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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  ________  to ________
Commission File Number: 001-33805
SCULPTOR CAPITAL MANAGEMENT, INC.
(Exact name of Registrant as specified in its charter)
 
Delaware 26-0354783
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
9 West 57th Street, New York, New York 10019
(Address of principal executive offices)
(212) 790-0000
(Registrant’s telephone number, including area code)
 
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s)Name of each exchange on which registered
Class A Shares SCUNew York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes      No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer  Accelerated filer
  
Non-accelerated filer  Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
    Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No 
As of November 3, 2022, there were 23,922,929 Class A Shares, 5,203,172 of Restricted Class A Shares and 33,569,188 Class B Shares outstanding.
 




SCULPTOR CAPITAL MANAGEMENT, INC.
TABLE OF CONTENTS
 
  Page
PART I — FINANCIAL INFORMATION
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
Item 3.
 
Item 4.
 
PART II — OTHER INFORMATION 
 
Item 1.
 
Item 1A.
 
Item 2.
 
Item 3.
 
Item 4.
 
Item 5.
 
Item 6.
 

i


Defined Terms
2007 Offerings
Refers collectively to our IPO and the concurrent private offering of approximately 3.81 million Class A Shares to DIC Sahir Limited, a wholly owned indirect subsidiary of Dubai Holdings LLC.
Accrued but unrecognized incentive incomeAccrued but unrecognized incentive income (“ABURI”) is the amount of incentive income accrued at the fund level on longer-term AUM that has not yet been recognized in our revenues. These amounts may ultimately not be recognized as revenue by us in the event of future losses in the respective funds.
Annual Report
Our annual report on Form 10-K for the year ended December 31, 2021, dated February 25, 2022 and filed with the SEC.
Assets Under Management
Assets Under Management (“AUM”) refers to the assets for which we provide investment management, advisory or certain other investment-related services. Specifically:
a.AUM for our multi-strategy and opportunistic credit funds is generally based on the net asset value of those funds plus any unfunded commitments, if applicable. AUM is reduced for unfunded commitments that will be funded through transfers from other funds.
b.AUM for Institutional Credit Strategies is generally based on the amount of equity outstanding for CLOs and CBOs (during the warehouse period) and the par value of the collateral assets and cash held (after warehouse period). For aircraft securitization vehicles, AUM is based on the adjusted portfolio appraisal values for the aircraft collateral within the securitization. AUM is reduced for any investments in these CLOs and securitization vehicles held by our other funds. AUM also includes the net asset value of other investment vehicles within this strategy.
c.AUM for our real estate funds is generally based on the amount of capital committed by our fund investors during the investment period and the amount of actual capital invested for periods following the investment period. AUM is reduced for unfunded commitments that will be funded through transfers from other funds.
d.AUM for our special purpose acquisition company (“SPAC”) sponsored by us includes the proceeds raised in the initial public offering that are currently held in a trust for use in a business combination.

AUM includes amounts that are not subject to management fees, incentive allocation or other amounts earned on AUM, including without limitation, investments by the Company, its executive managing directors, employees and certain other related parties. Our calculation of AUM may differ from the calculations of other asset managers, and as a result, may not be comparable to similar measures presented by other asset managers. Our calculations of AUM are not based on any definition set forth in the governing documents of the investment funds and are not calculated pursuant to any regulatory definitions.
Class A Shares
Our Class A Shares, representing Class A common stock of Sculptor Capital Management, Inc., which are publicly traded and listed on the NYSE.
Class B Shares
Class B Shares of Sculptor Capital Management, Inc., which are not publicly traded, are currently held solely by our executive managing directors and have no economic rights but entitle the holders thereof to one vote per share together with the holders of our Class A Shares.
CLOs
Collateralized loan obligations.
the Company, Sculptor Capital, the firm, we, us, our
Refers, unless the context requires otherwise, to the Registrant and its consolidated subsidiaries, including the Sculptor Operating Group.
Consolidated Entities
Refers to funds, special purpose entities, investment vehicles and other similar structures for which the Company is required to consolidate in accordance with GAAP.
1


Distribution HolidayThe Sculptor Operating Partnerships initiated a distribution holiday (the “Distribution Holiday”) on the Group A Units, Group E Units and Group P Units and on certain RSUs and RSAs that will terminate on the earlier of (x) 45 days after the last day of the first calendar quarter as of which the achievement of $600.0 million of Distribution Holiday Economic Income is realized and (y) April 1, 2026. Holders of Group A Units, Group E Units and Group P Units and certain RSUs and RSAs, do not receive distributions during the Distribution Holiday.
Distribution Holiday Economic Income Distribution Holiday Economic Income is the cumulative amount of Economic Income earned since October 1, 2018, less any dividends paid to Class A Shareholders or on the now-retired Preferred Units. Distribution Holiday Economic Income is a non-GAAP measure that is defined in the agreements of limited partnership of the Sculptor Operating Partnerships and is being presented to provide an update on the progress made toward the $600.0 million target required to exit the Distribution Holiday.
Economic Income
Economic Income is a non-GAAP measure of pre-tax operating performance that excludes the following from our results on a GAAP basis: noncontrolling interests, redeemable noncontrolling interests, equity based compensation expense, net of cash settled RSUs, depreciation and amortization expenses, components of our other income (loss), non-cash interest expense accretion on debt, and amounts related to consolidated entities, in addition, expenses related to incentive income profit-sharing arrangements are generally recognized at the same time the related incentive income revenue is recognized. The fair value of RSUs that are settled in cash to employees or executive managing directors, where the number of RSUs to be settled in cash is not certain at the time of grant, is included as an expense at the time of settlement. Where the number of RSUs to be settled in cash is certain on the grant date, the expense is recognized during the performance period to which the award relates. Similarly, deferred cash compensation is expensed in full during the performance period to which the award relates for Economic Income, rather than over the service period for GAAP. Further, impairment of right-of-use lease assets is excluded from Economic Income at the time the impairment is recognized for GAAP and the impact is then amortized over the lease term for Economic Income. Additionally, rent expense is offset by subrental income as management evaluates rent expenses on a net basis.
Exchange Act
Securities Exchange Act of 1934, as amended.
executive managing directors
The current executive managing directors of the Company, and, except where the context requires otherwise, also includes certain executive managing directors who are no longer active in our business.
Fee Paying Assets Under ManagementFee Paying Assets Under Management (“FP AUM”) refers to the AUM on which we earn management fees and/or incentive income.
funds
The multi-strategy funds, dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds and other alternative investment vehicles for which we provide asset management services, as well as the SPAC we sponsor.
GAAP
U.S. generally accepted accounting principles.
Group A Units
Refers collectively to one Class A operating group unit in each of the Sculptor Operating Partnerships. Group A Units are limited partner interests held by our executive managing directors.
Group A-1 Units
Refers collectively to one Class A-1 operating group unit in each of the Sculptor Operating Partnerships. Group A-1 Units are limited partner interests held by our executive managing directors.
Group B Units
Refers collectively to one Class B operating group unit in each of the Sculptor Operating Partnerships. Group B Units are limited partner interests held by Sculptor Corp.
2


Group E Units
Refers collectively to one Class E operating group unit in each of the Sculptor Operating Partnerships. Group E Units are limited partner interests held by our executive managing directors.
Group P Units
Refers collectively to one Group P operating group unit in each of the Sculptor Operating Partnerships. Group P Units are limited partner interests held by our executive managing directors.
Institutional Credit Strategies
Our asset management platform that invests in performing credits, including leveraged loans, high-yield bonds, private credit/bespoke financing and investment grade credit via CLOs, aircraft securitization vehicles, collateralized bond obligations, the structured alternative investment solution, and other customized solutions.
IPO
Our initial public offering of 3.6 million Class A Shares that occurred in November 2007.
Longer-term AUM
AUM from investors that are subject to initial commitment periods of three years or longer. Investors with longer-term AUM may have less than three years remaining in their commitment period. This excludes AUM that had initial commitment periods of three years or longer and subsequently moved to shorter commitment periods at the end of their initial commitment period.
NYSE
New York Stock Exchange.
Partner Equity Units
Refers collectively to the Group A Units, Group E Units and Group P Units.
Preferred UnitsOne Class A cumulative preferred unit in each of the Sculptor Operating Partnerships collectively represented one “Preferred Unit.” Certain of our executive managing directors collectively owned 100% of the Preferred Units. We redeemed in full the Preferred Units in the fourth quarter of 2020, and as of December 31, 2020 and 2021 there were no Preferred Units outstanding.
PSUs
Class A performance-based RSUs.
Recapitalization
Refers to the recapitalization of our business that occurred in February 2019. As part of the Recapitalization, a portion of the interests held by our former executive management were reallocated to existing members of senior management. In addition, we restructured the previously outstanding senior debt and Preferred Units.
Registrant
Sculptor Capital Management, Inc., a Delaware corporation.
RSAs
Restricted Class A Shares.
RSUs
Class A restricted share units.
Sculptor Corp
Sculptor Capital Holding Corporation, a Delaware corporation.
Sculptor Operating Group
Refers collectively to the Sculptor Operating Partnerships and their consolidated subsidiaries.
Sculptor Operating Group Units
Refers collectively to Sculptor Operating Group A, B, E, and P Units.
Sculptor Operating Partnerships
Refers collectively to Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP.
SEC
U.S. Securities and Exchange Commission.
3


Securities Act
Securities Act of 1933, as amended.
SPACRefers to special purpose acquisition company.
Special Investments
Investments that we, as investment manager, believe lack a readily ascertainable market value, are illiquid or should be held until the resolution of a special event or circumstance.
4


Available Information
We file annual, quarterly and current reports, proxy statements and other information required by the Exchange Act with the SEC. We make available free of charge on our website (www.sculptor.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those filings as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. We also use our website to distribute company information, including Assets Under Management by investment strategy, and such information may be deemed material. Accordingly, investors should monitor our website, in addition to our press releases, SEC filings and public conference calls and webcasts. The contents of our website are not, however, a part of this report.
Also posted on our website in the “Shareholder Services—Corporate Governance” section are charters for our Audit Committee; Compensation Committee; Nominating, Corporate Governance and Conflicts Committee and Corporate Responsibility and Compliance Committee, as well as our Corporate Governance Guidelines and Code of Business Conduct and Ethics governing our directors, officers and employees. Information on, or accessible through, our website is not a part of, and is not incorporated into, this report or any other SEC filing. Copies of our SEC filings or corporate governance materials are available without charge upon written request to Sculptor Capital Management, Inc., 9 West 57th Street, New York, New York 10019, Attention: Office of the Secretary. Any materials we file with the SEC are also publicly available through the SEC’s website (www.sec.gov).
No statements herein, available on our website or in any of the materials we file with the SEC constitute, or should be viewed as constituting, an offer of any fund.
Forward-Looking Statements
This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that reflect our current views with respect to, among other things, future events, our operations and our financial performance. We generally identify forward-looking statements by terminology such as “outlook,” “believe,” “expect,” “potential,” “continue,” “may,” “will,” “should,” “could,” “seek,” “approximately,” “predict,” “intend,” “plan,” “estimate,” “anticipate,” “opportunity,” “comfortable,” “assume,” “remain,” “maintain,” “sustain,” “achieve,” “see,” “think,” “position” or the negative version of those words or other comparable words.
Any forward-looking statements contained herein are based upon historical information and on our current plans, estimates and expectations. The inclusion of this or other forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.
We caution that forward-looking statements are subject to numerous assumptions, estimates, risks and uncertainties, including but not limited to the following: global economic, business, market and geopolitical conditions, the United Kingdom’s withdrawal from the European Union; poor investment performance of, or lack of capital flows into, the funds we manage; our investors’ right to redeem their investments from our funds on a regular basis; the highly variable nature of our revenues, results of operations and cash flows; difficult market conditions that could adversely affect our funds; counterparty default risks; the outcome of third-party litigation involving us; the consequences of the Foreign Corrupt Practices Act settlements with the SEC and the U.S. Department of Justice (the “DOJ”) and any claims or negative publicity arising therefrom or from matters involving the Company’s founding CEO; conditions impacting the alternative asset management industry; our ability to retain existing investor capital; our ability to successfully compete for fund investors, assets, professional talent and investment opportunities; our ability to retain our executive managing directors, managing directors and other investment professionals; our successful formulation and execution of our business and growth strategies; our ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to our business; United States (“U.S.”) and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy; and assumptions relating to our operations, investment performance, financial results, financial condition, business prospects, growth strategy and liquidity.
If one or more of these or other risks or uncertainties materialize, or if our assumptions or estimates prove to be incorrect, our actual results may vary materially from those indicated in these statements. These factors are not and should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and risks that are included in our filings with the SEC, including but not limited to those described in our Annual Report.
There may be additional risks, uncertainties and factors that we do not currently view as material or that are not known. The forward-looking statements contained in this report are made only as of the date of this report. We do not undertake to update any forward-looking statement because of new information, future developments or otherwise.
5

SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS — UNAUDITED
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
 September 30, 2022December 31, 2021
 (dollars in thousands)
Assets  
Cash and cash equivalents$170,304 $170,781 
Restricted cash7,144 7,289 
Investments (includes assets measured at fair value of $268,497 and $424,910, including assets sold under agreements to repurchase of $140,461 and $157,721 as of September 30, 2022 and December 31, 2021, respectively)
361,905 583,622 
Income and fees receivable26,037 193,636 
Due from related parties27,944 28,037 
Deferred income tax assets247,824 241,759 
Operating lease assets78,650 85,735 
Other assets, net101,643 77,091 
Assets of consolidated entities: 
Cash and cash equivalents83 — 
Restricted cash and cash equivalents9,882 234,601 
Investments of consolidated entities543,843 — 
Other assets of consolidated entities11,813 5,304 
Total Assets$1,587,072 $1,627,855 
Liabilities and Shareholders’ Equity 
Liabilities  
Compensation payable$73,269 $246,261 
Unearned income and fees66,188 62,800 
Tax receivable agreement liability178,773 195,752 
Operating lease liabilities95,174 104,753 
Debt obligations123,812 126,474 
Warrant liabilities, at fair value24,597 65,287 
Securities sold under agreements to repurchase152,883 156,448 
Other liabilities37,853 38,790 
Liabilities of consolidated entities: 
Notes payable, at fair value207,978 — 
Warrant liabilities, at fair value1,639 7,590 
Other liabilities of consolidated entities14,791 10,817 
Total Liabilities976,957 1,014,972 
Commitments and Contingencies (Note 16)
Redeemable Noncontrolling Interests of Consolidated Entities (Note 3)235,918 234,600 
Shareholders’ Equity  
Class A Shares, par value $0.01 per share, 100,000,000 shares authorized; 26,612,372 and 25,668,987 shares issued and 24,034,767 and 25,668,987 shares outstanding as of September 30, 2022 and December 31, 2021, respectively
240 257 
Class B Shares, par value $0.01 per share, 75,000,000 shares authorized; 33,569,188 and 33,613,023 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively
336 336 
Treasury stock, at cost; 2,577,605 and 0 as of September 30, 2022 and December 31, 2021, respectively
(28,232)— 
Additional paid-in capital237,940 184,691 
Accumulated deficit(277,292)(253,521)
Accumulated other comprehensive (loss) income(3,355)51 
Shareholders’ deficit attributable to Class A Shareholders(70,363)(68,186)
Shareholders’ equity attributable to noncontrolling interests444,560 446,469 
Total Shareholders’ Equity374,197 378,283 
Total Liabilities and Shareholders’ Equity$1,587,072 $1,627,855 
    See notes to consolidated financial statements.
6


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
 Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
 (dollars in thousands)
Revenues    
Management fees$66,236 $76,820 $211,443 $227,391 
Incentive income7,566 27,031 73,788 134,379 
Other revenues3,576 1,786 8,526 5,145 
Income of consolidated entities1,453 — 1,603 
Total Revenues78,831 105,637 295,360 366,918 

Expenses    
Compensation and benefits67,130 53,078 224,658 201,759 
Interest expense3,876 3,277 10,588 12,280 
General, administrative and other28,290 39,672 82,031 92,070 
Expenses of consolidated entities1,031 — 2,943 
Total Expenses100,327 96,027 320,220 306,111 

Other Loss    
Changes in fair value of warrant liabilities(2,386)(12,710)40,690 (50,885)
Changes in tax receivable agreement liability(14)(39)206 (18)
Net losses on retirement of debt— — — (30,198)
Net (losses) gains on investments(2,989)5,068 (39,171)16,685 
Net losses of consolidated entities(3,498)— (5,792)— 
Total Other Loss(8,887)(7,681)(4,067)(64,416)

(Loss) Income Before Income Taxes(30,383)1,929 (28,927)(3,609)
Income taxes227 8,653 (720)19,985 
Consolidated Net Loss(30,610)(6,724)(28,207)(23,594)
Less: Net loss attributable to noncontrolling interests9,410 2,386 15,837 20,777 
Less: Net income attributable to redeemable noncontrolling interests(1,492)— (5,257)— 
Net Loss Attributable to Sculptor Capital Management, Inc.(22,692)(4,338)(17,627)(2,817)
Change in redemption value of redeemable noncontrolling interests174 — 3,939 — 
Net Loss Attributable to Class A Shareholders$(22,518)$(4,338)$(13,688)$(2,817)
Loss per Class A Share   
Loss per Class A Share - basic$(0.91)$(0.17)$(0.53)$(0.11)
Loss per Class A Share - diluted$(0.91)$(0.17)$(1.79)$(0.50)
Weighted-average Class A Shares outstanding - basic24,772,098 25,334,903 25,620,996 24,743,527 
Weighted-average Class A Shares outstanding - diluted24,772,098 25,334,903 26,818,176 40,763,033 

See notes to consolidated financial statements.
7


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) — UNAUDITED
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(dollars in thousands)
Consolidated net loss$(30,610)$(6,724)$(28,207)$(23,594)
Other Comprehensive Loss, Net of Tax
Other comprehensive loss - currency translation adjustment(1,430)(565)(3,406)(1,248)
Comprehensive Loss(32,040)(7,289)(31,613)(24,842)
Less: Comprehensive loss attributable to noncontrolling interests9,410 2,678 15,837 21,439 
Less: Comprehensive income attributable to redeemable noncontrolling interests(1,492)— (5,257)— 
Comprehensive (Loss) Income Attributable to Sculptor Capital Management, Inc.$(24,122)$(4,611)$(21,033)$(3,403)

See notes to consolidated financial statements.
8


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) — UNAUDITED
Sculptor Capital Management, Inc. Shareholders
 Class A SharesClass B SharesTreasury Stock SharesClass A Shares Par ValueClass B Shares Par ValueAdditional Paid in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTreasury Stock, at costShareholders’ Deficit Attributable to Class A Shareholders Shareholders’ Equity Attributable to Noncontrolling InterestsTotal Shareholders’ Equity
(dollars in thousands, except share data)
Balance at July 1, 202224,885,028 33,633,474 1,641,589 $249 $336 $219,705 $(251,059)$(1,925)$(19,492)$(52,186)$448,085 $395,899 
Equity-based compensation, net of taxes85,755 (64,286)— — — 17,742 — — — 17,742 2,146 19,888 
Repurchase of Class A Shares(936,016)— 936,016 (9)— — — — (8,740)(8,749)— (8,749)
Dividend equivalents on Class A restricted share units— — — — — 319 (319)— — — — — 
Change in redemption value of SPAC Class A Shares— — — — — 174 — — — 174 — 174 
Cash dividends declared on Class A Shares ($0.13 per share)
— — — — — — (3,222)— — (3,222)— (3,222)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests— — — — — — (22,692)— — (22,692)(9,410)(32,102)
Currency translation adjustment— — — — — — — (1,430)— (1,430)— (1,430)
Capital contributions— — — — — — — — — — 5,490 5,490 
Capital distributions— — — — — — — — — — (1,751)(1,751)
Balance at September 30, 202224,034,767 33,569,188 2,577,605 $240 $336 $237,940 $(277,292)$(3,355)$(28,232)$(70,363)$444,560 $374,197 
Balance at July 1, 202125,101,187 32,887,882  $251 $329 $200,733 $(247,058)$419 $ $(45,326)$438,620 $393,294 
Equity-based compensation, net of taxes115,669 — — — 6,224 — — — 6,225 3,172 9,397 
Dividend equivalents on Class A restricted share units— — — — — 834 (834)— — — — — 
Cash dividends declared on Class A Shares ($0.54 per share)
— — — — — — (13,618)— — (13,618)— (13,618)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests— — — — — — (4,338)— — (4,338)(2,386)(6,724)
Currency translation adjustment— — — — — — — (273)— (273)(292)(565)
Capital contributions— — — — — — — — — — 763 763 
Capital distributions— — — — — — — — — — (3,001)(3,001)
Balance at September 30, 202125,216,856 32,887,882  $252 $329 $207,791 $(265,848)$146 $ $(57,330)$436,876 $379,546 
9


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) — (continued)

Sculptor Capital Management, Inc. Shareholders
 Class A SharesClass B SharesTreasury Stock SharesClass A Shares Par ValueClass B Shares Par ValueAdditional Paid in CapitalAccumulated DeficitAccumulated Other Comprehensive (Loss) IncomeTreasury Stock, at costShareholders’ Deficit Attributable to Class A Shareholders Shareholders’ Equity Attributable to Noncontrolling InterestsTotal Shareholders’ Equity
(dollars in thousands, except share data)
Balance at January 1, 202225,668,987 33,613,023  $257 $336 $184,691 $(253,521)$51 $ $(68,186)$446,469 $378,283 
Equity-based compensation, net of taxes943,385 (43,835)— — 49,167 — — — 49,176 6,029 55,205 
Repurchase of Class A Shares(2,577,605)— 2,577,605 (26)— — — — (28,232)(28,258)— (28,258)
Dividend equivalents on Class A restricted share units— — — — — 143 (143)— — — — — 
Change in redemption value of SPAC Class A Shares— — — — — 3,939 — — — 3,939 — 3,939 
Cash dividends declared on Class A Shares ($0.24 per share)
— — — — — — (6,001)— — (6,001)— (6,001)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests— — — — — — (17,627)— — (17,627)(15,837)(33,464)
Currency translation adjustment— — — — — — — (3,406)— (3,406)— (3,406)
Capital contributions— — — — — — — — — — 14,469 14,469 
Capital distributions— — — — — — — — — — (6,570)(6,570)
Balance at September 30, 202224,034,767 33,569,188 2,577,605 $240 $336 $237,940 $(277,292)$(3,355)$(28,232)$(70,363)$444,560 $374,197 
Balance at January 1, 202122,903,571 32,824,538  $229 $328 $166,917 $(178,674)$732 $ $(10,468)$445,348 $434,880 
Equity-based compensation, net of taxes2,313,285 63,344 — 23 33,563 — — — 33,587 14,724 48,311 
Dividend equivalents on Class A restricted share units— — — — — 7,311 (7,311)— — —  — 
Cash dividends declared on Class A Shares ($3.19 per share)
— — — — — — (77,046)— — (77,046)— (77,046)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests— — — — — — (2,817)— — (2,817)(20,777)(23,594)
Currency translation adjustment— — — — — — — (586)— (586)(662)(1,248)
Capital contributions— — — — — — — — — — 3,727 3,727 
Capital distributions— — — — — — — — — — (5,484)(5,484)
Balance at September 30, 202125,216,856 32,887,882  $252 $329 $207,791 $(265,848)$146 $ $(57,330)$436,876 $379,546 
See notes to consolidated financial statements.
10


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED



 Nine Months Ended September 30,
 20222021
 (dollars in thousands)
Cash Flows from Operating Activities 
Consolidated net loss$(28,207)$(23,594)
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities:  
Amortization of equity-based compensation66,664 54,089 
Depreciation, amortization and net gains and losses on fixed assets3,815 7,439 
Changes in fair value of warrant liabilities(40,690)50,885 
Net losses on retirement of debt— 30,198 
Deferred income taxes(4,103)14,452 
Non-cash lease expense14,311 27,084 
Net losses (gains) on investments, net of dividends42,831 (5,468)
Operating cash flows due to changes in:  
Income and fees receivable167,168 493,657 
Due from related parties(93)(3,724)
Other assets, net(11,635)10,099 
Compensation payable(178,630)(167,368)
Unearned income and fees3,388 8,162 
Tax receivable agreement liability(16,979)(7,200)
Operating lease liabilities(16,486)(17,354)
Other liabilities(819)(14,217)
Consolidated entities related items:  
Net losses of consolidated entities5,792 — 
Purchases of investments(493,970)— 
Proceeds from sale of investments180,669 — 
Other assets of consolidated entities(10,320)(3)
Other liabilities of consolidated entities(7,213)
Net Cash (Used in) Provided by Operating Activities(324,507)457,139 
Cash Flows from Investing Activities  
Purchases of fixed assets(2,317)(3,407)
Purchases of United States government obligations(98,082)(336,762)
Maturities and sales of United States government obligations224,386 199,290 
Investments in funds(136,734)(101,600)
Return of investments in funds152,517 27,701 
Consolidated entities related items:
Purchases of United States government obligations by SPAC(235,040)— 
Net Cash Used in Investing Activities(95,270)(214,778)
11


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED — (continued)
 Nine Months Ended September 30,
 20222021
 (dollars in thousands)
Cash Flows from Financing Activities  
Contributions from noncontrolling interests14,469 3,727 
Distributions to noncontrolling interests(6,570)(5,484)
Dividends on Class A Shares(6,001)(77,046)
Proceeds from debt obligations, net of issuance costs5,881 3,219 
Repayment of debt obligations, including prepayment costs(9,424)(249,731)
Proceeds from securities sold under agreements to repurchase, net of issuance costs20,395 45,920 
Purchases of treasury stock(28,232)— 
Other, net(6,254)(4,380)
Consolidated entities related items:
Proceeds from debt obligations of consolidated entities, net of issuance costs215,733 — 
Net Cash Provided by (Used in) Financing Activities199,997 (283,775)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(5,478)(755)
Net change in cash and cash equivalents and restricted cash(225,258)(42,169)
Cash and cash equivalents and restricted cash, beginning of period412,671 186,977 
Cash and Cash Equivalents and Restricted Cash, End of Period$187,413 $144,808 
Supplemental Disclosure of Cash Flow Information  
Cash paid during the period:  
Interest$8,746 $11,097 
Income taxes$7,199 $6,263 
Non-cash transactions:  
Assets related to initial consolidation of funds$16,699 $— 
Liabilities related to initial consolidation of funds$2,364 $— 
Assets related to deconsolidation of funds$44,042 $— 
Liabilities related to deconsolidation of funds$29,632 $— 
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents$170,304 $143,005 
Restricted cash7,144 1,803 
Cash and cash equivalents of consolidated entities83 — 
Restricted cash and cash equivalents of consolidated entities9,882 — 
Total Cash and Cash Equivalents and Restricted Cash$187,413 $144,808 

See notes to consolidated financial statements.
12


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022


1. ORGANIZATION
Sculptor Capital Management, Inc. (the “Registrant”), a Delaware corporation, together with its consolidated subsidiaries (collectively, the “Company” or “Sculptor Capital”), is a leading institutional alternative asset management firm with a global presence with offices in New York, London, Hong Kong and Shanghai. The Company provides asset management services and investment products across Credit, Real Estate, and Multi-Strategy. The Company serves its global client base through commingled funds, separate accounts and specialized products, as well as sponsoring a special purpose acquisition company (“SPAC”) (collectively, the “funds”). Sculptor Capital’s distinct investment process seeks to generate attractive and consistent risk-adjusted returns across market cycles through a combination of bottom-up fundamental analysis, a high degree of flexibility, a collaborative team and integrated risk management. The Company’s capabilities span all major geographies and asset classes, including fundamental equities, corporate credit, real estate debt and equity, merger arbitrage and structured credit.
The Company manages dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds, multi-strategy funds and other alternative investment vehicles. Through Institutional Credit Strategies, the Company’s asset management platform that invests in performing credits, the Company manages collateralized loan obligations (“CLOs”), aircraft securitization vehicles, collateralized bond obligations (“CBOs”), structured alternative investment solutions, commingled products and other customized solutions for clients.
The Company’s primary sources of revenues are management fees, which are generally based on the amount of the Company’s assets under management (“Assets Under Management” or “AUM”), as defined below, and incentive income, which is based on the investment performance of its funds. Accordingly, for any given period, the Company’s revenues will be driven by the combination of Assets Under Management and the investment performance of the funds. AUM refers to the assets of the funds to which the Company provides investment management and advisory services. The Company’s AUM are a function of the capital that is allocated to it by the investors in its funds and the investment performance of its funds.
The Company conducts its business and generates substantially all of its revenues primarily in the United States (the “U.S.”) through one operating and reportable segment. The single reportable segment reflects how the Company’s chief operating decision makers allocate resources, make operating decisions and assess financial performance on a consolidated basis under the Company’s ‘one-firm approach,’ which includes operating collaboratively across business lines, with predominantly a single expense pool. The Company conducts its operations through Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP (collectively, the “Sculptor Operating Partnerships” and collectively with their consolidated subsidiaries, the “Sculptor Operating Group”). The Registrant holds its interests in the Sculptor Operating Group indirectly through Sculptor Capital Holding Corporation (“Sculptor Corp”), a wholly owned subsidiary of the Registrant.
References to the Company’s “executive managing directors” include the current executive managing directors of the Company, and, except where the context requires otherwise, also include certain former executive managing directors who are no longer active in the Company’s business.
Company Structure
The Registrant is a holding company that, through Sculptor Corp, holds equity ownership interests in the Sculptor Operating Group. The Registrant had issued and outstanding the following share classes:
Class A Shares—Class A Shares are publicly traded and entitle the holders thereof to one vote per share on matters submitted to a vote of shareholders. The holders of Class A Shares are entitled to any distributions declared on the Class A Shares by the Registrant’s Board of Directors (other than RSAs, where entitlement to distributions may be subject to limitations and conditions).
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

Class B Shares—Class B Shares are held by executive managing directors, as further discussed below. These shares are not publicly traded but rather entitle the executive managing directors to one vote per share on matters submitted to a vote of shareholders. These shares do not participate in the earnings of the Registrant, as the executive managing directors participate in the related economics of the Sculptor Operating Group through their direct ownership in the Sculptor Operating Group, subject to the Distribution Holiday discussed below.
The Company conducts its operations through the Sculptor Operating Group. The following is a list of the outstanding units of the Sculptor Operating Partnerships as of September 30, 2022:
Group A Units—Group A Units are limited partner interests issued to certain executive managing directors. In connection with the Recapitalization, as defined below, the Sculptor Operating Partnerships initiated a distribution holiday (the “Distribution Holiday”). Holders of Group A Units do not receive distributions on such units during the Distribution Holiday. Each executive managing director may exchange his or her vested and booked-up (as defined below) Group A Units for an equal number of Class A Shares (or the cash equivalent thereof) over a period of two years in three equal installments commencing upon the final day of the Distribution Holiday and on each of the first and second anniversary thereof (or, for units that become vested and booked-up Group A Units after the final day of the Distribution Holiday, from the later of the date on which they would have been exchangeable in accordance with the foregoing and the date on which they become vested and booked-up Group A Units) (and thereafter such units will remain exchangeable), in each case, subject to certain restrictions. A “book-up” is achieved when sufficient appreciation has occurred to meet a prescribed capital account book-up target under the terms of the Sculptor Operating Partnership limited partnership agreements.
Group A Unit grants are accounted for as equity-based compensation. See Note 13 in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 25, 2022 (“Annual Report”) for additional information. The Company completed a recapitalization in February 2019 (“Recapitalization”). See Note 3 in the Company's Annual Report for additional details. In connection with the Recapitalization, each Group A Unit outstanding on the Recapitalization date was recapitalized into 0.65 Group A Units and 0.35 Group A-1 Units.
Group A-1 Units—Group A-1 Units are limited partner interests into which 0.35 of each Group A Unit was recapitalized in connection with the reallocation that was effectuated by the Recapitalization. The Group A-1 Units will be canceled at such time and to the extent that the Group E Units granted in connection with the Recapitalization vest and achieve a book-up. Group A-1 Units are not eligible to receive distributions at any time and do not participate in the net income (loss) of the Sculptor Operating Group. However, the holders of Group A-1 Units shall participate in any sale, change of control or other liquidity event that takes place prior to cancellation of the Group A-1 Units.
Group B Units—Sculptor Corp holds a general partner interest and Group B Units in each Sculptor Operating Partnership. Sculptor Corp owns all of the Group B Units, which represent equity interest in the Sculptor Operating Partnerships. Except during the Distribution Holiday as described above, the Group B Units are economically identical to the Group A Units held by executive managing directors but are not exchangeable for Class A Shares and are not subject to vesting, book-up, forfeiture or minimum retained ownership requirements.
Group E Units—Group E Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of a certain performance condition. Each Group E Unit converts into a Group A Unit and becomes exchangeable for one Class A Share (or the cash equivalent thereof) to the extent there has been a sufficient amount of appreciation for a Group E Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee, which consists of the Chief Executive Officer and the Chief Financial Officer of Sculptor Capital Management, Inc.). The Group E Units are entitled to share in residual assets upon liquidation, dissolution or
14


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

winding up and become eligible to participate in any tag along right, in a change of control transaction or other liquidity event only to the extent of their relative positive capital accounts (if any). Holders of Group E Units do not receive distributions during the Distribution Holiday. See Note 3 in the Company's Annual Report for additional details. Group E Unit grants are accounted for as equity-based compensation. See Note 13 in the Company's Annual Report for additional information.
Group P Units—Group P Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of certain service and market conditions. Each Group P Unit becomes exchangeable for one Class A Share (or the cash equivalent thereof), in each case upon satisfaction of certain service and market conditions at such time and, with respect to exchanges, to the extent there has been sufficient appreciation for a Group P Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee). The Group P Units are entitled to share in residual assets upon liquidation, dissolution or winding up and become eligible to participate in any tag along right, in a change of control transaction or other liquidity event only to the extent that certain market conditions are met and to the extent of their relative positive capital accounts (if any). The terms of the Group P Units may be varied for certain executive managing directors. See Note 13 in the Company's Annual Report for additional information.
Executive managing directors hold a number of Class B Shares equal to the number of Group A Units, vested Group E Units, Group A-1 Units (to the extent the corresponding Class B Shares have not been canceled in connection with the vesting of certain Group E Units issued in connection with the Recapitalization, as further discussed in Note 3 in the Company's Annual Report), and Group P Units held. Upon the exchange of a Group A Unit or Group P Unit for a Class A Share, the corresponding Class B Share is canceled and a Group B Unit is issued to Sculptor Corp. Class B Shares that relate to Group A-1 Units will be voted pro rata in accordance with the vote of the Class A Shares.
The following table presents the number of shares and units of the Registrant and the Sculptor Operating Partnerships, respectively, that were outstanding as of September 30, 2022:
 As of September 30, 2022
Sculptor Capital Management, Inc.
Class A Shares24,034,767
Class B Shares33,569,188
Restricted Class A Shares (“RSAs”)5,203,172
Restricted Share Units (“RSUs”)2,746,469 
Performance-based RSUs (“PSUs”)1,112,500 
Warrants to purchase Class A Shares (Note 7)
4,338,015 
Sculptor Operating Partnerships
Group A Units15,025,994
Group A-1 Units9,244,477
Group B Units24,034,767
Group E Units13,009,158
Group P Units5,348,572
The Company grants RSAs, RSUs and PSUs to its employees and executive managing directors as a form of compensation. These grants are accounted for as equity-based compensation. See Note 13 in the Company's Annual Report for additional information. In addition, the Company has 2,577,605 shares of treasury stock as of September 30, 2022.
15


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

Share Repurchase Program
In February 2022, the Company’s Board of Directors authorized the Company to repurchase up to $100.0 million of its outstanding common stock. The Company records its treasury stock repurchases at cost on a trade date basis. As of September 30, 2022, the Company repurchased 2,577,605 Class A Shares at a cost of $28.2 million for an average price of $10.95 per share through open market purchase transactions. As of September 30, 2022, $71.8 million remained available for repurchase of the Company’s common stock under the share repurchase program. All of the repurchased shares are classified as treasury stock in the Company’s consolidated balance sheets.
The repurchase program has no expiration date. The Company may purchase shares on a discretionary basis from time to time through open market purchases, privately negotiated transactions or other means, including through Rule 10b5-1 trading plans or through the use of other techniques such as accelerated share repurchases. The timing and amount of any transactions will be subject to the discretion of the Company based upon market conditions and other opportunities that the Company may have for the use or investment of its cash balances. The repurchase program does not require the purchase of any minimum number of shares and may be suspended, modified or discontinued at any time without prior notice.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These unaudited, interim, consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”), and exclude some of the disclosures required in audited financial statements and therefore should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report. Management believes all adjustments considered necessary for a fair presentation of the Company’s unaudited, interim, consolidated financial statements have been included and are of a normal and recurring nature and that estimates made in preparing unaudited, interim, consolidated financial statements are reasonable and prudent. The consolidated financial statements include the accounts of the Company, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest entities and for which the Company is considered the primary beneficiary, and certain other entities which are not considered variable interest entities but the Company is determined to have control. All significant intercompany transactions and balances have been eliminated in consolidation.
The results of operations presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. For example, incentive income for the majority of the Company’s multi-strategy AUM is recognized in the fourth quarter each year, based on full year investment performance.
Policies of Consolidated Entities
Consolidated Entities
For purposes of these consolidated financial statements, “consolidated entities” refers to funds, special purpose entities, investment vehicles and other similar structures which the Company is required to consolidate in accordance with GAAP. The funds are considered investment companies for GAAP purposes. Pursuant to specialized accounting guidance for investment companies and the retention of that guidance in the Company’s consolidated financial statements, the investments held by the consolidated funds are reflected in the consolidated financial statements at their estimated fair values.
The policy applied by the Company is that a consolidated entity that is considered an investment company under GAAP will generally consolidate another investment company when it owns substantially all of the interest in that investment company.
16


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

Income of Consolidated Entities
Income of consolidated entities consists of interest income, dividend income and other miscellaneous items. Interest income is recorded on an accrual basis. The consolidated entities may place debt obligations, including bank debt and other participation interests, on non-accrual status and, when necessary, reduce current interest income by charging off any interest receivable when collection of all or a portion of such accrued interest has become doubtful. The balance of non-accrual investments as of September 30, 2022, and the impact of such investments for the three and nine months ended September 30, 2022 were not material. Dividend income is recorded on the ex-dividend date, net of withholding taxes, if applicable. Premiums and discounts are amortized and accreted, respectively, to income of consolidated entities in the consolidated statements of comprehensive income (loss).
Expenses of Consolidated Entities
Expenses of consolidated entities consist of interest expense, general and administrative and other miscellaneous expenses. Interest expense is recorded on an accrual basis.
Certain Assets and Liabilities of Consolidated Entities
Investments of consolidated entities are carried at fair value and include the consolidated entities’ investments in securities, investment companies and other investments. Securities transactions are recorded on a trade-date basis. Realized gains and losses on sales of investments of the funds are determined on a specific identification basis and are included within net losses of consolidated entities in the consolidated statements of operations.
The fair value of investments held by the consolidated entities is based on observable market prices when available. Such values are generally based on the last reported sales price as of the reporting date. In the absence of readily ascertainable market values, the determination of the fair value of investments held by the consolidated funds may require significant judgment or estimation. For information regarding the valuation of these assets, see Note 4.
Assets of the consolidated structured alternative investment solution are presented within investments of consolidated entities, and liabilities due to third parties are presented within notes payable, at fair value within liabilities of consolidated entities in the consolidated balance sheets. Changes in the fair value of the vehicle’s financial assets and liabilities and related interest and other income are presented within net losses of consolidated entities, and ongoing expenses of the fund are presented as expenses of consolidated entities in the consolidated statements of operations.
Also included within investments of consolidated entities are U.S. Treasury bills with original maturities of 90 days or more when purchased, which are held in a trust account by the Company’s consolidated SPAC. These investments are restricted for use and may only be used for purposes of completing an initial business combination or redemption of public shares as set forth in the SPAC trust agreement.
Consolidation of SPAC, Structured Alternative Investment Solution and Other Funds
In 2021, the Company consolidated a SPAC, which it sponsors and continues to consolidate as of September 30, 2022. The SPAC accrues interest income on U.S. Treasury bill investments held in a trust account, and incurs certain operational expenses related to legal, insurance and deal research costs.
In the first quarter of 2022, the Company consolidated a fund it manages as a result of an increase in the Company’s investment in the vehicle, which resulted in the Company having a controlling financial interest in the VIE; the fund was subsequently deconsolidated in the first quarter of 2022 as the Company determined it was no longer the primary beneficiary as a result of the Company’s redemption of its economic exposure to the fund. The Company recognized no gain or loss from consolidation and deconsolidation of the fund in the first quarter of 2022.
17


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

Additionally, in the first quarter of 2022, the Company closed on a $350.0 million structured alternative investment solution. The vehicle is a collateralized financing vehicle that issues senior and subordinated notes to investors and uses those proceeds to invest in a diversified portfolio of funds managed by the Company. Senior and mezzanine notes issued by the vehicle make periodic payments based on a stated interest rate, while the most subordinated notes have no stated interest rate but receive periodic payments from excess cash flows remaining after periodic payments have been made to the other notes and for fees and expenses due, as prescribed by the terms of the notes.
The structured alternative investment solution is a variable interest entity (“VIE”) since it lacks sufficient equity at risk to finance its expected activities without additional subordinated financial support from other parties, as it is financed through senior, mezzanine and subordinated notes. The Company consolidates the entity, as it has the power to direct the activities that most significantly impact the vehicle’s economic performance, and the Company has the right to receive benefits or the obligation to absorb losses of the vehicle in the form of its retained interest that could potentially be significant to the vehicle. The Company invested approximately $127.8 million in the vehicle. The collateral assets of the consolidated entity are held solely to satisfy the obligations of the entity, and the investors in the consolidated vehicle have no recourse against the Company for any losses sustained by the entity.
The Company measures the financial assets of the consolidated structured alternative investment solution, an investment company, at fair value using net asset value (“NAV”) per share of the underlying funds. The Company may determine, based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses, in accordance with the requirements of GAAP. The terms of the investments in underlying funds generally provide for minimum holding or lock-up periods, as well as redemption restrictions. Refer to Note 4 for further disclosures of investments for which fair value is measured using NAV per share.
The Company has elected the fair value option for the financial liabilities of the structured alternative investment solution. The Company measures the financial liabilities of its consolidated entity based on the fair value of the financial assets of its consolidated entity, as the Company believes the fair value of the financial assets are more observable. The financial liabilities are measured as (i) the sum of the fair value of the consolidated fund assets less (ii) the sum of the fair value of any beneficial interests retained by the Company. As a result of this measurement alternative, there is no attribution of amounts to noncontrolling interest for consolidated structured alternative investment solution.
See Note 2 in the Company’s Annual Report for the complete listing of the Company’s significant accounting policies.
Recently Adopted Accounting Pronouncements
No changes to GAAP that went into effect in the nine months ended September 30, 2022, had a material effect on the Company’s consolidated financial statements.
Future Adoption of Accounting Pronouncements
No changes to GAAP that are not yet effective are expected to have a material effect on the Company’s consolidated financial statements.
3. NONCONTROLLING INTERESTS
Noncontrolling interests represent ownership interests in the Company’s subsidiaries held by parties other than the Company, and primarily relate to the Group A Units held by executive managing directors.
Prior to the Recapitalization, the attribution of net income (loss) of each Sculptor Operating Partnership was based on the relative ownership percentages of the Group A Units (noncontrolling interests) and the Group B Units (indirectly held by the Registrant). In applying the substantive profit-sharing arrangements in the Sculptor Operating Partnerships’ limited partnership
18


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

agreements to the Company’s consolidated financial statements, for periods subsequent to the Recapitalization and for the duration of the Distribution Holiday, the Company will allocate net income of each Sculptor Operating Partnership in any fiscal year solely to the Group B Units and any net loss on a pro rata basis based on the relative ownership percentages of the Group A Units and Group B Units. To the extent a Sculptor Operating Partnership incurs a net loss in an interim period, any net income recognized in a subsequent interim period in the same fiscal year is allocated on a pro rata basis to the extent of previously allocated net loss. Conversely, to the extent a Sculptor Operating Partnership recognizes net income in an interim period, any net loss incurred in a subsequent interim period in the same fiscal year is allocated solely to the Group B Units to the extent of previously allocated net income.
Noncontrolling interests are presented as a separate component of shareholders’ equity on the Company’s consolidated balance sheets. The primary components of noncontrolling interests are separately presented in the Company’s consolidated statements of changes in shareholders’ equity (deficit) to distinguish the shareholders’ equity (deficit) attributable to Class A shareholders and noncontrolling interest holders. Net income (loss) includes the net income (loss) attributable to the holders of noncontrolling interest on the Company’s consolidated statements of operations.
Sculptor Operating Group Ownership
The Company’s equity interest in the Sculptor Operating Group decreased to 46.2% as of September 30, 2022, from 46.5% as of September 30, 2021. Changes in the Company’s interest in the Sculptor Operating Group have historically been, and in the future may be, driven by the following: (i) the exchange of Group A Units and Group P Units for Class A Shares, at which time the related Class B Shares are also canceled; (ii) vesting of RSAs; (iii) the issuance of Class A Shares under the Company’s Amended and Restated 2007 Equity Incentive Plan, 2013 Incentive Plan and 2022 Incentive Plan related to the settlement of Class A restricted share units (the “RSUs”) or Class A market performance-based RSUs (the “PSUs”); (iv) the forfeiture of Group A Units and participating Group P Units by a departing executive managing director; and (v) the repurchase of Class A Shares and Group A Units. The Company’s interest in the Sculptor Operating Group is generally expected to continue to increase over time as additional Class A Shares are issued upon the exchange of Group A Units and Group P Units, as well as the settlement of vested RSUs, PSUs and RSAs. However, additional repurchases of Class A Shares under the Company’s 2022 Share Repurchase Program may lead to a decrease of the Company’s interest in the Sculptor Operating Group. Additionally, the Company’s economic interest in the Sculptor Operating Group will decline when Group P Units begin to participate, as described in Note 13 in the Company's Annual Report.
19


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

The table below sets forth the calculation of noncontrolling interests related to the Group A Units for each Sculptor Operating Partnership (rounding differences may occur). The blended participation percentages presented below take into account ownership changes throughout the periods presented.
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
 (dollars in thousands)
Sculptor Capital LP
Net (loss) income$(9,389)$5,081 $6,826 $(22,713)
Blended participation percentage%39 %%39 %
Net (Loss) Income Attributable to Group A Units$ $2,003 $ $(8,824)
Sculptor Capital Advisors LP
Net loss$(14,398)$(11,795)$(15,595)$(34,989)
Blended participation percentage39 %39 %38 %39 %
Net Loss Attributable to Group A Units$(5,548)$(4,556)$(5,999)$(13,592)
Sculptor Capital Advisors II LP
Net (loss) income$(9,800)$6,581 $(29,273)$48,164 
Blended participation percentage40 %%38 %%
Net (Loss) Income Attributable to Group A Units$(3,930)$ $(11,261)$ 
Total Sculptor Operating Group
Net loss$(33,587)$(133)$(38,042)$(9,538)
Blended participation percentage28 %n/m45 %235 %
Net Loss Attributable to Group A Units$(9,478)$(2,553)$(17,260)$(22,416)
_______________
n/m - not meaningful
The following table presents the components of the net loss attributable to noncontrolling interests:
Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
(dollars in thousands)
Group A Units$(9,478)$(2,553)$(17,260)$(22,416)
Other68 167 1,423 1,639 
 $(9,410)$(2,386)$(15,837)$(20,777)
20


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

The following table presents the components of the shareholders’ equity attributable to noncontrolling interests:
 September 30, 2022December 31, 2021
(dollars in thousands)
Group A Units$420,073 $431,304 
Other24,487 15,165 
 $444,560 $446,469 
Redeemable noncontrolling interests
In 2021, the Company consolidated the SPAC it sponsors. The Class A shares issued by the consolidated SPAC are redeemable for cash by the public shareholders in the event the SPAC is unable to complete a business combination or a tender offer provision by a set date. Therefore, the investors’ interests in the SPAC are classified within redeemable noncontrolling interests in the consolidated balance sheets. The following table presents the activity in redeemable noncontrolling interests in the three and nine months ended September 30, 2022. There were no redeemable noncontrolling interests outstanding during the first nine months of 2021.
Three Months Ended September 30, 2022Nine Months Ended September 30, 2022
(dollars in thousands)
Beginning balance$234,600 $234,600 
Change in redemption value of Class A Shares of consolidated SPAC(174)(3,939)
Comprehensive income1,492 5,257 
Ending Balance$235,918 $235,918 
4. INVESTMENTS AND FAIR VALUE DISCLOSURES
The following table presents the components of the Company’s investments as reported in the consolidated balance sheets:
September 30, 2022December 31, 2021
(dollars in thousands)
U.S. government obligations, at fair value$79,283 $205,400 
CLOs, at fair value189,214 219,510 
Equity method investments93,408 158,712 
Total Investments$361,905 $583,622 
Investments of Consolidated Entities$543,843 $ 
The Company invests in U.S. government obligations to manage excess liquidity. CLOs, at fair value, consist of investments in notes of unconsolidated CLOs. These investments are carried at fair value under the irrevocable fair value option election at initial recognition. Changes in fair value are recorded within net (losses) gains on investments in the consolidated statements of operations. Interest income on these investments is accrued using the effective interest method and separately presented from the overall change in fair value and is recognized in other revenue in the consolidated statement of operations.
The Company’s equity method investments include investments in funds, which are not consolidated, but in which the Company exerts significant influence, but not control. The Company has not elected the fair value option and accounts for such
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

investments under the equity method. Under the equity method of accounting, the Company recognizes its share of the underlying earnings (losses) from equity method investments within net (losses) gains on investments in the consolidated statements of operations. The carrying amounts of equity method investments are recorded in investments in the consolidated balance sheets. Refer to Note 15 for details of the related party nature of such investments.
Investments of consolidated entities include both investments of the Company’s consolidated SPAC, which consists of investments in U.S. Treasury bills held in a trust account, as well as investments held by the Company’s consolidated structured alternative investment solution. The investments of the consolidated structured alternative investment solution that the Company manages are generally measured at fair value using the NAV per share practical expedient. The Company may determine based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses in accordance with GAAP. The Company does not categorize investments where fair value is measured using the NAV practical expedient within the fair value hierarchy.
The following table summarizes the fair value of the investments of the structured alternative investment solution that are measured at NAV by strategy type and ability to redeem such investments as of September 30, 2022.
Fund Type(1)
Fair Value (as of September 30, 2022)
Redemption Frequency(2)
Redemption Notice Period(2)
(dollars in thousands)
Multi-strategy81,783 
Quarterly - Annually
30 days - 90 days
Credit212,940 
Monthly - Annually(3)
30 days - 90 days
Real estate7,153 
None(4)
N/A
Total$301,876 
_______________
(1)The structured alternative investment solution invests in both open-ended and close-ended funds. The investments in each fund may represent investments in a particular tranche of such fund subject to different withdrawal rights.
(2)$148.7 million of investments are subject to an initial lock-up period of three years during which time no withdrawals or redemptions are allowed. Once the lock-up period ends, the investments are able to be redeemed with the frequency noted above.
(3)18% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately six years.
(4)100% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately seven to nine years.

As of September 30, 2022, the structured alternative investment solution had unfunded commitments of $104.7 million related to the investments presented in the table above.
See Note 2 for additional information regarding the investments of consolidated entities.
Fair Value Disclosures
Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the funds it manages hold a variety of investments, certain of which are not publicly traded or that are otherwise illiquid. Significant judgement and estimation go into the assumptions that drive the fair value of these investments. The fair value of these investments may be estimated using a combination of observed transaction prices, prices from third parties (including independent pricing services and relevant broker quotes), models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable. Due to the inherent uncertainty of valuations of investments that are determined to be illiquid or do not have readily ascertainable fair values, the estimates of fair value may differ from the values ultimately realized, and those differences can be material.
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type and the specific characteristics of the financial instrument, including existence and transparency of transactions between market participants. Financial instruments with readily available actively quoted prices or for which fair value can be measured from actively-quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.
Financial instruments measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:
Level I – Quoted prices that are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments that would generally be included in this category are listed equities, U.S. government obligations and listed derivatives. The Company does not adjust the quoted price for these investments.
Level II – Quotations received from dealers making a market for financial instruments (“broker quotes”), valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly observable as of the reporting date. The types of financial instruments that would generally be included in this category are certain corporate bonds and loans, certain credit default swap contracts, certain bank debt securities, certain commercial real estate debt, less liquid equity securities, forward contracts and certain over the-counter (“OTC”) derivatives where the fair value is based on observable inputs. These financial instruments exhibit higher levels of liquid market observability as compared to Level III financial instruments.
Level III – Pricing inputs that are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value of financial instruments in this category may require significant management judgment or estimation. The fair value of these financial instruments may be estimated using a combination of observed transaction prices, independent pricing services, relevant broker quotes, models or other valuation methodologies based on pricing inputs that are neither directly or indirectly market observable (e.g., cash flows, implied yields, EBITDA multiples). The types of financial instruments that would generally be included in this category include CLOs, certain warrant liabilities, certain credit default swap contracts, certain bank debt securities, certain OTC derivatives, asset-backed securities, collateralized debt obligations and investments in affiliated credit funds.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument when the fair value is based on unobservable inputs.
For financial instruments for which the Company uses independent pricing services for valuation, the Company performs analytical procedures and compares independent pricing service valuations to other vendors’ pricing as applicable. The Company also performs due diligence reviews on independent pricing services on an annual basis and performs other due diligence procedures as may be deemed necessary.
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

Fair Value Measurements Categorized within the Fair Value Hierarchy
The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy as of September 30, 2022:
 As of September 30, 2022
 Level ILevel IILevel IIINAVTotal
 (dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations$67,853 $— $— $— $67,853 
Included within investments:
U.S. government obligations$79,283 $— $— $— $79,283 
CLOs(1)
$— $— $189,214 $— $189,214 
Included within investments of consolidated entities:
U.S. government obligations$236,017 $— $— $— $236,017 
Bank Debt— 5,950 — — 5,950 
Investments in funds— — — 301,876 301,876 
Investments of Consolidated Entities$236,017 $5,950 $ $301,876 $543,843 
Liabilities, at Fair Value
Warrants$— $— $24,597 $— $24,597 
Liabilities of consolidated entities:
Warrants$1,639 $— $— $— $1,639 
Notes payable$— $— $207,978 $— $207,978 
_______________
(1) As of September 30, 2022, investments in CLOs had contractual principal amounts of $198.2 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy as of December 31, 2021:
 As of December 31, 2021
 Level ILevel IILevel IIITotal
 (dollars in thousands)
Assets, at Fair Value
Included within investments:
U.S. government obligations$205,400 $— $— $205,400 
CLOs(1)
$— $— $219,510 $219,510 
Included within restricted cash of consolidated entities:
U.S. government obligations$234,601 $— $— $234,601 
Liabilities, at Fair Value
Warrants$— $— $65,287 $65,287 
Liabilities of consolidated entities:
Warrants$— $— $7,590 $7,590 
_______________
(1) As of December 31, 2021, investments in CLOs had contractual principal amounts of $205.9 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.
Reconciliation of Fair Value Measurements Categorized within Level III
Gains and losses on investments categorized within Level III, excluding those related to investments of consolidated entities and foreign currency translation adjustments, are recorded within net (losses) gains on investments in the consolidated statements of operations. Gains and losses related to foreign currency translation adjustments are recorded in the statements of comprehensive income (loss), and gains and losses related to investment of consolidated entities are recorded within net losses of consolidated entities. Amortization of premium, accretion of discount and foreign exchange gains and losses on non-U.S. dollar investments are also included within gains and losses in the tables below. Changes in fair value of warrant liabilities are included in other loss in the consolidated statements of operations. In the first quarter of 2022, the warrants of the consolidated SPAC began to trade publicly, and as such, were transferred from Level III to Level I. Changes in fair value of warrant liabilities and notes payable of the consolidated entities are included in net losses of consolidated entities in the consolidated statements of operations. The Company elected to measure its investments in CLOs, U.S. government obligations and notes payable of the consolidated fund at fair value through consolidated net (loss) income in order to simplify its accounting for these instruments.
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

The following table summarizes the changes in the Company’s Level III financial assets and liabilities for the three months ended September 30, 2022:
June 30, 2022Transfers InTransfers OutPurchases / IssuancesInvestment Sales / SettlementsGains / (Losses) Included in EarningsGains / (Losses) Included in Other Comprehensive IncomeSeptember 30, 2022
(dollars in thousands)
Assets, at Fair Value
CLOs$203,631 $— $— $248 $(40)$(4,143)$(10,482)$189,214 
Investments of consolidated entities:
Bank Debt$40,226 $— $(16,296)$— $(23,930)$— $— $— 
Liabilities, at Fair Value
Warrants$22,211 $— $— $— $— $(2,386)$— $24,597 
Liabilities of consolidated entities:
Notes payable$201,985 $— $— $— $— $(5,993)$— $207,978 
The following table summarizes the changes in the Company’s Level III financial assets and liabilities for the three months ended September 30, 2021:
June 30, 2021Purchases / IssuancesInvestment Sales / SettlementsGains / (Losses) Included in EarningsGains / (Losses) Included in Other Comprehensive IncomeSeptember 30, 2021
(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs$219,433 $982 $(286)$335 $(3,928)$216,536 
Liabilities, at Fair Value
Warrants$76,002 $— $— $(12,710)$— $88,712 
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

The following table summarizes the changes in the Company’s Level III financial assets and liabilities for the nine months ended September 30, 2022:
December 31, 2021Transfers InTransfers OutPurchases / IssuancesInvestment Sales / SettlementsGains / (Losses) Included in EarningsGains / (Losses) Included in Other Comprehensive IncomeSeptember 30, 2022
(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs$219,510 $— $— $30,087 $(12,413)$(22,931)$(25,039)$189,214 
Investments of consolidated entities:
Bank Debt$— $3,603 
(1)
$(47,258)
(1)
$98,217 $(51,335)$(3,227)$— $— 
Liabilities, at Fair Value
Warrants$65,287 $— $— $— $— $40,690 $— $24,597 
Liabilities of consolidated entities:
Warrants$7,590 $— $(3,450)
(2)
$— $— $4,140 $— $— 
Notes payable$— $— $— $215,733 $— $7,755 $— $207,978 
_______________
(1) Transfers into and out of Level III in bank debt include $2.3 million related to the consolidation and $14.0 million related to the subsequent deconsolidation of a fund that the Company manages.
(2) Transfers out of Level III into Level I related to warrants of consolidated entities that became publicly traded with available quoted prices during the first quarter of 2022.
The following table summarizes the changes in the Company’s Level III financial assets for the nine months ended September 30, 2021:
December 31, 2020Purchases / IssuancesInvestment Sales / SettlementsGains / (Losses) Included in EarningsGains / (Losses) Included in Other Comprehensive IncomeSeptember 30, 2021
(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs$205,510 $34,276 $(16,431)$2,088 $(8,907)$216,536 
Liabilities, at Fair Value
Warrants$37,827 $— $— $(50,885)$— $88,712 
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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2022

The table below summarizes the net change in unrealized gains and (losses) on the Company’s Level III financial instruments still held as of the reporting date:
 Three Months Ended September 30,Nine Months Ended September 30,
 2022202120222021
 (dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs