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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 March 31, 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 May 2, 2022, there were 25,519,876 Class A Shares, 5,249,768 of Restricted Class A Shares and 33,676,331 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
Advisers ActInvestment Advisers Act of 1940, as amended.
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.
1


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.
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, 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.
2


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.
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, 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
Refers to restricted Class A Shares that were granted in December 2021 and January 2022, and that may be granted from time to time.
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.
3


SEC
U.S. Securities and Exchange Commission.
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 “Investor Relations—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.
5




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.
6

SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS — UNAUDITED
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

 March 31, 2022December 31, 2021
 (dollars in thousands)
Assets  
Cash and cash equivalents$135,951 $170,781 
Restricted cash7,188 7,289 
Investments (includes assets measured at fair value of $226,552 and $424,910, including assets sold under agreements to repurchase of $171,195 and $157,721 as of March 31, 2022 and December 31, 2021, respectively)
391,680 583,622 
Income and fees receivable65,198 193,636 
Due from related parties20,446 28,037 
Deferred income tax assets236,665 241,759 
Operating lease assets84,095 85,735 
Other assets, net95,612 77,091 
Assets of consolidated entities: 
Cash and cash equivalents343,486 — 
Restricted cash and cash equivalents234,623 234,601 
Other assets of consolidated entities5,179 5,304 
Total Assets$1,620,123 $1,627,855 
Liabilities and Shareholders’ Equity 
Liabilities  
Compensation payable$31,823 $246,261 
Unearned income and fees79,093 62,800 
Tax receivable agreement liability178,986 195,752 
Operating lease liabilities102,314 104,753 
Debt obligations122,103 126,474 
Warrant liabilities, at fair value40,951 65,287 
Securities sold under agreements to repurchase172,519 156,448 
Other liabilities33,664 38,790 
Liabilities of consolidated entities: 
Loans payable, at fair value215,733 — 
Warrant liabilities, at fair value3,450 7,590 
Other liabilities of consolidated entities10,772 10,817 
Total Liabilities991,408 1,014,972 
Commitments and Contingencies (Note 16)
Redeemable Noncontrolling Interests of Consolidated Entities (Note 3)234,600 234,600 
Shareholders’ Equity  
Class A Shares, par value $0.01 per share, 100,000,000 and 100,000,000 shares authorized, 26,052,113 and 25,668,987 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
261 257 
Class B Shares, par value $0.01 per share, 75,000,000 and 75,000,000 shares authorized, 33,676,331 and 33,613,023 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively
337 336 
Treasury stock, at cost; 473,719 and 0 Class A shares as of March 31, 2022 and December 31, 2021, respectively
(6,249)— 
Additional paid-in capital202,305 184,691 
Accumulated deficit(239,776)(253,521)
Accumulated other comprehensive (loss) income(699)51 
Shareholders’ deficit attributable to Class A Shareholders(43,821)(68,186)
Shareholders’ equity attributable to noncontrolling interests437,936 446,469 
Total Shareholders’ Equity394,115 378,283 
Total Liabilities and Shareholders’ Equity$1,620,123 $1,627,855 
See notes to consolidated financial statements.
7


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
 Three Months Ended March 31,
20222021
 (dollars in thousands)
Revenues  
Management fees$73,437 $73,961 
Incentive income21,642 47,804 
Other revenues2,430 1,581 
(Loss) income of consolidated entities(161)
Total Revenues97,348 123,349 

Expenses  
Compensation and benefits77,785 89,234 
Interest expense3,285 4,868 
General, administrative and other27,316 27,376 
Expenses of consolidated entities244 
Total Expenses108,630 121,480 

Other Income (Loss)  
Changes in fair value of warrant liabilities24,336 (24,944)
Changes in tax receivable agreement liability(7)580 
Net losses on retirement of debt— (23,673)
Net (losses) gains on investments(5,344)5,362 
Net gains of consolidated entities4,140 — 
Total Other Income (Loss)23,125 (42,675)

Income (Loss) Before Income Taxes11,843 (40,806)
Income taxes6,967 (1,715)
Consolidated Net Income (Loss)4,876 (39,091)
Less: Net loss attributable to noncontrolling interests12,006 18,798 
Less: Net income attributable to redeemable noncontrolling interests(3,068)— 
Net Income (Loss) Attributable to Sculptor Capital Management, Inc.13,814 (20,293)
Change in redemption value of redeemable noncontrolling interests3,068 — 
Net Income (Loss) Attributable to Class A Shareholders$16,882 $(20,293)
Earnings (Loss) per Class A Share  
Earnings (Loss) per Class A Share - basic$0.63 $(0.85)
Loss per Class A Share - diluted$(0.29)$(0.99)
Weighted-average Class A Shares outstanding - basic26,596,572 23,853,428 
Weighted-average Class A Shares outstanding - diluted43,693,932 39,872,934 

See notes to consolidated financial statements.
8


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) — UNAUDITED
Three Months Ended March 31,
20222021
(dollars in thousands)
Consolidated net income (loss)$4,876 $(39,091)
Other Comprehensive Income (Loss), Net of Tax
Other comprehensive loss - currency translation adjustment(750)(868)
Comprehensive Income (Loss)4,126 (39,959)
Less: Comprehensive loss attributable to noncontrolling interests 12,006 19,284 
Less: Comprehensive income attributable to redeemable noncontrolling interests(3,068)— 
Comprehensive Income (Loss) Attributable to Sculptor Capital Management, Inc.$13,064 $(20,675)

See notes to consolidated financial statements.
9


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 ShareholdersShareholders’ 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 taxes856,845 63,308 — 14,477 — — — 14,487 1,924 16,411 
Repurchase of Class A Shares(473,719)— 473,719 (5)— — — — (6,249)(6,254)— (6,254)
Dividend equivalents on Class A restricted share units— — — — — 69 (69)— — — — — 
Change in redemption value of SPAC Class A Shares— — — — — 3,068 — — — 3,068 — 3,068 
Consolidated net loss (gain), excluding amounts attributable to redeemable noncontrolling interests— — — — — — 13,814 — — 13,814 (12,006)1,808 
Currency translation adjustment— — — — — — — (750)— (750)— (750)
Capital contributions— — — — — — — — — — 4,997 4,997 
Capital distributions— — — — — — — — — — (3,448)(3,448)
Balance at March 31, 202226,052,113 33,676,331 473,719 $261 $337 $202,305 $(239,776)$(699)$(6,249)$(43,821)$437,936 $394,115 
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 taxes996,206 63,345 — 10 18,454 — — — 18,465 10,074 28,539 
Dividend equivalents on Class A restricted share units— — — — — 590 (590)— — —  — 
Cash dividends declared on Class A Shares ($2.35 per share)
— — — — — — (55,965)— — (55,965)— (55,965)
Consolidated net gain, excluding amounts attributable to redeemable noncontrolling interests— — — — — — (20,293)— — (20,293)(18,798)(39,091)
Currency translation adjustment— — — — — — — (382)— (382)(486)(868)
Capital contributions— — — — — — — — — — 468 468 
Capital distributions— — — — — — — — — — (1,016)(1,016)
Balance at March 31, 202123,899,777 32,887,883  $239 $329 $185,961 $(255,522)$350 $ $(68,643)$435,590 $366,947 
See notes to consolidated financial statements.
10


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



 Three Months Ended March 31,
 20222021
 (dollars in thousands)
Cash Flows from Operating Activities  
Consolidated net income (loss)$4,876 $(39,091)
Adjustments to reconcile consolidated net income (loss) to net cash provided by operating activities:  
Amortization of equity-based compensation24,843 30,897 
Depreciation, amortization and net gains and losses on fixed assets1,394 1,735 
Changes in fair value of warrant liabilities(24,336)24,944 
Net losses on retirement of debt— 23,673 
Deferred income taxes5,522 (3,311)
Non-cash lease expense4,803 5,645 
Net losses (gains) on investments, net of dividends6,706 (4,622)
Operating cash flows due to changes in:  
Income and fees receivable128,362 457,239 
Due from related parties7,607 (2,855)
Other assets, net(17,708)3,321 
Compensation payable(218,098)(196,865)
Unearned income and fees16,293 (4,410)
Tax receivable agreement liability(16,766)(17,642)
Operating lease liabilities(5,508)(5,744)
Other liabilities(5,123)(5,980)
Consolidated entities related items:  
Net gains of consolidated entities(4,140)— 
Purchases of investments(32,778)— 
Proceeds from sale of investments8,760 — 
Other assets of consolidated entities(3,687)(3)
Other liabilities of consolidated entities27,785 
Net Cash (Used in) Provided by Operating Activities(91,193)266,933 
Cash Flows from Investing Activities  
Purchases of fixed assets(418)(1,290)
Purchases of United States government obligations(13,992)(91,533)
Maturities and sales of United States government obligations219,144 90,892 
Investments in funds(42,472)(25,477)
Return of investments in funds15,757 4,996 
Net Cash Provided by (Used in) Investing Activities178,019 (22,412)
11


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED — (continued)
 Three Months Ended March 31,
 20222021
 (dollars in thousands)
Cash Flows from Financing Activities  
Contributions from noncontrolling and redeemable noncontrolling interests4,997 468 
Distributions to noncontrolling and redeemable noncontrolling interests(3,447)(1,016)
Dividends on Class A Shares— (55,965)
Proceeds from debt obligations, net of issuance costs4,852 1,746 
Repayment of debt obligations, including prepayment costs(9,424)(174,400)
Proceeds from securities sold under agreements to repurchase, net of issuance costs20,395 — 
Purchases of treasury stock(6,249)— 
Proceeds from debt obligations of consolidated entities, net of issuance costs215,733 — 
Other, net(4,969)(787)
Net Cash Provided by (Used in) Financing Activities221,888 (229,954)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(137)(286)
Net change in cash and cash equivalents and restricted cash308,577 14,281 
Cash and cash equivalents and restricted cash, beginning of period412,671 186,977 
Cash and Cash Equivalents and Restricted Cash, End of Period$721,248 $201,258 
Supplemental Disclosure of Cash Flow Information  
Cash paid during the period:  
Interest$2,922 $4,678 
Income taxes$3,439 $974 
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$135,951 $198,039 
Restricted cash7,188 3,219 
Cash and cash equivalents of consolidated entities343,486 — 
Restricted cash and cash equivalents of the consolidated SPAC234,623 — 
Total Cash and Cash Equivalents and Restricted Cash$721,248 $201,258 

See notes to consolidated financial statements.
12


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 Multi-Strategy, Credit, and Real Estate. The Company serves global clients 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 multi-strategy funds, dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate 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 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. Assets Under Management (“AUM”) refer 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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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 March 31, 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. 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). The Group E 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 of their relative positive capital accounts
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(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 March 31, 2022:
 As of March 31, 2022
Sculptor Capital Management, Inc.
Class A Shares26,052,113
Class B Shares33,676,331
Restricted Class A Shares (“RSAs”)5,249,768
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 Units26,052,113
Group E Units13,009,158
Group P Units5,455,715
The Company has 473,719 of treasury stock shares as of March 31, 2022. In addition, the Company grants Class A restricted share units (“RSUs”) and performance-based RSUs (“PSUs”) to its employees and executive managing directors as a form of compensation. RSU and PSU grants are accounted for as equity-based compensation. See Note 13 in the Company's Annual Report in the Company’s Annual Report for additional information.
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 March 31,
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MARCH 31, 2022

2022, the Company repurchased 473,719 Class A Shares at a cost of $6.2 million for an average price of $13.19 per share through open market purchase transactions. As of March 31, 2022, $93.8 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 should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report. In the opinion of management, 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. 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 assets under management is recognized in the fourth quarter each year, based on full year investment performance.
In 2021, the Company consolidated a SPAC, which it continues to consolidate as of March 31, 2022. The SPAC accrues interest income on money market 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 two funds it manages. One of the funds was consolidated as a result of increasing the Company’s investment in the vehicle, which provided the Company with a controlling financial interest in the VIE; the fund was subsequently deconsolidated in the quarter 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. Refer below for further details on consolidation of structured alternative investment solution. The Company recognized no gain or loss from consolidation and deconsolidation of the funds in first quarter of 2022.
Consolidation of Structured Alternative Investment Solution
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. As of March 31, 2022, the cash proceeds from the issuance of the notes were not yet invested in the Company’s funds.
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
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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 in the entity.
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 entities’ are reflected in the consolidated financial statements at their estimated fair values.
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 March 31, 2022, and the impact of such investments for the three months ended March 31, 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 funds 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, at fair value 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 gains (losses) of consolidated funds in the consolidated statements of comprehensive income (loss).
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.
The Company measures the financial assets of the consolidated structured alternative investment solution at fair value through profit and loss as it meets the classification of an investment company and has elected the fair value option for the financial liabilities of the consolidated entity. 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. Assets of the consolidated fund are presented within assets of consolidated entities and liabilities due to third parties as notes payable within liabilities of consolidated entities in the consolidated
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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 gains (losses) of consolidated entities and ongoing expenses of the fund are presented as expenses of consolidated entities in the consolidated statements of operations.
Recently Adopted Accounting Pronouncements
No changes to GAAP that went into effect in the three months ended March 31, 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.
See Note 2 of the Annual Report for the complete listing of our accounting policies.
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 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 increased to 48.2% as of March 31, 2022, from 45.2% as of March 31, 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 and 2013 Incentive Plan related to the settlement of Class A restricted share units (the “RSUs”) or Class A 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 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.
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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.
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 March 31,
 20222021
 (dollars in thousands)
Sculptor Capital LP
Net income (loss)$41,216 $(47,463)
Blended participation percentage%40 %
Net Income (Loss) Attributable to Group A Units$ $(19,047)
Sculptor Capital Advisors LP
Net loss$(16,820)$(513)
Blended participation percentage37 %40 %
Net Loss Attributable to Group A Units$(6,153)$(206)
Sculptor Capital Advisors II LP
Net (loss) income$(17,796)$5,215 
Blended participation percentage37 %%
Net (Loss) Income Attributable to Group A Units$(6,510)$ 
Total Sculptor Operating Group
Net income (loss)$6,600 $(42,761)
Blended participation percentage-192 %45 %
Net Loss Attributable to Group A Units $(12,663)$(19,253)
The following table presents the components of the net loss attributable to noncontrolling interests:
Three Months Ended March 31,
 20222021
(dollars in thousands)
Group A Units$(12,663)$(19,253)
Other657 455 
 $(12,006)$(18,798)
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The following table presents the components of the shareholders’ equity attributable to noncontrolling interests:
 March 31, 2022December 31, 2021
(dollars in thousands)
Group A Units$420,566 $431,304 
Other17,370 15,165 
 $437,936 $446,469 
Redeemable noncontrolling interests
In the first quarter of 2022, the Company consolidated certain funds it manages, the fund investors’ interests in these funds are redeemable outside of the Company’s control therefore, the investors’ interests in these consolidated funds are classified within redeemable noncontrolling interests in the consolidated balance sheets. 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 first quarter of 2022, there were no redeemable noncontrolling interests outstanding during the first quarter of 2021.
Three Months Ended March 31,
2022
(dollars in thousands)
Beginning balance$234,600 
Change in redemption value of Class A Shares of consolidated SPAC(3,068)
Comprehensive income3,068 
Ending Balance$234,600 

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4. INVESTMENTS AND FAIR VALUE DISCLOSURES
The following table presents the components of the Company’s investments as reported in the consolidated balance sheets:
March 31, 2022December 31, 2021
(dollars in thousands)
U.S. government obligations, at fair value$— $205,400 
CLOs, at fair value226,552 219,510 
Equity method investments165,128 158,712 
Total Investments$391,680 $583,622 
The Company invests in U.S. government obligations to manage excess liquidity, and these investments are carried at fair value under the fair value option election. Changes in fair value are recorded within net (losses) gains on investments in the consolidated statements of operations.
CLOs, at fair value, consist of investments in notes of unconsolidated CLOs and are carried at fair value under the fair value option. Changes in fair value are included within net (losses) gains on investments in the consolidated statements of operations.
The Company’s equity investments include investments in funds, which are not consolidated, but in which the Company exerts significant influence. The Company has not elected the fair value option and accounts for such investments under the equity method. The Company recognizes its share of the underlying earnings of such entities 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.
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.
GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring assets and liabilities at fair value. Market price observability is impacted by a number of factors, including the type and the specific characteristics of the financial instrument. 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 certain listed equities, U.S. government obligations and certain listed derivatives.
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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 market observable as of the measurement date. The types of financial instruments that would generally be included in this category are certain corporate bonds, 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 in the market 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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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 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 March 31, 2022:
 As of March 31, 2022
 Level ILevel IILevel IIITotal
 (dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs(1)
$— $— $226,552 $226,552 
Included within restricted cash and cash equivalents of consolidated entities:
U.S. government obligations$234,623 $— $— $234,623 
Liabilities, at Fair Value
Warrants$— $— $40,951 $40,951 
Liabilities of consolidated entities:
Warrants$3,450 $— $— $3,450 
Notes payable$— $— $215,733 $215,733 
_______________
(1) As of March 31, 2022, investments in CLOs had contractual principal amounts of $217.3 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.
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.
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MARCH 31, 2022

Reconciliation of Fair Value Measurements Categorized within Level III
Gains and losses on investments categorized within Level III, excluding those related to 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). 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 income (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 of the consolidated entity are included in net (losses) gains of consolidated entities in the consolidated statements of operations.
The following table summarizes the changes in the Company’s Level III financial assets and liabilities for the three months ended March 31, 2022:
December 31, 2021Transfers InTransfers OutPurchases / IssuancesInvestment Sales / SettlementsGains / (Losses) Included in EarningsGains / (Losses) Included in Other Comprehensive IncomeMarch 31, 2022
(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs$219,510 $— $— $28,807 $(12,347)$(4,519)$(4,899)$226,552 
Investments of consolidated entities:
Bank Debt$— $3,603 
(1)
$(14,666)
(1)
$14,633 $(3,475)$(95)$— $— 
Liabilities, at Fair Value
Warrants$65,287 $— $— $— $— $24,336 $— $40,951 
Liabilities of consolidated entities:
Warrants$7,590 $— $(3,450)
(2)
$— $— $4,140 $— $— 
Notes payable$— $— $— $215,733 $— $— $— $215,733 
_______________
(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.
24


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

The following table summarizes the changes in the Company’s Level III financial assets for the three months ended March 31, 2021:
December 31, 2020Purchases / IssuancesInvestment Sales / SettlementsGains / (Losses) Included in EarningsGains / (Losses) Included in Other Comprehensive IncomeMarch 31, 2021
(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs$205,510 $2,448 $(20)$1,423 $(6,519)$202,842 
Liabilities, at Fair Value
Warrants$37,827 $— $— $(24,944)$— $62,771 

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 March 31,
 20222021
 (dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs$(9,418)$(5,096)
Liabilities, at Fair Value
Warrants$24,336 $(24,944)
Valuation Methodologies for Fair Value Measurements Categorized within Level III
Investments in CLOs are valued using independent pricing services. The Company performs procedures over the values provided by the pricing services as discussed above. Warrant liabilities of the Company are valued by independent pricing services using a Black-Scholes option pricing model, for which the Company’s Class A share price, warrant exercise price, risk free rate, volatility, dividend yield, redemption trigger price and term to expiry are the primary inputs to the valuation. The significant unobservable quantitative input used for the fair value measurement of the warrant liabilities of the Company, which are categorized as Level III under the fair value hierarchy, was volatility. The volatility used in the fair value measurement was 53.00% as of March 31, 2022.

Prior to being transferred to Level I, as discussed above, the warrant liabilities of the consolidated SPAC were valued by independent pricing services using a Monte Carlo simulation model, for which SAC I’s Class A share price, exercise price, risk free rate, volatility and term to expiry were the primary inputs to the valuation. The volatility used in the initial fair value measurement on December 13, 2021 (initial measurement) was 13.00%. The Company reviews inputs, assumptions and valuation methodologies used in the warrants’ valuations. As noted above, the warrant liabilities of the consolidated SPAC were transferred from Level III to Level I in the first quarter of 2022.
Notes payable of consolidated entities are valued using independent pricing services. 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. Refer to Note 2 for additional valuation considerations of the notes payable of consolidated entities.
25


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

Financial Instruments Not Measured at Fair Value
Management estimates that the carrying value of the Company’s financial instruments not measured at fair value, including its debt obligations and repurchase agreements, approximated their fair values as of March 31, 2022. The fair value measurements for the Company’s debt obligations and repurchase agreements are categorized as Level III within the fair value hierarchy and were determined using independent pricing services.
Loans Sold to CLOs Managed by the Company
From time to time the Company may sell loans to CLOs managed by the Company. These loans are purchased by the Company in the open market and simultaneously sold for cash to the CLOs. The loans are accounted for as transfers of financial assets as they meet the criteria for derecognition under U.S. GAAP. No loans were sold in each of the three months ended March 31, 2022 and 2021. The Company invests in senior secured and subordinated notes issued by certain CLOs to which it sold loans in the past. These investments represent retained interests to the Company and are in the form of a 5% vertical strip (i.e., 5% of each of the senior and subordinated tranches of notes issued by each CLO). The retained interests are reported within investments on the Company’s consolidated balance sheet. As of March 31, 2022 and December 31, 2021, the Company’s investments in these retained interests had a fair value of $85.4 million and $87.9 million, respectively.
The Company is subject to risks associated with the performance of the underlying collateral and the market yield of the assets. The Company’s risk of loss from retained interest is limited to its investments in these interests. The Company receives quarterly payments of interest and principal, as applicable, on these retained interests. In the three months ended March 31, 2022 and 2021, the Company received $675 thousand and $717 thousand, respectively, of interest and principal payments related to the retained interests.
The Company uses independent pricing services to value its investments in the CLOs, including the retained interests, and therefore the only key assumption is the price provided by such service. A corresponding adverse change of 10% or 20% on price would have a corresponding impact on the fair value of the Company’s investments in CLOs.
5. VARIABLE INTEREST ENTITIES
In the ordinary course of business, the Company sponsors the formation of entities that are considered VIEs. See Note 2 in the Company’s Annual Report for a discussion of entities that are VIEs and the evaluation of those entities for consolidation by the Company.
The table below presents the assets and liabilities of VIEs consolidated by the Company.
 March 31, 2022December 31, 2021
(dollars in thousands)
Assets  
Assets of consolidated entities:  
Cash and cash equivalents of consolidated entities$343,486 $— 
Other assets of consolidated entities4,152 4,339 
Total Assets$347,638 $4,339 
Liabilities  
Liabilities of consolidated entities:  
Notes payable of consolidated entities$215,733 $— 
Other liabilities of consolidated entities2,503 2,603 
Total Liabilities$218,236 $2,603 
26


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

The assets of consolidated variable interest entities may only be used to settle obligations of these entities and are not available to creditors of the Company. The investors in these consolidated entities have no recourse against the assets of the Company. There is no recourse to the Company for the consolidated VIEs’ liabilities.
The Company’s direct involvement with VIEs that are not consolidated is generally limited to providing asset management services and, in certain cases, insignificant investments in the VIEs. The maximum exposure to loss represents the potential loss of current investments or income and fees receivables from these entities, as well as the obligation to repay unearned revenues, primarily incentive income subject to clawback, in the event of any future fund losses, as well as unfunded commitments to certain funds that are VIEs, as discussed in Note 16. The Company does not provide, nor is it required to provide, any type of non-contractual financial or other support to its VIEs that are not consolidated.
The table below presents the net assets of unconsolidated VIEs in which the Company has variable interests along with the maximum risk of loss as a result of the Company’s involvement with VIEs:
March 31, 2022December 31, 2021
(dollars in thousands)
Net assets of unconsolidated VIEs in which the Company has a variable interest $11,976,467 $11,304,196 
Maximum risk of loss as a result of the Company’s involvement with VIEs:
Unearned income and fees79,093 62,800 
Income and fees receivable46,489 61,273 
Investments258,255 249,104 
Unfunded commitments(1)
230,100 60,474 
Maximum Exposure to Loss$613,937 $433,651 

(1) Includes commitments from certain employees and executive managing directors in the amounts of $81.7 million and $46.3 million as of March 31, 2022 and December 31, 2021, respectively.
27


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

6. LEASES
The Company has non-cancelable operating leases for its headquarters in New York and its offices in London, Hong Kong, Shanghai, and various other locations and data centers. The Company does not have renewal options for any of its current leases. The Company also subleases a portion of its office space in London and New York through the end of the lease term. In addition, the Company has finance leases for computer hardware. As of March 31, 2022, the Company has pledged collateral related to its lease obligations of $6.2 million, which is included within restricted cash in the consolidated balance sheets.
The tables below represent components of lease expense and associated cash flows:
Three Months Ended March 31,
20222021
(dollars in thousands)
Lease Cost
Operating lease cost$4,708 $5,437 
Short-term lease cost10 17 
Finance lease cost - amortization of leased assets92 199 
Finance lease cost - imputed interest on lease liabilities10 
Less: Sublease income(830)(411)
Net Lease Cost$3,983 $5,252 

Three Months Ended March 31,
20222021
(dollars in thousands)
Supplemental Lease Cash Flow Information
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases$5,326 $5,809 
Operating cash flows for finance leases$— $
Finance cash flows for finance leases$163 $624 
Right-of-use assets obtained in exchange for lease obligations
Operating leases$1,079 $2,893 
Finance leases$— $— 
March 31, 2022December 31, 2021
Lease Term and Discount Rate
Weighted average remaining lease term
Operating leases7.3 years7.6 years
Finance leases1.3 years1.3 years
Weighted average discount rate
Operating leases7.8 %7.8 %
Finance leases5.8 %6.3 %
28


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

Operating
Leases
Finance
Leases
(dollars in thousands)
Maturity of Lease Liabilities - Contractual Payments to be Paid
April 1, 2022 to December 31, 2022$15,757 $86 
202320,345 — 
202416,529 — 
202514,329 — 
202615,353 — 
Thereafter52,689 — 
Total Lease Payments135,002 86 
Imputed interest(32,688)(1)
Total Lease Liabilities - Contractual Payments to be Paid$102,314 $85 
Operating Leases
 (dollars in thousands)
Sublease Rent - Contractual Payments to be Received
April 1, 2022 to December 31, 2022$1,654 
20233,145 
20241,920 
20251,920 
20261,920 
Thereafter6,120 
Total Sublease Rent - Contractual Payments to be Received$16,679 

29


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

7. DEBT OBLIGATIONS AND WARRANTS
2020 Term LoanCLO Investments LoansTotal
(dollars in thousands)
Maturity of Debt Obligations
April 1, 2022 to December 31, 2022$— $— $— 
2023— 1,103 1,103 
2024— — — 
2025— — — 
2026— — — 
202795,000 — 95,000 
Thereafter— 39,035 39,035 
Total Payments95,000 40,138 135,138 
Unamortized discounts & deferred financing costs(12,817)(218)(13,035)
Total Debt Obligations$82,183 $39,920 $122,103 
2020 Credit Agreement
On September 25, 2020, Sculptor Capital LP, as borrower, (the “Borrower”), and certain other subsidiaries of the Company, as guarantors, entered into a credit and guaranty agreement (the “2020 Credit Agreement”), consisting of (i) a senior secured term loan facility in an initial aggregate principal amount of $320.0 million (the “2020 Term Loan”) and (ii) a senior secured revolving credit facility in an initial aggregate principal amount of $25.0 million (the “2020 Revolving Credit Facility”). The proceeds from the 2020 Term Loan were first allocated to the full fair value of the warrants issued in connection with the 2020 Credit Agreement (which establishes both a liability and a debt discount, as described below), and the residual proceeds, net of deferred offering costs and discounts, of $275.8 million was then recognized as the initial carrying value of the 2020 Term Loan.
Certain prepayments of the 2020 Term Loan are subject to a prepayment premium (the “Call Premium”) equal to (a) prior to the second anniversary of the Closing Date, a customary “make-whole” premium equal to the present value of all required interest payments that would be due from the date of prepayment through and including the second anniversary of the Closing Date plus a premium of 3.0% of the principal amount of loans prepaid, (b) on or after the second anniversary of the Closing Date but prior to the third anniversary of the Closing Date, a premium of 3.0% of the principal amount of loans prepaid, (c) on or after the third anniversary of the Closing Date but prior to the four anniversary of the Closing Date, a premium of 2.0% of the principal amount of loans prepaid and (d) thereafter, 0%. On June 21, 2021, the Company entered into a letter agreement amending the 2020 Credit Agreement to increase the amount of voluntary prepayments for which the Call Premium shall not apply from $175.0 million to $225.0 million in exchange for an amendment fee of $1.75 million. As such, no Call Premium was due on the first $225.0 million prepaid by the Company. The amendment fee was recorded as an additional discount to the 2020 Term Loan in the second quarter of 2021. In 2021, the Company prepaid $224.4 million of the 2020 Term Loan, resulting in an outstanding balance of $95.0 million, which is due at maturity. The Company recognized a $30.2 million loss on this retirement of debt. As a result of the $175.0 million of aggregate prepayments made through March 31, 2021, the Company is no longer subject to the cash sweep or financial maintenance covenants, other than the covenant requiring $20.0 billion minimum fee-paying Assets Under Management described below.
The 2020 Term Loan and the 2020 Revolving Credit Facility mature on the seventh and sixth anniversary, respectively, of the initial funding of the 2020 Term Loan, which occurred on November 13, 2020 (the “Closing Date”).
30


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

Borrowings under the 2020 Credit Agreement bear interest at a per annum rate equal to, at the Company’s option, one, two, three or six-month LIBOR (subject to a 0.75% floor) plus 6.25%, or a base rate (subject to a 1.75% floor) plus 5.25%. The Borrower is also required to pay an undrawn commitment fee at a rate per annum equal to 0.50% of the undrawn portion of the 2020 Revolving Credit Facility.
The 2020 Credit Agreement prohibits the total fee-paying Assets Under Management, subject to certain exclusions, of the Borrower, the guarantors and their consolidated subsidiaries as of the last day of any fiscal quarter to be less than $20.0 billion. The 2020 Credit Agreement contains customary events of default for a transaction of this type, after which obligations under the 2020 Credit Agreement may be declared immediately due and payable and sets forth certain types of bankruptcy or insolvency events of default involving the Borrower, the guarantors or any of the material subsidiaries of the foregoing after which the obligations under the 2020 Credit Agreement become automatically due and payable. The 2020 Credit Agreement also provided the counterparty the right to appoint an individual to a seat on the Company’s Board of Directors.
Warrants
In connection with the 2020 Credit Agreement, the Company has issued and outstanding warrants to purchase 4,338,015 Class A Shares. The warrants have a 10-year term from the Closing Date and an initial exercise price per share equal to $11.93. The exercise price is subject to reduction by an amount equal to any dividends paid on Class A Shares. As a result, the exercise price was $8.46 per share as of March 31, 2022. The warrants provide for customary adjustments in the event of a stock split, stock dividend, recapitalization or similar event. In lieu of making a cash payment otherwise contemplated upon exercise, the holder may exercise the warrants in whole or in part to receive a net number of Class A Shares. In addition, one of the warrants provides that, upon exercise in whole or in part by the holder, the Company may decide in its sole discretion whether the holder’s exercise of such warrant will be settled by delivery of Class A Shares (which shares may be reduced to a net number of Class A Shares in accordance with the procedure described in the preceding sentence) or by the Company’s payment to the holder of an amount in cash equal to the Black-Scholes value as provided for in the applicable warrant agreement. If the Company undergoes a change of control prior to the expiration date, the holder will have the right to require the Company to repurchase any remaining portion of the warrants not yet exercised at their Black-Scholes value as provided for in the applicable agreement. The warrants restrict transfers and other dispositions for 18 months from the Closing Date, subject to certain exceptions.
Debt Obligations of Consolidated Funds
Warrants of the Consolidated SPAC
At the time of IPO in December 2021, Sculptor Acquisition Corporation I (“SAC I”) issued 11.2 million warrants to the Company and 11.5 million warrants to third parties. The warrants have a 5-year term from the day of the SAC I IPO and an initial exercise price per share equal to $11.50. The warrants are subject to other customary terms common for instruments of this type. The Company eliminates the SPAC warrants it holds in consolidation. As of March 31, 2022, the warrants had fair value of $3.5 million.
Notes Payable of a Consolidated Entity
In the first quarter of 2022, the Company launched a structured alternative investment solution that it consolidated, which issued notes in the aggregate principal amount of $350.0 million, of which approximately $128.0 million were acquired by the Company and eliminated in consolidation. The notes held by the Company consisted and of $20.0 million of Class A, $20.0 million of Class B and $87.8 million of subordinate notes. The fair value of the notes payable as of March 31, 2022, was $215.7 million. The notes payable mature in May 2037.
31


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

The table below summarizes material terms of the notes payable:
Class A NotesClass B NotesClass C Notes
Subordinate Notes(1)
(dollars in thousands)
TypeSenior SecuredSenior SecuredMezzanine SecuredUnsecured
Initial principal amount$140,000 $70,000 $35,000 $105,000 
Initial interest rate4.25 %6.00 %6.75 %N/A
Interest rate after step up and effective date
6.25%; May 2028
8.00%; May 2029
9.50%; May 2025
N/A
_______________
(1) Subordinate notes do not have stated interest rates or principal entitlement but instead receive net proceeds from excess cash flows remaining after periodic payments have been made to more senior notes and after fees and expenses in accordance with the priority of payments.
See Note 2 for accounting policies for the notes payables of the consolidated entities
Credit Facility of a Consolidated Entity
In the first quarter of 2022, the structured alternative investment vehicle entered into a $52.5 million credit facility which expires March 18, 2025. The credit facility is capped at $20.0 million of the total borrowing capacity per quarter. The facility is subject to a SOFR reference rate, as defined in the agreement, plus 3.00%. The facility is also subject to an annual 1.15% unused commitment fee. As of March 31, 2022, the fund has not drawn on the facility. The credit facility agreement is subject to other customary terms common for instruments of this type. The creditors of our consolidated entities have no recourse to the Company. As of March 31, 2022, the consolidated entities were in compliance with all financial and non‑financial covenants under their debt obligations.
CLO Investments Loans
The Company entered into loans to finance portions of investments in certain CLOs (collectively, the “CLO Investments Loans”). In general, the Company will make interest payments on the loans at such time interest payments are received on its investments in the CLOs, and will make principal payments on the loans to the extent principal payments are received on its investments in the CLOs, with any remaining balance due upon maturity.
The loans are subject to customary events of default and covenants and also include terms that require the Company’s continued involvement with the CLOs. In addition to customary events of default included in financing arrangements of this type, an event of default would also be triggered if there is an event of default at the CLO level. Prior to the relevant CLO’s maturity date, this would include certain material covenant breaches, regulatory and insolvency events for the relevant CLO issuer, as well as a payment default, where the relevant CLO is unable to make interest payments on the senior, non-deferrable interest notes issued by the CLO. The CLO Investments Loans do not have any financial maintenance covenants and are secured by the related investments in CLOs, which investments had fair values of $42.7 million and $43.1 million as of March 31, 2022 and December 31, 2021, respectively.
32


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

Carrying amounts presented in the table below are net of discounts, if any, and unamortized deferred financing costs. The interest rates on the CLO Investments Loans are variable based on LIBOR or EURIBOR (subject to a floor of zero percent). The maturity date for each CLO Investments Loan is the earlier of the final maturity date presented in the table below or the date at which the Company no longer holds a risk retention investment in the respective CLO.
Initial Borrowing DateContractual RateFinal Maturity DateCarrying Value
March 31, 2022December 31, 2021
(dollars in thousands)
June 7, 2017
LIBOR plus 1.48%
November 16, 2029$17,227 $17,221 
August 2, 2017
LIBOR plus 1.41%
January 21, 203021,590 21,589 
October 21, 2021
EURIBOR plus 0.85%
August 29, 2023— 5,892 
January 19, 2022
EURIBOR plus 1.00%
December 15, 20231,103 — 
$39,920 $44,702 

8. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
The Company has a €200.0 million master credit facility agreement (the “CLO Financing Facility”) to finance portions of the risk retention investments in certain CLOs managed by the Company. Subject to the terms and conditions of the CLO Financing Facility, the Company and the counterparty may enter into repurchase agreements on such terms agreed upon by the parties. Each transaction entered into under the CLO Financing Facility will bear interest at a rate based on the weighted average effective interest rate of each class of securities that have been sold plus a spread to be agreed upon by the parties. As of March 31, 2022, €42.8 million of the CLO Financing Facility remained available.
Each transaction entered into under the CLO Financing Facility provides for payment netting and, in the case of a default or similar event with respect to the counterparty to the CLO Financing Facility, provides for netting across transactions. Generally, upon a counterparty default, the Company can terminate all transactions under the CLO Financing Facility and offset amounts it owes in respect of any one transaction against collateral it has received in respect of any other transactions under the CLO Financing Facility; provided, however, that in the case of certain defaults, the Company may only be able to terminate and offset solely with respect to the transaction affected by the default. During the term of a transaction entered into under the CLO Financing Facility, the Company will deliver cash or additional securities acceptable to the counterparty if the securities sold are in default. In addition to customary events of default included in financing arrangements of this type, an event of default would also be triggered if there is an event of default at the CLO level. Prior to the relevant CLO’s maturity date, this would include certain material covenant breaches, regulatory and insolvency events for the relevant CLO issuer, as well as a payment default where the relevant CLO is unable to make interest payments on the senior, non-deferrable interest notes issued by the CLO. Upon termination of a transaction, the Company will repurchase the previously sold securities from the counterparty at a previously determined repurchase price. The CLO Financing Facility may be terminated at any time upon certain defaults or circumstances agreed upon by the parties.
The repurchase agreements may result in credit exposure in the event the counterparty to the transaction is unable to fulfill its contractual obligations. The Company minimizes the credit risk associated with these activities by monitoring counterparty credit exposure and collateral values. Other than margin requirements, the Company is not subject to additional terms or contingencies which would expose the Company to additional obligations based upon the performance of the securities pledged as collateral.
33


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

The table below presents securities sold under agreements to repurchase that are offset, if any, as well as securities transferred to counterparties related to such transactions (capped so that the net amount presented will not be reduced below zero). No other material financial instruments were subject to master netting agreements or other similar agreements:
Securities Sold under Agreements to RepurchaseGross Amounts of Recognized LiabilitiesGross Amounts Offset in the Consolidated Balance SheetNet Amounts of Liabilities in the Consolidated Balance SheetSecurities TransferredNet Amount
 (dollars in thousands)
As of March 31, 2022$172,519 $— $172,519 $171,195 $1,324 
As of December 31, 2021$156,448 $— $156,448 $156,448 $— 
The securities sold under agreements to repurchase have a set scheduled maturity date that corresponds to the maturities of the securities sold under such transaction. The table below presents the remaining final contractual maturity of the securities sold under agreement to repurchase by class of collateral pledged:
Investments in CLOs
Securities Sold under Agreements to RepurchaseOvernight and ContinuousUp to 30 Days30-90 DaysGreater Than 90 DaysTotal
(dollars in thousands)
As of March 31, 2022$— $— $— $172,519 $172,519 
As of December 31, 2021$— $— $— $156,448 $156,448 

9. OTHER ASSETS, NET
The following table presents the components of other assets, net as reported in the consolidated balance sheets:
March 31, 2022December 31, 2021
(dollars in thousands)
Fixed Assets:  
  Leasehold improvements$47,797 $47,797 
  Computer hardware and software56,087 55,320 
  Furniture, fixtures and equipment8,049 8,013 
  Accumulated depreciation and amortization(84,765)(83,371)
Fixed assets, net27,168 27,759 
Goodwill22,691 22,691 
Redemption receivable(1)
19,940 — 
Prepaid expenses15,418 17,095 
Other10,395 9,546 
Total Other Assets, Net$95,612 $77,091 
_______________
(1) Represents amounts receivable on a redeemed investment in a fund.
34


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

10. OTHER LIABILITIES
The following table presents the components of other liabilities as reported in the consolidated balance sheets:
 March 31, 2022December 31, 2021
 (dollars in thousands)
Accrued expenses$14,531 $16,949 
Uncertain tax positions8,250 8,250 
Due to funds(1)
3,352 3,017 
Unused trade commissions
1,426 1,513 
Other6,105 9,061 
Total Other Liabilities$33,664 $38,790 
_______________
(1) To the extent that a fee-paying fund is an investor in another fee-paying fund, the Company rebates a corresponding portion of the management fees charged in the investee fund. Due to funds amounts also reflect certain incentive income and management fee waivers.
35


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

11. REVENUES
The following table presents management fees and incentive income recognized as revenues for the three months ended March 31, 2022 and 2021:
Three Months Ended March 31,
20222021
Management FeesIncentive IncomeManagement FeesIncentive Income
(dollars in thousands)
Multi-strategy funds$39,980 $955 $36,348 $25,984 
Credit
    Opportunistic credit funds12,824 19,803 13,247 8,767 
    Institutional Credit Strategies11,583 — 15,103 — 
Real estate funds9,050 884 9,263 13,053 
Total$73,437 $21,642 $73,961 $47,804 
The following table presents the composition of the Company’s income and fees receivable as of March 31, 2022 and December 31, 2021
March 31, 2022December 31, 2021
(dollars in thousands)
Management fees$25,369 $25,520 
Incentive income39,829 168,116 
Income and Fees Receivable$65,198 $193,636 
The Company recognizes management fees over the period in which the performance obligation is satisfied. The Company records incentive income when it is probable that a significant reversal of income will not occur. The majority of management fees and incentive income receivable at each balance sheet date is generally collected during the following quarter.
The following table presents the Company’s unearned income and fees as of March 31, 2022 and December 31, 2021:
March 31, 2022December 31, 2021
(dollars in thousands)
Management fees$$84 
Incentive income79,086 62,716 
Unearned Income and Fees$79,093 $62,800 
A liability for unearned incentive income is generally recognized when the Company receives incentive income distributions from its funds, primarily its real estate funds, whereby the distributions received have not yet met the recognition threshold of being probable that a significant reversal of cumulative revenue will not occur. A liability for unearned management fees is generally recognized when management fees are paid to the Company on a quarterly basis in advance, based on the amount of Assets Under Management at the beginning of the quarter. In the three months ended March 31, 2022 and 2021, the Company recognized $3.9 million and $9.8 million, respectively, of the beginning balance of unearned incentive income for each respective year. The Company recognized all of the beginning balances of unearned management fees during the respective quarter.
36


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

12. INCOME TAXES
The computation of the effective tax rate and provision at each interim period requires the use of certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent differences, and the likelihood of recovering deferred tax assets existing as of the balance sheet date. The estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained or as tax laws and regulations change. Accordingly, the effective tax rate for interim periods is not indicative of the tax rate expected for a full year.
The following is a reconciliation of the statutory U.S. federal income tax rate to the Company’s effective income tax rate: 
 Three Months Ended March 31,
 20222021
Statutory U.S. federal income tax rate21.00 %21.00 %
Loss passed through to noncontrolling interests15.83 %0.24 %
Foreign income taxes4.37 %-3.16 %
RSU excess income tax benefit or expense-11.53 %-1.49 %
State and local income taxes33.50 %1.59 %
Nondeductible amortization of Partner Equity Units19.81 %-1.38 %
Foreign tax credits and deductions-0.92 %0.66 %
Change in fair value of warrants-36.60 %-12.84 %
Disallowed executive compensation13.41 %-0.55 %
Other, net-0.04 %0.13 %
Effective Income Tax Rate58.83 %4.20 %
The Company recognizes tax benefits for amounts that are “more likely than not” to be sustained upon examination by tax authorities. For uncertain tax positions in which the benefit to be realized does not meet the “more likely than not” threshold, the Company establishes a liability, which is included within other liabilities in the consolidated balance sheets. As of March 31, 2022 and December 31, 2021, the Company had a liability for unrecognized tax benefits of $8.3 million. As of and for the three months ended March 31, 2022, the Company did not accrue interest or penalties related to uncertain tax positions. As of March 31, 2022, the Company does not believe that there will be a significant change to the uncertain tax positions during the next 12 months. The Company’s total unrecognized tax benefits if recognized, would affect its tax expense by $4.8 million as of March 31, 2022.
37


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

13. GENERAL, ADMINISTRATIVE AND OTHER
The following table presents the components of general, administrative and other expenses as reported in the consolidated statements of operations:
 Three Months Ended March 31,
 20222021
 (dollars in thousands)
Occupancy and equipment$7,090 $8,032 
Professional services5,464 4,428 
Recurring placement and related service fees5,249 4,351 
Information processing and communications
5,026 5,357 
Insurance
2,207 2,222 
Business development498 152 
Other expenses1,782 2,834 
Total General, Administrative and Other$27,316 $27,376 
14. EARNINGS (LOSS) PER CLASS A SHARE
Basic earnings (loss) per Class A Share is computed by dividing the net income (loss) attributable to Class A Shareholders by the weighted-average number of Class A Shares outstanding for the period.
For the three months ended March 31, 2022 and 2021, the Company included 186,944 and 232,235 RSUs respectively, that have vested but have not been settled in Class A Shares in the weighted-average Class A Shares outstanding used to calculate basic and diluted earnings (loss) per Class A Share.
When calculating dilutive earnings (loss) per Class A Share, the Company applies the treasury stock method to outstanding warrants, unvested RSUs and RSAs, which are only subject to a service condition. At the Sculptor Operating Group Level, the Company applies the if-converted method to vested Group A Units and vested Group E Units. For unvested Group A Units and unvested Group E Units, the Company applies the treasury stock method first to determine the number of incremental units that would be issuable and then applies the if-converted method to those resulting incremental units. The Company did not include RSAs subject to service and market conditions, Group P Units or unvested PSUs in the calculation of dilutive earnings (loss) per Class A Share, as the applicable market performance conditions had not yet been met as of the end of each reporting period presented below. The Company also did not include RSUs which will be settled in cash. The effect of dilutive securities on net income (loss) attributable to Class A Shareholders is presented net of tax.
38


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2022

The following tables present the computation of basic and diluted earnings (loss) per Class A Share:
Three Months Ended March 31, 2022Net Income (Loss) Attributable to Class A ShareholdersWeighted- Average Class A Shares OutstandingEarnings (Loss) Per Class A ShareNumber of Antidilutive Units and Warrants Excluded from Diluted Calculation
(dollars in thousands, except per share amounts)
Basic$16,882 26,596,572 $0.63 
Effect of dilutive securities:
Group A Units(9,115)15,025,994 — 
Group E Units