Sculptor Capital Management, Inc. [SCU] Filings

10-Q 1 scu-20230630.htm 10-Q scu-20230630

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

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.


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.


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.


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.

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.

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.

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.

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.

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

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.

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

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.

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).

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

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.

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

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.

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