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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 June 30, 2021
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 August 2, 2021, there were 25,216,458 Class A Shares and 32,887,882 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 38.1 million Class A Shares to DIC Sahir Limited, a wholly owned indirect subsidiary of Dubai Holdings LLC
active executive managing directors
Executive managing directors who remain active in our business
Annual Report
Our annual report on Form 10-K for the year ended December 31, 2020, dated February 23, 2021 and filed with the SEC
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
Distribution HolidayThe Sculptor Operating Partnerships initiated a distribution holiday (the “Distribution Holiday”) on the Group A Units, Group D Units, Group E Units and Group P Units and on certain RSUs 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 D Units, Group E Units and Group P Units and certain RSUs, 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.
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
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
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
1


Group A-1 Units
Refers collectively to one Class A-1 operating group unit in each of the Sculptor Operating Partnerships. Group A-1 Units are limited partner interests held by our executive managing directors
Group B Units
Refers collectively to one Class B operating group unit in each of the Sculptor Operating Partnerships. Group B Units are limited partner interests held by Sculptor Corp
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 Class 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
NYSE
New York Stock Exchange
Partner Equity Units
Refers collectively to the Group A Units, Group E Units and Group P Units
Preferred Units
One Class A cumulative preferred unit in each of the Sculptor Operating Partnerships collectively represents one “Preferred Unit.” Certain of our executive managing directors collectively owned 100% of the Preferred Units. Preferred Units issued in 2016 and 2017 are, collectively, referred to as “2016 Preferred Units.” Preferred Units issued in 2019 are referred to as “2019 Preferred Units.” We redeemed in full the Preferred Units in the fourth quarter of 2020, and as of June 30, 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 active and former executive managing directors 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
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, D, E, and P Units
Sculptor Operating Partnerships
Refers collectively to Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP
SEC
U.S. Securities and Exchange Commission
2


Securities Act
Securities Act of 1933, as amended
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

3


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 webcast. 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, including the impact of public health crises, such as the ongoing COVID-19 pandemic; United States (“U.S.”) and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy; 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 arising therefrom; whether the Company realizes all or any of the anticipated benefits from the Recapitalization and other related transactions; whether the Recapitalization and other related transactions result in any increased or unforeseen costs, indemnification obligations or have an impact on our ability to retain or compete for professional talent or investor capital; 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 active 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; the anticipated benefits of changing the Registrant’s tax classification from a partnership to a corporation and subsequently converting from a limited liability company to a corporation; 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
4




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 our Annual Report.
There may be additional risks, uncertainties and factors that we do not currently view as material or that are not known. The forward-looking statements contained in this report are made only as of the date of this report. We do not undertake to update any forward-looking statement because of new information, future developments or otherwise.
5

SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED BALANCE SHEETS — UNAUDITED
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
 June 30, 2021December 31, 2020
 (dollars in thousands)
Assets  
Cash and cash equivalents$153,827 $183,815 
Restricted cash1,635 3,162 
Investments (includes assets measured at fair value of $356,449 and $309,805, including assets sold under agreements to repurchase of $159,534 and $123,616 as of June 30, 2021 and December 31, 2020, respectively)
523,421 414,974 
Income and fees receivable75,975 539,623 
Due from related parties18,604 14,086 
Deferred income tax assets232,610 240,288 
Operating lease assets101,696 104,729 
Other assets, net79,147 82,500 
Assets of consolidated funds: 
Other assets of consolidated funds3  
Total Assets$1,186,918 $1,583,177 
Liabilities and Shareholders’ Equity 
Liabilities  
Compensation payable$48,656 $234,006 
Unearned income and fees67,204 61,880 
Tax receivable agreement liability183,053 190,292 
Operating lease liabilities111,458 115,237 
Debt obligations119,761 334,972 
Warrant liabilities, at fair value76,002 37,827 
Securities sold under agreements to repurchase157,934 122,638 
Other liabilities29,554 51,445 
Liabilities of consolidated funds: 
Other liabilities of consolidated funds2  
Total Liabilities793,624 1,148,297 
Commitments and Contingencies (Note 16)
Shareholders’ Equity  
Class A Shares, par value $0.01 per share, 100,000,000 and 100,000,000 shares authorized, 25,101,187 and 22,903,571 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
251 229 
Class B Shares, par value $0.01 per share, 75,000,000 and 75,000,000 shares authorized, 32,887,882 and 32,824,538 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively
329 328 
Additional paid-in capital200,733 166,917 
Accumulated deficit(247,058)(178,674)
Accumulated other comprehensive income419 732 
Shareholders’ deficit attributable to Class A Shareholders(45,326)(10,468)
Shareholders’ equity attributable to noncontrolling interests438,620 445,348 
Total Shareholders’ Equity393,294 434,880 
Total Liabilities and Shareholders’ Equity$1,186,918 $1,583,177 
See notes to consolidated financial statements.
6


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED
 Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
 (dollars in thousands)
Revenues    
Management fees$76,610 $60,383 $150,571 $127,336 
Incentive income59,544 38,238 107,348 47,560 
Other revenues1,778 2,424 3,359 5,377 
Income of consolidated funds 32 3 32 
Total Revenues137,932 101,077 261,281 180,305 

Expenses    
Compensation and benefits59,447 65,290 148,681 132,709 
Interest expense4,135 4,674 9,003 10,456 
General, administrative and other25,022 142,615 52,398 177,321 
Expenses of consolidated funds 19 2 19 
Total Expenses88,604 212,598 210,084 320,505 

Other (Loss) Income    
Changes in fair value of warrant liabilities(13,231) (38,175) 
Changes in tax receivable agreement liability(559) 21 278 
Net losses on retirement of debt(6,525)(170)(30,198)(693)
Net gains (losses) on investments6,255 29,178 11,617 (4,891)
Total Other (Loss) Income(14,060)29,008 (56,735)(5,306)

Income (Loss) Before Income Taxes35,268 (82,513)(5,538)(145,506)
Income taxes13,047 (17,400)11,332 (27,368)
Consolidated Net Income (Loss)22,221 (65,113)(16,870)(118,138)
Less: Net (income) loss attributable to noncontrolling interests(407)41,860 18,391 67,945 
Net Income (Loss) Attributable to Sculptor Capital Management, Inc.21,814 (23,253)1,521 (50,193)
Change in redemption value of Preferred Units (1,986) (3,313)
Net Income (Loss) Attributable to Class A Shareholders$21,814 $(25,239)$1,521 $(53,506)
Earnings (Loss) per Class A Share    
Earnings (Loss) per Class A Share - basic$0.87 $(1.12)$0.06 $(2.38)
Earnings (Loss) per Class A Share - diluted$0.40 $(1.77)$(0.32)$(3.04)
Weighted-average Class A Shares outstanding - basic25,025,974 22,590,084 24,442,940 22,447,399 
Weighted-average Class A Shares outstanding - diluted55,191,693 38,609,590 54,229,693 38,464,470 

See notes to consolidated financial statements.

7


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) — UNAUDITED
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
(dollars in thousands)
Consolidated net income (loss)$22,221 $(65,113)$(16,870)$(118,138)
Other Comprehensive Income (Loss), Net of Tax
Other comprehensive income (loss) - currency translation adjustment185  (683) 
Comprehensive Income (Loss)22,406 (65,113)(17,553)(118,138)
Less: Comprehensive (income) loss attributable to noncontrolling interests(523)41,860 18,761 67,945 
Comprehensive Income (Loss) Attributable to Sculptor Capital Management, Inc.$21,883 $(23,253)$1,208 $(50,193)

See notes to consolidated financial statements.
8


SCULPTOR CAPITAL MANAGEMENT, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) — UNAUDITED
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
(dollars in thousands)
Number of Class A Shares
Beginning balance
23,899,777 21,946,639 22,903,571 21,284,945 
Equity-based compensation
1,201,410 364,793 2,197,616 1,026,487 
Ending Balance
25,101,187 22,311,432 25,101,187 22,311,432 
Number of Class B Shares
Beginning balance
32,887,883 32,845,414 32,824,538 29,208,952 
Equity-based compensation
(1)(25,000)63,344 3,611,462 
Ending Balance
32,887,882 32,820,414 32,887,882 32,820,414 
Class A Shares Par Value
Beginning balance
$239 $219 $229 $213 
Equity-based compensation
12 4 22 10 
Ending Balance
$251 $223 $251 $223 
Class B Shares Par Value
Beginning balance
$329 $328 $328 $292 
Equity-based compensation
  1 36 
Ending Balance
$329 $328 $329 $328 
Additional Paid-in Capital
Beginning balance
$185,961 $130,968 $166,917 $117,936 
Dividend equivalents on Class A restricted share units5,887  6,477 875 
Equity-based compensation, net of taxes8,885 13,306 27,339 26,790 
Change in redemption value of Preferred Units  (1,986) (3,313)
Ending Balance
$200,733 $142,288 $200,733 $142,288 
9


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

Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
(dollars in thousands)
Accumulated Deficit
Beginning balance
$(255,522)$(383,187)$(178,674)$(343,759)
Cash dividends declared on Class A Shares(7,463) (63,428)(11,613)
Dividend equivalents on Class A restricted share units(5,887) (6,477)(875)
Consolidated net income (loss)21,814 (23,253)1,521 (50,193)
Ending Balance
$(247,058)$(406,440)$(247,058)$(406,440)
Accumulated Other Comprehensive Income
Beginning balance$350 $ $732 $ 
Currency translation adjustment69  (313) 
Ending Balance$419 $ $419 $ 
Shareholders’ Deficit Attributable to Class A Shareholders$(45,326)$(263,601)$(45,326)$(263,601)
Shareholders’ Equity Attributable to Noncontrolling Interests
Beginning balance
$435,590 $425,768 $445,348 $440,779 
Currency translation adjustment116  (370) 
Capital contributions2,496 2,059 2,964 3,549 
Capital distributions(1,467)(2,962)(2,483)(3,248)
Equity-based compensation, net of taxes1,478 3,681 11,552 13,551 
Consolidated net income (loss)407 (41,860)(18,391)(67,945)
Ending Balance
$438,620 $386,686 $438,620 $386,686 
Total Shareholders’ Equity$393,294 $123,085 $393,294 $123,085 
Cash dividends paid on Class A Shares$0.30 $ $2.65 $0.53 

See notes to consolidated financial statements.
10


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



 Six Months Ended June 30,
 20212020
 (dollars in thousands)
Cash Flows from Operating Activities  
Consolidated net loss$(16,870)$(118,138)
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:  
Amortization of equity-based compensation42,919 42,370 
Depreciation, amortization and net gains and losses on fixed assets3,309 3,606 
Changes in fair value of warrant liabilities38,175  
Net losses on retirement of debt30,198 693 
Deferred income taxes8,131 (30,726)
Non-cash lease expense10,748 10,656 
Net (gains) losses on investments, net of dividends(9,140)6,565 
Operating cash flows due to changes in:  
Income and fees receivable463,605 142,291 
Due from related parties(4,502)(5,080)
Other assets, net5,839 6,391 
Compensation payable(187,537)(143,037)
Unearned income and fees5,324 3,810 
Tax receivable agreement liability(7,239)(10,024)
Operating lease liabilities(11,076)(11,900)
Other liabilities(20,260)103,199 
Consolidated funds related items:  
Other assets of consolidated funds(3) 
Other liabilities of consolidated funds2 19 
Net Cash Provided by Operating Activities351,623 695 
Cash Flows from Investing Activities  
Purchases of fixed assets(4,243)(984)
Purchases of United States government obligations(164,523)(224,525)
Maturities and sales of United States government obligations131,690 165,218 
Investments in funds(97,887)(11,620)
Return of investments in funds24,692 4,202 
Net Cash Used in Investing Activities(110,271)(67,709)
11


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

 Six Months Ended June 30,
 20212020
 (dollars in thousands)
Cash Flows from Financing Activities  
Contributions from noncontrolling interests2,964 3,549 
Distributions to noncontrolling interests(2,483)(3,248)
Dividends on Class A Shares(63,428)(11,613)
Proceeds from debt obligations, net of issuance costs3,219 2,746 
Repayment of debt obligations, including prepayment costs(249,731)(36,667)
Proceeds from securities sold under agreements to repurchase, net of issuance costs41,004  
Other, net(3,838)(952)
Net Cash Used in Financing Activities(272,293)(46,185)
Effect of exchange rate changes on cash and cash equivalents and restricted cash(574) 
Net change in cash and cash equivalents and restricted cash(31,515)(113,199)
Cash and cash equivalents and restricted cash, beginning of period186,977 245,439 
Cash and Cash Equivalents and Restricted Cash, End of Period$155,462 $132,240 
Supplemental Disclosure of Cash Flow Information  
Cash paid during the period:  
Interest$8,236 $7,099 
Income taxes$4,179 $4,771 
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents$153,827 $127,702 
Restricted cash1,635 4,538 
Total Cash and Cash Equivalents and Restricted Cash$155,462 $132,240 

See notes to consolidated financial statements.

12


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021


1. ORGANIZATION
Sculptor Capital Management, Inc. (the “Registrant”), a Delaware corporation, together with its consolidated subsidiaries (collectively, the “Company” or “Sculptor Capital”), is a global alternative asset management firm providing investment products in a range of areas, including multi-strategy, credit and real estate. With offices in New York, London, Hong Kong and Shanghai, the Company serves global clients through commingled funds, separate accounts and specialized products (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, in strategies 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”), commingled products and other customized solutions for clients.
The Company’s primary sources of revenues are management fees, which are generally based on the amount of the Company’s assets under management, 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.
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 executive managing directors who are no longer active in the Company’s business. References to the Company’s “active executive managing directors” refer to executive managing directors who remain 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.
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
13


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021

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 June 30, 2021:
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. Beginning on the final day of 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 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. In the Recapitalization, the holders of the 2016 Preferred Units, as defined below, forfeited an additional 749,813 Group A Units, which were recapitalized into 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, 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 (if any). Holders of Group E Units do not receive distributions during the Distribution Holiday. See Note 3 in the
14


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021

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. 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 performance 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 performance 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. Group P Unit grants are accounted for as equity-based compensation. See Note 13 in the Company’s Annual Report for additional information.
Preferred Units— The Preferred Units were non-voting preferred equity interests in the Sculptor Operating Partnerships. Preferred Units issued in 2016 and 2017 are collectively referred to as the “2016 Preferred Units.” The 2016 Preferred Units were redeemed in full as a part of the Recapitalization. The Preferred Units issued in 2019 are referred to as the “2019 Preferred Units.” The 2019 Preferred Units were redeemed in full at a 25% discount in the fourth quarter of 2020.
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 a 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 June 30, 2021:
 As of June 30, 2021
Sculptor Capital Management, Inc.
Class A Shares25,101,187
Class B Shares32,887,882
Warrants to purchase Class A Shares (Note 7)
4,338,015 
Sculptor Operating Partnerships
Group A Units16,019,506
Group A-1 Units9,779,446
Group B Units25,101,187
Group E Units13,009,152
Group P Units3,385,000
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 for additional information.
15


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021

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. Certain prior year amounts have been reclassified to conform to the current year presentation.
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.
Recently Adopted Accounting Pronouncements
No changes to GAAP that went into effect in the six months ended June 30, 2021, had a material effect on the Company’s consolidated financial statements.
Future Adoption of Accounting Pronouncements
No changes to GAAP that are not yet effective are expected to have a material effect on the Company’s consolidated financial statements.
3. NONCONTROLLING INTERESTS
Noncontrolling interests represent ownership interests in the Company’s subsidiaries held by parties other than the Company, and primarily relate to the Group A Units held by executive managing directors.
Prior to the Recapitalization, the attribution of net income (loss) of each Sculptor Operating Partnership was based on the relative ownership percentages of the Group A Units (noncontrolling interests) and the Group B Units (indirectly held by the Registrant). In applying the substantive profit-sharing arrangements in the Sculptor Operating Partnerships’ limited partnership 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.
16


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021

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 June 30,Six Months Ended June 30,
 2021202020212020
 (dollars in thousands)
Sculptor Capital LP
Net income (loss)$19,669 $(100,963)$(27,794)$(142,140)
Blended participation percentage42 %42 %39 %42 %
Net Income (Loss) Attributable to Group A Units$8,220 $(42,031)$(10,827)$(59,405)
Sculptor Capital Advisors LP
Net loss$(22,681)$(9,353)$(23,194)$(19,291)
Blended participation percentage39 %41 %39 %42 %
Net Loss Attributable to Group A Units$(8,830)$(3,869)$(9,036)$(8,062)
Sculptor Capital Advisors II LP
Net income$36,368 $25,712 $41,583 $16,779 
Blended participation percentage0 %15 %0 %0 %
Net Income Attributable to Group A Units$ $3,770 $ $ 
Total Sculptor Operating Group
Net income (loss)$33,356 $(84,604)$(9,405)$(144,652)
Blended participation percentage-2 %50 %211 %47 %
Net Loss Attributable to Group A Units$(610)$(42,130)$(19,863)$(67,467)
The following table presents the components of the net income (loss) attributable to noncontrolling interests:
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
(dollars in thousands)
Group A Units$(610)$(42,130)$(19,863)$(67,467)
Other1,017 270 1,472 (478)
 $407 $(41,860)$(18,391)$(67,945)
The following table presents the components of the shareholders’ equity attributable to noncontrolling interests:
 June 30, 2021December 31, 2020
(dollars in thousands)
Group A Units$425,079 $433,756 
Other13,541 11,592 
 $438,620 $445,348 

17


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021

4. INVESTMENTS AND FAIR VALUE DISCLOSURES
The following table presents the components of the Company’s investments as reported in the consolidated balance sheets:
June 30, 2021December 31, 2020
(dollars in thousands)
U.S. government obligations, at fair value$137,016 $104,295 
CLOs, at fair value219,433 205,510 
Equity method investments166,972 105,169 
Total Investments$523,421 $414,974 
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 prioritizes 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 of assets and liabilities and the specific characteristics of the financial assets and liabilities. Financial assets and liabilities 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 assets and liabilities 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 assets or liabilities as of the reporting date. The types of financial assets and liabilities that would generally be included in this category are certain listed equities, U.S. government obligations and certain listed derivatives.
Level II – Quotations received from dealers making a market for these financial assets or liabilities (“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 assets and liabilities 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 assets and liabilities exhibit higher levels of liquid market observability as compared to Level III financial assets and liabilities.
Level III – Pricing inputs that are unobservable in the market and includes situations where there is little, if any, market activity for the financial asset or liability. The inputs into the determination of fair value of financial assets and liabilities in this category may require significant management judgment or estimation. The fair value of these financial assets and liabilities may be estimated using a combination of observed transaction prices, independent
18


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021

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 assets and liabilities that would generally be included in this category include CLOs, 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 asset or liability’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 asset or liability when the fair value is based on unobservable inputs.
Fair Value Measurements Categorized within the Fair Value Hierarchy
The following table summarizes the Company’s investments measured at fair value on a recurring basis within the fair value hierarchy as of June 30, 2021:
 As of June 30, 2021
 Level ILevel IILevel IIITotal
 (dollars in thousands)
Assets, at Fair Value
Included within investments:
U.S. government obligations$137,016 $ $ $137,016 
CLOs(1)
$ $ $219,433 $219,433 
Liabilities, at Fair Value
Warrants$ $ $76,002 $76,002 
_______________
(1) As of June 30, 2021, investments in CLOs had contractual principal amounts of $206.3 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.
19


SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2021

The following table summarizes the Company’s investments measured at fair value on a recurring basis within the fair value hierarchy as of December 31, 2020:
 As of December 31, 2020
 Level ILevel IILevel IIITotal
 (dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations$29,999 $ $ $29,999 
Included within investments:
U.S. government obligations$104,295 $ $ $104,295 
CLOs(1)
$ $ $205,510 $205,510 
Liabilities, at Fair Value
Warrants$ $ $37,827 $37,827 
_______________
(1) As of December 31, 2020, investments in CLOs had contractual principal amounts of $194.5 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.
Reconciliation of Fair Value Measurements Categorized within Level III
Gains and losses, excluding those related to foreign currency translation adjustments, are recorded within net gains (losses) 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.
The following table summarizes the changes in the Company’s Level III assets and liabilities for the three months ended June 30, 2021:
March 31, 2021Purchases / IssuancesInvestment Sales / SettlementsGains / (Losses) Included in EarningsGains / (Losses) Included in Other Comprehensive IncomeJune 30, 2021
(dollars in thousands)
Assets, at Fair Value