What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-25 compared with 2021-02-26 · 322 added, 276 removed, 944 unchanged (39% of the section changed)

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Other Information.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.

Not applicable.

Directors, Executive Officers and Corporate Governance.

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(1) The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit awards ("RSUs") since recipients of such awards are not required to pay an exercise price to receive the shares subject to these awards.

(2) Represents 1,193 shares of common stock issuable upon the exercise of stock options and 533,185 shares of our common stock issuable upon the vesting of RSUs outstanding under the Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan").

(2) Represents shares of our common stock issuable upon the vesting of RSUs outstanding under the Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan").

Of the 3,370,000 maximum number of shares of our common stock authorized for issuance under the Omnibus Plan, 119,634 shares of common stock have been issued on a cumulative basis in the form of direct grants to directors.

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Information required by this Item 13 is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.

Principal Accounting Fees and Services.

Principal Accountant Fees and Services.

Information required by this Item 14 is incorporated herein by reference to our definitive proxy statement for our 2022 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Exchange Act.

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The following Report of Independent Registered Public Accounting Firm and Consolidated Financial Statements of Virtus are included in this Annual Report:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PCAOB ID No.

Consolidated Balance Sheets as of December 31, 2021 and 2020

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(a)(2) Financial Statement Schedules:

All financial statement schedules have been omitted because the required information is either presented in the consolidated financial statements or the notes thereto or is not applicable or required.

All financial statement schedules have been omitted because the required information is either presented on the consolidated financial statements or the notes thereto or is not applicable or required.

(a)(3) Exhibits:

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and each of the management partners of SGA named therein, dated as of February 1, 2018 (incorporated by reference to Exhibit 2.3 of the Registrant's Annual Report on Form 10-K, filed February 27, 2018).

2.4 Membership Interest Purchase Agreement by and among the Registrant, Westchester Capital Management, LLC, Westchester Capital Partners, LLC, LPC Westchester, LP, MTSWCM Holdings, LLC, RDBWCM Holdings, LLC, and the Individual Equityholders (as defined therein), dated February 1, 2021.

(3) Articles of Incorporation and Bylaws

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10.15* Offer Letter from the Registrant to Wendy J.

Hills dated July 26, 2019.

10.16 Stock Purchase Agreement, dated October 27, 2016, between Bank of Montreal Holding Inc.

and Virtus Investment Partners, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed October 27, 2016).

10.17 Commitment Letter, dated as of December 16, 2016, among Barclays Bank PLC, Morgan Stanley Senior Funding, Inc.

and Virtus Investment Partners, Inc.

(incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K filed December 22, 2016).

10.18 Credit Agreement, dated as of June 1, 2017, by and among the Registrant, Morgan Stanley Senior Funding, Inc.

as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K, filed June 1, 2017).

10.19 Amendment No.

1 to Credit Agreement with the Registrant, Morgan Stanley Senior Funding, Inc.

as administrative agent, and the lenders party thereto (including, without limitation, the Amendment No.

1 Additional Term Lenders (as defined in the Amendment) to the Credit Agreement dated as of June 1, 2017 (incorporated by reference to Exhibit 10.1 of the Registrant's Current Report on Form 8-K, filed February 22, 2018).

10.20* Form of Virtus Investment Partners, Inc.

Performance Share Units Agreement (Special Integration Award) under the Virtus Investment Partners, Inc.

Omnibus Incentive and Equity Plan (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q, filed May 8, 2017).

Hills dated July 26, 2019 (incorporated by reference to Exhibit 10.15 of the Registrant’s Annual Report on Form 10-K, filed February 26, 2021).

10.16* Offer Letter from the Registrant to Richard W.

Smirl dated April 7, 2021 (incorporated by reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form 10-Q filed May 6, 2021).

10.17 Amended and Restated Credit Agreement, dated as of September 28, 2021, by and among Virtus Investment Partners, Inc.

as borrower, Morgan Stanley Senior Funding, Inc.

as administrative agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K, filed October 4, 2021).

(21) Subsidiaries of the Registrant

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Certifications of Registrant's Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 The following information formatted in iXBRL (Inline Extensible Business Reporting Language):

101 The following information is formatted in iXBRL (Inline Extensible Business Reporting Language):

(i) Consolidated Balance Sheets as of December 31, 2021 and December 31, 2020, (ii) Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2021, 2020 and 2019, (iv) Consolidated Statements of Cash Flows for the years ended December 31, 2021, 2020 and 2019, (v) Consolidated Statements of Changes in Stockholders' Equity for the years ended December 31, 2021, 2020 and 2019 and (vi) Notes to Consolidated Financial Statements.

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Director Melody L.

TREANOR /S/ STEPHEN T.

HOWARD MORRIS /S/ STEPHEN T.

Howard Morris

Director Stephen T.

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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.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the 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 financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the 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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

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

Valuation of Assets Acquired - Refer to Notes 2 and 4 to the financial statements

Critical Audit Matter Description

During the year, the Company completed an asset acquisition as part of a strategic partnership with Allianz Global Investors ("AllianzGI"), and two business combinations of NFJ Investment Group ("NFJ") and Westchester Capital Management ("Westchester").

The Company recorded the investment contracts and tradenames acquired under the asset acquisition at cost based on their relative fair values, and at fair value for those assets acquired under the business combinations.

Management estimated the fair value of the assets acquired under the asset acquisition and the business combinations using a discounted cash flow method for the investment contracts and a royalty savings method for the tradenames.

The determination required management to make significant estimates and assumptions related to future cash flows and the selection of the discount rates and long-term growth rates for these assets.

The inputs used in estimating the fair value are in most cases unobservable and reflect management’s own judgments about the assumptions market participants would use in pricing the assets.

Auditing the valuations of the assets acquired involved a high degree of judgment and an increased extent of effort, including involving our internal fair value specialists in evaluating management’s judgments especially as it relates to management’s assumptions of future cash flows, discount rates, and long-term growth rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of assets acquired for the AllianzGI, NFJ, and Westchester included the following, among others:

• We tested the design and operating effectiveness of controls over valuation of the assets acquired including controls over management’s projections of future cash flows, discount rates, and long-term growth rates.

• We evaluated the reasonableness of significant business assumptions related to future cash flows, by comparing the projections to historical results and certain peer companies.

We also held various discussions with accounting personnel and management regarding the business assumptions utilized in the valuation models and, on a sample basis, obtained audit evidence to substantiate the assumptions therein.

• With the assistance of our internal fair value specialists we evaluated certain valuation assumptions, including discount rates and long-term growth rates.

– We evaluated the reasonableness of the valuation methodologies used by management to determine whether they were consistent with generally accepted valuation practices.

– We estimated the discount rates used by management to determine whether management's discount rate estimates were within our independent range.

– We performed an analysis of inflation, economic, and industry growth statistics to determine whether management's long-term growth rate used in the income approach fell within a reasonable range of the market data.

– We evaluated the appropriateness of management’s selection of guideline public companies used in developing the discount rates.

• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

Valuation of Contingent Consideration – Refer to Notes 2 and 4 to the financial statements

Critical Audit Matter Description

During the year, the Company entered into contingent payment arrangements for the asset acquisition as part of a strategic partnership with AllianzGI and the business combinations of NFJ and Westchester.

Accordingly, at the respective acquisition

dates, the contingent consideration liability was recorded.

Subsequent to the acquisition dates, changes in the contingent consideration liability were recorded to reflect remeasurement and payments made, if applicable.

The contingent consideration related to the AllianzGI asset acquisition was determined to be estimable and probable of payment, and therefore was recorded at the estimated value on the acquisition date and are periodically evaluated for remeasurement.

Determining the estimated value of the contingent consideration involves significant management judgment in estimating revenue projections.

The contingent payment obligations related to the NFJ and Westchester business combinations were recorded as a liability at fair value on the acquisition date and are remeasured at fair value each reporting date.

Management uses a simulation model to determine the fair value of the Company's estimated contingent liability given the variable nature of the arrangements and the significant management judgments in estimating revenue projections, market rate assumptions, discount rates, and risk volatility assumptions.

The valuation of the AllianzGI, NFJ and Westchester contingent consideration uses unobservable inputs and reflect management’s own judgments about the assumptions market participants would use in pricing the liabilities.

Auditing the estimates involved a high degree of judgment and an increased extent of effort.

For the fair value of the business combination contingent consideration, our internal fair value specialists were engaged to evaluate management’s judgments utilized within the simulation model especially as it relates to revenue projections, market rate assumptions, discount rates, and risk volatility assumptions.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the valuation of the contingent consideration liability for the AllianzGI, NFJ, and Westchester acquisitions included the following, among others:

• We tested the design and operating effectiveness of controls over management’s valuation of the contingent consideration liability.

• We held discussions with accounting personnel and management regarding the revenue projections utilized in the valuation models.

We confirmed that the products included in the revenue projections utilized in the valuation models agreed to those within the respective acquisition agreements.

• For the AllianzGI acquisition, we evaluated the methodology used to calculate the estimated value of the contingent payment obligations to confirm it was appropriate for an asset acquisition and confirmed that the amounts recorded were based on the revenue projections and the contractual payment rate.

• With the assistance of our internal fair value specialists, we performed the below procedures related to the NFJ and Westchester contingent consideration liability:

– We evaluated the valuation methodology used by management to determine whether they were consistent with generally accepted valuation practices.

– We estimated the fair value of the contingent liability through the preparation of independent simulation models developed from the underlying acquisition agreements and using independently sourced input data.

We compared the fair value estimate produced by our independent model to the model prepared by management.

– We evaluated the appropriateness of management’s selection of guideline public companies used for market rate and risk volatility assumptions and the discount rates used by management in the simulation model.

• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

Consolidation — Consolidation of Investment Products - Refer to Notes 2 and 20 to the financial statements

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or (2) it is considered the primary beneficiary of an investment product that is a variable interest entity (VIE).

The Company is required to evaluate whether an investment product is a VOE or a VIE upon its initial involvement with the investment product, or the occurrence of a reconsideration event.

Management is required to evaluate whether an investment product is a VOE or a VIE upon its initial involvement with the investment product, or the occurrence of a reconsideration event.

This assessment involves management’s judgment and is determined based on a variety of factors including the capital structure of the investment product, the investment product’s activities, the equity investment at risk, and the proportionate voting and economic interests of the investors in the investment product including the Company.

For each investment product that is considered a VIE, the Company performs a primary beneficiary analysis to determine if it holds a controlling financial interest in the investment product.

For each investment product that is considered a VIE, management performs a primary beneficiary analysis to determine if it

holds a controlling financial interest in the investment product.

A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

The evaluation of these two criteria involves judgments to analyze the governing documents of the investment product.

Management’s evaluation of these two criteria involves judgments to analyze the governing documents of the investment product.

The level of judgment required may vary in significance based on the complexity of the voting rights and structure economic interests of the investment product and the facts and circumstances of the Company’s investment.

This required a high degree of auditor judgment and an increased extent of effort to evaluate management’s conclusions related to the power criterion and the economics criterion, including characterizing rights as protective or participating and evaluating all variable interests for the potential significance of economic exposure in the entity.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to testing the consolidation assessment of VIEs included the following:

Our audit procedures related to testing the consolidation assessment of VIEs included the following, among others:

• We tested the design and operating effectiveness of controls over management’s review of the consolidation analysis of new or modified investment products during the year.

▪ We read the governing documents (including the collateral management agreement, preference share subscription agreement and credit agreement, if applicable) of each investment product to confirm that:

• We read and analyzed the governing documents (including the collateral management agreement, preference share subscription agreement and credit agreement, if applicable) of each investment product to assess management’s conclusions.

Our procedures included evaluating the following:

– Key facts included in management’s consolidation analysis are consistent with the governing documents and the Company’s interests in the investment products;

– Relevant terms impacting the consolidation analysis under GAAP were considered including the evaluation of whether the investment product is a VOE or VIE;

▪ The Company's assessment effectively identifies the primary beneficiary of those investment products considered to be VIEs through an analysis of the power to direct activities of the VIE and the obligation to absorb losses or the right to receive benefits from the VIE.

– Judgments made by management based on the capital structure of the investment product, the investment product’s activities, the equity investment at risk, and the proportionate voting and economic interests of the investors in the investment product including the Company were appropriate;

– The determined primary beneficiary of those investment products possesses both (1) the power to direct activities of the VIE and (2) the obligation to absorb losses or the right to receive benefits from the VIE.

/s/ DELOITTE & TOUCHE LLP

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Consolidated Balance Sheets

(in thousands, except share data)

December 31, 2020 December 31, 2019

(in thousands, except share data) December 31, 2021 December 31, 2020

Cash and cash equivalents $ 378,921 $ 246,511

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Dividends payable 14,824 9,013

Contingent consideration 162,564 —

Debt 266,346 201,212

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Redeemable noncontrolling interests 138,965 115,513

Equity attributable to stockholders:

Series D mandatory convertible preferred stock, $ 0.01 par value, 0 and 1,150,000 shares authorized, issued and outstanding at December 31, 2020 and December 31, 2019

Equity attributable to Virtus Investment Partners, Inc.:

Common stock, $ 0.01 par value, 1,000,000,000 shares authorized;

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( 509,248 ) ( 451,749 )

Total equity attributable to stockholders 711,141 675,699

Total equity attributable to Virtus Investment Partners, Inc.

828,277 711,141

Noncontrolling interests 8,350 9,799

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Other operating expenses of consolidated investment products ("CIP") 3,562 10,585 4,015

Change in fair value of contingent consideration 12,400 — —

Restructuring and severance — 1,155 2,302

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Preferred stockholder dividends — — ( 8,337 )

Net Income (Loss) Attributable to Common Stockholders $ 79,957 $ 87,312 $ 67,192

Net Income (Loss) Attributable to Virtus Investment Partners, Inc.

$ 208,131 $ 79,957 $ 87,312

Earnings (Loss) per Share-Basic $ 27.13 $ 10.49 $ 12.54

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Other comprehensive income (loss), net of tax:

Foreign currency translation adjustment, net of tax of $( 7 ), $( 5 ) and $ 6 for the years ended December 31, 2020, 2019 and 2018

Unrealized gain (loss) on available-for-sale securities, net of tax of $ 111 for the year ended December 31, 2018

Foreign currency translation adjustment, net of tax of $ 3 , $( 7 ) and $( 5 ) for the years ended December 31, 2021, 2020 and 2019, respectively

Other comprehensive income (loss) ( 9 ) 20 14

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Balances at December 31, 2018 6,997,382 $ 106 1,150,000 $ 110,843 $ 1,209,805 $ ( 310,865 ) $ ( 731 ) 3,555,242 $ ( 379,249 ) $ 629,909 $ 13,958 $ 643,867 $ 57,481

Adjustment for adoption of ASU 2016-01 — — — — — ( 178 ) 178 — — — — — —

Acquisition of business — — — — — — — — — — — — 55,500

Net income (loss) — — — — — 95,649 — — — 95,649 ( 1,027 ) 94,622 10,886

Net unrealized gain (loss) on securities available-for-sale — — — — — — ( 292 ) — — ( 292 ) — ( 292 ) —

Foreign currency translation adjustment — — — — — — 14 — — 14 — 14 —

Net subscriptions (redemptions) and other — — — — 838 — — — — 838 ( 2,373 ) ( 1,535 ) ( 4,522 )

Reclassification from other comprehensive (income) loss — — — — — — 726 — — 726 — 726 —

Cash dividends declared ($ 7.25 per preferred share)

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Net subscriptions (redemptions) and other — — — — ( 167 ) — — — — ( 167 ) ( 2,057 ) ( 2,224 ) 12,960

Reclassification from other comprehensive (income) loss — — — — — — 726 — — 726 — 726 —

Cash dividends declared ($ 7.25 per preferred share)

— — — — ( 8,337 ) — — — — ( 8,337 ) — ( 8,337 ) —

Conversion of preferred stock 912,806 9 ( 1,150,000 ) ( 110,843 ) 110,834 — — — — — — — —

Cash dividends declared ($ 2.98 per common share)

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Balances at December 31, 2020 7,583,466 118 — — 1,298,002 ( 135,259 ) 29 4,207,403 ( 451,749 ) 711,141 9,799 720,940 115,513

Permanent Equity Temporary Equity

Common Stock Preferred Stock Additional

Capital Retained Earnings (Accumulated

Deficit) Accumulated

Comprehensive

Income (Loss) Treasury Stock Total

Shareholders Non-

Interests Total

Equity Redeemable

(in thousands, except share data) Shares Par Value Shares Amount Shares Amount

Net income (loss) — — — — — 208,131 — — — 208,131 817 208,948 53,887

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Net subscriptions (redemptions) and other — — — — — — — — — ( 2,266 ) ( 2,266 ) ( 30,435 )

Conversion of preferred stock 912,806 9 ( 1,150,000 ) ( 110,843 ) 110,834 — — — — — — — —

Cash dividends declared ($ 4.64 per common share)

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(Gain) loss on extinguishment of debt — ( 705 ) —

Change in fair value of contingent consideration 12,400 — —

Deferred taxes, net ( 9,664 ) 6,332 5,982

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Sales of investments by CIP 1,454,591 883,888 810,749

Net proceeds (purchases) of short term investments by CIP ( 1,092 ) 4,402 ( 552 )

(Purchases) sales of securities sold short by CIP, net 158 1,241 209

Change in other assets of CIP 388 998 ( 628 )

Change in liabilities of CIP ( 4,330 ) 971 ( 1,567 )

Net proceeds (purchases) of short-term investments and securities sold short by CIP 16,272 ( 934 ) 5,643

Change in other assets and liabilities of CIP ( 856 ) ( 3,942 ) 1,969

Amortization of discount on notes payable of CIP 5,159 11,169 4,505

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Change in cash and cash equivalents of CIP due to consolidation (deconsolidation), net ( 13,559 ) 9,724 9,980

Acquisition of business, net of cash acquired — — ( 126,995 )

Acquisition of business, net of cash acquired of $ 1,197

( 155,636 ) — —

Sale of available-for-sale securities — — 2,023

Purchases of available-for-sale securities — — ( 20,188 )

Net cash provided by (used in) investing activities ( 175,033 ) 8,681 4,448

Cash Flows from Financing Activities:

Issuance of debt — — 105,000

Refinancing of credit agreement 81,155 — —

Payment of long-term debt ( 12,513 ) ( 79,086 ) ( 54,851 )

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Taxes paid related to net share settlement of restricted stock units ( 19,509 ) ( 6,608 ) ( 7,696 )

Net subscriptions received from (redemptions/distributions paid to) noncontrolling interests ( 7,263 ) 7,786 ( 5,512 )

Net contributions from (distributions to) noncontrolling interests ( 3,270 ) ( 7,263 ) 7,786

Years Ended December 31,

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Common stock dividends payable 11,261 6,218 4,562

Increase (Decrease) to noncontrolling interests due to consolidation (deconsolidation) of CIP, net 17,137 ( 13,926 ) 56

Contingent consideration 150,164 — —

Consolidation (Deconsolidation) of CIP, net ( 30,550 ) 17,137 ( 13,926 )

(in thousands) 2021 2020

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The Company provides investment management and related services to individuals and institutions.

The Company's retail investment management services are provided to individuals through products consisting of U.S.

1940 Act mutual funds and Undertaking for Collective Investment in Transferable Securities ("UCITS" or "offshore funds" and collectively, with U.S.

1940 Act mutual funds, "open-end funds"), exchange traded funds ("ETFs"), closed-end funds (collectively, with open-end funds and ETFs, "funds") and retail separate accounts.

The Company's retail investment management services are provided to individuals through products consisting of mutual funds registered pursuant to the Investment Company Act of 1940, as amended, and Undertaking for Collective Investment in Transferable Securities ("UCITS" or "global funds" and collectively, with mutual funds, the "open-end funds"), exchange traded funds ("ETFs"), closed-end funds (collectively, with open-end funds and ETFs, the "funds") and retail separate accounts.

Institutional investment management services are offered through separate accounts and pooled or commingled structures to a variety of institutional clients.

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Noncontrolling interests - CIP

Noncontrolling interests - CIP represent third-party investments in the Company's CIP and are classified as redeemable noncontrolling interests in the Consolidated Balance Sheets because investors in those products are able request withdrawal at any time.

Noncontrolling interests - CIP represent third-party investments in the Company's CIP and are classified as redeemable noncontrolling interests on the Consolidated Balance Sheets because investors in those products are able to request withdrawal at any time.

Noncontrolling interests - affiliate

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The Company, in purchasing affiliate equity, has the option to settle in cash or shares of the Company's common stock and is entitled to the cash flow associated with any purchased equity.

Minority interests in an affiliate are recorded at estimated redemption value within redeemable noncontrolling interests in the Consolidated Balance Sheets and any changes in the estimated redemption value are recorded in the Consolidated Statements of Operations within noncontrolling interests.

Minority interests in an affiliate are recorded at estimated redemption value within redeemable noncontrolling interests on the Consolidated Balance Sheets and any changes in the estimated redemption value are recorded on the Consolidated Statements of Operations within noncontrolling interests.

Notes to Consolidated Financial Statements—(Continued)

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Operating segments are defined as components of an enterprise about which separate financial information is available that is regularly evaluated by the chief operating decision maker in deciding how to allocate resources to the segment and assess its performance.

The Company operates in one business segment, namely as an asset manager providing investment management and related services for individual and institutional clients.

The Company's Chief Executive Officer is the Company's chief operating decision maker.

The Company operates in one business segment, namely as an asset manager providing investment management and related services for individual and institutional clients.

Although the Company provides disclosures regarding assets under management and other asset flows by product, the Company's determination that it operates in one business segment is based on the fact that the same investment professionals manage both retail and institutional products, operational resources support multiple products, such products have the same or similar regulatory framework and the Company's chief operating decision maker reviews the Company's financial performance on a consolidated level.

Investment managers within the Company are generally not aligned with specific product lines.

Investment managers within the Company are generally not aligned with a specific product type.

Cash and Cash Equivalents

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Investment securities - fair value

Investment securities - fair value consist primarily of investments in the Company's sponsored funds, equity securities and trading debt securities and are carried at fair value in accordance with ASC 320, Investments-Debt and Equity Securities ("ASC 320"), and Topic 321, Investments-Equity Securities ("ASC 321").

Investment securities - fair value consist primarily of investments in the Company's sponsored funds and equity securities and are carried at fair value in accordance with ASC 320, Investments-Debt and Equity Securities ("ASC 320"), and Topic 321, Investments-Equity Securities ("ASC 321").

These securities are marked to market based on the respective publicly quoted net asset values of the funds or market prices of the equity securities or bonds.

These securities transactions are recorded on a trade date basis.

Any unrealized appreciation or depreciation on investment securities is reported in the Consolidated Statement of Operations within realized and unrealized gain (loss) on investments.

Transactions in these securities are recorded on a trade date basis.

Any unrealized appreciation or depreciation on investment securities is reported on the Consolidated Statement of Operations within realized and unrealized gain (loss) on investments.

Equity Method Investments

Equity method investments consist of Company investments in noncontrolled entities, where the Company does not hold a controlling financial interest but has the ability to significantly influence operating and financial matters.

Equity method investments are accounted for under the equity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures .

Under the equity method of accounting, the Company's share of the noncontrolled entities' net income or loss is recorded in other income (expense), net in the Consolidated Statements of Operations.

Equity method investments are accounted for in accordance with ASC 323, Investments-Equity Method and Joint Ventures .

Under the equity method of accounting, the Company's share of the noncontrolled entities' net income or loss is recorded in other income (expense), net on the Consolidated Statements of Operations.

Distributions received reduce the Company's investment.

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The Company has a non-qualified retirement plan (the "Excess Incentive Plan") that allows certain employees to voluntarily defer compensation.

Assets held in trust, which are considered investment securities, are included in investments at

Notes to Consolidated Financial Statements—(Continued)

fair value in accordance with ASC 820, Fair Value Measurement ("ASC 820");

the associated obligations to participants, which approximate the fair value of the associated assets, are included in other liabilities in the Consolidated Balance Sheets .

Assets held in trust, which are considered investment securities, are included in investments at fair value in accordance with ASC 820, Fair Value Measurement ("ASC 820");

the associated obligations to participants, which approximate the fair value of the associated assets, are included in other liabilities on the Consolidated Balance Sheets .

See Note 6 for additional information related to the Excess Incentive Plan.

Notes to Consolidated Financial Statements—(Continued)

Deferred Commissions

Deferred commissions, which are included in other assets in the Consolidated Balance Sheets, are commissions paid to broker-dealers on sales of certain mutual fund share classes.

Deferred commissions, which are included in other assets on the Consolidated Balance Sheets, are commissions paid to broker-dealers on sales of certain mutual fund share classes.

Deferred commissions are recovered by the receipt of monthly asset-based distributor fees from the mutual funds or contingent deferred sales charges received upon redemption of shares within the contingent deferred sales charge period, depending on the fund share class.

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A ROU asset is measured initially as the value of the lease liability plus initial direct costs and prepaid lease payments, and less lease incentives received.

Lease expense is recognized on a straight-line basis over the lease term and is recorded within other operating expenses in the Consolidated Statement of Operations.

Lease expense is recognized on a straight-line basis over the lease term and is recorded within other operating expenses on the Consolidated Statement of Operations.

Goodwill and Intangible Assets

Goodwill represents the excess of the purchase price of acquisitions and mergers over the identified assets and liabilities acquired.

Goodwill represents the excess of the purchase price of business combinations over the identified assets and liabilities acquired.

In accordance with ASC 350, Goodwill and Other Intangible Assets, goodwill is not amortized.

A single reporting unit has been identified for the purpose of assessing potential impairments of goodwill.

The Company has a single reporting unit for the purpose of assessing potential impairments of goodwill.

An impairment analysis of goodwill is performed annually or more frequently, if warranted by events or changes in circumstances affecting the Company's business.

The Company follows the Financial Accounting Standards Board's (the "FASB") ASU 2011-08, Testing Goodwill for Impairment, which provides the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

The Company follows ASU 2011-08, Testing Goodwill for Impairment, which provides the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

If, after assessing the totality of events or circumstances, it is determined that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing the two-step impairment test is unnecessary.

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Indefinite-lived intangible assets are comprised of certain trade names and fund investment advisory contracts.

Notes to Consolidated Financial Statements—(Continued)

assets are tested for impairment annually or when events or changes in circumstances indicate the assets might be impaired.

These assets are tested for impairment annually or when events or changes in circumstances indicate the assets might be impaired.

The Company follows ASU 2012-02, Testing Indefinite-Lived Intangible Assets for Impairment , which provides the option to perform a qualitative assessment of indefinite-lived intangible assets other than goodwill for impairment to determine if additional impairment testing is necessary.

The Company's 2021 and 2020 annual indefinite-lived intangible assets impairment analysis did not result in any impairment charges.

Notes to Consolidated Financial Statements—(Continued)

Contingent Consideration

The Company periodically enters into contingent payment arrangements in connection with its business combinations or asset purchases.

In contingent payment arrangements, the Company agrees to pay additional transaction consideration to the seller based on future performance.

The Company estimates the value of estimated future payments of these potential future obligations at the time a business combination or asset purchase is consummated.

Liabilities under contingent payment arrangements are recorded within contingent consideration on the Consolidated Balance Sheets.

Contingent payment obligations related to business combinations are remeasured at fair value each reporting date using a simulation model with the assistance of an independent valuation firm and approved by management (level 3 fair value measurement).

The change in fair value is recorded in the current period as a gain or loss.

Gains and losses resulting from changes in the fair value of contingent payment obligations are reflected within change in fair value of contingent consideration on the Consolidated Statements of Operations.

Contingent payment obligations related to our asset purchases, if estimable and probable of payment, are initially recorded at their estimated value and reviewed every reporting period for changes.

Any changes to the estimated value are recorded as an update of the initial acquisition cost of the asset with a corresponding change to the estimated contingent payment obligation on the Consolidated Balance Sheets.

Treasury Stock

Treasury stock is accounted for under the cost method and is included as a deduction from equity in the Stockholders' Equity section of the Consolidated Balance Sheets.

Treasury stock is accounted for under the cost method and is included as a deduction from equity on the Stockholders' Equity section of the Consolidated Balance Sheets.

Upon any subsequent resale, the treasury stock account is reduced by the cost of such stock.

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Investment management fees, distribution and service fees, and administration and shareholder service fees are generally calculated as a percentage of average net assets of the investment portfolios managed.

The net asset values from which investment management, distribution and service, and administration and shareholder service fees are calculated are variable in nature and subject to factors outside of the Company's control such as additional investments, withdrawals and market performance.

The net asset values from which these fees are calculated are variable in nature and subject to factors outside of the Company's control such as additional investments, withdrawals and market performance.

Because of this, these fees are considered constrained until the end of the contractual measurement period (monthly or quarterly), which is when asset values are generally determinable.

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Investment management services represent a series of distinct daily services that are performed over time.

Fees earned on funds are based on each fund's average daily or weekly net assets that are generally calculated and received on a monthly basis.

The Company records investment management fees net of fees paid to unaffiliated subadvisers, as the Company considers itself an agent of the fund as it relates to the day-to-day investment management services performed by unaffiliated subadvisers, with the Company's performance obligation being to arrange for the provision of that service and not control the specified service before that service is performed.

Fees earned on funds are based on each fund's average daily or weekly net assets and are generally calculated and received on a monthly basis.

The Company records investment management fees net of the fees paid to unaffiliated subadvisers, as the Company is deemed to be the agent of the fund as it relates to the day-to-day investment management services performed by unaffiliated subadvisers, with the Company's performance obligation being to arrange for the provision of that service and not control the specified service before it is performed.

Amounts paid to unaffiliated subadvisers for the years ended December 31, 2021, 2020 and 2019 were $ 115.5 million, $ 38.6 million and $ 40.5 million, respectively.

Retail separate account fees are generally based on the end of the preceding or current quarter's asset values.

Institutional account fees are generally based on an average of daily or month-end balances or the current quarter's asset values.

Retail separate account fees are generally earned based on the end of the preceding or current quarter's asset values.

Institutional account fees are generally earned based on an average of daily or month-end balances or the current quarter's asset values.

Fees for structured finance products, for which the Company acts as the collateral manager, consist of senior, subordinated and, in certain instances, incentive management fees.

Senior and subordinated management fees are calculated at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed with subordinated fees being recognized only after certain portfolio criteria are met.

Senior and subordinated management fees are earned at a contractual fee rate applied against the end of the preceding quarter par value of the total collateral being managed with subordinated fees being earned only after certain portfolio criteria are met.

Incentive fees on certain of the Company's collateralized loan obligations ("CLOs") are typically a percentage of the excess cash flows available to holders of the subordinated notes, above a threshold level internal rate of return.

Distribution and Service Fees

Distribution and service fees are sales- and asset-based fees earned from open-end funds, for marketing and distribution services.

Distribution and service fees are sales- and asset-based fees earned from open-end funds, for marketing and distribution

Notes to Consolidated Financial Statements—(Continued)

Depending on the fund type or share class, these fees primarily consist of an asset-based fee that is paid by the fund over a period of years to cover allowable sales and marketing expenses, or front-end sales charges that are based on a percentage of the offering price.

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Shareholder servicing activities are generally services satisfied over time.

The Company distributes its open-end funds through unaffiliated financial intermediaries that comprise national and regional broker-dealers.

These unaffiliated financial intermediaries provide distribution and shareholder service activities on

Notes to Consolidated Financial Statements—(Continued)

behalf of the Company.

The Company distributes its open-end funds through unaffiliated financial intermediaries that comprise national, regional and independent broker-dealers.

These unaffiliated financial intermediaries provide distribution and shareholder service activities on behalf of the Company.

The Company passes related distribution and service fees to these unaffiliated financial intermediaries for these services and considers itself the principal in these arrangements since it has control of the services prior to the services being transferred to the customer.

These payments are classified within distribution and other asset-based expenses.

Administration & Shareholder Service Fees

The Company provides administrative fund services to its open-end mutual funds, ETFs and certain of its closed-end funds and shareholder services to its open-end funds.

Administration and Shareholder Service Fees

The Company provides administrative fund services to its open-end mutual funds, ETFs and the majority of its closed-end funds and shareholder services to its open-end funds.

Administration and shareholder services are performed over time.

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Shareholder services include maintaining shareholder accounts, processing shareholder transactions, preparing filings and performing necessary reporting.

Other Income & Fees

Other income and fees consist primarily of redemption income on the early redemption of certain share classes of mutual funds.

Advertising and Promotion

Advertising and promotional costs are expensed as incurred.

These costs are classified in other operating expenses in the Consolidated Statements of Operations.

Other Income and Fees

Other income and fees primarily represent fees related to other fee earning assets and contingent sales charges earned from investor redemptions of certain shares sold without a front-end sales charge.

Stock-based Compensation

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The value of RSUs that contain a performance metric ("PSUs") is determined based on (i) the fair market value price on the date of grant, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718 or (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.

Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and is not adjusted in future periods based upon the achievement of the market condition.

Compensation expense for PSU awards with a performance condition is recorded each period based upon a probability assessment of the expected outcome of the performance metric with a final adjustment upon measurement at the end of the performance period.

The Company accounts for income taxes in accordance with ASC 740, Income Taxes ("ASC 740"), which requires recognition of the amount of taxes payable or refundable for the current year as well as deferred tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the reported amounts in the Consolidated Financial Statements.

The Company's methodology for determining the realizability of deferred tax assets includes consideration of taxable income in prior carryback year(s), if carryback is permitted under the tax law, as well as consideration of the reversal of deferred tax liabilities that are in the same period and jurisdiction and are of the same character as the temporary differences that gave rise to the deferred tax assets.

Compensation expense for PSU awards that contain a market condition is fixed at the date of grant and is not adjusted in future periods based upon the achievement of the market condition.

Notes to Consolidated Financial Statements—(Continued)

that gave rise to the deferred tax assets.

The Company's methodology also includes estimates of future taxable income from its operations as well as the expiration dates and amounts of carry-forwards related to net operating losses and capital losses.

These estimates are projected through the life of the related deferred tax assets based on assumptions that the Company believes to be reasonable and consistent with demonstrated operating results.

Unanticipated changes in future operating results may have

Notes to Consolidated Financial Statements—(Continued)

a significant impact on the realization of deferred tax assets.

Unanticipated changes in future operating results may have a significant impact on the realization of deferred tax assets.

Valuation allowances are provided when it is determined that it is more likely than not that the benefit of deferred tax assets will not be realized.

Comprehensive Income

The Company reports all changes in comprehensive income in the Consolidated Statements of Changes in Stockholders' Equity and the Consolidated Statements of Comprehensive Income.

The Company reports all changes in comprehensive income on the Consolidated Statements of Changes in Stockholders' Equity and the Consolidated Statements of Comprehensive Income.

Comprehensive income includes net income (loss) and foreign currency translation adjustments (net of tax).

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Earnings (loss) per share ("EPS") is calculated in accordance with ASC 260, Earnings per Share .

Basic EPS is computed by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including (i) shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method and (ii) shares issuable upon the conversion of the Company's mandatory convertible preferred stock ("MCPS"), as determined under the if-converted method.

Basic EPS is computed by dividing net income (loss) attributable to Virtus Investment Partners, Inc.

by the weighted-average number of common shares outstanding for the period, excluding dilution for potential common stock issuances.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock, including shares issuable upon the vesting of RSUs and stock option exercises using the treasury stock method, as determined under the if-converted method.

For purposes of calculating diluted EPS, preferred stock dividends have been subtracted from net income (loss) in periods in which utilizing the if-converted method would be anti-dilutive.

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ASC 820 establishes a framework for measuring fair value and a valuation hierarchy based upon the transparency of inputs used in the valuation of an asset or liability.

The FASB defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

The Financial Accounting Standards Board (the "FASB") defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.

Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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New Accounting Standards Implemented

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40) ("ASU 2018-15").

This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software, including an internal-use software license.

The Company adopted this standard on January 1, 2020.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820) .

This standard modifies the disclosure requirements on fair value measurements.

The Company adopted this standard on January 1, 2020.

The adoption of

Notes to Consolidated Financial Statements—(Continued)

this standard did not have a material impact on the Company's consolidated financial statements.

New Accounting Standards Not Yet Implemented

In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) .

This standard clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323 and the accounting for certain forward contracts and purchased options in Topic 815.

This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

Early adoption is permitted, with the amendments to be applied on a prospective basis.

The Company has evaluated the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements.

The Company adopted this standard on January 1, 2021.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740, Income Taxes , and also improves consistent application by clarifying and amending existing guidance.

This standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020.

Early adoption is permitted, with the amendments to be applied on a retrospective, modified retrospective or prospective basis, depending on the specific amendment.

The Company has evaluated the impact of adopting this standard and, at this time, does not anticipate it will have a material impact on its consolidated financial statements.

This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles of

Notes to Consolidated Financial Statements—(Continued)

Topic 740, Income Taxes , and improves consistent application by clarifying and amending existing guidance.

The Company adopted this standard on January 1, 2021.

The adoption of this standard did not have a material impact on the Company's consolidated financial statements.

Revenue Disaggregated by Source

The following table summarizes revenue by source:

The following table summarizes investment management fees by source:

Years Ended December 31,

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Total investment management fees $ 781,585 $ 505,338 $ 461,477

Distribution and service fees 38,425 40,898 50,715

Administration and shareholder service fees 59,463 59,884 63,614

Other income and fees 670 987 885

Total revenues $ 603,896 $ 563,246 $ 552,235

Westchester Capital Management

On October 1, 2021, the Company completed the acquisition of Westchester Capital Management, LLC ("Westchester"), which was accounted for in accordance with ASC 805, Business Combinations ("ASC 805").

The total purchase price of $ 169.3 million was allocated to the assets acquired and liabilities assumed based upon their estimated fair values at the date of the acquisition.

Goodwill of $ 23.0 million and intangible assets of $ 144.4 million were recorded as a result of the acquisition.

The Company expects $ 155.6 million of the purchase price to be tax deductible over 15 years.

The revenues and operating income of Westchester were not material to the Company's results of operations for the year ended December 31, 2021.

Transaction consideration consisted of $ 136.8 million in cash paid at closing and $ 32.5 million in contingent consideration, which represents future potential earn-out payments based on pre-established performance metrics related to retention and revenue growth rates.

An initial contingent consideration payment of $ 20.0 million was earned and paid in December 2021 and future payments will be made, if earned, in 2025 and 2026.

The remaining contingent consideration of $ 12.5 million at December 31, 2021 has been accounted for as a liability within contingent consideration on the Company's Consolidated Balance Sheet.

The following table summarizes the identified acquired assets and liabilities assumed as of the Westchester acquisition date:

October 1, 2021

(in thousands)

Cash and cash equivalents $ 1,197

Intangible assets 144,400

Goodwill 23,040

Other assets 4,997

Total Assets 173,634

Accounts payable and accrued liabilities 4,300

Total liabilities 4,300

Total Net Assets Acquired $ 169,334

Notes to Consolidated Financial Statements—(Continued)

Identifiable Intangible Assets Acquired

In connection with the allocation of the Westchester purchase price, the Company identified the following intangible assets:

October 1, 2021

Approximate Fair Value

( in thousands)

Weighted Average of Useful Life

Definite-lived intangible assets:

Investment management agreements $ 138,000 10

Trade names 6,400 10

Total definite-lived intangible assets $ 144,400

The fair value of investment management agreements was estimated using a discounted cash flow method and the fair value of the trade names was estimated using a royalty savings method which were prepared with the assistance of an independent valuation firm and approved by management.

AllianzGI Strategic Partnership

On February 1, 2021, the Company finalized a strategic partnership with Allianz Global Investors U.S.

LLC ("AllianzGI"), pursuant to which the Company became the investment adviser, distributor and/or administrator of certain of AllianzGI's open-end, closed-end and retail separate account assets.

This transaction was classified as an asset acquisition and the cost of the acquisition was allocated to the assets acquired on the basis of their relative fair values.

Additionally, as part of the strategic partnership, AllianzGI’s Dallas-based Value Equity team joined the Company as a newly established affiliated manager, NFJ Investment Group ("NFJ").

The addition of NFJ was classified as a business combination under ASC 805 and assets acquired were recorded at fair value.

Assets acquired primarily consisted of definite-lived intangible assets representing open-end, closed-end and retail separate account investment contracts as well as indefinite-lived assets consisting of goodwill related to NFJ.

The revenues and operating income of NFJ were not material to the Company's results of operations for the year ended December 31, 2021.

Transaction consideration consists of variable cash payments based on a percentage of the investment management fees earned on certain open-end, closed-end and retail separate account assets from the transaction.

Payments are to be made annually on the anniversary of the closing date of the transactions over the next seven years .

The initial estimated value of these future revenue participation payments was $ 137.7 million upon closing.

These future payments have been recorded as a liability and included as Contingent Consideration on the Company's Consolidated Balance Sheet.

In addition, the Company capitalized $ 7.7 million of costs associated with certain assets acquired.

Contingent payment obligations related to the NFJ acquisition which is accounted for in accordance with ASC 805 was remeasured at fair value as of December 31, 2021, with the change in fair value recorded within the consolidated statement of operations.

The estimated value of future revenue participation payments at December 31, 2021 was $ 150.1 million.

The following table summarizes the identified acquired assets:

February 1, 2021

Approximate Fair Value

(in thousands)

Weighted Average Useful Life

Definite-lived intangible assets:

Open-end and closed-end fund investment contracts $ 101,447 13

Retail separate account investment contracts 17,000 6

Trade name 1,941 8

Total definite-lived intangible assets 120,388

Goodwill 25,000

Total assets acquired $ 145,388

The fair value of the investment management agreements was estimated using a discounted cash flow method and the fair value of the trade names was estimated using a royalty savings method which were prepared with the assistance of an

Notes to Consolidated Financial Statements—(Continued)

independent valuation firm and approved by management.

Goodwill and Other Intangible Assets

Below is a summary of intangible assets, net:

(in thousands) 2020 2019

Definite-lived intangible assets, net:

Investment contracts and other $ 489,570 $ 489,570

Accumulated amortization ( 252,822 ) ( 222,695 )

Definite-lived intangible assets, net 236,748 266,875

Indefinite-lived intangible assets 43,516 43,516

Total intangible assets, net $ 280,264 $ 310,391

Activity in goodwill and intangible assets, net was as follows:

Definite-Lived Indefinite-Lived Total

(in thousands) Gross Book Value Accumulated Amortization Net Book Value Net Book Value Net Book Value

Balances of December 31, 2019 $ 489,570 $ ( 222,695 ) $ 266,875 $ 43,516 $ 310,391

Additions — — — — —

Intangible amortization — ( 30,127 ) ( 30,127 ) — ( 30,127 )

Balances of December 31, 2020 489,570 ( 252,822 ) 236,748 43,516 280,264

Additions/Transfers 266,006 — 266,006 ( 1,218 ) 264,788

Intangible amortization — ( 44,481 ) ( 44,481 ) — ( 44,481 )

Balances of December 31, 2021 $ 755,576 $ ( 297,303 ) $ 458,273 $ 42,298 $ 500,571

Activity in goodwill was as follows:

Years Ended December 31,

(in thousands) 2021 2020 2019

Intangible assets, net

Balance, beginning of period $ 290,366 $ 290,366 $ 290,366

Acquisitions 48,040 — —

Amortization expense ( 30,127 ) ( 30,244 ) ( 25,142 )

Balance, end of period $ 338,406 $ 290,366 $ 290,366

Balance, beginning of period $ 290,366 $ 290,366 $ 170,153

Acquisitions — — 120,213

Balance, end of period $ 290,366 $ 290,366 $ 290,366

Definite-lived intangible asset amortization for the next five years and thereafter is estimated as follows (in thousands):

Definite-lived intangible asset amortization for the next five years and thereafter is estimated as follows:

Fiscal Year Amount

(in thousands)

2022 $ 56,520

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At December 31, 2021, the weighted average estimated remaining amortization period for definite-lived intangible assets was 9.8 years.

Notes to Consolidated Financial Statements—(Continued)

Investments consist primarily of investments in the Company's sponsored products.

The Company's investments, excluding the assets of CIP discussed in Note 19, at December 31, 2020 and 2019 were as follows:

The Company's investments,

Notes to Consolidated Financial Statements—(Continued)

excluding the assets of CIP discussed in Note 20, at December 31, 2021 and 2020 were as follows:

(in thousands) 2021 2020

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Investment securities - fair value consist of investments in the Company's sponsored funds, separately managed accounts and trading debt securities.

The composition of the Company's investment securities - fair value were as follows:

December 31, 2020

(in thousands) Cost Fair

Investment Securities - fair value:

Sponsored funds $ 22,378 $ 25,909

Equity securities 9,614 14,078

Debt securities 7 3

Total investment securities - fair value $ 31,999 $ 39,990

December 31, 2019

The composition of the Company's investment securities - fair value was as follows:

December 31, 2021 December 31, 2020

(in thousands) Cost Fair

Value Cost Fair

Investment Securities - fair value:

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Equity Method Investments

The Company's equity method investments primarily consist of investments in limited partnerships.

The Company's equity method investments primarily consist of an investment in a limited partnership.

For the years ended December 31, 2021, 2020 and 2019, distributions from equity method investments were $ 3.7 million, $ 1.2 million and $ 0.8 million, respectively.

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Each participant is responsible for designating investment options for their contributions, and the ultimate distribution paid to each participant reflects any gains or losses on the assets realized while in the trust.

Notes to Consolidated Financial Statements—(Continued)

held in trust are included in investments and are carried at fair value utilizing Level 1 valuation techniques in accordance with ASC 320;

the associated obligations to participants are included in other liabilities in the Consolidated Balance Sheets .

Assets held in trust are included in investments and are carried at fair value utilizing Level 1 valuation techniques in accordance with ASC 320;

the associated obligations to participants are included in other liabilities on the Consolidated Balance Sheets .

Other Investments

Other investments represent interests in entities not accounted for under the equity method such as those accounted for under the cost method.

Notes to Consolidated Financial Statements—(Continued)

Fair Value Measurements

The Company's assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 19, as of December 31, 2020 and December 31, 2019, by fair value hierarchy level were as follows:

The Company's assets and liabilities measured at fair value on a recurring basis, excluding the assets and liabilities of CIP discussed in Note 20, as of December 31, 2021 and 2020, by fair value hierarchy level were as follows:

December 31, 2021

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Equity securities 14,009 — — 14,009

Debt securities — 3 — 3

Nonqualified retirement plan assets 13,321 — — 13,321

Total assets measured at fair value $ 400,933 — $ — $ 400,933

Contingent consideration $ — $ — $ 88,400 $ 88,400

Total liabilities measured at fair value $ — $ — $ 88,400 $ 88,400

December 31, 2020

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Total assets measured at fair value $ 257,700 $ 3 $ — $ 257,703

The following is a discussion of the valuation methodologies used for the Company's assets measured at fair value.

The following is a discussion of the valuation methodologies used for the Company's assets and liabilities measured at fair value.

Cash equivalents represent investments in money market funds.

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The fair value of closed-end funds and ETFs is determined based on the official closing price on the exchange on which they are traded on and are categorized as Level 1.

Equity securities represent securities traded on active markets and are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Equity securities represent securities traded on active markets, are valued at the official closing price (typically the last sale or bid) on the exchange on which the securities are primarily traded and are categorized as Level 1.

Debt securities represent investments in senior secured bank loans and are based on evaluated quotations received from independent pricing services and are categorized as Level 2.

Notes to Consolidated Financial Statements—(Continued)

Nonqualified retirement plan assets represent mutual funds within a nonqualified retirement plan whose fair value is determined based on their published net asset value and are categorized as Level 1.

Contingent consideration represents liabilities associated with the Company's business combinations.

See Note 4 for a discussion of the transactions.

The estimated fair values are measured using a simulation model using unobservable market data

Notes to Consolidated Financial Statements—(Continued)

inputs prepared with the assistance of an independent valuation firm and approved by management.

These liabilities are included in Level 3 of the valuation hierarchy.

Cash, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments.

Transfers into and out of levels are reflected when significant inputs used for the fair value measurement, including market inputs or performance attributes, become observable or unobservable or when the Company determines it has the ability, or no longer has the ability, to redeem, in the near term, certain investments that the Company values using a net asset value, or if the book value no longer represents fair value.

The Company had no Level 3 investments for the twelve months ended December 31, 2020.

The following table is a reconciliation of assets for Level 3 investments for which significant unobservable inputs were used to determine fair value for the twelve months ended December 31, 2019:

Twelve Months Ended December 31,

The following table presents a reconciliation of beginning and ending balances of recurring fair value measurements classified as Level 3:

(in thousands)

Level 3 Investments (1)

Balance at beginning of period $ 4,122

(Sales) purchases ( 4,185 )

Change in unrealized gain (loss), net 63

Balance at end of period $ —

(1) The investments that are categorized as Level 3 were valued utilizing third-party pricing information without adjustment.

Contingent consideration, beginning of year $ —

Additions for acquisitions 96,000

Reduction of liability for payments made ( 20,000 )

Increase (reduction) of liability related to re-measurement of fair value 12,400

Contingent consideration, end of year $ 88,400

Furniture, Equipment and Leasehold Improvements, Net

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Furniture, equipment and leasehold improvements, net $ 12,542 $ 14,488

All of the Company's leases qualify as operating leases and consist primarily of leases for office locations, which have remaining initial lease terms ranging from 0.3 to 9.3 years and a weighted average remaining lease term of 6.3 years.

All of the Company's leases qualify as operating leases and consist primarily of leases for office facilities, which have remaining initial lease terms ranging from 0.2 to 8.3 years and a weighted average remaining lease term of 6.1 years.

The Company has options to renew some of its leases for periods ranging from 3.0 to 10.0 years, depending on the lease.

None of the Company's renewal options were considered reasonably assured of being exercised and, therefore, were excluded from the initial lease term used to determine the Company's ROU asset and lease liability.

The Company's ROU asset, recorded in other assets , and lease liability, recorded in other liabilities in the Consolidated Balance Sheets, at December 31, 2020 were $ 17.1 million and $ 24.8 million, respectively.

The Company's right-of-use asset, recorded in other assets , and lease liability, recorded in other liabilities on the Consolidated Balance Sheets, at December 31, 2021 were $ 37.3 million and $ 46.3 million, respectively.

The weighted average discount rate used to measure the Company's lease liability was 3.74 % at December 31, 2021.

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Lease liability maturities as of December 31, 2021 were as follows:

Fiscal Year Amount

(in thousands)

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Total expense (benefit) for income taxes $ 90,835 $ 43,935 $ 35,177

The following presents a reconciliation of the provision (benefit) for income taxes computed at the federal statutory rate to the provision (benefit) for income taxes recognized in the Consolidated Statements of Operations for the years indicated:

The following presents a reconciliation of the provision (benefit) for income taxes computed at the federal statutory rate to the provision (benefit) for income taxes recognized on the Consolidated Statements of Operations for the years indicated:

Years Ended December 31,

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State taxes, net of federal benefit 17,283 5 9,775 6 6,859 5

Excess tax benefits related to share-based compensation ( 4,095 ) ( 1 ) 239 — ( 1,298 ) ( 1 )

Nondeductible compensation 3,461 1 2,686 2 2,080 2

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The Company's tax position for the years ended December 31, 2021, 2020 and 2019 was impacted by changes in the valuation allowance related to the unrealized and realized gains and losses on the Company's investments.

Notes to Consolidated Financial Statements—(Continued)

Deferred taxes resulted from temporary differences between the amounts reported in the consolidated financial statements and the tax basis of assets and liabilities.

Deferred taxes resulted from temporary differences between the amounts reported on the consolidated financial statements and the tax basis of assets and liabilities.

The tax effects of temporary differences were as follows:

Notes to Consolidated Financial Statements—(Continued)

(in thousands) 2021 2020

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As of December 31, 2021, the Company had state net operating loss carry-forwards, varying by subsidiary and jurisdiction, represented by a $ 4.9 million deferred tax asset.

The state net operating loss carry-forwards are scheduled to begin to expire in 2021.

Certain state net operating loss carry-forwards are scheduled to begin to expire in 2022.

Internal Revenue Code Section 382 ("Section 382") limits tax deductions for net operating losses, capital losses and net unrealized built-in losses after there is a substantial change in ownership in a corporation's stock involving a 50 -percentage point increase in ownership by 5 % or larger stockholders.

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Balance, end of year $ 1,235 $ 1,021 $ 1,172

Notes to Consolidated Financial Statements—(Continued)

If recognized, $ 1.0 million of the $ 1.2 million gross unrecognized tax benefit balance at December 31, 2021 would favorably impact the Company's effective income tax rate.

The Company does not expect any significant changes to its liability for unrecognized tax benefits during the next 12 months.

Notes to Consolidated Financial Statements—(Continued)

The Company recognizes interest and penalties related to income tax matters within income tax expense.

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Credit Agreement

The Company's credit agreement, as amended (the "Credit Agreement"), is comprised of (i) $ 365.0 million of seven-year term debt (the "Term Loan") expiring in June 2024, and (ii) a $ 100.0 million five-year revolving credit facility (the "Credit Facility") expiring in June 2022.

During the year ended December 31, 2020, the Company reduced its Term Loan by $ 80.1 million, including the retirement of $ 10.0 million of principal for $ 8.9 million from certain debt holders in accordance with the prepayment provisions in the Credit Agreement.

At December 31, 2020, $ 205.7 million was outstanding under the Term Loan, and the Company had no outstanding borrowings under its Credit Facility.

In accordance with ASC 835, Interest, the amounts outstanding under the Company's Term Loan are presented in the Consolidated Balance Sheet net of related debt issuance costs, which were $ 4.5 million as of December 31, 2020.

Amounts outstanding under the Credit Agreement for the Term Loan and the Credit Facility bear interest at an annual rate equal to, at the option of the Company, either (i) LIBOR (adjusted for reserves) for interest periods of one, two, three or six months (or, solely in the case of the Credit Facility, if agreed to by each relevant lender, twelve months or periods less than one month), subject to a "floor" of 0 % for the Credit Facility and 0.75 % for the Term Loan, or (ii) an alternate base rate, in either case plus an applicable margin.

The applicable margin on amounts outstanding under the Credit Agreement is 2.50 %, in the case of LIBOR-based loans, and 1.50 % in the case of alternate base rate loans.

In each case the applicable margin is subject to a 25 basis point reduction if the Company's secured net leverage ratio (as defined in the Credit Agreement) as of the last day of the preceding fiscal quarter is not greater than 1.00 to 1.00, as reflected in certain financial reports required under the Credit Agreement.

The Credit Agreement includes a financial maintenance covenant that the Company will not permit the Total Net Leverage Ratio to exceed 2.50 :1.00 as of the last day of any fiscal quarter, provided that this covenant will apply only if on such day the aggregate principal amount of outstanding revolving loans and letters of credit under the Credit Facility exceeds 30 % of the aggregate revolving commitments as of such day.

The obligations of the Company under the Credit Agreement are guaranteed by certain of its subsidiaries and secured by substantially all of the assets of the Company, subject to customary exceptions.

The Term Loan amortizes at the rate of 1.00 % per annum payable in equal quarterly installments and is mandatorily repaid with:

(i) 50 % of the Company's excess cash flow (as defined in the Credit Agreement) on an annual basis, declining to 25 % if the Company's secured net leverage ratio declines below 1.0 and further declining to 0 % if the Company's secured net leverage ratio declines below 0.5;

(ii) the net proceeds of certain asset sales, casualty or condemnation events, subject to customary reinvestment rights;

and (iii) the proceeds of any indebtedness incurred other than indebtedness permitted to be incurred by the Credit Agreement.

At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce the commitment under the Credit Facility in minimum specified increments or prepay the Term Loan in whole or in part, subject to the payment of

On September 28, 2021, the Company refinanced its credit agreement through an amended and restated credit agreement (the "Credit Agreement").

The Credit Agreement provides for (i) a $ 275.0 million seven-year term loan (the "Term Loan") and (ii) a $ 175.0 million revolving credit facility with a five-year term.

The $ 194.0 million outstanding under the previous term loan was retired using proceeds from the Term Loan.

At December 31, 2021, $ 274.3 million was outstanding under the Term Loan, and there were no outstanding borrowings under the revolving credit facility.

In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented on the Consolidated Balance Sheet net of related debt issuance costs, which were $ 8.0 million as of December 31, 2021.

Because the debt instruments are not substantially different, the refinancing was treated as a debt modification for accounting purposes.

Amounts outstanding under the Credit Agreement bear interest at an annual rate equal to, at the option of the Company, either LIBOR (adjusted for reserves) for interest periods of one, three or six months (or, solely in the case of the revolving credit facility, if agreed to by each relevant Lender, 12 months) or an alternate base rate, in either case plus an applicable margin.

The applicable margins are 2.25 %, in the case of LIBOR-based loans, and 1.25 %, in the case of alternate base rate loans.

Interest is payable quarterly in arrears with respect to alternate base rate loans and on the last day of each interest period with respect to LIBOR-based loans (but, in the case of any LIBOR-based loan with an interest period of more than three months, at three-month intervals).

The Credit Agreement contains LIBOR and other subsequent benchmark successor provisions.

The terms of the Credit Agreement require the Company to pay a quarterly commitment fee on the average unused amount of the revolving credit facility.

The fee is initially set at 0.50 % and following the first delivery of certain financial reports, will range from 0.375 % to 0.50 %, based on the secured net leverage ratio of the Company as of the last day of the preceding fiscal quarter, as reflected in such financial reports.

The Term Loan will amortize at the rate of 1.00 % per annum payable in equal quarterly installments on the last day of each calendar quarter, commencing on December 31, 2021.

In addition, the Credit Agreement requires that the Term Loan be mandatorily prepaid with (i) 50 % of the Company’s excess cash flow on an annual basis, stepping down to 25 % if the Company’s secured net leverage ratio declines to 2 :1 or below and stepping down to 0 % if the Company’s secured net leverage ratio declines below 1.5 :1;

(ii) 50 % of the net proceeds of certain asset sales, casualty or condemnation events, subject to customary reinvestment rights;

and (iii) 100 % of the proceeds of any indebtedness incurred to refinance the term loans or other refinancing indebtedness as well as indebtedness incurred other than indebtedness permitted to be incurred by the Credit Agreement.

At any time, upon timely notice, the Company may terminate the Credit Agreement in full, reduce the commitment under the facility in minimum specified increments or prepay loans in whole or in part, subject to the payment of breakage fees with respect to LIBOR-based loans and, in the case of any term loans that are prepaid in connection with a “repricing transaction” occurring within the six-month period following the closing date of the Credit Agreement, a 1.00 % premium.

The Credit Agreement contains customary affirmative and negative covenants, including covenants that affect, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its organizational documents, subject to customary exceptions, thresholds, qualifications and “baskets.” In addition, the Credit Agreement contains a financial performance covenant that is only applicable when greater than 35 % of the revolving credit facility is outstanding, requiring a maximum leverage ratio, as of the last day of each of the four fiscal quarter periods, of no greater than the levels set forth in the Credit Agreement.

Notes to Consolidated Financial Statements—(Continued)

breakage fees with respect to LIBOR-based loans and, in the case of any Term Loans that are prepaid in connection with a "repricing transaction" occurring within the six-month period following the closing date, a 1.00 % premium.

Future minimum Term Loan payments (exclusive of any mandatory excess cash flow repayments) as of December 31, 2021 were as follows:

Fiscal Year Amount

(in thousands)

2027 and thereafter 260,563

Commitments and Contingencies

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However, in the event of unexpected subsequent developments and given the inherent unpredictability of these legal and regulatory matters, the Company can provide no assurance that its assessment of any claim, dispute, regulatory examination or investigation or other legal matter will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's results of operations or cash flows in particular quarterly or annual periods.

Preferred Stock Conversion

On February 3, 2020, 1,150,000 shares of MCPS converted to 912,870 shares of the Company's common stock.

Each share of MCPS converted to 0.7938 shares of common stock at a conversion price of $ 125.97 per share, subject to customary anti-dilution adjustments.

The number of shares of common stock issued upon conversion was determined based on the volume-weighted average price per share of the Company's common stock over the 20 consecutive trading day period beginning on, and including, the 22nd scheduled trading day immediately preceding the mandatory conversion date.

Notes to Consolidated Financial Statements—(Continued)

Equity Transactions

During the first and second quarters of the year ended December 31, 2021, the Board of Directors declared quarterly cash dividends on the Company's common stock of $ 0.82 each.

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Total dividends declared on the Company's common stock were $ 37.2 million for the year ended December 31, 2021.

At December 31, 2020, $ 9.0 million was included as dividends payable in liabilities in the Consolidated Balance Sheet representing the fourth quarter dividends to be paid on February 12, 2021 for the Company's common stock shareholders of record as of January 29, 2021.

At December 31, 2021, $ 14.8 million was included as dividends payable in liabilities on the Consolidated Balance Sheet representing the fourth quarter dividends to be paid on February 11, 2022 for common stock shareholders of record as of January 28, 2022.

Notes to Consolidated Financial Statements—(Continued)

Common Stock Repurchases

In May 2020, the Company's Board of Directors authorized an additional 750,000 shares to be repurchased under the Company's share repurchase program, bringing the total number of shares authorized to be repurchased under the program since its inception to 4,930,045 shares.

During the year ended December 31, 2021, the Company repurchased a total of 193,193 common shares at a weighted average price of $ 297.60 per share, for a total cost, including fees and expenses, of $ 57.5 million under its share repurchase program.

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The changes in accumulated other comprehensive income (loss), by component, were as follows:

(in thousands) Unrealized Gains

Available-for-Sale Foreign

Foreign Currency

Translation Adjustments

(in thousands)

Balance at December 31, 2020 $ 29

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Balance at December 31, 2021 $ 20

(in thousands) Unrealized Gains

Available-for-Sale Foreign

Foreign Currency

Translation Adjustments

(in thousands)

Balance at December 31, 2019 $ 9

Foreign currency translation adjustments, net of tax of $( 7 )

Amounts reclassified from accumulated other comprehensive income (loss), net of tax of $( 254 )

Net current-period other comprehensive income (loss) 20

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Employees may contribute a percentage of their eligible compensation into the 401(k) Plan, subject to certain limitations imposed by the Internal Revenue Code.

Through December 31, 2020, the Company matched employees' contributions at a rate of 100 % of employees' contributions up to the first 5.0 % of the employees' compensation contributed to the 401(k) Plan.

The Company matches employees' contributions at a rate of 100 % of employees' contributions up to the first 5.0 % of the employees' compensation contributed to the 401(k) Plan.

The Company's matching contributions were $ 5.9 million, $ 5.3 million and $ 5.1 million in 2021, 2020 and 2019, respectively.

Notes to Consolidated Financial Statements—(Continued)

Stock-Based Compensation

Pursuant to the Company's Omnibus Incentive and Equity Plan (the "Plan"), officers, employees and directors may be granted equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and unrestricted shares of common stock.

At December 31, 2020, 343,165 shares of common stock remain available for issuance of the 2,820,000 shares that are authorized for issuance under the Plan.

Pursuant to the Company's Omnibus Incentive and Equity Plan (the "Omnibus Plan"), officers, employees and directors may be granted equity-based awards, including restricted stock units ("RSUs"), performance stock units ("PSUs"), stock options and unrestricted shares of common stock.

At December 31, 2021, 807,671 shares of common stock remain available for issuance of the 3,370,000 shares that are authorized for issuance under the Omnibus Plan.

Stock-based compensation expense is summarized as follows:

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Stock-based compensation expense $ 26,225 $ 21,481 $ 22,232

Notes to Consolidated Financial Statements—(Continued)

Restricted Stock Units

Each RSU entitles the holder to one share of common stock when the restriction expires.

RSUs may be time-vested or performance-contingent (PSUs) that convert into RSUs after performance measurement is complete and generally vest in one to three years .

Shares that are issued upon vesting are newly issued shares from the Plan and are not issued from treasury stock.

RSUs may be time-vested or performance-contingent PSUs that convert into RSUs after performance measurement is complete.

Shares that are issued upon vesting, generally one to three years after grant, are newly issued shares from the Omnibus Plan and are not issued from treasury stock.

RSU activity, inclusive of PSUs, for the year ended December 31, 2021 is summarized as follows:

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The Company paid $ 19.5 million, $ 6.5 million and $ 6.9 million for the years ended December 31, 2021, 2020 and 2019, respectively, in minimum employee tax withholding obligations related to RSUs withheld for net share settlements.

These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have been otherwise issued as a result of the vesting.

During the years ended December 31, 2020 and 2019, the Company granted 68,371 and 52,960 PSUs that contain performance-based metrics in addition to a service condition.

These net share settlements had the effect of share repurchases by the Company as they reduced the number of shares that would have otherwise been issued as a result of the vesting.

During the years ended December 31, 2021 and 2020, the Company granted 26,425 and 68,371 PSUs, respectively, that contain performance-based metrics in addition to a service condition.

Compensation expense for PSUs is generally recognized over a three-year service period based upon the value determined using a combination of (i) the intrinsic value method, for awards that contain a performance metric that represents a "performance condition" in accordance with ASC 718, and (ii) the Monte Carlo simulation valuation model for awards that contain a "market condition" performance metric under ASC 718.

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As of December 31, 2021 and 2020, unamortized stock-based compensation expense for unvested RSUs and PSUs was $ 24.9 million and $ 22.3 million, respectively, with a weighted average remaining contractual life of 1.0 years and 1.2 years, respectively.

The Company did no t capitalize any stock-based compensation expenses during the years ended December 31,

The Company did no t capitalize any stock-based compensation expenses during the years ended December 31, 2021, 2020 and 2019.

Notes to Consolidated Financial Statements—(Continued)

2020, 2019 and 2018.

Stock Options

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Vested and exercisable at December 31, 2021 — $ —

Stock options generally cliff vest after three years and have a contractual life of ten years .

The weighted-average remaining contractual term for stock options outstanding, vested and exercisable at December 31, 2020 and December 31, 2019 was 0.2 and 0.8 years, respectively.

At December 31, 2020, the aggregate intrinsic value of stock options outstanding and vested and exercisable was $ 0.2 million.

The total intrinsic value of stock options exercised for the years ended December 31, 2021, 2020 and 2019 was $ 0.2 million, $ 0.4 million and $ 6.4 million, respectively.

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Preferred stock dividends — — ( 8,337 )

Net Income (Loss) Attributable to Common Stockholders $ 79,957 $ 87,312 $ 67,192

Net Income (Loss) Attributable to Virtus Investment Partners, Inc.

$ 208,131 $ 79,957 $ 87,312

Shares (in thousands):

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Concentration of Credit Risk

The concentration of credit risk with respect to advisory fees receivable is generally limited due to the short payment terms extended to clients by the Company.

The following client including the Company's sponsored funds provided 10 percent or more of the Company's investment management, administration and shareholder service fee revenues:

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Virtus KAR Small Cap Growth Fund * 10 % *

Virtus Newfleet Multi-Sector Short Term Bond Fund * * 10 %

Virtus Vontobel Emerging Markets Opportunities Fund * * 10 %

* Less than 10 percent of total revenues of the Company

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The primary beneficiary is the entity that has both the power to direct the activities that most significantly impact the VIE's economic performance and has the obligation to absorb losses of, or the right to receive benefits from, the VIE that could potentially be significant to the VIE.

In the normal course of its business, the Company sponsors various investment products, some of which are consolidated by the Company.

In the normal course of business, the Company sponsors various investment products, some of which are consolidated by the Company.

CIP includes both VOEs, made up primarily of open-end funds in which the Company holds a controlling financial interest, and VIEs, which primarily consist of CLOs of which the Company is considered the primary beneficiary.

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The Company has no right to the benefits from, and does not bear the risks associated with, these investment products beyond the Company's investments in, and fees generated from, these products.

The following table presents the balances of CIP that, after intercompany eliminations, were reflected on the Consolidated

Notes to Consolidated Financial Statements—(Continued)

The following table presents the balances of CIP that, after intercompany eliminations, were reflected in the Consolidated Balance Sheets as of December 31, 2020 and 2019:

Balance Sheets as of December 31, 2021 and 2020:

As of December 31,

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At December 31, 2021, the Company consolidated six CLOs.

The financial information of certain CLOs is included in the Company's consolidated financial statements on a one-month lag based upon the availability of the fund's financial information.

The financial information of certain CLOs is included on the Company's consolidated financial statements on a one-month lag based upon the availability of the fund's financial information.

A majority-owned consolidated private fund, whose primary purpose is to invest in CLOs for which the Company serves as the collateral manager, is also included.

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These bank loan investments mature at various dates between 2022 and 2029 and pay interest at LIBOR plus a spread of up to 10.0 %.

The CLOs may elect to reinvest any prepayments received on bank loan investments up until the periods between October 2019 and March 2025, depending on the CLO.

The CLOs may elect to reinvest any prepayments received on bank loan investments up until the periods between October 2019 and October 2026, depending on the CLO.

Generally, subsequent prepayments received after the reinvestment period must be used to pay down the note obligations.

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These note obligations bear interest at variable rates based on LIBOR plus a pre-defined spread ranging from 0.8 % to 8.9 %.

The principal amounts outstanding of these note obligations mature on dates ranging from October 2027 to April 2033.

The principal amounts outstanding of these note obligations mature on dates ranging from October 2027 to October 2034.

The Company's beneficial interests and maximum exposure to loss related to these consolidated CLOs is limited to (i) ownership in the subordinated notes and (ii) accrued management fees.

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Total Beneficial Interests $ 77,445

The following table represents income and expenses of the consolidated CLOs included on the Company's Consolidated

Notes to Consolidated Financial Statements—(Continued)

The following table represents income and expenses of the consolidated CLOs included in the Company's Consolidated Statements of Operations for the period indicated:

Statements of Operations for the period indicated:

December 31, 2021

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Equity investments 26,111 2,961 462 29,534

Derivatives 858 1,227 — 2,085

Total assets measured at fair value $ 231,576 $ 2,110,697 $ 3,157 $ 2,345,430

Notes payable $ — $ 2,033,617 $ — $ 2,033,617

Derivatives 714 757 — 1,471

Short sales 515 — — 515

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Equity investments 38,468 3,856 814 43,138

Derivatives 858 1,227 — 2,085

Total assets measured at fair value $ 138,480 $ 2,224,282 $ 54,182 $ 2,416,944

Notes payable $ — $ 2,190,445 $ — $ 2,190,445

Derivatives 714 757 — 1,471

Short sales 520 — — 520

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Derivative instruments in an asset position are classified as other assets of CIP on the Consolidated Balance Sheets.

Derivative instruments in a liability position are classified as liabilities of CIP within the Consolidated Balance Sheets.

Derivative instruments in a liability position are classified as liabilities of CIP on the Consolidated Balance Sheets.

The change in fair value of such derivatives is recorded in realized and unrealized gain (loss) on investments of CIP, net, on the Consolidated Statements of Operations.

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Short sales are transactions in which a security is sold that is not owned or is owned but there is no intention to deliver, in anticipation that the price of the security will decline.

Short sales are recorded in the Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security.

The securities purchase payable at December 31, 2020 and 2019 approximated fair value due to the short term nature of the instruments.

Short sales are recorded on the Consolidated Balance Sheets within other liabilities of CIP and are classified as Level 1 based on the underlying equity security.

Notes to Consolidated Financial Statements—(Continued)

The securities purchased payable at December 31, 2021 and 2020 approximated fair value due to the short term nature of the instruments.

The following table is a reconciliation of assets of CIP for Level 3 investments for which significant unobservable inputs were used to determine fair value.

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Subsequent Events

AllianzGI Strategic Partnership

On February 1, 2021, the Company completed actions necessary to finalize its agreement from July 2020 with Allianz Global Investors U.S.

LLC and Allianz Global Investors Distributors LLC (collectively, "AllianzGI") pursuant to which the company became the investment adviser, distributor and/or administrator of certain AllianzGI's open-end, closed-end and retail separate account assets.

Agreement with Westchester Capital Management

On February 1, 2021, the Company entered into an agreement to acquire all of the equity of Westchester Capital Management.

The transaction is expected to close in the second half of the 2021, subject to customary closing conditions and approvals by Westchester Capital Management Funds Board and shareholders.

Notes to Consolidated Financial Statements—(Continued)

Acquisition of Stone Harbor Investment Partners, LLC ("Stone Harbor")

On January 1, 2022, the Company completed its acquisition of Stone Harbor, a premier manager of emerging markets debt, multi-asset credit, global corporate, and other strategies with $ 14.7 billion of assets under management at December 31, 2021.

Dividends Declared

On February 23, 2022, the Company declared a quarterly cash dividend of $ 1.50 per common share to be paid on May 13, 2022 to shareholders of record at the close of business on April 29, 2022.

Selected Quarterly Data (Unaudited)

(in thousands, except per share data) Fourth

Quarter Third

Quarter Second

Quarter First

Revenues $ 171,646 $ 154,790 $ 132,894 $ 144,566

Operating Income (Loss) 50,931 41,009 26,622 24,602

Net Income (Loss) 61,814 40,934 16,209 1,006

Net Income (Loss) Attributable to Common Stockholders 43,315 29,648 11,279 ( 4,285 )

Earnings (loss) per share—Basic $ 5.67 $ 3.86 $ 1.46 $ ( 0.58 )

Earnings (loss) per share—Diluted $ 5.40 $ 3.71 $ 1.43 $ ( 0.58 )

(in thousands, except per share data) Fourth

Quarter Third

Quarter Second

Quarter First

Revenues $ 146,084 $ 145,955 $ 140,489 $ 130,718

Operating Income (Loss) 37,796 35,787 30,128 20,999

Net Income (Loss) 29,782 25,359 27,899 22,468

Net Income (Loss) Attributable to Common Stockholders 20,808 22,000 24,842 19,662

Earnings (loss) per share—Basic $ 3.02 $ 3.17 $ 3.55 $ 2.80

Earnings (loss) per share—Diluted $ 2.83 $ 2.95 $ 3.26 $ 2.61

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

What changed 10-K

Item 9A. Controls and Procedures