What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-09 compared with 2023-05-09 · 111 added, 84 removed, 285 unchanged (41% of the section changed)

40 unchanged sentences

Our investment strategies are available in a diverse range of styles and disciplines, managed by differentiated investment managers.

We have offerings in various asset classes (equity, fixed income, multi-asset and alternative), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental and quantitative).

We have offerings in various asset classes (equity, fixed income, multi-asset and alternatives), geographies (domestic, global, international and emerging), market capitalizations (large, mid and small), styles (growth, core and value) and investment approaches (fundamental and quantitative).

Our retail products include open-end funds, closed-end funds and retail separate accounts.

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Our private client business is marketed directly to individual clients by financial advisory teams at our affiliated investment managers.

Our institutional distribution resources include affiliate specific institutional sales teams primarily focused on the U.S.

Our institutional distribution resources include affiliate specific sales teams primarily focused on the U.S.

market, supported by shared consultant relation support and non-U.S.

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Financial Highlights

▪ Net income per diluted share was $5.21 in the first quarter of 2023, an increase of $0.99, or 23.5%, as compared to net income per diluted share of $4.22 in the first quarter of 2022.

▪ Total sales were $6.2 billion in the first quarter of 2023, a decrease of $3.2 billion, or 33.9%, from $9.4 billion in the first quarter of 2022.

Net outflows were $1.9 billion in the first quarter of 2023 compared to $2.0 billion in the first quarter of 2022.

▪ Assets under management were $154.8 billion at March 31, 2023, a decrease of $28.5 billion, or 15.5%, from March 31, 2022.

On April 1, 2023, the Company completed its previously announced acquisition of AlphaSimplex Group, LLC ("AlphaSimplex"), a leading manager of quantitative alternative investment solutions.

Transaction consideration of $130.0 million was financed with existing balance sheet resources and $50.0 million drawn from the Company's revolving credit facility.

▪ Net income per diluted share was $4.10 in the second quarter of 2023, an increase of $1.81, or 79.0%, compared to net income per diluted share of $2.29 in the second quarter of 2022.

▪ Total sales were $7.6 billion in the second quarter of 2023, a decrease of $0.3 billion, or 3.9%, from $7.9 billion in the second quarter of 2022.

Net flows were breakeven in the second quarter of 2023 compared to net outflows of $4.8 billion in the second quarter of 2022.

▪ Assets under management were $168.3 billion at June 30, 2023, an increase of $12.9 billion, or 8.3%, from June 30, 2022.

On April 1, 2023, the Company completed the acquisition of AlphaSimplex Group, LLC ("AlphaSimplex") for $113.4 million in cash at closing, including $50.0 million drawn from the Company's revolving credit facility.

In June 2023, the Company repaid $10.0 million of the amount drawn on the credit facility.

On August 4, 2023, the Company repaid an additional $20.0 million of the amount drawn on the credit facility.

Assets Under Management

At March 31, 2023, total assets under management were $154.8 billion, representing a decrease of $28.5 billion, or 15.5%, from March 31, 2022, and an increase of $5.5 billion, or 3.7%, from December 31, 2022.

The decrease from March 31, 2022 was due to $12.8 billion of negative market performance and $13.4 billion of net outflows.

The increase from December 31, 2022 was due to $7.8 billion in positive market performance partially offset by $1.9 billion of net outflows.

At June 30, 2023, total assets under management were $168.3 billion, representing an increase of $12.9 billion, or 8.3%, from June 30, 2022, and an increase of $18.9 billion, or 12.7%, from December 31, 2022.

The increase from June 30, 2022 was due to $16.3 billion of positive market performance and $7.8 billion from the acquisition of AlphaSimplex, partially offset by $8.6 billion of net outflows.

The increase from December 31, 2022 was due to $14.1 billion in positive market performance and $7.8 billion from the acquisition of AlphaSimplex partially offset by $1.9 billion of net outflows.

Assets Under Management by Product

The following table summarizes our assets under management by product:

As of March 31, Change

As of June 30, Change

(in millions) 2023 2022 $ %

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Three Months Ended

June 30, Six Months Ended

(in millions) 2023 2022 2023 2022

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Beginning balance $ 10,358 $ 12,060 $ 10,361 $ 12,068

Inflows 20 24 24 32

Outflows — — — —

Net flows 20 24 24 32

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The following table summarizes assets under management by asset class:

As of March 31, Change % of Total

As of June 30, Change % of Total

(in millions) 2023 2022 $ % 2023 2022

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equity, fixed income, and alternatives.

(2) Consists of event-driven, real estate securities, infrastructure, long/short and other strategies.

(2) Consists of managed futures, event-driven, real estate securities, infrastructure, long/short, and other strategies.

Average Assets Under Management and Average Fees Earned

The following table summarizes the average management fees earned in basis points and average assets under management:

Three Months Ended March 31,

Three Months Ended June 30,

Average Fee Earned

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All Products 42.2 41.2 $ 162,989 $ 171,381

Six Months Ended June 30,

Average Fee Earned

(expressed in basis points)

Average Assets Under

(in millions) (3)

2023 2022 2023 2022

Open-End Funds (1) 48.5 46.3 $ 55,131 $ 70,564

Closed-End Funds 57.3 57.6 $ 10,323 $ 11,583

Retail Separate Accounts 44.2 43.2 $ 36,375 $ 42,681

Institutional Accounts (2) 31.7 31.1 $ 55,846 $ 55,915

All Products 42.1 41.6 $ 157,675 $ 180,743

(1) Represents assets under management of U.S.

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Retail separate account fees are calculated based on the end of the preceding or current quarter’s asset values or on an average of month-end balances.

Institutional account fees are calculated based on an average of month-end balances, an average of current quarter’s asset values or on a combination of the underlying cash flows and the principal value of the product.

Average fees earned will vary based on several factors, including the asset mix and expense reimbursements to the funds.

The average fee rate earned on all products for the three months ended March 31, 2023 remained consistent compared to the same period in the prior year as higher fee rates on open-end funds were offset by a lower blended rate on closed-end funds due to changes in the underlying asset mix.

The average fee rate earned on all products for the three and six months ended June 30, 2023 increased by 1.0 basis points and 0.5 basis points, respectively, compared to the same periods in the prior year primarily due to the addition of alternative strategies with higher fee rates from the AlphaSimplex acquisition.

Results of Operations

Summary Financial Data

Three Months Ended March 31,

(in thousands) 2023 2022 2023 vs.

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2023 2022 $ % 2023 2022 $ %

Investment management fees $ 179,979 $ 185,024 $ (5,045) (2.7) % $ 344,457 $ 391,841 $ (47,384) (12.1) %

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Earnings (loss) per share-diluted $ 4.10 $ 2.29 $ 1.81 79.0 % $ 9.31 $ 6.54 $ 2.77 42.4 %

In the first quarter of 2023, total revenues decreased 21.6% to $197.9 million from $252.4 million in the first quarter of 2022, primarily as a result of lower average assets under management due to negative market performance and net outflows.

Operating income decreased $37.0 million to $28.6 million in the first quarter of 2023 compared to $65.6 million in the first quarter of 2022, due primarily to the aforementioned lower revenue.

In the second quarter of 2023, total revenues decreased 5.2% to $213.5 million from $225.3 million in the second quarter of 2022, primarily as a result of lower average assets under management due to net outflows partially offset by the addition of AlphaSimplex.

Operating income decreased $17.6 million to $39.0 million in the second quarter of 2023 compared to $56.7 million in the second quarter of 2022, due primarily to the aforementioned lower revenue and increased operating expenses due to the addition of AlphaSimplex.

Revenues by source were as follows:

Three Months Ended March 31,

(in thousands) 2023 2022 2023 vs.

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2023 2022 $ % 2023 2022 $ %

Investment management fees

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Investment management fees are earned based on a percentage of assets under management and are paid pursuant to the terms of the respective investment management contracts, which generally require monthly or quarterly payments.

Investment management fees decreased by $42.3 million, or 20.5%, for the three months ended March 31, 2023 compared to the same period in the prior year due to lower average assets under management.

Investment management fees decreased by $5.0 million, or 2.7%, and $47.4 million, or 12.1%, for the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year due primarily to lower average assets under management, partially offset by the addition of AlphaSimplex.

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 decreased by $5.9 million, or 29.3%, for the three months ended March 31, 2023 compared to the same period in the prior year, due primarily to lower sales and assets for open-end funds in share classes that have sales- and asset-based distribution and service fees.

Distribution and service fees decreased by $3.0 million, or 17.6%, and $8.9 million, or 23.9%, for the for the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year, primarily due to lower sales and assets for open-end funds in share classes that have sales- and asset-based distribution and service fees.

Administration and Shareholder Service Fees

Administration and shareholder service fees represent fees earned for fund administration and shareholder services from our U.S.

retail funds, ETFs, and certain of our closed-end funds.

Fund administration and shareholder service fees decreased by $6.0 million, or 24.6%, for the three months ended March 31, 2023, compared to the same period in the prior year

primarily due to the decrease in average assets under management for our open-end and closed-end funds during the period as a result of market performance and net outflows in our open-end funds.

retail funds and certain of our closed-end funds.

Fund administration and shareholder service fees decreased by $3.7 million, or 17.0%, and $9.7 million, or 21.0%, for the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year primarily due to the decrease in average assets under management for our open-end funds during the periods as a result of market performance and net outflows.

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.

Other income and fees decreased by $0.4 million, or 30.5%, for the three months ended March 31, 2023, compared to the same period in the prior year primarily due to lower average other fee earning assets and redemptions.

Other income and fees remained consistent for the three and six months ended June 30, 2023 compared to the same periods in the prior year.

Operating Expenses

Operating expenses by category were as follows:

Three Months Ended March 31,

(in thousands) 2023 2022 2023 vs.

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2023 2022 $ % 2023 2022 $ %

Operating expenses

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Other operating expenses of CIP 360 649 (289) (44.5) % 1,060 1,389 (329) (23.7) %

Change in fair value of contingent consideration (6,800) 2,900 (9,700) (334.5) % (6,800) 2,900 (9,700) (334.5) %

Depreciation expense 1,485 962 523 54.4 % 2,630 1,897 733 38.6 %

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Employment expenses consist of fixed and variable compensation and related employee benefit costs.

Employment expenses for the three months ended March 31, 2023 were $98.6 million, which represented a decrease of $7.4 million, or 7.0%, compared to the same period in the prior year.

The decrease was primarily due to lower incentive compensation expenses in the current year period.

Employment expenses for the three and six months ended June 30, 2023 were $104.7 million and $203.3 million, respectively, which represented an increase of $15.3 million, or 17.2%, and $8.0 million, or 4.1%, respectively, compared to the same periods in the prior year.

The increase was primarily due to the addition of AlphaSimplex, which includes retention payments to employees as part of the transaction consideration that were classified as compensation expense.

Distribution and Other Asset-Based Expenses

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The deferred sales commissions are amortized on a straight-line basis over the period commissions are recovered from distribution fee revenues and contingent sales charges received upon redemption of shares.

During the three months ended March 31, 2023, distribution and other asset-based expenses decreased $9.1 million, or 27.8%, as compared to the same period in the prior year primarily due to a decrease in assets under management in share classes that have asset-based distribution and other asset-based expenses.

During the three and six months ended June 30, 2023, distribution and other asset-based expenses decreased $3.1 million, or 10.9%, and $12.3 million, or 19.9%, respectively, compared to the same periods in the prior year primarily due to a decrease in assets under management in share classes that have asset-based distribution and other asset-based expenses.

Other Operating Expenses

Other operating expenses primarily consist of investment research and technology costs, professional fees, travel-and distribution-related costs, rent and occupancy expenses, and other business costs.

Other operating expenses decreased $1.0 million, or 3.1%, for the three months ended March 31, 2023 as compared to the same period in the prior year primarily due to lower legal and professional fees incurred, partially offset by higher travel-related expenses, in the current year period.

Other operating expenses increased $1.9 million, or 6.1%, and $0.9 million, or 1.5%, for the three and six months ended June 30, 2023, respectively, compared to the

same periods in the prior year primarily due to the addition of AlphaSimplex.

Other Operating Expenses of CIP

Other operating expenses of CIP remained consistent during the three months ended March 31, 2023 compared to the same period in the prior year.

Other operating expenses of CIP remained consistent during the three and six months ended June 30, 2023 compared to the respective periods in the prior year.

Change in Fair Value of Contingent Consideration

Contingent consideration related to the Company's acquisitions are fair valued on each reporting date taking into consideration changes in various estimates, including underlying performance estimates, discount rates and amount of time until the conditions of the contingent payments are achieved.

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

The $9.7 million change in fair value of contingent consideration for the three and six months ended June 30, 2023 compared to the respective periods in the prior year was primarily attributable to changes in underlying performance estimates and discount rates.

Depreciation Expense

Depreciation expense consists primarily of the straight-line depreciation of furniture, equipment and leasehold improvements.

Depreciation expense increased $0.2 million, or 22.5%, for the three months ended March 31, 2023 compared to the same periods in the prior year.

This increase is primarily attributable to software and equipment purchases made in the current year period.

Depreciation expense increased $0.5 million, or 54.4%, and $0.7 million, or 38.6% for the three and six months ended June 30, 2023, respectively, compared to the respective periods in the prior year.

The increases are primarily due to the addition of AlphaSimplex, as well as software and equipment purchases made in the current year periods.

Amortization Expense

Amortization expense consists of the amortization of definite-lived intangible assets over their estimated useful lives.

Amortization expense decreased $0.3 million, or 1.8%, for the three months ended March 31, 2023 compared to the same period in the prior year due to certain intangible assets becoming fully amortized in the prior year.

Amortization expense increased $1.2 million, or 8.1%, and $0.9 million, or 3.1% for the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year primarily due to the addition of AlphaSimplex.

Other Income (Expense)

Other Income (Expense), net by category were as follows:

Three Months Ended March 31,

(in thousands) 2023 2022 2023 vs.

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2023 2022 $ % 2023 2022 $ %

Other Income (Expense)

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Realized and unrealized gain (loss) on investments, net

Realized and unrealized gain (loss) on investments, net changed during the three months ended March 31, 2023 by $5.7 million as compared to the same period in the prior year.

The realized and unrealized gains and losses during the period reflected changes in overall market conditions experienced during the periods.

Realized and unrealized gain (loss) on investments, net changed during the three and six months ended June 30, 2023 by $12.3 million and $17.9 million, respectively, compared to the same periods in the prior year.

The realized and unrealized gains and losses reflect changes in overall market conditions for the respective periods.

Realized and unrealized gain (loss) of CIP, net

Realized and unrealized gain (loss) of CIP, net changed by $15.9 million during the three months ended March 31, 2023 compared to the same period in the prior year.

The change for the three months ended March 31, 2023 consisted primarily of an increase in unrealized gains of $53.3 million due to changes in market values of leveraged loans, partially offset by changes in unrealized losses of $37.3 million related to the value of the notes payable.

Realized and unrealized gain (loss) of CIP, net changed by $17.2 million and $33.2 million during the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year.

The change for the three months ended June 30, 2023 consisted primarily of net realized and unrealized gains of $29.7 million due to changes in market values of leveraged loans, partially offset by changes in unrealized losses of $12.5 million related to the value of the notes payable.

The change for the six months ended June 30, 2023 consisted primarily of net realized and unrealized gains of $82.9 million due to changes in market values of leveraged loans, partially offset by changes in unrealized losses of $49.7 million related to the value of the notes payable.

Other income (expense), net

Other income (expense), net changed by $0.6 million during the three months ended March 31, 2023 compared to the same period in the prior year.

The change during the three-month period was primarily due to equity method investment losses during the current year period compared to equity method investment gains during the prior year period.

Other income (expense), net changed by $1.4 million and $2.0 million during the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year primarily due to equity method investment losses during the current year periods compared to equity method investment gains during the prior-year periods.

Interest Income (Expense)

Interest Income (Expense), net by category were as follows:

Three Months Ended March 31,

(in thousands) 2023 2022 2023 vs.

Three Months Ended

June 30, Change Six Months Ended

June 30, Change

(in thousands) 2023 2022 $ % 2023 2022 $ %

Interest Income (Expense)

5 unchanged sentences

Interest Expense

Interest expense increased $2.7 million, or 119.6%, during the three months ended March 31, 2023 compared to the same period in the prior year.

The increase was attributable to higher interest rates on our debt.

Interest expense increased $3.4 million, or 120.1%, and $6.1 million, or 119.9% during the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year attributable to higher average interest rates and higher average debt balances during the current year periods.

Interest and Dividend Income

Interest and dividend income increased $2.9 million, or 887.2%, during the three months ended March 31, 2023 compared to the same period in the prior year.

The increase was primarily attributable to higher interest earned on cash balances during the current year period compared to prior year period.

Interest and dividend income increased $2.1 million, or 405.7%, and $5.1 million, or 590.0%, during the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year primarily attributable to higher interest earned on cash balances during the current year periods compared to prior year periods.

Interest and Dividend Income of Investments of CIP

Interest and dividend income of investments of CIP increased $26.4 million, or 129.7%, for the three months ended

March 31, 2023, compared to the same period in the prior year.

The increase was primarily due to higher average interest rates during the current year and the addition of a new CLO in the fourth quarter of 2022.

Interest and dividend income of investments of CIP increased $25.5 million, or 113.7%, and $51.9 million, or 121.3%, for the three and six months ended June 30, 2023, respectively, compared to the same period in the prior year.

The increases were primarily due to higher average interest rates during the current year periods and the addition of a CLO in the fourth quarter of 2022.

Interest Expense of CIP

Interest expense of CIP represents interest expense on the notes payable of CIP.

Interest expense of CIP increased $23.1 million, or 191.2% for the three months ended March 31, 2023 compared to the same period in the prior year.

The increase during the three months ended March 31, 2023 was primarily due to higher average interest rates and the addition of a new CLO in the fourth quarter of 2022.

Interest expense of CIP increased $24.3 million, or 168.7%, and $47.4 million, or 179.0%, for the three and six months ended June 30, 2023, respectively, compared to the same periods in the prior year.

The increases during the three and six months ended June 30, 2023 were primarily due to higher average interest rates and the addition of a CLO in the fourth quarter of 2022.

Income Tax Expense (Benefit)

The provision for income taxes reflected U.S.

federal, state and local taxes at an estimated effective tax rate of 20.1% and 30.0% for the three months ended March 31, 2023 and 2022, respectively.

The lower estimated effective tax rate for the three months ended March 31, 2023 was primarily due to excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

federal, state and local taxes at an estimated effective tax rate of 23.2% and 38.4% for the six months ended June 30, 2023 and 2022, respectively.

The lower estimated effective tax rate for the six months ended June 30, 2023 was primarily due to excess tax benefits associated with stock-based compensation and the change in valuation allowances in the current year related to the tax effects of unrealized gains on certain of our investments.

The higher effective tax rate in the prior-year period was due to valuation allowances recorded for the tax effects of unrealized losses on certain of our investments.

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The following table summarizes certain financial data relating to our liquidity and capital resources:

March 31, 2023 December 31, 2022 Change

(in thousands) 2023 vs.

June 30, 2023 December 31, 2022 Change

(in thousands) $ %

Balance Sheet Data

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Total equity 856,709 822,936 33,773 4.1 %

Three Months Ended

March 31, Change

(in thousands) 2023 2022 2023 vs.

Six Months Ended

June 30, Change

(in thousands) 2023 2022 $ %

Cash Flow Data

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Financing activities (210,727) (240,177) 29,450 (12.3) %

At March 31, 2023, we had $213.4 million of cash and cash equivalents and $115.7 million of investments, which included $80.7 million of investment securities, compared to $338.2 million of cash and cash equivalents and $100.3 million of investments, which included $77.0 million of investment securities, at December 31, 2022.

At June 30, 2023, we had $201.5 million of cash and cash equivalents and $123.3 million of investments, which included $89.3 million of investment securities, compared to $338.2 million of cash and cash equivalents and $100.3 million of investments, which included $77.0 million of investment securities, at December 31, 2022.

Uses of Capital

Our main uses of capital related to operating activities comprise employee compensation and related benefit costs, which include annual incentive compensation, other operating expenses, which primarily consist of investment research, technology costs, professional fees, distribution and occupancy costs, as well as interest on our indebtedness and income taxes.

Annual incentive compensation, which is one of the largest annual operating cash expenditures, is typically paid in the first quarter of the year.

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In addition to operating activities, other uses of cash could include:

(i) investments in organic growth, including

seeding or launching new products and expanding distribution;

(i) investments in organic growth, including seeding or launching new products and expanding distribution;

(ii) debt principal payments through scheduled amortization, excess cash flow payment requirements or additional paydowns;

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Failure to meet these requirements could result in adverse consequences to us, including additional reporting requirements, a lower required ratio of aggregate indebtedness to net capital, or interruption of our business.

At March 31, 2023, the ratio of aggregate indebtedness to net capital of our broker-dealer was below the maximum allowed, and net capital was significantly greater than the required minimum.

At June 30, 2023, the ratio of aggregate indebtedness to net capital of our broker-dealer was below the maximum allowed, and net capital was significantly greater than the required minimum.

Balance Sheet

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Investments consist primarily of investments in our sponsored funds.

CIP represent investment products for which we provide investment management services and where we either have a controlling financial interest or are considered the primary beneficiary of an investment product that is considered a variable interest entity.

CIP represent investment products for which we provide investment management

services and where we either have a controlling financial interest or are considered the primary beneficiary of an investment product that is considered a variable interest entity.

Operating Cash Flow

Net cash used in operating activities of $43.0 million for the three months ended March 31, 2023 decreased by $38.8 million from net cash used in operating activities of $81.8 million for the same period in the prior year primarily due to a $51.8 million reduction in net sales of investments by CIP.

Net cash provided by operating activities of $102.1 million for the six months ended June 30, 2023 increased by $64.5 million from net cash provided by operating activities of $37.6 million for the same period in the prior year primarily due to an increase of $77.7 million in net sales of investments by CIP.

Investing Cash Flow

Cash flows from investing activities consist primarily of capital expenditures and other investing activities related to our business operations.

Net cash used in investing activities was $13.1 million for the three months ended March 31, 2023 compared to net cash used in investing activities of $22.6 million in the same period for the prior year.

The decrease in cash used in investing activities during the three months ended March 31, 2023 compared to the prior year period related to the decrease in cash paid for acquisitions and other investments.

Net cash used in investing activities was $123.2 million for the six months ended June 30, 2023 compared to net cash used in investing activities of $24.4 million in the same period for the prior year.

The increase in cash used in investing activities during the six months ended June 30, 2023 compared to the prior year period is primarily due to the acquisition of AlphaSimplex.

Financing Cash Flow

Cash flows from financing activities consist primarily of transactions related to our common shares, issuance and repayment of debt by us and CIP, payments of contingent consideration and changes to noncontrolling interests.

Net cash used in financing activities decreased by $30.7 million to $115.1 million for the three months ended March 31, 2023 from $145.8 million for the three months ended March 31, 2022.

The net change was primarily due to a $30.0 million decrease in share repurchases.

Net cash used in financing activities decreased by $29.5 million to $210.7 million for the six months ended June 30, 2023 from $240.2 million for the six months ended June 30, 2022.

The net change was primarily due to a $60.0 million decrease in share repurchases, an increase of $50.0 million in net borrowings on the credit agreement in the current year and lower contingent consideration payments, partially offset by a $92.3 million increase on the repayment on borrowings of CIP.

Credit Agreement

The Company's credit agreement, as amended (the "Credit Agreement"), comprises (i) a $275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $175.0 million revolving credit facility with a five-year term expiring in September 2026.

During the three months ended March 31, 2023, the Company repaid $0.7 million outstanding under its Term Loan.

At March 31, 2023, $260.9 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 in the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were $6.3 million as of March 31, 2023.

On April 3, 2023, the Company borrowed $50.0 million under the revolving credit facility to partially finance its acquisition of AlphaSimplex Group, LLC.

The Company's credit agreement, most recently amended on June 20, 2023, changing the base interest rate from LIBOR to SOFR, (the "Credit Agreement"), comprises (i) a $275.0 million term loan with a seven-year term (the "Term Loan") expiring in September 2028, and (ii) a $175.0 million revolving credit facility with a five-year term expiring in September 2026.

During the six months ended June 30, 2023, the Company repaid $1.4 million outstanding under its Term Loan.

At June 30, 2023, $260.2 million was outstanding under the Term Loan.

In accordance with ASC 835, Interest , the amounts outstanding under the Company's Term Loan are presented on the Condensed Consolidated Balance Sheet net of related debt issuance costs, which were $6.0 million as of June 30, 2023.

On April 3, 2023, the Company borrowed $50.0 million under the revolving credit facility to partially finance its acquisition of AlphaSimplex, $40.0 million of which was outstanding at June 30, 2023 (see Note 4 for further information).

On August 4, 2023, the Company repaid $20.0 million outstanding under the credit facility.

Critical Accounting Policies and Estimates

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A complete description of our significant accounting policies is included in our 2022 Annual Report on Form 10-K.

There were no material changes in our critical

accounting policies and estimates in the three months ended March 31, 2023.

There were no material changes in our critical accounting policies and estimates in the three months ended June 30, 2023.

Recently Issued Accounting Pronouncements

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The Company is primarily exposed to market risk associated with unfavorable movements in interest rates and securities prices.

During the three months ended March 31, 2023, there were no material changes to the information contained in Part II, Item 7A of the Company's 2022 Annual Report on Form 10-K.

During the three and six months ended June 30, 2023, there were no material changes to the information contained in Part II, Item 7A of the Company's 2022 Annual Report on Form 10-K.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis