10-Q

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, 2023
	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	SCU	New 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 4, 2023, there were 24,996,767 Class A Shares, 4,650,661 Restricted Class A Shares and 33,017,247 Class B Shares outstanding.

SCULPTOR CAPITAL MANAGEMENT, INC.

TABLE OF CONTENTS

 

		Page
PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	6
	Consolidated Balance Sheets as of June 30, 2023 and December 31, 2022	6
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2023 and 2022	7
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2023 and 2022	8
	Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the Three and Six Months Ended June 30, 2023 and 2022	9
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	11
	Notes to Consolidated Financial Statements	13
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	46
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	86
Item 4.	Controls and Procedures	88
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	90
Item 1A.	Risk Factors	90
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	91
Item 3.	Defaults upon Senior Securities	91
Item 4.	Mine Safety Disclosures	91
Item 5.	Other Information	91
Item 6.	Exhibits	92
Signatures		93

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 income	Accrued 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.
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, 2022, dated March 3, 2023, and filed with the SEC.
Advisers Act	Investment 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 the 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. AUM for our new real estate investment vehicle is based on net asset value. d.AUM for our special purpose acquisition company (“SPAC”) sponsored by us included the proceeds raised in the initial public offering held in a trust account for use in a business combination. The SPAC liquidated in the second quarter of 2023. 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.

1

the Company, Sculptor Capital, the firm, we, us, our	Refers, unless the context requires otherwise, to the Registrant and its consolidated subsidiaries, including the Sculptor Operating Group.
Consolidated Entities	Refers to funds, special purpose entities, investment vehicles and other similar structures for which the Company is required to consolidate in accordance with GAAP.
Distribution Holiday	The Sculptor Operating Partnerships initiated a distribution holiday (the “Distribution Holiday”) on the Group A Units, Group E Units and Group P Units and on certain RSUs and RSAs that will terminate on the earlier of (x) 45 days after the last day of the first calendar quarter as of which the achievement of $600.0 million of Distribution Holiday Economic Income is realized and (y) April 1, 2026. Holders of Group A Units, Group E Units and Group P Units and certain RSUs and RSAs, do not receive distributions during the Distribution Holiday.
Distribution Holiday Economic Income	Distribution Holiday Economic Income is the cumulative amount of Economic Income earned since October 1, 2018, less any dividends paid to Class A Shareholders or on the now-retired Preferred Units. Distribution Holiday Economic Income is a non-GAAP measure that is defined in the agreements of limited partnership of the Sculptor Operating Partnerships and is being presented to provide an update on the progress made toward the $600.0 million target required to exit the Distribution Holiday.
Economic Income	Economic Income is a non-GAAP measure of pre-tax operating performance that excludes the following from our results on a GAAP basis: noncontrolling interests, redeemable noncontrolling interests, equity based compensation expense, net of cash settled RSUs, depreciation and amortization expenses, components of our other income (loss), non-cash interest expense accretion on debt, and amounts related to consolidated entities. In addition, expenses related to incentive income profit-sharing arrangements are generally recognized at the same time the related incentive income revenue is recognized. The fair value of RSUs that are settled in cash to employees or executive managing directors, where the number of RSUs to be settled in cash is not certain at the time of grant, is included as an expense at the time of settlement. Where the number of RSUs to be settled in cash is certain on the grant date, the expense is recognized during the performance period to which the award relates. Similarly, deferred cash compensation is expensed in full during the performance period to which the award relates for Economic Income, rather than over the service period for GAAP. Further, impairment of right-of-use lease assets is excluded from Economic Income at the time the impairment is recognized for GAAP and the impact is then amortized over the lease term for Economic Income. Additionally, rent expense is offset by subrental income as management evaluates rent expenses on a net basis.
Exchange Act	Securities Exchange Act of 1934, as amended.
executive managing directors	The current executive managing directors of the Company, and, except where the context requires otherwise, also includes certain executive managing directors who are no longer active in our business.
Fee Paying Assets Under Management	Fee 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 sponsored.
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.

2

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 Group P operating group unit in each of the Sculptor Operating Partnerships. Group P Units are limited partner interests held by our executive managing directors.
Institutional Credit Strategies	Our asset management platform that invests in performing credits, including leveraged loans, high-yield bonds, private credit/bespoke financing and investment grade credit via CLOs, aircraft securitization vehicles, collateralized bond obligations, the structured alternative investment solution, and other customized solutions.
IPO	Our initial public offering of 3.6 million Class A Shares that occurred in November 2007.
Longer-term AUM	AUM from investors that are subject to initial commitment periods of three years or longer. Investors with longer-term AUM may have less than three years remaining in their commitment period. This excludes AUM that had initial commitment periods of three years or longer and subsequently moved to shorter commitment periods at the end of their initial commitment period.
NYSE	New York Stock Exchange.
Partner Equity Units	Refers collectively to the Group A Units, Group E Units and Group P Units.
Preferred Units	One 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.
PSUs	Class A performance-based RSUs.
Recapitalization	Refers to the recapitalization of our business that occurred in February 2019. As part of the Recapitalization, a portion of the interests held by our former executive management were reallocated to existing members of senior management. In addition, we restructured the previously outstanding senior debt and Preferred Units.
Registrant	Sculptor Capital Management, Inc., a Delaware corporation.
RSAs	Restricted Class A Shares.
RSUs	Class A restricted share units.
Sculptor Corp	Sculptor Capital Holding Corporation, a Delaware corporation.
Sculptor Operating Group	Refers collectively to the Sculptor Operating Partnerships and their consolidated subsidiaries.

3

Sculptor Operating Group Units	Refers collectively to Sculptor Operating Group A, B, E, and P Units.
Sculptor Operating Partnerships	Refers collectively to Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP.
SEC	U.S. Securities and Exchange Commission.
Securities Act	Securities Act of 1933, as amended.
SPAC	Refers to special purpose acquisition company.
Special Investments	Investments that we, as investment manager, believe lack a readily ascertainable market value, are illiquid or should be held until the resolution of a special event or circumstance.

4

Available Information

We file annual, quarterly and current reports, proxy statements and other information required by the Exchange Act with the SEC. We make available free of charge on our website (www.sculptor.com) our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those filings as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. We also use our website to distribute company information, including Assets Under Management by investment strategy, and such information may be deemed material. Accordingly, investors should monitor our website, in addition to our press releases, SEC filings and public conference calls and webcasts. The contents of our website are not, however, a part of this report.

Also posted on our website in the “Shareholder Services—Corporate Governance” section are charters for our Audit Committee; Compensation Committee; Nominating, Corporate Governance and Conflicts Committee and Corporate Responsibility and Compliance Committee, as well as our Corporate Governance Guidelines and Code of Business Conduct and Ethics governing our directors, officers and employees. Information on, or accessible through, our website is not a part of, and is not incorporated into, this report or any other SEC filing. Copies of our SEC filings or corporate governance materials are available without charge upon written request to Sculptor Capital Management, Inc., 9 West 57th Street, New York, New York 10019, Attention: Office of the Secretary. Any materials we file with the SEC are also publicly available through the SEC’s website (www.sec.gov).

No statements herein, available on our website or in any of the materials we file with the SEC constitute, or should be viewed as constituting, an offer of any fund.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that reflect our current views with respect to, among other things, future events, our operations and our financial performance. We generally identify forward-looking statements by terminology such as “outlook,” “believe,” “expect,” “potential,” “continue,” “may,” “will,” “should,” “could,” “seek,” “approximately,” “predict,” “intend,” “plan,” “estimate,” “anticipate,” “opportunity,” “comfortable,” “assume,” “remain,” “maintain,” “sustain,” “achieve,” “see,” “think,” “position” or the negative version of those words or other comparable words.

Any forward-looking statements contained herein are based upon historical information and on our current plans, estimates and expectations. The inclusion of this or other forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved.

We caution that forward-looking statements are subject to numerous assumptions, estimates, risks and uncertainties, including but not limited to the following: global economic, business, market and geopolitical conditions, 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 United Kingdom’s withdrawal from the European Union; the outcome of third-party litigation involving us; or from matters involving the founder and former CEO of our predecessor Och-Ziff; 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; the publicly announced special committee process and any outcome thereof; our ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to our business; U.S. and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy; and assumptions relating to our operations, investment performance, financial results, financial condition, business prospects, growth strategy and liquidity.

If one or more of these or other risks or uncertainties materialize, or if our assumptions or estimates prove to be incorrect, our actual results may vary materially from those indicated in these statements. These factors are not and should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and risks that are included in our filings with the SEC, including but not limited to those described in our Annual Report.

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

5

SCULPTOR CAPITAL MANAGEMENT, INC.

CONSOLIDATED BALANCE SHEETS — UNAUDITED

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Assets
Cash and cash equivalents	$	159,679	$	258,863
Restricted cash	7,915		7,895
Investments (includes assets measured at fair value of $267,126 and $231,929 including assets sold under agreements to repurchase of $164,202 and $157,107 as of June 30, 2023 and December 31, 2022, respectively)	347,731		299,059
Income and fees receivable	29,973		56,360
Due from related parties	33,047		32,846
Deferred income tax assets	249,064		257,939
Operating lease assets	70,066		75,861
Other assets, net	77,492		106,442
Assets of consolidated entities:
Cash and cash equivalents	468		3
Restricted cash and cash equivalents	9,800		9,805
Investments of consolidated entities	323,276		544,554
Other assets of consolidated entities	1,471		2,579
Total Assets	$	1,309,982	$	1,652,206
Liabilities and Shareholders’ Equity
Liabilities
Compensation payable	$	48,343	$	127,209
Unearned income and fees	46,866		53,869
Tax receivable agreement liability	173,350		190,245
Operating lease liabilities	85,095		92,045
Debt obligations	117,849		124,176
Warrant liabilities, at fair value	24,423		24,163
Securities sold under agreements to repurchase	169,721		166,632
Other liabilities	35,183		43,049
Liabilities of consolidated entities:
Notes payable, at fair value	205,290		196,106
Warrant liabilities, at fair value	—		596
Other liabilities of consolidated entities	1,790		9,669
Total Liabilities	907,910		1,027,759
Commitments and Contingencies (Note 16)
Redeemable Noncontrolling Interests of Consolidated Entities (Note 3)	—		237,864
Shareholders’ Equity
Class A Shares, par value $0.01 per share, 100,000,000 shares authorized; 27,993,941 and 26,729,608 shares issued and 24,971,561 and 23,707,228 shares outstanding as of June 30, 2023 and December 31, 2022, respectively	250		238
Class B Shares, par value $0.01 per share, 75,000,000 shares authorized; 33,017,247 and 33,569,188 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively	330		336
Treasury stock, at cost; 3,022,380 as of June 30, 2023 and December 31, 2022	(32,495)		(32,495)
Additional paid-in capital	283,057		255,293
Accumulated deficit	(278,365)		(276,149)
Accumulated other comprehensive income (loss)	720		(119)
Shareholders’ deficit attributable to Class A Shareholders	(26,503)		(52,896)
Shareholders’ equity attributable to noncontrolling interests	428,575		439,479
Total Shareholders’ Equity	402,072		386,583
Total Liabilities and Shareholders’ Equity	$	1,309,982	$	1,652,206

    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,
	2023		2022		2023		2022
	(dollars in thousands)
Revenues
Management fees	$	62,442	$	71,770	$	126,150	$	145,207
Incentive income	4,296		44,580		44,582		66,222
Other revenues	6,703		2,520		13,248		4,950
Income of consolidated entities	1,862		311		4,558		150
Total Revenues	75,303		119,181		188,538		216,529
Expenses
Compensation and benefits	57,484		79,743		126,106		157,528
Interest expense	6,154		3,427		11,750		6,712
General, administrative and other	29,928		26,425		63,723		53,741
Expenses of consolidated entities	1,304		1,668		1,851		1,912
Total Expenses	94,870		111,263		203,430		219,893
Other Income (Loss)
Changes in fair value of warrant liabilities	(434)		18,740		(260)		43,076
Changes in tax receivable agreement liability	(584)		227		(527)		220
Net gains (losses) on investments	5,208		(30,838)		10,136		(36,182)
Net gains (losses) of consolidated entities	1,866		(6,434)		9,743		(2,294)
Total Other Income (Loss)	6,056		(18,305)		19,092		4,820
(Loss) Income Before Income Taxes	(13,511)		(10,387)		4,200		1,456
Income taxes	(1,190)		(7,914)		11,557		(947)
Consolidated Net (Loss) Income	(12,321)		(2,473)		(7,357)		2,403
Less: Net loss (income) attributable to noncontrolling interests	9,822		(5,579)		16,027		6,427
Less: Net income attributable to redeemable noncontrolling interests	(1,851)		(697)		(3,350)		(3,765)
Net (Loss) Income Attributable to Sculptor Capital Management, Inc.	(4,350)		(8,749)		5,320		5,065
Change in redemption value of redeemable noncontrolling interests	8,004		697		6,826		3,765
Net Income (Loss) Attributable to Class A Shareholders	$	3,654	$	(8,052)	$	12,146	$	8,830
Earnings (Loss) per Class A Share
Earnings (Loss) per Class A Share - basic	$	0.15	$	(0.32)	$	0.48	$	0.34
Loss per Class A Share - diluted	$	(0.12)	$	(0.89)	$	(0.05)	$	(1.00)
Weighted-average Class A Shares outstanding - basic	25,179,467		25,514,364		25,176,667		26,052,478
Weighted-average Class A Shares outstanding - diluted	40,205,461		26,565,792		40,202,661		27,611,057

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,
	2023		2022		2023		2022
	(dollars in thousands)
Consolidated net (loss) income	$	(12,321)	$	(2,473)	$	(7,357)	$	2,403
Other Comprehensive (Loss) Income, Net of Tax
Other comprehensive income (loss) - currency translation adjustment	174		(1,226)		839		(1,976)
Comprehensive (Loss) Income	(12,147)		(3,699)		(6,518)		427
Less: Comprehensive loss (income) attributable to noncontrolling interests	9,822		(5,579)		16,027		6,427
Less: Comprehensive income attributable to redeemable noncontrolling interests	(1,851)		(697)		(3,350)		(3,765)
Comprehensive (Loss) Income Attributable to Sculptor Capital Management, Inc.	$	(4,176)	$	(9,975)	$	6,159	$	3,089

See notes to consolidated financial statements.

8

SCULPTOR CAPITAL MANAGEMENT, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) — UNAUDITED

	Sculptor Capital Management, Inc. Shareholders
	Class A Shares	Class B Shares	Treasury Stock Shares	Class A Shares Par Value		Class B Shares Par Value		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock, at cost		Shareholders’ Deficit Attributable to Class A Shareholders		Shareholders’ Equity Attributable to Noncontrolling Interests		Total Shareholders’ Equity
	(dollars in thousands, except share data)
Balance at April 1, 2023	24,970,157	33,018,248	3,022,380	$	250	$	330	$	263,607	$	(272,410)	$	546	$	(32,495)	$	(40,172)	$	434,767	$	394,595
Equity-based compensation, net of taxes	1,404	(1,001)	—	—		—		11,339		—		—		—		11,339		1,447		12,786
Repurchase of Class A Shares	—	—	—	—		—		—		—		—		—		—		—		—
Dividend equivalents on Class A restricted share units	—	—	—	—		—		107		(107)		—		—		—		—		—
Change in redemption value of SPAC Class A Shares	—	—	—	—		—		8,004		—		—		—		8,004		—		8,004
Cash dividends declared on Class A Shares ($0.06 per share)	—	—	—	—		—		—		(1,498)		—		—		(1,498)		—		(1,498)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests	—	—	—	—		—		—		(4,350)		—		—		(4,350)		(9,822)		(14,172)
Currency translation adjustment	—	—	—	—		—		—		—		174		—		174		—		174
Capital contributions	—	—	—	—		—		—		—		—		—		—		3,248		3,248
Capital distributions	—	—	—	—		—		—		—		—		—		—		(1,065)		(1,065)
Balance at June 30, 2023	24,971,561	33,017,247	3,022,380	$	250	$	330	$	283,057	$	(278,365)	$	720	$	(32,495)	$	(26,503)	$	428,575	$	402,072
Balance at April 1, 2022	26,052,113	33,676,331	473,719	$	261	$	337	$	202,305	$	(239,776)	$	(699)	$	(6,249)	$	(43,821)	$	437,936	$	394,115
Equity-based compensation, net of taxes	785	(42,857)	—	—		(1)		16,948		—		—		—		16,947		1,959		18,906
Repurchase of Class A Shares	(1,167,870)	—	1,167,870	(12)		—		—		—		—		(13,243)		(13,255)		—		(13,255)
Dividend equivalents on Class A restricted share units	—	—	—	—		—		(245)		245		—		—		—		—		—
Change in redemption value of SPAC Class A Shares	—	—	—	—		—		697		—		—		—		697		—		697
Cash dividends declared on Class A Shares ($0.11 per share)	—	—	—	—		—		—		(2,779)		—		—		(2,779)		—		(2,779)
Consolidated net (loss) income, excluding amounts attributable to redeemable noncontrolling interests	—	—	—	—		—		—		(8,749)		—		—		(8,749)		5,579		(3,170)
Currency translation adjustment	—	—	—	—		—		—		—		(1,226)		—		(1,226)		—		(1,226)
Capital contributions	—	—	—	—		—		—		—		—		—		—		3,982		3,982
Capital distributions	—	—	—	—		—		—		—		—		—		—		(1,371)		(1,371)
Balance at June 30, 2022	24,885,028	33,633,474	1,641,589	$	249	$	336	$	219,705	$	(251,059)	$	(1,925)	$	(19,492)	$	(52,186)	$	448,085	$	395,899

9

SCULPTOR CAPITAL MANAGEMENT, INC.

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) — (continued)

	Sculptor Capital Management, Inc. Shareholders
	Class A Shares	Class B Shares	Treasury Stock Shares	Class A Shares Par Value		Class B Shares Par Value		Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Treasury Stock, at cost		Shareholders’ Deficit Attributable to Class A Shareholders		Shareholders’ Equity Attributable to Noncontrolling Interests		Total Shareholders’ Equity
	(dollars in thousands, except share data)
Balance at January 1, 2023	23,707,228	33,569,188	3,022,380	$	238	$	336	$	255,293	$	(276,149)	$	(119)	$	(32,495)	$	(52,896)	$	439,479	$	386,583
Equity-based compensation, net of taxes	1,264,333	(551,941)	—	12		(6)		19,894		—		—		—		19,900		2,808		22,708
Dividend equivalents on Class A restricted share units	—	—	—	—		—		1,044		(1,044)		—		—		—		—		—
Change in redemption value of SPAC Class A Shares	—	—	—	—		—		6,826		—		—		—		6,826		—		6,826
Cash dividends declared on Class A Shares ($0.26 per share)	—	—	—	—		—		—		(6,492)		—		—		(6,492)		—		(6,492)
Consolidated net income (loss), excluding amounts attributable to redeemable noncontrolling interests	—	—	—	—		—		—		5,320		—		—		5,320		(16,027)		(10,707)
Currency translation adjustment	—	—	—	—		—		—		—		839		—		839		—		839
Capital contributions	—	—	—	—		—		—		—		—		—		—		4,528		4,528
Capital distributions	—	—	—	—		—		—		—		—		—		—		(2,213)		(2,213)
Balance at June 30, 2023	24,971,561	33,017,247	3,022,380	$	250	$	330	$	283,057	$	(278,365)	$	720	$	(32,495)	$	(26,503)	$	428,575	$	402,072
Balance at January 1, 2022	25,668,987	33,613,023	—	$	257	$	336	$	184,691	$	(253,521)	$	51	$	—	$	(68,186)	$	446,469	$	378,283
Equity-based compensation, net of taxes	857,630	20,451	—	9		—		31,425		—		—		—		31,434		3,883		35,317
Repurchase of Class A Shares	(1,641,589)	—	1,641,589	(17)		—		—		—		—		(19,492)		(19,509)		—		(19,509)
Dividend equivalents on Class A restricted share units	—	—	—	—		—		(176)		176		—		—		—		—		—
Change in redemption value of SPAC Class A Shares	—	—	—	—		—		3,765		—		—		—		3,765		—		3,765
Cash dividends declared on Class A Shares ($0.11 per share)	—	—	—	—		—		—		(2,779)		—		—		(2,779)		—		(2,779)
Consolidated net loss (gain), excluding amounts attributable to redeemable noncontrolling interests	—	—	—	—		—		—		5,065		—		—		5,065		(6,427)		(1,362)
Currency translation adjustment	—	—	—	—		—		—		—		(1,976)		—		(1,976)		—		(1,976)
Capital contributions	—	—	—	—		—		—		—		—		—		—		8,979		8,979
Capital distributions	—	—	—	—		—		—		—		—		—		—		(4,819)		(4,819)
Balance at June 30, 2022	24,885,028	33,633,474	1,641,589	$	249	$	336	$	219,705	$	(251,059)	$	(1,925)	$	(19,492)	$	(52,186)	$	448,085	$	395,899

See notes to consolidated financial statements.

10

SCULPTOR CAPITAL MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

	Six Months Ended June 30,
	2023		2022
	(dollars in thousands)
Cash Flows from Operating Activities
Consolidated net (loss) income	$	(7,357)	$	2,403
Adjustments to reconcile consolidated net (loss) income to net cash provided by (used in) operating activities:
Amortization of equity-based compensation	28,087		45,647
Depreciation, amortization and net gains and losses on fixed assets	2,078		2,698
Changes in fair value of warrant liabilities	260		(43,076)
Deferred income taxes	8,685		(2,238)
Non-cash lease expense	9,205		9,550
Net (gains) losses on investments, net of dividends	(8,367)		38,968
Operating cash flows due to changes in:
Income and fees receivable	26,514		167,958
Due from related parties	(151)		(2,085)
Other assets, net	(2,170)		(15,850)
Compensation payable	(81,775)		(199,515)
Unearned income and fees	(7,004)		4,471
Tax receivable agreement liability	(16,895)		(16,993)
Operating lease liabilities	(10,359)		(11,029)
Other liabilities	(7,887)		(2,536)
Consolidated entities related items:
Net (gains) losses of consolidated entities	(8,751)		2,294
Purchases of investments	(22,994)		(463,231)
Proceeds from sale of investments	29,033		86,645
Other assets of consolidated entities	(237)		(2,679)
Other liabilities of consolidated entities	(8,475)		62,858
Net Cash Used in Operating Activities	(78,560)		(335,740)
Cash Flows from Investing Activities
Purchases of fixed assets	(66)		(1,310)
Purchases of United States government obligations	(58,736)		(28,784)
Maturities and sales of United States government obligations	25,000		219,144
Investments in funds	(12,412)		(49,077)
Return of investments in funds	39,370		37,734
Consolidated entities related items:
Proceeds from sale of investment in government obligations of consolidated SPAC	242,272		—
Net Cash Provided by Investing Activities	235,428		177,707

11

SCULPTOR CAPITAL MANAGEMENT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED — (continued)

	Six Months Ended June 30,
	2023		2022
	(dollars in thousands)
Cash Flows from Financing Activities
Contributions from noncontrolling interests	4,528		8,979
Distributions to noncontrolling interests	(2,213)		(4,819)
Dividends on Class A Shares	(6,492)		(2,779)
Proceeds from debt obligations, net of issuance costs	435		5,683
Repayment of debt obligations, including prepayment costs	(7,648)		(9,424)
Proceeds from securities sold under agreements to repurchase, net of issuance costs	—		20,395
Purchases of treasury stock	—		(19,492)
Other, net	(2,733)		(5,962)
Consolidated entities related items:
Redemption of SPAC Class A Shares	(242,172)		—
Proceeds from debt obligations of consolidated entities, net of issuance costs	—		215,733
Net Cash (Used in) Provided by Financing Activities	(256,295)		208,314
Effect of exchange rate changes on cash and cash equivalents and restricted cash	723		(2,552)
Net change in cash and cash equivalents and restricted cash	(98,704)		47,729
Cash and cash equivalents and restricted cash, beginning of period	276,566		412,671
Cash and Cash Equivalents and Restricted Cash, End of Period	$	177,862	$	460,400
Supplemental Disclosure of Cash Flow Information
Cash paid during the period:
Interest	$	10,202	$	5,682
Income taxes	$	7,049	$	6,274
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	$	159,679	$	192,578
Restricted cash	7,915		7,238
Cash and cash equivalents of consolidated entities	468		25,650
Restricted cash and cash equivalents of consolidated entities	9,800		234,934
Total Cash and Cash Equivalents and Restricted Cash	$	177,862	$	460,400

See notes to consolidated financial statements.

12

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

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 global alternative asset manager and a specialist in opportunistic investing with offices in New York, London, Hong Kong and Shanghai. The Company provides asset management services and investment products across Credit, Real Estate, and Multi-Strategy. The Company serves its global client base through commingled funds, separate accounts and specialized products (collectively, the “funds”). The Company’s model is driven by a global team that is predominantly home-grown, long tenured and incentivized to put client outcomes first. The Company’s capabilities span all major geographies and asset classes, including corporate credit, structured credit, real estate debt and equity, fundamental equities, merger arbitrage, and convertible and derivative arbitrage.

The Company manages dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds, multi-strategy funds, and other alternative investment vehicles. Through Institutional Credit Strategies, the Company’s asset management platform that invests in performing credits, the Company manages collateralized loan obligations (“CLOs”), aircraft securitization vehicles, collateralized bond obligations (“CBOs”), structured alternative investment solutions, commingled products and other customized solutions for clients.

The Company’s primary sources of revenues are management fees, which are generally based on the amount of the Company’s assets under management (“Assets Under Management” or “AUM”), as defined below, and incentive income, which is based on the investment performance of its funds. Accordingly, for any given period, the Company’s revenues will be driven by the combination of Assets Under Management and the investment performance of the funds. AUM refers to the assets of the funds to which the Company provides investment management and advisory services. The Company’s AUM are a function of the capital that is allocated to it by the investors in its funds and the investment performance of its funds.

The Company conducts its business and generates substantially all of its revenues primarily in the United States (the “U.S.”) through one operating and reportable segment. The single reportable segment reflects how the Company’s chief operating decision makers allocate resources, make operating decisions and assess financial performance on a consolidated basis under the Company’s ‘one-firm approach’, which includes operating collaboratively across business lines, with predominantly a single expense pool. The Company conducts its operations through Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP (collectively, the “Sculptor Operating Partnerships” and collectively with their consolidated subsidiaries, the “Sculptor Operating Group”). The Registrant holds its interests in the Sculptor Operating Group indirectly through Sculptor Capital Holding Corporation (“Sculptor Corp”), a wholly owned subsidiary of the Registrant.

References to the Company’s “executive managing directors” include the current executive managing directors of the Company, and, except where the context requires otherwise, also include certain former executive managing directors who are no longer active in the Company’s business.

On July 23, 2023, the Company entered into an Agreement and Plan of Merger with Rithm Capital Corp. and certain of its affiliates. Refer to Note 17 for details of the proposed transaction with Rithm Capital Corp.

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 (the “Board of Directors” or the “Board”) (other than RSAs, where entitlement to distributions may be subject to limitations and conditions).

13

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

•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 June 30, 2023:

•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 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, book-up, forfeiture or minimum retained ownership requirements.

•Group E Units—Group E Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of a certain performance condition. Each Group E Unit converts into a Group A Unit and becomes exchangeable for one Class A Share (or the cash equivalent thereof) to the extent there has been a sufficient amount of appreciation for a Group E Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee, which consists of the Chief Executive Officer and the Chief Financial Officer of Sculptor Capital Management, Inc.). The Group E Units are entitled to share in residual assets upon liquidation, dissolution or

14

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

winding up and become eligible to participate in any tag along right, in a change of control transaction or other liquidity event only to the extent of their relative positive capital accounts (if any). Holders of Group E Units do not receive distributions during the Distribution Holiday. See Note 3 in the Company’s Annual Report for additional details. Group E Unit grants are accounted for as equity-based compensation. See Note 13 in the Company’s Annual Report for additional information.

•Group P Units—Group P Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of certain service and market conditions. Each Group P Unit becomes exchangeable for one Class A Share (or the cash equivalent thereof), in each case upon satisfaction of certain service and market conditions at such time and, with respect to exchanges, to the extent there has been sufficient appreciation for a Group P Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee). The Group P Units are entitled to share in residual assets upon liquidation, dissolution or winding up and become eligible to participate in any tag along right, in a change of control transaction or other liquidity event only to the extent that certain market conditions are met and to the extent of their relative positive capital accounts (if any). The terms of the Group P Units may be varied for certain executive managing directors. Group P Unit grants are accounted for as equity-based compensation. 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.

15

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The following table presents the number of shares and units of the Company and the Sculptor Operating Partnerships, respectively, that were outstanding as of June 30, 2023:

	As of June 30, 2023
Sculptor Capital Management, Inc.
Class A Shares	24,971,561
Class B Shares	33,017,247
Restricted Class A Shares (“RSAs”)	4,650,661
Restricted Share Units (“RSUs”)	2,672,474
Performance-based RSUs (“PSUs”)	912,500
Warrants to purchase Class A Shares (Note 7)	4,338,015
Sculptor Operating Partnerships
Group A Units	15,025,994
Group A-1 Units	9,244,477
Group B Units	24,971,561
Group E Units	13,020,157
Group P Units	4,734,286

The Company grants RSAs, RSUs and PSUs to its employees and executive managing directors as a form of compensation. These grants are accounted for as equity-based compensation. See Note 13 in the Company's Annual Report for additional information. In addition, the Company has 3,022,380 shares of treasury stock as of June 30, 2023.

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 June 30, 2023, the Company repurchased 3,022,380 Class A Shares at a cost of $32.5 million for an average price of $10.75 per share through open market purchase transactions. No shares were purchased in the three months ended June 30, 2023. As of June 30, 2023, $67.5 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. On July 23, 2023, we entered into an Agreement and Plan of Merger (including the schedules and exhibits thereto, the “Merger Agreement”) with entities affiliated with Rithm Capital Corp. The Company will not repurchase any shares while the Merger Agreement remains in effect. See Note 17 to the unaudited consolidated financial statements for more information regarding the Merger Agreement.

2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited, interim, consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”), and exclude some of the disclosures required in audited financial statements and therefore should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report. Management believes all adjustments considered necessary for a fair presentation of the Company’s unaudited, interim, consolidated financial statements have been included and are of a normal and recurring nature and that estimates made in preparing unaudited, interim, consolidated financial statements are reasonable and prudent. The consolidated financial statements include the accounts of the Company, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest

16

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

entities and for which the Company is considered the primary beneficiary, and certain other entities which are not considered variable interest entities but the Company is determined to have control. All significant intercompany transactions and balances have been eliminated in consolidation.

The results of operations presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. For example, incentive income for the majority of the Company’s multi-strategy AUM is recognized in the fourth quarter each year, based on full year investment performance.

See Note 2 in the Company’s Annual Report for the complete listing of our significant accounting policies.

Recently Adopted Accounting Pronouncements

No changes to GAAP that went into effect in the six months ended June 30, 2023, 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.

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 47.1% as of June 30, 2023, from 47.0% as of June 30, 2022. Changes in the Company’s interest in the Sculptor Operating Group have historically been, and in the future may be, driven by the following: (i) the exchange of Group A Units and Group P Units for Class A Shares, at which time the related Class B Shares are also canceled; (ii) vesting of RSAs; (iii) the issuance of Class A Shares under the Company’s Amended and Restated 2007 Equity Incentive Plan, 2013 Incentive Plan and 2022 Incentive Plan related to the settlement of RSUs or PSUs; and (iv) the forfeiture of Group A Units and participating Group P Units by a departing executive managing director.

17

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

In connection with the proposed transaction among the Company and Rithm Capital Corp., holders of Group A Units and Group A-1 Units are expected to be offered the opportunity to enter into a rollover agreement with affiliates of Rithm Capital Corp. Refer to Note 17 for details of the rollover agreement.

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,
	2023			2022			2023			2022
	(dollars in thousands)
Sculptor Capital LP
Net income (loss)	$	11,952		$	(25,001)		$	43,039		$	16,215
Blended participation percentage	0		%	0		%	0		%	0		%
Net Income Attributable to Group A Units	$	—		$	—		$	—		$	—
Sculptor Capital Advisors LP
Net (loss) income	$	(16,369)		$	15,623		$	(20,551)		$	(1,197)
Blended participation percentage	38		%	36		%	38		%	38		%
Net (Loss) Income Attributable to Group A Units	$	(6,149)		$	5,702		$	(7,720)		$	(451)
Sculptor Capital Advisors II LP
Net loss	$	(13,203)		$	(1,677)		$	(27,654)		$	(19,473)
Blended participation percentage	38		%	49		%	38		%	38		%
Net Loss Attributable to Group A Units	$	(4,960)		$	(821)		$	(10,389)		$	(7,331)
Total Sculptor Operating Group
Net loss	$	(17,620)		$	(11,055)		$	(5,166)		$	(4,455)
Blended participation percentage	63		%	-44		%	351		%	175		%
Net (Loss) Income Attributable to Group A Units	$	(11,109)		$	4,881		$	(18,109)		$	(7,782)

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,
	2023		2022		2023		2022
	(dollars in thousands)
Group A Units	$	(11,109)	$	4,881	$	(18,109)	$	(7,782)
Other	1,287		698		2,082		1,355
	$	(9,822)	$	5,579	$	(16,027)	$	(6,427)

18

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The following table presents the components of the shareholders’ equity attributable to noncontrolling interests:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Group A Units	$	397,640	$	412,941
Other	30,935		26,538
	$	428,575	$	439,479

Redeemable noncontrolling interests

In the second quarter of 2023, our consolidated SPAC was liquidated in accordance with its charter and its Class A shares were redeemed. The Class A shares issued by the consolidated SPAC were redeemable for cash by the public shareholders in the event the SPAC did not consummate an initial business combination within the time period required by its charter. Therefore, the investors’ interests in the SPAC were classified as redeemable noncontrolling interests in the consolidated balance sheets. The following table presents the activity in redeemable noncontrolling interests, excluding the reversal of deferred underwriting fees as a result of the SPAC liquidation, for the three and six months ended June 30, 2023:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023		2023
	SPAC		SPAC
	(dollars in thousands)
Beginning balance	$	240,541	$	237,864
Change in redemption value of Class A Shares of consolidated SPAC	(220)		958
Capital distributions	(242,172)		(242,172)
Comprehensive income	1,851		3,350
Ending Balance	$	—	$	—

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, 2023		December 31, 2022
	(dollars in thousands)
U.S. government obligations, at fair value	$	58,988	$	24,782
CLOs, at fair value	208,138		207,147
Equity method investments	80,605		67,130
Total Investments	$	347,731	$	299,059
Investments of Consolidated Entities	$	323,276	$	544,554

The Company invests in U.S. government obligations to manage excess liquidity. CLOs, at fair value, consist of investments in notes of unconsolidated CLOs. These investments are carried at fair value under the irrevocable fair value option election at initial recognition. Changes in fair value are recorded within net gains (losses) on investments in the consolidated

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

statements of operations. Interest income on these investments is accrued using the effective interest method and separately presented from the overall change in fair value and is recognized in other revenues in the consolidated statement of operations.

The Company’s equity method investments include investments in funds, which are not consolidated, but in which the Company exerts significant influence, but not control. The Company has not elected the fair value option and accounts for such investments under the equity method. Under the equity method of accounting, the Company recognizes its share of the underlying earnings (losses) from equity method investments within net gains (losses) 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.

In the second quarter of 2023, our consolidated SPAC was liquidated in accordance with its charter and the investments held in a SPAC’s trust account were liquidated. Investments of consolidated entities included both investments of the Company’s consolidated SPAC, prior to its liquidation, which consisted of investments in U.S. Treasury bills held in a trust account and measured at fair value, as well as investments held by the Company’s consolidated structured alternative investment solution. The investments of the consolidated structured alternative investment solution that the Company manages are generally measured at fair value using the NAV per share practical expedient. The Company may determine based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses in accordance with GAAP. The Company does not categorize investments where fair value is measured using the NAV practical expedient within the fair value hierarchy.

The following table summarizes the fair value of the investments of the structured alternative investment solution that are measured using the NAV practical expedient by strategy type and ability to redeem such investments as of June 30, 2023:

Fund Type(1)	Fair Value (as of June 30, 2023)		Redemption Frequency(2)	Redemption Notice Period(2)
	(dollars in thousands)
Multi-strategy	76,240		Quarterly - Annually	30 days - 90 days
Credit	238,339		Monthly - Annually(3)	30 days - 90 days
Real estate	8,697		None(4)	N/A
Total	$	323,276

_______________

(1)The structured alternative investment solution invests in both open-ended and close-ended funds. The investments in each fund may represent investments in a particular tranche of such fund subject to different withdrawal rights.

(2)$159.6 million of investments are subject to an initial lock-up period of three years during which time no withdrawals or redemptions are allowed. Once the lock-up period ends, the investments are able to be redeemed with the frequency noted above.

(3)24% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately six years from inception.

(4)100% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately seven to nine years from inception.

As of June 30, 2023, the structured alternative investment solution had unfunded commitments of $91.8 million related to the investments presented in the table above.

See Note 2 in the Company’s Annual Report for additional information regarding the investments of consolidated entities.

Fair Value Disclosures

Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the funds it manages

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

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 financial instruments at fair value. Market price observability is impacted by a number of factors, including the type and the specific characteristics of the financial instrument, including existence and transparency of transactions between market participants. Financial instruments with readily available actively quoted prices or for which fair value can be measured from actively-quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.

Financial instruments measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:

•Level I – Quoted prices that are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments that would generally be included in this category are listed equities, U.S. government obligations and listed derivatives. The Company does not adjust the quoted price for these investments.

•Level II – Quotations received from dealers making a market for financial instruments (“broker quotes”), valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly observable as of the reporting date. The types of financial instruments that would generally be included in this category are certain corporate bonds and loans, certain credit default swap contracts, certain bank debt securities, certain commercial real estate debt, less liquid equity securities, forward contracts and certain over the-counter (“OTC”) derivatives where the fair value is based on observable inputs. These financial instruments exhibit higher levels of liquid market observability as compared to Level III financial instruments.

•Level III – Pricing inputs that are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value of financial instruments in this category may require significant management judgment or estimation. The fair value of these financial instruments may be estimated using a combination of observed transaction prices, independent pricing services, relevant broker quotes, models or other valuation methodologies based on pricing inputs that are neither directly or indirectly market observable (e.g., cash flows, implied yields, EBITDA multiples). The types of financial instruments that would generally be included in this category include CLOs, certain warrant liabilities, certain credit default swap contracts, certain bank debt securities, certain OTC derivatives, asset-backed securities, collateralized debt obligations and investments in affiliated credit funds.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument when the fair value is based on unobservable inputs.

For financial instruments for which the Company uses independent pricing services for valuation, the Company performs analytical procedures and compares independent pricing service valuations to other vendors’ pricing as applicable. The Company also performs due diligence reviews on independent pricing services on an annual basis and performs other due

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

diligence procedures as may be deemed necessary.

Fair Value Measurements Categorized within the Fair Value Hierarchy

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy for the periods presented:

	As of June 30, 2023
	Level I		Level II		Level III		NAV		Total
	(dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations	$	4,998	$	—	$	—	$	—	$	4,998
Included within investments:
U.S. government obligations	$	58,988	$	—	$	—	$	—	$	58,988
CLOs(1)	$	—	$	—	$	208,138	$	—	$	208,138
Included within investments of consolidated entities:
Investments in funds	—		—		—		323,276		323,276
Investments of Consolidated Entities	$	—	$	—	$	—	$	323,276	$	323,276
Liabilities, at Fair Value
Warrants	$	—	$	—	$	24,423	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	—	$	—	$	205,290	$	—	$	205,290

_______________

(1) As of June 30, 2023, investments in CLOs had contractual principal amounts of $208.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

	As of December 31, 2022
	Level I		Level II		Level III		NAV		Total
	(dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations	$	19,937	$	—	$	—	$	—	$	19,937
Included within investments:
U.S. government obligations	$	24,782	$	—	$	—	$	—	$	24,782
CLOs(1)	$	—	$	—	$	207,147	$	—	$	207,147
Included within investments of consolidated entities:
U.S. government obligations	$	237,964	$	—	$	—	$	—	$	237,964
Investments in funds	—		—		—		306,590		306,590
Investments of Consolidated Entities	$	237,964	$	—	$	—	$	306,590	$	544,554
Liabilities, at Fair Value
Warrants	$	—	$	—	$	24,163	$	—	$	24,163
Liabilities of consolidated entities:
Warrants	$	596	$	—	$	—	$	—	$	596
Notes Payable	$	—	$	—	$	196,106	$	—	$	196,106

_______________

(1) As of December 31, 2022, investments in CLOs had contractual principal amounts of $212.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.

Reconciliation of Fair Value Measurements Categorized within Level III

Gains and losses on investments categorized within Level III, excluding those related to investments of consolidated entities and foreign currency translation adjustments, are recorded within net 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), and gains and losses related to investment of consolidated entities are recorded within net gains (losses) of consolidated entities. Amortization of premium, accretion of discount and foreign exchange gains and losses on non-U.S. dollar investments are also included within gains and losses in the tables below. Changes in fair value of warrant liabilities are included in other income 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 and in the second quarter of 2023, the warrants expired worthless as the SPAC was liquidated. Changes in fair value of warrant liabilities and notes payable of the consolidated entities are included in net gains (losses) of consolidated entities in the consolidated statements of operations. The Company elected to measure its investments in CLOs, U.S. government obligations and notes payable of the consolidated fund at fair value through consolidated net (loss) income in order to simplify its accounting for these instruments.

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the three months ended June 30, 2023 and 2022:

	March 31, 2023		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2023
	(dollars in thousands)
Assets, at Fair Value
Included within investments
CLOs	$	207,030	$	—	$	—	$	544	$	(3,094)	$	2,778	$	880	$	208,138
Liabilities, at Fair Value
Warrants	$	23,989	$	—	$	—	$	—	$	—	$	(434)	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	197,813	$	—	$	—	$	—	$	—	$	(7,477)	$	—	$	205,290
	March 31, 2022		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	226,552	$	—	$	—	$	1,032	$	(26)	$	(14,269)	$	(9,658)	$	203,631
Investments of consolidated entities:
Bank Debt	$	—	$	—	$	—	$	41,792	$	—	$	(1,566)	$	—	$	40,226
Liabilities, at Fair Value
Warrants	$	40,951	$	—	$	—	$	—	$	—	$	18,740	$	—	$	22,211
Liabilities of consolidated entities:
Notes payable	$	215,733	$	—	$	—	$	—	$	—	$	13,748	$	—	$	201,985

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the six months ended June 30, 2023 and 2022:

	December 31, 2022		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2023
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	207,147	$	—	$	—	$	544	$	(8,455)	$	5,587	$	3,315	$	208,138
Liabilities, at Fair Value
Warrants	$	24,163	$	—	$	—	$	—	$	—	$	(260)	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	196,106	$	—	$	—	$	—	$	—	$	(9,184)	$	—	$	205,290

	December 31, 2021		Transfers In			Transfers Out			Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	219,510	$	—		$	—		$	29,839	$	(12,373)	$	(18,788)	$	(14,557)	$	203,631
Investments of consolidated entities:
Bank Debt	$	—	$	3,603	(1)	$	(14,666)	(1)	$	56,425	$	(3,475)	$	(1,661)	$	—	$	40,226
Liabilities, at Fair Value
Warrants	$	65,287	$	—		$	—		$	—	$	—	$	43,076	$	—	$	22,211
Liabilities of consolidated entities:
Warrants	$	7,590	$	—		$	(3,450)	(2)	$	—	$	—	$	4,140	$	—	$	—
Notes payable	$	—	$	—		$	—		$	215,733	$	—	$	13,748	$	—	$	201,985

_______________

(1) Transfers into and out of Level III in bank debt include $2.3 million related to the consolidation (Transfers In) and $14.0 million related to the subsequent deconsolidation (Transfers Out) 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.

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The table below summarizes the net change in unrealized gains and (losses) on the Company’s Level III financial instruments outstanding as of the reporting date:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	3,658	$	(23,928)	$	8,902	$	(33,346)
Included within investments of consolidated entities:
Bank debt	$	—	$	(1,566)	$	—	$	(1,566)
Liabilities, at Fair Value
Warrants	$	(434)	$	18,740	$	(260)	$	43,076
Liabilities of consolidated entities:
Notes payable	$	(7,477)	$	13,748	$	(9,184)	$	13,748

Level III Valuation Methodologies

Financial instruments classified within Level III of the fair value hierarchy are generally comprised of CLOs, warrant liabilities and notes payable of consolidated entities.

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 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 56.10% as of June 30, 2023.

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 the consolidated entity, as the Company believes the fair value of the financial assets is more observable. Refer to Note 2 in the Company’s Annual Report for additional valuation considerations of the notes payable of consolidated entities.

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 June 30, 2023. The fair value measurements for the Company’s debt obligations and repurchase agreements are categorized as Level III within the fair value hierarchy. The fair value measurements for the Company’s CLO Investments Loans (as defined in Note 7) and repurchase agreements were determined using independent pricing services. The fair value measurement for the Company’s 2020 Term Loan (as defined in Note 7) was determined using a discounted cash flow model.

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

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 six months ended June 30, 2023 and 2022. 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 June 30, 2023 and December 31, 2022, the Company’s investments in these retained interests had a fair value of $75.4 million and $78.6 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. For the six months ended June 30, 2023 and 2022, the Company received $8.0 million and $1.3 million, respectively, of interest and principal payments related to the retained interests.

The Company may from time to time refinance its investment in CLOs. If a refinanced CLO investment is considered substantially different from the original CLO investment, the refinancing is accounted for as a sale and a new refinanced CLO investment is recognized at fair value that is used to determine the amount of gain or loss on derecognition that is presented within net gains (losses) on investments in the consolidated statements of operations. If the refinancing is not considered substantially different from the original CLO investment, a new effective interest rate that equates the revised cash flows to the carrying amount of the original CLO investment is calculated and applied prospectively.

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. In accordance with GAAP consolidation guidance, the Company consolidates certain VIEs for which it is the primary beneficiary either directly or indirectly through a consolidated entity. 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.

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The table below presents the assets and liabilities of VIEs consolidated by the Company.

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Assets
Assets of consolidated entities:
Cash and cash equivalents of consolidated entities	$	408	$	3
Restricted cash and cash equivalents of consolidated entities	9,800		9,805
Investments of consolidated entities, at fair value	323,276		306,590
Other assets of consolidated entities	1,471		2,016
Total Assets	$	334,955	$	318,414
Liabilities
Liabilities of consolidated entities:
Notes payable of consolidated entities	$	205,290	$	196,106
Other liabilities of consolidated entities	1,776		1,601
Total Liabilities	$	207,066	$	197,707

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 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 other than its own capital commitments.

The table below presents the net assets of unconsolidated VIEs in which the Company has variable interests along with the maximum exposure to loss as a result of the Company’s involvement with non-consolidated VIEs:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Net assets of unconsolidated VIEs in which the Company has a variable interest	$	12,384,193	$	12,738,164
Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs:
Unearned income and fees	46,866		53,869
Income and fees receivable	17,315		41,890
Investments	249,538		245,583
Investments of consolidated entities	247,036		237,699
Unfunded commitments(1)	218,885		182,797
Maximum Exposure to Loss	$	779,640	$	761,838

_______________

(1) Includes commitments from certain employees and executive managing directors in the amounts of $82.4 million and $65.4 million as of June 30, 2023 and December 31, 2022, respectively.

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

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 June 30, 2023, 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Lease Cost
Operating lease cost	$	4,600	$	4,656	$	9,205	$	9,364
Short-term lease cost	22		44		44		54
Finance lease cost - amortization of leased assets	72		91		171		183
Finance lease cost - imputed interest on lease liabilities	15		1		30		4
Less: Sublease income	(840)		(804)		(1,637)		(1,634)
Net Lease Cost	$	3,869	$	3,988	$	7,813	$	7,971

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(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	$	5,238	$	5,165	$	10,453	$	10,491
Operating cash flows for finance leases	$	—	$	—	$	5	$	—
Finance cash flows for finance leases	$	—	$	—	$	223	$	163
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—	$	—	$	—	$	1,079

	June 30, 2023		December 31, 2022
Lease Term and Discount Rate
Weighted average remaining lease term
Operating leases	6.3 years		6.7 years
Finance leases	4.0 years		4.5 years
Weighted average discount rate
Operating leases	7.9	%	7.8	%
Finance leases	7.9	%	7.9	%

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

	Operating Leases		Finance Leases
	(dollars in thousands)
Maturity of Lease Liabilities - Contractual Payments to be Paid
July 1, 2023 to December 31, 2023	$	9,781	$	—
2024	16,529		228
2025	14,329		228
2026	15,353		228
2027	17,675		228
Thereafter	35,015		—
Total Lease Payments	108,682		912
Imputed interest	(23,587)		(131)
Total Lease Liabilities - Contractual Payments to be Paid	$	85,095	$	781

	Operating Leases
	(dollars in thousands)
Sublease Rent - Contractual Payments to be Received
July 1, 2023 to December 31, 2023	$	1,626
2024	1,920
2025	1,920
2026	1,920
2027	1,960
Thereafter	4,160
Total Sublease Rent - Contractual Payments to be Received	$	13,506

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SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

7. DEBT OBLIGATIONS AND WARRANTS

	2020 Term Loan		CLO Investments Loans		Total
	(dollars in thousands)
Maturity of Debt Obligations
July 1, 2023 to December 31, 2023	$	—	$	—	$	—
2024	—		—		—
2025	—		436		436
2026	—		—		—
2027	95,000		—		95,000
2028	—		—		—
Thereafter	—		33,297		33,297
Total Payments	95,000		33,733		128,733
Unamortized discounts & deferred financing costs	(10,700)		(184)		(10,884)
Total Debt Obligations	$	84,300	$	33,549	$	117,849

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, as amended on December 20, 2022, (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 fourth 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”). Borrowings under the 2020 Credit Agreement bear interest at a per annum rate equal to, at the Company’s option, the one, three or six-month Secured Overnight Financing Rate (“SOFR”) (subject to a 0.75% floor), plus 6.25%. With respect to interest calculated using one-month SOFR, additional rate equal to 0.05% is applied and with respect to interest calculated using three-month or six-month SOFR,

31

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

additional rate equal to 0.10% is applied. 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.

The Company expects to repay all amounts outstanding under the 2020 Term Loan and the 2020 Revolving Credit Facility in connection with the closing of the proposed transaction between the Company and Rithm Capital Corp. Refer to Note 17 for details of the proposed transaction.

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 $7.95 per share as of June 30, 2023. 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, the 2020 Credit Agreement 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.

Warrants of the Consolidated SPAC

In the second quarter of 2023, the SPAC was liquidated in accordance with its charter and the warrants expired worthless. 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 had 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 were subject to other customary terms common for instruments of this type. The Company eliminated the SPAC warrants it held in consolidation.

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 $127.8 million were acquired by the Company and eliminated in consolidation. The notes held by the Company consisted of $20.0 million of Class A, $20.0 million of Class C and $87.8 million of subordinated notes. Changes in the fair value of the notes payable of the structured alternative investment solution are presented within net gains (losses) of consolidated entities in the consolidated statements of operations. The fair value of the notes payable as of June 30, 2023, was $205.3 million. The notes payable mature in May 2037.

32

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The table below summarizes material terms of the notes payable:

	Class A Notes			Class B Notes			Class C Notes			Subordinated Notes(1)
	(dollars in thousands)
Type	Senior Secured			Senior Secured			Mezzanine Secured			Unsecured
Initial principal amount	$	140,000		$	70,000		$	35,000		$	105,000
Initial interest rate	4.25		%	6.00		%	6.75		%	N/A
Interest rate after step up and effective date(2)	6.25%; May 2028			8.00%; May 2029			9.50%; May 2025			N/A

_______________

(1) Subordinated 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.

(2) Interest rate after a one time step up in basis at the indicated effective date.

See Note 2 in the Company’s Annual Report 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 June 30, 2023, 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 the Company’s consolidated entities have no recourse to the Company.

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 with fair values of $35.3 million and $40.0 million as of June 30, 2023 and December 31, 2022, respectively.

33

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

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 final maturity date for each CLO Investments Loan is the earlier of the contractual 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. The timing of principal payments on CLO Investments Loans is contingent on principal payments made to the Company on the investments in CLOs and the CLO Investments Loans may amortize well in advance of their contractual maturity dates.

Initial Borrowing Date	Contractual Rate	Contractual Maturity Date	Carrying Value
			June 30, 2023		December 31, 2022
			(dollars in thousands)
June 7, 2017	LIBOR plus 1.48%	November 16, 2029	$	13,974	$	16,835
August 2, 2017	LIBOR plus 1.41%	January 21, 2030	19,139		21,594
January 19, 2022	EURIBOR plus 1.50%	December 15, 2023	—		2,285
June 1, 2023	EURIBOR plus 1.85%	April 12, 2025	436		—
			$	33,549	$	40,714

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 June 30, 2023, €43.3 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.

34

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The table below presents securities sold under agreements to repurchase that are offset, if any, as well as securities transferred to the counterparty 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 Repurchase	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities in the Consolidated Balance Sheet		Securities Transferred		Net Amount
	(dollars in thousands)
As of June 30, 2023	$	169,721	$	—	$	169,721	$	164,202	$	5,519
As of December 31, 2022	$	166,632	$	—	$	166,632	$	157,107	$	9,525

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 to the counterparty under agreement to repurchase by class of collateral pledged:

	Investments in CLOs
Securities Sold under Agreements to Repurchase	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
	(dollars in thousands)
As of June 30, 2023	$	—	$	—	$	—	$	169,721	$	169,721
As of December 31, 2022	$	—	$	—	$	—	$	166,632	$	166,632

9. OTHER ASSETS, NET

The following table presents the components of other assets, net as reported in the consolidated balance sheets:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Fixed Assets:
Leasehold improvements	$	47,736	$	47,736
Computer hardware and software	44,680		44,603
Furniture, fixtures and equipment	8,013		8,013
Accumulated depreciation and amortization	(81,468)		(79,390)
Fixed assets, net	18,961		20,962
Goodwill	22,691		22,691
Prepaid expenses	14,174		16,698
Cloud computing costs	12,702		9,940
Redemption receivable(1)	—		28,721
Other	8,964		7,430
Total Other Assets, Net	$	77,492	$	106,442

_______________

(1) Represents amounts receivable on a redeemed investment in a fund.

35

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

10. OTHER LIABILITIES

The following table presents the components of other liabilities as reported in the consolidated balance sheets:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Accrued expenses	$	16,154	$	20,925
Uncertain tax positions	8,250		8,250
Due to funds(1)	3,172		3,854
Other	7,607		10,020
Total Other Liabilities	$	35,183	$	43,049

_______________

(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.

11. REVENUES

The following table presents management fees and incentive income recognized as revenues for the three months ended June 30, 2023 and 2022:

	Three Months Ended June 30,
	2023				2022
	Management Fees		Incentive Income		Management Fees		Incentive Income
	(dollars in thousands)
Multi-strategy funds	$	29,268	$	407	$	38,612	$	(835)
Credit
Opportunistic credit funds	12,145		3,303		12,342		102
Institutional Credit Strategies	12,271		—		11,808		—
Real estate funds	8,758		586		9,008		45,313
Total	$	62,442	$	4,296	$	71,770	$	44,580

The following table presents management fees and incentive income recognized as revenues for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023				2022
	Management Fees		Incentive Income		Management Fees		Incentive Income
	(dollars in thousands)
Multi-strategy funds	$	60,150	$	723	$	78,592	$	120
Credit
Opportunistic credit funds	24,681		14,122		25,166		19,905
Institutional Credit Strategies	23,738		—		23,391		—
Real estate funds	17,581		29,737		18,058		46,197
Total	$	126,150	$	44,582	$	145,207	$	66,222

36

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

The following table presents the composition of the Company’s income and fees receivable as of June 30, 2023 and December 31, 2022:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Management fees	$	24,946	$	25,402
Incentive income	5,027		30,958
Income and Fees Receivable	$	29,973	$	56,360

The Company recognizes management fees over the period in which the performance obligation is satisfied, and are generally recognized at the end of each reporting period. 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 June 30, 2023 and December 31, 2022:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Management fees	$	1	$	2
Incentive income	46,865		53,867
Unearned Income and Fees	$	46,866	$	53,869

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 six months ended June 30, 2023 and 2022 the Company recognized $26.3 million and $41.4 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.

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.

37

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Statutory U.S. federal income tax rate	21.00	%	21.00	%	21.00	%	21.00	%
Loss (income) passed through to noncontrolling interests	-14.82	%	13.60	%	63.28	%	31.73	%
Foreign income taxes	-11.92	%	5.14	%	80.72	%	-1.10	%
RSU/RSA excess income tax benefit or expense	0.12	%	-1.24	%	38.26	%	-85.00	%
State and local income taxes	13.06	%	16.21	%	31.85	%	156.82	%
Nondeductible amortization of Partner Equity Units	-4.72	%	2.54	%	31.78	%	143.06	%
Foreign tax credits and deductions	2.50	%	-1.08	%	-16.95	%	0.23	%
Change in fair value of warrants	-1.14	%	41.17	%	1.10	%	-591.40	%
Disallowed executive compensation	-10.08	%	-20.63	%	66.55	%	256.31	%
Other, net	-3.17	%	-0.52	%	15.37	%	3.31	%
SPAC Loss	17.96	%	—	%	-57.79	%	—	%
Effective Income Tax Rate	8.80	%	76.19	%	275.17	%	-65.04	%

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 June 30, 2023 and December 31, 2022, the Company had a liability for unrecognized tax benefits of $8.3 million. As of and for the six months ended June 30, 2023, the Company did not accrue interest or penalties related to uncertain tax positions. As of June 30, 2023, 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 June 30, 2023.

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Professional services	$	8,712	$	6,177	$	20,368	$	11,641
Occupancy and equipment	6,802		6,900		13,501		13,990
Information processing and communications	5,882		5,175		11,532		10,201
Recurring placement and related service fees	3,656		5,182		7,282		10,431
Insurance	2,318		2,228		4,635		4,435
Business development	984		797		2,020		1,295
Other expenses	1,574		(34)		4,385		1,748
Total General, Administrative and Other	$	29,928	$	26,425	$	63,723	$	53,741

38

14. EARNINGS (LOSS) PER CLASS A SHARE

Basic earnings (loss) per Class A Share is computed by dividing the net earnings (loss) attributable to Class A Shareholders by the weighted-average number of Class A Shares outstanding for the period.

For the three months ended June 30, 2023 and 2022, the Company included 207,906 and 163,136 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 (loss) earnings per Class A Share. For the six months ended June 30, 2023 and 2022 the Company included 205,804 and 174,974 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 unvested RSAs, Group P Units or PSUs subject to service and market conditions in the calculation of dilutive earnings (loss) per Class A Share, as the applicable market 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 earnings (loss) attributable to Class A Shareholders is presented net of tax.

The following tables present the computation of basic and diluted earnings (loss) per Class A Share:

Three Months Ended June 30, 2023	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	3,654	25,179,467	$	0.15
Effect of dilutive securities:
Group A Units	(8,446)		15,025,994			—
Group E Units	—		—			13,020,839
RSUs	—		—			2,532,586
RSAs	—		—			1,096,970
Warrants	—		—			4,338,015
Diluted	$	(4,792)	40,205,461	$	(0.12)

39

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

Three Months Ended June 30, 2022	Net Loss Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Loss Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	(8,052)	25,514,364	$	(0.32)
Effect of dilutive securities:
Group A Units	—		—			15,025,994
Group E Units	—		—			13,009,158
RSUs	—		—			2,605,627
RSAs	—		—			1,575,134
Warrants	(15,702)		1,051,428			—
Diluted	$	(23,754)	26,565,792	$	(0.89)

Six Months Ended June 30, 2023	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	12,146	25,176,667	$	0.48
Effect of dilutive securities:
Group A Units	(14,127)		15,025,994			—
Group E Units	—		—			13,019,799
RSUs	—		—			2,304,905
RSAs	—		—			1,084,688
Warrants	—		—			4,338,015
Diluted	$	(1,981)	40,202,661	$	(0.05)

Six Months Ended June 30, 2022	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	8,830	26,052,478	$	0.34
Effect of dilutive securities:
Group A Units	—		—			15,025,994
Group E Units	—		—			13,009,157
RSUs	—		—			2,557,642
RSAs	—		—			1,312,520
Warrants	(36,341)		1,558,579			—
Diluted	$	(27,511)	27,611,057	$	(1.00)

40

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

15. RELATED PARTY TRANSACTIONS

Due from Related Parties

Amounts due from related parties relate primarily to amounts due from the funds for expenses paid on their behalf. These amounts are reimbursed to the Company on an ongoing basis.

Certain Amounts Related to Tax Receivable Agreement Liability

Amounts due to related parties relate primarily to future payments owed to certain trusts related to Daniel S. Och, under the tax receivable agreement, as discussed further in Note 16. The tax receivable agreement liability was $173.4 million as of June 30, 2023, and $64.7 million of the balance was due to related parties. The Company made payments totaling $17.4 million, and $16.9 million under the tax receivable agreement (inclusive of interest thereon) in the six months ended June 30, 2023 and 2022, respectively, of which $7.7 million and $7.4 million were paid to related parties, respectively. $17.4 million was paid during the three months ended June 30, 2023 and no payments were made in the three months ended June 30, 2022.

Management Fees and Incentive Income Earned from Related Parties and Waived Fees

The Company earns substantially all of its management fees and incentive income from the funds, which are considered related parties as the Company manages the operations of and makes investment decisions for these funds.

As of June 30, 2023 and December 31, 2022, respectively, approximately $838.9 million and $906.6 million of the Company’s Assets Under Management represented investments by the Company, its executive managing directors, employees and certain other related parties in the Company’s funds. As of June 30, 2023 and December 31, 2022, approximately 40% and 43%, respectively, of these Assets Under Management were not charged management fees or incentive income.

The following table presents management fees and incentive income charged on investments held by the Company’s executive managing directors, employees and certain other related parties:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Fees charged on investments held by related parties:
Management fees	$	930	$	1,320	$	1,860	$	2,159
Incentive income	$	65	$	1,533	$	973	$	2,031

Investment in SPAC

The SPAC did not consummate an initial business combination within the time period required by its charter. As a result, in second quarter of 2023, the SPAC redeemed all of its outstanding public shares for cash and the private placement and public warrants have become worthless. The SPAC’s dissolution is in progress. In a private placement concurrent with the initial public offering of the SPAC the Company sponsored, SAC I sold warrants to Sculptor Acquisition Sponsor I, LLC, a subsidiary of the Company, for total gross proceeds of $11.2 million. Sculptor Acquisition Sponsor I, LLC owned the majority of the Class B ordinary shares outstanding of SAC I, and consolidated SAC I under the voting interest model prior to its liquidation, and therefore the private placement warrants and Class B ordinary shares held by the Company were eliminated upon consolidation. Refer to Note 2 in the Company’s Annual Report for additional details on the SPAC.

Investment in Structured Alternative Investment Solution

In the first quarter of 2022, the Company closed on a $350.0 million structured alternative investment solution, a collateralized financing vehicle consolidated by the Company. The Company invested approximately $127.8 million in the vehicle.

41

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

Refer to Note 2 in the Company’s Annual Report and Note 4 for additional details on the structured alternative investment solution.

16. COMMITMENTS AND CONTINGENCIES

Tax Receivable Agreement

The purchase of Group A Units from current and former executive managing directors and the Ziffs with the proceeds from the 2007 Offerings, and subsequent taxable exchanges by them of Group A Units, Group E Units and Group P Units (“Partner Equity Units”) for Class A Shares on a one-for-one basis (or, at the Company’s option, a cash equivalent), resulted, and, in the case of future exchanges, are anticipated to result, in an increase in the tax basis of the assets of the Sculptor Operating Group that would not otherwise have been available. The Company anticipates that any such tax basis adjustment resulting from an exchange will be allocated principally to certain intangible assets of the Sculptor Operating Group, and the Company will derive its tax benefits principally through amortization of these intangibles over a 15-year period. Consequently, these tax basis adjustments will increase, for tax purposes, the Company’s depreciation and amortization expenses and will therefore reduce the amount of tax that Sculptor Corp and any other future corporate taxpaying entities that acquire Group B Units in connection with an exchange, if any, would otherwise be required to pay in the future. Accordingly, pursuant to the tax receivable agreement, such corporate taxpaying entities (including Sculptor Capital Management, Inc. once it became treated as a corporate taxpayer following the Company’s conversion from a partnership to a corporation for U.S. federal income tax purposes, effective April 1, 2019 (the “Corporate Classification Change”), have agreed to pay the executive managing directors and the Ziffs 75% of the amount of cash savings, if any, in federal, state and local income taxes in the U.S. that these entities actually realize related to their units as a result of such increases in tax basis. For tax years prior to 2019, such percentage was 85% of such annual cash savings under the tax receivable agreement.

In connection with the Recapitalization, the Company amended the tax receivable agreement to provide that, conditioned on Sculptor Capital Management, Inc. electing to be classified as, or converting into, a corporation for U.S. tax purposes, (i) no amounts are due or payable with respect to the 2017 tax year, (ii) only partial payments equal to 85% of the excess of such cash savings that would otherwise be due over 85% of such cash savings determined assuming that taxable income equals Economic Income are due and payable in respect of the 2018 tax year and (iii) the percentage of cash savings required to be paid with respect to the 2019 tax year and thereafter, as well as with respect to cash savings from subsequent exchanges, is reduced to 75%.

In connection with the departure of certain former executive managing directors since the 2007 Offerings, the right to receive payments under the tax receivable agreement by those former executive managing directors was contributed to the Sculptor Operating Group. As a result, the Company expects to pay to the other executive managing directors and the Ziffs approximately 69% of the amount of cash savings, if any, in federal, state and local income taxes in the U.S. that the Company realizes as a result of such increases in tax basis with respect to future tax years. To the extent that the Company does not realize any cash savings, it would not be required to make corresponding payments under the tax receivable agreement.

The Company recorded its initial estimate of future payments under the tax receivable agreement as a decrease to additional paid-in capital and an increase in the tax receivable agreement liability in the consolidated financial statements. Subsequent adjustments to the liability for future payments under the tax receivable agreement related to changes in estimated future tax rates or state income tax apportionment are recognized through current period earnings in the consolidated statements of operations.

The estimate of the timing and the amount of future payments under the tax receivable agreement involves several assumptions that do not account for the significant uncertainties associated with these potential payments, including an assumption that Sculptor Corp will have sufficient taxable income in the relevant tax years to utilize the tax benefits that would give rise to an obligation to make payments. The actual timing and amount of any actual payments under the tax receivable agreement will vary based upon these and a number of other factors. As of June 30, 2023, the estimated future payment under the

42

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

tax receivable agreement was $173.4 million, which is recorded in the tax receivable agreement liability balance on the consolidated balance sheets.

The table below presents management’s estimate as of June 30, 2023, of the maximum amounts that would be payable under the tax receivable agreement assuming that the Company will have sufficient taxable income each year to fully realize the expected tax savings. In light of the numerous factors affecting the Company’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table. The impact of any net operating losses is included in the “Thereafter” amount in the table below.

	Potential Payments Under Tax Receivable Agreement
	(dollars in thousands)
July 1, 2023 to December 31, 2023	$	—
2024	18,040
2025	5,079
2026	37,628
2027	31,415
Thereafter	81,189
Total Payments	$	173,350

Litigation

On August 24, 2022, a complaint under Section 220 of Delaware’s general corporation law, which allows shareholders to inspect corporate books and records, was filed by Daniel S. Och, the Founder of Och-Ziff and four former Och-Ziff executive managing directors. In April 2022, the Founder and these former executive managing directors made a demand to inspect books and records relating to alleged corporate governance concerns in connection with the promotion of James S. Levin to Chief Executive Officer, a new executive compensation plan approved by the Board of Directors in December 2021, and other matters related to the Board’s exercise of its duties. Despite the voluntary production by the Company of extensive documentation in response to that demand, the Founder and the former executive managing directors filed the Section 220 complaint to compel additional production.

On November 18, 2022, the parties announced a settlement of the matter whereby the Founder and the former executive managing directors dismissed the Section 220 complaint with prejudice and in return, among other things, the Company agreed to produce certain additional books and records as well as to issue a press release announcing the formation of a special committee of the Board.

From time to time, the Company is involved in litigation and claims incidental to the conduct of the Company’s business. The Company is also subject to extensive scrutiny by regulatory agencies globally that have, or may in the future have, regulatory authority over the Company and its business activities.

The Company accrues a liability for legal proceedings only when those matters present loss contingencies that it believes are both probable and reasonably estimable. As of June 30, 2023, the Company does not have any potential liability related to any current legal proceeding or claim that would individually, or in the aggregate, materially affect its results of operations, financial position or cash flows.

Investment Commitments

The Company has unfunded capital commitments of $219.0 million to certain funds it manages, of which $91.8 million relates to commitments of the Company’s consolidated structured alternative investment solution. The remaining $127.2 million

43

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

relates to commitments of the Company to unconsolidated funds. Approximately $82.4 million of the Company’s commitments will be funded by contributions to the Company from certain employees and executive managing directors. The Company expects to fund these commitments over the approximately next 5 years. The Company has guaranteed these commitments in the event any executive managing director fails to fund any portion when called by the fund. The Company has historically not funded any of these commitments and does not expect to in the future, as these commitments are expected to be funded by the Company’s executive managing directors individually.

Other Contingencies

In the normal course of business, the Company enters into contracts that provide a variety of general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

Additionally, the Company has agreements with certain of the funds it manages to reimburse certain expenses in excess of an agreed-upon cap. During the six months ended June 30, 2023 and 2022, these amounts were not material.

17. SUBSEQUENT EVENTS

On July 23, 2023, the Company entered into an Agreement and Plan of Merger (including the schedules and exhibits thereto, the “Merger Agreement”), by and among the Company, Rithm Capital Corp., a Delaware corporation (“Rithm”), the Sculptor Operating Partnerships, Calder Sub, Inc., a Delaware corporation and subsidiary of Rithm (“Merger Sub Inc.”), Calder Sub I, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub I”), Calder Sub II, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub II”), and Calder Sub III, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub III” and, collectively with Merger Sub I and Merger Sub II, the “LP Merger Subs” and, collectively with Merger Sub Inc., the “Merger Subs”).

Pursuant to the terms of the Merger Agreement, (i) Merger Sub Inc. will merge with and into the Company, with the Company surviving such merger as the surviving corporation (the “Surviving Corporation”) (the “Public Merger”), (ii) Merger Sub I will merge with and into Sculptor Capital LP, with Sculptor Capital LP surviving such merger as the surviving partnership, (iii) Merger Sub II will merge with and into Sculptor Capital Advisors LP, with Sculptor Capital Advisors LP surviving such merger as the surviving partnership, and (iv) Merger Sub III will merge with and into Sculptor Capital Advisors II LP, with Sculptor Capital Advisors II LP surviving such merger as the surviving partnership (collectively, the “Mergers”).

The merger of Merger Sub Inc. and the Company will become effective at the time the certificate of merger is filed with the Delaware Secretary of State or at such later effective time and date that is agreed to by Rithm and the Company and specified in the certificate of merger (the “Effective Time”) and the mergers of each of the Sculptor Operating Partnerships will become effective at the time the applicable certificates of merger is filed with the Delaware Secretary of State or at such later effective time and date that is agreed to by Rithm and the Company and specified in the applicable certificates of merger.

On the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, (i) each Class A Share issued and outstanding immediately prior to the Effective Time (but excluding (x) any shares of Class A Shares and Class B Shares (the “ Company Common Stock” that are owned directly by Rithm, Merger Sub Inc. or any of their subsidiaries immediately prior to the Effective Time or held in treasury of the Company, (y) any shares of the Company Common Stock as to which appraisal rights have been properly exercised and (z) any unvested and outstanding award of service-based restricted shares of the Company Common Stock granted pursuant to the Company’s equity incentive plans to be cancelled without payment in respect thereof pursuant to Section 3.06(c) of the Merger Agreement) will be cancelled and converted into the right to receive an amount in cash equal to $11.15, without interest (the “Public Merger Consideration”), (ii) each Class B Share issued and outstanding immediately prior to the Effective Time will be cancelled and no payment will be made in respect thereof and (iii) each issued and outstanding share of common stock, par value $0.01 per share, of Merger Sub Inc. issued and outstanding immediately prior to the Effective Time will be converted into and become one (1) fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

44

SCULPTOR CAPITAL MANAGEMENT, INC. — UNAUDITED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2023

Holders of Class A Units and Class A-1 Units of the Sculptor Operating Partnerships are expected to be offered the opportunity to enter into a rollover agreement (the “Rollover Agreement”) with Rithm, Calder Holdco I, LP, a Delaware limited partnership and subsidiary of Rithm (“Holdco I”), Calder Holdco II, LP, a Delaware limited partnership and subsidiary of Rithm (“Holdco II”), and Calder Holdco III, LP, a Delaware limited partnership and subsidiary of Rithm (“Holdco III” and collectively with Holdco I and Holdco II, the “Holdcos”). Holders of such Sculptor Operating Partnership units that elect to enter into the Rollover Agreement will agree, subject to the terms and conditions set forth in the Rollover Agreement, immediately prior to the closing, to contribute certain of their equity interests in the Sculptor Operating Partnerships (the “Rollover Interests”) to the Holdcos in exchange for a number of equity interests in each of the Holdcos having an aggregate value equal to the contributed value of the Rollover Interests (the “Rollover”). The closing of the Rollover will be conditioned upon the holders of at least 50% of the issued and outstanding Class A Units and Class A-1 Units of the Sculptor Operating Partnerships entering into the Rollover Agreement prior to the date of the special meeting of shareholders related to the Mergers.

The Merger Agreement contains certain customary representations and warranties made by each party, which, in the case of the Company and the Sculptor Operating Partnerships, are qualified by the confidential disclosures provided to Rithm in connection with the Merger Agreement, as well as matters included in the Company’s reports filed with the SEC prior to the date of the Merger Agreement. Rithm, the Company and the Sculptor Operating Partnerships have agreed to various customary covenants, including covenants regarding the conduct of the Company’s business prior to the closing of the Mergers, covenants requiring the Company to recommend that its stockholders approve the Merger Agreement and covenants prohibiting the Company from soliciting alternative acquisition proposals or providing information to or engaging in discussions with third parties, in each case, except in limited circumstances as provided in the Merger Agreement.

The Merger Agreement also includes customary termination rights for both the Company and Rithm, subject, in certain circumstances, to the payment by the Company of a termination fee of approximately $16.6 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the related notes included in Item 1 of this quarterly report and with our audited consolidated financial statements and the related notes included in our Annual Report. In addition, this discussion and analysis contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described under the heading “Forward-Looking Statements” in this report, and under the heading “Item 1A. Risk Factors” in this quarterly report and in our Annual Report, and in other reports we file with the SEC, that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. An investment in our Class A Shares is not an investment in any of our funds.

Overview

Overview of Our Business

Sculptor Capital is a leading global alternative asset manager and a specialist in opportunistic investing. With offices in New York, London, Hong Kong and Shanghai, we provide asset management services and investment products across Credit, Real Estate and Multi-Strategy platforms with approximately $34.0 billion in Assets Under Management as of August 1, 2023. We serve our global client base through our commingled funds, separate accounts and specialized products. For over 25 years, the Company has pursued consistent outperformance by building an operating model and culture which balance the ability to act swiftly on market opportunity with rigorous diligence that minimizes risk. The Company’s model is driven by a global team that is predominantly home-grown, long tenured and incentivized to put client outcomes first. The Company’s capabilities span all major geographies and asset classes, including corporate credit, structured credit, real estate debt and equity, fundamental equities, merger arbitrage, and convertible and derivative arbitrage.

We manage dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds, multi-strategy funds, and other alternative investment vehicles. Through Institutional Credit Strategies, our asset management platform that invests in performing credits, we manage CLOs, aircraft securitization vehicles, collateralized bond obligations (“CBOs”), structured alternative investment solutions, commingled products and other customized solutions for clients.

Pending Merger with Rithm Capital

On July 23, 2023, we entered into an Agreement and Plan of Merger (including the schedules and exhibits thereto, the “Merger Agreement”), by and among the Company, Rithm Capital Corp., a Delaware corporation (“Rithm”), the Sculptor Operating Partnerships, Calder Sub, Inc., a Delaware corporation and subsidiary of Rithm (“Merger Sub Inc.”), Calder Sub I, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub I”), Calder Sub II, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub II”), and Calder Sub III, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub III” and, collectively with Merger Sub I and Merger Sub II, the “LP Merger Subs” and, collectively with Merger Sub Inc., the “Merger Subs”).

Pursuant to the terms of the Merger Agreement, (i) Merger Sub Inc. will merge with and into the Company, with the Company surviving such merger as the surviving corporation, (ii) Merger Sub I will merge with and into Sculptor Capital LP, with Sculptor Capital LP surviving such merger as the surviving partnership, (iii) Merger Sub II will merge with and into Sculptor Capital Advisors LP, with Sculptor Capital Advisors LP surviving such merger as the surviving partnership, and (iv) Merger Sub III will merge with and into Sculptor Capital Advisors II LP, with Sculptor Capital Advisors II LP surviving such merger as the surviving partnership (collectively, the “Mergers”).

For additional information related to the Merger Agreement, please refer to our Current Report on Form 8-K filed with the SEC on July 24, 2023 and Note 17 to the accompanying unaudited consolidated financial statements.

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Overview of Our Financial Results

As a global alternative asset manager, our results of operations are impacted by a variety of factors, including conditions in the global financial markets and economic and political environments. Fueled by a sharp reversal in investor sentiment, risk assets performed well during the quarter as expectations of an economic soft-landing set in. Implied volatility collapsed virtually across the board to pre-pandemic levels, rate volatility being the one note-worthy exception. Despite continued signs of stress and fragility materializing across global markets against a mixed and uncertain economic picture, in the second quarter of 2023, Sculptor Credit Opportunities Master Fund and Sculptor Master Fund extended strong year-to-date absolute and relative performance versus peer indices. Market conditions remain challenged, and we believe both our funds, through their unconstrained investment style, and our platform, from our business diversification and strong balance sheet, are well positioned to navigate these challenging conditions.

As of June 30, 2023, our AUM was $34.8 billion, a decrease of $2.1 billion year-over-year, and our longer-term AUM was $25.5 billion or 73% of our total AUM. Our AUM decreased primarily due to (i) net outflows in multi-strategy funds and (ii) distributions and other reductions in real estate funds, Institutional Credit Strategies, and opportunistic credit funds. These decreases were partially offset by (i) performance related appreciation in multi-strategy and opportunistic credit funds and (ii) net inflows in real estate funds and Institutional Credit Strategies.

We reported a GAAP net income of $3.7 million in the second quarter of 2023, compared to net loss of $8.1 million for the second quarter of 2022, and GAAP net income of $12.1 million in the first half of 2023, compared to a GAAP net income of $8.8 million in the first half of 2022.

Management fees were $62.4 million in the second quarter of 2023, a decrease of $9.3 million compared to the second quarter of 2022. Our management fees fell primarily due to lower average assets under management in our multi-strategy funds, as a result of net outflows as well as negative fund performance in 2022.

Incentive income was $4.3 million in the second quarter of 2023 driven primarily by crystallizations in our opportunistic credit funds.

Expenses were $94.9 million in the second quarter of 2023, down by $16.4 million from the second quarter of 2022. This was primarily driven by lower compensation and benefits expenses, largely due to decreases in bonus expense and equity-based compensation, partially offset by elevated professional services fees, primarily legal costs.

Other income in the second quarter of 2023 increased by $24.4 million from the second quarter of 2022, primarily as a result of higher gains on our investments and higher gains of consolidated entities partially offset by changes in the fair value of warrant liabilities, which generated losses for the quarter compared to gains in the prior year period.

Please see the “Results of Operations” section of this MD&A for commentary regarding changes in net (loss) income attributable to noncontrolling interests and changes in the redemption value of redeemable noncontrolling interests.

Economic Income was $3.2 million for the second quarter of 2023, compared to $32.6 million for the second quarter of 2022. Economic Income was $21.7 million in the first half of 2023, compared to $61.8 million in the first half of 2022. The decreases were primarily due to lower incentive income, which was partially offset by lower profit sharing bonus expense, lower management fees, and higher general, administrative and other expenses, largely as a result of elevated legal costs for the activities of the Special Committee of our Board of Directors.

Economic Income is a non-GAAP measure. For additional information regarding non-GAAP measures, as well as for a discussion of the drivers of the year-over-year change in Economic Income, please see “—Economic Income Analysis.”

Managing Business Performance

Our financial results are primarily driven by the combination of our AUM and the investment performance of our funds. Both of these factors directly affect the revenues we earn from management fees and incentive income. Growth in AUM in our funds and positive investment performance of our funds drive growth in our revenues and earnings. Conversely, poor investment

47

performance slows our growth by decreasing our AUM and increasing the potential for redemptions from our funds, which would have a negative effect on our revenues and earnings.

We typically accept capital from new and existing investors in our multi-strategy and certain open-end opportunistic credit funds on a monthly basis on the first day of each month. Investors in these funds (other than with respect to capital invested in Special Investments) typically have the right to redeem their interests either following an initial lock-up period of one to four years, or on a quarterly basis for certain multi-strategy fund investors. Following the expiration of these lock-up periods, subject to certain limitations, investors may redeem capital generally on a quarterly, annual or three-year basis upon giving 30 to 90 days prior written notice. The lock-up requirements for our funds may generally be waived or modified at the sole discretion of each funds’ general partner or board of directors, as applicable.

With respect to investors with quarterly redemption rights, requests for redemptions submitted during a quarter generally reduce AUM on the first day of the following quarter. Accordingly, quarterly redemptions generally will have no impact on management fees during the quarter in which they are submitted. Instead, these redemptions will reduce management fees in the following quarter. With respect to investors with annual redemption rights, redemptions paid prior to the end of a quarter impact AUM in the quarter in which they are paid, and therefore impact management fees for that quarter.

Investors in our closed-end credit funds, securitization vehicles, real estate and certain other funds are not able to redeem their investments. In those funds, investors generally make a commitment that is funded over an investment period (or at launch for our securitization vehicles). Upon the expiration of the investment period, the investments are then sold or realized over time, and distributions are made to the investors in the fund.

Information with respect to our AUM throughout this report, including the tables set forth below, includes investments by us, our executive managing directors, employees and certain other related parties. As of June 30, 2023, approximately 2% of our AUM represented investments by us, our executive managing directors, employees and certain other related parties in our funds. As of that date, approximately 40% of these affiliated AUM are not charged management fees and are not subject to an incentive income calculation. Additionally, to the extent that a fund is an investor in another fund or vehicle, we waive or rebate a corresponding portion of the management fees charged to the fund.

As further discussed below in “—Understanding Our Results—Revenues—Management Fees,” we generally calculate management fees based on AUM as of the beginning of each quarter. The AUM in the tables below are presented net of management fees and incentive income as of the end of the period. Accordingly, the AUM presented in the tables below are not the amounts used to calculate management fees for the respective periods.

Appreciation (depreciation) in the tables below reflects the aggregate net capital appreciation (depreciation) for the entire period and is presented on a total return basis, net of all fees and expenses (except incentive income on Special Investments), and includes the reinvestment of all dividends and other income. Management fees and incentive income vary by product.

As a result of the performance-related depreciation in Sculptor Master Fund and Sculptor Credit Opportunities Master Fund in 2022, we will not earn incentive income in future periods on the AUM of certain investors until such losses from 2022 have been recovered. As of June 30, 2023, we had $507.5 million of fund-related losses remaining in Sculptor Master Fund, versus $1.4 billion as of December 31, 2022, representing substantial progress against our high watermark position given fund appreciation year-to-date. In Sculptor Credit Opportunities Master Fund, we fully recovered our losses from 2022 given fund appreciation year-to-date.

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Summary of Changes in AUM

The tables below present the changes to our AUM for the respective periods based on the type of funds or investment vehicles we manage.

	Three Months Ended June 30, 2023
	March 31, 2023		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2023
	(dollars in thousands)
Multi-strategy funds	$	9,288,762	$	(1,004,044)	$	—	$	234,508	$	—	$	8,519,226
Credit
Opportunistic credit funds	5,937,035		(48,803)		(214,046)		156,959		—		5,831,145
Institutional Credit Strategies	16,344,941		(8,004)		(182,506)		4,110		16,646		16,175,187
Real estate funds	4,516,065		35,790		(329,822)		6,703		4,215		4,232,951
Total	$	36,086,803	$	(1,025,061)	$	(726,374)	$	402,280	$	20,861	$	34,758,509

	Three Months Ended June 30, 2022
	March 31, 2022		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2022
	(dollars in thousands)
Multi-strategy funds	$	11,076,217	$	(137,889)	$	—	$	(1,188,851)	$	—	$	9,749,477
Credit
Opportunistic credit funds	6,309,552		75,275		(103,589)		(254,941)		—		6,026,297
Institutional Credit Strategies	16,657,708		123,637		(52,195)		(2,801)		(266,485)		16,459,864
Real estate funds	4,590,385		77,782		(33,348)		333		(11,200)		4,623,952
Total	$	38,633,862	$	138,805	$	(189,132)	$	(1,446,260)	$	(277,685)	$	36,859,590

	Six Months Ended June 30, 2023
	December 31, 2022		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2023
	(dollars in thousands)
Multi-strategy funds	$	9,174,103	$	(1,370,725)	$	—	$	715,848	$	—	$	8,519,226
Credit
Opportunistic credit funds	5,970,962		(41,753)		(425,339)		327,275		—		5,831,145
Institutional Credit Strategies	16,273,736		91,751		(241,646)		8,388		42,958		16,175,187
Real estate funds	4,563,692		52,791		(406,090)		15,219		7,339		4,232,951
Total	$	35,982,493	$	(1,267,936)	$	(1,073,075)	$	1,066,730	$	50,297	$	34,758,509

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	Six Months Ended June 30, 2022
	December 31, 2021		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2022
	(dollars in thousands)
Multi-strategy funds	$	11,112,445	$	172,722	$	(49)	$	(1,535,641)	$	—	$	9,749,477
Credit
Opportunistic credit funds	6,350,474		(22,853)		(103,589)		(197,735)		—		6,026,297
Institutional Credit Strategies	16,052,406		920,280		(153,396)		(2,947)		(356,479)		16,459,864
Real estate funds	4,544,862		214,393		(119,780)		333		(15,856)		4,623,952
Total	$	38,060,187	$	1,284,542	$	(376,814)	$	(1,735,990)	$	(372,335)	$	36,859,590

_______________

(1)Includes transfers between Sculptor funds.

(2)Includes the effects of changes in the par value of the underlying collateral of the CLOs, foreign currency translation changes in the measurement of AUM of our European CLOs and other funds, and changes in the portfolio appraisal value for aircraft securitization vehicles. For FP AUM, this also includes movements in or out of FP AUM.

AUM totaled $34.8 billion as of June 30, 2023. In the six months ended June 30, 2023, AUM decreased by $1.2 billion, driven by: (i) net outflows of $1.3 billion, primarily in our multi-strategy funds, and (ii) distributions and other reductions of $1.1 billion in credit and real estate funds. These decreases were partially offset by performance-related appreciation of $1.1 billion, primarily in our multi-strategy and opportunistic credit funds.

AUM net outflows of $1.3 billion in the six months ended June 30, 2023, were comprised of (i) $1.6 billion of gross outflows due to redemptions, primarily in our multi-strategy and opportunistic credit funds, and (ii) $339.7 million of gross inflows, driven primarily by $135.5 million in opportunistic credit funds due to an additional close in STAX and $94.6 million in Institutional Credit Strategies. In 2023, excluding securitization vehicles within Institutional Credit Strategies, our largest sources of gross inflows were from high net worth and family offices, foundations and endowments and pensions, while the largest sources of gross outflows were attributable to pensions, sovereign wealth and corporates and high net worth and family offices.

Also as to flows, following a strong fundraising start to 2022, inflows slowed in the second half of 2022, and we are experiencing elevated redemption requests and negative impact on our ability to raise new capital from investors into our funds so far in 2023, driven by a variety of factors, primarily the uncertainty and perceived instability created by actions taken by the founder and former Chief Executive Officer of Och-Ziff over the last year. Also relevant are market factors impacting investor allocations, idiosyncratic factors related to one or more investors (e.g., rebalancing), idiosyncratic factors related to one or more of our funds (e.g., fund performance) and other factors.

The actions (as described in the Risk Factor in our Annual Report titled, “The founder and former Chief Executive Officer of Och-Ziff has taken certain actions that have had an adverse impact on our business”) by the founder and former CEO of Och-Ziff have created headwinds for our business including negative effects on fund investor sentiment, which we expect to continue until there is a resolution that gives investors confidence that there will be no further adverse actions against us.

Distributions and other reductions of $1.1 billion in the six months ended June 30, 2023, were driven primarily by: (i) $425.3 million of distributions from our opportunistic credit funds, primarily the Customized Credit Focused Platform, (ii) $406.1 million of distributions from our real estate funds as a result of the liquidation of our SPAC and realizations as legacy funds harvest assets, primarily in Sculptor Real Estate Credit Fund I and Sculptor Real Estate Fund III, and (iii) $241.6 million of distributions from Institutional Credit Strategies primarily from paydowns in certain of our CLOs.

As of August 1, 2023, estimated AUM decreased to $34.0 billion, driven by $481.8 million of net outflows, as well as $245.6 million of distributions and other reductions. These decreases were partially offset by $118.8 million of performance-related appreciation.

In the six months ended June 30, 2022, AUM net inflows of $1.3 billion were comprised of (i) $2.4 billion of gross inflows, driven by $1.3 billion in Institutional Credit Strategies, from the launch of an additional European CLO and the close of a

50

structured alternative investment solution, $776.5 million in multi-strategy funds, primarily driven by inflows into Sculptor Master Fund, and $214.4 million in real estate funds, driven by the launch of Real Estate Credit Fund II; and (ii) $762.2 million of gross outflows due to redemptions, primarily in our multi-strategy and opportunistic credit funds. In the six months ended June 30, 2022, excluding securitization vehicles within Institutional Credit Strategies, our largest sources of gross inflows were from high net worth and family offices and related parties, while pensions and fund-of-funds were the largest source of gross outflows.

Summary of Changes in FP AUM

The tables below present the changes to our FP AUM for the respective periods based on the type of funds or investment vehicles we manage. FP AUM represents the AUM on which we earn management fees and / or incentive income.

	Three Months Ended June 30, 2023
	March 31, 2023		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2023
	(dollars in thousands)
Multi-strategy funds	$	9,187,380	$	(990,027)	$	—	$	231,448	$	(39,141)	$	8,389,660
Credit
Opportunistic credit funds	5,254,919		(94,078)		(212,625)		153,557		68,210		5,169,983
Institutional Credit Strategies	11,168,143		35,300		(104,551)		3,396		9,715		11,112,003
Real estate funds	3,819,363		32,838		(79,868)		5,071		4,206		3,781,610
Total	$	29,429,805	$	(1,015,967)	$	(397,044)	$	393,472	$	42,990	$	28,453,256

	Three Months Ended June 30, 2022
	March 31, 2022		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2022
	(dollars in thousands)
Multi-strategy funds	$	10,837,660	$	(145,836)	$	—	$	(1,160,088)	$	8,915	$	9,540,651
Credit
Opportunistic credit funds	5,730,008		71,312		(100,715)		(251,223)		50,531		5,499,913
Institutional Credit Strategies	11,337,931		136,884		(29,665)		(2,346)		(206,992)		11,235,812
Real estate funds	3,923,995		52,211		(30,724)		—		(51,200)		3,894,282
Total	$	31,829,594	$	114,571	$	(161,104)	$	(1,413,657)	$	(198,746)	$	30,170,658

	Six Months Ended June 30, 2023
	December 31, 2022		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2023
	(dollars in thousands)
Multi-strategy funds	$	9,020,989	$	(1,306,139)	$	—	$	708,191	$	(33,381)	$	8,389,660
Credit
Opportunistic credit funds	5,387,491		(189,599)		(422,177)		320,494		73,774		5,169,983
Institutional Credit Strategies	11,158,253		58,543		(132,684)		6,327		21,564		11,112,003
Real estate funds	3,717,036		47,353		(151,212)		10,909		157,524		3,781,610
Total	$	29,283,769	$	(1,389,842)	$	(706,073)	$	1,045,921	$	219,481	$	28,453,256

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	Six Months Ended June 30, 2022
	December 31, 2021		Inflows / (Outflows)(1)		Distributions / Other Reductions		Appreciation / (Depreciation)		Other(2)		June 30, 2022
	(dollars in thousands)
Multi-strategy funds	$	10,877,541	$	158,142	$	(49)	$	(1,500,539)	$	5,556	$	9,540,651
Credit
Opportunistic credit funds	5,742,605		(26,223)		(100,715)		(194,872)		79,118		5,499,913
Institutional Credit Strategies	11,142,956		458,449		(67,852)		(2,360)		(295,381)		11,235,812
Real estate funds	3,875,427		162,211		(87,487)		—		(55,869)		3,894,282
Total	$	31,638,529	$	752,579	$	(256,103)	$	(1,697,771)	$	(266,576)	$	30,170,658

_______________

(1)Includes transfers between Sculptor funds.

(2)Includes the effects of changes in the par value of the underlying collateral of the CLOs, foreign currency translation changes in the measurement of AUM of our European CLOs and other funds, and changes in the portfolio appraisal value for aircraft securitization vehicles. For FP AUM, this also includes movements in or out of FP AUM.

FP AUM totaled $28.5 billion as of June 30, 2023. FP AUM is lower than AUM primarily due to:

•Amounts held by our employees or other related parties who do not pay fees in our multi-strategy funds, opportunistic credit funds, and real estate funds

•Uncalled capital for funds where we do not earn management fees until it is invested for our opportunistic credit funds and real estate funds; and

•Fee rebates when our funds invest in the equity of CLOs in Institutional Credit Strategies, in addition to the AUM associated with the structured alternative investment solution, which becomes FP AUM once it is invested in our funds. Refer to the “Institutional Credit Strategies” section below for further details.

In the six months ended June 30, 2023, FP AUM decreased by $830.5 million, primarily as a result of drivers discussed in the Summary of Changes in AUM section above.

Weighted-Average FP AUM and Average Management Fee Rates

The table below presents our weighted-average FP AUM and average management fee rates for our FP AUM. Weighted-average FP AUM exclude the impact of second quarter investment performance for the periods presented, as these amounts generally do not impact management fees calculated for those periods. Our average management fee may vary from period to period based on the mix of products that comprise our FP AUM. The average management fee rates below consider management fees on an Economic Income basis. For reconciliations of our non-GAAP measures to the respective GAAP measures, please see “—Economic Income Reconciliations” at the end of this MD&A.

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
	(dollars in thousands)
Weighted-average fee-paying assets under management	$	28,312,783		$	31,728,559		$	28,296,076		$	31,824,604
Average management fee rates	0.83		%	0.84		%	0.84		%	0.85		%

Fund Performance Information

The tables below present performance information for the funds we manage. The return information presented represents, where applicable, the composite performance of all feeder funds that comprise each of the master funds presented. Gross return information is generally calculated using the total return of all feeder funds, net of all fees and expenses except

52

management fees and incentive income of such feeder funds and master funds, and the returns of each feeder fund include the reinvestment of all dividends and other income. Net return information is generally calculated as the gross returns less management fees and incentive income. Return information that includes Special Investments excludes incentive income on unrealized gains attributable to such investments, which could reduce returns at the time of realization. Special Investments and initial public offering investments are not allocated to all investors in the funds, and investors that were not allocated Special Investments and initial public offering investments may experience materially different returns.

The performance information presented in this “Fund Performance Information” section is not indicative of the performance of our Class A Shares and is not necessarily indicative of the future results of any particular fund, including the accrued unrecognized amounts of incentive income. An investment in our Class A Shares is not an investment in any of our funds. There can be no assurance that any of our existing or future funds will achieve similar results. The timing and amount of incentive income generated from our funds are inherently uncertain. Incentive income is a function of investment performance and realizations of investments, which vary period-to-period based on market conditions and other factors. We cannot predict when, or if, any realization of investments will occur. Incentive income recognized for any particular period is not a reliable indicator of incentive income that may be earned in subsequent periods.

Multi-Strategy Funds

Our multi-strategy funds invest globally in high-conviction investment ideas across asset classes, regions and investment strategies with a primary focus on idiosyncratic opportunities where return drivers are less sensitive to direction of broader financial markets and which tend to arise when value is obscured by attributes such as complexity, corporate actions, market dislocations, or investor misunderstandings. Additionally, we have the flexibility to take on market-directional risk when we believe that broad market dislocations have created asymmetric upside/downside potential.

The table below presents AUM and investment performance for our multi-strategy funds. AUM are generally based on the net asset value of these funds plus any unfunded commitments, if applicable. Management fees generally range from 1.00% to 2.00% annually of FP AUM. For the second quarter of 2023, our multi-strategy funds had an average management fee rate of 1.25% of FP AUM.

We generally crystallize incentive income from the majority of our multi-strategy funds on an annual basis. Incentive income is generally equal to 20% of the realized and unrealized profits attributable to each investor. A portion of the AUM in Sculptor Master Fund is subject to initial commitment periods of three years, and for certain of these assets, including assets that subsequently moved to shorter commitment periods at the end of their initial commitment period, we only earn incentive income once profits attributable to an investor exceed a preferential return, or “hurdle rate”, which is generally equal to the 3-month T-bill rate for our multi-strategy funds. Once the investment performance has exceeded the hurdle rate for these assets, we may receive a “catch-up” allocation, resulting in a potential recognition by us of a full 20% of the net profits attributable to investors in these assets upon crystallization at the end of the multi-year commitment period.

					Returns for the Six Months Ended June 30,								Annualized Returns Since Inception Through June 30, 2023
	Assets Under Management as of June 30,				2023				2022
	2023		2022		Gross		Net		Gross		Net		Gross			Net
Fund	(dollars in thousands)
Sculptor Master Fund(1)(2)	$	8,510,906	$	9,031,780	9.3	%	8.5	%	-12.6	%	-13.2	%	15.5	%	(3)	10.7	%	(3)
Other funds(2)	8,320		717,697		n/m		n/m		n/m		n/m		n/m			n/m
	$	8,519,226	$	9,749,477

_______________

n/m not meaningful

(1)The returns for the Sculptor Master Fund exclude Special Investments. Special Investments in the Sculptor Master Fund are held by investors representing a small percentage of AUM in the fund. Inclusive of these Special Investments, the returns of the Sculptor Master Fund for the six months ended June 30, 2023 were 9.3% gross and 8.5% net, for the six months ended June 30, 2022 were -12.2% gross and -12.8% net, and annualized since inception through June 30, 2023 were 15.2% gross and 10.5% net.

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(2)In the third quarter of 2022, we consolidated Sculptor Enhanced Master Fund into the Sculptor Master Fund, as a result we show the related historical AUM in Other funds

(3)The annualized returns since inception are those of the Sculptor Multi-Strategy Composite, which represents the composite performance of all accounts that were managed in accordance with our broad multi-strategy mandate that were not subject to portfolio investment restrictions or other factors that limited our investment discretion since inception on April 1, 1994. Performance is calculated using the total return of all such accounts net of all investment fees and expenses of such accounts, and the returns include the reinvestment of all dividends and other income. The performance calculation for the Sculptor Master Fund excludes realized and unrealized gains and losses attributable to currency hedging specific to certain investors investing in Sculptor Master Fund in currencies other than the U.S. dollar. For the period from April 1, 1994 through December 31, 1997, the returns are gross of certain overhead expenses that were reimbursed by the accounts. Such reimbursement arrangements were terminated at the inception of the Sculptor Master Fund on January 1, 1998. The size of the accounts comprising the composite during the time period shown vary materially. Such differences impacted our investment decisions and the diversity of the investment strategies followed. Furthermore, the composition of the investment strategies we follow is subject to our discretion, has varied materially since inception and is expected to vary materially in the future. As of June 30, 2023, the annualized returns since the Sculptor Master Fund’s inception on January 1, 1998 were 12.4% gross and 8.3% net excluding Special Investments and 12.1% gross and 8.1% net inclusive of Special Investments.

AUM in our multi-strategy funds decreased by $1.2 billion, or 13%, year-over-year. This was driven primarily by $1.9 billion of net outflows and transfers, partially offset by $673.3 million of performance-related appreciation. In first half of 2023, the largest sources of gross inflows into our multi-strategy funds were from high net worth and family offices, pensions and related parties, while the largest sources of gross outflows were attributable to pensions, sovereign wealth and corporates and high net worth and family offices.

The Sculptor Master Fund generated a gross return of 9.3% and a net return of 8.5% in the first half of 2023 as compared to the HFRI Fund Weighted Composite Index which generated 3.5%. The fund delivered strong absolute and relative performance on a historically low risk position for the fund, recovering a majority of our 2022 losses and reducing our high watermark.

In the first half of 2022, the Sculptor Master Fund generated a gross return of -12.6% and a net return of -13.2%. Our investment model, which benefits from conservative positioning, a centralized risk framework and inherent diversification, protected capital during a volatile quarter, minimizing losses as compared to the broader market. Losses in the fund were predominately from equities, while positions within convertible and derivative arbitrage and corporate credit were also detractors. These losses were partially offset by gains in structured credit.

Credit

	Assets Under Management as of June 30,
	2023		2022
	(dollars in thousands)
Opportunistic credit funds	$	5,831,145	$	6,026,297
Institutional Credit Strategies	16,175,187		16,459,864
	$	22,006,332	$	22,486,161

Opportunistic Credit Funds

Our opportunistic credit funds seek to generate risk-adjusted returns by capturing value in mispriced investments across disrupted, dislocated and distressed corporate, structured and private credit markets globally.

AUM for our opportunistic credit funds are generally based on the net asset value of those funds plus any unfunded commitments, if applicable. Management fees for our opportunistic credit funds generally range from 0.75% to 2.25% annually of the net asset value of these funds. For the second quarter of 2023, our opportunistic credit funds had an average management fee rate of 0.95% of FP AUM.

The table below presents AUM and investment performance information for certain of our opportunistic credit funds. Incentive income related to these funds (excluding the closed-end opportunistic fund, which is explained further below) is generally equal to 20% of realized and unrealized profits attributable to each investor, and a portion of these AUM is subject to hurdle rates, which are generally 5% to 8% for our open-end opportunistic credit funds. Once the cumulative investment performance has exceeded the hurdle rate, we typically receive a “catch-up” allocation, resulting in the potential recognition by us

54

of a full 20% of the net profits attributable to investors in these funds. The measurement periods for these AUM generally range from one to five years.

We generally crystallize incentive income from our opportunistic credit funds at the end of a multi-year measurement period. This results in a timing difference between when we can recognize incentive income and when we accrue the associated discretionary bonus expense. Incentive income accrued at the fund level that cannot yet be recognized drives an increase in our ABURI balance. Compensation expense related to ABURI generated from our opportunistic credit funds is generally recognized in the fourth quarter of the year the underlying fund performance is generated which may not occur at the same time that the related revenues are recognized by us. In addition, we recognize incentive income on our opportunistic credit funds related to certain tax distributions on realizations at the fund level. Realizations at the fund level may give rise to tax liabilities for our investors and us. Funds distribute capital back to us to cover these tax liabilities and this in turn drives the recognition of tax distribution-related incentive income.

					Returns for the Six Months Ended June 30,								Annualized Returns Since Inception Through June 30, 2023
	Assets Under Management as of June 30,				2023				2022
	2023		2022		Gross		Net		Gross		Net		Gross		Net
Fund	(dollars in thousands)
Sculptor Credit Opportunities Master Fund(1)	$	1,604,095	$	1,904,832	7.7	%	6.5	%	-2.4	%	-2.8	%	12.7	%	9.0	%
Customized Credit Focused Platform	3,597,498		3,827,891		See below for return information on our Customized Credit Focused Platform.
Closed-end opportunistic credit funds	629,552		293,574		See below for return information on our closed-end opportunistic credit funds.
	$	5,831,145	$	6,026,297

_______________

(1)The returns for the Sculptor Credit Opportunities Master Fund exclude Special Investments, which are held by investors representing a small percentage of AUM in the fund. Inclusive of these Special Investments, the returns of the Sculptor Credit Opportunities Master Fund for the six months ended June 30, 2023 were 7.7% gross and 6.5% net, for the six months ended June 30, 2022 were -2.4% gross and -2.8% net, and annualized since inception through June 30, 2023 were 12.4% gross and 8.8% net.

AUM in our opportunistic credit funds decreased by $195.2 million, or 3%, year-over-year. This was driven primarily by distributions and other reductions of $504.2 million primarily from the Customized Credit Focused Platform partially offset by $358.6 million of performance-related appreciation, primarily from our open ended funds. We continue to raise capital for STAX with total committed capital of $471.0 million to date. We plan to hold additional closes and have seen previous periods of market volatility act as a catalyst for capital raising in these types of strategies.

In the first half of 2023, the Sculptor Credit Opportunities Master Fund, our global opportunistic credit fund, delivered strong absolute and relative performance versus relevant credit indices and benchmarks, fully recovering 2022 losses and eliminating our high watermark and building upon its long-term track record. The fund generated a gross return of 7.7% and a net return of 6.5%, as compared to BAML Global High Yield of 5.3% and HFRX Fixed Income Credit Index of 3.0% for the first half of 2023. In the first half of 2023, both corporate credit and structured credit contributed to performance.

In the first half of 2022, the Sculptor Credit Opportunities Master Fund, our global opportunistic credit fund, generated a gross return of -2.4% and a net return of -2.8%. During the period, the fund delivered strong results as compared to Global High Yield and global equities. In 2022, the fund experienced losses in corporate credit and structured credit.

Our Customized Credit Focused Platform invests under a flexible credit mandate across the credit spectrum to allow timely investments as market conditions change and dislocate. The table below presents investment performance for the fund.

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	Weighted Average Return for the Six Months Ended June 30,(2)								Inception to Date as of June 30, 2023
	2023				2022				IRR				Net Invested Capital Multiple(5)
Customized Credit Focused Platform	Gross		Net		Gross		Net		Gross(3)		Net(4)
Opportunistic Credit Performance(1)	7.9	%	6.0	%	-4.6	%	-4.0	%	14.4	%	10.9	%	3.5x

_______________

(1)Performance presented is for the opportunistic credit strategies in the Customized Credit Focused Platform. As of June 30, 2023, approximately 92% of the invested capital in the Customized Credit Focused Platform is invested in the Platform’s opportunistic credit strategies.

(2)Weighted Average Returns reflect the total profit & loss divided by the weighted average capital base, which represents net asset value plus net contributions (distributions) for the period.

(3)Gross IRR represents estimated, unaudited, annualized pre-tax returns based on the timing of cash inflows and outflows for each investment. It is calculated in the same manner as Net IRR, however, it does not reflect adjustments to cash flows related to incentive income, management fees and the applicable fund expenses. Gross IRR represents the estimated, unaudited, annualized pre-tax return based on the actual and/or projected timing of cash inflows from, and outflows to, investors for each investment (irrespective of any funding from a credit facility or other third-party financing source used by the Customized Credit Focused Platform). In certain cases, funding from a credit facility or other third party financing source was initially used by the Customized Credit Focused Platform to acquire an investment or pay certain expenses, which may have the effect of increasing the Gross IRR above that which would have been presented, had drawdowns from limited partners been initially used to acquire the investment or pay such expenses. Gross IRR includes the effect of investment hedges as determined by us. There can be no assurance that an appropriate hedge will be identified for each investment or that an appropriate hedge will be available for all investments.

(4)Net IRR is the Gross IRR adjusted to reflect actual management fees, incentive income and expenses incurred by the Customized Credit Focused Platform.

(5)Net invested capital multiple measures the current net asset value over the net invested capital, where net invested capital represents cumulative contributions less cumulative distributions. The Customized Credit Focused Platform has an active liquid investment program, a key element of which includes ramping up and ramping down depending on market conditions.

The table below presents AUM investment performance and other information for our closed-end opportunistic credit funds. Our closed-end opportunistic credit funds follow a European-style waterfall, whereby incentive income may be paid to us only after a fund investor receives distributions in excess of their total contributed capital and a preferential return, which is generally 6% to 8%. Incentive income related to these funds is generally equal to 20% of the cumulative realized profits in excess of the preferential return attributable to each investor over the life of the fund. Once the investment performance has exceeded the preferential return, we typically receive a “catch-up” allocation, resulting in a potential recognition by us of a full 20% of the net profits attributable to investors in these funds. These funds, unless otherwise noted, have concluded their investment periods, and therefore we expect AUM for these funds to decrease as investments are sold and the related proceeds are distributed to the investors in these funds.

	Assets Under Management as of June 30,				Inception to Date as of June 30, 2023
	2023		2022		Total Commitments		Total Invested Capital(1)		Gross IRR(2)		Net IRR(3)		Gross MOIC(4)
Fund (Investment Period)	(dollars in thousands)
Sculptor Tactical Credit Fund (2022 - 2025)(5)	$	414,756	$	83,651	$	470,671	$	215,355	n/m		n/m		n/m
Sculptor European Credit Opportunities Fund (2012-2015)	—		—		459,600		305,487		15.7	%	11.8	%	1.5x
Sculptor Structured Products Domestic Fund II (2011-2014)	—		—		326,850		326,850		19.2	%	15.1	%	2.1x
Sculptor Structured Products Offshore Fund II (2011-2014)	—		—		304,531		304,531		16.5	%	12.9	%	1.9x
Sculptor Structured Products Offshore Fund I (2010-2013)	—		—		155,098		155,098		23.7	%	18.9	%	2.1x
Sculptor Structured Products Domestic Fund I (2010-2013)	—		3,423		99,986		99,986		22.4	%	17.8	%	2.0x
OZ Global Credit Master Fund I (2008-2009)	—		—		214,141		214,141		5.5	%	4.2	%	1.1x
Other funds	214,796		206,500		779,671		424,941		n/m		n/m		n/m
	$	629,552	$	293,574	$	2,810,548	$	2,046,389

_______________

n/m not meaningful

56

(1)Represents funded capital commitments net of recallable distributions to investors.

(2)Gross IRR for our closed-end opportunistic credit funds represents the estimated, unaudited, annualized return based on the timing of cash inflows and outflows for the fund as of June 30, 2023, including the fair value of unrealized investments as of such date, together with any appreciation or depreciation from related hedging activity. Gross IRR does not include the effects of management fees or incentive income, which would reduce the return, and includes the reinvestment of all fund income.

(3)Net IRR is calculated as described in footnote (2), but is reduced by all management fees, as well as paid incentive and accrued incentive income that will be payable upon the distribution of each fund’s capital in accordance with the terms of the relevant fund. Accrued incentive income may be higher or lower at such time. The net IRR represents a composite rate of return for a fund and does not reflect the net IRR specific to any individual investor.

(4)Gross Multiple on Invested Capital (“MOIC”) for our closed-end opportunistic credit funds is calculated by dividing the sum of the net asset value of the fund, accrued incentive income, life-to-date incentive income and management fees paid and any non-recallable distributions made from the fund by the invested capital.

(5)This fund has not yet invested a level of committed capital that would lead to presentation of meaningful IRR and MOIC information. Therefore, such information is not presented.

Institutional Credit Strategies

Institutional Credit Strategies is 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, CBOs, structured alternative investment solutions, commingled products and other customized solutions for clients.

AUM for Institutional Credit Strategies are generally based on the amount of equity outstanding for CLOs and CBOs (during the warehouse period), the par value of the collateral assets and cash held at CLOs and CBOs (after the warehouse period), and adjusted portfolio appraisal values for the aircraft collateral within the securitization vehicles. AUM also includes the net asset value of other investment vehicles within the strategy. However, AUM are reduced for any investments in CLOs and securitization vehicles held by our other funds. Management fees for Institutional Credit Strategies generally range from 0.25% to 0.50% annually of AUM. For the second quarter of 2023, Institutional Credit Strategies had an average management fee rate of 0.43% net of rebates on cross-investments from other funds we manage.

Incentive income from our CLOs and CBO is generally equal to 20% of the excess cash flows due to the holders of the subordinated notes issued by the CLOs and CBO and is generally subject to a 12% hurdle rate. Because of the hurdle rate and structure of our CLOs and CBO, we do not expect to earn a meaningful amount of incentive income from these entities, and therefore no return information is presented for these vehicles. We do not earn incentive income from our aircraft securitization vehicles.

During the first quarter of 2022, we closed on a $350.0 million structured alternative investment solution, which was tailored to meet the needs of insurance investors. The financing vehicle issued senior and subordinated notes to investors and used those proceeds to invest in a diversified portfolio of funds managed by us. Prior to investing in the portfolio of funds, the AUM was included within Institutional Credit Strategies. Upon investment in the funds, which began during April 2022, we earn management and incentive fees based on the terms of the underlying funds in which the vehicle invests and the associated AUM is included in those funds.

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	Most Recent Launch or Refinancing Year			Assets Under Management as of June 30,
		Deal Size		2023		2022
		(dollars in thousands)
Collateralized loan obligations(1)	2017	$	1,658,282	$	979,116	$	1,024,627
	2018	5,315,728		3,752,762		4,038,908
	2019	653,250		—		—
	2020	1,868,287		1,660,780		1,673,813
	2021	8,174,069		6,961,137		6,981,035
	2022	852,334		800,989		783,981
	2023	—		100		—
		18,521,950		14,154,884		14,502,364
Aircraft securitization vehicles	2018	696,000		398,929		432,723
	2019	1,128,000		290,870		299,178
	2020	472,732		159,231		173,943
	2021	821,529		556,213		591,256
		3,118,261		1,405,243		1,497,100
Collateralized bond obligation	2021	367,050		284,923		286,141
Other funds				330,137		174,259
		$	22,007,261	$	16,175,187	$	16,459,864

_______________

(1)AUM for collateralized loan obligations includes AUM of CLOs in their warehouse period.

AUM in Institutional Credit Strategies totaled $16.2 billion as of June 30, 2023, decreasing $284.7 million, or 2%, year-over-year. This was driven primarily by: (i) the redemption and amortization of certain of our CLOs, as a result of natural life-cycle events; and (ii) decreases driven by changes in the portfolio appraisal value for our aircraft securitization vehicles. These decreases were partially offset by (i) net inflows in certain other funds; and (ii) foreign currency translation adjustments in our European CLOs. CLO issuance for 2022 and the first half of 2023 was below our historical levels, given the current market environment as well as the public actions taken by the founder and former CEO of Och-Ziff.

Real Estate Funds

Our real estate funds generally make investments in commercial and residential real estate, including real property, multi-property portfolios, real estate-related joint ventures, real estate operating companies and other real estate-related assets. We seek to build portfolios that are balanced between traditional and non-traditional asset classes, employing moderate leverage, using creative structures and targeting high cash-on-cash returns.

AUM for our real estate funds are 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 are reduced for unfunded commitments that will be funded through transfers from other funds. AUM for the real estate vehicle launched in December 2022 is based on net asset value. Management fees for our real estate funds, exclusive of co-investment vehicles, generally range from 0.50% to 1.50% annually of FP AUM, however, management fees for Sculptor Real Estate Credit Fund I and Sculptor Real Estate Credit Fund II are based on invested capital both during and after the investment period. For the second quarter of 2023, our real estate funds, inclusive of co-investment vehicles, had an average management fee rate of 0.93% of FP AUM.

The tables below present AUM, investment performance and other information for our real estate funds. The amounts included within “co-investment and other funds” below mainly relate to co-investment vehicles in which we partner with clients on investment opportunities, typically with lower fees.

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Our real estate funds generally follow an American-style waterfall, whereby incentive income may be paid to us after a fund investment is realized if a fund investor receives distributions in excess of the capital contributed for such investment, as well as a preferential return on such investment, which is generally 6% to 10%. Upon each subsequent realization, incentive income, which is generally 20% of realized profits, is recalculated based on the cumulative realized profits in excess of the preferential return attributable to each investor over the life of the fund. Once the investment performance has exceeded the preferential rate, we may receive a “catch-up” allocation, resulting in a potential recognition by us of a full 20% of the realized net profits attributable to investors in these funds.

In addition, we recognize incentive income on our real estate funds related to certain tax distributions on realizations at the fund level. Realizations at the fund level may give rise to tax liabilities for our investors and us. Funds distribute capital back to us to cover these tax liabilities and this in turn drives the recognition of tax distribution-related incentive income. In addition, incentive income is recognized as investments are sold and related distributions are made to investors and us. Due to the recalculation of cumulative realized profits upon each realization, the fund may clawback incentive income previously paid to us. As a result, we record incentive income paid to us by the real estate funds as unearned revenue in our consolidated balance sheets until the criteria for revenue recognition has been met as we have received cash before we can recognize the revenue.

For additional information on incentive income accrued at fund level for our real estate, as well as other funds, see “Longer-Term AUM and Accrued Unrecognized Incentive Income” for additional information.

For funds that have concluded their investment periods, we expect AUM to decrease as investments are sold and the related proceeds are distributed to the investors in these funds.

	Assets Under Management as of June 30,
	2023		2022
Fund (Investment Period)	(dollars in thousands)
Sculptor Real Estate Fund I (2005-2010)	$	—	$	—
Sculptor Real Estate Fund II (2011-2014)	19,291		20,413
Sculptor Real Estate Fund III (2014-2019)	170,716		251,089
Sculptor Real Estate Fund IV (2019-2023)	2,595,055		2,593,626
Sculptor Real Estate Credit Fund I (2015-2020)	147,297		375,001
Sculptor Real Estate Credit Fund II (2022-2025)	154,033		136,035
Co-investment and other funds	1,146,559		1,247,788
	$	4,232,951	$	4,623,952

	Inception to Date as of June 30, 2023
			Total Investments									Realized/Partially Realized Investments(1)
	Total Commitments		Invested Capital(2)		Total Value(3)		Gross IRR(4)		Net IRR(5)		Gross MOIC(6)	Invested Capital		Total Value		Gross IRR(4)		Gross MOIC(6)
Fund	(dollars in thousands)
Sculptor Real Estate Fund I	$	408,081	$	386,298	$	847,612	25.5	%	16.1	%	2.2x	$	386,298	$	847,612	25.5	%	2.2x
Sculptor Real Estate Fund II	839,508		762,588		1,608,831		32.8	%	21.7	%	2.1x	762,588		1,608,831		32.8	%	2.1x
Sculptor Real Estate Fund III	1,500,000		1,112,924		2,244,003		30.4	%	21.1	%	2.0x	1,045,110		2,188,317		31.8	%	2.1x
Sculptor Real Estate Fund IV(7)	2,596,024		1,389,858		1,747,972		n/m		n/m		n/m	337,506		512,912		n/m		n/m
Sculptor Real Estate Credit Fund I	736,225		728,606		946,773		18.1	%	12.7	%	1.3x	578,931		760,173		18.6	%	1.3x
Sculptor Real Estate Credit Fund II(7)	180,540		45,738		53,119		n/m		n/m		n/m	n/m		n/m		n/m		n/m
Co-investment and other funds	1,363,512		1,103,187		1,460,067		n/m		n/m		n/m	196,791		353,355		n/m		n/m
	$	7,623,889	$	5,529,199	$	8,908,377						$	3,307,224	$	6,271,200

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	Unrealized Investments as of June 30, 2023
	Invested Capital		Total Value		Gross MOIC(6)
Fund	(dollars in thousands)
Sculptor Real Estate Fund I	$	—	$	—	—
Sculptor Real Estate Fund II	—		—		—
Sculptor Real Estate Fund III	67,814		55,686		0.8x
Sculptor Real Estate Fund IV(7)	1,052,352		1,235,060		n/m
Sculptor Real Estate Credit Fund I	149,675		186,600		1.2x
Sculptor Real Estate Credit Fund II(7)	45,738		53,119		n/m
Co-investment and other funds	906,396		1,106,712		n/m
	$	2,221,975	$	2,637,177

_______________

n/m not meaningful

(1)An investment is considered partially realized when the total amount of proceeds received, including dividends, interest or other distributions of income and return of capital, represents at least 50% of invested capital.

(2)Invested capital represents total aggregate contributions made for investments by the fund.

(3)Total value represents the sum of realized distributions and the fair value of unrealized and partially realized investments as of June 30, 2023. Total value will be impacted (either positively or negatively) by future economic and other factors. Accordingly, the total value ultimately realized will likely be higher or lower than the amounts presented as of June 30, 2023.

(4)Gross IRR for our real estate funds represents the estimated, unaudited, annualized return based on the timing of cash inflows and outflows for the aggregated investments as of June 30, 2023, including the fair value of unrealized and partially realized investments as of such date, together with any unrealized appreciation or depreciation from related hedging activity. Gross IRR is not adjusted for estimated management fees, incentive income or other fees or expenses to be paid by the fund, which would reduce the return.

(5)Net IRR is calculated as described in footnote (4), but is reduced by management fees and other fund-level fees and expenses not adjusted for in the calculation of gross IRR. Net IRR is further reduced by paid incentive and accrued incentive income that will be payable upon the distribution of each fund’s capital in accordance with the terms of the relevant fund. Accrued incentive income may be higher or lower at such time. The net IRR represents a composite rate of return for a fund and does not reflect the net IRR specific to any individual investor.

(6)Gross MOIC for our real estate funds is calculated by dividing the value of a fund’s investments by the invested capital, prior to adjustments for incentive income, management fees or other expenses to be paid by the fund.

(7)These funds have not yet invested a level of committed capital that would lead to presentation of meaningful IRR and MOIC information. Therefore, such information is not presented. Sculptor Real Estate Credit Fund II total commitments include $34.3 million associated with the structured alternative investment solution.

AUM in our real estate funds totaled $4.2 billion as of June 30, 2023, decreasing $391.0 million or 8% year-over-year. This was driven primarily by $677.1 million of distributions and other reductions, primarily related to: (i) distributions from Sculptor Real Estate Credit Fund I and Sculptor Real Estate Fund III as these funds are harvesting investments; and (ii) the liquidation of our SPAC, which was non-fee paying. These decreases were partially offset by net inflows of $261.9 million, primarily in a real estate investment vehicle. Our real estate funds continue to deploy capital and generate strong returns with a 30.4% annualized gross return in Sculptor Real Estate Fund III and an 18.1% annualized gross return in Sculptor Real Estate Credit Fund I.

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Longer-Term AUM and Accrued But Unrecognized Incentive Income (“ABURI”)

As of June 30, 2023, approximately 73% of our AUM was subject to initial commitment periods of three years or longer, excluding 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. The table below presents the amount of these AUM.

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Multi-strategy funds	$	418,161	$	408,171
Credit
Opportunistic credit funds	4,720,325		4,742,929
Institutional Credit Strategies	16,162,559		16,259,128
Real estate funds	4,232,950		4,562,718
	$	25,533,995	$	25,972,946

Longer-term AUM has increased from 26% in 2013 to 45% in 2016 to 73% as of June 30, 2023, driven by growth in opportunistic credit, Institutional Credit Strategies and real estate funds. Longer-term AUM creates stability in our platform and provides more consistency in our management fee earnings.

The table below presents the changes in the amount of incentive income accrued at the fund level but that has not yet been recognized in our revenues (ABURI) during the six months ended June 30, 2023:

	December 31, 2022		Recognized Incentive Income		Performance		June 30, 2023
	(dollars in thousands)
Multi-strategy funds	$	359	$	(700)	$	1,180	$	839
Credit
Opportunistic credit funds	37,328		(13,696)		53,247		76,879
Real estate funds	122,815		(30,176)		24,577		117,216
	$	160,502	$	(44,572)	$	79,003	$	194,933

Incentive income, if any, on our longer-term AUM is based on the cumulative investment performance generated over the respective commitment period. These amounts may ultimately not be recognized as revenue by us in the event of future losses in the respective funds. See “—Understanding Our Results—Revenues—Incentive Income” for additional information. As of June 30, 2023, our ABURI was $194.9 million, up $34.4 million in the first half of 2023 primarily from the positive performance in our opportunistic credit and real estate funds, partially offset by the crystallization of ABURI into incentive income. We generated $53.2 million of performance in our opportunistic credit funds, largely in the Customized Credit Focused platform and $24.6 million of performance in our real estate funds, largely in Sculptor Real Estate Fund IV, in the first half of 2023.

Our ABURI from longer-term AUM generally comprise the following:

•Multi-strategy funds. Multi-strategy ABURI is derived from clients in the three-year liquidity tranche, where incentive income other than tax distributions will be recognized at the end of each client’s three-year period.

•Opportunistic credit funds. Opportunistic credit funds ABURI is derived from three sources:

◦Clients in the three-year and four-year liquidity tranches of an open-end opportunistic credit fund, where incentive income other than tax distributions will be recognized at the end of each client’s three-year or four-year period.

◦Long-dated closed-end opportunistic credit funds, where incentive income will be recognized during each fund’s harvest period after invested capital and a preferred return has been distributed to the clients, other than tax distributions.

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◦The Customized Credit Focused Platform, where incentive income is recognized at the end of a multi-year term; previously crystallized on December 31, 2020, other than tax distributions.

•Real estate funds. Real Estate ABURI is derived from long-dated real estate funds, where incentive income will start to be recognized following the completion of each fund’s investment period as investments are realized and after invested capital and a preferred return has been distributed to the clients other than tax distributions.

Certain ABURI amounts will generally have compensation expense (on an Economic Income basis) that will reduce the amount ultimately realized on a net basis. Compensation expense relating to ABURI from our real estate funds is generally recognized at the same time the related incentive income revenue is recognized as the compensation is structured as carried interest in these vehicles. Compensation expense relating to ABURI generated from our multi-strategy funds and opportunistic credit funds is generally recognized in the fourth quarter of the year the underlying fund performance is generated which may not occur at the same time that the related revenues are generated.

Understanding Our Results

Revenues

Our operations historically have been financed primarily by cash flows generated by our business. Our principal sources of revenues are management fees and incentive income. For any given period, our revenues are influenced by the amount of our AUM, the investment performance of our funds and the timing of when we recognize incentive income for certain AUM as discussed below.

The ability of investors to contribute capital to and redeem capital from our funds causes our AUM to fluctuate from period to period. Fluctuations in AUM also result from our funds’ investment performance. Both of these factors directly impact the revenues we earn from management fees and incentive income. For example, a $1.0 billion increase or decrease in AUM subject to a 1% management fee would generally increase or decrease annual management fees by $10.0 million. If profits, net of management fees, attributable to a fee-paying fund investor were $10.0 million in a given year, we generally would earn incentive income equal to $2.0 million, assuming a 20% incentive income rate, a one-year commitment period, no hurdle rate and no high-water marks from prior years.

For any given quarter, our revenues are influenced by the combination of AUM and the investment performance of our funds. For example, incentive income for the majority of our multi-strategy AUM is recognized in the fourth quarter each year, based on full year investment performance.

Management Fees. Management fees are generally calculated and paid to us on a quarterly basis in advance, based on the amount of AUM at the beginning of the quarter. Management fees are prorated for capital inflows and redemptions during the quarter. Accordingly, changes in our management fee revenues from quarter to quarter are driven by changes in the quarterly opening balances of AUM, the relative magnitude and timing of inflows and redemptions during the respective quarter, the impact of differing management fee rates charged on those inflows and redemptions, as well as the impact of the deferral of subordinated management fees from certain CLOs. See “—Weighted-Average FP AUM and Average Management Fee Rates” for information on our average management fee rate and Note 11 to our consolidated financial statements for additional information regarding management fees.

Incentive Income. We earn incentive income based on the cumulative performance of our funds over a commitment period. We recognize incentive income when such amounts are probable of not significantly reversing. See Note 11 to our consolidated financial statements for additional information regarding incentive income.

Other Revenues. Other revenues consist primarily of interest income on investments in CLOs, cash equivalents and long-term U.S. government obligations, as well as subrental income. Interest income is recognized on an effective yield basis. Subrental income is recognized on a straight-line basis over the lease term.

Income of Consolidated Entities. Revenues recorded as income of consolidated entities consist primarily of interest income, dividend income, fees and other income.

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Expenses

Compensation and Benefits. Compensation and benefits consist of salaries, employee benefits, payroll taxes, and discretionary and guaranteed cash bonus expenses. We generally recognize compensation and benefits expenses over the related service period.

On an annual basis, compensation and benefits comprise a significant portion of total expenses, with discretionary cash bonuses generally comprising a significant portion of total compensation and benefits. We accrue minimum annual discretionary cash bonuses on a straight-line basis during the year. The total amount of discretionary cash bonuses ultimately recognized for the full year, which is determined in the fourth quarter of each year, could differ materially from the minimum amount accrued, as the total discretionary cash bonus is dependent upon a variety of factors, including fund performance for the year.

Due to multi-year crystallizations in our credit and real estate funds, we may recognize discretionary bonus expense as incentive is generated at the fund level but before we recognize the related incentive income. As our discretionary cash bonuses are generally determined based on fund performance in a given year, there may be differences in the timing of when bonuses are accrued and when the corresponding incentive income is recognized, particularly for performance generated on our longer-term AUM and AUM that have annual incentive income crystallization dates other than at year-end. In the fourth quarter we recognize discretionary bonuses, which are largely based on current year fund performance regardless of the year in which incentive income is recognized. It is best to look at our compensation ratio on incentive income over a multi-year period given the difference in timing of these line items. For additional information on incentive income recognized at fund level but not yet recognized by us see “—Longer-Term AUM and Accrued Unrecognized Incentive Income” for additional information. We generally pay our bonuses in January of the year following the year in which bonuses were accrued.

Compensation and benefits also include equity-based compensation expense, which is primarily in the form of RSUs granted to our independent board members, employees and executive managing directors, as well as RSAs, PSUs and Partner Equity Units granted to executive managing directors. These awards are structured to create strong alignment of economic interest between our executives and shareholders, in addition to retaining key talent.

We also have profit-sharing arrangements whereby certain employees or executive managing directors are entitled to a share of incentive income that we earn primarily from our real estate funds. This incentive income is typically paid to us and then we pay a portion to the profit-sharing participant as investments held by these funds are realized. To the extent that the payments to the employees or executive managing directors are probable and reasonably estimable, we accrue these payments as compensation expense for GAAP purposes, which may occur prior to the recognition of the related incentive income.

Deferred cash interests (“DCIs”) are also granted to certain employees and executive managing directors as a form of compensation. DCIs reflect notional fund investments made by us on behalf of an employee or executive managing director. DCIs generally vest over a three-year period, subject to an employee’s or executive managing director’s continued service. Upon vesting, we pay the employee or executive managing director an amount in cash equal to the notional investment represented by the DCIs, as adjusted for notional fund performance. Except as otherwise provided in the relevant DCI plan or in an award agreement, in the event of a termination of the employee’s or executive managing director’s service, any portion of the DCIs that is unvested as of the date of termination will be forfeited. These awards are designed to create strong alignment of economic interest between our executives and fund investors, in addition to retaining key talent.

Sculptor’s compensation structure is designed to align the interests of our executive managing directors and employees with those of investors in our funds and our Class A Shareholders. Our compensation structure focuses on both individual and firm-wide performance through bonus compensation in a combination of equity and deferred cash interests that vest over time.

Interest Expense. Amounts included within interest expense relate primarily to indebtedness outstanding.

General, Administrative and Other. General, administrative and other expenses are comprised of professional services, occupancy and equipment, information processing and communications, recurring placement and related service fees, business development, insurance, impairment of right-of-use lease assets, foreign currency transaction gains and losses, and other miscellaneous expenses. Legal provisions are also included within general, administrative and other.

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Expenses of Consolidated Entities. Expenses recorded as expenses of consolidated entities consist of interest expense, general, administrative and other miscellaneous expenses.

Other Income (Loss)

Changes in Fair Value of Warrant Liabilities. Changes in fair value of warrant liabilities represent gains (losses) from changes in fair value of warrants.

Changes in Tax Receivable Agreement Liability. Changes in tax receivable agreement liability consists of changes in our estimate of the future payments related to the tax receivable agreement that result from changes in future income tax savings due to changes in tax rates. See Note 16 to our consolidated financial statements included in this report for additional information.

Net Gains (Losses) on Investments. Net gains (losses) on investments primarily consist of realized and unrealized net gains and losses on investments in U.S. government obligations and investments in our funds, including CLOs and other funds we manage.

Net Gains (Losses) of Consolidated Entities. Net gains (losses) of consolidated entities primarily consist of gains (losses) on investments held by consolidated entities, changes in the fair value of the structured alternative investment solution’s assets and liabilities and related interest and other income, as well as changes in the fair value of warrant liabilities related to our consolidated SPAC that has been liquidated in second quarter of 2023.

Income Taxes

Income taxes consist of our provision for federal, state and local income taxes in the U.S. and foreign income taxes, including provisions for deferred income taxes resulting from temporary differences between the tax and GAAP bases. The computation of the provision requires certain estimates and significant judgment, including, but not limited to, the expected taxable income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent differences between the tax and GAAP bases and the likelihood of being able to fully utilize deferred income tax assets existing as of the end of the period.

The Sculptor Operating Partnerships are partnerships for U.S. federal income tax purposes and the Registrant is a corporation for U.S. federal income tax purposes. Generally all of the income allocated to the Registrant from the Sculptor Operating Group will be subject to corporate-level income taxes in the U.S. See Note 12 for additional information regarding significant items impacting our income tax provision and effective tax rate.

Net (Loss) Income Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interests

Noncontrolling interests represent ownership interests in our subsidiaries held by parties other than us and are primarily made up of Group A Units. Increases or decreases in net (loss) income attributable to the Group A Units are driven by the earnings of the Sculptor Operating Group. See Note 3 in our Annual Report for additional information regarding our ownership interest in the Sculptor Operating Group.

During second quarter of 2023, our consolidated SPAC was liquidated and its Class A shares were redeemed. Allocations of earnings to these shares were reflected within net income (loss) attributable to redeemable noncontrolling interests in the consolidated statements of operations. Increases or decreases in the net income (loss) attributable to SPAC investors’ interests in the SPAC were driven primarily by interest income generated on investments in U.S. Treasury bills, changes in fair value of warrant liabilities of the SPAC and various expenses related to legal costs, business development and insurance. Change in redemption value of Class A Shares of the consolidated SPAC, including the impact of the deferred underwriting fee reversal as a result of the SPAC liquidation, were reflected within change in redemption value of redeemable noncontrolling interests in the consolidated statements of operations.

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Results of Operations

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Net Income (Loss) Attributable to Class A Shareholders

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Net Income (Loss) Attributable to Class A Shareholders	$	3,654	$	(8,052)	$	12,146	$	8,830

Refer below for the discussion of the contributing factors to changes in net income (loss) attributable to Class A Shareholders from the prior year.

Revenues

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Management fees	$	62,442	$	71,770	$	126,150	$	145,207
Incentive income	4,296		44,580		44,582		66,222
Other revenues	6,703		2,520		13,248		4,950
Income of consolidated entities	1,862		311		4,558		150
Total Revenues	$	75,303	$	119,181	$	188,538	$	216,529

Total revenues for the quarter-to-date period were $75.3 million, decreasing $43.9 million from prior year period, and total revenues for the first half of 2023 were $188.5 million, decreasing $28.0 million when compared to the first half of 2022. These changes were primarily due to the following:

Management Fees

Management fees decreased by $9.3 million for the quarter-to-date period and $19.1 million for the year-to-date period, driven primarily by multi-strategy funds as a result of lower average assets under management in our multi-strategy funds, as a result of net outflows as well as negative fund performance in 2022. Please see “—Managing Business Performance—Multi-Strategy Funds” for additional information regarding the performance of the Sculptor Master Fund and “—Managing Business Performance—Weighted-Average FP AUM and Average Management Fee Rates” and “—Managing Business Performance—Summary of Changes in FP AUM” above for information regarding our average management fee rates and further detail on changes in FP AUM, respectively.

Incentive Income

Incentive income decreased by $40.3 million for the quarter-to-date period and decreased by $21.6 million for the year-to-date period. This was primarily driven by:

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•Opportunistic credit funds. We recognized $3.3 million of incentive in the quarter and $14.1 million year-to-date primarily from distributions in the Customized Credit Focused Platform. A $3.2 million increase for the quarter-to-date period and $5.8 million decrease for the year-to-date period was due to incentive income in our opportunistic credit funds is generally recognized at the end of a multi-year investment period, the timing of which will vary by fund and individual investor.

•Real estate funds. We recognized $29.7 million year-to-date driven by crystallizations in Sculptor Real Estate Fund III, as the fund is realizing investments during its harvest period. A $44.7 million decrease for the quarter-to-date period and $16.5 million decrease for the year-to-date period was driven by timing of realizations in our real estate funds which will vary from period to period based on exit opportunities.

Other Revenues

Other revenues increased by $4.2 million for the quarter-to-date period and increased $8.3 million for the year-to-date period primarily driven by higher interest income earned on both cash and cash equivalents, longer-term treasury bills and our risk retention investments in CLOs driven by higher interest rates.

Income of Consolidated Entities

Income of consolidated entities increased by $1.6 million for the quarter-to-date period and increased $4.4 million for the year-to-date period. Both the quarter-to-date and year-to-date increases were driven primarily by higher interest income generated on the trust assets of our consolidated SPAC invested in U.S. government obligations that were subsequently liquidated in the second quarter of 2023. The increase in interest income was due to higher interest rates.

Expenses    

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Compensation and benefits	$	57,484	$	79,743	$	126,106	$	157,528
Interest expense	6,154		3,427		11,750		6,712
General, administrative and other	29,928		26,425		63,723		53,741
Expenses of consolidated entities	1,304		1,668		1,851		1,912
Total Expenses	$	94,870	$	111,263	$	203,430	$	219,893

Total expenses for the quarter-to-date period were $94.9 million, decreasing $16.4 million year-over-year, and total expenses for the year-to-date period were $203.4 million, decreasing $16.5 million year-over-year, primarily due to the following:

Compensation and Benefits

Compensation and benefits decreased by $22.3 million and $31.4 million for the quarter-to-date and year-to-date periods, respectively, primarily driven by:

•$16.5 million and $15.7 million decreases in bonus expense for the quarter-to-date and year-to-date periods, respectively, primarily as a result of lower carried interest profit sharing expense linked to incentive income generated by Sculptor Real Estate Fund III.

•Equity-based compensation expenses decreased by $6.6 million and $17.6 million for the quarter-to-date and year-to-date periods, respectively, primarily due to the following:

◦A $6.3 million decrease for the quarter-to-date period and a $14.6 million decrease for the year-to-date period, primarily related to amortizations of RSUs and RSAs due to fewer units outstanding, and lower weighted-average grant date fair value year-over-year for the RSUs.

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◦A $2.6 million decrease for the year-to-date period related to Group E Units, as fewer units remain unvested.

Interest Expense

$2.7 million and $5.0 million increases in interest expense for the quarter-to-date and year-to date periods, respectively, primarily due to higher interest rates.

General, Administrative and Other Expenses

$3.5 million and $10.0 million increases in general, administrative and other expenses for the quarter-to-date and year-to-date periods, respectively, primarily due to an increase in professional services expenses, largely as a result of elevated legal costs for the activities of the Special Committee of our Board of Directors.

Other Income (Loss)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Changes in fair value of warrant liabilities	$	(434)	$	18,740	$	(260)	$	43,076
Changes in tax receivable agreement liability	(584)		227		(527)		220
Net gains (losses) on investments	5,208		(30,838)		10,136		(36,182)
Net gains (losses) of consolidated entities	1,866		(6,434)		9,743		(2,294)
Total Other Income (Loss)	$	6,056	$	(18,305)	$	19,092	$	4,820

Total other income for the quarter-to-date period was $6.1 million, increasing from a loss of $18.3 million by $24.4 million year-over-year. Total other income for the year-to-date period was $19.1 million, increasing $14.3 million year-over-year, which resulted from the following:

•Changes in fair value of warrant liabilities. These represent the change in the fair value of warrants to purchase our Class A Shares that were issued in connection with the 2020 Credit Agreement. The primary driver of the changes in fair value for both 2023 and 2022 was the change in our Class A Share price and the warrants strike price during each of the respective periods. See Note 4 to our consolidated financial statements included in this report for additional details on warrants valuation inputs.

•Changes in tax receivable agreement liability. These are a result of changes in projected future tax rates impacting the anticipated liability under the tax receivable agreement.

•Net gains (losses) on investments. Investment income increased by $36.0 million and $46.3 million for the quarter-to-date and year-to-date periods, respectively. This was primarily due to gains on our risk retention investments in our CLOs and equity method investments in our multi-strategy funds, compared to the prior year period in which these investments generated losses.

•Net gains (losses) of consolidated entities. Income of consolidated entities increased by $8.3 million and $12.0 million for the quarter-to-date and year-to-date periods, respectively, primarily due to gains on investments in funds of our consolidated structured alternative investment solution.

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Income Taxes

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Income taxes	$	(1,190)	$	(7,914)	$	11,557	$	(947)

Income tax expense for the quarter-to-date period increased by $6.7 million, and increased by $12.5 million for the year-to-date period, primarily due to lower taxable losses during the period.

Net (Loss) Income Attributable to Noncontrolling Interests

The following table presents the components of the net (loss) income attributable to noncontrolling interests and net income attributable to redeemable noncontrolling interests:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Group A Units	$	(11,109)	$	4,881	$	(18,109)	$	(7,782)
Other	1,287		698		2,082		1,355
Noncontrolling Interests	$	(9,822)	$	5,579	$	(16,027)	$	(6,427)
Redeemable noncontrolling interests	$	1,851	$	697	$	3,350	$	3,765

Net loss attributable to noncontrolling interests for the quarter-to-date period was $9.8 million, decreasing from a gain of $5.6 million by $15.4 million compared to the prior year period. Net loss attributable to noncontrolling interests was $16.0 million for the year-to-date period, increasing by $9.6 million compared to the prior year period. The increase in loss was driven by higher losses generated by Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP in the second quarter of 2023 as compared to the second quarter of 2022. There was no income allocated to the noncontrolling interests from Sculptor Capital LP in those periods. During the Distribution Holiday, net income earned by any Sculptor Operating Partnership is allocated 100% to Sculptor Capital Management, Inc., while losses are allocated on a pro rata basis among the Group A Units (noncontrolling interests) and Sculptor Capital Management, Inc. as described in Note 3 to the financial statements included in this report.

Net income attributable to redeemable noncontrolling interests relates to the SPAC that was liquidated during the second quarter of 2023. The $1.2 million increase was primarily due to a gain related to change in fair value of the SPAC’s warrant liabilities as they expired worthless in the second quarter of 2023 and higher interest income earned on the SPAC’s trust assets before they were liquidated.

Change in Redemption Value of Redeemable Noncontrolling Interests

The following table presents the change in redemption value of redeemable noncontrolling interests:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Change in redemption value of redeemable noncontrolling interests	$	8,004	$	697	$	6,826	$	3,765

The change in redemption value of redeemable noncontrolling interest for the quarter-to-date and year-to-date periods was a gain of $8.0 million, increasing by $7.3 million, and a gain of $6.8 million increasing by $3.1 million. These amounts represented the accretion to redemption value of the SPAC’s Class A Shares driven by the fluctuations in the SPAC’s earnings allocated to the SPAC’s Class A shareholders and a reversal of deferred underwriting fee originally allocated to the SPAC issued

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Class A Shares due to SPAC liquidation.

Economic Income Analysis

In addition to analyzing our results on a GAAP basis, management also reviews our results on an “Economic Income” basis. Economic Income excludes the adjustments described below that are required for presentation of our results on a GAAP basis, but that management does not consider when evaluating operating performance in any given period. Management uses Economic Income as the basis on which it evaluates our financial performance and makes resource allocation and other operating decisions. Management considers it important that investors review the same operating information that it uses.

Economic Income is a measure of pre-tax operating performance that excludes the following from our results on a GAAP basis:

•Equity-based compensation expenses, net of cash settled RSUs. When the number of RSUs to be settled in cash is discretionary at the time of the grant, then the fair value of RSUs that are settled in cash is included as an expense at the time of settlement. When the number of RSUs to be settled in cash is certain on the grant date, then the expense is recognized during the performance period to which the award relates.

•Amounts related to non-cash interest expense accretion on term debt. The 2020 Term Loan and Debt Securities, which were issued in connection with the Recapitalization, were each recognized at a significant discount, as proceeds from each borrowing were allocated to warrant liabilities and the 2019 Preferred Units, respectively, resulting in non-cash accretion to par over time through interest expense for GAAP. The Debt Securities and the 2019 Preferred Units were fully redeemed in 2020. Management excludes this non-cash expense from Economic Income, as it does not consider it to be reflective of our economic borrowing costs.

•Depreciation and amortization expenses, changes in fair value of warrant liabilities, changes in the tax receivable agreement liability, net losses on retirement of debt, gains and losses on fixed assets, and gains and losses on investments in funds, as management does not consider these items to be reflective of operating performance.

•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, as management evaluates impairment expenses over the life of the related lease asset and considers the impairment charge to be nonrecurring in nature. Additionally, rent expense is offset by subrental income as management evaluates rent expenses on a net basis.

•Income allocations to our executive managing directors on their direct interests in the Sculptor Operating Group. Management reviews operating performance at the Sculptor Operating Group level, where our operations are performed, prior to making any income allocations.

•Net income (loss) attributable to redeemable noncontrolling interests, which relates to our consolidated SPAC that was liquidated during the second quarter of 2023, is also eliminated as management does not consider this to be reflective of operating performance.

•Amounts related to the consolidated entities, as management does not consider these amounts to be representative of our core operating performance. We also exclude the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned in relation to total AUM and fund performance.

Additionally, management fees are presented net of recurring placement and related service fees, as management considers these fees a reduction in management fees, not an expense.

Expenses related to incentive income profit-sharing arrangements are generally recognized at the same time the related incentive income revenue is recognized, as management reviews the compensation expense related to these arrangements in relation to any incentive income earned from the relevant fund.

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Further, for Economic Income deferred cash compensation is expensed in full during the performance period to which the award relates, rather than over the service period for GAAP, as management views the compensation expense impact in relation to the performance period.

As a result of the adjustments described above, management fees, incentive income, other revenues, compensation and benefits, interest expense, general, administrative and other expenses, net income (loss) attributable to noncontrolling interests and net income (loss) attributable to redeemable noncontrolling interests as presented on an Economic Income basis are also non-GAAP measures.

For reconciliations of our non-GAAP measures to the respective GAAP measures, please see “—Economic Income Reconciliations” at the end of this MD&A.

Our non-GAAP financial measures should not be considered alternatives to our GAAP net income allocated to Class A Shareholders or cash flow from operations, or as indicative of liquidity or the cash available to fund operations. Our non-GAAP measures may not be comparable to similarly titled measures used by other companies.

Three and Six Months Ended June 30, 2023 Compared to Three and Six Months Ended June 30, 2022

Economic Income (Non-GAAP)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Economic Income	$	3,174	$	32,565	$	21,732	$	61,766

Refer below for the discussion of the contributing factors to changes in Economic Income from the prior year.

Economic Income Revenues (Non-GAAP)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Economic Income Basis
Management fees	$	58,374	$	66,313	$	118,029	$	134,070
Incentive income	4,296		44,580		44,630		66,149
Other revenues	5,677		1,604		11,281		3,044
Total Economic Income Revenues	$	68,347	$	112,497	$	173,940	$	203,263

Economic Income revenues for the quarter-to-date period were $68.3 million, decreasing $44.2 million, and Economic Income revenues for the year-to-date period were $173.9 million, decreasing $29.3 million from the prior year period. These decreases were primarily due to the following:

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Management Fees

Management fees decreased by $7.9 million for the quarter-to-date period and $16.0 million for the year-to-date period, driven primarily by multi-strategy funds as a result of lower average assets under management in our multi-strategy funds, as a result of net outflows as well as negative fund performance in 2022. Please see “—Managing Business Performance—Multi-Strategy Funds” for additional information regarding the performance of the Sculptor Master Fund and “—Managing Business Performance—Weighted-Average FP AUM and Average Management Fee Rates” and “—Managing Business Performance—Summary of Changes in FP AUM” above for information regarding our average management fee rates and further detail on changes in FP AUM, respectively.

Incentive Income

Incentive income decreased by $40.3 million for the quarter-to-date period and $21.5 million for the year-to-date period, primarily due to the following:

•Opportunistic credit funds. We recognized $3.3 million of incentive in the quarter and $14.1 million year-to-date primarily from distributions in the Customized Credit Focused Platform. A $3.2 million increase for the quarter-to-date period and $5.7 million decrease for the year-to-date period was due to incentive income in our opportunistic credit funds is generally recognized at the end of a multi-year investment period, the timing of which will vary by fund and individual investor.

•Real estate funds. We did not recognize a material amount of incentive in the quarter and recognized $29.7 million year-to-date driven by crystallizations in Sculptor Real Estate Fund III, as the fund is realizing investments during its harvest period. A $44.7 million decrease for the quarter-to-date period and $16.5 million decrease for the year-to-date period was driven by timing of realizations in our real estate funds which will vary from period to period based on exit opportunities.

Other Revenues

Other revenues increased by $4.1 million for the quarter-to-date period and increased $8.2 million for the year-to-date period primarily as a result of higher interest income on both cash and cash equivalents, longer-term treasury bills and our risk retention investments in CLOs driven by higher interest rates.

Economic Income Expenses (Non-GAAP)

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Economic Income Basis
Compensation and benefits	$	35,338	$	58,011	$	89,160	$	97,208
Interest expense	5,898		3,173		11,247		6,212
General, administrative and other expenses	23,936		18,658		51,800		37,985
Total Economic Income Expenses	$	65,172	$	79,842	$	152,207	$	141,405

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Economic Income expenses for the quarter-to-date period were $65.2 million, decreasing $14.7 million year-over-year, and for the year-to-date period were $152.2 million, increasing $10.8 million year-over-year, primarily due to the following:

Compensation and Benefits

Compensation and benefits decreased by $22.7 million and $8.0 million for the quarter-to-date and year-to-date periods, primarily driven by $23.4 million and $9.8 million decreases in bonus expense, respectively. This was primarily due to lower real estate profit sharing expense linked to incentive income generated by Sculptor Real Estate Fund III.

Interest Expense

$2.7 million and $5.0 million increases in interest expense for the quarter-to-date and year-to date periods, respectively, primarily due to higher interest rates.

General, Administrative and Other Expenses

$5.3 million and $13.8 million increases in general, administrative and other expenses for the quarter-to-date and year-to-date periods, respectively, primarily due to an increase in professional services expenses, largely as a result of elevated legal costs for the activities of the Special Committee of our Board of Directors.

Liquidity and Capital Resources

Overview

The working capital needs of our business have historically been met, and we anticipate will continue to be met, through cash generated from management fees and incentive income earned from our funds.

We ended the quarter with $159.7 million of unrestricted cash and cash equivalents, and $30.0 million of management fees and incentive income receivable the majority of which will be collected in the third quarter of 2023 and $59.0 million of investments in U.S. government obligations that we can liquidate as needed. We also have access to an additional $25.0 million through our undrawn 2020 Revolving Credit Facility.

Based on management’s experience and our current level of AUM, we believe that our current liquidity position, together with the cash generated from management fees will be sufficient to meet our anticipated fixed operating expenses (as defined below) and other working capital needs for at least the next 12 months. For our longer-term liquidity needs, we expect to continue to fund our fixed operating expenses through management fees and to fund discretionary cash bonuses and the repayment of our financing arrangements through a combination of management fees and incentive income. We may also decide to meet these requirements by issuing additional debt, equity or other securities.

Over the long term, we believe our AUM will grow, including longer-term fee generating capital, and sustain positive investment performance in our funds, which will reflect positively on our revenue streams strengthening the balance sheet and providing the firm with stability to cover our long-term liquidity requirements.

To maintain maximum flexibility to meet demands and opportunities both in the short and long term, and subject to existing contractual arrangements, including the terms of the Merger Agreement with Rithm, we may want to use cash on hand, issue additional equity or borrow additional funds to:

•Support the future growth in our business.

•Create new or enhance existing products and investment platforms.

•Repay amounts due under our debt obligations and repurchase agreements.

•Repay amounts due under the tax receivable agreement.

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•Pursue new investment opportunities.

•Develop new distribution channels.

On July 23, 2023, we entered into the Merger Agreement with Rithm. The Merger Agreement contains limitations on actions that we may take between signing and closing without the consent of Rithm, including the declaration or payment of dividends, the repurchase of shares of our capital stock and entry into new lines of business. See Note 17 to the unaudited consolidated financial statements for more information regarding the Merger Agreement.

Share Repurchase Program

In February 2022, the Board of Directors authorized us to repurchase up to $100.0 million of our outstanding common stock. As of June 30, 2023, we repurchased 3,022,380 Class A Shares at the average price of $10.75 per share. No shares were repurchased in the three months ended June 30, 2023. The repurchase program has no expiration date. On July 23, 2023, we entered into the Merger Agreement with entities affiliated with Rithm. We do not intend to repurchase any shares while the Merger Agreement remains in effect. See Note 17 to the unaudited consolidated financial statements for more information regarding the Merger Agreement.

Liquidity Needs

Over the next 12 months, we expect that our primary liquidity needs will be to:

•Pay our operating expenses.

•Pay interest and principal on our financing arrangements.

•Provide capital to facilitate the growth of our business, including making risk retention investments in CLOs managed by us that are subject to EU and UK risk retention rules, investments in our funds and fund capital commitments to our funds.

•Pay income taxes, RSU tax withholding obligations and amounts due under the tax receivable agreement.

•Make tax distributions required to be made pursuant to the Sculptor Operating Partnership agreements and distributions necessary to allow us to make payments as required pursuant to the tax receivable agreement.

Operating Expenses

We generally rely on management fees to cover our “fixed” operating expenses, which we define as salaries, benefits, a minimum discretionary bonus and general, administrative and other expenses, including upcoming lease payments as presented in Note 6 to our consolidated financial statements, incurred in the ordinary course of business. No assurances can be given that our management fees will be sufficient to cover our fixed operating expenses in future periods. To the extent our management fees do not cover our fixed operating expenses, as well as to fund any other liabilities, we would rely on cash on hand and incentive income to cover any shortfall. We cannot predict the amount of incentive income, if any, that we may earn in any given year. Total annual revenues, which are heavily influenced by the amount of incentive income we earn, historically have been sufficient to fund both our fixed operating expenses and all of our other working capital needs, including annual discretionary cash bonuses. These cash bonuses, which historically have comprised our largest cash operating expense, are variable such that in any year where total annual revenues are greater or less than the prior year, cash bonuses may be adjusted accordingly. Our ability to scale our largest cash operating expense to our total annual revenues helps us manage our cash flow and liquidity position from year to year.

Historically, we have determined the amount of discretionary cash bonuses during the fourth quarter of each year, based on our total annual revenues and fund performance. We have historically funded these amounts through fourth quarter management fees and incentive income crystallized on December 31, which represents the majority of the incentive income we typically earn each year. Related to performance on longer-term AUM, we accrue bonus expense on ABURI which will not be

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recognized as incentive income in the current year, but will have associated bonus expense in the current year period. This ABURI could crystallize into incentive income in future periods without the associated bonus expense, which would shift attributable earnings into future periods. In addition, we may elect to increase the amount of cash bonuses paid to employees over the amount already accrued throughout the year, with any incremental amounts recognized as expense in the fourth quarter. Although we cannot predict the amount, if any, of incentive income we may earn, we are able to regularly monitor expected management fees and we believe that we may be able to adjust our expense infrastructure, including discretionary cash bonuses, as needed to meet the requirements of our business and in order to maintain positive operating cash flows. Nevertheless, if we generate insufficient cash flows from operations to meet our short-term liquidity needs, we may have to borrow funds or sell assets, subject to existing contractual arrangements.

Financing Arrangements

We may use cash on hand to pay interest and principal due on our financing arrangements, including debt obligations and repurchase agreements, prior to their respective maturity or due dates, which would reduce amounts available to distribute to our Class A Shareholders. We may also refinance all or a portion of any borrowings outstanding on or prior to their respective maturity dates. For any amounts unpaid as of a maturity or due date, we will be required to repay the remaining balance by using cash on hand, refinancing the remaining balance by incurring new debt, which could result in higher borrowing costs, or by issuing equity or other securities, which would dilute existing shareholders. See Notes 7 and 8 to our consolidated financial statements for details on our debt obligations and repurchase agreements.

CLO Risk Retention Investments

In order to meet risk retention requirements for certain of the CLOs we manage, we use a combination of cash on hand, as well as financing under the CLO Investments Loans and repurchase agreements to fund our 5% risk retention investments. We expect to continue relying on a combination of cash on hand and financing to fund future CLO risk retention investments. Payments of interest and principal on these borrowings are generally due at such time interest and principal payments are received on our risk retention investments in the related CLOs; therefore, our CLO risk retention investments and related financings generally have a net positive impact on our liquidity at each CLO interest and principal payment date.

Tax Receivable Agreement

We have made, and may in the future be required to make, payments under the tax receivable agreement that we entered into with our executive managing directors and Ziff Investors Partnership, L.P. II and certain of its affiliates and control persons (the “Ziffs”). As of June 30, 2023, assuming no material changes in the relevant tax law and that we generate sufficient taxable income to realize the full tax benefit of the increased amortization resulting from the increase in tax basis of certain Sculptor Operating Group assets, we expected to pay our executive managing directors and the Ziffs approximately $173.4 million. Future cash savings and related payments to our executive managing directors under the tax receivable agreement in respect of subsequent exchanges would be in addition to these amounts. See Note 16 to our consolidated financial statements for additional details.

Payments under the tax receivable agreement are anticipated to increase the tax basis adjustment and, consequently, result in increasing annual amortization deductions in the taxable years of and after such increases to the original basis adjustments, and potentially will give rise to increasing tax savings with respect to such years and correspondingly increasing payments under the tax receivable agreement.

The obligation to make payments under the tax receivable agreement is an obligation of Sculptor Corp, and any other corporate taxpaying entities that hold Group B Units, and not of the Sculptor Operating Group. We may need to incur debt to finance payments under the tax receivable agreement to the extent the Sculptor Operating Group does not distribute cash to Sculptor Corp in an amount sufficient to meet our obligations under the tax receivable agreement.

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The actual increase in tax basis of the Sculptor Operating Group assets resulting from an exchange or from payments under the tax receivable agreement, as well as the amortization thereof and the timing and amount of payments under the tax receivable agreement, will vary based upon a number of factors, including the following:

•The amount and timing of our income will impact the payments to be made under the tax receivable agreement. To the extent that we do not have sufficient taxable income to utilize the amortization deductions available as a result of the increased tax basis in the Sculptor Operating Partnerships’ assets, payments required under the tax receivable agreement would be reduced.

•The price of our Class A Shares at the time of any exchange will determine the actual increase in tax basis of the Sculptor Operating Partnerships’ assets resulting from such exchange; payments under the tax receivable agreement resulting from future exchanges, if any, will be dependent in part upon such actual increase in tax basis.

•The composition of the Sculptor Operating Group assets at the time of any exchange will determine the extent to which we may benefit from amortizing the increased tax basis in such assets and thus will impact the amount of future payments under the tax receivable agreement resulting from any future exchanges.

•The extent to which future exchanges are taxable will impact the extent to which we will receive an increase in tax basis of the Sculptor Operating Group assets as a result of such exchanges, and thus will impact the benefit derived by us and the resulting payments, if any, to be made under the tax receivable agreement.

•The tax rates in effect at the time any potential tax savings are realized, which would affect the amount of any future payments under the tax receivable agreement.

Depending upon the outcome of these factors, payments that we may be obligated to make to our current and former executive managing directors and the Ziffs under the tax receivable agreement in respect of exchanges could be substantial. In light of the numerous factors affecting our obligation to make payments under the tax receivable agreement, the timing and amounts of any such actual payments are not reasonably ascertainable.

Dividends and Distributions

The table below presents the cash dividends paid on our Class A Shares in 2023 and 2022. Dividends are generally declared and paid in the quarter following the quarter to which they relate. For example, the dividend paid on May 23, 2023, was in respect of earnings for the first quarter of 2023. We paid no related cash distributions to our executive managing directors on their Sculptor Operating Group Units in the respective periods as a result of the Distribution Holiday.

	Class A Shares
Payment Date	Record Date	Dividend per Share
May 23, 2023	May 16, 2023	$	0.06
March 21, 2023	March 14, 2023	$	0.20
November 28, 2022	November 21, 2022	$	0.01
August 22, 2022	August 15, 2022	$	0.13
May 25, 2022	May 18, 2022	$	0.11

As discussed in Note 3 in our Annual Report, in connection with the Recapitalization, we and our executive managing directors agreed to a “Distribution Holiday” on the Group A Units, Group E Units, Group P Units, PSUs and 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. During the Distribution Holiday, dividends may continue to be paid on our Class A Shares. As of June 30, 2023, we have generated a total of $548.5 million of Distribution Holiday Economic Income, compared to the target of $600.0 million.

Distribution Holiday Economic Income is the cumulative amount of Economic Income earned since October 1, 2018, less any dividends paid to Class A Shareholders and on the now-retired Preferred Units. Distribution Holiday Economic Income

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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. Please see “—Distribution Holiday Economic Income Reconciliation” for a reconciliation of Distribution Holiday Economic Income to net income attributable to Class A Shareholders.

During the Distribution Holiday, we expect to pay dividends on our Class A Shares annually in an aggregate amount equal to not less than 20% or greater than 30% of our annual Economic Income less an estimate of payments under the tax receivable agreement, and income taxes related to the earnings for the periods; provided, that, if the minimum amount of dividends eligible to be made hereunder would be $1.00 or less per Class A Share, then we expect to pay up to $1.00 per Class A Share (subject to appropriate adjustment in the event of any equity dividend, equity split, combination or other similar recapitalization with respect to the Class A Shares). During the Distribution Holiday, (i) we will only make distributions with respect to Group B Units, (ii) the performance thresholds of Group P Units and PSUs shall be adjusted to take into account performance and distributions during such period, and (iii) RSUs and certain RSAs will continue to receive dividend equivalents in respect of dividends or distributions paid on the Class A Shares. For certain executive managing directors, distributions on RSUs, as well as distributions counted in determining whether market performance conditions of Group P Units and PSUs are met, are limited to an aggregate amount not to exceed $4.00 per Group P Unit, PSU, RSU, or RSA, as applicable, cumulatively during the Distribution Holiday. Following the termination of the Distribution Holiday, Group A Units and Group E Units (whether vested or unvested) shall receive distributions even if such units have not been booked-up. See Note 13 in our Annual Report for additional information.

The declaration and payment of any distribution may be subject to legal, contractual or other restrictions. For example, as a Delaware corporation, the Registrant’s Board may only declare and pay dividends either out of its surplus (as defined in Delaware General Corporation Law) or in case there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Our cash needs and payment obligations may fluctuate significantly from quarter to quarter, and we may have material unexpected expenses in any period. This may cause amounts available for distribution to significantly fluctuate from quarter to quarter or may reduce or eliminate such amounts.

Additionally, RSUs and certain RSAs outstanding accrue dividend equivalents equal to the dividend amounts paid on our Class A Shares. To date, these dividend equivalents have been awarded in the form of additional RSUs or RSAs, as applicable, which accrue additional dividend equivalents. The dividend equivalents will only be paid if the related RSUs/RSAs vest and will be settled at the same time as the underlying RSUs/RSAs. Our Board of Directors has the right to determine whether the RSUs and any related dividend equivalents will be settled in Class A Shares or in cash. We currently withhold shares to satisfy the tax withholding obligations related to vested RSUs/RSAs and dividend equivalents held by our employees, which results in the use of cash from operations or borrowings to satisfy these tax-withholding payments. In addition, certain RSAs and Class P Units may receive dividend equivalents in the form of additional RSAs or Class P Units, as applicable, upon satisfaction of certain market performance-based vesting requirements.

Historically, when we have paid dividends on our Class A Shares, we also made distributions to our executive managing directors on their interests in the Sculptor Operating Group, subject to the terms of the limited partnership agreements of the Sculptor Operating Partnerships; however, as part of the Recapitalization, the Sculptor Operating Partnerships initiated the Distribution Holiday. See Note 3 in our Annual Report for additional information regarding the Distribution Holiday.

Our cash distribution policy has certain risks and limitations, particularly with respect to our liquidity. Although we expect to pay distributions according to our policy, we may not make distributions according to our policy, or at all, if, among other things, we do not have the cash necessary to pay the distribution. Furthermore, by paying cash distributions rather than investing that cash in our businesses, we might risk slowing the pace of our growth, or not having a sufficient amount of cash to fund our obligations, operations, new investments or unanticipated capital expenditures, should the need arise. In such event, we may not be able to execute our business and growth strategy to the extent intended.

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On July 23, 2023, we entered into the Merger Agreement with entities affiliated with Rithm. Pursuant to the Merger Agreement, we will not pay dividends with respect to periods ending June 30, 2023 or thereafter, while the Merger Agreement remains in effect. ”See Note 17 to the unaudited consolidated financial statements for more information regarding the Merger Agreement.

Risks to Our Liquidity

In the normal course of our funds’ life cycles, investors in our multi-strategy and certain open-end opportunistic credit funds have the right to redeem their interests following an initial lock up period, as discussed in the “Managing Business Performance” section, which could impact our liquidity and management fees. While we continuously make every effort to scale our operations so that management fees are sufficient to cover our fixed operating expenses, our management fees may not always cover these expenses. Additionally, in the event that a future contingent liability were to arise that exceeded our liquidity resources, we would need to rely on new sources of liquidity such as issuing additional equity or borrowing additional funds.

Any new borrowing arrangement that we may enter into may have covenants that impose additional limitations on us, including with respect to making distributions, entering into business transactions or other matters, and may result in increased interest expense. If we are unable to meet our debt obligations on terms that are favorable to us, our business may be adversely impacted. No assurance can be given that we will be able to issue new notes, enter into new credit facilities or issue equity or other securities in the future on attractive terms or at all.

Adverse market conditions, increase the risk that our management fees and incentive income may decline if net outflows increase or as a result of performance-related depreciation in our funds. Lower revenues and other factors may make it more difficult or costly to raise or borrow additional funds, and excessive borrowing costs or other significant market barriers may limit or prevent us from maximizing our growth potential and flexibility. We have also evaluated our financing arrangements to ensure compliance with debt covenants. Through the date of this filing, we remain in compliance with our debt covenants and expect to continue to be in compliance in the near term.

Our CLO risk retention financing arrangements are not subject to any financial maintenance covenants, but are subject to customary events of default and covenants included in financing arrangements of this type and also include terms that require our continued involvement with the CLOs. In addition to customary events of default included in financing arrangements of this type, the CLO Investments Loans may be accelerated to the extent there is an event of default (“EOD”) 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. For the repurchase agreements, in addition to customary events of default and covenants included in financing arrangements of this type, there are margin requirements that may cause us to post additional cash collateral; however, this is only triggered in the event of an EOD at the CLO level. Currently, we do not view any of the customary or CLO level EODs for these types of financing arrangements as a material risk. In particular, an EOD related to an interest payment default on the senior, non-deferrable interest notes of the type of cash flow CLOs that we manage has been unprecedented even during the credit crisis in 2008 and 2009.

On March 5, 2021, the UK Financial Conduct Authority announced that it would phase out LIBOR as a benchmark immediately after December 31, 2021, for sterling, euro, Japanese yen, Swiss franc and 1-week and 2-month U.S. Dollar settings and immediately after June 30, 2023, for the remaining U.S. Dollar settings. Since the initial announcement, we have taken the necessary steps to prepare for and mitigate the impacts of this transition, and will continue to monitor any regulatory changes in the interest rate benchmark landscape. For the face value of instruments impacted by the LIBOR transition that we hold on our books see Note 7 to our consolidated financial statements included in this report. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business—The replacement of LIBOR with an alternative reference rate, may adversely affect our collateralized loan obligation transactions” in our Annual Report for additional information.

Our Funds’ Liquidity and Capital Resources

Our funds have access to liquidity from our prime brokers and other counterparties. Additionally, our funds may have committed facilities in addition to regular financing from our counterparties. These sources of liquidity provide our funds with additional financing resources, allowing them to take advantage of opportunities in the global marketplace.

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Our funds’ current liquidity position could be adversely impacted by any substantial, unanticipated investor redemptions from our funds that are made within a short time period. As discussed above in the “Managing Business Performance” section, capital contributions from investors in our multi-strategy and open-end opportunistic credit funds generally are subject to initial lock-up periods of one to four years, except for certain multi-strategy fund investors who have the right to redeem their interests on a quarterly basis. Following the expiration of these lock-up periods, subject to certain limitations, investors may redeem capital generally on a quarterly, annual, or three-year basis upon giving 30 to 90 days’ prior written notice. These lock-ups and redemption notice periods help us to manage our liquidity position. Investors in our other funds are generally not allowed to redeem until the end of the life of the fund.

We also follow a rigorous risk management process and regularly monitor the liquidity of our funds’ portfolios in relation to economic and market factors and the timing of potential investor redemptions. As a result of this process, we may determine to reduce exposure or increase the liquidity of our funds’ portfolios at any time, whether in response to global economic and market conditions, redemption requests or otherwise. For these reasons, we believe we will be well prepared to address market conditions and redemption requests, as well as any other events, with limited impact on our funds’ liquidity position. Nevertheless, significant redemptions made during a single quarter, or in successive quarters, could adversely affect our funds’ liquidity position, as we may meet redemptions by using our funds’ available cash or selling assets (possibly at a loss). Such actions would result in lower AUM, which would reduce the amount of management fees and incentive income we may earn. Our funds could also meet redemption requests by increasing leverage, provided we are able to obtain financing on reasonable terms, if at all. We believe our funds have sufficient liquidity to meet any anticipated redemptions for the foreseeable future.

Liquidity of Consolidated SPAC

During second quarter of 2023, our consolidated SPAC was liquidated and its investments that were held in a trust account were liquidated to redeem the SPAC Class A shareholders.

Cash Flows Analysis

Operating Activities. Net cash from operating activities for the six months ended June 30, 2023 and 2022 was $(78.6) million and $(335.7) million, respectively. Excluding the activity of our consolidated entities, our net cash from operating activities was $(67.1) million and $(21.6) million for the six months ended June 30, 2023 and 2022, respectively. Our net cash flows from operating activities are generally comprised of current-year management fees, the collection of incentive income earned during the fourth quarter of the previous year, interest income collected on our investments and bank deposits, less cash used for operating expenses, including interest paid on our debt obligations. Also contributing to cash from operating activities for the six months ended June 30, 2022 were the investing activities of the structured alternative investment solution we consolidate.

Investing Activities. Net cash from investing activities for the six months ended June 30, 2023 and 2022 was $235.4 million, and $177.7 million, respectively. Excluding the activity of our consolidated entities, our net cash from investing activities was $(6.8) million and $177.7 million for six months ended June 30, 2023 and 2022, respectively. Investing cash inflows in 2023 was primarily driven by the sale of the U.S. government obligations by our consolidated SPAC that was liquidated during the second quarter of 2023. Investing cash inflows in 2022 primarily related to maturities and sales of U.S. government obligations and return of investments in our funds, partially offset by investments made in our funds and purchases of U.S. government obligations.

Financing Activities. Net cash from financing activities for the six months ended June 30, 2023 and 2022 was $(256.3) million, and $208.3 million, respectively. Excluding the activity of our consolidated entities, our net cash from financing activities was $(14.1) million and $(7.4) million for the six months ended June 30, 2023 and 2022, respectively. Net cash from financing activities is generally comprised of dividends paid to our Class A Shareholders, borrowings and repayments related to our debt obligations and those of our consolidated entities, repurchases of treasury shares, and proceeds from repurchase agreements used to finance risk retention investments in our CLOs. During the second quarter of 2023, our consolidated SPAC was liquidated, and as a result, it redeemed its Class A Shares. Additionally, our consolidated structured alternative investment solution issued $215.7 million of notes payable in 2022. These financing-related cash flows are of the consolidated entities and do not directly impact the cash flows related to our Class A Shareholders.

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In the six months ended June 30, 2023, we did not enter into any new material financing arrangements. In the six months ended June 30, 2022, we entered into a $20.4 million repurchase agreement to finance a risk retention investment in our European CLOs. In the six months ended June 30, 2023, we did not repurchase any Class A shares, compared to $19.5 million of repurchases of Class A shares in the six months ended June 30, 2022, as a part of our share repurchase program.

We paid dividends of $6.5 million and $2.8 million to our Class A Shareholders in the six months ended June 30, 2023, and six months ended June 30, 2022, respectively. No distributions were made to our executive managing directors in the six months ended June 30, 2023 or June 30, 2022, as a result of the Distribution Holiday.

Critical Accounting Estimates

Critical accounting estimates are those that require us to make significant judgments, estimates or assumptions that affect amounts reported in our financial statements or the notes thereto. We base our judgments, estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable and prudent. Actual results may differ materially from these estimates. See Note 2 to our consolidated financial statements included in our Annual Report for a description of our accounting policies. Set forth below is a summary of what we believe to be our most critical accounting policies and estimates.

Fair Value of Investments

The valuation of investments held by our funds is the most critical estimate made by management impacting our results. Pursuant to specialized accounting for investment companies under GAAP, investments held by the funds are carried at their estimated fair values. The valuation of investments held by our funds has a significant impact on our results, as our management fees and incentive income are generally determined based on the fair value of these investments.

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 assets and liabilities. Assets and liabilities with readily available, actively quoted prices (Level I) or for which fair value can be measured from actively quoted prices (Level II) generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value than those measured using pricing inputs that are unobservable in the market (Level III). See Note 4 to our consolidated financial statements included in this report for additional information regarding fair value measurements.

As of June 30, 2023, the absolute values of our funds’ invested assets and liabilities (excluding the notes and loans payable of our securitization vehicles) were classified within the fair value hierarchy as follows: approximately 25% within Level I; approximately 48% within Level II; and approximately 27% within Level III. As of December 31, 2022, the absolute values of our funds’ invested assets and liabilities (excluding the notes and loans payable of our securitization vehicles) were classified within the fair value hierarchy as follows: approximately 31% within Level I; approximately 44% within Level II; and approximately 25% within Level III. The percentage of our funds’ assets and liabilities within the fair value hierarchy will fluctuate based on the investments made at any given time and such fluctuations could be significant. A portion of our funds’ Level III assets relate to Special Investments or other investments on which we do not earn any incentive income until such investments are sold or otherwise realized. Upon the sale or realization event of these assets, any realized profits are included in the calculation of incentive income for such year. Accordingly, the estimated fair value of our funds’ Level III assets may not have any relation to the amount of incentive income actually earned with respect to such assets.

Valuation of Investments. Fair value represents the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants as of the measurement date. The fair value of our funds’ investments is based on observable market prices when available. We, as the investment manager of our funds, determine the fair value of investments that are not actively traded on a recognized securities exchange or otherwise lack a readily ascertainable market value. The methods and procedures to value these investments may include the following: performing comparisons with prices of comparable or similar securities; obtaining valuation-related information from the issuers; calculating the present value of future cash flows; assessing other analytical data and information relating to the investment that is an indication of value; obtaining information provided by third parties; and evaluating financial information provided by the management of these investments.

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Significant judgment and estimation go into the assumptions that drive our valuation methodologies and procedures for assets that are not actively traded on a recognized securities exchange or otherwise lack a readily ascertainable market value. The valuation of investments can be more difficult when severe economic and market shocks occur. The COVID-19 pandemic is an example of such a shock. The actual amounts ultimately realized could differ materially from the values estimated based on the use of these methodologies. Realizations at values significantly lower than the values at which investments have been reflected could result in losses at the fund level and a decline in future management fees and incentive income. Such situations may also negatively impact fund investor perception of our valuation policies and procedures, which could result in redemptions and difficulties in raising additional capital.

We have established an internal control infrastructure over the valuation of financial instruments that includes ongoing oversight by our Valuation Controls Group and Valuation Committee, as well as periodic audits by our Internal Audit function. These management control functions are segregated from the trading and investing functions.

The Valuation Committee is responsible for establishing the valuation policy and monitors compliance with the policy, ensuring that all of the funds’ investments reflect fair value, as well as providing oversight of the valuation process. The valuation policy includes, but is not limited to the following: determining the pricing sources used to value specific investment classes; the selection of independent pricing services; performing due diligence of independent pricing services; and the classification of investments within the fair value hierarchy. The Valuation Committee reviews a variety of reports on a monthly basis, which include the following: summaries of the sources used to determine the value of the funds’ investments; summaries of the fair value hierarchy of the funds’ investments; methodology changes and variance reports that compare the values of investments to independent pricing services. The Valuation Committee is independent from the investment professionals and may obtain input from investment professionals for consideration in carrying out its responsibilities.

The Valuation Committee has assigned the responsibility of performing price verification and related quality controls in accordance with the valuation policy to the Valuation Controls Group. The Valuation Controls Group’s other responsibilities include the following: overseeing the collection and evaluation of counterparty prices, broker-dealer quotations, exchange prices and pricing information provided by independent pricing services. Additionally, the Valuation Controls Group is responsible for performing back testing by comparing prices observed in executed transactions to valuations provided by independent pricing service providers on a monthly basis; performing stale pricing analysis on a monthly basis; performing due diligence reviews on independent pricing services on an annual basis; and recommending changes in valuation policies to the Valuation Committee. The Valuation Controls Group also verifies that indicative broker quotations used to value certain investments are representative of fair value through procedures such as comparison to independent pricing services, back testing procedures, review of stale pricing reports and performance of other due diligence procedures as may be deemed necessary.

Investment professionals and members of the Valuation Controls Group review a daily profit and loss report, as well as other periodic reports that analyze the profit and loss and related asset class exposure of the funds’ investments.

The Internal Audit function employs a risk-based program of audit coverage that is designed to provide an assessment of the design and effectiveness of controls over our operations, regulatory compliance, valuation of financial instruments and reporting. Additionally, the Internal Audit function meets periodically with management and the Audit Committee of our Board of Directors to evaluate and provide guidance on the existing risk framework and control environment assessments.

For information regarding the impact that the fair value measurement of AUM has on our results, please see “Part I—Item 3. Quantitative and Qualitative Disclosures About Market Risk.”

Recognition of Incentive Income

The determination of whether to recognize incentive income under GAAP requires a significant amount of judgment regarding whether it is probable that a significant revenue reversal of incentive income that we are potentially entitled to as of a point in time will not occur in future periods, which would preclude the recognition of such amounts as incentive income. Management considers a variety of factors when evaluating whether the recognition of incentive income is appropriate, including: the performance of the fund, whether we have received or are entitled to receive incentive income distributions and whether such amounts are restricted, the investment period and expected term of the fund, where the fund is in its life-cycle, the volatility and liquidity of investments held by the fund, our team’s experience with similar investments and potential sales of investments within

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the fund. Management continuously evaluates whether there are additional considerations that could potentially impact the recognition of incentive income and notes that the recognition, and potential reversal, of incentive income is subject to potentially significant variability due to changes to the aforementioned considerations. See Note 11 for details on amounts recognized and deferred for incentive income.

Variable Interest Entities

The determination of whether or not to consolidate a variable interest entity under GAAP requires a significant amount of judgment concerning the degree of control over an entity by its holders of variable interests. To make these judgments, management conducts an analysis, on a case-by-case basis, of whether we are the primary beneficiary and are therefore required to consolidate the entity. Management continually reconsiders whether we should consolidate a variable interest entity. Upon the occurrence of certain events, such as investor redemptions or modifications to fund organizational documents and investment management agreements, management will reconsider its conclusion regarding the status of an entity as a variable interest entity.

Income Taxes

We use the asset and liability method of accounting for deferred income taxes. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is established when management believes it is more likely than not that a deferred income tax asset will not be realized.

The majority of our deferred income tax assets relate to the goodwill and other intangible assets deductible for tax purposes by Sculptor Corp that arose in connection with the purchase of Group A Units with proceeds from the 2007 Offerings, subsequent exchanges of Group A Units for Class A Shares and subsequent payments made under the tax receivable agreement, in addition to any related net operating loss carryforward. In accordance with relevant provisions of the Code, we expect to take these goodwill and other intangible deductions over the 15-year period following the 2007 Offerings and subsequent exchanges, as well as an additional 20-year loss carryforward period available to us for net operating losses generated prior to 2018 and indefinite carryforward period for net operating losses generated beginning in 2018, in order to fully realize the deferred income tax assets. Our analysis of whether we expect to have sufficient future taxable income to realize these deductions is based solely on estimates over this period.

Sculptor Corp generated taxable income of $25.5 million for the six months ended June 30, 2023, before taking into account deductions related to the amortization of the goodwill and other intangible assets. We determined that we would need to generate taxable income of at least $787.1 million over the remaining one-year weighted-average amortization period, as well as an additional 20-year loss carryforward period available for expiring losses, in order to fully realize the deferred income tax assets. Using the estimates and assumptions discussed below, we expect to generate sufficient taxable income over the remaining amortization and loss carryforward periods available to us in order to fully realize the deferred income tax assets.

To generate $787.1 million in taxable income over the remaining amortization and loss carryforward periods available to us, we estimated that, based on estimated AUM of $34.2 billion as of July 1, 2023, we would need to generate a minimum compound annual growth rate in AUM of less than 3% over the period for which the taxable income estimate relates to fully realize the deferred income tax assets, assuming no performance-related growth, and therefore no incentive income. The assumed nature and amount of this estimated growth rate are not based on historical results or current expectations of future growth; however, the other assumptions underlying the taxable income estimates, are based on our near-term operating budget. If our actual growth rate in AUM falls below this minimum threshold for any extended time during the period for which these estimates relate and we do not otherwise experience offsetting growth rates in other periods, we may not generate taxable income sufficient to realize the deferred income tax assets and may need to record a valuation allowance.

Management regularly reviews the model used to generate the estimates, including the underlying assumptions. If it determines that a valuation allowance is required for any reason, the amount would be determined based on the relevant circumstances at that time. To the extent we record a valuation allowance against our deferred income tax assets related to the goodwill and other intangible assets, we would record a corresponding decrease in the liability under the tax receivable agreement equal to approximately 69% of such amount; therefore, our consolidated net income (loss) would only be impacted by 31% of any valuation allowance recorded against the deferred income tax assets.

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Actual taxable income may differ from the estimate described above, which was prepared solely for determining whether we currently expect to have sufficient future taxable income to realize the deferred income tax assets. Furthermore, actual or estimated future taxable income may be materially impacted by significant changes in AUM, whether as a result of fund investment performance or fund investor contributions or redemptions, significant changes to the assumptions underlying our estimates, future changes in income tax law, state income tax apportionment or other factors.

As of June 30, 2023, we had $243.0 million of net operating losses available to offset future taxable income for federal income tax purposes that will expire between 2030 and 2037, and $255.1 million of net operating losses available to be carried forward without expiration. Additionally, $220.0 million of net operating losses are available to offset future taxable income for state income tax purposes and $216.2 million for local income tax purposes that will expire between 2035 and 2043.

Based on the analysis set forth above, as of June 30, 2023, we have determined that it is not necessary to record a valuation allowance with respect to our deferred income tax assets related to the goodwill and other intangible assets deductible for tax purposes, and any related net operating loss carryforward. However, we have determined that we may not realize certain foreign income tax credits and accordingly, a valuation allowance of $4.7 million has been established for these items.

Impact of Recently Adopted Accounting Pronouncements on Recent and Future Trends

No changes to GAAP that went into effect during the six months ended June 30, 2023, are expected to substantively impact our future trends.

Expected Impact of Future Adoption of New Accounting Pronouncements on Future Trends

None of the changes to GAAP that have been issued but that we have not yet adopted are expected to substantively impact our future trends.

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Economic Income Reconciliations

The tables below present the reconciliations of total Economic Income and its components to the respective GAAP measures for the periods presented in this MD&A:

	Three Months Ended June 30,
	2023		2022
	(dollars in thousands)
Net Income (Loss) Attributable to Class A Shareholders—GAAP	$	3,654	$	(8,052)
Change in redemption value of redeemable noncontrolling interests	(8,004)		(697)
Net Loss Allocated to Sculptor Capital Management, Inc.—GAAP	(4,350)		(8,749)
Equity-based compensation, net of RSUs settled in cash	14,301		20,804
Deferred cash compensation	6,707		7,730
Incentive income profit sharing	1,138		(6,802)
2020 Term Loan and Debt Securities non-cash interest expense accretion	256		254
Depreciation, amortization and net gains and losses on fixed assets	1,035		1,304
Changes in fair value of warrant liabilities	434		(18,740)
Changes in tax receivable agreement liability	584		(227)
Net (gains) losses on investments	(5,208)		30,838
Other adjustments	(138)		—
Income taxes	(1,190)		(7,914)
Net (loss) income allocated to noncontrolling interests	(9,822)		5,579
Net income attributable to redeemable noncontrolling interests	1,851		697
Consolidated entities related items:
Income of consolidated entities	(1,862)		(311)
Expenses of consolidated entities	1,304		1,668
Net (gains) losses of consolidated entities	(1,866)		6,434
Economic Income—Non-GAAP	$	3,174	$	32,565

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	Six Months Ended June 30,
	2023		2022
	(dollars in thousands)
Net Income Attributable to Class A Shareholders—GAAP	$	12,146	$	8,830
Change in redemption value of redeemable noncontrolling interests	(6,826)		(3,765)
Net Income Allocated to Sculptor Capital Management, Inc.—GAAP	5,320		5,065
Equity-based compensation, net of RSUs settled in cash	27,476		43,541
Deferred cash compensation	13,286		16,310
Incentive income profit sharing	(3,816)		469
2020 Term Loan non-cash discount accretion	503		500
Depreciation, amortization and net gains and losses on fixed assets	2,078		2,698
Changes in fair value of warrant liabilities	260		(43,076)
Changes in tax receivable agreement liability	527		(220)
Net (gains) losses on investments	(10,136)		36,182
Other adjustments	(196)		(150)
Income taxes	11,557		(947)
Net loss allocated to noncontrolling interests	(16,027)		(6,427)
Net income attributable to redeemable noncontrolling interests	3,350		3,765
Consolidated entities related items:
Income of consolidated entities	(4,558)		(150)
Expenses of consolidated entities	1,851		1,912
Net (gains) losses of consolidated entities	(9,743)		2,294
Economic Income—Non-GAAP	$	21,732	$	61,766

Economic Income Revenues

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Management fees—GAAP	$	62,442	$	71,770	$	126,150	$	145,207
Adjustment to management fees(1)(2)	(4,068)		(5,457)		(8,121)		(11,137)
Management Fees—Economic Income Basis—Non-GAAP	58,374		66,313		118,029		134,070
Incentive income—GAAP	4,296		44,580		44,582		66,222
Adjustment to incentive income(2)	—		—		48		(73)
Incentive Income—Economic Income Basis— Non-GAAP	4,296		44,580		44,630		66,149
Other revenues—GAAP	6,703		2,520		13,248		4,950
Adjustment to other revenues(3)	(1,026)		(916)		(1,967)		(1,906)
Other Revenues—Economic Income Basis—Non-GAAP	5,677		1,604		11,281		3,044
Total Revenues—Economic Income Basis—Non-GAAP	$	68,347	$	112,497	$	173,940	$	203,263

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(1)Adjustment to present management fees net of recurring placement and related service fees, as management considers these fees a reduction in management fees, not an expense.

(2)Adjustment to exclude the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned in relation to total AUM and fund performance.

(3)Adjustment to offset rent expense by subrental income as management evaluates rent expense on a net basis.

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Economic Income Expenses

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Compensation and benefits—GAAP	$	57,484	$	79,743	$	126,106	$	157,528
Adjustment to compensation and benefits(1)	(22,146)		(21,732)		(36,946)		(60,320)
Compensation and Benefits—Economic Income Basis—Non-GAAP	$	35,338	$	58,011	$	89,160	$	97,208
Interest expense—GAAP	$	6,154	$	3,427	$	11,750	$	6,712
Adjustment to interest expense(2)	(256)		(254)		(503)		(500)
Interest Expense—Economic Income Basis—Non-GAAP	$	5,898	$	3,173	$	11,247	$	6,212
General, administrative and other expenses—GAAP	$	29,928	$	26,425	$	63,723	$	53,741
Adjustment to general, administrative and other expenses(3)	(5,992)		(7,767)		(11,923)		(15,756)
General, Administrative and Other Expenses—Economic Income Basis—Non-GAAP	$	23,936	$	18,658	$	51,800	$	37,985

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(1)Adjustment to exclude equity-based compensation, net of cash settled RSUs. When the number of RSUs to be settled in cash is discretionary at the time of the grant, then the fair value of RSUs that are settled in cash is included as an expense at the time of settlement. When the number of RSUs to be settled in cash is certain on the grant date, then the expense is recognized during the performance period to which the award relates. In addition, expenses related to incentive income profit-sharing arrangements are generally recognized at the same time the related incentive income revenue is recognized, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned from the relevant fund. For Economic income deferred cash compensation is expensed in full during the performance period to which the award relates to, rather than over the service period for GAAP as management views the compensation expense impact in relation to the performance period.

(2)Adjustment to exclude amounts related to non-cash interest expense accretion on debt. The 2020 Term Loan and the Debt Securities, which were issued in connection with the Recapitalization, were each recognized at a significant discount, as proceeds from each borrowing were allocated to warrant liabilities and the 2019 Preferred Units, respectively, resulting in non-cash accretion to par over time through interest expense for GAAP. The Debt Securities and the 2019 Preferred Units were fully redeemed in 2020. Management excludes this non-cash expense from Economic Income, as it does not consider it to be reflective of our economic borrowing costs.

(3)Adjustment to exclude depreciation, amortization, and losses on fixed assets, as management does not consider these items to be reflective of our operating performance. 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, as management evaluates impairment expenses over the life of the related lease asset and considers the impairment charge to be nonrecurring in nature. Additionally, rent expense is offset by subrental income as management evaluates rent expenses on a net basis. Further, recurring placement and related service fees are excluded, as management considers these fees a reduction in management fees, not an expense.

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Distribution Holiday Economic Income Reconciliation

The table below presents the reconciliation of Distribution Holiday Economic Income to net income (loss) attributable to Class A Shareholders from October 1, 2018, to June 30, 2023.

	From October 1, 2018 to June 30, 2023
	(dollars in thousands)
Net income attributable to Class A shareholders	$	212,652
Change in redemption value of redeemable noncontrolling interests and Preferred Units	(22,516)
Net Income Allocated to Sculptor Capital Management, Inc.—GAAP	190,136
Equity-based compensation, net of RSUs settled in cash	358,541
Deferred cash compensation	(6,277)
Incentive income profit sharing	(12,441)
2020 Term Loan and Debt Securities non-cash discount accretion	21,508
Depreciation, amortization and net gains and losses on fixed assets	34,180
Changes in fair value of warrant liabilities	(5,856)
Changes in tax receivable agreement liability	16,591
Net losses on retirement of debt	41,584
Net gains on investments	(670)
Impairment of right-of-use asset	11,240
Other adjustments	3,633
Income taxes	140,550
Net loss allocated to noncontrolling interests	(101,351)
Net income attributable to redeemable noncontrolling interests	17,962
Less: Dividends paid on 2019 Preferred Units	(6,952)
Less: Dividends to Class A Shareholders declared with respect to such periods	(128,117)
Consolidated entities related items:
Income of consolidated entities	(23,649)
Expenses of consolidated entities	8,430
Net gains of consolidated entities	(10,493)
Distribution Holiday Economic Income—Non-GAAP	$	548,549

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our predominant exposure to market risk is related to our role as general partner or investment manager for the funds, and the sensitivities to movements in the fair value of their investments that may adversely affect our management fees and incentive income. Our risk management committee is responsible for monitoring and providing oversight over various risks that may arise in the course of our business including market risks, counterparty, geopolitical and operational risks, in addition to traditional portfolio risk management.

The quantitative information provided in this section was prepared using estimates and assumptions that management believes are reasonable to provide an indication of the directional impact that a hypothetical adverse movement in certain risks would have on net income attributable to Class A Shareholders. The actual impact of a hypothetical adverse movement in these risks could be materially different from the amounts shown below.

Management of Market Risk

Risk management is highly integrated with our investment process and the operations of our business. Our approach to

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investing and managing risk is based on (i) proactive risk management, (ii) preservation of capital, (iii) dynamic capital allocation and (iv) expertise across strategies and geographies. We constantly monitor risk and have instituted a formal and consistent process to disseminate information, conduct informed debate, and take proactive or responsive action across our portfolios. In addition to our formalized process, we conduct custom studies and optimizations for various groups on an as-needed, ad hoc basis such as bespoke hedge solutions, pre-trade what-if analysis, and portfolio rebalance alternatives. Our goal is to preserve capital during periods of market decline and generate competitive investment performance in rising markets. We use sophisticated risk tools and active portfolio management to govern exposures to market and other risk factors. We adhere strictly to each fund’s mandate and provisions with respect to leverage. We are knowledgeable about the risks of fund leverage, respectful of its limits, and judicious in our application. We allocate to individual investments based on a thorough analysis of the risk/reward for each opportunity under consideration and the investment objectives for each of our funds. When managing our funds’ exposure to market risks, we may from time to time use hedging strategies and various forms of derivative instruments to limit the funds’ exposure to changes in the relative values of investments that may result from market developments, including changes in prevailing interest rates, currency exchange rates and commodity prices.

Changes in Fair Value

Fair value of the financial assets and liabilities of our funds may fluctuate in response to changes in the value of investments, foreign currency exchange rates, commodity prices, and interest rates, among other factors. The fair value changes in the financial assets and liabilities of our funds may affect the amount of our AUM and may impact the amount of management fees and incentive income we may earn from the funds.

The amount of our AUM in our multi-strategy and opportunistic credit funds is generally based on net asset value (plus unfunded commitments in certain cases). A 10% change in the fair value of the net assets held by our funds as of June 30, 2023 and December 31, 2022, would have resulted in changes of approximately $1.4 billion and $1.5 billion, respectively, in AUM. AUM for our real estate funds and securitization vehicles is generally not based on net asset value.

Additionally, we carry the following financial instruments at fair value: risk retention investments in certain of our CLOs, investments in U.S. government obligations, investments of our consolidated entities, warrants issued by us and our consolidated entity, and notes payable of a consolidated entity. A hypothetical 10% change in the fair value of these instruments would have a corresponding impact on our earnings. Refer to Note 4 of our consolidated financial statements included in this quarterly report for additional details on how we report the changes in fair value of these instruments.

Impact on Management Fees

Management fees for our multi-strategy and opportunistic credit funds are generally based on the net asset value of those funds. Accordingly, management fees will generally change in proportion to changes in the fair value of investments held by these funds. Management fees for our real estate funds and securitization vehicles are not based on net asset value; therefore, management fees are not directly impacted by changes in the fair value of investments held by those funds.

A hypothetical 10% decline in the fair value of the net assets held by our funds would have resulted in a reduction of management fees by approximately $8.4 million in the six months ended June 30, 2023 and $10.3 million in the six months ended June 30, 2022.

Impact on Incentive Income

Incentive income for our funds is generally based on a percentage of profits generated by our funds over a commitment period, which is impacted by global market conditions and other factors. Major factors that influence the degree of impact include how the investments held by our funds are impacted by changes in the market and the extent to which any hurdle rates or high-water marks impact our ability to earn incentive income. Consequently, incentive income cannot be readily predicted or estimated.

A 10% change in the fair value of the net assets held by our funds as of the end of any year could significantly affect our incentive income. We do not earn incentive income on unrealized gains attributable to Special Investments and certain other investments, and therefore a change in the fair value of those investments would have no effect on incentive income until such investments are sold or otherwise realized.

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Exchange Rate Risk

Changes in currency rates will impact the carrying value of financial instruments denominated in currencies other than the U.S. dollar. We hold certain cash and risk retention investments in the European CLOs as well as related financing (CLO Investments Loans and repurchase agreements) denominated in non-U.S. dollar currencies, which may be affected by movements in the rate of exchange between the U.S. dollar and foreign currencies. Additionally, a portion of our operating expenses and management fees are denominated in non-U.S. dollar currencies. We manage our exposure to exchange rate risks through our regular operating activities, wherein we may align foreign currency payments and receipts, and when appropriate, through the use of derivative financial instruments to hedge certain foreign currency exposure, although the impact of these were not material in 2023 and 2022.

We estimate that as of June 30, 2023 and 2022, a hypothetical 10% weakening or strengthening of the U.S. dollar against all foreign currency rates would not have a material direct impact on our revenues, net income attributable to Class A Shareholders or Economic Income. The impact on cash flows from financial instruments would be insignificant.

Our investment funds hold investments that are denominated in non-U.S. dollar currencies that may be affected by movement in the rate of exchange between the U.S. dollar and non-U.S. dollar currencies. The funds may seek to hedge resulting currency exposure through borrowings in foreign currencies or through the use of derivative financial instruments.

Interest Rate Risk

Borrowings under the 2020 Term Loan and our investments in CLOs accrue interest at variable rates. Interest rate changes may therefore affect the amount of our interest payments, future earnings and cash flows. We estimate that as of June 30, 2023 and 2022, a hypothetical one percentage increase or decrease in variable interest rates would not have a material direct impact on our annual interest income, interest expense, net income attributable to Class A Shareholders or Economic Income.

Our investment funds hold investments that may be affected by changes in interest rates. A material increase in interest rates would be expected to negatively affect valuation of investments that accrue interest at fixed rates. The actual impact would be dependent upon the average duration of fixed income holdings at the time and may be partially offset by the use of derivative financial instruments and higher interest income on variable rate securities, which would be expected to benefit as these securities would generate higher levels of current income. For funds that pay management fees based on net asset value, we estimate that our management fees would change proportionally with such increases or decreases in net asset value.

Credit Risk

Credit risk is the risk that counterparties or debt issuers may fail to fulfill their obligations or that the collateral value may become inadequate to cover our exposure. We manage credit risk by monitoring the credit exposure to and the creditworthiness of counterparties, requiring additional collateral where appropriate.

Item 4. Controls and Procedures

Effectiveness of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

As of June 30, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our

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disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective and were operating at a reasonable assurance level.

Inherent Limitations on Effectiveness of Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls.

The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act, that occurred in the second quarter of 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are from time to time involved in litigation and claims incidental to the conduct of our business. Like other businesses in our industry, we are subject to extensive scrutiny by regulatory agencies globally that have, or may in the future have, regulatory authority over us and our business activities. This has resulted in, or may in the future result in, regulatory agency investigations, litigation and subpoenas, and related sanctions and costs. See “Part I, Item 1A. Risk Factors—Risks Related to Our Business—Regulatory changes in jurisdictions outside the U.S. could adversely affect our business” in our Annual Report. See Note 16 to our consolidated financial statements included in this report for additional information.

On August 24, 2022, a complaint under Section 220 of Delaware’s general corporation law, which allows shareholders to inspect corporate books and records, was filed by Daniel S. Och, the founder and former Chief Executive Officer (the “Founder”) of Och-Ziff Capital Management LLC and its consolidated subsidiaries (“Och-Ziff”) and four former Och-Ziff executive managing directors. On November 18, 2022, the parties announced a settlement of the matter whereby the Founder and the former executive managing directors dismissed the Section 220 complaint with prejudice and in return, among other things, the Company agreed to produce certain additional books and records as well as to issue a press release announcing the formation of a special committee of the Board.

Item 1A. Risk Factors

There have been no material changes from the risk factors disclosed in Part I, Item 1A "Risk Factors" included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 other than the following:

The announcement and pendency of the transactions contemplated by the Merger Agreement may adversely affect our business, financial condition and results of operations.

Uncertainty about the effect of the transactions contemplated by the Merger Agreement on our employees, clients and other parties may have an adverse effect on our business, financial condition and results of operation regardless of whether the proposed transaction is completed. These risks to our business include the following, all of which could be exacerbated by a delay in the completion of the proposed transaction:

•the impairment of our ability to attract and retain employees as well as clients;

•the diversion of significant management time and resources towards the completion of the proposed transaction;

•the inability to pursue alternative business opportunities or make appropriate changes to our business because the transaction agreement requires us to conduct our business in the ordinary course of business consistent with past practice and not engage in certain kinds of transactions prior to the completion of the proposed transaction;

•litigation relating to the proposed transaction and the costs related thereto; and

•the incurrence of significant costs, expenses, and fees for professional services and other transaction costs in connection with the proposed transaction.

Failure to consummate the proposed transaction within the expected timeframe or at all could have a material adverse impact on our business, financial condition and results of operations.

While we believe the closing conditions will be satisfied, there can be no assurance. The consummation of the proposed Mergers is subject to the satisfaction or waiver of specified closing conditions, including (i) approval of the transactions by the requisite vote of our stockholders and approval of the transactions by the affirmative vote of the holders representing at least a majority of the aggregate voting power of the outstanding shares of Class A Common Stock owned by the Non-Unitholder Stockholders (as defined in the Merger Agreement) and that are entitled to vote thereon, (ii) approval of the mergers of each of the Sculptor Operating Partnerships by the general partner of each of the Sculptor Operating Partnerships, (iii) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the approval of the Financial Conduct Authority in the United Kingdom and the approval of the Securities and Futures Commission

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in Hong Kong, (iv) the absence of a Company Material Adverse Effect (as defined in the Merger Agreement) on the Company, (v) the accuracy of each party’s representations and warranties (subject to customary materiality qualifiers), (vi) each party’s compliance with its covenants and agreements contained in the Merger Agreement in all material respects and (vii) the receipt of consent of investment funds or other vehicles managed by us and our subsidiaries representing at least 85% of such parties’ run rate revenue to the “assignment” (as defined in the Investment Advisers Act of 1940) of their client contracts. There can be no assurance that these or the other conditions to closing will be satisfied in a timely manner or at all.

The Merger Agreement also provides that the Merger Agreement may be terminated by us or Rithm under certain circumstances, and in certain specified circumstances upon termination of the Merger Agreement we will be required to pay Rithm a termination fee of approximately $16.6 million. If we are required to make this payment, doing so could materially adversely affect our business, financial condition and results of operations.

Our clients may have an adverse reaction should a transaction, having been announced, not close. Further, any disruptions to our business resulting from the announcement and pendency of the proposed Mergers, including any adverse changes in our relationships with our clients or employees, could continue or accelerate in the event of an unconsummated transaction. In addition, if the proposed Mergers are not completed, the share price of our common stock will likely decline to the extent that the current market price of our common stock reflects an assumption that the proposed Mergers will be completed. Also, we have incurred, and will continue to incur, significant costs, expenses and fees for professional services and other transaction costs in connection with the proposed Mergers, for which we will have received little or no benefit if the proposed Mergers are not completed. Many of these fees and costs will be payable by us even if the proposed Mergers are not completed and may relate to activities that we would not have undertaken other than to complete the proposed Mergers.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

Rule 10b5-1 Trading Plans

During the three months ended June 30, 2023, no director or “officer” (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Say-on-Pay Vote Frequency

The Company held its annual meeting of shareholders on June 22, 2023 (the “Annual Meeting”). At the Annual Meeting, the Company’s shareholders voted, as recommended by the Board of Directors of the Company, on an advisory basis, that the frequency of the shareholder vote to approve the compensation of the named executive officers should be held every year. In light of the recommendation and the result of the non-binding advisory vote, the Company currently intends to hold an advisory vote on the compensation of its named executive officers every year.

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Board of Directors Reclassification

The certificate of incorporation and by-laws of Sculptor Capital Management, Inc. provide that its directors shall be divided into three classes, designated as Class I, Class II and Class III, and that each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire board. In light of the number of directors currently serving on the Company’s board, on August 4, 2023 the Company acted to reclassify Charmel Maynard from a Class II director to a Class III director such that each class shall consist of two members. This reclassification was achieved through the resignation, on August 3, 2023, of Mr. Maynard as a Class II director followed by the election, on August 4, 2023 of Mr. Maynard as a Class III director, which election was preceded by a recommendation from the Nominating, Corporate Governance and Conflicts Committee. Mr. Maynard will continue to serve on the Audit Committee, the Nominating, Corporate Governance and Conflicts Committee and the Committee on Corporate Responsibility and Compliance.

Item 6. Exhibits

Exhibit
No. Description

31.1*	Certificate of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934.
31.2*	Certificate of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) under the Securities Exchange Act of 1934.
32.1*	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following financial information from the Quarterly Report on Form 10-Q for the three months ended June 30, 2023, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Comprehensive Income (Loss); (iv) Consolidated Statements of Changes in Shareholders’ Equity (Deficit); (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.
104*	Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101)
*	Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: August 8, 2023

SCULPTOR CAPITAL MANAGEMENT, INC.
By:	/s/ Dava Ritchea
	Dava Ritchea
	Chief Financial Officer and Executive Managing Director

93

EX-31.1

Exhibit 31.1

Certificate of Chief Executive Officer pursuant to

Rule 13a-14(a)/Rule 15d-14(a) under the

Securities Exchange Act of 1934.

I, James S. Levin, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Sculptor Capital Management, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 8, 2023	/s/ James S. Levin
		Name:	James S. Levin
		Title:	Chief Executive Officer, Chief Investment Officer, Executive Managing Director and Director

EX-31.2

Exhibit 31.2

Certificate of Chief Financial Officer pursuant to

Rule 13a-14(a)/Rule 15d-14(a) under the

Securities Exchange Act of 1934.

I, Dava Ritchea, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Sculptor Capital Management, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	August 8, 2023	/s/ Dava Ritchea
		Name:	Dava Ritchea
		Title:	Chief Financial Officer and Executive Managing Director

EX-32.1

Exhibit 32.1

Certification pursuant to 18 U.S.C. Section 1350,

as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

This certification is provided pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and accompanies the Quarterly Report on Form 10-Q (the “Form 10-Q”) for the quarter ended June 30, 2023, of Sculptor Capital Management, Inc. (the “Company”).

We, James S. Levin and Dava Ritchea, the Chief Executive Officer and Chief Financial Officer, respectively, of the Company certify that, to the best of our knowledge:

i.    The Form 10-Q fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and

ii.    The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	August 8, 2023	/s/ James S. Levin
		Name:	James S. Levin
		Title:	Chief Executive Officer, Chief Investment Officer, Executive Managing Director and Director
Date:	August 8, 2023	/s/ Dava Ritchea
		Name:	Dava Ritchea
		Title:	Chief Financial Officer and Executive Managing Director

The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Form 10-Q or as a separate disclosure document.

XML

Cover page - shares	6 Months Ended
	Jun. 30, 2023	Aug. 04, 2023
Document Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-33805
Entity Registrant Name	SCULPTOR CAPITAL MANAGEMENT, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	26-0354783
Entity Address, Address Line One	9 West 57th Street
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10019
City Area Code	212
Local Phone Number	790-0000
Title of 12(b) Security	Class A Shares
Trading Symbol	SCU
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001403256
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false
Class A Shares
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		24,996,767
Restricted Class A Shares (“RSAs”)
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		4,650,661
Class B Shares
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		33,017,247

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Assets
Cash and cash equivalents	$ 159,679	$ 258,863
Restricted cash	7,915	7,895
Investments (includes assets measured at fair value of $267,126 and $231,929 including assets sold under agreements to repurchase of $164,202 and $157,107 as of June 30, 2023 and December 31, 2022, respectively)	347,731	299,059
Income and fees receivable	29,973	56,360
Other Receivables	33,047	32,846
Deferred income tax assets	249,064	257,939
Operating lease assets	70,066	75,861
Total Other Assets, Net	77,492	106,442
Assets of consolidated entities:
Cash and cash equivalents	468	3
Restricted cash and cash equivalents of consolidated entities	9,800	9,805
Investments of Consolidated Entities	323,276	544,554
Other assets of consolidated entities	1,471	2,579
Total Assets	1,309,982	1,652,206
Liabilities
Compensation payable	48,343	127,209
Unearned income and fees	46,866	53,869
Tax receivable agreement liability	173,350	190,245
Operating lease liabilities	85,095	92,045
Debt obligations	117,849	124,176
Warrant liabilities, at fair value	24,423	24,163
Securities sold under agreements to repurchase	169,721	166,632
Other liabilities	35,183	43,049
Liabilities of consolidated entities:
Notes payable, at fair value	205,290	196,106
Warrant liabilities, at fair value	0	596
Other liabilities of consolidated entities	1,790	9,669
Total Liabilities	907,910	1,027,759
Commitments and Contingencies
Redeemable noncontrolling interests of consolidated entities	0	237,864
Shareholders’ Equity
Treasury stock, at cost; 3,022,380 as of June 30, 2023 and December 31, 2022	(32,495)	(32,495)
Additional paid-in capital	283,057	255,293
Accumulated deficit	(278,365)	(276,149)
Accumulated other comprehensive income (loss)	720	(119)
Shareholders’ deficit attributable to Class A Shareholders	(26,503)	(52,896)
Shareholders’ equity attributable to noncontrolling interests	428,575	439,479
Total Shareholders’ Equity	402,072	386,583
Total Liabilities and Shareholders’ Equity	1,309,982	1,652,206
Class A Shares
Shareholders’ Equity
Common stock value	250	238
Class B Shares
Shareholders’ Equity
Common stock value	$ 330	$ 336

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Investments measured at fair value	$ 267,126	$ 231,929
Assets sold under agreements to repurchase	$ 164,202	$ 157,107
Treasury stock (in shares)	3,022,380	3,022,380
Class A Shares
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	27,993,941	26,729,608
Common stock, shares outstanding (in shares)	24,971,561	23,707,228
Class B Shares
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	75,000,000	75,000,000
Common stock, shares issued (in shares)	33,017,247	33,569,188
Common stock, shares outstanding (in shares)	33,017,247	33,569,188

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Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Revenues
Other revenues	$ 6,703	$ 2,520	$ 13,248	$ 4,950
Income of consolidated entities	1,862	311	4,558	150
Total Revenues	75,303	119,181	188,538	216,529
Expenses
Compensation and benefits	57,484	79,743	126,106	157,528
Interest expense	6,154	3,427	11,750	6,712
General, administrative and other	29,928	26,425	63,723	53,741
Expenses of consolidated entities	1,304	1,668	1,851	1,912
Total Expenses	94,870	111,263	203,430	219,893
Other Income (Loss)
Changes in fair value of warrant liabilities	(434)	18,740	(260)	43,076
Changes in tax receivable agreement liability	(584)	227	(527)	220
Net gains (losses) on investments	5,208	(30,838)	10,136	(36,182)
Net gains (losses) of consolidated entities	1,866	(6,434)	9,743	(2,294)
Total Other Income (Loss)	6,056	(18,305)	19,092	4,820
(Loss) Income Before Income Taxes	(13,511)	(10,387)	4,200	1,456
Income taxes	(1,190)	(7,914)	11,557	(947)
Consolidated Net (Loss) Income	(12,321)	(2,473)	(7,357)	2,403
Less: Net loss (income) attributable to noncontrolling interests	9,822	(5,579)	16,027	6,427
Less: Comprehensive income attributable to redeemable noncontrolling interests	(1,851)	(697)	(3,350)	(3,765)
Net (Loss) Income Attributable to Sculptor Capital Management, Inc.	(4,350)	(8,749)	5,320	5,065
Change in redemption value of redeemable noncontrolling interests	8,004	697	6,826	3,765
Net Income (Loss) Attributable to Class A Shareholders	$ 3,654	$ (8,052)	$ 12,146	$ 8,830
Earnings (Loss) per Class A Share
Earnings (Loss) per Class A Share - basic (in dollars per share)	$ 0.15	$ (0.32)	$ 0.48	$ 0.34
Loss per Class A Share - diluted (in dollars per share)	$ (0.12)	$ (0.89)	$ (0.05)	$ (1.00)
Weighted-average Class A Shares outstanding - basic (in shares)	25,179,467	25,514,364	25,176,667	26,052,478
Weighted-average Class A Shares outstanding - diluted (in shares)	40,205,461	26,565,792	40,202,661	27,611,057
Management fees
Revenues
Investment management revenues	$ 62,442	$ 71,770	$ 126,150	$ 145,207
Incentive income
Revenues
Investment management revenues	$ 4,296	$ 44,580	$ 44,582	$ 66,222

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Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Comprehensive Income [Abstract]
Consolidated net (loss) income	$ (12,321)	$ (2,473)	$ (7,357)	$ 2,403
Other Comprehensive (Loss) Income, Net of Tax
Other comprehensive income (loss) - currency translation adjustment	174	(1,226)	839	(1,976)
Comprehensive (Loss) Income	(12,147)	(3,699)	(6,518)	427
Less: Comprehensive loss (income) attributable to noncontrolling interests	9,822	(5,579)	16,027	6,427
Less: Comprehensive income attributable to redeemable noncontrolling interests	(1,851)	(697)	(3,350)	(3,765)
Comprehensive (Loss) Income Attributable to Sculptor Capital Management, Inc.	$ (4,176)	$ (9,975)	$ 6,159	$ 3,089

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Consolidated Statements of Changes in Shareholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Class A Shares	Class B Shares	Shareholders’ Deficit Attributable to Class A Shareholders	Common Stock Par Value Class A Shares	Common Stock Par Value Class B Shares	Treasury Stock	Additional Paid in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)	Shareholders’ Equity Attributable to Noncontrolling Interests
Common stock, beginning balance (in shares) at Dec. 31, 2021		25,668,987	33,613,023
Treasury stock, beginning balance (in shares) at Dec. 31, 2021							0
Beginning balance at Dec. 31, 2021	$ 378,283			$ (68,186)	$ 257	$ 336	$ 0	$ 184,691	$ (253,521)	$ 51	$ 446,469
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation, net of taxes (in shares)		857,630	20,451
Equity-based compensation, net of taxes	35,317			31,434	9			31,425			3,883
Repurchase of Class A Shares (in shares)		(1,641,589)					1,641,589
Repurchase of Class A Shares	(19,509)			(19,509)	(17)		$ (19,492)
Dividend equivalents on Class A restricted share units								(176)	176
Change in redemption value of SPAC Class A Shares	3,765			3,765				3,765
Cash dividends declared on Class A Shares	(2,779)			(2,779)					(2,779)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests	(1,362)			5,065					5,065		(6,427)
Other comprehensive income (loss) - currency translation adjustment	(1,976)			(1,976)						(1,976)
Capital contributions	8,979										8,979
Capital distributions	(4,819)										(4,819)
Common stock, ending balance (in shares) at Jun. 30, 2022		24,885,028	33,633,474
Treasury stock, ending balance (in shares) at Jun. 30, 2022							1,641,589
Ending balance at Jun. 30, 2022	395,899			(52,186)	249	336	$ (19,492)	219,705	(251,059)	(1,925)	448,085
Common stock, beginning balance (in shares) at Mar. 31, 2022		26,052,113	33,676,331
Treasury stock, beginning balance (in shares) at Mar. 31, 2022							473,719
Beginning balance at Mar. 31, 2022	394,115			(43,821)	261	337	$ (6,249)	202,305	(239,776)	(699)	437,936
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation, net of taxes (in shares)		785	(42,857)
Equity-based compensation, net of taxes	18,906			16,947	0	(1)		16,948			1,959
Repurchase of Class A Shares (in shares)		(1,167,870)					1,167,870
Repurchase of Class A Shares	(13,255)			(13,255)	(12)		$ (13,243)
Dividend equivalents on Class A restricted share units								(245)	245
Change in redemption value of SPAC Class A Shares	697			697				697
Cash dividends declared on Class A Shares	(2,779)			(2,779)					(2,779)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests	(3,170)			(8,749)					(8,749)		5,579
Other comprehensive income (loss) - currency translation adjustment	(1,226)			(1,226)						(1,226)
Capital contributions	3,982										3,982
Capital distributions	(1,371)										(1,371)
Common stock, ending balance (in shares) at Jun. 30, 2022		24,885,028	33,633,474
Treasury stock, ending balance (in shares) at Jun. 30, 2022							1,641,589
Ending balance at Jun. 30, 2022	$ 395,899			(52,186)	249	336	$ (19,492)	219,705	(251,059)	(1,925)	448,085
Common stock, beginning balance (in shares) at Dec. 31, 2022		23,707,228	33,569,188
Treasury stock, beginning balance (in shares) at Dec. 31, 2022	3,022,380						3,022,380
Beginning balance at Dec. 31, 2022	$ 386,583			(52,896)	238	336	$ (32,495)	255,293	(276,149)	(119)	439,479
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation, net of taxes (in shares)		1,264,333	(551,941)
Equity-based compensation, net of taxes	22,708			19,900	12	(6)		19,894			2,808
Repurchase of Class A Shares		$ (32,500)
Dividend equivalents on Class A restricted share units								1,044	(1,044)
Change in redemption value of SPAC Class A Shares	6,826			6,826				6,826
Cash dividends declared on Class A Shares	(6,492)			(6,492)					(6,492)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests	(10,707)			5,320					5,320		(16,027)
Other comprehensive income (loss) - currency translation adjustment	839			839						839
Capital contributions	4,528										4,528
Capital distributions	$ (2,213)										(2,213)
Common stock, ending balance (in shares) at Jun. 30, 2023		24,971,561	33,017,247
Treasury stock, ending balance (in shares) at Jun. 30, 2023	3,022,380						3,022,380
Ending balance at Jun. 30, 2023	$ 402,072			(26,503)	250	330	$ (32,495)	283,057	(278,365)	720	428,575
Common stock, beginning balance (in shares) at Mar. 31, 2023		24,970,157	33,018,248
Treasury stock, beginning balance (in shares) at Mar. 31, 2023							3,022,380
Beginning balance at Mar. 31, 2023	394,595			(40,172)	250	330	$ (32,495)	263,607	(272,410)	546	434,767
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Equity-based compensation, net of taxes (in shares)		1,404	(1,001)
Equity-based compensation, net of taxes	12,786			11,339				11,339			1,447
Dividend equivalents on Class A restricted share units								107	(107)
Change in redemption value of SPAC Class A Shares	8,004			8,004				8,004
Cash dividends declared on Class A Shares	(1,498)			(1,498)					(1,498)
Consolidated net loss, excluding amounts attributable to redeemable noncontrolling interests	(14,172)			(4,350)					(4,350)		(9,822)
Other comprehensive income (loss) - currency translation adjustment	174			174						174
Capital contributions	3,248										3,248
Capital distributions	$ (1,065)										(1,065)
Common stock, ending balance (in shares) at Jun. 30, 2023		24,971,561	33,017,247
Treasury stock, ending balance (in shares) at Jun. 30, 2023	3,022,380						3,022,380
Ending balance at Jun. 30, 2023	$ 402,072			$ (26,503)	$ 250	$ 330	$ (32,495)	$ 283,057	$ (278,365)	$ 720	$ 428,575

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Consolidated Statements of Changes in Shareholders' Equity (Deficit) (Parenthetical) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Statement of Stockholders' Equity [Abstract]
Dividends Paid per Class A Share (in dollars per share)	$ 0.06	$ 0.11	$ 0.26	$ 0.11

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash Flows from Operating Activities
Consolidated net (loss) income	$ (7,357)	$ 2,403
Adjustments to reconcile consolidated net (loss) income to net cash provided by (used in) operating activities:
Amortization of equity-based compensation	28,087	45,647
Depreciation, amortization and net gains and losses on fixed assets	2,078	2,698
Changes in fair value of warrant liabilities	260	(43,076)
Deferred income taxes	8,685	(2,238)
Non-cash lease expense	9,205	9,550
Net (gains) losses on investments, net of dividends	(8,367)	38,968
Operating cash flows due to changes in:
Income and fees receivable	26,514	167,958
Due from related parties	(151)	(2,085)
Other assets, net	(2,170)	(15,850)
Compensation payable	(81,775)	(199,515)
Unearned income and fees	(7,004)	4,471
Tax receivable agreement liability	(16,895)	(16,993)
Operating lease liabilities	(10,359)	(11,029)
Other liabilities	(7,887)	(2,536)
Consolidated entities related items:
Net (gains) losses of consolidated entities	(8,751)	2,294
Purchases of investments	(22,994)	(463,231)
Proceeds from sale of investments	29,033	86,645
Other assets of consolidated entities	(237)	(2,679)
Other liabilities of consolidated entities	(8,475)	62,858
Net Cash Used in Operating Activities	(78,560)	(335,740)
Cash Flows from Investing Activities
Purchases of fixed assets	(66)	(1,310)
Purchases of United States government obligations	(58,736)	(28,784)
Maturities and sales of United States government obligations	25,000	219,144
Investments in funds	(12,412)	(49,077)
Return of investments in funds	39,370	37,734
Consolidated entities related items:
Proceeds from sale of investment in government obligations of consolidated SPAC	242,272	0
Net Cash Provided by Investing Activities	235,428	177,707
Cash Flows from Financing Activities
Contributions from noncontrolling interests	4,528	8,979
Distributions to noncontrolling interests	(2,213)	(4,819)
Dividends on Class A Shares	(6,492)	(2,779)
Proceeds from debt obligations, net of issuance costs	435	5,683
Repayment of debt obligations, including prepayment costs	(7,648)	(9,424)
Proceeds from securities sold under agreements to repurchase, net of issuance costs	0	20,395
Purchases of treasury stock	0	(19,492)
Redemption of SPAC Class A Shares	(242,172)	0
Other, net	(2,733)	(5,962)
Consolidated entities related items:
Proceeds from debt obligations of consolidated entities, net of issuance costs	0	215,733
Net Cash (Used in) Provided by Financing Activities	(256,295)	208,314
Effect of exchange rate changes on cash and cash equivalents and restricted cash	723	(2,552)
Net change in cash and cash equivalents and restricted cash	(98,704)	47,729
Cash and cash equivalents and restricted cash, beginning of period	276,566	412,671
Cash and Cash Equivalents and Restricted Cash, End of Period	177,862	460,400
Cash paid during the period:
Interest	10,202	5,682
Income taxes	7,049	6,274
Non-cash transactions:
Assets related to initial consolidation of funds	0	16,699
Liabilities related to initial consolidation of funds	0	2,364
Assets related to deconsolidation of funds	0	44,042
Liabilities related to deconsolidation of funds	0	29,632
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	159,679	192,578
Restricted cash	7,915	7,238
Cash and cash equivalents	468	25,650
Restricted cash and cash equivalents of consolidated entities	9,800	234,934
Total Cash and Cash Equivalents and Restricted Cash	$ 177,862	$ 460,400

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ORGANIZATION

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

ORGANIZATION

ORGANIZATION

Sculptor Capital Management, Inc. (the “Registrant”), a Delaware corporation, together with its consolidated subsidiaries (collectively, the “Company” or “Sculptor Capital”), is a leading global alternative asset manager and a specialist in opportunistic investing with offices in New York, London, Hong Kong and Shanghai. The Company provides asset management services and investment products across Credit, Real Estate, and Multi-Strategy. The Company serves its global client base through commingled funds, separate accounts and specialized products (collectively, the “funds”). The Company’s model is driven by a global team that is predominantly home-grown, long tenured and incentivized to put client outcomes first. The Company’s capabilities span all major geographies and asset classes, including corporate credit, structured credit, real estate debt and equity, fundamental equities, merger arbitrage, and convertible and derivative arbitrage.

The Company manages dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds, multi-strategy funds, and other alternative investment vehicles. Through Institutional Credit Strategies, the Company’s asset management platform that invests in performing credits, the Company manages collateralized loan obligations (“CLOs”), aircraft securitization vehicles, collateralized bond obligations (“CBOs”), structured alternative investment solutions, commingled products and other customized solutions for clients.

The Company’s primary sources of revenues are management fees, which are generally based on the amount of the Company’s assets under management (“Assets Under Management” or “AUM”), as defined below, and incentive income, which is based on the investment performance of its funds. Accordingly, for any given period, the Company’s revenues will be driven by the combination of Assets Under Management and the investment performance of the funds. AUM refers to the assets of the funds to which the Company provides investment management and advisory services. The Company’s AUM are a function of the capital that is allocated to it by the investors in its funds and the investment performance of its funds.

The Company conducts its business and generates substantially all of its revenues primarily in the United States (the “U.S.”) through one operating and reportable segment. The single reportable segment reflects how the Company’s chief operating decision makers allocate resources, make operating decisions and assess financial performance on a consolidated basis under the Company’s ‘one-firm approach’, which includes operating collaboratively across business lines, with predominantly a single expense pool. The Company conducts its operations through Sculptor Capital LP, Sculptor Capital Advisors LP and Sculptor Capital Advisors II LP (collectively, the “Sculptor Operating Partnerships” and collectively with their consolidated subsidiaries, the “Sculptor Operating Group”). The Registrant holds its interests in the Sculptor Operating Group indirectly through Sculptor Capital Holding Corporation (“Sculptor Corp”), a wholly owned subsidiary of the Registrant.

References to the Company’s “executive managing directors” include the current executive managing directors of the Company, and, except where the context requires otherwise, also include certain former executive managing directors who are no longer active in the Company’s business.

On July 23, 2023, the Company entered into an Agreement and Plan of Merger with Rithm Capital Corp. and certain of its affiliates. Refer to Note 17 for details of the proposed transaction with Rithm Capital Corp.

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 (the “Board of Directors” or the “Board”) (other than RSAs, where entitlement to distributions may be subject to limitations and conditions).

•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 June 30, 2023:

•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 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, book-up, forfeiture or minimum retained ownership requirements.

•Group E Units—Group E Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of a certain performance condition. Each Group E Unit converts into a Group A Unit and becomes exchangeable for one Class A Share (or the cash equivalent thereof) to the extent there has been a sufficient amount of appreciation for a Group E Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee, which consists of the Chief Executive Officer and the Chief Financial Officer of Sculptor Capital Management, Inc.). The Group E Units are entitled to share in residual assets upon liquidation, dissolution or

winding up and become eligible to participate in any tag along right, in a change of control transaction or other liquidity event only to the extent of their relative positive capital accounts (if any). Holders of Group E Units do not receive distributions during the Distribution Holiday. See Note 3 in the Company’s Annual Report for additional details. Group E Unit grants are accounted for as equity-based compensation. See Note 13 in the Company’s Annual Report for additional information.

•Group P Units—Group P Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains upon satisfaction of certain service and market conditions. Each Group P Unit becomes exchangeable for one Class A Share (or the cash equivalent thereof), in each case upon satisfaction of certain service and market conditions at such time and, with respect to exchanges, to the extent there has been sufficient appreciation for a Group P Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Sculptor Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee). The Group P Units are entitled to share in residual assets upon liquidation, dissolution or winding up and become eligible to participate in any tag along right, in a change of control transaction or other liquidity event only to the extent that certain market conditions are met and to the extent of their relative positive capital accounts (if any). The terms of the Group P Units may be varied for certain executive managing directors. Group P Unit grants are accounted for as equity-based compensation. 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 Company and the Sculptor Operating Partnerships, respectively, that were outstanding as of June 30, 2023:

	As of June 30, 2023
Sculptor Capital Management, Inc.
Class A Shares	24,971,561
Class B Shares	33,017,247
Restricted Class A Shares (“RSAs”)	4,650,661
Restricted Share Units (“RSUs”)	2,672,474
Performance-based RSUs (“PSUs”)	912,500
Warrants to purchase Class A Shares (Note 7)	4,338,015
Sculptor Operating Partnerships
Group A Units	15,025,994
Group A-1 Units	9,244,477
Group B Units	24,971,561
Group E Units	13,020,157
Group P Units	4,734,286

The Company grants RSAs, RSUs and PSUs to its employees and executive managing directors as a form of compensation. These grants are accounted for as equity-based compensation. See Note 13 in the Company's Annual Report for additional information. In addition, the Company has 3,022,380 shares of treasury stock as of June 30, 2023.

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 June 30, 2023, the Company repurchased 3,022,380 Class A Shares at a cost of $32.5 million for an average price of $10.75 per share through open market purchase transactions. No shares were purchased in the three months ended June 30, 2023. As of June 30, 2023, $67.5 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. On July 23, 2023, we entered into an Agreement and Plan of Merger (including the schedules and exhibits thereto, the “Merger Agreement”) with entities affiliated with Rithm Capital Corp. The Company will not repurchase any shares while the Merger Agreement remains in effect. See Note 17 to the unaudited consolidated financial statements for more information regarding the Merger Agreement.

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited, interim, consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”), and exclude some of the disclosures required in audited financial statements and therefore should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report. Management believes all adjustments considered necessary for a fair presentation of the Company’s unaudited, interim, consolidated financial statements have been included and are of a normal and recurring nature and that estimates made in preparing unaudited, interim, consolidated financial statements are reasonable and prudent. The consolidated financial statements include the accounts of the Company, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest

entities and for which the Company is considered the primary beneficiary, and certain other entities which are not considered variable interest entities but the Company is determined to have control. All significant intercompany transactions and balances have been eliminated in consolidation.

The results of operations presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. For example, incentive income for the majority of the Company’s multi-strategy AUM is recognized in the fourth quarter each year, based on full year investment performance.

See Note 2 in the Company’s Annual Report for the complete listing of our significant accounting policies.

Recently Adopted Accounting Pronouncements

No changes to GAAP that went into effect in the six months ended June 30, 2023, 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.

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NONCONTROLLING INTERESTS

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

NONCONTROLLING INTERESTS

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 47.1% as of June 30, 2023, from 47.0% as of June 30, 2022. Changes in the Company’s interest in the Sculptor Operating Group have historically been, and in the future may be, driven by the following: (i) the exchange of Group A Units and Group P Units for Class A Shares, at which time the related Class B Shares are also canceled; (ii) vesting of RSAs; (iii) the issuance of Class A Shares under the Company’s Amended and Restated 2007 Equity Incentive Plan, 2013 Incentive Plan and 2022 Incentive Plan related to the settlement of RSUs or PSUs; and (iv) the forfeiture of Group A Units and participating Group P Units by a departing executive managing director.

In connection with the proposed transaction among the Company and Rithm Capital Corp., holders of Group A Units and Group A-1 Units are expected to be offered the opportunity to enter into a rollover agreement with affiliates of Rithm Capital Corp. Refer to Note 17 for details of the rollover agreement.

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,
	2023			2022			2023			2022
	(dollars in thousands)
Sculptor Capital LP
Net income (loss)	$	11,952		$	(25,001)		$	43,039		$	16,215
Blended participation percentage	0		%	0		%	0		%	0		%
Net Income Attributable to Group A Units	$	—		$	—		$	—		$	—
Sculptor Capital Advisors LP
Net (loss) income	$	(16,369)		$	15,623		$	(20,551)		$	(1,197)
Blended participation percentage	38		%	36		%	38		%	38		%
Net (Loss) Income Attributable to Group A Units	$	(6,149)		$	5,702		$	(7,720)		$	(451)
Sculptor Capital Advisors II LP
Net loss	$	(13,203)		$	(1,677)		$	(27,654)		$	(19,473)
Blended participation percentage	38		%	49		%	38		%	38		%
Net Loss Attributable to Group A Units	$	(4,960)		$	(821)		$	(10,389)		$	(7,331)
Total Sculptor Operating Group
Net loss	$	(17,620)		$	(11,055)		$	(5,166)		$	(4,455)
Blended participation percentage	63		%	-44		%	351		%	175		%
Net (Loss) Income Attributable to Group A Units	$	(11,109)		$	4,881		$	(18,109)		$	(7,782)

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,
	2023		2022		2023		2022
	(dollars in thousands)
Group A Units	$	(11,109)	$	4,881	$	(18,109)	$	(7,782)
Other	1,287		698		2,082		1,355
	$	(9,822)	$	5,579	$	(16,027)	$	(6,427)

The following table presents the components of the shareholders’ equity attributable to noncontrolling interests:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Group A Units	$	397,640	$	412,941
Other	30,935		26,538
	$	428,575	$	439,479

Redeemable noncontrolling interests

In the second quarter of 2023, our consolidated SPAC was liquidated in accordance with its charter and its Class A shares were redeemed. The Class A shares issued by the consolidated SPAC were redeemable for cash by the public shareholders in the event the SPAC did not consummate an initial business combination within the time period required by its charter. Therefore, the investors’ interests in the SPAC were classified as redeemable noncontrolling interests in the consolidated balance sheets. The following table presents the activity in redeemable noncontrolling interests, excluding the reversal of deferred underwriting fees as a result of the SPAC liquidation, for the three and six months ended June 30, 2023:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023		2023
	SPAC		SPAC
	(dollars in thousands)
Beginning balance	$	240,541	$	237,864
Change in redemption value of Class A Shares of consolidated SPAC	(220)		958
Capital distributions	(242,172)		(242,172)
Comprehensive income	1,851		3,350
Ending Balance	$	—	$	—

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INVESTMENTS AND FAIR VALUE DISCLOSURES

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

INVESTMENTS AND FAIR VALUE DISCLOSURES

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, 2023		December 31, 2022
	(dollars in thousands)
U.S. government obligations, at fair value	$	58,988	$	24,782
CLOs, at fair value	208,138		207,147
Equity method investments	80,605		67,130
Total Investments	$	347,731	$	299,059
Investments of Consolidated Entities	$	323,276	$	544,554

The Company invests in U.S. government obligations to manage excess liquidity. CLOs, at fair value, consist of investments in notes of unconsolidated CLOs. These investments are carried at fair value under the irrevocable fair value option election at initial recognition. Changes in fair value are recorded within net gains (losses) on investments in the consolidated

statements of operations. Interest income on these investments is accrued using the effective interest method and separately presented from the overall change in fair value and is recognized in other revenues in the consolidated statement of operations.

The Company’s equity method investments include investments in funds, which are not consolidated, but in which the Company exerts significant influence, but not control. The Company has not elected the fair value option and accounts for such investments under the equity method. Under the equity method of accounting, the Company recognizes its share of the underlying earnings (losses) from equity method investments within net gains (losses) 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.

In the second quarter of 2023, our consolidated SPAC was liquidated in accordance with its charter and the investments held in a SPAC’s trust account were liquidated. Investments of consolidated entities included both investments of the Company’s consolidated SPAC, prior to its liquidation, which consisted of investments in U.S. Treasury bills held in a trust account and measured at fair value, as well as investments held by the Company’s consolidated structured alternative investment solution. The investments of the consolidated structured alternative investment solution that the Company manages are generally measured at fair value using the NAV per share practical expedient. The Company may determine based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses in accordance with GAAP. The Company does not categorize investments where fair value is measured using the NAV practical expedient within the fair value hierarchy.

The following table summarizes the fair value of the investments of the structured alternative investment solution that are measured using the NAV practical expedient by strategy type and ability to redeem such investments as of June 30, 2023:

Fund Type(1)	Fair Value (as of June 30, 2023)		Redemption Frequency(2)	Redemption Notice Period(2)
	(dollars in thousands)
Multi-strategy	76,240		Quarterly - Annually	30 days - 90 days
Credit	238,339		Monthly - Annually(3)	30 days - 90 days
Real estate	8,697		None(4)	N/A
Total	$	323,276

_______________

(1)The structured alternative investment solution invests in both open-ended and close-ended funds. The investments in each fund may represent investments in a particular tranche of such fund subject to different withdrawal rights.

(2)$159.6 million of investments are subject to an initial lock-up period of three years during which time no withdrawals or redemptions are allowed. Once the lock-up period ends, the investments are able to be redeemed with the frequency noted above.

(3)24% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately six years from inception.

(4)100% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately seven to nine years from inception.

As of June 30, 2023, the structured alternative investment solution had unfunded commitments of $91.8 million related to the investments presented in the table above.

See Note 2 in the Company’s Annual Report for additional information regarding the investments of consolidated entities.

Fair Value Disclosures

Fair value represents the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date (i.e., an exit price). The Company and the funds it manages

hold a variety of investments, certain of which are not publicly traded or that are otherwise illiquid. Significant judgement and estimation go into the assumptions that drive the fair value of these investments. The fair value of these investments may be estimated using a combination of observed transaction prices, prices from third parties (including independent pricing services and relevant broker quotes), models or other valuation methodologies based on pricing inputs that are neither directly nor indirectly market observable. Due to the inherent uncertainty of valuations of investments that are determined to be illiquid or do not have readily ascertainable fair values, the estimates of fair value may differ from the values ultimately realized, and those differences can be material.

GAAP establishes a hierarchical disclosure framework that prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type and the specific characteristics of the financial instrument, including existence and transparency of transactions between market participants. Financial instruments with readily available actively quoted prices or for which fair value can be measured from actively-quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.

Financial instruments measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:

•Level I – Quoted prices that are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments that would generally be included in this category are listed equities, U.S. government obligations and listed derivatives. The Company does not adjust the quoted price for these investments.

•Level II – Quotations received from dealers making a market for financial instruments (“broker quotes”), valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly observable as of the reporting date. The types of financial instruments that would generally be included in this category are certain corporate bonds and loans, certain credit default swap contracts, certain bank debt securities, certain commercial real estate debt, less liquid equity securities, forward contracts and certain over the-counter (“OTC”) derivatives where the fair value is based on observable inputs. These financial instruments exhibit higher levels of liquid market observability as compared to Level III financial instruments.

•Level III – Pricing inputs that are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value of financial instruments in this category may require significant management judgment or estimation. The fair value of these financial instruments may be estimated using a combination of observed transaction prices, independent pricing services, relevant broker quotes, models or other valuation methodologies based on pricing inputs that are neither directly or indirectly market observable (e.g., cash flows, implied yields, EBITDA multiples). The types of financial instruments that would generally be included in this category include CLOs, certain warrant liabilities, certain credit default swap contracts, certain bank debt securities, certain OTC derivatives, asset-backed securities, collateralized debt obligations and investments in affiliated credit funds.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument when the fair value is based on unobservable inputs.

For financial instruments for which the Company uses independent pricing services for valuation, the Company performs analytical procedures and compares independent pricing service valuations to other vendors’ pricing as applicable. The Company also performs due diligence reviews on independent pricing services on an annual basis and performs other due

diligence procedures as may be deemed necessary.

Fair Value Measurements Categorized within the Fair Value Hierarchy

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy for the periods presented:

	As of June 30, 2023
	Level I		Level II		Level III		NAV		Total
	(dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations	$	4,998	$	—	$	—	$	—	$	4,998
Included within investments:
U.S. government obligations	$	58,988	$	—	$	—	$	—	$	58,988
CLOs(1)	$	—	$	—	$	208,138	$	—	$	208,138
Included within investments of consolidated entities:
Investments in funds	—		—		—		323,276		323,276
Investments of Consolidated Entities	$	—	$	—	$	—	$	323,276	$	323,276
Liabilities, at Fair Value
Warrants	$	—	$	—	$	24,423	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	—	$	—	$	205,290	$	—	$	205,290

_______________

(1) As of June 30, 2023, investments in CLOs had contractual principal amounts of $208.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.

	As of December 31, 2022
	Level I		Level II		Level III		NAV		Total
	(dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations	$	19,937	$	—	$	—	$	—	$	19,937
Included within investments:
U.S. government obligations	$	24,782	$	—	$	—	$	—	$	24,782
CLOs(1)	$	—	$	—	$	207,147	$	—	$	207,147
Included within investments of consolidated entities:
U.S. government obligations	$	237,964	$	—	$	—	$	—	$	237,964
Investments in funds	—		—		—		306,590		306,590
Investments of Consolidated Entities	$	237,964	$	—	$	—	$	306,590	$	544,554
Liabilities, at Fair Value
Warrants	$	—	$	—	$	24,163	$	—	$	24,163
Liabilities of consolidated entities:
Warrants	$	596	$	—	$	—	$	—	$	596
Notes Payable	$	—	$	—	$	196,106	$	—	$	196,106

_______________

(1) As of December 31, 2022, investments in CLOs had contractual principal amounts of $212.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.

Reconciliation of Fair Value Measurements Categorized within Level III

Gains and losses on investments categorized within Level III, excluding those related to investments of consolidated entities and foreign currency translation adjustments, are recorded within net 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), and gains and losses related to investment of consolidated entities are recorded within net gains (losses) of consolidated entities. Amortization of premium, accretion of discount and foreign exchange gains and losses on non-U.S. dollar investments are also included within gains and losses in the tables below. Changes in fair value of warrant liabilities are included in other income 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 and in the second quarter of 2023, the warrants expired worthless as the SPAC was liquidated. Changes in fair value of warrant liabilities and notes payable of the consolidated entities are included in net gains (losses) of consolidated entities in the consolidated statements of operations. The Company elected to measure its investments in CLOs, U.S. government obligations and notes payable of the consolidated fund at fair value through consolidated net (loss) income in order to simplify its accounting for these instruments.

The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the three months ended June 30, 2023 and 2022:

	March 31, 2023		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2023
	(dollars in thousands)
Assets, at Fair Value
Included within investments
CLOs	$	207,030	$	—	$	—	$	544	$	(3,094)	$	2,778	$	880	$	208,138
Liabilities, at Fair Value
Warrants	$	23,989	$	—	$	—	$	—	$	—	$	(434)	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	197,813	$	—	$	—	$	—	$	—	$	(7,477)	$	—	$	205,290
	March 31, 2022		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	226,552	$	—	$	—	$	1,032	$	(26)	$	(14,269)	$	(9,658)	$	203,631
Investments of consolidated entities:
Bank Debt	$	—	$	—	$	—	$	41,792	$	—	$	(1,566)	$	—	$	40,226
Liabilities, at Fair Value
Warrants	$	40,951	$	—	$	—	$	—	$	—	$	18,740	$	—	$	22,211
Liabilities of consolidated entities:
Notes payable	$	215,733	$	—	$	—	$	—	$	—	$	13,748	$	—	$	201,985

The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the six months ended June 30, 2023 and 2022:

	December 31, 2022		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2023
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	207,147	$	—	$	—	$	544	$	(8,455)	$	5,587	$	3,315	$	208,138
Liabilities, at Fair Value
Warrants	$	24,163	$	—	$	—	$	—	$	—	$	(260)	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	196,106	$	—	$	—	$	—	$	—	$	(9,184)	$	—	$	205,290

	December 31, 2021		Transfers In			Transfers Out			Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	219,510	$	—		$	—		$	29,839	$	(12,373)	$	(18,788)	$	(14,557)	$	203,631
Investments of consolidated entities:
Bank Debt	$	—	$	3,603	(1)	$	(14,666)	(1)	$	56,425	$	(3,475)	$	(1,661)	$	—	$	40,226
Liabilities, at Fair Value
Warrants	$	65,287	$	—		$	—		$	—	$	—	$	43,076	$	—	$	22,211
Liabilities of consolidated entities:
Warrants	$	7,590	$	—		$	(3,450)	(2)	$	—	$	—	$	4,140	$	—	$	—
Notes payable	$	—	$	—		$	—		$	215,733	$	—	$	13,748	$	—	$	201,985

_______________

(1) Transfers into and out of Level III in bank debt include $2.3 million related to the consolidation (Transfers In) and $14.0 million related to the subsequent deconsolidation (Transfers Out) of a fund that the Company manages.

(2) Transfers out of Level III into Level I related to warrants of consolidated entities that became publicly traded with available quoted prices during the first quarter of 2022.

The table below summarizes the net change in unrealized gains and (losses) on the Company’s Level III financial instruments outstanding as of the reporting date:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	3,658	$	(23,928)	$	8,902	$	(33,346)
Included within investments of consolidated entities:
Bank debt	$	—	$	(1,566)	$	—	$	(1,566)
Liabilities, at Fair Value
Warrants	$	(434)	$	18,740	$	(260)	$	43,076
Liabilities of consolidated entities:
Notes payable	$	(7,477)	$	13,748	$	(9,184)	$	13,748

Level III Valuation Methodologies

Financial instruments classified within Level III of the fair value hierarchy are generally comprised of CLOs, warrant liabilities and notes payable of consolidated entities.

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 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 56.10% as of June 30, 2023.

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 the consolidated entity, as the Company believes the fair value of the financial assets is more observable. Refer to Note 2 in the Company’s Annual Report for additional valuation considerations of the notes payable of consolidated entities.

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 June 30, 2023. The fair value measurements for the Company’s debt obligations and repurchase agreements are categorized as Level III within the fair value hierarchy. The fair value measurements for the Company’s CLO Investments Loans (as defined in Note 7) and repurchase agreements were determined using independent pricing services. The fair value measurement for the Company’s 2020 Term Loan (as defined in Note 7) was determined using a discounted cash flow model.

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 six months ended June 30, 2023 and 2022. 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 June 30, 2023 and December 31, 2022, the Company’s investments in these retained interests had a fair value of $75.4 million and $78.6 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. For the six months ended June 30, 2023 and 2022, the Company received $8.0 million and $1.3 million, respectively, of interest and principal payments related to the retained interests.

The Company may from time to time refinance its investment in CLOs. If a refinanced CLO investment is considered substantially different from the original CLO investment, the refinancing is accounted for as a sale and a new refinanced CLO investment is recognized at fair value that is used to determine the amount of gain or loss on derecognition that is presented within net gains (losses) on investments in the consolidated statements of operations. If the refinancing is not considered substantially different from the original CLO investment, a new effective interest rate that equates the revised cash flows to the carrying amount of the original CLO investment is calculated and applied prospectively.

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.

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VARIABLE INTEREST ENTITIES

6 Months Ended

Jun. 30, 2023

Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Determination Methodology and Factors [Abstract]

VARIABLE INTEREST ENTITIES

VARIABLE INTEREST ENTITIES In the ordinary course of business, the Company sponsors the formation of entities that are considered VIEs. In accordance with GAAP consolidation guidance, the Company consolidates certain VIEs for which it is the primary beneficiary either directly or indirectly through a consolidated entity. 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.

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Assets
Assets of consolidated entities:
Cash and cash equivalents of consolidated entities	$	408	$	3
Restricted cash and cash equivalents of consolidated entities	9,800		9,805
Investments of consolidated entities, at fair value	323,276		306,590
Other assets of consolidated entities	1,471		2,016
Total Assets	$	334,955	$	318,414
Liabilities
Liabilities of consolidated entities:
Notes payable of consolidated entities	$	205,290	$	196,106
Other liabilities of consolidated entities	1,776		1,601
Total Liabilities	$	207,066	$	197,707

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 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 other than its own capital commitments.

The table below presents the net assets of unconsolidated VIEs in which the Company has variable interests along with the maximum exposure to loss as a result of the Company’s involvement with non-consolidated VIEs:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Net assets of unconsolidated VIEs in which the Company has a variable interest	$	12,384,193	$	12,738,164
Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs:
Unearned income and fees	46,866		53,869
Income and fees receivable	17,315		41,890
Investments	249,538		245,583
Investments of consolidated entities	247,036		237,699
Unfunded commitments(1)	218,885		182,797
Maximum Exposure to Loss	$	779,640	$	761,838

_______________

(1) Includes commitments from certain employees and executive managing directors in the amounts of $82.4 million and $65.4 million as of June 30, 2023 and December 31, 2022, respectively.

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LEASES

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

LEASES

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 June 30, 2023, 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Lease Cost
Operating lease cost	$	4,600	$	4,656	$	9,205	$	9,364
Short-term lease cost	22		44		44		54
Finance lease cost - amortization of leased assets	72		91		171		183
Finance lease cost - imputed interest on lease liabilities	15		1		30		4
Less: Sublease income	(840)		(804)		(1,637)		(1,634)
Net Lease Cost	$	3,869	$	3,988	$	7,813	$	7,971

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(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	$	5,238	$	5,165	$	10,453	$	10,491
Operating cash flows for finance leases	$	—	$	—	$	5	$	—
Finance cash flows for finance leases	$	—	$	—	$	223	$	163
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—	$	—	$	—	$	1,079

	June 30, 2023		December 31, 2022
Lease Term and Discount Rate
Weighted average remaining lease term
Operating leases	6.3 years		6.7 years
Finance leases	4.0 years		4.5 years
Weighted average discount rate
Operating leases	7.9	%	7.8	%
Finance leases	7.9	%	7.9	%

	Operating Leases		Finance Leases
	(dollars in thousands)
Maturity of Lease Liabilities - Contractual Payments to be Paid
July 1, 2023 to December 31, 2023	$	9,781	$	—
2024	16,529		228
2025	14,329		228
2026	15,353		228
2027	17,675		228
Thereafter	35,015		—
Total Lease Payments	108,682		912
Imputed interest	(23,587)		(131)
Total Lease Liabilities - Contractual Payments to be Paid	$	85,095	$	781

	Operating Leases
	(dollars in thousands)
Sublease Rent - Contractual Payments to be Received
July 1, 2023 to December 31, 2023	$	1,626
2024	1,920
2025	1,920
2026	1,920
2027	1,960
Thereafter	4,160
Total Sublease Rent - Contractual Payments to be Received	$	13,506

LEASES

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 June 30, 2023, 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Lease Cost
Operating lease cost	$	4,600	$	4,656	$	9,205	$	9,364
Short-term lease cost	22		44		44		54
Finance lease cost - amortization of leased assets	72		91		171		183
Finance lease cost - imputed interest on lease liabilities	15		1		30		4
Less: Sublease income	(840)		(804)		(1,637)		(1,634)
Net Lease Cost	$	3,869	$	3,988	$	7,813	$	7,971

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(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	$	5,238	$	5,165	$	10,453	$	10,491
Operating cash flows for finance leases	$	—	$	—	$	5	$	—
Finance cash flows for finance leases	$	—	$	—	$	223	$	163
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—	$	—	$	—	$	1,079

	June 30, 2023		December 31, 2022
Lease Term and Discount Rate
Weighted average remaining lease term
Operating leases	6.3 years		6.7 years
Finance leases	4.0 years		4.5 years
Weighted average discount rate
Operating leases	7.9	%	7.8	%
Finance leases	7.9	%	7.9	%

	Operating Leases		Finance Leases
	(dollars in thousands)
Maturity of Lease Liabilities - Contractual Payments to be Paid
July 1, 2023 to December 31, 2023	$	9,781	$	—
2024	16,529		228
2025	14,329		228
2026	15,353		228
2027	17,675		228
Thereafter	35,015		—
Total Lease Payments	108,682		912
Imputed interest	(23,587)		(131)
Total Lease Liabilities - Contractual Payments to be Paid	$	85,095	$	781

	Operating Leases
	(dollars in thousands)
Sublease Rent - Contractual Payments to be Received
July 1, 2023 to December 31, 2023	$	1,626
2024	1,920
2025	1,920
2026	1,920
2027	1,960
Thereafter	4,160
Total Sublease Rent - Contractual Payments to be Received	$	13,506

LEASES

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 June 30, 2023, 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Lease Cost
Operating lease cost	$	4,600	$	4,656	$	9,205	$	9,364
Short-term lease cost	22		44		44		54
Finance lease cost - amortization of leased assets	72		91		171		183
Finance lease cost - imputed interest on lease liabilities	15		1		30		4
Less: Sublease income	(840)		(804)		(1,637)		(1,634)
Net Lease Cost	$	3,869	$	3,988	$	7,813	$	7,971

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(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	$	5,238	$	5,165	$	10,453	$	10,491
Operating cash flows for finance leases	$	—	$	—	$	5	$	—
Finance cash flows for finance leases	$	—	$	—	$	223	$	163
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—	$	—	$	—	$	1,079

	June 30, 2023		December 31, 2022
Lease Term and Discount Rate
Weighted average remaining lease term
Operating leases	6.3 years		6.7 years
Finance leases	4.0 years		4.5 years
Weighted average discount rate
Operating leases	7.9	%	7.8	%
Finance leases	7.9	%	7.9	%

	Operating Leases		Finance Leases
	(dollars in thousands)
Maturity of Lease Liabilities - Contractual Payments to be Paid
July 1, 2023 to December 31, 2023	$	9,781	$	—
2024	16,529		228
2025	14,329		228
2026	15,353		228
2027	17,675		228
Thereafter	35,015		—
Total Lease Payments	108,682		912
Imputed interest	(23,587)		(131)
Total Lease Liabilities - Contractual Payments to be Paid	$	85,095	$	781

	Operating Leases
	(dollars in thousands)
Sublease Rent - Contractual Payments to be Received
July 1, 2023 to December 31, 2023	$	1,626
2024	1,920
2025	1,920
2026	1,920
2027	1,960
Thereafter	4,160
Total Sublease Rent - Contractual Payments to be Received	$	13,506

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DEBT OBLIGATIONS AND WARRANTS

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

DEBT OBLIGATIONS AND WARRANTS

DEBT OBLIGATIONS AND WARRANTS

	2020 Term Loan		CLO Investments Loans		Total
	(dollars in thousands)
Maturity of Debt Obligations
July 1, 2023 to December 31, 2023	$	—	$	—	$	—
2024	—		—		—
2025	—		436		436
2026	—		—		—
2027	95,000		—		95,000
2028	—		—		—
Thereafter	—		33,297		33,297
Total Payments	95,000		33,733		128,733
Unamortized discounts & deferred financing costs	(10,700)		(184)		(10,884)
Total Debt Obligations	$	84,300	$	33,549	$	117,849

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, as amended on December 20, 2022, (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 fourth 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”). Borrowings under the 2020 Credit Agreement bear interest at a per annum rate equal to, at the Company’s option, the one, three or six-month Secured Overnight Financing Rate (“SOFR”) (subject to a 0.75% floor), plus 6.25%. With respect to interest calculated using one-month SOFR, additional rate equal to 0.05% is applied and with respect to interest calculated using three-month or six-month SOFR,

additional rate equal to 0.10% is applied. 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.

The Company expects to repay all amounts outstanding under the 2020 Term Loan and the 2020 Revolving Credit Facility in connection with the closing of the proposed transaction between the Company and Rithm Capital Corp. Refer to Note 17 for details of the proposed transaction.

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 $7.95 per share as of June 30, 2023. 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, the 2020 Credit Agreement 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.

Warrants of the Consolidated SPAC

In the second quarter of 2023, the SPAC was liquidated in accordance with its charter and the warrants expired worthless. 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 had 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 were subject to other customary terms common for instruments of this type. The Company eliminated the SPAC warrants it held in consolidation.

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 $127.8 million were acquired by the Company and eliminated in consolidation. The notes held by the Company consisted of $20.0 million of Class A, $20.0 million of Class C and $87.8 million of subordinated notes. Changes in the fair value of the notes payable of the structured alternative investment solution are presented within net gains (losses) of consolidated entities in the consolidated statements of operations. The fair value of the notes payable as of June 30, 2023, was $205.3 million. The notes payable mature in May 2037.

The table below summarizes material terms of the notes payable:

	Class A Notes			Class B Notes			Class C Notes			Subordinated Notes(1)
	(dollars in thousands)
Type	Senior Secured			Senior Secured			Mezzanine Secured			Unsecured
Initial principal amount	$	140,000		$	70,000		$	35,000		$	105,000
Initial interest rate	4.25		%	6.00		%	6.75		%	N/A
Interest rate after step up and effective date(2)	6.25%; May 2028			8.00%; May 2029			9.50%; May 2025			N/A

_______________

(1) Subordinated 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.

(2) Interest rate after a one time step up in basis at the indicated effective date.

See Note 2 in the Company’s Annual Report 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 June 30, 2023, 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 the Company’s consolidated entities have no recourse to the Company.

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 with fair values of $35.3 million and $40.0 million as of June 30, 2023 and December 31, 2022, respectively.

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 final maturity date for each CLO Investments Loan is the earlier of the contractual 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. The timing of principal payments on CLO Investments Loans is contingent on principal payments made to the Company on the investments in CLOs and the CLO Investments Loans may amortize well in advance of their contractual maturity dates.

Initial Borrowing Date	Contractual Rate	Contractual Maturity Date	Carrying Value
			June 30, 2023		December 31, 2022
			(dollars in thousands)
June 7, 2017	LIBOR plus 1.48%	November 16, 2029	$	13,974	$	16,835
August 2, 2017	LIBOR plus 1.41%	January 21, 2030	19,139		21,594
January 19, 2022	EURIBOR plus 1.50%	December 15, 2023	—		2,285
June 1, 2023	EURIBOR plus 1.85%	April 12, 2025	436		—
			$	33,549	$	40,714

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

6 Months Ended

Jun. 30, 2023

Transfers and Servicing of Financial Assets [Abstract]

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

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 June 30, 2023, €43.3 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.

The table below presents securities sold under agreements to repurchase that are offset, if any, as well as securities transferred to the counterparty 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 Repurchase	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities in the Consolidated Balance Sheet		Securities Transferred		Net Amount
	(dollars in thousands)
As of June 30, 2023	$	169,721	$	—	$	169,721	$	164,202	$	5,519
As of December 31, 2022	$	166,632	$	—	$	166,632	$	157,107	$	9,525

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 to the counterparty under agreement to repurchase by class of collateral pledged:

	Investments in CLOs
Securities Sold under Agreements to Repurchase	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
	(dollars in thousands)
As of June 30, 2023	$	—	$	—	$	—	$	169,721	$	169,721
As of December 31, 2022	$	—	$	—	$	—	$	166,632	$	166,632

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OTHER ASSETS, NET

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

OTHER ASSETS, NET

OTHER ASSETS, NET

The following table presents the components of other assets, net as reported in the consolidated balance sheets:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Fixed Assets:
Leasehold improvements	$	47,736	$	47,736
Computer hardware and software	44,680		44,603
Furniture, fixtures and equipment	8,013		8,013
Accumulated depreciation and amortization	(81,468)		(79,390)
Fixed assets, net	18,961		20,962
Goodwill	22,691		22,691
Prepaid expenses	14,174		16,698
Cloud computing costs	12,702		9,940
Redemption receivable(1)	—		28,721
Other	8,964		7,430
Total Other Assets, Net	$	77,492	$	106,442

_______________

(1) Represents amounts receivable on a redeemed investment in a fund.

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OTHER LIABILITIES

6 Months Ended

Jun. 30, 2023

Other Liabilities Disclosure [Abstract]

OTHER LIABILITIES

OTHER LIABILITIES

The following table presents the components of other liabilities as reported in the consolidated balance sheets:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Accrued expenses	$	16,154	$	20,925
Uncertain tax positions	8,250		8,250
Due to funds(1)	3,172		3,854
Other	7,607		10,020
Total Other Liabilities	$	35,183	$	43,049

_______________

(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.

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REVENUES

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

REVENUES

REVENUES

The following table presents management fees and incentive income recognized as revenues for the three months ended June 30, 2023 and 2022:

	Three Months Ended June 30,
	2023				2022
	Management Fees		Incentive Income		Management Fees		Incentive Income
	(dollars in thousands)
Multi-strategy funds	$	29,268	$	407	$	38,612	$	(835)
Credit
Opportunistic credit funds	12,145		3,303		12,342		102
Institutional Credit Strategies	12,271		—		11,808		—
Real estate funds	8,758		586		9,008		45,313
Total	$	62,442	$	4,296	$	71,770	$	44,580

The following table presents management fees and incentive income recognized as revenues for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023				2022
	Management Fees		Incentive Income		Management Fees		Incentive Income
	(dollars in thousands)
Multi-strategy funds	$	60,150	$	723	$	78,592	$	120
Credit
Opportunistic credit funds	24,681		14,122		25,166		19,905
Institutional Credit Strategies	23,738		—		23,391		—
Real estate funds	17,581		29,737		18,058		46,197
Total	$	126,150	$	44,582	$	145,207	$	66,222

The following table presents the composition of the Company’s income and fees receivable as of June 30, 2023 and December 31, 2022:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Management fees	$	24,946	$	25,402
Incentive income	5,027		30,958
Income and Fees Receivable	$	29,973	$	56,360

The Company recognizes management fees over the period in which the performance obligation is satisfied, and are generally recognized at the end of each reporting period. 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 June 30, 2023 and December 31, 2022:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Management fees	$	1	$	2
Incentive income	46,865		53,867
Unearned Income and Fees	$	46,866	$	53,869

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 six months ended June 30, 2023 and 2022 the Company recognized $26.3 million and $41.4 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.

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INCOME TAXES

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

INCOME TAXES

INCOME TAXESThe 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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Statutory U.S. federal income tax rate	21.00	%	21.00	%	21.00	%	21.00	%
Loss (income) passed through to noncontrolling interests	-14.82	%	13.60	%	63.28	%	31.73	%
Foreign income taxes	-11.92	%	5.14	%	80.72	%	-1.10	%
RSU/RSA excess income tax benefit or expense	0.12	%	-1.24	%	38.26	%	-85.00	%
State and local income taxes	13.06	%	16.21	%	31.85	%	156.82	%
Nondeductible amortization of Partner Equity Units	-4.72	%	2.54	%	31.78	%	143.06	%
Foreign tax credits and deductions	2.50	%	-1.08	%	-16.95	%	0.23	%
Change in fair value of warrants	-1.14	%	41.17	%	1.10	%	-591.40	%
Disallowed executive compensation	-10.08	%	-20.63	%	66.55	%	256.31	%
Other, net	-3.17	%	-0.52	%	15.37	%	3.31	%
SPAC Loss	17.96	%	—	%	-57.79	%	—	%
Effective Income Tax Rate	8.80	%	76.19	%	275.17	%	-65.04	%

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 June 30, 2023 and December 31, 2022, the Company had a liability for unrecognized tax benefits of $8.3 million. As of and for the six months ended June 30, 2023, the Company did not accrue interest or penalties related to uncertain tax positions. As of June 30, 2023, 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 June 30, 2023.

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GENERAL, ADMINISTRATIVE AND OTHER

6 Months Ended

Jun. 30, 2023

Other Income and Expenses [Abstract]

GENERAL, ADMINISTRATIVE AND OTHER

GENERAL, ADMINISTRATIVE AND OTHERThe following table presents the components of general, administrative and other expenses as reported in the consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Professional services	$	8,712	$	6,177	$	20,368	$	11,641
Occupancy and equipment	6,802		6,900		13,501		13,990
Information processing and communications	5,882		5,175		11,532		10,201
Recurring placement and related service fees	3,656		5,182		7,282		10,431
Insurance	2,318		2,228		4,635		4,435
Business development	984		797		2,020		1,295
Other expenses	1,574		(34)		4,385		1,748
Total General, Administrative and Other	$	29,928	$	26,425	$	63,723	$	53,741

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EARNINGS (LOSS) PER CLASS A SHARE

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER CLASS A SHARE

EARNINGS (LOSS) PER CLASS A SHARE

Basic earnings (loss) per Class A Share is computed by dividing the net earnings (loss) attributable to Class A Shareholders by the weighted-average number of Class A Shares outstanding for the period.

For the three months ended June 30, 2023 and 2022, the Company included 207,906 and 163,136 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 (loss) earnings per Class A Share. For the six months ended June 30, 2023 and 2022 the Company included 205,804 and 174,974 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 unvested RSAs, Group P Units or PSUs subject to service and market conditions in the calculation of dilutive earnings (loss) per Class A Share, as the applicable market 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 earnings (loss) attributable to Class A Shareholders is presented net of tax.

The following tables present the computation of basic and diluted earnings (loss) per Class A Share:

Three Months Ended June 30, 2023	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	3,654	25,179,467	$	0.15
Effect of dilutive securities:
Group A Units	(8,446)		15,025,994			—
Group E Units	—		—			13,020,839
RSUs	—		—			2,532,586
RSAs	—		—			1,096,970
Warrants	—		—			4,338,015
Diluted	$	(4,792)	40,205,461	$	(0.12)

Three Months Ended June 30, 2022	Net Loss Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Loss Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	(8,052)	25,514,364	$	(0.32)
Effect of dilutive securities:
Group A Units	—		—			15,025,994
Group E Units	—		—			13,009,158
RSUs	—		—			2,605,627
RSAs	—		—			1,575,134
Warrants	(15,702)		1,051,428			—
Diluted	$	(23,754)	26,565,792	$	(0.89)

Six Months Ended June 30, 2023	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	12,146	25,176,667	$	0.48
Effect of dilutive securities:
Group A Units	(14,127)		15,025,994			—
Group E Units	—		—			13,019,799
RSUs	—		—			2,304,905
RSAs	—		—			1,084,688
Warrants	—		—			4,338,015
Diluted	$	(1,981)	40,202,661	$	(0.05)

Six Months Ended June 30, 2022	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	8,830	26,052,478	$	0.34
Effect of dilutive securities:
Group A Units	—		—			15,025,994
Group E Units	—		—			13,009,157
RSUs	—		—			2,557,642
RSAs	—		—			1,312,520
Warrants	(36,341)		1,558,579			—
Diluted	$	(27,511)	27,611,057	$	(1.00)

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RELATED PARTY TRANSACTIONS

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

Due from Related Parties

Amounts due from related parties relate primarily to amounts due from the funds for expenses paid on their behalf. These amounts are reimbursed to the Company on an ongoing basis.

Certain Amounts Related to Tax Receivable Agreement Liability

Amounts due to related parties relate primarily to future payments owed to certain trusts related to Daniel S. Och, under the tax receivable agreement, as discussed further in Note 16. The tax receivable agreement liability was $173.4 million as of June 30, 2023, and $64.7 million of the balance was due to related parties. The Company made payments totaling $17.4 million, and $16.9 million under the tax receivable agreement (inclusive of interest thereon) in the six months ended June 30, 2023 and 2022, respectively, of which $7.7 million and $7.4 million were paid to related parties, respectively. $17.4 million was paid during the three months ended June 30, 2023 and no payments were made in the three months ended June 30, 2022.

Management Fees and Incentive Income Earned from Related Parties and Waived Fees

The Company earns substantially all of its management fees and incentive income from the funds, which are considered related parties as the Company manages the operations of and makes investment decisions for these funds.

As of June 30, 2023 and December 31, 2022, respectively, approximately $838.9 million and $906.6 million of the Company’s Assets Under Management represented investments by the Company, its executive managing directors, employees and certain other related parties in the Company’s funds. As of June 30, 2023 and December 31, 2022, approximately 40% and 43%, respectively, of these Assets Under Management were not charged management fees or incentive income.

The following table presents management fees and incentive income charged on investments held by the Company’s executive managing directors, employees and certain other related parties:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Fees charged on investments held by related parties:
Management fees	$	930	$	1,320	$	1,860	$	2,159
Incentive income	$	65	$	1,533	$	973	$	2,031

Investment in SPAC

The SPAC did not consummate an initial business combination within the time period required by its charter. As a result, in second quarter of 2023, the SPAC redeemed all of its outstanding public shares for cash and the private placement and public warrants have become worthless. The SPAC’s dissolution is in progress. In a private placement concurrent with the initial public offering of the SPAC the Company sponsored, SAC I sold warrants to Sculptor Acquisition Sponsor I, LLC, a subsidiary of the Company, for total gross proceeds of $11.2 million. Sculptor Acquisition Sponsor I, LLC owned the majority of the Class B ordinary shares outstanding of SAC I, and consolidated SAC I under the voting interest model prior to its liquidation, and therefore the private placement warrants and Class B ordinary shares held by the Company were eliminated upon consolidation. Refer to Note 2 in the Company’s Annual Report for additional details on the SPAC.

Investment in Structured Alternative Investment Solution

In the first quarter of 2022, the Company closed on a $350.0 million structured alternative investment solution, a collateralized financing vehicle consolidated by the Company. The Company invested approximately $127.8 million in the vehicle.

Refer to Note 2 in the Company’s Annual Report and Note 4 for additional details on the structured alternative investment solution.

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Tax Receivable Agreement

The purchase of Group A Units from current and former executive managing directors and the Ziffs with the proceeds from the 2007 Offerings, and subsequent taxable exchanges by them of Group A Units, Group E Units and Group P Units (“Partner Equity Units”) for Class A Shares on a one-for-one basis (or, at the Company’s option, a cash equivalent), resulted, and, in the case of future exchanges, are anticipated to result, in an increase in the tax basis of the assets of the Sculptor Operating Group that would not otherwise have been available. The Company anticipates that any such tax basis adjustment resulting from an exchange will be allocated principally to certain intangible assets of the Sculptor Operating Group, and the Company will derive its tax benefits principally through amortization of these intangibles over a 15-year period. Consequently, these tax basis adjustments will increase, for tax purposes, the Company’s depreciation and amortization expenses and will therefore reduce the amount of tax that Sculptor Corp and any other future corporate taxpaying entities that acquire Group B Units in connection with an exchange, if any, would otherwise be required to pay in the future. Accordingly, pursuant to the tax receivable agreement, such corporate taxpaying entities (including Sculptor Capital Management, Inc. once it became treated as a corporate taxpayer following the Company’s conversion from a partnership to a corporation for U.S. federal income tax purposes, effective April 1, 2019 (the “Corporate Classification Change”), have agreed to pay the executive managing directors and the Ziffs 75% of the amount of cash savings, if any, in federal, state and local income taxes in the U.S. that these entities actually realize related to their units as a result of such increases in tax basis. For tax years prior to 2019, such percentage was 85% of such annual cash savings under the tax receivable agreement.

In connection with the Recapitalization, the Company amended the tax receivable agreement to provide that, conditioned on Sculptor Capital Management, Inc. electing to be classified as, or converting into, a corporation for U.S. tax purposes, (i) no amounts are due or payable with respect to the 2017 tax year, (ii) only partial payments equal to 85% of the excess of such cash savings that would otherwise be due over 85% of such cash savings determined assuming that taxable income equals Economic Income are due and payable in respect of the 2018 tax year and (iii) the percentage of cash savings required to be paid with respect to the 2019 tax year and thereafter, as well as with respect to cash savings from subsequent exchanges, is reduced to 75%.

In connection with the departure of certain former executive managing directors since the 2007 Offerings, the right to receive payments under the tax receivable agreement by those former executive managing directors was contributed to the Sculptor Operating Group. As a result, the Company expects to pay to the other executive managing directors and the Ziffs approximately 69% of the amount of cash savings, if any, in federal, state and local income taxes in the U.S. that the Company realizes as a result of such increases in tax basis with respect to future tax years. To the extent that the Company does not realize any cash savings, it would not be required to make corresponding payments under the tax receivable agreement.

The Company recorded its initial estimate of future payments under the tax receivable agreement as a decrease to additional paid-in capital and an increase in the tax receivable agreement liability in the consolidated financial statements. Subsequent adjustments to the liability for future payments under the tax receivable agreement related to changes in estimated future tax rates or state income tax apportionment are recognized through current period earnings in the consolidated statements of operations.

The estimate of the timing and the amount of future payments under the tax receivable agreement involves several assumptions that do not account for the significant uncertainties associated with these potential payments, including an assumption that Sculptor Corp will have sufficient taxable income in the relevant tax years to utilize the tax benefits that would give rise to an obligation to make payments. The actual timing and amount of any actual payments under the tax receivable agreement will vary based upon these and a number of other factors. As of June 30, 2023, the estimated future payment under the

tax receivable agreement was $173.4 million, which is recorded in the tax receivable agreement liability balance on the consolidated balance sheets.

The table below presents management’s estimate as of June 30, 2023, of the maximum amounts that would be payable under the tax receivable agreement assuming that the Company will have sufficient taxable income each year to fully realize the expected tax savings. In light of the numerous factors affecting the Company’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table. The impact of any net operating losses is included in the “Thereafter” amount in the table below.

	Potential Payments Under Tax Receivable Agreement
	(dollars in thousands)
July 1, 2023 to December 31, 2023	$	—
2024	18,040
2025	5,079
2026	37,628
2027	31,415
Thereafter	81,189
Total Payments	$	173,350

Litigation

On August 24, 2022, a complaint under Section 220 of Delaware’s general corporation law, which allows shareholders to inspect corporate books and records, was filed by Daniel S. Och, the Founder of Och-Ziff and four former Och-Ziff executive managing directors. In April 2022, the Founder and these former executive managing directors made a demand to inspect books and records relating to alleged corporate governance concerns in connection with the promotion of James S. Levin to Chief Executive Officer, a new executive compensation plan approved by the Board of Directors in December 2021, and other matters related to the Board’s exercise of its duties. Despite the voluntary production by the Company of extensive documentation in response to that demand, the Founder and the former executive managing directors filed the Section 220 complaint to compel additional production.

On November 18, 2022, the parties announced a settlement of the matter whereby the Founder and the former executive managing directors dismissed the Section 220 complaint with prejudice and in return, among other things, the Company agreed to produce certain additional books and records as well as to issue a press release announcing the formation of a special committee of the Board.

From time to time, the Company is involved in litigation and claims incidental to the conduct of the Company’s business. The Company is also subject to extensive scrutiny by regulatory agencies globally that have, or may in the future have, regulatory authority over the Company and its business activities.

The Company accrues a liability for legal proceedings only when those matters present loss contingencies that it believes are both probable and reasonably estimable. As of June 30, 2023, the Company does not have any potential liability related to any current legal proceeding or claim that would individually, or in the aggregate, materially affect its results of operations, financial position or cash flows.

Investment Commitments

The Company has unfunded capital commitments of $219.0 million to certain funds it manages, of which $91.8 million relates to commitments of the Company’s consolidated structured alternative investment solution. The remaining $127.2 million

relates to commitments of the Company to unconsolidated funds. Approximately $82.4 million of the Company’s commitments will be funded by contributions to the Company from certain employees and executive managing directors. The Company expects to fund these commitments over the approximately next 5 years. The Company has guaranteed these commitments in the event any executive managing director fails to fund any portion when called by the fund. The Company has historically not funded any of these commitments and does not expect to in the future, as these commitments are expected to be funded by the Company’s executive managing directors individually.

Other Contingencies

In the normal course of business, the Company enters into contracts that provide a variety of general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements could involve future claims that may be made against the Company. Currently, no such claims exist or are expected to arise and, accordingly, the Company has not accrued any liability in connection with such indemnifications.

Additionally, the Company has agreements with certain of the funds it manages to reimburse certain expenses in excess of an agreed-upon cap. During the six months ended June 30, 2023 and 2022, these amounts were not material.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2023

Subsequent Events [Abstract]

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

On July 23, 2023, the Company entered into an Agreement and Plan of Merger (including the schedules and exhibits thereto, the “Merger Agreement”), by and among the Company, Rithm Capital Corp., a Delaware corporation (“Rithm”), the Sculptor Operating Partnerships, Calder Sub, Inc., a Delaware corporation and subsidiary of Rithm (“Merger Sub Inc.”), Calder Sub I, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub I”), Calder Sub II, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub II”), and Calder Sub III, LP, a Delaware limited partnership and subsidiary of Rithm (“Merger Sub III” and, collectively with Merger Sub I and Merger Sub II, the “LP Merger Subs” and, collectively with Merger Sub Inc., the “Merger Subs”).

Pursuant to the terms of the Merger Agreement, (i) Merger Sub Inc. will merge with and into the Company, with the Company surviving such merger as the surviving corporation (the “Surviving Corporation”) (the “Public Merger”), (ii) Merger Sub I will merge with and into Sculptor Capital LP, with Sculptor Capital LP surviving such merger as the surviving partnership, (iii) Merger Sub II will merge with and into Sculptor Capital Advisors LP, with Sculptor Capital Advisors LP surviving such merger as the surviving partnership, and (iv) Merger Sub III will merge with and into Sculptor Capital Advisors II LP, with Sculptor Capital Advisors II LP surviving such merger as the surviving partnership (collectively, the “Mergers”).

The merger of Merger Sub Inc. and the Company will become effective at the time the certificate of merger is filed with the Delaware Secretary of State or at such later effective time and date that is agreed to by Rithm and the Company and specified in the certificate of merger (the “Effective Time”) and the mergers of each of the Sculptor Operating Partnerships will become effective at the time the applicable certificates of merger is filed with the Delaware Secretary of State or at such later effective time and date that is agreed to by Rithm and the Company and specified in the applicable certificates of merger.

On the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, (i) each Class A Share issued and outstanding immediately prior to the Effective Time (but excluding (x) any shares of Class A Shares and Class B Shares (the “ Company Common Stock” that are owned directly by Rithm, Merger Sub Inc. or any of their subsidiaries immediately prior to the Effective Time or held in treasury of the Company, (y) any shares of the Company Common Stock as to which appraisal rights have been properly exercised and (z) any unvested and outstanding award of service-based restricted shares of the Company Common Stock granted pursuant to the Company’s equity incentive plans to be cancelled without payment in respect thereof pursuant to Section 3.06(c) of the Merger Agreement) will be cancelled and converted into the right to receive an amount in cash equal to $11.15, without interest (the “Public Merger Consideration”), (ii) each Class B Share issued and outstanding immediately prior to the Effective Time will be cancelled and no payment will be made in respect thereof and (iii) each issued and outstanding share of common stock, par value $0.01 per share, of Merger Sub Inc. issued and outstanding immediately prior to the Effective Time will be converted into and become one (1) fully paid and non-assessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

Holders of Class A Units and Class A-1 Units of the Sculptor Operating Partnerships are expected to be offered the opportunity to enter into a rollover agreement (the “Rollover Agreement”) with Rithm, Calder Holdco I, LP, a Delaware limited partnership and subsidiary of Rithm (“Holdco I”), Calder Holdco II, LP, a Delaware limited partnership and subsidiary of Rithm (“Holdco II”), and Calder Holdco III, LP, a Delaware limited partnership and subsidiary of Rithm (“Holdco III” and collectively with Holdco I and Holdco II, the “Holdcos”). Holders of such Sculptor Operating Partnership units that elect to enter into the Rollover Agreement will agree, subject to the terms and conditions set forth in the Rollover Agreement, immediately prior to the closing, to contribute certain of their equity interests in the Sculptor Operating Partnerships (the “Rollover Interests”) to the Holdcos in exchange for a number of equity interests in each of the Holdcos having an aggregate value equal to the contributed value of the Rollover Interests (the “Rollover”). The closing of the Rollover will be conditioned upon the holders of at least 50% of the issued and outstanding Class A Units and Class A-1 Units of the Sculptor Operating Partnerships entering into the Rollover Agreement prior to the date of the special meeting of shareholders related to the Mergers.

The Merger Agreement contains certain customary representations and warranties made by each party, which, in the case of the Company and the Sculptor Operating Partnerships, are qualified by the confidential disclosures provided to Rithm in connection with the Merger Agreement, as well as matters included in the Company’s reports filed with the SEC prior to the date of the Merger Agreement. Rithm, the Company and the Sculptor Operating Partnerships have agreed to various customary covenants, including covenants regarding the conduct of the Company’s business prior to the closing of the Mergers, covenants requiring the Company to recommend that its stockholders approve the Merger Agreement and covenants prohibiting the Company from soliciting alternative acquisition proposals or providing information to or engaging in discussions with third parties, in each case, except in limited circumstances as provided in the Merger Agreement.

The Merger Agreement also includes customary termination rights for both the Company and Rithm, subject, in certain circumstances, to the payment by the Company of a termination fee of approximately $16.6 million.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Pay vs Performance Disclosure
Net Income (Loss) Attributable to Parent	$ (4,350)	$ (8,749)	$ 5,320	$ 5,065

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Insider Trading Arrangements	3 Months Ended
	Jun. 30, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

These unaudited, interim, consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”), and exclude some of the disclosures required in audited financial statements and therefore should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report. Management believes all adjustments considered necessary for a fair presentation of the Company’s unaudited, interim, consolidated financial statements have been included and are of a normal and recurring nature and that estimates made in preparing unaudited, interim, consolidated financial statements are reasonable and prudent. The consolidated financial statements include the accounts of the Company, its wholly owned or majority owned subsidiaries, the consolidated entities which are considered to be variable interest

entities and for which the Company is considered the primary beneficiary, and certain other entities which are not considered variable interest entities but the Company is determined to have control. All significant intercompany transactions and balances have been eliminated in consolidation.

The results of operations presented for the interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. For example, incentive income for the majority of the Company’s multi-strategy AUM is recognized in the fourth quarter each year, based on full year investment performance.

Recently Adopted and Future Adoption of Accounting Pronouncements

Recently Adopted Accounting Pronouncements

No changes to GAAP that went into effect in the six months ended June 30, 2023, 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.

Investments

The Company invests in U.S. government obligations to manage excess liquidity. CLOs, at fair value, consist of investments in notes of unconsolidated CLOs. These investments are carried at fair value under the irrevocable fair value option election at initial recognition. Changes in fair value are recorded within net gains (losses) on investments in the consolidated

statements of operations. Interest income on these investments is accrued using the effective interest method and separately presented from the overall change in fair value and is recognized in other revenues in the consolidated statement of operations.

The Company’s equity method investments include investments in funds, which are not consolidated, but in which the Company exerts significant influence, but not control. The Company has not elected the fair value option and accounts for such investments under the equity method. Under the equity method of accounting, the Company recognizes its share of the underlying earnings (losses) from equity method investments within net gains (losses) 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.

In the second quarter of 2023, our consolidated SPAC was liquidated in accordance with its charter and the investments held in a SPAC’s trust account were liquidated. Investments of consolidated entities included both investments of the Company’s consolidated SPAC, prior to its liquidation, which consisted of investments in U.S. Treasury bills held in a trust account and measured at fair value, as well as investments held by the Company’s consolidated structured alternative investment solution. The investments of the consolidated structured alternative investment solution that the Company manages are generally measured at fair value using the NAV per share practical expedient. The Company may determine based on its own due diligence and investment procedures, that NAV per share does not represent fair value. In such circumstances, the Company will estimate the fair value in good faith and in a manner that it reasonably chooses in accordance with GAAP. The Company does not categorize investments where fair value is measured using the NAV practical expedient within the fair value hierarchy.

Fair Value Measurement

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 financial instruments at fair value. Market price observability is impacted by a number of factors, including the type and the specific characteristics of the financial instrument, including existence and transparency of transactions between market participants. Financial instruments with readily available actively quoted prices or for which fair value can be measured from actively-quoted prices generally will have a higher degree of market price observability and lesser degree of judgment used in measuring fair value.

Financial instruments measured at fair value are classified and disclosed into one of the following categories based on the observability of inputs used in the determination of fair values:

•Level I – Quoted prices that are available in active markets for identical financial instruments as of the reporting date. The types of financial instruments that would generally be included in this category are listed equities, U.S. government obligations and listed derivatives. The Company does not adjust the quoted price for these investments.

•Level II – Quotations received from dealers making a market for financial instruments (“broker quotes”), valuations obtained from independent third-party pricing services, the use of models or other valuation methodologies based on pricing inputs that are either directly or indirectly observable as of the reporting date. The types of financial instruments that would generally be included in this category are certain corporate bonds and loans, certain credit default swap contracts, certain bank debt securities, certain commercial real estate debt, less liquid equity securities, forward contracts and certain over the-counter (“OTC”) derivatives where the fair value is based on observable inputs. These financial instruments exhibit higher levels of liquid market observability as compared to Level III financial instruments.

•Level III – Pricing inputs that are unobservable for the financial instruments and includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value of financial instruments in this category may require significant management judgment or estimation. The fair value of these financial instruments may be estimated using a combination of observed transaction prices, independent pricing services, relevant broker quotes, models or other valuation methodologies based on pricing inputs that are neither directly or indirectly market observable (e.g., cash flows, implied yields, EBITDA multiples). The types of financial instruments that would generally be included in this category include CLOs, certain warrant liabilities, certain credit default swap contracts, certain bank debt securities, certain OTC derivatives, asset-backed securities, collateralized debt obligations and investments in affiliated credit funds.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, a financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument when the fair value is based on unobservable inputs.

For financial instruments for which the Company uses independent pricing services for valuation, the Company performs analytical procedures and compares independent pricing service valuations to other vendors’ pricing as applicable. The Company also performs due diligence reviews on independent pricing services on an annual basis and performs other due

diligence procedures as may be deemed necessary.

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ORGANIZATION (Tables)

6 Months Ended

Jun. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Shares and Operating Group Units

The following table presents the number of shares and units of the Company and the Sculptor Operating Partnerships, respectively, that were outstanding as of June 30, 2023:

	As of June 30, 2023
Sculptor Capital Management, Inc.
Class A Shares	24,971,561
Class B Shares	33,017,247
Restricted Class A Shares (“RSAs”)	4,650,661
Restricted Share Units (“RSUs”)	2,672,474
Performance-based RSUs (“PSUs”)	912,500
Warrants to purchase Class A Shares (Note 7)	4,338,015
Sculptor Operating Partnerships
Group A Units	15,025,994
Group A-1 Units	9,244,477
Group B Units	24,971,561
Group E Units	13,020,157
Group P Units	4,734,286

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NONCONTROLLING INTERESTS (Tables)

6 Months Ended

Jun. 30, 2023

Noncontrolling Interest [Abstract]

Calculation of Noncontrolling Interests Attributable to Group A Units

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,
	2023			2022			2023			2022
	(dollars in thousands)
Sculptor Capital LP
Net income (loss)	$	11,952		$	(25,001)		$	43,039		$	16,215
Blended participation percentage	0		%	0		%	0		%	0		%
Net Income Attributable to Group A Units	$	—		$	—		$	—		$	—
Sculptor Capital Advisors LP
Net (loss) income	$	(16,369)		$	15,623		$	(20,551)		$	(1,197)
Blended participation percentage	38		%	36		%	38		%	38		%
Net (Loss) Income Attributable to Group A Units	$	(6,149)		$	5,702		$	(7,720)		$	(451)
Sculptor Capital Advisors II LP
Net loss	$	(13,203)		$	(1,677)		$	(27,654)		$	(19,473)
Blended participation percentage	38		%	49		%	38		%	38		%
Net Loss Attributable to Group A Units	$	(4,960)		$	(821)		$	(10,389)		$	(7,331)
Total Sculptor Operating Group
Net loss	$	(17,620)		$	(11,055)		$	(5,166)		$	(4,455)
Blended participation percentage	63		%	-44		%	351		%	175		%
Net (Loss) Income Attributable to Group A Units	$	(11,109)		$	4,881		$	(18,109)		$	(7,782)

Components of Net Loss Attributable to Noncontrolling Interests

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,
	2023		2022		2023		2022
	(dollars in thousands)
Group A Units	$	(11,109)	$	4,881	$	(18,109)	$	(7,782)
Other	1,287		698		2,082		1,355
	$	(9,822)	$	5,579	$	(16,027)	$	(6,427)

Components of Shareholders' Equity Attributable to Noncontrolling Interests

The following table presents the components of the shareholders’ equity attributable to noncontrolling interests:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Group A Units	$	397,640	$	412,941
Other	30,935		26,538
	$	428,575	$	439,479

Redeemable Noncontrolling Interest

The following table presents the activity in redeemable noncontrolling interests, excluding the reversal of deferred underwriting fees as a result of the SPAC liquidation, for the three and six months ended June 30, 2023:

	Three Months Ended June 30,		Six Months Ended June 30,
	2023		2023
	SPAC		SPAC
	(dollars in thousands)
Beginning balance	$	240,541	$	237,864
Change in redemption value of Class A Shares of consolidated SPAC	(220)		958
Capital distributions	(242,172)		(242,172)
Comprehensive income	1,851		3,350
Ending Balance	$	—	$	—

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INVESTMENTS AND FAIR VALUE DISCLOSURES (Tables)

6 Months Ended

Jun. 30, 2023

Fair Value Disclosures [Abstract]

Investments Summary

The following table presents the components of the Company’s investments as reported in the consolidated balance sheets:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
U.S. government obligations, at fair value	$	58,988	$	24,782
CLOs, at fair value	208,138		207,147
Equity method investments	80,605		67,130
Total Investments	$	347,731	$	299,059
Investments of Consolidated Entities	$	323,276	$	544,554

Fair Value, Investments, Entities that Calculate Net Asset Value Per Share

The following table summarizes the fair value of the investments of the structured alternative investment solution that are measured using the NAV practical expedient by strategy type and ability to redeem such investments as of June 30, 2023:

Fund Type(1)	Fair Value (as of June 30, 2023)		Redemption Frequency(2)	Redemption Notice Period(2)
	(dollars in thousands)
Multi-strategy	76,240		Quarterly - Annually	30 days - 90 days
Credit	238,339		Monthly - Annually(3)	30 days - 90 days
Real estate	8,697		None(4)	N/A
Total	$	323,276

_______________

(1)The structured alternative investment solution invests in both open-ended and close-ended funds. The investments in each fund may represent investments in a particular tranche of such fund subject to different withdrawal rights.

(2)$159.6 million of investments are subject to an initial lock-up period of three years during which time no withdrawals or redemptions are allowed. Once the lock-up period ends, the investments are able to be redeemed with the frequency noted above.

(3)24% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately six years from inception.

(4)100% of these investments are in closed-end funds which cannot be redeemed, as distributions will be received as the underlying assets are liquidated, which is expected to be approximately seven to nine years from inception.

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The following tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis within the fair value hierarchy for the periods presented:

	As of June 30, 2023
	Level I		Level II		Level III		NAV		Total
	(dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations	$	4,998	$	—	$	—	$	—	$	4,998
Included within investments:
U.S. government obligations	$	58,988	$	—	$	—	$	—	$	58,988
CLOs(1)	$	—	$	—	$	208,138	$	—	$	208,138
Included within investments of consolidated entities:
Investments in funds	—		—		—		323,276		323,276
Investments of Consolidated Entities	$	—	$	—	$	—	$	323,276	$	323,276
Liabilities, at Fair Value
Warrants	$	—	$	—	$	24,423	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	—	$	—	$	205,290	$	—	$	205,290

_______________

(1) As of June 30, 2023, investments in CLOs had contractual principal amounts of $208.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.

	As of December 31, 2022
	Level I		Level II		Level III		NAV		Total
	(dollars in thousands)
Assets, at Fair Value
Included within cash and cash equivalents:
U.S. government obligations	$	19,937	$	—	$	—	$	—	$	19,937
Included within investments:
U.S. government obligations	$	24,782	$	—	$	—	$	—	$	24,782
CLOs(1)	$	—	$	—	$	207,147	$	—	$	207,147
Included within investments of consolidated entities:
U.S. government obligations	$	237,964	$	—	$	—	$	—	$	237,964
Investments in funds	—		—		—		306,590		306,590
Investments of Consolidated Entities	$	237,964	$	—	$	—	$	306,590	$	544,554
Liabilities, at Fair Value
Warrants	$	—	$	—	$	24,163	$	—	$	24,163
Liabilities of consolidated entities:
Warrants	$	596	$	—	$	—	$	—	$	596
Notes Payable	$	—	$	—	$	196,106	$	—	$	196,106

_______________

(1) As of December 31, 2022, investments in CLOs had contractual principal amounts of $212.0 million outstanding, which excludes the Company’s investments in subordinated tranches of the notes, as these do not have contractual principal payments.

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the three months ended June 30, 2023 and 2022:

	March 31, 2023		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2023
	(dollars in thousands)
Assets, at Fair Value
Included within investments
CLOs	$	207,030	$	—	$	—	$	544	$	(3,094)	$	2,778	$	880	$	208,138
Liabilities, at Fair Value
Warrants	$	23,989	$	—	$	—	$	—	$	—	$	(434)	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	197,813	$	—	$	—	$	—	$	—	$	(7,477)	$	—	$	205,290
	March 31, 2022		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	226,552	$	—	$	—	$	1,032	$	(26)	$	(14,269)	$	(9,658)	$	203,631
Investments of consolidated entities:
Bank Debt	$	—	$	—	$	—	$	41,792	$	—	$	(1,566)	$	—	$	40,226
Liabilities, at Fair Value
Warrants	$	40,951	$	—	$	—	$	—	$	—	$	18,740	$	—	$	22,211
Liabilities of consolidated entities:
Notes payable	$	215,733	$	—	$	—	$	—	$	—	$	13,748	$	—	$	201,985

The following tables summarize the changes in the Company’s Level III financial assets and liabilities for the six months ended June 30, 2023 and 2022:

	December 31, 2022		Transfers In		Transfers Out		Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2023
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	207,147	$	—	$	—	$	544	$	(8,455)	$	5,587	$	3,315	$	208,138
Liabilities, at Fair Value
Warrants	$	24,163	$	—	$	—	$	—	$	—	$	(260)	$	—	$	24,423
Liabilities of consolidated entities:
Notes payable	$	196,106	$	—	$	—	$	—	$	—	$	(9,184)	$	—	$	205,290

	December 31, 2021		Transfers In			Transfers Out			Purchases / Issuances		Investment Sales / Settlements		Gains / (Losses) Included in Earnings		Gains / (Losses) Included in Other Comprehensive Income		June 30, 2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	219,510	$	—		$	—		$	29,839	$	(12,373)	$	(18,788)	$	(14,557)	$	203,631
Investments of consolidated entities:
Bank Debt	$	—	$	3,603	(1)	$	(14,666)	(1)	$	56,425	$	(3,475)	$	(1,661)	$	—	$	40,226
Liabilities, at Fair Value
Warrants	$	65,287	$	—		$	—		$	—	$	—	$	43,076	$	—	$	22,211
Liabilities of consolidated entities:
Warrants	$	7,590	$	—		$	(3,450)	(2)	$	—	$	—	$	4,140	$	—	$	—
Notes payable	$	—	$	—		$	—		$	215,733	$	—	$	13,748	$	—	$	201,985

_______________

(1) Transfers into and out of Level III in bank debt include $2.3 million related to the consolidation (Transfers In) and $14.0 million related to the subsequent deconsolidation (Transfers Out) 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.

Fair Value, Measured on Recurring Basis, Gain (Loss) Included in Earnings

The table below summarizes the net change in unrealized gains and (losses) on the Company’s Level III financial instruments outstanding as of the reporting date:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Assets, at Fair Value
Included within investments:
CLOs	$	3,658	$	(23,928)	$	8,902	$	(33,346)
Included within investments of consolidated entities:
Bank debt	$	—	$	(1,566)	$	—	$	(1,566)
Liabilities, at Fair Value
Warrants	$	(434)	$	18,740	$	(260)	$	43,076
Liabilities of consolidated entities:
Notes payable	$	(7,477)	$	13,748	$	(9,184)	$	13,748

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VARIABLE INTEREST ENTITIES (Tables)

6 Months Ended

Jun. 30, 2023

Variable Interest Entity, Reporting Entity Involvement, Maximum Loss Exposure, Determination Methodology and Factors [Abstract]

Variable Interest Entities

The table below presents the assets and liabilities of VIEs consolidated by the Company.

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Assets
Assets of consolidated entities:
Cash and cash equivalents of consolidated entities	$	408	$	3
Restricted cash and cash equivalents of consolidated entities	9,800		9,805
Investments of consolidated entities, at fair value	323,276		306,590
Other assets of consolidated entities	1,471		2,016
Total Assets	$	334,955	$	318,414
Liabilities
Liabilities of consolidated entities:
Notes payable of consolidated entities	$	205,290	$	196,106
Other liabilities of consolidated entities	1,776		1,601
Total Liabilities	$	207,066	$	197,707

The table below presents the net assets of unconsolidated VIEs in which the Company has variable interests along with the maximum exposure to loss as a result of the Company’s involvement with non-consolidated VIEs:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Net assets of unconsolidated VIEs in which the Company has a variable interest	$	12,384,193	$	12,738,164
Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs:
Unearned income and fees	46,866		53,869
Income and fees receivable	17,315		41,890
Investments	249,538		245,583
Investments of consolidated entities	247,036		237,699
Unfunded commitments(1)	218,885		182,797
Maximum Exposure to Loss	$	779,640	$	761,838

_______________

(1) Includes commitments from certain employees and executive managing directors in the amounts of $82.4 million and $65.4 million as of June 30, 2023 and December 31, 2022, respectively.

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LEASES (Tables)

6 Months Ended

Jun. 30, 2023

Leases [Abstract]

Lease Cost

The tables below represent components of lease expense and associated cash flows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Lease Cost
Operating lease cost	$	4,600	$	4,656	$	9,205	$	9,364
Short-term lease cost	22		44		44		54
Finance lease cost - amortization of leased assets	72		91		171		183
Finance lease cost - imputed interest on lease liabilities	15		1		30		4
Less: Sublease income	(840)		(804)		(1,637)		(1,634)
Net Lease Cost	$	3,869	$	3,988	$	7,813	$	7,971

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(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	$	5,238	$	5,165	$	10,453	$	10,491
Operating cash flows for finance leases	$	—	$	—	$	5	$	—
Finance cash flows for finance leases	$	—	$	—	$	223	$	163
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	—	$	—	$	—	$	1,079

	June 30, 2023		December 31, 2022
Lease Term and Discount Rate
Weighted average remaining lease term
Operating leases	6.3 years		6.7 years
Finance leases	4.0 years		4.5 years
Weighted average discount rate
Operating leases	7.9	%	7.8	%
Finance leases	7.9	%	7.9	%

Maturity of Lease Liabilities

	Operating Leases		Finance Leases
	(dollars in thousands)
Maturity of Lease Liabilities - Contractual Payments to be Paid
July 1, 2023 to December 31, 2023	$	9,781	$	—
2024	16,529		228
2025	14,329		228
2026	15,353		228
2027	17,675		228
Thereafter	35,015		—
Total Lease Payments	108,682		912
Imputed interest	(23,587)		(131)
Total Lease Liabilities - Contractual Payments to be Paid	$	85,095	$	781

Maturity of Lease Liabilities

	Operating Leases		Finance Leases
	(dollars in thousands)
Maturity of Lease Liabilities - Contractual Payments to be Paid
July 1, 2023 to December 31, 2023	$	9,781	$	—
2024	16,529		228
2025	14,329		228
2026	15,353		228
2027	17,675		228
Thereafter	35,015		—
Total Lease Payments	108,682		912
Imputed interest	(23,587)		(131)
Total Lease Liabilities - Contractual Payments to be Paid	$	85,095	$	781

Sublease Rent Payments Receivable

	Operating Leases
	(dollars in thousands)
Sublease Rent - Contractual Payments to be Received
July 1, 2023 to December 31, 2023	$	1,626
2024	1,920
2025	1,920
2026	1,920
2027	1,960
Thereafter	4,160
Total Sublease Rent - Contractual Payments to be Received	$	13,506

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DEBT OBLIGATIONS AND WARRANTS (Tables)

6 Months Ended

Jun. 30, 2023

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

	2020 Term Loan		CLO Investments Loans		Total
	(dollars in thousands)
Maturity of Debt Obligations
July 1, 2023 to December 31, 2023	$	—	$	—	$	—
2024	—		—		—
2025	—		436		436
2026	—		—		—
2027	95,000		—		95,000
2028	—		—		—
Thereafter	—		33,297		33,297
Total Payments	95,000		33,733		128,733
Unamortized discounts & deferred financing costs	(10,700)		(184)		(10,884)
Total Debt Obligations	$	84,300	$	33,549	$	117,849

Notes Payable, Consolidating Funds

The table below summarizes material terms of the notes payable:

	Class A Notes			Class B Notes			Class C Notes			Subordinated Notes(1)
	(dollars in thousands)
Type	Senior Secured			Senior Secured			Mezzanine Secured			Unsecured
Initial principal amount	$	140,000		$	70,000		$	35,000		$	105,000
Initial interest rate	4.25		%	6.00		%	6.75		%	N/A
Interest rate after step up and effective date(2)	6.25%; May 2028			8.00%; May 2029			9.50%; May 2025			N/A

_______________

(1) Subordinated 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.

(2) Interest rate after a one time step up in basis at the indicated effective date.

CLO Investments Loans Table

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 final maturity date for each CLO Investments Loan is the earlier of the contractual 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. The timing of principal payments on CLO Investments Loans is contingent on principal payments made to the Company on the investments in CLOs and the CLO Investments Loans may amortize well in advance of their contractual maturity dates.

Initial Borrowing Date	Contractual Rate	Contractual Maturity Date	Carrying Value
			June 30, 2023		December 31, 2022
			(dollars in thousands)
June 7, 2017	LIBOR plus 1.48%	November 16, 2029	$	13,974	$	16,835
August 2, 2017	LIBOR plus 1.41%	January 21, 2030	19,139		21,594
January 19, 2022	EURIBOR plus 1.50%	December 15, 2023	—		2,285
June 1, 2023	EURIBOR plus 1.85%	April 12, 2025	436		—
			$	33,549	$	40,714

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE (Tables)

6 Months Ended

Jun. 30, 2023

Transfers and Servicing of Financial Assets [Abstract]

Schedule of Repurchase Agreements Offsetting Disclosures

The table below presents securities sold under agreements to repurchase that are offset, if any, as well as securities transferred to the counterparty 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 Repurchase	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities in the Consolidated Balance Sheet		Securities Transferred		Net Amount
	(dollars in thousands)
As of June 30, 2023	$	169,721	$	—	$	169,721	$	164,202	$	5,519
As of December 31, 2022	$	166,632	$	—	$	166,632	$	157,107	$	9,525

Schedule of Remaining Contractual Maturity of Repurchase Agreements

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 to the counterparty under agreement to repurchase by class of collateral pledged:

	Investments in CLOs
Securities Sold under Agreements to Repurchase	Overnight and Continuous		Up to 30 Days		30-90 Days		Greater Than 90 Days		Total
	(dollars in thousands)
As of June 30, 2023	$	—	$	—	$	—	$	169,721	$	169,721
As of December 31, 2022	$	—	$	—	$	—	$	166,632	$	166,632

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OTHER ASSETS, NET (Tables)

6 Months Ended

Jun. 30, 2023

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Other Assets

The following table presents the components of other assets, net as reported in the consolidated balance sheets:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Fixed Assets:
Leasehold improvements	$	47,736	$	47,736
Computer hardware and software	44,680		44,603
Furniture, fixtures and equipment	8,013		8,013
Accumulated depreciation and amortization	(81,468)		(79,390)
Fixed assets, net	18,961		20,962
Goodwill	22,691		22,691
Prepaid expenses	14,174		16,698
Cloud computing costs	12,702		9,940
Redemption receivable(1)	—		28,721
Other	8,964		7,430
Total Other Assets, Net	$	77,492	$	106,442

_______________

(1) Represents amounts receivable on a redeemed investment in a fund.

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OTHER LIABILITIES (Tables)

6 Months Ended

Jun. 30, 2023

Other Liabilities Disclosure [Abstract]

Components of Other Liabilities

The following table presents the components of other liabilities as reported in the consolidated balance sheets:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Accrued expenses	$	16,154	$	20,925
Uncertain tax positions	8,250		8,250
Due to funds(1)	3,172		3,854
Other	7,607		10,020
Total Other Liabilities	$	35,183	$	43,049

_______________

(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.

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REVENUES (Tables)

6 Months Ended

Jun. 30, 2023

Revenue from Contract with Customer [Abstract]

Management Fees and Incentive Income Recognized

The following table presents management fees and incentive income recognized as revenues for the three months ended June 30, 2023 and 2022:

	Three Months Ended June 30,
	2023				2022
	Management Fees		Incentive Income		Management Fees		Incentive Income
	(dollars in thousands)
Multi-strategy funds	$	29,268	$	407	$	38,612	$	(835)
Credit
Opportunistic credit funds	12,145		3,303		12,342		102
Institutional Credit Strategies	12,271		—		11,808		—
Real estate funds	8,758		586		9,008		45,313
Total	$	62,442	$	4,296	$	71,770	$	44,580

The following table presents management fees and incentive income recognized as revenues for the six months ended June 30, 2023 and 2022:

	Six Months Ended June 30,
	2023				2022
	Management Fees		Incentive Income		Management Fees		Incentive Income
	(dollars in thousands)
Multi-strategy funds	$	60,150	$	723	$	78,592	$	120
Credit
Opportunistic credit funds	24,681		14,122		25,166		19,905
Institutional Credit Strategies	23,738		—		23,391		—
Real estate funds	17,581		29,737		18,058		46,197
Total	$	126,150	$	44,582	$	145,207	$	66,222

Income and Fees Receivable

The following table presents the composition of the Company’s income and fees receivable as of June 30, 2023 and December 31, 2022:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Management fees	$	24,946	$	25,402
Incentive income	5,027		30,958
Income and Fees Receivable	$	29,973	$	56,360

Unearned Income and Fees

The following table presents the Company’s unearned income and fees as of June 30, 2023 and December 31, 2022:

	June 30, 2023		December 31, 2022
	(dollars in thousands)
Management fees	$	1	$	2
Incentive income	46,865		53,867
Unearned Income and Fees	$	46,866	$	53,869

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2023

Income Tax Disclosure [Abstract]

Schedule of Effective Income Tax Rate Reconciliation

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 June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Statutory U.S. federal income tax rate	21.00	%	21.00	%	21.00	%	21.00	%
Loss (income) passed through to noncontrolling interests	-14.82	%	13.60	%	63.28	%	31.73	%
Foreign income taxes	-11.92	%	5.14	%	80.72	%	-1.10	%
RSU/RSA excess income tax benefit or expense	0.12	%	-1.24	%	38.26	%	-85.00	%
State and local income taxes	13.06	%	16.21	%	31.85	%	156.82	%
Nondeductible amortization of Partner Equity Units	-4.72	%	2.54	%	31.78	%	143.06	%
Foreign tax credits and deductions	2.50	%	-1.08	%	-16.95	%	0.23	%
Change in fair value of warrants	-1.14	%	41.17	%	1.10	%	-591.40	%
Disallowed executive compensation	-10.08	%	-20.63	%	66.55	%	256.31	%
Other, net	-3.17	%	-0.52	%	15.37	%	3.31	%
SPAC Loss	17.96	%	—	%	-57.79	%	—	%
Effective Income Tax Rate	8.80	%	76.19	%	275.17	%	-65.04	%

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GENERAL, ADMINISTRATIVE AND OTHER (Tables)

6 Months Ended

Jun. 30, 2023

Other Income and Expenses [Abstract]

Components of General, Administrative and Other Expenses

The following table presents the components of general, administrative and other expenses as reported in the consolidated statements of operations:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Professional services	$	8,712	$	6,177	$	20,368	$	11,641
Occupancy and equipment	6,802		6,900		13,501		13,990
Information processing and communications	5,882		5,175		11,532		10,201
Recurring placement and related service fees	3,656		5,182		7,282		10,431
Insurance	2,318		2,228		4,635		4,435
Business development	984		797		2,020		1,295
Other expenses	1,574		(34)		4,385		1,748
Total General, Administrative and Other	$	29,928	$	26,425	$	63,723	$	53,741

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EARNINGS (LOSS) PER CLASS A SHARE (Tables)

6 Months Ended

Jun. 30, 2023

Earnings Per Share [Abstract]

Computation of Basic and Diluted Earnings (Loss) Per Class A Share

The following tables present the computation of basic and diluted earnings (loss) per Class A Share:

Three Months Ended June 30, 2023	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	3,654	25,179,467	$	0.15
Effect of dilutive securities:
Group A Units	(8,446)		15,025,994			—
Group E Units	—		—			13,020,839
RSUs	—		—			2,532,586
RSAs	—		—			1,096,970
Warrants	—		—			4,338,015
Diluted	$	(4,792)	40,205,461	$	(0.12)

Three Months Ended June 30, 2022	Net Loss Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Loss Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	(8,052)	25,514,364	$	(0.32)
Effect of dilutive securities:
Group A Units	—		—			15,025,994
Group E Units	—		—			13,009,158
RSUs	—		—			2,605,627
RSAs	—		—			1,575,134
Warrants	(15,702)		1,051,428			—
Diluted	$	(23,754)	26,565,792	$	(0.89)

Six Months Ended June 30, 2023	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	12,146	25,176,667	$	0.48
Effect of dilutive securities:
Group A Units	(14,127)		15,025,994			—
Group E Units	—		—			13,019,799
RSUs	—		—			2,304,905
RSAs	—		—			1,084,688
Warrants	—		—			4,338,015
Diluted	$	(1,981)	40,202,661	$	(0.05)

Six Months Ended June 30, 2022	Net Income (Loss) Attributable to Class A Shareholders		Weighted- Average Class A Shares Outstanding	Earnings (Loss) Per Class A Share		Number of Antidilutive Units and Warrants Excluded from Diluted Calculation
	(dollars in thousands, except per share amounts)
Basic	$	8,830	26,052,478	$	0.34
Effect of dilutive securities:
Group A Units	—		—			15,025,994
Group E Units	—		—			13,009,157
RSUs	—		—			2,557,642
RSAs	—		—			1,312,520
Warrants	(36,341)		1,558,579			—
Diluted	$	(27,511)	27,611,057	$	(1.00)

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RELATED PARTY TRANSACTIONS (Tables)

6 Months Ended

Jun. 30, 2023

Related Party Transactions [Abstract]

Management Fees and Incentive Income Earned from Related Parties

The following table presents management fees and incentive income charged on investments held by the Company’s executive managing directors, employees and certain other related parties:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
	(dollars in thousands)
Fees charged on investments held by related parties:
Management fees	$	930	$	1,320	$	1,860	$	2,159
Incentive income	$	65	$	1,533	$	973	$	2,031

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COMMITMENTS AND CONTINGENCIES (Tables)

6 Months Ended

Jun. 30, 2023

Commitments and Contingencies Disclosure [Abstract]

Schedule of Estimated Future Maximum Payments Under Tax Receivable Agreement

The table below presents management’s estimate as of June 30, 2023, of the maximum amounts that would be payable under the tax receivable agreement assuming that the Company will have sufficient taxable income each year to fully realize the expected tax savings. In light of the numerous factors affecting the Company’s obligation to make such payments, the timing and amounts of any such actual payments may differ materially from those presented in the table. The impact of any net operating losses is included in the “Thereafter” amount in the table below.

	Potential Payments Under Tax Receivable Agreement
	(dollars in thousands)
July 1, 2023 to December 31, 2023	$	—
2024	18,040
2025	5,079
2026	37,628
2027	31,415
Thereafter	81,189
Total Payments	$	173,350

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ORGANIZATION - Additional Information (Details) $ / shares in Units, $ in Thousands		3 Months Ended		6 Months Ended
	Feb. 07, 2019 shares	Jun. 30, 2023 USD ($) shares	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($) $ / shares shares	Jun. 30, 2022 USD ($)	Dec. 31, 2022 shares	Feb. 28, 2022 USD ($)
Class of Stock
Ratio of group A units, recapitalized as group A-1 units	0.35
Ratio of group A units, recapitalized as group A units	0.65
Number of group A units forfeited in connection with recapitalization (in shares) | shares	749,813
Treasury stock (in shares) | shares		3,022,380		3,022,380		3,022,380
Stock repurchase program, authorized amount | $							$ 100,000
Stock repurchased during period | $			$ 13,255		$ 19,509
Stock repurchase program, remaining authorized repurchase amount | $		$ 67,500		$ 67,500
Class A Shares
Class of Stock
Treasury stock, shares acquired (in shares) | shares		0		3,022,380
Stock repurchased during period | $				$ 32,500
Average price per treasury share purchased (in dollars per share) | $ / shares				$ 10.75
Treasury Stock
Class of Stock
Treasury stock (in shares) | shares		3,022,380		3,022,380

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ORGANIZATION - Schedule of Shares and Operating Group Units (Details) - shares	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Class of Stock
Warrants outstanding (in shares)	4,338,015
Class A Shares
Class of Stock
Stock and operating group units outstanding (in shares)	24,971,561	24,970,157	23,707,228	24,885,028	26,052,113	25,668,987
Class B Shares
Class of Stock
Stock and operating group units outstanding (in shares)	33,017,247	33,018,248	33,569,188	33,633,474	33,676,331	33,613,023
Restricted Class A Shares (“RSAs”)
Class of Stock
Stock and operating group units outstanding (in shares)	4,650,661
Restricted Share Units (“RSUs”)
Class of Stock
Stock and operating group units outstanding (in shares)	2,672,474
Unvested equity awards outstanding (in shares)	2,672,474
Performance-based RSUs (“PSUs”)
Class of Stock
Stock and operating group units outstanding (in shares)	912,500
Unvested equity awards outstanding (in shares)	912,500
Group A Units
Class of Stock
Stock and operating group units outstanding (in shares)	15,025,994
Group A-1 Units
Class of Stock
Stock and operating group units outstanding (in shares)	9,244,477
Group B Units
Class of Stock
Stock and operating group units outstanding (in shares)	24,971,561
Group E Units
Class of Stock
Stock and operating group units outstanding (in shares)	13,020,157
Group P Units
Class of Stock
Stock and operating group units outstanding (in shares)	4,734,286

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NONCONTROLLING INTERESTS - Additional Information (Details)	Jun. 30, 2023	Jun. 30, 2022
Total Sculptor Operating Group | Sculptor Capital Management, Inc
Noncontrolling Interest [Line Items]
Ownership interest, percent	47.10%	47.00%

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NONCONTROLLING INTERESTS - Calculation of Noncontrolling Interests Attributable to Group A Units (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Noncontrolling Interest [Line Items]
Net income (loss)	$ (4,350)	$ (8,749)	$ 5,320	$ 5,065
Less: Net loss (income) attributable to noncontrolling interests	(9,822)	5,579	(16,027)	(6,427)
Sculptor Capital LP
Noncontrolling Interest [Line Items]
Net income (loss)	11,952	(25,001)	43,039	16,215
Sculptor Capital Advisors LP
Noncontrolling Interest [Line Items]
Net income (loss)	(16,369)	15,623	(20,551)	(1,197)
Sculptor Capital Advisors II LP
Noncontrolling Interest [Line Items]
Net income (loss)	(13,203)	(1,677)	(27,654)	(19,473)
Total Sculptor Operating Group
Noncontrolling Interest [Line Items]
Net income (loss)	(17,620)	(11,055)	(5,166)	(4,455)
Group A Units
Noncontrolling Interest [Line Items]
Less: Net loss (income) attributable to noncontrolling interests	$ (11,109)	$ 4,881	$ (18,109)	$ (7,782)
Group A Units | Sculptor Capital LP
Noncontrolling Interest [Line Items]
Blended participation percentage	0.00%	0.00%	0.00%	0.00%
Less: Net loss (income) attributable to noncontrolling interests	$ 0	$ 0	$ 0	$ 0
Group A Units | Sculptor Capital Advisors LP
Noncontrolling Interest [Line Items]
Blended participation percentage	38.00%	36.00%	38.00%	38.00%
Less: Net loss (income) attributable to noncontrolling interests	$ (6,149)	$ 5,702	$ (7,720)	$ (451)
Group A Units | Sculptor Capital Advisors II LP
Noncontrolling Interest [Line Items]
Blended participation percentage	38.00%	49.00%	38.00%	38.00%
Less: Net loss (income) attributable to noncontrolling interests	$ (4,960)	$ (821)	$ (10,389)	$ (7,331)
Group A Units | Total Sculptor Operating Group
Noncontrolling Interest [Line Items]
Blended participation percentage	63.00%	(44.00%)	351.00%	175.00%
Less: Net loss (income) attributable to noncontrolling interests	$ (11,109)	$ 4,881	$ (18,109)	$ (7,782)

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NONCONTROLLING INTERESTS - Components of Net Loss Attributable to Noncontrolling Interests (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Noncontrolling Interest [Line Items]
Less: Net loss (income) attributable to noncontrolling interests	$ (9,822)	$ 5,579	$ (16,027)	$ (6,427)
Group A Units
Noncontrolling Interest [Line Items]
Less: Net loss (income) attributable to noncontrolling interests	(11,109)	4,881	(18,109)	(7,782)
Other
Noncontrolling Interest [Line Items]
Less: Net loss (income) attributable to noncontrolling interests	$ 1,287	$ 698	$ 2,082	$ 1,355

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NONCONTROLLING INTERESTS - Components of Shareholders' Equity Attributable to Noncontrolling Interests (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Noncontrolling Interest [Line Items]
Shareholders’ equity attributable to noncontrolling interests	$ 428,575	$ 439,479
Group A Units
Noncontrolling Interest [Line Items]
Shareholders’ equity attributable to noncontrolling interests	397,640	412,941
Other
Noncontrolling Interest [Line Items]
Shareholders’ equity attributable to noncontrolling interests	$ 30,935	$ 26,538

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NONCONTROLLING INTERESTS - Redeemable Noncontrolling Interest (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Increase (Decrease) in Redeemable Noncontrolling Interest [Roll Forward]
Redeemable noncontrolling interest, beginning balance			$ 237,864
Capital distributions	$ (1,065)	$ (1,371)	(2,213)	$ (4,819)
Comprehensive income	1,851	$ 697	3,350	$ 3,765
Redeemable noncontrolling interest, ending balance	0		0
SPAC
Increase (Decrease) in Redeemable Noncontrolling Interest [Roll Forward]
Redeemable noncontrolling interest, beginning balance	240,541		237,864
Change in redemption value of Class A Shares of consolidated SPAC	(220)		958
Capital distributions	(242,172)		(242,172)
Comprehensive income	1,851		3,350
Redeemable noncontrolling interest, ending balance	$ 0		$ 0

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INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
U.S. government obligations	$ 58,988	$ 24,782
CLOs, at fair value	208,138	207,147
Equity method investments	80,605	67,130
Investments	347,731	299,059
Investments of Consolidated Entities	$ 323,276	$ 544,554

XML

INVESTMENTS AND FAIR VALUE DISCLOSURES - Fair Value Option (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2023 USD ($)
Structured Alternative Investment Solution
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	$ 323,276
Investments subject to lock up period	$ 159,600
Lock up period of investments	3 years
Multi-strategy | Structured Alternative Investment Solution
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	$ 76,240
Opportunistic credit funds | Structured Alternative Investment Solution
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	$ 238,339
Redemption restriction percent	24.00%
Redemption restriction period	6 years
Real estate | Structured Alternative Investment Solution
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Fair Value	$ 8,697
Redemption restriction percent	100.00%
Minimum | Multi-strategy
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption Frequency	Quarterly
Redemption Notice Period	30 days
Minimum | Opportunistic credit funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption Frequency	Monthly
Redemption Notice Period	30 days
Minimum | Real estate | Structured Alternative Investment Solution
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption restriction period	7 years
Maximum | Multi-strategy
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption Frequency	Annually
Redemption Notice Period	90 days
Maximum | Opportunistic credit funds
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption Frequency	Annually
Redemption Notice Period	90 days
Maximum | Real estate | Structured Alternative Investment Solution
Fair Value, Investments, Entities that Calculate Net Asset Value Per Share [Line Items]
Redemption restriction period	9 years

XML

INVESTMENTS AND FAIR VALUE DISCLOSURES - Additional Information (Details)	6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Loans Sold to CLOs Managed by the Company
Loans sold to CLOs	$ 0	$ 0
Risk retention percentage	5.00%
Fair value of investments in retained interests	$ 75,400,000		$ 78,600,000
Cash flows from retained interests	$ 8,000,000	$ 1,300,000
Minimum
Loans Sold to CLOs Managed by the Company
Adverse price change, percentage	10.00%
Maximum
Loans Sold to CLOs Managed by the Company
Adverse price change, percentage	20.00%
Structured Alternative Investment Solution
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Unfunded commitment amount	$ 91,800,000
Measurement Input, Price Volatility | Management Company
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Warrants unobservable measurement input	0.5610

XML

INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Investments Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Included within investments:
U.S. government obligations	$ 58,988	$ 24,782
CLOs	208,138	207,147
Included within investments of consolidated entities:
U.S. government obligations	58,988	24,782
Investments	347,731	299,059
Liabilities, at Fair Value
Warrant liabilities, at fair value	24,423	24,163
CLOs
Liabilities of consolidated entities:
Contractual principal on investments in CLOs	208,000	212,000
Fair Value, Measurements, Recurring
Included within cash and cash equivalents:
U.S. government obligations	4,998	19,937
Included within investments:
U.S. government obligations	58,988	24,782
CLOs	208,138	207,147
Included within investments of consolidated entities:
U.S. government obligations	58,988	24,782
Liabilities, at Fair Value
Warrant liabilities, at fair value	24,423	24,163
Fair Value, Measurements, Recurring | Consolidated Entities
Included within investments:
U.S. government obligations		237,964
Included within investments of consolidated entities:
U.S. government obligations		237,964
Fair Value	323,276	306,590
Investments	323,276	544,554
Liabilities, at Fair Value
Warrant liabilities, at fair value		596
Liabilities of consolidated entities:
Notes payable of consolidated entities	205,290	196,106
Fair Value, Measurements, Recurring | Level I
Included within cash and cash equivalents:
U.S. government obligations	4,998	19,937
Included within investments:
U.S. government obligations	58,988	24,782
CLOs	0	0
Included within investments of consolidated entities:
U.S. government obligations	58,988	24,782
Liabilities, at Fair Value
Warrant liabilities, at fair value	0	0
Fair Value, Measurements, Recurring | Level I | Consolidated Entities
Included within investments:
U.S. government obligations		237,964
Included within investments of consolidated entities:
U.S. government obligations		237,964
Fair Value	0	0
Investments	0	237,964
Liabilities, at Fair Value
Warrant liabilities, at fair value		596
Liabilities of consolidated entities:
Notes payable of consolidated entities	0	0
Fair Value, Measurements, Recurring | Level II
Included within cash and cash equivalents:
U.S. government obligations	0	0
Included within investments:
U.S. government obligations	0	0
CLOs	0	0
Included within investments of consolidated entities:
U.S. government obligations	0	0
Liabilities, at Fair Value
Warrant liabilities, at fair value	0	0
Fair Value, Measurements, Recurring | Level II | Consolidated Entities
Included within investments:
U.S. government obligations		0
Included within investments of consolidated entities:
U.S. government obligations		0
Fair Value	0	0
Investments	0	0
Liabilities, at Fair Value
Warrant liabilities, at fair value		0
Liabilities of consolidated entities:
Notes payable of consolidated entities	0	0
Fair Value, Measurements, Recurring | Level III
Included within cash and cash equivalents:
U.S. government obligations	0	0
Included within investments:
U.S. government obligations	0	0
CLOs	208,138	207,147
Included within investments of consolidated entities:
U.S. government obligations	0	0
Liabilities, at Fair Value
Warrant liabilities, at fair value	24,423	24,163
Fair Value, Measurements, Recurring | Level III | Consolidated Entities
Included within investments:
U.S. government obligations		0
Included within investments of consolidated entities:
U.S. government obligations		0
Fair Value	0	0
Investments	0	0
Liabilities, at Fair Value
Warrant liabilities, at fair value		0
Liabilities of consolidated entities:
Notes payable of consolidated entities	205,290	196,106
Fair Value, Measurements, Recurring | NAV
Included within cash and cash equivalents:
U.S. government obligations	0	0
Included within investments:
U.S. government obligations	0	0
CLOs	0	0
Included within investments of consolidated entities:
U.S. government obligations	0	0
Liabilities, at Fair Value
Warrant liabilities, at fair value	0	0
Fair Value, Measurements, Recurring | NAV | Consolidated Entities
Included within investments:
U.S. government obligations		0
Included within investments of consolidated entities:
U.S. government obligations		0
Fair Value	323,276	306,590
Investments	323,276	306,590
Liabilities, at Fair Value
Warrant liabilities, at fair value		0
Liabilities of consolidated entities:
Notes payable of consolidated entities	$ 0	$ 0

XML

INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Changes in Company's Level III Investments (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Warrants
Liabilities, at Fair Value
Beginning balance, Liability	$ 23,989	$ 40,951
Transfers In	0	0		$ 0
Transfers Out	0	0		0
Purchases / Issuances	0	0
Investment Sales / Settlements	0	0
Gains / (Losses) Included in Earnings	(434)	18,740
Gains / (Losses) Included in Other Comprehensive Income	0	0
Ending balance, Liability	24,423	22,211	$ 24,423	22,211
Warrants | Management Company
Liabilities, at Fair Value
Beginning balance, Liability			24,163	65,287
Transfers In			0
Transfers Out			0
Purchases / Issuances			0	0
Investment Sales / Settlements			0	0
Gains / (Losses) Included in Earnings			(260)	43,076
Gains / (Losses) Included in Other Comprehensive Income			0	0
Ending balance, Liability	24,423	22,211	24,423	22,211
Warrants | Consolidated Entities
Liabilities, at Fair Value
Beginning balance, Liability				7,590
Transfers In				0
Transfers Out				(3,450)
Purchases / Issuances				0
Investment Sales / Settlements				0
Gains / (Losses) Included in Earnings				4,140
Gains / (Losses) Included in Other Comprehensive Income				0
Ending balance, Liability		0		0
Notes Payable | Consolidated Entities
Liabilities, at Fair Value
Beginning balance, Liability	197,813	215,733	196,106	0
Transfers In	0	0	0	0
Transfers Out	0	0	0	0
Purchases / Issuances	0	0	0	215,733
Investment Sales / Settlements	0	0	0	0
Gains / (Losses) Included in Earnings	(7,477)	13,748	(9,184)	13,748
Gains / (Losses) Included in Other Comprehensive Income	0	0	0	0
Ending balance, Liability	205,290	201,985	205,290	201,985
CLOs
Assets, at Fair Value
Beginning balance, Asset	207,030	226,552
Transfers In	0	0
Transfers Out	0	0
Purchases / Issuances	544	1,032
Investment Sales / Settlements	(3,094)	(26)
Gains / (Losses) Included in Earnings	2,778	(14,269)
Gains / (Losses) Included in Other Comprehensive Income	880	(9,658)
Ending balance, Asset	208,138	203,631	208,138	203,631
CLOs | Management Company
Assets, at Fair Value
Beginning balance, Asset			207,147	219,510
Transfers In			0	0
Transfers Out			0	0
Purchases / Issuances			544	29,839
Investment Sales / Settlements			(8,455)	(12,373)
Gains / (Losses) Included in Earnings			5,587	(18,788)
Gains / (Losses) Included in Other Comprehensive Income			3,315	(14,557)
Ending balance, Asset	$ 208,138	203,631	$ 208,138	203,631
Bank Debt | Consolidated Entities
Assets, at Fair Value
Beginning balance, Asset		0
Transfers In		0
Transfers Out		0
Purchases / Issuances		41,792
Investment Sales / Settlements		0
Gains / (Losses) Included in Earnings		(1,566)
Gains / (Losses) Included in Other Comprehensive Income		0
Ending balance, Asset		40,226		40,226
Liabilities, at Fair Value
Beginning balance, Liability				0
Transfers In				3,603
Transfers Out				(14,666)
Purchases / Issuances				56,425
Investment Sales / Settlements				(3,475)
Gains / (Losses) Included in Earnings				(1,661)
Gains / (Losses) Included in Other Comprehensive Income				0
Ending balance, Liability		$ 40,226		40,226
Bank Debt | Consolidated Entities
Liabilities, at Fair Value
Transfers Into Level 3 As A Result of Consolidation				2,300
Transfers Out Of Level 3 As A Result of Deconsolidation				$ 14,000

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INVESTMENTS AND FAIR VALUE DISCLOSURES - Schedule of Net Unrealized Gains (Losses) on Company's Level III Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Warrants
Liabilities, at Fair Value
Fair Value, Asset (Liability), Recurring Basis, Still Held, Unrealized Gain (Loss)	$ (434)	$ 18,740	$ (260)	$ 43,076
Notes payable | Consolidated Entities
Liabilities, at Fair Value
Fair Value, Asset (Liability), Recurring Basis, Still Held, Unrealized Gain (Loss)	(7,477)	13,748	(9,184)	13,748
CLOs
Assets, at Fair Value
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss)	3,658	(23,928)	8,902	(33,346)
Bank Debt | Consolidated Entities
Assets, at Fair Value
Fair Value, Asset, Recurring Basis, Still Held, Unrealized Gain (Loss)	$ 0	$ (1,566)	$ 0	$ (1,566)

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VARIABLE INTEREST ENTITIES - Assets and Liabilities of Funds that are VIEs and Consolidated by Company (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Jun. 30, 2022
Assets of consolidated entities:
Cash and cash equivalents	$ 468	$ 3	$ 25,650
Restricted cash and cash equivalents of consolidated entities	9,800	9,805	$ 234,934
Investments of Consolidated Entities	323,276	544,554
Other assets of consolidated entities	1,471	2,579
Total Assets	1,309,982	1,652,206
Liabilities of consolidated entities:
Notes payable, at fair value	205,290	196,106
Other liabilities of consolidated entities	1,790	9,669
Total Liabilities	907,910	1,027,759
Variable Interest Entity, Primary Beneficiary
Assets of consolidated entities:
Cash and cash equivalents	408	3
Restricted cash and cash equivalents of consolidated entities	9,800	9,805
Investments of Consolidated Entities	323,276	306,590
Other assets of consolidated entities	1,471	2,016
Total Assets	334,955	318,414
Liabilities of consolidated entities:
Notes payable, at fair value	205,290	196,106
Other liabilities of consolidated entities	1,776	1,601
Total Liabilities	$ 207,066	$ 197,707

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VARIABLE INTEREST ENTITIES - Assets and Liabilities Related to VIEs that are Not Consolidated (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs:
Income and fees receivable	$ 29,973	$ 56,360
Investments of Consolidated Entities	323,276	544,554
Unfunded commitments	219,000
Unfunded commitments from employees to VIEs	82,400	65,400
Variable Interest Entity, Not Primary Beneficiary
Variable Interest Entity [Line Items]
Net assets of unconsolidated VIEs in which the Company has a variable interest	12,384,193	12,738,164
Maximum risk of loss as a result of the Company’s involvement with unconsolidated VIEs:
Unearned income and fees	46,866	53,869
Income and fees receivable	17,315	41,890
Investments	249,538	245,583
Investments of Consolidated Entities	247,036	237,699
Unfunded commitments	218,885	182,797
Maximum Exposure to Loss	$ 779,640	$ 761,838

XML

LEASES - Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Lease collateral	$ 6,200		$ 6,200
Operating lease cost	4,600	$ 4,656	9,205	$ 9,364
Short-term lease cost	22	44	44	54
Finance lease cost - amortization of leased assets	72	91	171	183
Finance lease cost - imputed interest on lease liabilities	15	1	30	4
Less: Sublease income	(840)	(804)	(1,637)	(1,634)
Net Lease Cost	$ 3,869	$ 3,988	$ 7,813	$ 7,971

XML

LEASES- Supplemental Lease Cash Flow Information (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Leases [Abstract]
Operating cash flows for operating leases	$ 5,238	$ 5,165	$ 10,453	$ 10,491
Operating cash flows for finance leases	0	0	5	0
Finance cash flows for finance leases	0	0	223	163
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability	$ 0	$ 0	$ 0	$ 1,079

XML

LEASES- Lease Term and Discount Rate (Details)	Jun. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted average remaining lease term, Operating leases	6 years 3 months 18 days	6 years 8 months 12 days
Weighted average remaining lease term, Financing leases	4 years	4 years 6 months
Weighted average discount rate, Operating leases	7.90%	7.80%
Weighted average discount rate, Financing leases	7.90%	7.90%

XML

LEASES- Maturity of Lease Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Operating Leases
July 1, 2023 to December 31, 2023	$ 9,781
2024	16,529
2025	14,329
2026	15,353
2027	17,675
Thereafter	35,015
Total Lease Payments	108,682
Imputed interest	(23,587)
Operating lease liabilities	85,095	$ 92,045
Finance Leases
2024	228
July 1, 2023 to December 31, 2023	0
2025	228
2026	228
2027	228
Thereafter	0
Total Lease Payments	912
Imputed interest	(131)
Finance lease liabilities	$ 781

XML

LEASES - Sublease Rent (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Leases [Abstract]
July 1, 2023 to December 31, 2023	$ 1,626
2024	1,920
2025	1,920
2026	1,920
2027	1,960
Thereafter	4,160
Total Sublease Rent - Contractual Payments to be Received	$ 13,506

XML

DEBT OBLIGATIONS AND WARRANTS - Schedule of Debt Principal Payments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022	Sep. 25, 2020
Maturity of Debt Obligations
July 1, 2023 to December 31, 2023	$ 0
2024	0
2025	436
2026	0
2027	95,000
2028	0
Thereafter	33,297
Total Payments	128,733
Unamortized discounts & deferred financing costs	(10,884)
Debt obligations	117,849	$ 124,176
2020 Term Loan
Maturity of Debt Obligations
July 1, 2023 to December 31, 2023	0
2024	0
2025	0
2026	0
2027	95,000
2028	0
Thereafter	0
Total Payments	95,000
Unamortized discounts & deferred financing costs	(10,700)
Debt obligations	84,300		$ 275,800
CLO Investments Loans
Maturity of Debt Obligations
July 1, 2023 to December 31, 2023	0
2024	0
2025	436
2026	0
2027	0
2028	0
Thereafter	33,297
Total Payments	33,733
Unamortized discounts & deferred financing costs	(184)
Debt obligations	$ 33,549	$ 40,714

XML

DEBT OBLIGATIONS AND WARRANTS - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended	6 Months Ended	12 Months Ended
	Nov. 13, 2020	Sep. 25, 2020	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021	Jun. 30, 2023	Dec. 31, 2022	Jun. 21, 2021
Debt Instruments and Warrants [Line Items]
Debt obligations						$ 117,849	$ 124,176
Obligation balance						$ 128,733
Warrants, Term		10 years
Warrants, Exercise price (in USD per share)		$ 11.93				$ 7.95
Warrants outstanding (in shares)						4,338,015
Warrant liabilities, at fair value						$ 0	596
Notes payable, at fair value						205,290	196,106
Investments						347,731	299,059
Structured Alternative Investment Solution
Debt Instruments and Warrants [Line Items]
Notes payable, at fair value						205,300
Investments			$ 127,800
Structured Alternative Investment Solution
Debt Instruments and Warrants [Line Items]
Undrawn commitment fee			1.15%
Notes payable, at fair value			$ 350,000
Line of Credit Facility, Commitment Fee Amount			52,500
Line of Credit Facility, Maximum Amount Outstanding During Period			$ 20,000
Line of Credit Facility, Interest Rate at Period End			3.00%
Class A Shares
Debt Instruments and Warrants [Line Items]
Warrants, Number of shares issuable		4,338,015
Sculptor Acquisition Corp I | SPAC
Debt Instruments and Warrants [Line Items]
Warrants, Term					5 years
Warrants, Exercise price (in USD per share)					$ 11.50
Warrants outstanding (in shares)					11,500,000
Sculptor Acquisition Corp I | Management Company
Debt Instruments and Warrants [Line Items]
Warrants outstanding (in shares)					11,200,000
2020 Term Loan
Debt Instruments and Warrants [Line Items]
Initial principal amount		$ 320,000
Debt obligations		$ 275,800				84,300
Call Premium due in addition to make-whole premium on prepayment occurring prior to second anniversary of Closing Date		3.00%
Call Premium on prepayment occurring on or after second anniversary, but prior to third anniversary of Closing Date		3.00%
Call Premium on prepayment occurring on or after third anniversary, but prior to fourth anniversary of Closing Date		2.00%
Call Premium on prepayment occurring on or after fourth anniversary of Closing Date		0.00%
Repayment Of Debt Amount For Which Prepayment Premium Is Not Charged - Beginning Of Range								$ 175,000
Amount Of Debt Prepayment For Which Prepayment Premium Is Not Charged, As Amended								225,000
Amendment fee								$ 1,750
Obligation balance						95,000
Net losses on retirement of debt					$ 30,200
Minimum amount of fee-paying assets under management covenant		$ 20,000,000
2020 Revolving Credit Facility
Debt Instruments and Warrants [Line Items]
Repurchase agreements credit facility borrowing capacity		$ 25,000
Repayments of debt				$ 175,000	$ 224,400
Undrawn commitment fee	0.50%
CLO Investments Loans
Debt Instruments and Warrants [Line Items]
Debt obligations						33,549	40,714
Obligation balance						33,733
Collateral on CLO Investments Loans						$ 35,300	$ 40,000
Class A Notes | Structured Alternative Investment Solution
Debt Instruments and Warrants [Line Items]
Investments			$ 20,000
Subordinated Notes | Structured Alternative Investment Solution
Debt Instruments and Warrants [Line Items]
Investments			87,800
Class C Notes | Structured Alternative Investment Solution
Debt Instruments and Warrants [Line Items]
Investments			$ 20,000
SOFR | 2020 Term Loan
Debt Instruments and Warrants [Line Items]
Debt Instrument, Floor on Variable Rate	0.75%
Contractual Rate	6.25%
Three or Six Months SOFR | 2020 Term Loan
Debt Instruments and Warrants [Line Items]
Contractual Rate	0.10%
One Month SOFR | 2020 Term Loan
Debt Instruments and Warrants [Line Items]
Contractual Rate	0.05%

XML

DEBT OBLIGATIONS AND WARRANTS - Notes Payable (Details) - Structured Alternative Investment Solution - USD ($) $ in Thousands	May 31, 2029	May 31, 2028	May 31, 2025	Jun. 30, 2023
Class A Notes | Senior Secured
Debt Instruments and Warrants [Line Items]
Initial principal amount				$ 140,000
Initial interest rate				4.25%
Class A Notes | Senior Secured | Interest Rate After Step Up
Debt Instruments and Warrants [Line Items]
Initial interest rate		6.25%
Class B Notes | Senior Secured
Debt Instruments and Warrants [Line Items]
Initial principal amount				$ 70,000
Initial interest rate				6.00%
Class B Notes | Senior Secured | Interest Rate After Step Up
Debt Instruments and Warrants [Line Items]
Initial interest rate	8.00%
Class C Notes | Mezzanine Secured
Debt Instruments and Warrants [Line Items]
Initial principal amount				$ 35,000
Initial interest rate				6.75%
Class C Notes | Mezzanine Secured | Interest Rate After Step Up
Debt Instruments and Warrants [Line Items]
Initial interest rate			9.50%
Subordinated Notes | Unsecured
Debt Instruments and Warrants [Line Items]
Initial principal amount				$ 105,000

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DEBT OBLIGATIONS AND WARRANTS - Schedule of CLO Investments Loans (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Debt Instruments and Warrants [Line Items]
Debt obligations	$ 117,849	$ 124,176
CLO Investments Loans
Debt Instruments and Warrants [Line Items]
Debt obligations	33,549	40,714
CLO Investments Loans | June 7, 2017
Debt Instruments and Warrants [Line Items]
Debt obligations	$ 13,974	16,835
CLO Investments Loans | June 7, 2017 | LIBOR
Debt Instruments and Warrants [Line Items]
Contractual Rate	1.48%
CLO Investments Loans | August 2, 2017
Debt Instruments and Warrants [Line Items]
Debt obligations	$ 19,139	21,594
CLO Investments Loans | August 2, 2017 | LIBOR
Debt Instruments and Warrants [Line Items]
Contractual Rate	1.41%
CLO Investments Loans | 44580
Debt Instruments and Warrants [Line Items]
Debt obligations	$ 0	2,285
CLO Investments Loans | 44580 | EURIBOR
Debt Instruments and Warrants [Line Items]
Contractual Rate	1.50%
CLO Investments Loans | 45078
Debt Instruments and Warrants [Line Items]
Debt obligations	$ 436	$ 0
CLO Investments Loans | 45078 | EURIBOR
Debt Instruments and Warrants [Line Items]
Contractual Rate	1.85%

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Additional Details (Details) - Repurchase agreements credit facility € in Millions	Jun. 30, 2023 EUR (€)
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Repurchase agreements credit facility borrowing capacity	€ 200.0
Repurchase agreements credit facility undrawn balance	€ 43.3

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Balance Sheet Offsetting (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Transfers and Servicing of Financial Assets [Abstract]
Gross Amounts of Recognized Liabilities	$ 169,721	$ 166,632
Gross Amounts Offset in the Consolidated Balance Sheet	0	0
Net Amounts of Liabilities in the Consolidated Balance Sheet	169,721	166,632
Securities Transferred	164,202	157,107
Net Amount	$ 5,519	$ 9,525

XML

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Remaining Maturities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Net Amounts of Liabilities in the Consolidated Balance Sheet	$ 169,721	$ 166,632
Overnight and Continuous
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Net Amounts of Liabilities in the Consolidated Balance Sheet	0	0
Up to 30 Days
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Net Amounts of Liabilities in the Consolidated Balance Sheet	0	0
30-90 Days
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Net Amounts of Liabilities in the Consolidated Balance Sheet	0	0
Greater Than 90 Days
Transfer of Certain Financial Assets Accounted for as Secured Borrowings [Line Items]
Net Amounts of Liabilities in the Consolidated Balance Sheet	$ 169,721	$ 166,632

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OTHER ASSETS, NET - Components of Other Assets (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fixed Assets:
Leasehold improvements	$ 47,736	$ 47,736
Computer hardware and software	44,680	44,603
Furniture, fixtures and equipment	8,013	8,013
Accumulated depreciation and amortization	(81,468)	(79,390)
Fixed assets, net	18,961	20,962
Goodwill	22,691	22,691
Prepaid expenses	14,174	16,698
Cloud computing costs	12,702	9,940
Redeption receivable	0	28,721
Other	8,964	7,430
Total Other Assets, Net	$ 77,492	$ 106,442

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OTHER LIABILITIES - Components of Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Other Liabilities Disclosure [Abstract]
Accrued expenses	$ 16,154	$ 20,925
Uncertain tax positions	8,250	8,250
Due to funds	3,172	3,854
Other	7,607	10,020
Total Other Liabilities	$ 35,183	$ 43,049

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REVENUES - Management Fees and Incentive Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Management fees
Disaggregation of Revenue [Line Items]
Investment management revenues	$ 62,442	$ 71,770	$ 126,150	$ 145,207
Incentive income
Disaggregation of Revenue [Line Items]
Investment management revenues	4,296	44,580	44,582	66,222
Multi-Strategy Funds | Management fees
Disaggregation of Revenue [Line Items]
Investment management revenues	29,268	38,612	60,150	78,592
Multi-Strategy Funds | Incentive income
Disaggregation of Revenue [Line Items]
Investment management revenues	407	(835)	723	120
Opportunistic credit funds | Management fees
Disaggregation of Revenue [Line Items]
Investment management revenues	12,145	12,342	24,681	25,166
Opportunistic credit funds | Incentive income
Disaggregation of Revenue [Line Items]
Investment management revenues	3,303	102	14,122	19,905
Institutional Credit Strategies | Management fees
Disaggregation of Revenue [Line Items]
Investment management revenues	12,271	11,808	23,738	23,391
Institutional Credit Strategies | Incentive income
Disaggregation of Revenue [Line Items]
Investment management revenues	0	0	0	0
Real estate funds | Management fees
Disaggregation of Revenue [Line Items]
Investment management revenues	8,758	9,008	17,581	18,058
Real estate funds | Incentive income
Disaggregation of Revenue [Line Items]
Investment management revenues	$ 586	$ 45,313	$ 29,737	$ 46,197

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REVENUES - Income and Fees Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Income and Fees Receivable [Line Items]
Income and fees receivable	$ 29,973	$ 56,360
Management fees
Income and Fees Receivable [Line Items]
Income and fees receivable	24,946	25,402
Incentive income
Income and Fees Receivable [Line Items]
Income and fees receivable	$ 5,027	$ 30,958

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REVENUES - Unearned Income and Fees (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Unearned Income and Fees [Line Items]
Unearned income and fees	$ 46,866	$ 53,869
Management fees
Unearned Income and Fees [Line Items]
Unearned income and fees	1	2
Incentive income
Unearned Income and Fees [Line Items]
Unearned income and fees	$ 46,865	$ 53,867

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REVENUES - Additional Details (Details) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Incentive Income
Disaggregation of Revenue [Line Items]
Unearned incentive recognized of the beginning unearned balance	$ 26.3	$ 41.4

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INCOME TAXES- Reconciliation of Statutory U.S. Federal Income Tax Rate (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Income Tax Disclosure [Abstract]
Statutory U.S. federal income tax rate	21.00%	21.00%	21.00%	21.00%
Loss (income) passed through to noncontrolling interests	(14.82%)	13.60%	63.28%	31.73%
Foreign income taxes	(11.92%)	5.14%	80.72%	(1.10%)
RSU/RSA excess income tax benefit or expense	0.12%	(1.24%)	38.26%	(85.00%)
State and local income taxes	13.06%	16.21%	31.85%	156.82%
Nondeductible amortization of Partner Equity Units	(4.72%)	2.54%	31.78%	143.06%
Foreign tax credits and deductions	2.50%	(1.08%)	(16.95%)	0.23%
Change in fair value of warrants	(1.14%)	41.17%	1.10%	(591.40%)
Disallowed executive compensation	(10.08%)	(20.63%)	66.55%	256.31%
Other, net	(3.17%)	(0.52%)	15.37%	3.31%
SPAC Loss	17.96%	0.00%	(57.79%)	0.00%
Effective Income Tax Rate	8.80%	76.19%	275.17%	(65.04%)

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INCOME TAXES - Additional Information (Details) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Income Tax Disclosure [Abstract]
Unrecognized tax benefits	$ 8.3	$ 8.3
Unrecognized tax benefits that would impact effective tax rate	$ 4.8

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GENERAL, ADMINISTRATIVE AND OTHER - Components of General, Administrative and Other Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Other Income and Expenses [Abstract]
Professional services	$ 8,712	$ 6,177	$ 20,368	$ 11,641
Occupancy and equipment	6,802	6,900	13,501	13,990
Information processing and communications	5,882	5,175	11,532	10,201
Recurring placement and related service fees	3,656	5,182	7,282	10,431
Insurance	2,318	2,228	4,635	4,435
Business development	984	797	2,020	1,295
Other expenses	1,574	(34)	4,385	1,748
Total General, Administrative and Other	$ 29,928	$ 26,425	$ 63,723	$ 53,741

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EARNINGS (LOSS) PER CLASS A SHARE - Additional Information (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
RSUs
Earnings Per Share [Line Items]
Vested RSUs included in weighted-average Class A Shares outstanding	207,906	163,136	205,804	174,974

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EARNINGS (LOSS) PER CLASS A SHARE- Computation of Basic and Diluted Earnings (Loss) Per Class A Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Earnings Per Share [Line Items]
Net Income Attributable to Class A Shareholders, Basic	$ 3,654	$ (8,052)	$ 12,146	$ 8,830
Net Income (Loss) Attributable to Class A Shareholders, Diluted	$ (4,792)	$ (23,754)	$ (1,981)	$ (27,511)
Weighted-average Class A Shares outstanding - basic (in shares)	25,179,467	25,514,364	25,176,667	26,052,478
Weighted-average Class A Shares outstanding - diluted (in shares)	40,205,461	26,565,792	40,202,661	27,611,057
Earnings (loss) per Class A Share - Basic (in dollars per share)	$ 0.15	$ (0.32)	$ 0.48	$ 0.34
Loss per Class A Share - diluted (in dollars per share)	$ (0.12)	$ (0.89)	$ (0.05)	$ (1.00)
Group A Units
Earnings Per Share [Line Items]
Net Income (Loss) Attributable to Class A Shareholders, Effect of dilutive securities	$ (8,446)	$ 0	$ (14,127)	$ 0
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares)	15,025,994	0	15,025,994	0
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation	0	15,025,994	0	15,025,994
Group E Units
Earnings Per Share [Line Items]
Net Income (Loss) Attributable to Class A Shareholders, Effect of dilutive securities	$ 0	$ 0	$ 0	$ 0
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares)	0	0	0	0
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation	13,020,839	13,009,158	13,019,799	13,009,157
RSUs
Earnings Per Share [Line Items]
Net Income (Loss) Attributable to Class A Shareholders, Effect of dilutive securities	$ 0	$ 0	$ 0	$ 0
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares)	0	0	0	0
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation	2,532,586	2,605,627	2,304,905	2,557,642
Restricted Class A Shares (“RSAs”)
Earnings Per Share [Line Items]
Net Income (Loss) Attributable to Class A Shareholders, Effect of dilutive securities	$ 0	$ 0	$ 0	$ 0
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares)	0	0	0	0
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation	1,096,970	1,575,134	1,084,688	1,312,520
Warrants
Earnings Per Share [Line Items]
Net Income (Loss) Attributable to Class A Shareholders, Effect of dilutive securities	$ 0	$ (15,702)	$ 0	$ (36,341)
Weighted-Average Class A Shares Outstanding, Effect of dilutive securities (in shares)	0	1,051,428	0	1,558,579
Number of Antidilutive Units and Warrants Excluded from Diluted Calculation	4,338,015	0	4,338,015	0

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RELATED PARTY TRANSACTIONS - Additional Information (Details) - USD ($)	1 Months Ended	3 Months Ended		6 Months Ended
	Dec. 31, 2021	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022	Mar. 31, 2022
Related Party Transaction [Line Items]
Tax receivable agreement liability		$ 173,350,000		$ 173,350,000		$ 190,245,000
Notes payable, at fair value		205,290,000		205,290,000		196,106,000
Investments		347,731,000		347,731,000		299,059,000
Structured Alternative Investment Solution
Related Party Transaction [Line Items]
Notes payable, at fair value							$ 350,000,000
Payments Under Tax Receivable Agreement
Related Party Transaction [Line Items]
Payments under Tax Receivable Agreement		17,400,000	$ 0	17,400,000	$ 16,900,000
Executive Managing Directors, Employees and Other Related Parties | Payments Under Tax Receivable Agreement
Related Party Transaction [Line Items]
Tax receivable agreement liability		64,700,000		64,700,000
Payments under Tax Receivable Agreement				7,700,000	$ 7,400,000
Executive Managing Directors, Employees and Other Related Parties | Amount of Related Party Assets Under Management
Related Party Transaction [Line Items]
Assets under management		$ 838,900,000		$ 838,900,000		$ 906,600,000
Executive Managing Directors, Employees and Other Related Parties | Percent of Related Party Assets Under Management Not Charged Fees
Related Party Transaction [Line Items]
Percent of assets under management not charged management and incentive fees		40.00%		40.00%		43.00%
SPAC
Related Party Transaction [Line Items]
Proceeds from issuance of warrants	$ 11,200,000

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RELATED PARTY TRANSACTIONS - Management Fees and Incentive Income Earned from Related Parties and Waived Fees (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Management fees
Related Party Transaction [Line Items]
Investment management revenues	$ 62,442	$ 71,770	$ 126,150	$ 145,207
Incentive income
Related Party Transaction [Line Items]
Investment management revenues	4,296	44,580	44,582	66,222
Fees charged on investments held by related parties: | Management fees | Executive Managing Directors, Employees and Other Related Parties
Related Party Transaction [Line Items]
Investment management revenues	930	1,320	1,860	2,159
Fees charged on investments held by related parties: | Incentive income | Executive Managing Directors, Employees and Other Related Parties
Related Party Transaction [Line Items]
Investment management revenues	$ 65	$ 1,533	$ 973	$ 2,031

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COMMITMENTS AND CONTINGENCIES - Additional Information (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Dec. 31, 2022	Apr. 01, 2019	Dec. 31, 2018
Loss Contingencies [Line Items]
Amortization of intangible assets period	15 years
Percentage of tax savings to be paid under tax receivable agreement to remaining EMDs and Ziffs	69.00%
Tax receivable agreement liability	$ 173,350	$ 190,245
Unfunded capital commitments of the Company to funds managed	$ 219,000
Purchase commitment period	5 years
Director
Loss Contingencies [Line Items]
Unfunded capital commitments of the Company to funds managed	$ 82,400
Consolidated Entities
Loss Contingencies [Line Items]
Unfunded capital commitments of the Company to funds managed	127,200
Structured Alternative Investment Solution
Loss Contingencies [Line Items]
Unfunded capital commitments of the Company to funds managed	$ 91,800
Tax Year 2019
Loss Contingencies [Line Items]
Percentage of tax savings to be paid under tax receivable agreement	75.00%		75.00%
Tax Year, Prior To 2018
Loss Contingencies [Line Items]
Percentage of tax savings to be paid under tax receivable agreement				85.00%
Tax Year 2018
Loss Contingencies [Line Items]
Percentage of tax savings to be paid under tax receivable agreement	85.00%

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COMMITMENTS AND CONTINGENCIES - Estimated Potential Payments Under Tax Receivable Agreement (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Potential Payments Under Tax Receivable Agreement
July 1, 2023 to December 31, 2023	$ 0
2024	18,040
2025	5,079
2026	37,628
2027	31,415
Thereafter	81,189
Total Payments	$ 173,350	$ 190,245

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SUBSEQUENT EVENTS - Additional Information (Details) - Subsequent Event $ / shares in Units, $ in Millions	Jul. 23, 2023 USD ($) $ / shares
Subsequent Event [Line Items]
Common stock, par value (in dollars per share)	$ 0.01
Termination fee | $	$ 16.6
Merger Agreement
Subsequent Event [Line Items]
Business acquisition share price (in dollars per share)	$ 11.15