of these VIEs with the exception of the management fees and performance fees, if any, earned by the Company or any investment the Company has made into the Funds. 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): 2024 2023 Assets Investments $ 154.0 $ 33.9 Other assets of consolidated Funds 5.3 1.3 Total Assets $ 159.3 $ 35.2 Liabilities Liabilities of consolidated Funds $ 21.2 $ 4.3 Total Liabilities $ 21.2 $ 4.3 “Investments” consist of investments in equity securities, 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. 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. The Company’s investment in any unconsolidated VIE generally represents an insignificant interest of the Fund’s net assets and assets under management, such that the majority of the VIE’s results are attributable to third parties. The Company’s exposure to risk in these entities is generally limited to any capital contribution it has made or is required to make and any earned but uncollected management fees. The Company has not issued any investment performance guarantees to these VIEs or their investors. 99 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 5) Variable Interest Entities (cont.) The following information pertains to unconsolidated VIEs for which the Company holds a variable interest at December 31 (in millions): 2024 2023 Unconsolidated VIE assets $ 558.7 $ 669.1 Unconsolidated VIE liabilities $ 270.4 $ 316.5 Equity interests on the Consolidated Balance Sheets $ 2.9 $ 3.6 Maximum risk of loss (1) $ 2.9 $ 3.6 (1) Includes equity investments the Company has made. 6) Fixed Assets Fixed assets consisted of the following at December 31 (in millions): 2024 2023 Leasehold improvements $ 28.5 $ 30.0 Office equipment 8.7 9.5 Furniture and fixtures 6.3 6.2 Software and web development 111.1 118.0 Fixed assets, at cost 154.6 163.7 Accumulated depreciation and amortization ( 118.9 ) ( 119.5 ) Fixed assets, net $ 35.7 $ 44.2 Depreciation and amortization expense was $ 18.5 million, $ 17.3 million and $ 18.5 million for the years ended December 31, 2024, 2023 and 2022, respectively. During the year ended December 31, 2024 and 2023, the Company disposed of property, plant, and equipment with a cost basis of $ 19.0 million and $ 4.4 million, respectively, and accumulated depreciation of $( 19.0 ) million and $( 4.4 ) million, respectively. These disposals included leasehold improvements, office equipment, furniture and fixtures and software. There were no gains or losses on disposals recorded during the year ended December 31, 2024 and 2023 . 7) Leases The Company has operating leases for corporate offices, data centers and certain equipment. The operating leases have remaining lease terms of less than 1 year to 9 years, some of which include options to extend the leases for up to 5 years. 100 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 7) Leases (cont.) The following table summarizes information about the Company’s operating leases for the years ended December 31 (in millions): 2024 2023 2022 Operating lease cost $ 8.7 $ 8.6 $ 10.0 Variable lease cost 0.1 0.1 0.1 Sublease income — — ( 0.5 ) Total operating lease expense $ 8.8 $ 8.7 $ 9.6 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 9.0 $ 9.3 6.4 ROU asset obtained in exchange for new operating lease liabilities 2.1 3.4 2.2 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, 2024 and 2023, the weighted average remaining lease term was 8.5 years and 9.5 years, respectively, and the weighted average discount rate was 3.55 % and 3.53 %, respectively. Maturities of operating lease liabilities were as follows (in millions): Operating Leases Year Ending December 31, 2025 $ 9.5 2026 9.4 2027 9.0 2028 8.6 2029 8.0 Thereafter 33.2 Total lease payments 77.7 Less imputed interest ( 10.4 ) Total $ 67.3 101 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 8) Goodwill The following table presents the changes in goodwill in 2024 and 2023 (in millions): Quant & Solutions Goodwill $ 22.1 Accumulated impairment ( 1.8 ) December 31, 2022 $ 20.3 Additions — Impairments — Goodwill 22.1 Accumulated impairment ( 1.8 ) December 31, 2023 $ 20.3 Additions — Impairments — Goodwill 22.1 Accumulated impairment ( 1.8 ) December 31, 2024 $ 20.3 9) Related Party Transactions Amounts due for investment advisory fee receivables from related parties were comprised of the following at December 31 (in millions): 2024 2023 Investment advisory fee receivable from unconsolidated Funds (1) $ 42.7 $ 21.2 Total amounts due for investment advisory fee receivables from related parties $ 42.7 $ 21.2 Related party transactions included in the Company’s Consolidated Statements of Operations for the years ended December 31 consisted of (in millions): Revenues: 2024 2023 2022 Management fees from unconsolidated Funds (1) $ 119.9 $ 86.5 $ 93.6 Performance fees from unconsolidated Funds (1) 9.3 1.0 3.6 Total related party revenues $ 129.2 $ 87.5 $ 97.2 102 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 9) Related Party Transactions (cont.) (1) Transactions with unconsolidated Acadian LLC-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. These transactions are comprised of fees for advisory services and investments in unconsolidated funds. See Note 4 “Fair Value Measurements” for more information on the investments in unconsolidated funds. 10) Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consisted of the following at December 31 (in millions): 2024 2023 Accounts payable $ 6.7 $ 8.6 Accrued expenses 25.6 24.9 Accrued interest payable 5.6 5.6 Total accounts payable and accrued expenses $ 37.9 $ 39.1 11) Other Compensation Liabilities Other compensation liabilities consisted of the following at December 31 (in millions): 2024 2023 Share-based payments liability (Note 18) $ 25.4 $ 23.0 Profit interests compensation liability 18.7 — Voluntary deferral plan liability (Note 17) 48.4 44.5 Total other compensation liabilities $ 92.5 $ 67.5 Profit interests compensation expense amounted to $ 19.0 million in 2024, $ 0.0 million in 2023, and $( 28.0 ) million in 2022. Redemptions of profit sharing interests from Acadian LLC key employees for cash were $ 0.3 million in 2024, $ 0.0 million in 2023, and $ 2.7 million in 2022. 103 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 12) Borrowings and Debt The Company’s borrowings and long-term debt were comprised of the following as of the dates indicated (in millions): December 31, 2024 December 31, 2023 (in millions) Carrying value Fair Value Fair Value Level Carrying value Fair Value Fair Value Level Revolving credit facility: $ 140 million revolving credit facility expiring August 29, 2027 (1)(2) $ — $ — $ — $ — Total revolving credit facility $ — $ — $ — $ — Third-party borrowings: $ 275 million 4.80 % Senior Notes Due July 27, 2026 (3) 274.3 271.7 2 273.9 263.1 2 Total third-party borrowings $ 274.3 $ 271.7 $ 273.9 $ 263.1 (1) Fair value approximates carrying value because the credit facility has variable interest rates based on selected short term market rates. (2) On August 29, 2024, Acadian LLC’s $ 125 million revolving credit facility was terminated and replaced with a new $ 140 million revolving credit facility. (3) 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 August 29, 2024, Acadian LLC, Royal Bank of Canada, Goldman Sachs Bank USA, Morgan Stanley Bank, N.A., the Bank of New York Mellon, Bank of America N.A., as an issuing bank, and Citibank, N.A., as an issuing bank and administrative agent (collectively, the “Lenders”), entered into a new revolving credit facility agreement (the “Acadian LLC Credit Agreement”), which replaced Acadian LLC’s revolving credit facility dated as of March 7, 2022 (the “Prior Credit Agreement”). The maturity date of the Prior Credit Agreement was March 7, 2025, and the maturity date of the Acadian LLC Credit Agreement is August 29, 2027. Borrowings under the Acadian LLC Credit Agreement bear interest, at Acadian LLC’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 LLC’s Leverage Ratio (as defined below) or (b) Adjusted Term SOFR plus an additional amount ranging from 1.5 % to 2.0 %, with such additional amount based on Acadian LLC’s Leverage Ratio. In addition, a commitment fee is charged based on the average daily unused portion of the revolving credit facility under the Acadian LLC Credit Agreement at a per annum rate ranging from 0.25 % to 0.375 %, with such amount based on Acadian LLC’s Leverage Ratio. The weighted average interest rate for the revolving credit facility was 6.93 %, 6.19 % and 2.64 % in 2024, 2023 and 2022, respectively. 104 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 12) Borrowings and Debt (cont.) Under the Acadian LLC Credit Agreement, the ratio of Acadian LLC’s third-party borrowings to Acadian LLC’s trailing twelve months Adjusted EBITDA, as defined by the Acadian LLC Credit Agreement (the “Leverage Ratio”), cannot exceed 2.5 x and the Acadian LLC interest coverage ratio must not be less than 4.0 x. Senior Notes 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. 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, 2024, the aggregate maturities of debt commitments, based on their contractual terms, are as follows: Future minimum debt commitments 2025 $ — 2026 275.0 2027 — 2028 — 2029 — Thereafter — Total $ 275.0 The Company was in compliance with the required covenants related to borrowings and debt facilities as of December 31, 2024. 105 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 13) Income Taxes Income before income taxes consisted of the following for the years ended December 31 (in millions): 2024 2023 2022 Domestic $ 118.1 $ 90.1 $ 139.1 Foreign 7.6 6.4 5.7 Total $ 125.7 $ 96.5 $ 144.8 The components of income tax expense for the years ended December 31 are as follows (in millions): 2024 2023 2022 Current: Federal $ 32.0 $ 22.6 $ 21.9 State 14.7 11.2 14.4 Foreign 2.4 1.6 1.5 Total current expense (benefit) 49.1 35.4 37.8 Deferred: Federal ( 9.9 ) ( 6.3 ) 4.7 State — 0.5 1.5 Foreign ( 0.3 ) ( 0.2 ) 0.2 Total deferred expense (benefit) ( 10.2 ) ( 6.0 ) 6.4 Total tax expense (benefit) $ 38.9 $ 29.4 $ 44.2 The Company has recognized income tax benefit related to derivative securities within other comprehensive income of $ 0.9 million, $ 0.9 million and $ 1.3 million in the years ended December 31, 2024, 2023 and 2022, respectively. The provision for income taxes in 2024, 2023 and 2022 included benefits of $ 0.0 million, $ 0.0 million and $ 0.1 million, respectively, related to the utilization of net operating loss carryforwards. 106 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 13) Income Taxes (cont.) The reconciliation of the difference between the Company’s U.S. Federal statutory income tax rate and the effective income tax rate for the years ended December 31 is as follows: 2024 2023 2022 Tax at U.S. federal statutory income tax rate 21.0 % 21.0 % 21.0 % State income taxes, net of federal benefit 7.1 % 7.3 % 8.0 % Other permanent tax items — % ( 0.2 ) % 0.1 % Executive Compensation 0.2 % 0.1 % 0.2 % Adjustment to liabilities for uncertain tax positions 0.2 % 0.2 % ( 0.1 ) % Effect of foreign operations 1.0 % 0.8 % 0.7 % Effect of changes in tax law — % 3.5 % — % Effect of income from non-controlling interest ( 0.3 ) % ( 0.3 ) % — % Impact of state tax obligations on deferred tax assets 1.9 % ( 1.5 ) % ( 0.5 ) % Other ( 0.1 ) % ( 0.4 ) % 1.1 % Effective income tax rate 31.0 % 30.5 % 30.5 % 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 year 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, in the year ended December 31, 2023, 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 $ 0.1 million, $ 0.5 million and $ 0.9 million during the years ended December 31, 2024, 2023 and 2022, respectively, due to the lapse of statute of limitations. 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. The Company has recognized tax expense of $ 1.1 million, $ 0.6 million and $ 0.9 million during the years ended December 31, 2024, 2023 and 2022, respectively, related to the GILTI tax. During the year ending December 31, 2023, the Company removed its indefinite reinvestment of foreign unremitted earnings assertion for multiple foreign subsidiaries. As of December 31, 2024, the Company maintains the assertion that the foreign unremitted earnings of multiple foreign subsidiaries are not permanently reinvested. The amount of deferred tax recorded during the period was not material. 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, 2024. 107 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 13) Income Taxes (cont.) 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. The significant components of deferred tax assets and deferred tax liabilities for the years ended December 31 are as follows (in millions): 2024 2023 Deferred tax assets: Investment in partnerships 73.4 63.6 Employee compensation 1.3 1.6 Other 2.6 2.1 Cash flow hedge 1.6 2.6 Total deferred tax assets 78.9 69.9 Valuation allowance — — Deferred tax assets, net of valuation allowance 78.9 69.9 Deferred tax liabilities: Right of use assets 0.1 0.1 Investments 0.5 0.1 Total deferred tax liabilities 0.6 0.2 Net deferred tax assets $ 78.3 $ 69.7 At December 31, 2024 and 2023, the Company’s net deferred tax asset primarily relates to its basis difference in its investment in Acadian LLC, which is treated as a partnership for federal income tax purposes. 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. The weight given to the evidence is commensurate with the extent to which it can be objectively verified. The more negative evidence that exists, the more positive evidence that is necessary and the more difficult it is to support a conclusion that a valuation allowance is not needed. The Company has three years of cumulative earnings as of December 31, 2024, 2023 and 2022. As of December 31, 2024, management believes it is more likely than not that the balance of the deferred tax assets will be realized based on forecasted taxable income. 108 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 13) Income Taxes (cont.) A reconciliation of the change in gross unrecognized tax benefits for the years ended December 31 is as follows (in millions): 2024 2023 2022 Balance as of January 1 $ 1.1 $ 0.9 $ 1.0 Additions based on current year tax positions 0.3 0.7 0.7 Reductions related to lapses of statutes of limitations ( 0.1 ) ( 0.5 ) ( 0.8 ) Balance as of December 31 $ 1.3 $ 1.1 $ 0.9 The Company’s liability for uncertain tax positions includes unrecognized benefits of $ 1.0 million and $ 0.8 million at December 31, 2024 and 2023, respectively, that if recognized would affect the effective tax rate on income. The Company recognized $ 0.1 million, $ 0.1 million, and $ 0.0 million in interest and penalties in its income tax provision for the years ended December 31, 2024, 2023 and 2022, respectively. The Company recognizes accrued interest and penalties relating to unrecognized tax benefits as income tax expense. The Company’s liability for uncertain tax positions at December 31, 2024, 2023 and 2022 includes accrued interest and penalties of $ 0.2 million, $ 0.2 million and $ 0.1 million, respectively. 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, 2024 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. As of December 31, 2024, the Company is generally no longer subject to income tax examinations by U.S. federal, state, local, or foreign tax authorities for calendar years prior to 2020. At December 31, 2024, 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 $ 0.7 million within the next twelve months. 109 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 14) Commitments and Contingencies Operational commitments 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 periods presented. Guaranty The Company entered into a guaranty for an office space security deposit on behalf of Acadian LLC in the amount of $ 2.5 million in January 2020. This represents the maximum potential amount of future (undiscounted) payments that the Company could be required to make under the guaranty in the event of default by the guaranteed parties. This guaranty expires in 2033. There are no liabilities recorded on the Consolidated Balance Sheets as of December 31, 2024 and 2023, related to this guaranty. Litigation The Company is subject to claims, legal proceedings, and other contingencies in the ordinary course of its 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. The Company establishes accruals for matters for which the outcome is probable and can be reasonably estimated. As of December 31, 2024 and 2023, there were no material accruals for claims and the Company does not believe any outstanding matters will have a material adverse effect on the Company. Indemnifications In the normal course of business, the Company may enter into contracts that contain a variety of representations and warranties, and which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. Foreign tax contingency The Company has clients in non-U.S. jurisdictions which require entities that are conducting certain business activities in such jurisdictions to collect and remit tax assessed on certain fees paid for goods and services provided. The Company does not believe this requirement is applicable based on its limited business activities in these jurisdictions. However, given the fact that uncertainty exists around the requirement, the Company has chosen to evaluate its potential exposure related to non-collection and remittance of these taxes. At December 31, 2024 and 2023, management of the Company has estimated the potential maximum exposure and concluded that it is not material. No accrual for the potential exposure has been recorded as the probability of incurring any potential liability relating to this exposure is not probable at December 31, 2024 and 2023. 110 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 14) Commitments and Contingencies (cont.) Considerations of credit risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash, cash equivalents, restricted cash and investments. 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 operates. Cash deposits at the various financial institutions may exceed Federal Deposit Insurance Corporation insurance limits. 111 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 15) Earnings Per Share Basic earnings per share is calculated by dividing net income attributable to controlling interests by the weighted-average number of shares of common stock outstanding. Diluted earnings per share is similar to basic earnings per share, but is adjusted for the effect of potentially issuable common stock, except when inclusion is antidilutive. The calculation of basic and diluted earnings per share of common stock for the years ended December 31, 2024, 2023 and 2022 is as follows (dollars in millions, except per share data): 2024 2023 2022 Numerator: Net income attributable to controlling interests $ 85.0 $ 65.8 $ 100.6 Denominator: Weighted-average shares of common stock outstanding—basic 37,770,185 41,493,154 42,056,278 Potential shares of common stock: Restricted stock units 22,178 7,448 14,147 Employee stock options 536,043 1,037,341 1,085,844 Weighted-average shares of common stock outstanding—diluted 38,328,406 42,537,943 43,156,269 Earnings per share of common stock attributable to controlling interests: Basic $ 2.25 $ 1.59 $ 2.39 Diluted $ 2.22 $ 1.55 $ 2.33 16) Revenue Management fees The Company’s management fees are a function of the fee rates charged to clients, which are typically expressed in basis points, and the levels of the Company’s assets under management. The most significant driver of increases or decreases in this average fee rate is changes in the mix of the Company’s assets under management caused by net inflows or outflows in certain asset classes or disproportionate market movements. Performance fees The Company’s products subject to performance fees earn these fees upon exceeding high-water mark performance thresholds or outperforming a hurdle rate. Performance fees are recorded in revenues when the contractual performance criteria have been met and when it is probable that a significant reversal of revenue recognized will not occur in future reporting periods. 112 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 16) Revenue (cont.) Disaggregation of management fee revenue The geographic disaggregation of management fee revenue for the years ended December 31 (in millions) is presented below: 2024 2023 2022 Quant & Solutions U.S. $ 327.5 $ 281.9 $ 279.1 Non-U.S. 103.6 91.3 88.3 Management fee revenue $ 431.1 $ 373.2 $ 367.4 17) Employee Benefits The Company has various defined contribution plans covering substantially all of its full-time employees. In addition to pre-tax contributions made by employees, the Company also makes contributions to the qualified plans annually. The Company also has non-qualified defined contribution plans covering certain senior employees. The Company has established a Deferred Compensation Plan under which the Board of Directors makes awards that may be invested by the recipient in investments deemed available under the plan. Vesting of awards under the Deferred Compensation Plan is based on the number of years of service already provided by the employee at the date of the grant. In addition, the Company has established a Voluntary Deferral Plan that provides officers of the Company the opportunity to voluntarily defer a portion of their compensation. The compensation deferred is deemed to be invested in one or more investment options available under the plan. These non-qualified plans are unfunded, although the Company does make contributions to a Rabbi Trust to hedge its risks in terms of providing returns to employees on their deemed investments held in the plan. As of December 31, 2024 and 2023, a total of $ 48.4 million and $ 44.5 million, respectively, had been recorded as long-term compensation liabilities and a total of $ 48.5 million and $ 44.7 million, respectively, had been invested under the Deferred Compensation and Voluntary Deferral plans. The change in the fair value of long-term compensation liabilities and the change in fair value of the assets invested under the Deferred Compensation and Voluntary Deferral plans was $ 4.6 million and $ 4.6 million, respectively, for the year ended December 31, 2024, $ 4.8 million and $ 4.9 million, respectively, for the year ended December 31, 2023, and $ 4.9 million and $ 4.9 million, respectively, for the year ended December 31, 2022. The Company recorded total expenses in relation to its qualified and non-qualified plans within compensation and benefits in its Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022 of $ 8.5 million, $ 5.5 million and $ 6.0 million, respectively. 113 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 18) Equity-based Compensation Cash-settled Acadian LLC awards The Company maintains a compensation arrangement with Acadian LLC whereby in exchange for continued service, Acadian LLC equity is either purchased by, or granted to Acadian LLC key employees subject to a limit imposed by the Company, and may be repurchased either by Acadian LLC 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 the vesting date. The Company accounts for the arrangement 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, when award holders maximize value and post-vesting restrictions. Vested Acadian LLC liability-classified equity awards are revalued at each period end until settlement date, with changes in the liabilities included within compensation expense. The following table presents the changes in the share-based payments liability for the years ended December 31 (in millions): 2024 2023 2022 Balance, beginning of period $ 23.0 $ 19.4 $ 28.1 Amortization and revaluation of granted awards 10.5 6.2 ( 4.6 ) Repurchases (cash-settled) ( 8.1 ) ( 2.6 ) ( 4.1 ) Balance, end of period $ 25.4 $ 23.0 $ 19.4 Equity-settled corporate awards Acadian Asset Management Inc. equity incentive plan The Company has established various plans under which it is authorized to grant restricted stock awards (“RSAs”), restricted stock units (“RSUs”), performance-based restricted stock awards (“Performance-based RSAs”), performance-based restricted stock units (“Performance-based RSUs”) and stock option awards. These plans are maintained to provide equity-based compensation arrangements to employees and non-executive directors. Equity ownership encourages employees and directors to act in the best long-term interests of the Company. As of December 31, 2024, the Company had 4.5 million shares of common stock available to be granted under the various plans. Compensation expense recognized by the Company for the years ended December 31, 2024, 2023 and 2022 in relation to these awards was $ 0.9 million, $ 1.2 million, and $ 2.4 million respectively. The related income tax benefit recognized for years ended December 31, 2024, 2023 and 2022 was $ 0.1 million, $ 0.2 million and $ 0.3 million respectively. Unamortized compensation expense related to unvested RSUs at December 31, 2024 of $ 1.2 million is expected to be recognized over a weighted-average period of 1.6 years. The service inception date for annual awards granted in 2024 is deemed to be January 1, 2023. It is anticipated that annual awards for 2024 with a fair value of $ 0.8 million will be granted during 2025 with a service inception date of January 1, 2024. 114 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 18) Equity-based Compensation (cont.) Grants of restricted stock in Acadian Asset Management Inc. The following table summarizes the activity related to restricted stock awards: 2024 2023 2022 Acadian Asset Management Inc. RSAs Number of shares Weighted average grant date fair value per share Number of shares Weighted average grant date fair value per share Number of shares Weighted average grant date fair value per share Outstanding at beginning of the year — $ — — $ — 2,500 $ 10.09 Granted during the year — — — — — — Forfeited during the year — — — — ( 125 ) 10.09 Vested during the year — — — — ( 2,375 ) 10.09 Outstanding at end of the year — $ — — $ — — $ — 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, 2024, 2023 and 2022. Restricted stock awards under the plan generally have a vesting period of one to three years . Grants of restricted stock units in Acadian Asset Management Inc. The following table summarizes the activity related to restricted stock units: 2024 2023 2022 Acadian Asset Management Inc. RSUs Number of shares Weighted average grant date fair value per share Number of shares Weighted average grant date fair value per share Number of shares Weighted average grant date fair value per share Outstanding at beginning of the year 48,797 $ 24.19 71,664 $ 20.95 38,703 $ 15.33 Granted during the year 44,639 21.68 49,494 24.04 59,999 22.62 Forfeited during the year — — ( 15,823 ) 25.05 ( 3,003 ) 17.55 Vested during the year ( 30,747 ) 23.54 ( 56,538 ) 19.72 ( 24,035 ) 16.51 Outstanding at end of the year 62,689 $ 22.80 48,797 $ 24.19 71,664 $ 20.95 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 units granted to employees. Restricted stock units under the plan generally have a vesting period of one to three years . 115 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 18) Equity-based Compensation (cont.) Grants of Performance-based restricted stock units in Acadian Asset Management Inc. The following table summarizes the activity related to performance-based restricted stock units: 2024 2023 2022 Acadian Asset Management Inc. Performance-based RSUs Number of shares Weighted average grant date fair value per share Number of shares Weighted average grant date fair value per share Number of shares Weighted average grant date fair value per share Outstanding at beginning of the year — $ — — $ — 9,013 $ 14.62 Vested during the year — — — — ( 7,932 ) 14.62 Other movements — — — — ( 1,081 ) 14.62 Outstanding at end of the year — $ — — $ — — $ — 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, 2024, 2023, and 2022. Performance-based RSUs under the plan have a vesting period of three years . Grants of Stock Options in Acadian Asset Management Inc. The following tables summarizes the activity related to the Company’s stock option awards: 2024 Stock Options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding at beginning of the year 1,659,000 $ 10.64 0.8 Granted during the year — — Forfeited during the year — — Exercised during the year ( 1,659,000 ) 10.64 Outstanding at end of the year — $ — 0.0 $ — Exercisable at end of the year — $ — 0.0 $ — 116 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 18) Equity-based Compensation (cont.) 2023 Stock Options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value 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 ( 736,463 ) 11.80 Outstanding at end of the year 1,659,000 $ 10.64 0.8 $ 14,128,440 Exercisable at end of the year 1,659,000 $ 10.64 0.8 $ 14,128,440 2022 Stock Options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Outstanding at beginning of the year 2,969,963 $ 11.09 2.5 Exercised during the year ( 499,500 ) 11.70 Outstanding at end of the year 2,470,463 $ 10.97 1.6 $ 23,746,573 Exercisable at end of the year 1,441,463 $ 11.03 1.5 $ 13,767,753 There were no stock options granted by the Company during the year ended December 31, 2024, 2023, and 2022. The total fair value of options vested during the years ended December 31, 2024, 2023 and 2022 was $ 0.0 million, $ 1.3 million and $ 1.3 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $ 24.7 million, $ 5.1 million and $ 6.0 million, respectively. The Company received $ 0.1 million, $ 0.0 million and $ 0.0 million related to the exercise of options for the year ended December 31, 2024, 2023, and 2022, respectively. The Company realized tax benefits of $ 0.1 million, $ 0.3 million, and $ 0.3 million related to the exercise of options for the year ended December 31, 2024, 2023, and 2022, respectively. Shares issued upon exercise of the options represent newly issued shares. 117 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 19) Accumulated Other Comprehensive Income (Loss) The components of accumulated other comprehensive income (loss), net of tax, for the years ended December 31, 2024, 2023 and 2022 were as follows (in millions): Foreign currency translation adjustment Valuation and amortization of derivative securities Total Balance, as of December 31, 2021 $ 4.8 $ ( 15.6 ) $ ( 10.8 ) Foreign currency translation adjustment before tax ( 3.1 ) — ( 3.1 ) Amortization related to derivatives securities, before tax (1) — 4.6 4.6 Tax impact — ( 1.3 ) ( 1.3 ) Other comprehensive income (loss) ( 3.1 ) 3.3 0.2 Balance, as of December 31, 2022 $ 1.7 $ ( 12.3 ) $ ( 10.6 ) Foreign currency translation adjustment before tax 1.4 — 1.4 Amortization related to derivatives securities, before tax — 3.4 3.4 Tax impact — ( 0.9 ) ( 0.9 ) Other comprehensive income 1.4 2.5 3.9 Balance, as of December 31, 2023 $ 3.1 ( 9.8 ) $ ( 6.7 ) Foreign currency translation adjustment before tax ( 0.5 ) — ( 0.5 ) Amortization related to derivatives securities, before tax — 3.6 3.6 Tax impact 0.1 ( 0.9 ) ( 0.8 ) Other comprehensive income (loss) ( 0.4 ) 2.7 2.3 Balance, as of December 31, 2024 $ 2.7 $ ( 7.1 ) $ ( 4.4 ) (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. 118 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 20) Derivatives and Hedging Cash flow hedge In July 2015, the Company entered into a series of $ 300.0 million notional Treasury rate lock contracts which were designated and qualified as cash flow hedges. The Company documented its hedging strategy and risk management objective for this contract in anticipation of a future debt issuance. The Treasury rate lock contract eliminated the impact of fluctuations in the underlying benchmark interest rate for future forecasted debt issuances. The Company assessed the effectiveness of the hedging contract at inception and on a quarterly basis thereafter. 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. As of December 31, 2024, the balance recorded in accumulated other comprehensive income (loss) in connection with the Treasury rate lock contract amounted to $( 7.1 ) million, net of tax. This balance will be reclassified to earnings through interest expense over the life of the issued debt. Amounts of $ 3.6 million, $ 3.4 million and $ 4.6 million have been reclassified for the years ended December 31, 2024, 2023 and 2022, respectively. During the next twelve months the Company expects to reclassify approximately $ 3.9 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. 21) Segment Information The Company has the following reportable segment: • Quant & Solutions —comprised of strategies that leverage cutting-edge technology to gather and analyze data to identify mispriced assets to deliver attractive risk-adjusted returns for investors; portfolios include developed and developing markets for equity, credit and alternative strategies. This segment is comprised of the Company’s interest in Acadian LLC. The corporate holding company (“Hold Co”) is included within the Unallocated Corporate expenses category. The Hold Co 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 CODM is the Company’s Chief Executive Officer. 119 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 21) Segment Information (cont.) Performance Measure The primary measure used by the CODM in measuring performance and allocating resources to the segment is economic net income (“ENI”). ENI is used to make resource allocation decisions, determine appropriate levels of investment or dividend payout, manage balance sheet leverage, determine variable compensation and equity distributions, and incentivize management. The Company defines ENI for the segment as ENI revenue less ENI operating expenses. The ENI adjustments to U.S. GAAP include both reclassifications of U.S. GAAP revenue and expense items, as well as adjustments to U.S. GAAP results, primarily to exclude non-cash, non-economic expenses recognized under U.S. GAAP. This measure supplements and should be considered in addition to, and not in lieu of, the Consolidated Statements of Operations prepared in accordance with U.S. GAAP. The Company does not disclose total asset information for its reportable segment as the information is not reviewed by the CODM. ENI revenue includes management fees, performance fees and other revenue under U.S. GAAP, adjusted to include management fees paid to the Company by consolidated Funds. Significant segment ENI expenses include fixed compensation and benefits, variable compensation, and Acadian LLC key employee distributions included in compensation and benefits expense under U.S. GAAP, depreciation and amortization under U.S. GAAP, adjusted to exclude non-cash expenses representing changes in the value of Acadian LLC equity and profit interests held by Acadian LLC key employees, capital transaction costs, and restructuring costs. Other segment items include ENI general and administrative expense under U.S. GAAP, adjusted to exclude restructuring costs and include sales based compensation. ENI segment results are also adjusted to exclude consolidated Fund revenues, consolidated Fund expenses and investment return recorded under U.S. GAAP. 120 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 21) Segment Information (cont.) Segment Presentation The following table sets forth summarized operating results for the Company’s segment and related adjustments necessary to reconcile the segment economic net income to arrive at the Company’s consolidated U.S. GAAP net income attributable to controlling interests for the years ended December 31 (in millions): ($ in millions) 2024 2023 2022 U.S. GAAP consolidated revenue $ 505.6 $ 426.6 $ 417.2 Exclude revenue from consolidated Funds (a) 3.1 3.0 0.4 Quant & Solutions segment ENI revenue $ 502.5 $ 423.6 $ 416.8 Less: Quant & Solutions segment ENI expenses Fixed compensation and benefits (b) 90.7 86.6 79.0 Variable compensation (c) 119.9 102.2 96.0 Acadian LLC key employee distributions (d) 9.7 5.1 5.1 Depreciation and amortization (e) 18.1 17.3 18.1 Other segment items (f) 87.9 80.3 68.4 Segment economic net income $ 176.2 $ 132.1 $ 150.2 Reconciliation of segment ENI to net income attributable to controlling interests: Unallocated corporate expenses (g) ( 19.4 ) ( 19.1 ) ( 22.2 ) Adjustments and reconciling items (h) 1.9 ( 7.1 ) ( 0.1 ) Non-cash compensation expenses for Acadian LLC key employee equity and profit interest revaluations (i) ( 23.2 ) 0.1 40.0 Investment income (loss) 2.2 ( 0.1 ) 0.2 Interest income 3.5 6.1 0.8 Interest expense ( 19.4 ) ( 19.6 ) ( 20.5 ) Loss on extinguishment of debt — — ( 3.2 ) Net consolidated Funds' investment gains (losses) 3.9 4.1 ( 0.4 ) Income before income taxes $ 125.7 $ 96.5 $ 144.8 Income tax expense ( 38.9 ) ( 29.4 ) ( 44.2 ) Consolidated net income $ 86.8 $ 67.1 $ 100.6 Net income attributable to non-controlling interests in consolidated Funds ( 1.8 ) ( 1.3 ) — Net income attributable to controlling interests $ 85.0 $ 65.8 $ 100.6 121 Acadian Asset Management Inc. Notes to Consolidated Financial Statements (Continued) December 31, 2024 and 2023 21) Segment Information (cont.) Reconciling Adjustments: (a) Adjustment to exclude consolidated Funds revenues, which are included in U.S. GAAP revenue. (b) Fixed compensation and benefits includes base salaries, payroll taxes and the cost of benefit programs provided, adjusted for severance relating to restructuring costs. (c) Variable compensation is contractually set and calculated individually for Acadian LLC bonuses. Amounts are adjusted for non-cash Acadian LLC key employee equity revaluations and severance relating to restructuring costs. (d) Acadian LLC key employee distributions includes the share of Acadian LLC profits after variable compensation that is attributable to the Acadian LLC key employee equity and profits interests holders, according to their ownership interests. (e) Depreciation and amortization includes U.S. GAAP depreciation and amortization, adjusted for costs associated with the wind-down of the MACS business in the standalone format. (f) Other segment items includes segment systems, portfolio administration costs and other general & administrative expenses adjusted to exclude restructuring costs. (g) Included in unallocated corporate expenses for the years ended December 31, 2024, 2023 and 2022 was compensation and benefits of $ 10.0 million, $ 9.2 million, and $ 11.4 million, respectively, related to Hold Co which are included in U.S. GAAP net income attributable to controlling interests. Included in unallocated corporate expenses for the years ended December 31, 2024, 2023 and 2022 was general and administrative expenses of $ 9.4 million, $ 9.9 million, and $ 10.4 million, respectively, related to Hold Co which are included in U.S. GAAP net income attributable to controlling interests. Included in unallocated corporate expenses for the year ended December 31, 2022 was depreciation expense of $ 0.4 million related to Hold Co which is include in U.S. GAAP net income attributable to controlling interests. (h) Adjustments and reconciling items includes consolidated Funds revenue, consolidated Fund expense, and restructuring costs. (i) Non-cash Acadian LLC key employee equity revaluations represent changes in the value of Acadian LLC equity and profit interests held by Acadian LLC key employees, which are included within the U.S. GAAP compensation and benefits expense. 122 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None.