What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-07 compared with 2020-10-30 · 135 added, 238 removed, 195 unchanged (66% of the section changed)

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Such statements are subject to certain risks and uncertainties, including, among others, the factors discussed under the caption “Item 1A.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, and also under “Item 1A.

Risk Factors” in our Quarterly Report on Form 10-Q for the period ended March 31, 2020.

These factors (among others) could affect our financial condition, business activities, results of operations, cash flows or overall financial performance and could cause our actual results and business activities to differ materially from historical periods and those presently anticipated and projected.

Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020.

These factors (among others) could affect our financial condition, business activities, results of operations, cash flows, or overall financial performance and cause actual results and business activities to differ materially from historical periods and those presently anticipated and projected.

Forward-looking statements speak only as of the date they are made, and we will not undertake and we specifically disclaim any obligation to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of events, whether or not anticipated.

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Executive Overview

We are a global asset management company with equity investments in high-quality boutique investment management firms, which we call our “Affiliates.” Our strategy is to generate long-term value by investing in leading independent active investment managers, through a proven partnership approach, and allocating resources across our unique opportunity set to the areas of highest growth and return.

Through our innovative partnership approach, each Affiliate’s management team retains significant equity ownership in their firm while maintaining operational autonomy.

In addition, we offer centralized capabilities to our Affiliates across a variety of areas, including strategy, marketing and distribution, and product development.

As of September 30, 2020, our aggregate assets under management were $653.5 billion, across a broad range of active, return-oriented strategies.

D uring the nine months ended September 30, 2020, the pandemic caused by the novel coronavirus (“COVID-19”) had a significant impact on the global economy, which may continue for months to come.

The overall extent and duration of COVID-19 on businesses and economic activity generally remains unclear.

We and our Affiliates remain focused on the health and well-being of the individuals and families at AMG, our Affiliates, and the community at large.

Given the nature of our decentralized operations and our entrepreneurial culture, we and our Affiliates remain fully operational and have experienced minimal disruption in continuing to serve our key stakeholders, most importantly our clients.

We continue to monitor the economic uncertainty related to COVID-19, and the extent of the impact on our business operations and financial results will depend on a number of factors and future developments, which are uncertain and cannot be predicted.

We are a leading partner to independent active investment management firms globally.

Our strategy is to generate long-term value by investing in a diverse array of excellent partner-owned investment firms, which we call our “Affiliates,” through a proven partnership approach, and allocating resources across our unique opportunity set to the areas of highest growth and return.

Our innovative partnership approach enables each Affiliate’s management team to own significant equity in their firm while maintaining operational and investment autonomy.

In addition, we offer our Affiliates growth capital, global distribution, and other strategic value-added capabilities, which enhance the long-term growth of these independent businesses and enable them to align equity incentives across generations of principals to build enduring franchises.

As of March 31, 2021, our aggregate assets under management were approximately $738 billion, across a broad range of active, return-oriented strategies.

In the first quarter of 2021, we completed a minority investment in Boston Common Asset Management LLC, a women-owned leader in global sustainable and impact investing.

On April 30, 2021, we completed a minority investment in OCP Asia Limited, a leading alternative manager in private markets, providing customized secured lending solutions across the Asia-Pacific region.

Operating Performance Measures

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The following table presents our key aggregate operating performance measures:

As of and for the Three Months Ended September 30, As of and for the Nine Months Ended September 30,

(in billions, except as noted) 2019 2020 % Change 2019 2020 % Change

As of and for the Three Months Ended March 31,

(in billions, except as noted) 2020 2021 % Change

Assets under management $ 599.9 $ 738.0 23 %

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Aggregate fees (in millions) 1,253.1 1,414.4 13 %

As of and for the three and nine months ended September 30, 2020, assets under management and average assets under management exclude the assets under management of certain Affiliates in which we have repositioned or are repositioning our interests.

These Affiliates are not significant to our operating performance measures or our results of operations.

Assets under management and therefore average assets under management, include the assets under management of our consolidated and equity method Affiliates.

Assets under management is presented on a current basis without regard to the timing of the inclusion of an Affiliate’s financial results in our operating performance measures and Consolidated Financial Statements.

Average assets under management reflects the timing of the inclusion of an Affiliate’s financial results in our operating performance measures and Consolidated Financial Statements.

Average assets under management for mutual funds and similar retail investment products represents an average of the daily net assets under management, while for institutional and high net worth clients, average assets under management represents an average of the assets at the beginning or end of each month during the applicable period.

For the three and nine months ended September 30, 2019 and 2020, aggregate fees consists of the total asset and performance based fees earned by all of our consolidated and equity method Affiliates, and includes the aggregate fees of certain Affiliates in which we have repositioned or are repositioning our interests.

These Affiliates are not significant to our operating performance measures or our results of operations.

Average assets under management for mutual funds and similar retail investment products represents an average of the daily net assets under management, while for institutional and high net worth clients, average assets under management generally represents an average of the assets at the beginning or end of each month during the applicable period.

Aggregate fees consist of the total asset and performance based fees earned by all of our consolidated and equity method Affiliates.

For certain of our Affiliates accounted for under the equity method, we report aggregate fees and the Affiliate’s financial results in our Consolidated Financial Statements one quarter in arrears.

Aggregate fees is provided in addition to, but not as a substitute for, Consolidated revenue or other GAAP performance measures.

Aggregate fees are provided in addition to, but not as a substitute for, Consolidated revenue or other GAAP performance measures.

Assets Under Management

Through our Affiliates, we provide a comprehensive and diverse range of active, return-oriented strategies designed to assist institutional, retail, and high net worth clients worldwide in achieving their investment objectives.

We continue to see demand for active, return-oriented strategies, particularly in illiquid alternative and multi-asset and fixed income strategies, reflecting continued investor demand for returns that are less correlated to traditional equity markets, while we are experiencing outflows in quantitative strategies across alternative strategies and equities strategies.

We believe the best performing active equity managers (whether global-, regional-, or country-specific) will continue to have significant opportunities to grow as a result of net client cash inflows.

In addition, investor demand for passively-managed products, including exchange traded funds has continued, and we have experienced outflows in certain equity strategies, consistent with this industry-wide trend.

However, we believe the best performing active equity managers (whether global-, regional-, or country-specific) will continue to have significant opportunities to grow as a result of net client cash inflows.

We believe we are well-positioned to benefit from these trends.

The outbreak of COVID-19 has created significant disruption in economic activity.

The impact of the COVID-19 outbreak on our Affiliates and their clients’ demand for investment strategies is currently uncertain, and could result in changes in investor demand for our strategies in ways that cannot be predicted but could vary from recent trends.

If financial markets were to worsen as a result of COVID-19 or other factors, our average assets under management and asset based fees could be adversely impacted.

The following charts present information regarding the composition of our assets under management by active, return-oriented strategy and client type as of September 30, 2020:

Assets Under Management (in billions)

We also anticipate that independent investment firms will continue to seek access to an evolving range of partnership solutions, and that we have a significant opportunity to invest in outstanding firms across the global asset management industry.

The following charts present information regarding the composition of our assets under management by active, return-oriented strategy and client type as of March 31, 2021:

Assets Under Management

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(1) Alternatives include illiquid alternative strategies, which accounted for 15% of our assets under management as of September 30, 2020.

(2) Global equities include emerging markets strategies, which accounted for 8% of our assets under management as of September 30, 2020.

The following tables present changes in our assets under management by active, return-oriented strategy and client type for the three months ended September 30, 2020:

(1) Alternatives include illiquid alternative strategies, which accounted for 14% of our assets under management as of March 31, 2021.

(2) Global equities include emerging markets strategies, which accounted for 9% of our assets under management as of March 31, 2021.

The following tables present changes in our assets under management by active, return-oriented strategy and client type for the three months ended March 31, 2021:

By Strategy - Quarter to Date

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Equities Multi-Asset & Fixed Income Total

June 30, 2020 $ 220.5 $ 229.2 $ 84.0 $ 104.7 $ 638.4

Client cash inflows and commitments 6.3 7.7 3.1 5.8 22.9

Client cash outflows (9.9) (13.5) (8.5) (5.0) (36.9)

Net client cash flows (3.6) (5.8) (5.4) 0.8 (14.0)

Market changes 1.3 15.1 5.5 3.5 25.4

Foreign exchange (1)

1.7 2.3 0.2 0.5 4.7

Realizations and distributions (net) (0.7) (0.1) — — (0.8)

(0.1) — — (0.1) (0.2)

September 30, 2020 $ 219.1 $ 240.7 $ 84.3 $ 109.4 $ 653.5

By Client Type - Quarter to Date

(in billions) Institutional Retail High Net Worth Total

June 30, 2020 $ 364.9 $ 161.8 $ 111.7 $ 638.4

Client cash inflows and commitments 9.1 8.9 4.9 22.9

Client cash outflows (19.4) (12.9) (4.6) (36.9)

Net client cash flows (10.3) (4.0) 0.3 (14.0)

Market changes 14.0 7.7 3.7 25.4

Foreign exchange (1)

2.5 2.0 0.2 4.7

Realizations and distributions (net) (0.7) (0.1) — (0.8)

— (0.2) — (0.2)

September 30, 2020 $ 370.4 $ 167.2 $ 115.9 $ 653.5

By Strategy - Year to Date

Alternatives Global Equities U.S.

Equities Multi-Asset & Fixed Income Total

December 31, 2020 $ 216.5 $ 278.5 $ 103.5 $ 117.7 $ 716.2

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(0.2) — 0.1 — (0.1)

September 30, 2020 $ 219.1 $ 240.7 $ 84.3 $ 109.4 $ 653.5

By Client Type - Year to Date

Institutional Retail High Net Worth Total

March 31, 2021 $ 222.8 $ 284.7 $ 110.7 $ 119.8 $ 738.0

By Client Type - Quarter to Date

(in billions) Institutional Retail High Net Worth Total

December 31, 2020 $ 401.0 $ 189.3 $ 125.9 $ 716.2

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(0.5) 0.5 (0.1) (0.1)

September 30, 2020 $ 370.4 $ 167.2 $ 115.9 $ 653.5

March 31, 2021 $ 408.9 $ 196.8 $ 132.3 $ 738.0

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Aggregate Fees

Aggregate fees consists of asset and performance based fees.

Aggregate fees consist of asset and performance based fees of our consolidated and equity method Affiliates.

Asset based fees include advisory and other fees earned by our Affiliates for services provided to their clients and are typically determined as a percentage of the value of a client’s assets under management.

Performance based fees are based on investment performance, typically on an absolute basis or relative to a benchmark, and are recognized when they are earned (i.e., when they become billable to customers and are not subject to claw-back).

Performance based fees are based on investment performance, typically on an absolute basis or relative to a benchmark, and are generally recognized when it is improbable that there will be a significant reversal in the amount of revenue recognized.

Performance based fees are generally billed less frequently than asset based fees, and although performance based fees inherently depend on investment performance and will vary from period to period, we anticipate performance based fees will be a recurring component of our aggregate fees.

Aggregate fees is generally determined by the level of our average assets under management, the composition of these assets across our active, return-oriented strategies that realize different asset based fee ratios, and performance based fees.

Aggregate fees are generally determined by the level of our average assets under management and the composition of these assets across our strategies that realize different asset based fee ratios and performance based fees.

Our asset based fee ratio is calculated as asset based fees divided by average assets under management.

Aggregate fees were $961.7 million for the three months ended September 30, 2020, a decrease of $168.8 million or 15% as compared to the three months ended September 30, 2019.

The decrease in our aggregate fees was due to a $165.5 million or 15% decrease from asset based fees and a $3.3 million or less than 1% decrease from performance based fees.

The decrease in asset based fees was due to a decrease in our average assets under management, principally in our alternative strategies and equities strategies due to net client cash outflows and a change in the composition of our assets under management.

Aggregate fees were $3,175.7 million for the nine months ended September 30, 2020, a decrease of $369.9 million or 10% as compared to the nine months ended September 30, 2019.

The decrease in our aggregate fees was due to a $464.1 million or 13% decrease from asset based fees, partially offset by a $94.2 million or 3% increase from performance based fees.

The decrease in asset based fees was due to a decrease in our average assets under management, principally in our alternative strategies and global equity strategies due to net client cash outflows and a change in the composition of our assets under management.

Aggregate fees were $1,414.4 million for the three months ended March 31, 2021, an increase of $161.3 million or 13% as compared to the three months ended March 31, 2020.

The increase in our aggregate fees was due to a $143.3 million or 11% increase from performance based fees and an $18.0 million or 2% increase from asset based fees.

The increase in asset based fees was due to an increase in our average assets under management, principally in our global equity strategies, offset by a change in the composition of our assets under management.

Financial and Supplemental Financial Performance Measures

The following table presents our key financial and supplemental financial performance measures:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in millions) 2019 2020 % Change 2019 2020 % Change

For the Three Months Ended March 31,

(in millions) 2020 2021 % Change

Net income (loss) (controlling interest) $ (15.6) $ 149.9 N.M.

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Adjusted EBITDA (controlling interest) is an important supplemental financial performance measure for management as it provides a comprehensive view of our share of the financial performance of our business.

For the three months ended September 30, 2020, our Adjusted EBITDA (controlling interest) decreased $25.3 million or 12%, primarily due to a $168.8 million or 15% decrease in aggregate fees.

While aggregate fees decreased $369.9 million or 10% in the nine months ended September 30, 2020, our Adjusted EBITDA (controlling interest) decreased $97.7 million or 15%.

Adjusted EBITDA (controlling interest) decreased more than aggregate fees on a percentage basis due to a decline in earnings at certain Affiliates in which we share in revenue less agreed-upon expenses and the recognition of performance based fees at Affiliates in which we hold less of an economic interest.

The decrease was also due to a $15.7 million increase in share-based compensation primarily due to an event that accelerated certain share-based compensation.

For the three months ended September 30, 2020, our Net income (controlling interest) decreased $15.0 million or 17%, primarily due to a $25.3 million decrease from the decline in Adjusted EBITDA (controlling interest), partially offset by a $9.3 million decrease in Intangible amortization and impairments attributable to the controlling interest.

While Adjusted EBITDA (controlling interest) decreased $97.7 million or 15%, for the nine months ended September 30, 2020, our Net income (controlling interest) increased $93.1 million.

The increase in Net income (controlling interest) was primarily due to a $278.6 million decrease in equity method intangible amortization and impairments.

This increase was partially offset by a $36.2 million increase in Intangible amortization and impairments, and a $36.8 million increase in Income tax expense, both attributable to the controlling interest.

For the three months ended March 31, 2021, our Adjusted EBITDA (controlling interest) increased $46.4 million or 23%, primarily due to a $161.3 million or 13% increase in aggregate fees, of which we hold a greater economic interest.

While Adjusted EBITDA (controlling interest) increased $46.4 million or 23% for the three months ended March 31, 2021, our Net income (controlling interest) increased $165.5 million.

The increase in Net income (controlling interest) was greater than the increase in Adjusted EBITDA (controlling interest) primarily due to a $144.1 million decrease in equity method intangible amortization and impairments and a $17.3 million increase in Investment and other income attributable to the controlling interest, partially offset by a $48.2 million increase in Income tax expense attributable to the controlling interest.

We believe Economic net income (controlling interest) is an important supplemental financial performance measure because it represents our performance before non-cash expenses relating to the acquisition of interests in Affiliates and improves comparability of performance between periods.

In the three months ended September 30, 2020, our Economic net income (controlling interest) decreased $7.3 million or 5%.

This decrease was primarily due to a $25.3 million decrease in Adjusted EBITDA (controlling interest), partially offset by a $19.3 million decrease in current and other deferred taxes attributable to the controlling interest.

In the nine months ended September 30, 2020, our Economic net income (controlling interest) decreased $65.5 million or 13%.

This decrease was primarily due to a $97.7 million decrease in Adjusted EBITDA (controlling interest), partially offset by a $39.7 million decrease in current and other deferred taxes attributable to the controlling interest.

For the three months ended March 31, 2021, our Economic net income (controlling interest) increased $33.5 million or 22%, primarily due to a $46.4 million increase in Adjusted EBITDA (controlling interest), partially offset by an $8.0 million increase in Interest expense attributable to the controlling interest.

Results of Operations

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The following table presents our consolidated Affiliate average assets under management and Consolidated revenue:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in millions, except as noted) 2019 2020 % Change 2019 2020 % Change

For the Three Months Ended March 31,

(in millions, except as noted) 2020 2021 % Change

Consolidated Affiliate average assets under management (in billions) $ 351.9 $ 422.1 20 %

Consolidated revenue $ 507.3 $ 559.1 10 %

Our Consolidated revenue decreased $54.2 million or 10% for the three months ended September 30, 2020, due to a $51.3 million or 9% decrease from asset based fees and a $2.9 million or 1% decrease from performance based fees.

The decrease in asset based fees was due to a decrease in consolidated Affiliate average assets under management, principally in our alternative strategies and U.S.

equity strategies due to net client cash outflows and a change in the composition of our assets under management.

Our Consolidated revenue decreased $210.8 million or 13% for the nine months ended September 30, 2020, due to a $172.5 million or 11% decrease from asset based fees and a $38.3 million or 2% decrease from performance based fees.

The decrease in asset based fees was due to a decrease in consolidated Affiliate average assets under management, principally in our alternative strategies and U.S.

equity strategies due to net client cash outflows and a change in the composition of our assets under management.

Our Consolidated revenue increased $51.8 million or 10% for the three months ended March 31, 2021, due to a $49.5 million or 10% increase from asset based fees and a $2.3 million or less than 1% increase from performance based fees.

The increase in asset based fees was due to an increase in consolidated Affiliate average assets under management, principally in our global equity strategies, offset by a change in the composition of our assets under management.

Consolidated Expenses

Our Consolidated expenses are primarily attributable to the non-controlling interests of our consolidated Affiliates in which we share in revenue without regard to expenses.

For these Affiliates, the amount of expenses attributable to the non-controlling interests, including compensation, is generally determined by the percentage of revenue allocated to expenses as part of the structured partnership interests in place at the respective Affiliate.

structured partnership interests in place at the respective Affiliate.

Accordingly, increases in revenue generally will increase a consolidated Affiliate’s expenses attributable to the non-controlling interests and decreases in revenue will generally decrease a consolidated Affiliate’s expenses attributable to the non-controlling interests.

The following table presents our Consolidated expenses:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

% Change % Change

For the Three Months Ended March 31,

(in millions) 2020 2021

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Total consolidated expenses $ 354.3 $ 378.5 7 %

Compensation and related expenses decreased $9.5 million or 4% for the three months ended September 30, 2020, primarily due to a $13.9 million decrease in bonus and salary expenses, principally as a result of the decline in Consolidated revenue and headcount repositioning in 2019.

This decrease was partially offset by a $4.0 million increase in share-based compensation expense.

Compensation and related expenses decreased $71.3 million or 10% for the nine months ended September 30, 2020, primarily due to a $91.2 million decrease in bonus and salary expenses, principally as a result of the decline in Consolidated revenue and headcount repositioning in 2019.

This decrease was partially offset by a $15.7 million increase in share-based compensation, primarily due to an event that accelerated certain share-based compensation and a $4.1 million increase in Affiliate equity compensation expense.

Selling, general and administrative expenses decreased $17.4 million or 19% for the three months ended September 30, 2020, primarily due to a $5.4 million decrease in travel-related expenses, a $4.6 million decrease from sub-advisory and distribution expenses related to a decrease in consolidated Affiliate average assets under management, and a $3.6 million decrease in renewal commissions.

Selling, general and administrative expenses decreased $45.4 million or 16% for the nine months ended September 30, 2020, primarily due to a $15.3 million decrease from sub-advisory and distribution expenses related to a decrease in consolidated Affiliate average assets under management, a $13.6 million decrease in travel-related expenses, an $11.1 million decrease in renewal commissions, and a $4.6 million decrease in costs due to the impact of office closures.

Intangible amortization and impairments increased $10.8 million or 51% for the three months ended September 30, 2020, primarily due to a $24.9 million expense to reduce the carrying value of acquired client relationships at certain of our Affiliates to fair value.

See Note 9 of our Consolidated Financial Statements.

These increases were partially offset by a $14.2 million reduction in amortization expense related to certain definite-lived assets being fully amortized.

Intangible amortization and impairments increased $61.4 million or 85% for the nine months ended September 30, 2020, primarily due to an $85.2 million expense to reduce the carrying value of acquired client relationships at certain of our Affiliates to fair value.

See Note 9 of our Consolidated Financial Statements.

These increases were partially offset by a $19.5 million reduction in amortization expense related to certain definite-lived assets being fully amortized and a $4.4 million reduction in amortization expense related to a decrease in actual and expected client attrition for certain definite-lived acquired client relationships.

Interest expense increased $4.3 million or 22% for the three months ended September 30, 2020, primarily due to a $3.5 million increase due to the termination of our pound sterling-denominated forward foreign currency contracts in March 2020 and a $2.9 million increase from our 3.3% senior unsecured notes due June 15, 2030 issued in June 2020 (the “2030 senior notes”).

Compensation and related expenses increased $39.1 million or 19% for the three months ended March 31, 2021, primarily due to a $28.9 million increase in bonus and salary expenses principally as a result of the increase in Consolidated revenue, an $8.6 million increase in Affiliate equity compensation expense, and a $1.5 million increase in share-based compensation expense.

Selling, general and administrative expenses decreased $11.5 million or 13% for the three months ended March 31, 2021, primarily due to a $5.4 million decrease in travel-related expenses as a result of reduced travel during the COVID-19 pandemic, a $3.5 million decrease in reserves on notes receivable, and a $1.1 million decrease in professional fees.

Intangible amortization and impairments decreased $13.1 million or 64% for the three months ended March 31, 2021, primarily due to a $13.6 million decrease in amortization expense related to certain definite-lived assets being fully amortized.

Interest expense increased $8.0 million or 41% for the three months ended March 31, 2021, primarily due to a $6.3 million increase from our debt securities issued in 2020 and a $2.8 million increase from the termination of our pound sterling-denominated forward foreign currency contracts, which occurred in the first quarter of 2020.

These increases were partially offset by a $1.6 million decrease from lower interest rates and lower borrowings on our senior unsecured term loan facility (the “term loan”).

Interest expense increased $8.2 million or 14% for the nine months ended September 30, 2020, primarily due to a $7.6 million increase due to the termination of our pound sterling-denominated forward foreign currency contracts in March 2020, a $4.3 million increase from our 5.875% junior subordinated notes issued in March 2019, and a $3.8 million increase from our 2030 senior notes.

These increases were partially offset by a $7.6 million decrease from lower interest rates and lower borrowings on our term loan and our senior unsecured multicurrency revolving credit facility (the “revolver”).

There were no significant changes in Depreciation and other amortization or Other expenses (net) for the three and nine months ended September 30, 2020.

There were no significant changes in Depreciation and other amortization for the three months ended March 31, 2021.

Other expenses (net) increased $2.5 million or 23% for the three months ended March 31, 2021, primarily due to a $2.0 million decrease in gains related to changes in the value of Affiliate equity purchase obligations.

Equity Method Income (Loss) (Net)

For a majority of our Affiliates accounted for under the equity method, we use structured partnership interests in which we contractually share in the Affiliate’s revenue less agreed-upon expenses.

We also use structured partnership interests in which we contractually share in the Affiliate’s revenue without regard to expenses.

For our Affiliates accounted for under the equity method, we use structured partnership interests in which we contractually share in the Affiliate’s revenue or revenue less agreed-upon expenses.

Our share of earnings or losses from Affiliates accounted for under the equity method, net of amortization and impairments, is included in Equity method income (loss) (net).

The following table presents equity method Affiliate average assets under management and equity method revenue, as well as equity method earnings and equity method intangible amortization and impairments, which in aggregate form Equity method income (loss) (net):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in millions, except as noted) 2019 2020 % Change 2019 2020 % Change

For the Three Months Ended March 31,

(in millions, except as noted) 2020 2021 % Change

Operating Performance Measures

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Equity method intangible amortization and impairments (179.3) (35.2) (80) %

Equity method income (loss) (net) $ 10.3 $ 17.0 65 % $ (318.5) $ (78.8) (75) %

Our equity method revenue decreased $114.6 million or 20% for the three months ended September 30, 2020, primarily due to a $114.2 million or 20% decrease from asset based fees.

The decrease in asset based fees was primarily due to a decrease in equity method Affiliate average assets under management, principally in our alternative strategies due to net client cash outflows and a change in the composition of our assets under management.

For the three months ended September 30, 2020, equity method earnings decreased $11.1 million or 18%, primarily due to a $114.6 million or 20% decrease in equity method revenue.

Equity method intangible amortization and impairments decreased $17.8 million or 34% for the three months ended September 30, 2020, primarily due to a $10.0 million decrease in expenses to reduce the carrying value of an Affiliate to fair value.

See Note 10 of our Consolidated Financial Statements.

The decrease was also due to a $7.5 million reduction in amortization expense related to a decrease in actual and expected client attrition for certain definite-lived acquired client relationships.

Our equity method revenue decreased $159.1 million or 9% for the nine months ended September 30, 2020, due to a $291.4 million or 16% decrease from asset based fees, partially offset by a $132.3 million or 7% increase from performance based fees.

While equity method revenue decreased $159.1 million or 9% for the nine months ended September 30, 2020, equity method earnings decreased $38.9 million or 18%.

Equity method earnings decreased more than equity method revenue on a percentage basis due to a decline in earnings at certain Affiliates in which we share in revenue less agreed-upon expenses.

Equity method intangible amortization and impairments decreased $278.6 million or 53% for the nine months ended September 30, 2020, primarily due to a $285.0 million decrease in expenses to reduce the carrying value of certain Affiliates to fair value.

See Note 10 of our Consolidated Financial Statements.

This decrease was partially offset by an $8.0 million increase in amortization expense due to an increase in actual and expected client attrition for certain definite-lived acquired client relationships.

Equity method income (loss) (net) $ (113.2) $ 51.7 N.M.

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(1) Percentage change is not meaningful

Our equity method revenue increased $109.5 million or 15% for the three months ended March 31, 2021, primarily due to a $141.0 million or 19% increase from performance based fees, partially offset by a $31.5 million or 4% decrease from asset based fees.

The decrease in asset based fees was primarily due to a change in the composition of our assets under management.

For the three months ended March 31, 2021, equity method earnings increased $20.8 million or 31%, primarily due to a $109.5 million or 15% increase in equity method revenue.

Equity method earnings increased more than equity method revenue on a percentage basis primarily due to the recognition of performance based fees at Affiliates in which we hold more of an economic interest.

Equity method intangible amortization and impairments decreased $144.1 million or 80% for the three months ended March 31, 2021, primarily due to a $140.0 million decrease in expenses to reduce the carrying value of an Affiliate to fair value (see Note 11 of our Consolidated Financial Statements) and a $5.9 million decrease in amortization expenses related to a decrease in actual and expected client attrition.

These decreases were partially offset by a $2.3 million increase in amortization expense due to investments in new Affiliates.

Investment and Other Income

The following table presents our Investment and other income:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in millions) 2019 2020 % Change 2019 2020 % Change

Investment and other income $ 6.7 $ 12.7 90 % $ 22.0 $ 2.9 (87) %

Investment and other income increased $6.0 million or 90% for the three months ended September 30, 2020, primarily due to a $5.4 million increase in net unrealized gains on Other investments.

Investment and other income decreased $19.1 million or 87% for the nine months ended September 30, 2020, primarily due to a $22.9 million net decrease from the valuation and realized gains on sales of Investments in marketable securities and Other investments, partially offset by a $5.5 million increase from foreign currency translation.

For the Three Months Ended March 31,

(in millions) 2020 2021 % Change

Investment and other income $ 2.4 $ 32.3 N.M.

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(1) Percentage change is not meaningful.

Investment and other income increased $29.9 million for the three months ended March 31, 2021, primarily due to a $32.3 million net increase from the valuation of Investments in marketable securities and Other investments.

Income Tax Expense

The following table presents our Income tax expense:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in millions) 2019 2020 % Change 2019 2020 % Change

For the Three Months Ended March 31,

(in millions) 2020 2021 % Change

Income tax expense $ 2.2 $ 50.5 N.M.

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(1) Percentage change is not meaningful.

Income tax expense increased $7.0 million or 23% for the three months ended September 30, 2020, primarily due to a $10.1 million increase in deferred tax expense resulting from the revaluation of certain of our deferred tax liabilities due to an increase in the UK tax rate during the period and a $6.4 million increase in a valuation allowance against certain foreign net operating losses.

These increases were partially offset by a $6.4 million capital loss benefit for an amount carried back to a year prior to the effective date of the Tax Cuts and Jobs Act and a $3.2 million decrease in estimated Global Intangible Low Tax Income (“GILTI”) expense as a result of regulatory guidance issued during the period.

Income tax expense increased $38.6 million for the nine months ended September 30, 2020, primarily due to a $129.9 million increase in Income before income taxes attributable to the controlling interest, a $10.1 million increase in deferred tax expense resulting from the revaluation of certain of our deferred tax liabilities due to an increase in the UK tax rate during the period and a $10.7 million increase in valuation allowances against certain state and foreign loss carryforwards.

These increases were partially offset by $10.5 million of capital loss benefits for amounts carried back to years prior to the effective date of the Tax Cuts and Jobs Act and a $3.2 million decrease in estimated GILTI expense as a result of regulatory guidance issued during the period.

Income tax expense increased $48.3 million for the three months ended March 31, 2021, primarily due to a $213.7 million increase in income (loss) before income taxes attributable to the controlling interest, partially offset by a $3.1 million decrease in tax shortfalls related to share-based compensation.

Net Income (Loss)

The following table presents Net income, Net income (non-controlling interests), and Net income (loss) (controlling interest):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

(in millions) 2019 2020 % Change 2019 2020 % Change

Net income $ 162.1 $ 127.8 (21) % $ 209.3 $ 231.2 10 %

For the Three Months Ended March 31,

(in millions) 2020 2021 % Change

Net income $ 40.0 $ 214.1 N.M.

Net income (non-controlling interests) 55.6 64.2 15 %

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(1) Percentage change is not meaningful.

Net income (controlling interest) decreased $15.0 million or 17% for the three months ended September 30, 2020, primarily due to a decrease in Consolidated revenue and increases in consolidated Intangible amortization and impairments, Interest expense and Income tax expense, partially offset by an increase in Equity method income (net).

Net income (controlling interest) increased $93.1 million for the nine months ended September 30, 2020, primarily due to a decrease in Equity method loss (net), partially offset by a decrease in Consolidated revenue and increases in Income tax expense and consolidated Intangible amortization and impairments.

Net income (controlling interest) increased $165.5 million for the three months ended March 31, 2021, primarily due to an increase in Equity method income (net), an increase in Consolidated revenue, and an increase in Investment and other income attributable to the controlling interest.

These increases were partially offset by an increase in Income tax expense attributable to the controlling interest.

Supplemental Financial Performance Measures

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The following table presents a reconciliation of Net income (loss) (controlling interest) to Adjusted EBITDA (controlling interest):

For the Three Months Ended September 30, For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in millions) 2020 2021

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Intangible amortization and impairments (1)

68.4 59.1 583.5 341.1

Other items (2)

4.0 (5.5) 10.3 16.9

Adjusted EBITDA (controlling interest) $ 200.4 $ 246.8

___________________________

(1) Intangible amortization and impairments in our Consolidated Statement of Income includes amortization attributable to our non-controlling interests.

(1) Intangible amortization and impairments in our Consolidated Statement of Income include amortization attributable to the non-controlling interests of our consolidated Affiliates.

For our Affiliates accounted for under the equity method, we do not separately report intangible amortization and impairments in our Consolidated Statements of Income.

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The following table presents the Intangible amortization and impairments shown above:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in millions) 2020 2021

3 unchanged sentences

Total $ 195.7 $ 40.6

(2) Other items includes depreciation and adjustments to contingent payment arrangements.

Beginning with the first quarter of 2020, other items also includes certain Affiliate equity expenses and gains and losses on general partner and seed capital investments.

These changes were made to improve the comparability of performance between periods.

Prior periods have not been revised as the amounts were not significant.

(2) Other items includes depreciation, adjustments to contingent payment arrangements, certain Affiliate equity expenses, and gains and losses on general partner and seed capital investments.

Economic Net Income (controlling interest) and Economic Earnings Per Share

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We believe Economic net income (controlling interest) and Economic earnings per share are important measures because they represent our performance before non-cash expenses relating to the acquisition of interests in Affiliates and improve comparability of performance between periods.

Economic net income

(controlling interest) and Economic earnings per share are used by our management and Board of Directors as our principal performance benchmarks, including as one of the measures for aligning executive compensation with stockholder value.

These non-GAAP performance measures are provided in addition to, but not as substitutes for, Net income (loss) (controlling interest) and Earnings per share (diluted) or other GAAP performance measures.

Economic net income (controlling interest) and Economic earnings per share are used by our management and Board of Directors as our principal performance benchmarks, including as one of the measures for aligning executive compensation with stockholder value.

These non-GAAP performance measures are provided in addition to, but not as substitutes for, Net income (loss) (controlling interest) and Earnings (loss) per share (diluted) or other GAAP performance measures.

We adjust Net income (loss) (controlling interest) to calculate Economic net income (controlling interest) by adding back our share of pre-tax intangible amortization and impairments attributable to intangible assets (including the portion attributable to equity method investments in Affiliates) because these expenses do not correspond to the changes in the value of these assets, which do not diminish predictably over time.

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The following table presents a reconciliation of Net income (loss) (controlling interest) to Economic net income (controlling interest) and Economic earnings per share:

For the Three Months Ended September 30, For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in millions, except per share data) 2020 2021

1 unchanged sentence

Intangible amortization and impairments (1)

68.4 59.1 583.5 341.1

Intangible-related deferred taxes (31.0) 8.9

Other economic items (2)

1.2 (5.3) 5.4 12.7

Economic net income (controlling interest) $ 151.3 $ 184.8

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Stock options and restricted stock units 0.0 —

Assumed issuance of junior convertible securities shares — (2.2)

Average shares outstanding (adjusted diluted) 47.8 43.2

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(1) See note (1) to the table in “Adjusted EBITDA (controlling interest).”

(2) Other economic items includes non-cash imputed interest (principally related to the accounting for convertible securities and contingent payment arrangements), tax windfalls and shortfalls from share-based compensation and certain Affiliate equity expenses.

Beginning with the first quarter of 2020, other economic items also includes gains and losses on general partner and seed capital investments.

These changes were made to improve the comparability of performance between periods.

Prior periods have not been revised as the amounts were not significant.

For the three and nine months ended September 30, 2019 and 2020, other economic items were net of income tax expense (benefit) of $0.3 million and $0.7 million, respectively, and $2.3 million and $(0.8) million, respectively.

For the three months ended March 31, 2020 and 2021, other economic items were net of income tax expense of $1.1 million and $6.9 million, respectively.

Liquidity and Capital Resources

We generate long-term value by investing in new Affiliates, investing in existing Affiliates, and investing in centralized capabilities through which we can leverage our scale and resources to benefit our Affiliates and enhance their long-term growth prospects.

We then return capital to shareholders through share repurchases and the payment of cash dividends on our common stock while maintaining a conservative capital structure consistent with an investment grade rating.

Cash and cash equivalents were $929.4 million as of September 30, 2020 and were attributable to both the controlling and non-controlling interests.

In the nine months ended September 30, 2020, we met our cash requirements through cash generated

by operating activities.

Our principal uses of cash during the nine months ended September 30, 2020 were, and for the foreseeable future are expected to be, for investments in new Affiliates, investments in existing Affiliates primarily through repurchases of Affiliate equity interests, repayment of debt, the return of capital through share repurchases and the payment of cash dividends on our common stock, distributions to Affiliate equity holders, and general working capital purposes.

We anticipate that cash flows from operations, together with borrowings under our revolver, will be sufficient to support our cash flow needs for the foreseeable future.

We generate long-term value by investing in new Affiliate partnerships, investing in existing Affiliates, and investing in centralized capabilities through which we can leverage our scale and resources to benefit our Affiliates and enhance their long-term growth prospects.

Given our annual cash generation from operations, in addition to investing for growth in our business, we are also able to return excess capital to shareholders primarily through share repurchases.

We continue to manage our capital structure consistent with an investment grade company and are currently rated A3 by Moody’s Investors Service and BBB+ by S&P Global Ratings.

Cash and cash equivalents were $766.2 million as of March 31, 2021 and were attributable to both our controlling and the non-controlling interests.

In the three months ended March 31, 2021, we met our cash requirements primarily through cash generated by operating activities.

Our principal uses of cash in the three months ended March 31, 2021 were for share repurchases, investments in existing Affiliates through purchases of Affiliate equity interests, and investments in new Affiliates.

We expect investments in new Affiliates, investments in existing Affiliates, primarily through purchases of Affiliate equity interests and general partner and seed capital investments, the return of capital through share repurchases and the payment of cash dividends on our common stock, repayment of debt, distributions to Affiliate equity holders, and general working capital to be the primary uses of cash on a consolidated basis for the foreseeable future.

We anticipate that our current cash balance, cash flows from operations, and borrowings under our revolver will be sufficient to support our uses of cash for the foreseeable future.

In addition, we may draw funding from the debt and equity capital markets, and our credit ratings, among other factors, allow us to access these sources of funding on favorable terms.

We are currently rated A3 by Moody’s Investors Service and BBB+ by S&P Global Ratings.

The following table presents operating, investing, and financing cash flow activities:

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

(in millions) 2020 2021

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Operating cash flows are calculated by adjusting Net income for other significant sources and uses of cash, significant non-cash items, and timing differences in the cash settlement of assets and liabilities.

For the nine months ended September 30, 2020, Cash flows from operating activities were $626.8 million, primarily from Net income adjusted for non-cash items of $571.7 million and Distributions of earnings received from equity method investments of $197.2 million.

These items were partially offset by timing differences in the cash settlement of assets and liabilities of $136.2 million, primarily due to the payment of incentive compensation.

For the nine months ended September 30, 2020, operating cash flows were primarily attributable to the controlling interest.

For the three months ended March 31, 2021, Cash flows from operating activities were $188.9 million, primarily from Net income of $214.1 million adjusted for non-cash items of $10.5 million, and $157.9 million of distributions of earnings received from equity method investments.

These items were partially offset by timing differences in the cash settlement of receivables and payables, accrued liabilities, and other liabilities of $159.2 million, primarily due to the payment of incentive compensation, and net purchases of securities by consolidated Affiliate sponsored investment products of $24.6 million.

For the three months ended March 31, 2021, operating cash flows were primarily attributable to the controlling interest.

Investing Cash Flow

For the nine months ended September 30, 2020, Cash flows from investing activities were $8.0 million, primarily due to the purchases of fixed assets of $6.8 million.

For the three months ended March 31, 2021, Cash flows used in investing activities were $24.1 million, primarily due to investments in new Affiliates of $11.8 million and net purchases of investment securities of $11.6 million.

Financing Cash Flow

For the nine months ended September 30, 2020, Cash flows used in financing activities were $221.5 million, primarily due to $249.1 million of distributions to non-controlling interests, $232.5 million of Affiliate equity repurchases, net of issuances, the return of $229.3 million of capital to shareholders through share repurchases and dividends on our common stock, and a $100.0 million paydown of our term loan.

Cash flows used in financing activities was partially offset by the receipt of $349.8 million of proceeds from the issuance of 2030 senior notes and $275.0 million of proceeds from the issuance of our junior subordinated notes with a maturity date of September 30, 2060 (the “2060 junior subordinated notes”).

For the three months ended March 31, 2021, Cash flows used in financing activities were $440.9 million, primarily due to the return of $313.3 million of capital to shareholders, principally through share repurchases, $102.6 million of distributions to non-controlling interests, $15.0 million of Affiliate equity purchases, net of issuances, $15.0 million of repurchases of our junior convertible securities, and $10.0 million of taxes paid from shares withheld related to issuances of common stock.

flows used in financing activities were partially offset by the receipt of $23.1 million of subscriptions to consolidated funds, net of redemptions.

Affiliate Equity

We periodically repurchase Affiliate equity from and issue Affiliate equity to our consolidated Affiliate partners and our officers, under agreements that provide us with a conditional right to call and Affiliate equity holders with a conditional right to put their Affiliate equity interests to us at certain intervals.

We periodically purchase Affiliate equity from and issue Affiliate equity to our consolidated Affiliate partners and our officers, under agreements that provide us with a conditional right to call and Affiliate equity holders with a conditional right to put their Affiliate equity interests to us at certain intervals.

For Affiliates accounted for under the equity method, we do not typically have such put and call arrangements.

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Affiliate equity holders are also permitted to sell their equity interests to other individuals or entities in certain cases, subject to our approval or other restrictions.

As of September 30, 2020, our current redemption value of $652.0 million for these interests (including $25.5 million of consolidated Affiliate sponsored investment products primarily attributable to third-party investors) has been presented as Redeemable non-controlling interests.

Although the timing and amounts of these purchases are difficult to predict, we paid $232.5 million for Affiliate equity repurchases, net of issuances during the nine months ended September 30, 2020, and we expect net repurchases of approximately $65 million of Affiliate equity during the remainder of 2020.

In the event of a repurchase, we become the owner of the cash flow associated with the repurchased equity.

As of March 31, 2021, our current redemption value of $730.6 million for Affiliate equity interests (including $59.1 million of consolidated Affiliate sponsored investment products primarily attributable to third-party investors) has been presented as Redeemable non-controlling interests.

Although the timing and amounts of these purchases are difficult to predict, we paid $15.0 million for Affiliate equity purchases, net of issuances, during the three months ended March 31, 2021, and we expect net purchases of approximately $100 million of Affiliate equity during the remainder of 2021.

In the event of a purchase, we become the owner of the cash flow associated with the purchased equity.

See Notes 14 and 15 of our Consolidated Financial Statements.

Share Repurchases

Our Board of Directors authorized share repurchase programs in October 2019 and January 2019 to repurchase up to 6.0 million and 3.3 million shares of our common stock, respectively, and these authorizations have no expiry.

Purchases may be made from time to time, at management’s discretion, in the open market or in privately negotiated transactions, including through the use of derivative financial instruments and accelerated share repurchase programs.

During the three and nine months ended September 30, 2020, we repurchased 1.3 million and 2.8 million shares, respectively, of our common stock, at an average price per share of $67.82 and $72.22, respectively.

As of September 30, 2020, we had repurchased all of the shares of the January 2019 authorized amount, and there were a total of 4.1 million shares available for repurchase under our October 2019 share repurchase program.

Our Board of Directors authorized share repurchase programs in January 2021 and October 2019 to repurchase up to 5.0 million and 6.0 million shares of our common stock, respectively, and these authorizations have no expiry.

Purchases may be made from time to time, at management’s discretion, in the open market or in privately negotiated transactions, including through the use of trading plans, as well as pursuant to accelerated share repurchase programs or other share repurchase strategies that may include derivative financial instruments.

During the three months ended March 31, 2021, we repurchased 1.6 million shares of our common stock, at an average price per share of $128.84.

As of March 31, 2021, there were a total of 5.3 million shares available for repurchase under our January 2021 and October 2019 share repurchase programs.

The following table presents the carrying value of our outstanding indebtedness.

See Note 7 of our Consolidated Financial Statements:

(in millions) December 31, 2019 September 30, 2020

(in millions) December 31, 2020 March 31, 2021

Senior bank debt $ 350.0 $ 350.0

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Senior Bank Debt

We have a $1.25 billion revolver and a $350.0 million term loan (together, the “credit facilities”).

The revolver matures on January 18, 2024, and the term loan matures on January 18, 2023.

We have a $1.25 billion senior unsecured multicurrency revolving credit facility (the “revolver”) and a $350.0 million term loan (together with the revolver, the “credit facilities”).

On January 8, 2021, we amended and refinanced the term loan to adjust the marginal rate by 0.075% to 0.950% and to extend the maturity by three years.

The commercial terms of the term loan otherwise remained the same.

The revolver matures on January 18, 2024, and the term loan, as amended, matures on January 18, 2026.

Subject to certain conditions, we may increase the commitments under the revolver by up to an additional $500.0 million and may borrow up to an additional $75.0 million under the term loan.

As of September 30, 2020, we had no outstanding borrowings under the revolver, and could borrow all capacity and remain in compliance with our credit facilities.

In the second quarter of 2020, we issued $350.0 million of senior unsecured notes with a maturity date of June 15, 2030.

The 2030 senior notes bear interest at a fixed rate of 3.3% per annum.

Interest is payable semi-annually, and we have the right to redeem the 2030 senior notes at any time, in whole or in part, at a make-whole redemption price plus accrued and unpaid interest.

In addition to customary event of default provisions, the indenture governing the 2030 senior notes limits our ability to consolidate, merge or sell all or substantially all of our assets and requires us to make an offer to repurchase the 2030 senior notes upon certain change of control triggering events.

In the second quarter of 2020, we used $250.0 million of the net proceeds from the 2030 senior notes to repay all of the outstanding indebtedness under our revolver, and $100.0 million of the remaining net proceeds to repay a portion of the outstanding indebtedness under the term loan.

Junior Subordinated Notes

In September 2020, we issued $275.0 million of junior subordinated notes.

The 2060 junior subordinated notes bear interest at a fixed rate of 4.750% per annum.

Interest is payable quarterly, commencing on December 30, 2020, and we have the right to defer interest payments in accordance with the terms of the notes.

The 2060 junior subordinated notes were issued at 100% of the principal amount and rank junior and subordinate in right of payment and upon liquidation to all of our current and future senior indebtedness.

On or after September 30, 2025, at our option, the 2060 junior subordinated notes may be redeemed in whole or in part, at 100% of the principal amount, plus any accrued and unpaid interest.

Prior to September 30, 2025, at our option, the 2060 junior subordinated notes may be redeemed in whole but not in part, at 100% of the principal amount, plus any accrued and unpaid interest, if certain changes in tax laws, regulations or interpretations occur;

or at 102% of the principal amount, plus any accrued and unpaid interest, if a rating agency makes certain changes relating to the equity credit criteria for securities with features similar to the 2060 junior subordinated notes.

We intend to use the net proceeds from the 2060 junior subordinated notes for general corporate purposes, which may include the repayment of indebtedness, share repurchases and investments in new and existing boutique investment management firms.

As of March 31, 2021, we had no outstanding borrowings under the revolver, and could borrow all capacity and remain in compliance with our credit facilities.

Junior Convertible Securities

As of March 31, 2021, we had 5.15% junior convertible trust preferred securities outstanding (the “junior convertible securities”) with a carrying value of $308.8 million.

The junior convertible securities were issued by AMG Capital Trust II, a Delaware statutory trust, in October 2007.

Each of the junior convertible securities represents an undivided beneficial interest in the assets of the trust.

The trust’s only assets are junior subordinated convertible debentures issued to it by us, and have substantially the same payment terms as the junior convertible securities.

We own all of the trust’s common securities, and have fully and unconditionally guaranteed, on a subordinated basis, the payment obligations on the junior convertible securities.

We do not consolidate the trust’s financial results into our Consolidated Financial Statements.

The carrying value of the junior convertible securities is accreted to the principal amount at maturity ($416.7 million) over a remaining life of approximately 17 years.

Holders of the junior convertible securities have no rights to put these securities to us.

Upon conversion, holders will receive cash or shares of our common stock, or a combination thereof, at our election.

We may redeem the junior convertible securities, subject to our stock trading at or above certain specified levels over specified times periods, and may also repurchase junior convertible securities in the open market or in privately negotiated transactions from time to time at management’s discretion.

In the first quarter of 2021, we paid $15.0 million to repurchase a portion of our junior convertible securities, resulting in reductions of $10.3 million and $2.9 million to Debt and Additional paid-in capital, respectively.

As a result of these repurchases, we also reduced our Deferred income tax liability (net) by $3.3 million.

Equity Distribution Program

We have equity distribution and forward equity agreements with several major securities firms under which we may, from time to time, issue and sell shares of our common stock (immediately or on a forward basis) having an aggregate sales price of up to $500.0 million (the “equity distribution program”).

As of September 30, 2020, no sales had occurred under the equity distribution program.

In the first quarter of 2020, we entered into an interest rate swap contract (the “interest rate swap”) with a financial institution, which will expire in March 2023.

The interest rate swap, which is designated as a cash flow hedge, is used to exchange our LIBOR-based interest payments for fixed rate payments.

Under the contract, we receive payments based on one month LIBOR and make payments based on an annual fixed rate of 0.5135% on a notional amount of $250.0 million.

In the first quarter of 2020, we terminated our forward contracts and corresponding collar contracts entered into in 2018, and we received net proceeds of $24.9 million upon settlement.

See Note 6 of our Consolidated Financial Statements.

As of March 31, 2021, no sales had occurred under the equity distribution program.

See Note 8 of our Consolidated Financial Statements.

Contractual Obligations

The following table summarizes our contractual obligations as of September 30, 2020.

Contractual debt obligations include the cash payment of fixed interest.

(in millions) Total Remainder of 2020 2021-2022 2023-2024 Thereafter

Contractual Obligations

Senior bank debt $ 350.0 $ — $ — $ 350.0 $ —

Senior notes 1,336.6 6.1 81.6 473.1 775.8

Junior convertible securities 813.5 5.5 44.4 44.4 719.2

Junior subordinated notes 1,776.5 8.0 61.4 61.4 1,645.7

228.6 10.8 75.6 56.2 86.0

Affiliate equity repurchase obligations (2)

69.9 64.7 5.2 — —

Other obligations (3)

73.7 35.0 38.7 — —

Total contractual obligations $ 4,648.8 $ 130.1 $ 306.9 $ 985.1 $ 3,226.7

Contingent Obligations

Contingent payment arrangements (4)

$ 52.5 $ — $ 40.0 $ 12.5 $ —

___________________________

(1) The total controlling interest portion is $50.4 million ($3.2 million through 2020, $22.1 million in 2021-2022, $16.5 million in 2023-2024 and $8.6 million thereafter).

(2) Affiliate equity repurchase obligations represent the fair value of obligations put to us and outstanding as of September 30, 2020.

(3) Other obligations represent obligations to make investments in an Affiliate and for liabilities at certain consolidated Affiliates as of September 30, 2020.

(4) Contingent payment arrangements represent the expected settlement amounts.

The maximum contingent obligation that may become payable is $150.0 million in 2021, $77.5 million in 2022 and $62.5 million from 2023 through 2025.

The table above does not include liabilities for commitments to co-invest in certain Affiliate sponsored investment products or uncertain tax positions of $129.4 million and $61.7 million, respectively.

This table also does not include potential obligations relating to our derivative financial instruments.

See Note 9 of our Consolidated Financial Statements.

These items are excluded as we cannot predict the timing of when such obligations will be paid.

As of March 31, 2021, our lease obligations were $29.4 million for the remainder of 2021, $66.1 million from 2022 through 2023, $48.6 million from 2024 through 2025, and $63.9 million thereafter.

The portion of these lease obligations attributable to the controlling interest were $7.4 million for the remainder of 2021, $15.9 million from 2022 through 2023, $14.0 million from 2024 through 2025, and $4.0 million thereafter.

Recent Accounting Developments

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There have been no material changes to our Quantitative and Qualitative Disclosures About Market Risk for the three

months ended September 30, 2020.

months ended March 31, 2021.

Please refer to Item 7A of our 2020 Annual Report on Form 10-K.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis