Segments (Tables)

9 Months Ended

Sep. 30, 2020

The following tables set forth summarized operating results for the Company's three segments and related adjustments necessary to reconcile the segment economic net income to arrive at the Company's consolidated U.S. GAAP net income (loss):

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2020 (in millions):


	Three Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	89.0	$	43.8	$	47.9	$	0.1	$	1.6	(a)	$	182.4

ENI operating expenses	37.2		15.3		15.5		5.8		12.6		(b)	86.4
Earnings before variable compensation	51.8		28.5		32.4		(5.7)		(11.0)			96.0
Variable compensation	18.0		10.1		12.3		0.8		3.3		(c)	44.5
ENI operating earnings (after variable comp)	33.8		18.4		20.1		(6.5)		(14.3)			51.5
Affiliate key employee distributions	0.8		7.3		2.9		—		—			11.0
Earnings after Affiliate key employee distributions	33.0		11.1		17.2		(6.5)		(14.3)			40.5
Net interest expense	—		—		—		(5.3)		(1.6)		(d)	(6.9)
Net investment income	—		—		—		—		6.0		(e)	6.0
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		3.2		(e)	3.2
Income tax expense	—		—		—		(11.8)		(1.0)		(f)	(12.8)
Economic net income	$	33.0	$	11.1	$	17.2	$	(23.6)	$	(0.5)		$	37.2

The following table presents the financial data for the Company’s three segments for the three months ended September 30, 2019 (in millions):


	Three Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	93.1	$	37.4	$	65.2	$	0.1	$	2.0	(a)	$	197.8

ENI operating expenses	40.8		16.1		18.5		8.3		5.5		(b)	89.2
Earnings before variable compensation	52.3		21.3		46.7		(8.2)		(3.5)			108.6
Variable compensation	18.8		7.8		15.6		1.9		—		(c)	44.1
ENI operating earnings (after variable comp)	33.5		13.5		31.1		(10.1)		(3.5)			64.5
Affiliate key employee distributions	1.5		5.0		6.1		—		—			12.6
Earnings after Affiliate key employee distributions	32.0		8.5		25.0		(10.1)		(3.5)			51.9
Net interest expense	—		—		—		(5.7)		(2.2)		(d)	(7.9)
Net investment loss	—		—		—		—		7.0		(e)	7.0
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(7.6)		(e)	(7.6)
Income tax (expense) benefit	—		—		—		(12.3)		44.3		(f)	32.0

Economic net income	$	32.0	$	8.5	$	25.0	$	(28.1)	$	38.0		$	75.4

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2020 (in millions):


	Nine Months Ended September 30, 2020
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	257.9	$	128.2	$	147.5	$	0.3	$	5.8	(a)	$	539.7

ENI operating expenses	109.3		47.6		52.7		19.4		0.4		(b)	229.4
Earnings before variable compensation	148.6		80.6		94.8		(19.1)		5.4			310.3
Variable compensation	52.7		29.0		36.0		2.6		17.4		(c)	137.7
ENI operating earnings (after variable comp)	95.9		51.6		58.8		(21.7)		(12.0)			172.6
Affiliate key employee distributions	2.9		20.0		8.9		—		—			31.8
Earnings after Affiliate key employee distributions	93.0		31.6		49.9		(21.7)		(12.0)			140.8
Net interest expense	—		—		—		(16.5)		(5.1)		(d)	(21.6)
Net investment income	—		—		—		—		17.3		(e)	17.3
Gain on sale of Affiliate	—		—		—		—		7.2		(e)	7.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(21.3)		(e)	(21.3)
Income tax expense	—		—		—		(31.4)		(2.3)		(f)	(33.7)
Economic net income	$	93.0	$	31.6	$	49.9	$	(69.6)	$	(16.2)		$	88.7

The following table presents the financial data for the Company’s three segments for the nine months ended September 30, 2019 (in millions):


	Nine Months Ended September 30, 2019
	Quant & Solutions		Alter-natives		Liquid Alpha		Other		Reconciling Adjustments			Total U.S. GAAP(1)
ENI revenue	$	277.3	$	125.7	$	202.8	$	0.3	$	6.0	(a)	$	612.1

ENI operating expenses	120.4		49.4		60.0		25.4		4.8		(b)	260.0
Earnings before variable compensation	156.9		76.3		142.8		(25.1)		1.2			352.1
Variable compensation	57.6		28.0		48.1		7.5		4.6		(c)	145.8
ENI operating earnings (after variable comp)	99.3		48.3		94.7		(32.6)		(3.4)			206.3
Affiliate key employee distributions	4.1		17.1		18.6		—		—			39.8
Earnings after Affiliate key employee distributions	95.2		31.2		76.1		(32.6)		(3.4)			166.5
Net interest expense	—		—		—		(15.4)		(6.9)		(d)	(22.3)
Net investment income	—		—		—		—		25.2		(e)	25.2
Net income attributable to non-controlling interests in consolidated Funds	—		—		—		—		(9.6)		(e)	(9.6)
Income tax (expense) benefit	—		—		—		(36.9)		33.2		(f)	(3.7)
Economic net income	$	95.2	$	31.2	$	76.1	$	(84.9)	$	38.5		$	156.1

(1) The most directly comparable U.S. GAAP measure of ENI revenue is U.S. GAAP revenue. The most directly comparable U.S. GAAP measure of ENI operating expenses is U.S. GAAP operating expenses, which is comprised of ENI operating expenses, variable compensation and Affiliate key employee distributions above. The most directly comparable U.S. GAAP measure of earnings after Affiliate key employee distributions is U.S. GAAP operating income. The most directly comparable U.S. GAAP measure of ENI is U.S. GAAP net income attributable to controlling interests.

Reconciling Adjustments:

(a)Adjusted to exclude earnings from equity-accounted Affiliate, which are included in U.S. GAAP investment income, and to include consolidated Funds revenues and the separate revenues recorded for certain Fund expenses reimbursed by customers, which are included in U.S. GAAP revenue.

(b)Adjusted to include non-cash amortization expense for pre-acquisition employee equity, non-cash expenses for key employee equity and profit interest revaluations, capital transaction costs, goodwill impairment and amortization of acquired intangible assets, restructuring costs, consolidated Funds’ operating expenses and the Fund expenses reimbursed by customers, each of which are included in U.S. GAAP operating expenses.

(c)Adjusted to include restructuring costs and the impact of a one-time compensation arrangement entered into during the first quarter of 2020 that includes advances against future compensation payments, which are included in U.S. GAAP compensation expense.

(d)Adjusted to include the cost of seed financing, which is included in U.S. GAAP interest expense.

(e)Adjusted to include net investment income (loss), net income (loss) attributable to non-controlling interests in consolidated Funds, and the gain on sale of Affiliate, all of which are included in U.S. GAAP net income attributable to controlling interests.

(f)Adjusted to include the impact of deferred tax attributable to the amortization of goodwill and acquired intangibles. Also adjusted to include tax expense or benefits relating to uncertain tax positions, the tax impact of certain ENI adjustments and other unusual items that are not included in current operating results for ENI purposes.

Management Fee Revenue by Geographical Area

Management fee revenue by principal geographic area is comprised of the following for the three and nine months ended September 30 (in millions):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
U.S.	$	134.1	$	148.2	$	395.9	$	459.4
Non-U.S.	44.1		48.2		131.5		150.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8