~~0001527166 cg:A5.625SeniorNotesDue2043Member us-gaap:SeniorNotesMember 2019-04-01 2019-06-30~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~JUNE~~June 30, ~~2020~~2021



☐			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: 001-35538

The Carlyle Group Inc.

(Exact name of registrant as specified in its charter)



~~Delaware~~

	~~45-2832612~~
Delaware		45-2832612
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1001 Pennsylvania Avenue, NW

Washington,, DC,, 20004-2505

(Address of principal executive offices) (Zip Code)

(~~202~~) (202) 729-5626

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CG	The Nasdaq Global Select Market
4.625% Subordinated Notes due 2061 of Carlyle Finance L.L.C.	CGABL	The Nasdaq Global Select Market

As of July 28, ~~2020,~~2021, there were ~~348,693,884~~354,462,148 shares of common stock of the registrant outstanding.

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 ý 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 ý No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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

☐

~~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 ☒

TABLE OF CONTENTS


					Page
PART I – FINANCIAL INFORMATION

				~~Page~~
~~PART I – FINANCIAL INFORMATION~~

Item 1.	Financial Statements			5

			Unaudited Condensed Consolidated Financial Statements – June 30, ~~2020~~2021 and ~~2019:~~2020:

			Condensed Consolidated Balance Sheets as of June ~~30, 2020~~ 3 0 , 2021 and December 31, ~~2019~~2020		5

			Condensed Consolidated Statements of Operations for the Three and S ix Months Ended June 3 0 , 2021 and 2020		6

			Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020		67

			Condensed Consolidated Statements of ~~Comprehensive Income~~Changes in Equity for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020		78

			~~Condensed Consolidated Statements of Changes in Equity for the Three and Six Months Ended June 30, 2020 and 2019~~		8

	Condensed Consolidated Statements of Cash Flows for ~~the Three and Six~~th e S ix Months Ended June 30, ~~2020~~2021 and ~~2019~~2020	10

			Notes to the Condensed Consolidated Financial Statements		11

Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations		6968

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		~~137~~124

Item 4.			Controls and Procedures		~~137~~125

PART II – OTHER INFORMATION

Item 1.			Legal Proceedings		~~138~~126

Item 1A.			Risk Factors		~~138~~126

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		~~138~~126

Item 3.			Defaults Upon Senior Securities		~~138~~126

Item 4.			Mine Safety Disclosures		~~138~~126

Item 5.			Other Information		~~138~~126

Item 6.			Exhibits		~~139~~127

SIGNATURE					~~140~~128

Forward-Looking Statements

This report may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, contingencies, our dividend policy, ~~our expectations regarding the impact of COVID-19,~~ and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements including, but not limited to, those described under the sections entitled “Risk Factors” in this report and in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the United States Securities and Exchange Commission (“SEC”) on February ~~12, 2020 and in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on April 30, 2020,~~11, 2021, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other periodic filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.

Website and Social Media Disclosure

We use our website (www.carlyle.com), our corporate Facebook page (https://www.facebook.com/onecarlyle/), our corporate Twitter account (@OneCarlyle or www.twitter.com/onecarlyle), our corporate Instagram account (@onecarlyle or www.instagram.com/onecarlyle), our corporate LinkedIn account (www.linkedin.com/company/the-carlyle-group) and our corporate YouTube channel (www.youtube.com/user/onecarlyle) as channels of distribution of material company information. For example, financial and other material information regarding our company is routinely posted on and accessible at www.carlyle.com. Accordingly, investors should monitor these channels, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive email alerts and other information about Carlyle when you enroll your email address by visiting the “Email Alert Subscription” section at http://ir.carlyle.com/email-alerts. The contents of our website and social media channels are not, however, a part of this Quarterly Report on Form 10-Q and are not incorporated by reference herein.

On January 1, 2020, we completed our conversion from a Delaware limited partnership named The Carlyle Group L.P. into a Delaware Corporation named The Carlyle Group Inc. Pursuant to the Conversion, at the specified effective time on January 1, 2020, each common unit of The Carlyle Group L.P. outstanding immediately prior to the effective time converted into one share of common stock of The Carlyle Group Inc. and each special voting unit and general partner unit was canceled for no consideration. In addition, holders of the partnership units in Carlyle Holdings I L.P., Carlyle Holdings II L.P., and Carlyle Holdings III L.P. exchanged such units for an equivalent number of shares of common stock and certain other restructuring steps occurred (the conversion, together with such restructuring steps and related transactions, the “Conversion”).

Unless the context suggests otherwise, references in this report to “Carlyle,” the “Company,” “we,” “us” and “our” refer (i) prior to the consummation of the Conversion to The Carlyle Group L.P. and its consolidated subsidiaries and (ii) from and after the consummation of the Conversion to The Carlyle Group Inc. and its consolidated subsidiaries. References to our common stock or shares in periods prior to the Conversion refer to the common units of The Carlyle Group L.P. When we refer to our “senior Carlyle professionals,” we are referring to the partner-level personnel of our firm. References in this report to the ownership of the senior Carlyle professionals include the ownership of personal planning vehicles of these individuals. When we refer to the “Carlyle Holdings partnerships” or “Carlyle Holdings”, we are referring to Carlyle Holdings I L.P., Carlyle Holdings II L.P., and Carlyle Holdings III L.P., which prior to the Conversion were the holding partnerships through which the Company and our senior Carlyle professionals and other holders of Carlyle Holdings partnership units owned their respective interests in our business.

~~“Carlyle~~ “Carlyle funds,” “our funds” and “our investment funds” refer to the investment funds and vehicles advised by Carlyle.

~~“Carry~~ “Carry funds” generally refers to closed-end investment vehicles, in which commitments are drawn down over a specified investment period, and in which the general partner receives a special residual allocation of income from limited partners, which

we refer to as carried interest, in the event that specified investment returns are achieved by the fund. Disclosures referring to carry funds will also include the impact of certain commitments which do not earn carried interest, but

are either part of, or associated with our carry funds. The rate of carried interest, as well as the share of carried interest allocated to Carlyle, may vary across the carry fund platform. Carry funds generally include the following investment vehicles across our ~~four~~three business segments:

~~Corporate~~•Global Private Equity: Buyout, middle market and growth capital, ~~funds advised by Carlyle~~

~~Real Assets: Real~~real estate, ~~power, infrastructure~~ and ~~energy~~natural resources funds advised by Carlyle, as well as certain energy funds advised by our strategic partner NGP Energy Capital Management (“NGP”) in which Carlyle is entitled to receive a share of carried interest (“NGP Carry Funds”)

•Global Credit: Distressed credit, energy credit, opportunistic credit, corporate mezzanine funds, aircraft financing and servicing, and other closed-end credit funds advised by Carlyle

•Investment Solutions: Funds and vehicles advised by AlpInvest Partners B.V. (“AlpInvest”) ~~and Metropolitan Real Estate Equity Management, LLC (“Metropolitan”)~~, which include primary fund, secondary and co-investment strategies

Carry funds specifically exclude certain funds advised by NGP in which Carlyle is not entitled to receive a share of carried interest (or “NGP Predecessor Funds”), collateralized loan obligation vehicles (“CLOs”), business development companies and direct lending managed accounts, as well as capital raised from third-party investors to acquire a 76.6% interest in Fortitude Holdings.

For an explanation of the fund acronyms used throughout this Quarterly Report, refer to “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation – Our Family of Funds.”

~~“Fee-earning~~ “Fee-earning assets under management” or “Fee-earning AUM” refers to the assets we manage or advise from which we derive recurring fund management fees. Our Fee-earning AUM is generally based on one of the following, once fees have been activated:


~~(a)~~	the amount of limited partner capital commitments, generally for carry funds where the original investment period has not expired, for AlpInvest carry funds during the commitment fee period and for Metropolitan carry funds during the weighted-average investment period of the underlying funds;


~~(b)~~	the remaining amount of limited partner invested capital at cost, generally for carry funds and certain co-investment vehicles where the original investment period has expired, Metropolitan carry funds after the expiration of the weighted-average investment period of the underlying funds, and one of our business development companies;


~~(c)~~	the amount of aggregate fee-earning collateral balance of our CLOs and other securitization vehicles, as defined in the fund indentures (typically exclusive of equities and defaulted positions) as of the quarterly cut-off date;


~~(d)~~	~~the external investor portion of the net asset value of our open-ended funds (pre redemptions and subscriptions), as well as certain carry funds;~~


~~(e)~~	~~the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our business development companies and certain carry funds; or~~


~~(f)~~	~~the lower of cost or fair value of invested capital, generally for AlpInvest carry funds where the commitment fee period has expired and certain carry funds where the investment period has expired.~~

~~“Assets~~(a)the amount of limited partner capital commitments, generally for carry funds where the original investment period has not expired, for AlpInvest carry funds during the commitment fee period;

(c)the amount of aggregate fee-earning collateral balance of our CLOs and other securitization vehicles, as defined in the fund indentures (typically exclusive of equities and defaulted positions) as of the quarterly cut-off date;

(d)the external investor portion of the net asset value of our open-ended funds (pre-redemptions and subscriptions), as well as certain carry funds;

(e)the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our business development companies and certain carry funds; or

“Assets under management” or “AUM” refers to the assets we manage or advise. Our AUM generally equals the sum of the following:

(a) the aggregate fair value of our carry funds and related co-investment vehicles, NGP Predecessor Funds and separately managed accounts, plus the capital that Carlyle is entitled to call from investors in those funds and vehicles (including Carlyle commitments to those funds and vehicles and those of senior Carlyle professionals and employees) pursuant to the terms of their capital commitments to those funds and vehicles;


~~(b)~~	(b) the amount of aggregate collateral balance and principal cash or aggregate principal amount of the notes of our CLOs and other structured products (inclusive of all positions);


~~(c)~~	~~the net asset value (pre-redemptions and subscriptions) of our open-ended funds; and~~


~~(d)~~	the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that Carlyle is entitled to call from investors in those vehicles pursuant to the terms of their capital commitments to those vehicles.

(d) the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that Carlyle is entitled to call from investors in those vehicles pursuant to the terms of their capital commitments to those vehicles.

We include in our calculation of AUM and Fee-earning AUM certain energy and renewable resources funds that we jointly advise with Riverstone Holdings L.L.C. (“Riverstone”), the NGP Predecessor Funds and NGP Carry Funds (collectively, the “NGP Energy Funds”) that are advised by NGP, as well as capital raised from third-party investors to acquire a 76.6% interest in Fortitude Holdings.

For most of our carry funds, total AUM includes the fair value of the capital invested, whereas Fee-earning AUM includes the amount of capital commitments or the remaining amount of invested capital, depending on whether the original investment period for the fund has expired. As such, Fee-earning AUM may be greater than total AUM when the aggregate fair value of the remaining investments is less than the cost of those investments.

Our calculations of AUM and Fee-earning AUM may differ from the calculations of other asset managers. As a result, these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of AUM (but not Fee-earning AUM) includes uncalled commitments to, and the fair value of invested capital in, our investment funds from Carlyle and our personnel, regardless of whether such commitments or invested capital are subject to management fees, incentive fees or performance allocations. Our calculations of AUM or Fee-earning AUM are not based on any definition of AUM or Fee-earning AUM that is set forth in the agreements governing the investment funds that we manage or advise.

“Metropolitan” refers to Metropolitan Real Estate Management, LLC, which was included in the Investment Solutions business segment prior to its sale on April 1, 2021.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

The Carlyle Group Inc.

Condensed Consolidated Balance Sheets

(Dollars in millions)


	June 30, 2020			December 31, 2019				June 30, 2021		December 31, 2020
	(Unaudited)							(Unaudited)
Assets							Assets
Cash and cash equivalents	$	554.5		$	793.4		Cash and cash equivalents	$	1,586.2	$	987.6
Cash and cash equivalents held at Consolidated Funds	98.0			122.4			Cash and cash equivalents held at Consolidated Funds	187.5		148.6
Restricted cash	4.5			34.6			Restricted cash	31.0		2.0
Investments, including accrued performance allocations of $3,792.2 million and $3,855.6 million as of June 30, 2020 and December 31, 2019, respectively	5,976.0			6,804.4

Investments, including accrued performance allocations of $8,145.9 million and $4,968.6 million as of June 30, 2021 and December 31, 2020, respectively							Investments, including accrued performance allocations of $8,145.9 million and $4,968.6 million as of June 30, 2021 and December 31, 2020, respectively	10,642.3		7,380.9
Investments of Consolidated Funds	4,581.2			5,007.3			Investments of Consolidated Funds	6,123.4		6,056.9
Due from affiliates and other receivables, net	275.8			273.9			Due from affiliates and other receivables, net	276.0		272.5
Due from affiliates and other receivables of Consolidated Funds, net	142.5			74.4			Due from affiliates and other receivables of Consolidated Funds, net	189.0		89.1

Fixed assets, net	122.3			108.2			Fixed assets, net	142.0		149.2
Lease right-of-use assets, net	189.6			203.8			Lease right-of-use assets, net	336.6		361.1
Deposits and other	56.7			54.0			Deposits and other	76.9		51.7

Intangible assets, net	55.1			62.3			Intangible assets, net	38.9		48.7
Deferred tax assets	266.5			270.1			Deferred tax assets	19.4		96.5
Total assets	$	12,322.7		$	13,808.8		Total assets	$	19,649.2	$	15,644.8
Liabilities and equity							Liabilities and equity
Debt obligations	$	1,943.7		$	1,976.3		Debt obligations	$	2,307.5	$	1,970.9
Loans payable of Consolidated Funds	4,517.5			4,706.7			Loans payable of Consolidated Funds	5,393.1		5,563.0

Accounts payable, accrued expenses and other liabilities	316.6			354.9			Accounts payable, accrued expenses and other liabilities	309.8		286.3
Accrued compensation and benefits	2,359.5			2,496.5			Accrued compensation and benefits	4,566.7		3,222.6
Due to affiliates	458.8			542.1			Due to affiliates	402.1		436.7
Deferred revenue	51.6			71.0			Deferred revenue	123.1		89.0
Deferred tax liabilities	36.9			65.2			Deferred tax liabilities	466.5		57.8
Other liabilities of Consolidated Funds	205.5			316.1			Other liabilities of Consolidated Funds	923.6		556.1

Lease liabilities	266.9			288.2			Lease liabilities	513.8		513.5
Accrued giveback obligations	23.0			22.2			Accrued giveback obligations	21.0		18.7

Total liabilities	10,180.0			10,839.2			Total liabilities	15,027.2		12,714.6
Commitments and contingencies							Commitments and contingencies	0		0
Partners’ capital (common units, 117,840,651 issued and outstanding as of December 31, 2019)	—			703.8
Common stock, $0.01 par value, 100,000,000,000 shares authorized (348,693,884 shares issued and outstanding as of June 30, 2020)	3.5			—

Common stock, $0.01 par value, 100,000,000,000 shares authorized (354,462,149 and 353,520,576 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively)							Common stock, $0.01 par value, 100,000,000,000 shares authorized (354,462,149 and 353,520,576 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively)	3.5		3.5
Additional paid-in-capital	2,679.8			—			Additional paid-in-capital	2,621.7		2,546.2
Retained earnings (deficit)	(466.1		)	—
Retained earnings							Retained earnings	1,940.1		348.2
Accumulated other comprehensive loss	(258.9		)	(85.2		)	Accumulated other comprehensive loss	(228.3)		(208.7)

Non-controlling interests in consolidated entities	184.4			333.5			Non-controlling interests in consolidated entities	285.0		241.0
Non-controlling interests in Carlyle Holdings	—			2,017.5

Total equity	2,142.7			2,969.6			Total equity	4,622.0		2,930.2
Total liabilities and equity	$	12,322.7		$	13,808.8		Total liabilities and equity	$	19,649.2	$	15,644.8

See accompanying notes.

The Carlyle Group Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Dollars in millions, except share and per share data)


													Three Months Ended June 30,				Six Months Ended June 30,
	Three Months Ended June 30,					Six Months Ended June 30,							2021		2020		2021		2020
	2020			2019		2020			2019
Revenues												Revenues
Fund management fees	$	371.8		$	390.9	$	727.7		$	744.3		Fund management fees	$	394.4	$	371.8	$	775.4	$	727.7
Incentive fees	9.0			8.8		17.9			16.9			Incentive fees	10.4		9.0		19.9		17.9

Investment income (loss)												Investment income (loss)
Performance allocations	1,191.8			247.6		254.2			596.7			Performance allocations	2,080.7		1,191.8		3,866.8		254.2

Principal investment income (loss)	(512.6		)	342.0		(765.9		)	643.8			Principal investment income (loss)	137.7		(512.6)		316.8		(765.9)

Total investment income (loss)	679.2			589.6		(511.7		)	1,240.5			Total investment income (loss)	2,218.4		679.2		4,183.6		(511.7)
Interest and other income	15.8			26.0		43.2			48.2			Interest and other income	21.0		15.8		41.4		43.2
Interest and other income of Consolidated Funds	55.2			45.8		108.2			98.2			Interest and other income of Consolidated Funds	62.1		55.2		123.2		108.2

Total revenues	1,131.0			1,061.1		385.3			2,148.1			Total revenues	2,706.3		1,131.0		5,143.5		385.3
Expenses												Expenses
Compensation and benefits												Compensation and benefits
Cash-based compensation and benefits	212.5			221.4		416.8			431.9			Cash-based compensation and benefits	231.8		212.5		460.3		416.8
Equity-based compensation	30.5			35.2		59.6			71.2			Equity-based compensation	47.2		30.5		79.6		59.6
Performance allocations and incentive fee related compensation	535.6			113.6		93.1			299.0			Performance allocations and incentive fee related compensation	994.0		535.6		1,860.6		93.1

Total compensation and benefits	778.6			370.2		569.5			802.1			Total compensation and benefits	1,273.0		778.6		2,400.5		569.5
General, administrative and other expenses	80.2			110.7		149.8			223.2			General, administrative and other expenses	109.1		80.2		200.8		149.8
Interest	25.9			19.5		49.8			39.2			Interest	25.5		25.9		48.5		49.8
Interest and other expenses of Consolidated Funds	39.3			27.5		84.9			65.6			Interest and other expenses of Consolidated Funds	46.5		39.3		88.9		84.9
Other non-operating expenses	0.5			0.4		0.7			0.7

Other non-operating expenses (income)												Other non-operating expenses (income)	(3.1)		0.5		(2.5)		0.7
Total expenses	924.5			528.3		854.7			1,130.8			Total expenses	1,451.0		924.5		2,736.2		854.7
Other income (loss)												Other income (loss)
Net investment income (loss) of Consolidated Funds	50.3			9.2		(62.8		)	(5.0		)	Net investment income (loss) of Consolidated Funds	(2.6)		50.3		9.7		(62.8)
Income (loss) before provision for income taxes	256.8			542.0		(532.2		)	1,012.3			Income (loss) before provision for income taxes	1,252.7		256.8		2,417.0		(532.2)
Provision (benefit) for income taxes	52.3			15.5		(27.7		)	39.5			Provision (benefit) for income taxes	306.2		52.3		579.6		(27.7)
Net income (loss)	204.5			526.5		(504.5		)	972.8			Net income (loss)	946.5		204.5		1,837.4		(504.5)
Net income (loss) attributable to non-controlling interests in consolidated entities	58.6			39.8		(38.4		)	35.3			Net income (loss) attributable to non-controlling interests in consolidated entities	21.5		58.6		43.1		(38.4)
Net income (loss) attributable to Carlyle Holdings	145.9			486.7		(466.1		)	937.5
Net income attributable to non-controlling interests in Carlyle Holdings	—			332.6		—			640.5

Net income (loss) attributable to The Carlyle Group Inc.	145.9			154.1		(466.1		)	297.0			Net income (loss) attributable to The Carlyle Group Inc.	$	925.0	$	145.9	$	1,794.3	$	(466.1)
Net income attributable to Series A Preferred Unitholders	—			5.9		—			11.8
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders	$	145.9		$	148.2	$	(466.1	)	$	285.2
Net income (loss) attributable to The Carlyle Group Inc. per common share (see Note 11)												Net income (loss) attributable to The Carlyle Group Inc. per common share (see Note 11)
Basic	$	0.42		$	1.34	$	(1.34	)	$	2.60		Basic	$	2.61	$	0.42	$	5.06	$	(1.34)
Diluted	$	0.41		$	1.23	$	(1.34	)	$	2.41		Diluted	$	2.55	$	0.41	$	4.97	$	(1.34)
Weighted-average common shares												Weighted-average common shares
Basic	348,574,528			110,440,227		348,407,144			109,828,740			Basic	354,506,335		348,574,528		354,368,976		348,407,144
Diluted	357,268,275			120,920,439		348,407,144			118,372,885			Diluted	362,151,588		357,268,275		361,328,946		348,407,144

Substantially all revenue is earned from affiliates of the Company. See accompanying notes.

The Carlyle Group Inc.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(Dollars in millions)


	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,				Six Months Ended June 30,
	2020			2019			2020			2019			2021		2020		2021		2020
Net income (loss)	$	204.5		$	526.5		$	(504.5	)	$	972.8	Net income (loss)	$	946.5	$	204.5	$	1,837.4	$	(504.5)
Other comprehensive income (loss)												Other comprehensive income (loss)
Foreign currency translation adjustments	12.2			(0.7		)	(10.7		)	1.2		Foreign currency translation adjustments	4.7		12.2		(23.2)		(10.7)
Unrealized gains (losses) on Fortitude Re available-for-sale securities	(12.3		)	6.8			(20.0		)	12.4
Unrealized losses on Fortitude Re available-for-sale securities												Unrealized losses on Fortitude Re available-for-sale securities	0		(12.3)		0		(20.0)

Defined benefit plans												Defined benefit plans
Unrealized gain (loss) for the period	1.4			0.3			(1.8		)	2.0		Unrealized gain (loss) for the period	0.6		1.4		1.9		(1.8)
Less: reclassification adjustment for gain during the period, included in cash-based compensation and benefits expense	0.5			0.2			0.9			0.5		Less: reclassification adjustment for gain during the period, included in cash-based compensation and benefits expense	0.6		0.5		1.1		0.9
Other comprehensive income (loss)	1.8			6.6			(31.6		)	16.1		Other comprehensive income (loss)	5.9		1.8		(20.2)		(31.6)
Comprehensive income (loss)	206.3			533.1			(536.1		)	988.9		Comprehensive income (loss)	952.4		206.3		1,817.2		(536.1)

Comprehensive income (loss) attributable to non-controlling interests in consolidated entities	58.5			33.7			(51.2		)	29.5		Comprehensive income (loss) attributable to non-controlling interests in consolidated entities	21.7		58.5		42.5		(51.2)
Comprehensive income (loss) attributable to Carlyle Holdings	147.8			499.4			(484.9		)	959.4
Comprehensive income attributable to non-controlling interests in Carlyle Holdings	—			341.3			—			655.3

Comprehensive income (loss) attributable to The Carlyle Group Inc.	$	147.8		$	158.1		$	(484.9	)	$	304.1	Comprehensive income (loss) attributable to The Carlyle Group Inc.	$	930.7	$	147.8	$	1,774.7	$	(484.9)

See accompanying notes.

The Carlyle Group Inc.

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

(Dollars and shares in millions)


	Common Shares	Common Stock		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non- controlling Interests in Consolidated Entities		Total Equity
Balance at March 31, 2021	354.5	$	3.5	$	2,573.7	$	1,118.8	$	(234.0)	$	250.2	$	3,712.2



Shares repurchased	(0.3)	—		—		(15.0)		—		—		(15.0)

Equity-based compensation	—	—		48.0		—		—		—		48.0
Shares issued for equity-based awards	0.3	—		—		—		—		—		—

Contributions	—	—		—		—		—		40.7		40.7
Distributions	—	—		—		(88.7)		—		(27.6)		(116.3)
Net income	—	—		—		925.0		—		21.5		946.5





Currency translation adjustments	—	—		—		—		4.5		0.2		4.7

Defined benefit plans, net	—	—		—		—		1.2		—		1.2
Balance at June 30, 2021	354.5	$	3.5	$	2,621.7	$	1,940.1	$	(228.3)	$	285.0	$	4,622.0


	Common Shares	Common Stock		Additional Paid-in-Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non- controlling Interests in Consolidated Entities		Total Equity
Balance at December 31, 2020	353.5	$	3.5	$	2,546.2	$	348.2	$	(208.7)	$	241.0	$	2,930.2



Shares repurchased	(0.6)	—		—		(25.0)		—		—		(25.0)


Equity-based compensation	—	—		75.5		—		—		—		75.5
Shares issued for equity-based awards	1.6	—		—		—		—		—		—
Contributions	—	—		—		—		—		44.4		44.4
Distributions	—	—		—		(177.4)		—		(42.9)		(220.3)
Net income	—	—		—		1,794.3		—		43.1		1,837.4

Currency translation adjustments	—	—		—		—		(22.6)		(0.6)		(23.2)

Defined benefit plans, net	—	—		—		—		3.0		—		3.0
Balance at June 30, 2021	354.5	$	3.5	$	2,621.7	$	1,940.1	$	(228.3)	$	285.0	$	4,622.0

Common
Units Common Shares Partners’
Capital Common Stock Additional Paid-in-Capital Retained Earnings (Deficit) Accumulated
Other
Comprehensive
Income (Loss) Non-
controlling
Interests in
Consolidated
Entities Non-
controlling
Interests in
Carlyle
Holdings Total
Equity
Balance at March 31, 2020 —
348.4
$ —
$ 3.5
$ 2,569.0
$ (612.0 ) $ (95.1 ) $ 203.7
$ —
$ 2,069.1
Reclassification resulting from Conversion - Non-controlling Interest in Carlyle Holdings —
—
—
—
165.7
—
(165.7 ) —
—
—
Tax effects resulting from Conversion —
—
—
—
—
—
—
—
—
—
Equity-based compensation —
—
—
—
32.3
—
—
—
—
32.3
Shares issued for equity-based awards —
0.3
—
—
—
—
—
—
—
—
Contributions —
—
—
—
—
—
—
9.8
—
9.8
Distributions —
—
—
—
(87.2 ) —
—
(10.9 ) —
(98.1 )
Net income —
—
—
—
—
145.9
—
�� 58.6
—
204.5
Deconsolidation of Consolidated Entities —

—

—

—

—

—

—

(76.7 )
—

(76.7 )
Currency translation adjustments —
—
—
—
—
—
12.3
(0.1 ) —
12.2
Unrealized loss on Fortitude Re available-for-sale securities —
—
—
—
—
—
(12.3 ) —
—
(12.3 )
Defined benefit plans, net —
—
—
—
—
—
1.9
—
—
1.9
Balance at June 30, 2020 —
348.7
$ —
$ 3.5
$ 2,679.8
$ (466.1 ) $ (258.9 ) $ 184.4
$ —
$ 2,142.7

Common
Units Common Shares Partners’
Capital Common Stock Additional Paid-in-Capital Retained Earnings (Deficit) Accumulated
Other
Comprehensive
Income (Loss) Non-
controlling
Interests in
Consolidated
Entities Non-
controlling
Interests in
Carlyle
Holdings Total
Equity
Balance at December 31, 2019 117.8
—
$ 703.8
$ —
$ —
$ —
$ (85.2 ) $ 333.5
$ 2,017.5
$ 2,969.6
Reclassification resulting from Conversion - Partners' Capital (117.8 ) 117.8
(703.8 ) 1.2
702.6
—
—
—
—
—
Reclassification resulting from Conversion - Non-controlling Interest in Carlyle Holdings —
229.4
—
2.3
2,180.9
—
(165.7 ) —
(2,017.5 ) —
Shares repurchased —
(1.1 ) —
—
(26.4 ) —
—
—
—
(26.4 )
Tax effects resulting from Conversion —
—
—
—
(64.4 ) —
10.8
—
—
(53.6 )
Equity-based compensation —
—
—
—
61.7
—
—
—
—
61.7
Shares issued for equity-based awards —
2.6
—
—
—
—
—
—
—
—
Contributions —
—
—
—
—
—
—
14.0
—
14.0
Distributions —
—
—
—
(174.6 ) —
—
(35.2 ) —
(209.8 )
Net loss —
—
—
—
—
(466.1 ) —
(38.4 ) —
(504.5 )
Deconsolidation of Consolidated Entities —
—
—
—
—
—
—
(76.7 ) —
(76.7 )
Currency translation adjustments —
—
—
—
—
—
2.1
(12.8 ) —
(10.7 )
Unrealized loss on Fortitude Re available-for-sale securities —
—
—
—
—
—
(20.0 ) —
—
(20.0 )
Defined benefit plans, net —
—
—
—
—
—
(0.9 ) —
—
(0.9 )
Balance at June 30, 2020 —
348.7
$ —
$ 3.5
$ 2,679.8
$ (466.1 ) $ (258.9 ) $ 184.4
$ —
$ 2,142.7
The Carlyle Group Inc.

Condensed Consolidated Statements of Changes in Equity

(Continued) (Unaudited)

(Dollars and shares in millions)

Common
Units Preferred Equity Partners’
Capital Accumulated
Other
Comprehensive
Income (Loss) Non-
controlling
Interests in
Consolidated
Entities Non-
controlling
Interests in
Carlyle
Holdings Total
Partners’
Capital
Balance at March 31, 2019 110.1
$ 387.5
$ 779.2
$ (81.5 ) $ 290.0
$ 1,760.6
$ 3,135.8
Reallocation of ownership interests in Carlyle Holdings —
—
2.1
(0.2 ) —
(1.9 ) —
Exchange of Carlyle Holdings units for common units 0.2
—
1.9
(0.1 ) —
(1.8 ) —
Units repurchased —
—
(1.6 ) —
—
—
(1.6 )
Deferred tax effects resulting from acquisition of interests in Carlyle Holdings —
—
0.3
—
—
—
0.3
Equity-based compensation —
—
12.2
—
—
24.5
36.7
Issuances of common units for equity-based awards 0.4
—
—
—
—
—
—
Contributions —
—
—
—
6.9
—
6.9
Distributions —
(5.9 ) (21.1 ) —
(22.1 ) (43.8 ) (92.9 )
Net income —
5.9
148.2
—
39.8
332.6
526.5
Currency translation adjustments —
—
—
1.6
(6.1 ) 3.8
(0.7 )
Unrealized gains on Fortitude Re available-for-sale securities —
—
—
2.2
—
4.6
6.8
Defined benefit plans, net —
—
—
0.2
—
0.3
0.5
Balance at June 30, 2019 110.7
$ 387.5
$ 921.2
$ (77.8 ) $ 308.5
$ 2,078.9
$ 3,618.3

Common
Units Preferred Equity Partners’
Capital Accumulated
Other
Comprehensive
Income (Loss) Non-
controlling
Interests in
Consolidated
Entities Non-
controlling
Interests in
Carlyle
Holdings Total
Partners’
Capital
Balance at December 31, 2018 107.7
$ 387.5
$ 673.4
$ (83.3 ) $ 324.2
$ 1,534.5
$ 2,836.3
Reallocation of ownership interests in Carlyle Holdings —
—
15.4
(1.3 ) —
(14.1 ) —
Exchange of Carlyle Holdings units for common units 0.4
—
3.3
(0.3 ) —
(3.0 ) —
Units repurchased (0.6 ) —
(12.0 ) —
—
—
(12.0 )
Deferred tax effects resulting from acquisition of interests in Carlyle Holdings —
—
0.4
—
—
—
0.4
Equity-based compensation —
—
24.2
—
—
49.9
74.1
Issuances of common units for equity-based awards 3.2
—
—
—
—
—
—
Contributions —
—
—
—
9.1
—
9.1
Distributions —
(11.8 ) (68.5 ) —
(54.3 ) (143.2 ) (277.8 )
Net income —
11.8
285.2
—
35.3
640.5
972.8
Cumulative effect adjustment upon adoption of ASU 2016-2 —
—
(0.2 ) —
—
(0.5 ) (0.7 )
Currency translation adjustments —
—
—
2.3
(5.8 ) 4.7
1.2
Unrealized gains on Fortitude Re available-for-sale securities —
—
—
4.0
—
8.4
12.4
Defined benefit plans, net —
—
—
0.8
—
1.7
2.5
Balance at June 30, 2019 110.7
$ 387.5
$ 921.2
$ (77.8 ) $ 308.5
$ 2,078.9
$ 3,618.3


	Common Units	Common Shares	Partners’ Capital		Common Stock		Additional Paid-in- Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Non- controlling Interests in Consolidated Entities		Non- controlling Interests in Carlyle Holdings		Total Equity
Balance at March 31, 2020	0	348.4	$	0	$	3.5	$	2,569.0	$	(612.0)	$	(95.1)	$	203.7	$	0	$	2,069.1

Reclassification resulting from Conversion - Non-controlling Interest in Carlyle Holdings	—	—	—		—		165.7		—		(165.7)		—		—		—



Equity-based compensation	—	—	—		—		32.3		—		—		—		—		32.3
Shares issued for equity-based awards	—	0.3	—		—		—		—		—		—		—		—
Contributions	—	—	—		—		—		—		—		9.8		—		9.8
Distributions	—	—	—		—		(87.2)		—		—		(10.9)		—		(98.1)
Net income	—	—	—		—		—		145.9		—		58.6		—		204.5

Deconsolidation of Consolidated Entities	—	—	—		—		—		—		—		(76.7)		—		(76.7)
Currency translation adjustments	—	—	—		—		—		—		12.3		(0.1)		—		12.2
Unrealized loss on Fortitude Re available-for-sale securities	—	—	—		—		—		—		(12.3)		—		—		(12.3)
Defined benefit plans, net	—	—	—		—		—		—		1.9		—		—		1.9
Balance at June 30, 2020	0	348.7	$	0	$	3.5	$	2,679.8	$	(466.1)	$	(258.9)	$	184.4	$	0	$	2,142.7


	Common Units	Common Shares	Partners’ Capital		Common Stock		Additional Paid-in- Capital		Retained Earnings (Deficit)		Accumulated Other Comprehensive Income (Loss)		Non- controlling Interests in Consolidated Entities		Non- controlling Interests in Carlyle Holdings		Total Equity
Balance at December 31, 2019	117.8	0	$	703.8	$	0	$	0	$	0	$	(85.2)	$	333.5	$	2,017.5	$	2,969.6
Reclassification resulting from Conversion - Partners' Capital	(117.8)	117.8	(703.8)		1.2		702.6		—		—		—		—		—
Reclassification resulting from Conversion - Non-controlling Interest in Carlyle Holdings	—	229.4	—		2.3		2,180.9		—		(165.7)		—		(2,017.5)		—

Shares repurchased	—	(1.1)	—		—		(26.4)		—		—		—		—		(26.4)
Tax effects resulting from Conversion	—	—	—		—		(64.4)		—		10.8		—		—		(53.6)
Equity-based compensation	—	—	—		—		61.7		—		—		—		—		61.7
Shares issued for equity-based awards	—	2.6	—		—		—		—		—		—		—		—
Contributions	—	—	—		—		—		—		—		14.0		—		14.0
Distributions	—	—	—		—		(174.6)		—		—		(35.2)		—		(209.8)
Net loss	—	—	—		—		—		(466.1)		—		(38.4)		—		(504.5)

Deconsolidation of Consolidated Entities	—	—	—		—		—		—		—		(76.7)		—		(76.7)
Currency translation adjustments	—	—	—		—		—		—		2.1		(12.8)		—		(10.7)
Unrealized loss on Fortitude Re available-for-sale securities	—	—	—		—		—		—		(20.0)		—		—		(20.0)
Defined benefit plans, net	—	—	—		—		—		—		(0.9)		—		—		(0.9)
Balance at June 30, 2020	0	348.7	$	0	$	3.5	$	2,679.8	$	(466.1)	$	(258.9)	$	184.4	$	0	$	2,142.7

See accompanying notes.

The Carlyle Group Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in millions)


	Six Months Ended June 30,								Six Months Ended June 30,
	2020				2019				2021		2020
Cash flows from operating activities								Cash flows from operating activities
Net income (loss)	$	(504.5	)		$	972.8		Net income (loss)	$	1,837.4	$	(504.5)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:								Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	26.0				28.8			Depreciation and amortization	26.8		26.0
Right-of-use asset impairment, net of broker fees								Right-of-use asset impairment, net of broker fees	24.8		0
Equity-based compensation	59.6				71.2			Equity-based compensation	79.6		59.6

Non-cash performance allocations and incentive fees	28.7				(268.3		)	Non-cash performance allocations and incentive fees	(1,703.9)		28.7
Non-cash principal investment (income) loss	769.3				(640.7		)	Non-cash principal investment (income) loss	(303.8)		769.3
Other non-cash amounts	(10.7		)		4.6			Other non-cash amounts	5.5		(10.7)
Consolidated Funds related:								Consolidated Funds related:
Realized/unrealized (gain) loss on investments of Consolidated Funds	382.3				(18.2		)	Realized/unrealized (gain) loss on investments of Consolidated Funds	(102.8)		382.3
Realized/unrealized (gain) loss from loans payable of Consolidated Funds	(319.5		)		23.2			Realized/unrealized (gain) loss from loans payable of Consolidated Funds	93.1		(319.5)
Purchases of investments by Consolidated Funds	(1,046.4		)		(827.2		)	Purchases of investments by Consolidated Funds	(2,700.4)		(1,046.4)
Proceeds from sale and settlements of investments by Consolidated Funds	1,088.6				1,032.8			Proceeds from sale and settlements of investments by Consolidated Funds	2,426.9		1,088.6
Non-cash interest income, net	(2.8		)		(1.8		)	Non-cash interest income, net	(6.7)		(2.8)
Change in cash and cash equivalents held at Consolidated Funds	21.8				27.4			Change in cash and cash equivalents held at Consolidated Funds	(8.3)		21.8
Change in other receivables held at Consolidated Funds	(68.0		)		55.3			Change in other receivables held at Consolidated Funds	(99.5)		(68.0)
Change in other liabilities held at Consolidated Funds	(113.2		)		(251.1		)	Change in other liabilities held at Consolidated Funds	365.1		(113.2)
Other non-cash amounts of Consolidated Funds	0.3				—			Other non-cash amounts of Consolidated Funds	0		0.3
Purchases of investments	(164.6		)		(107.0		)	Purchases of investments	(103.4)		(244.2)
Payment of purchase price adjustment in Fortitude Re	(79.6		)		—
Proceeds from the sale of investments	166.2				214.6			Proceeds from the sale of investments	398.2		166.2
Payments of contingent consideration								Payments of contingent consideration	(49.9)		0

Changes in deferred taxes, net	(61.6		)		20.3			Changes in deferred taxes, net	481.9		(61.6)
Change in due from affiliates and other receivables	(18.8		)		30.8			Change in due from affiliates and other receivables	(14.9)		(18.8)

Change in deposits and other	(4.8		)		(13.9		)	Change in deposits and other	(26.6)		(4.8)

Change in accounts payable, accrued expenses and other liabilities	(46.5		)		(44.4		)	Change in accounts payable, accrued expenses and other liabilities	25.4		(46.5)
Change in accrued compensation and benefits	(125.4		)		(23.2		)	Change in accrued compensation and benefits	(113.9)		(125.4)
Change in due to affiliates	(28.2		)	��	(1.2		)	Change in due to affiliates	24.5		(28.2)

Change in lease right-of-use assets and lease liabilities	(5.9		)		2.9			Change in lease right-of-use assets and lease liabilities	4.6		(5.9)
Change in deferred revenue	(19.2		)		(18.7		)	Change in deferred revenue	35.6		(19.2)
Net cash (used in) provided by operating activities	(76.9		)		269.0
Net cash provided by (used in) operating activities								Net cash provided by (used in) operating activities	595.3		(76.9)
Cash flows from investing activities								Cash flows from investing activities

Purchases of fixed assets, net	(23.7		)		(23.7		)	Purchases of fixed assets, net	(17.6)		(23.7)
Proceeds from sale of MRE, net of cash sold								Proceeds from sale of MRE, net of cash sold	5.9		0
Net cash used in investing activities	(23.7		)		(23.7		)	Net cash used in investing activities	(11.7)		(23.7)
Cash flows from financing activities								Cash flows from financing activities

Borrowings under credit facilities	263.8				—			Borrowings under credit facilities	0		263.8
Repayments under credit facilities	(295.6		)		—			Repayments under credit facilities	0		(295.6)
Repayment of term loan	—				(25.0		)
Issuance of 4.625% subordinated notes due 2061, net of financing costs								Issuance of 4.625% subordinated notes due 2061, net of financing costs	484.2		0

Payments on debt obligations	(1.5		)		(13.6		)	Payments on debt obligations	(229.4)		(1.5)
Proceeds from debt obligations, net of financing costs	—				20.4			Proceeds from debt obligations, net of financing costs	87.7		0

Net borrowings (payments) on loans payable of Consolidated Funds	134.6				(40.3		)	Net borrowings (payments) on loans payable of Consolidated Funds	(15.9)		134.6
Payments of contingent consideration	(0.3		)		—			Payments of contingent consideration	0		(0.3)

Dividends to common stockholders	(174.6		)		(68.5		)	Dividends to common stockholders	(177.4)		(174.6)
Distributions to preferred unitholders	—				(11.8		)
Distributions to non-controlling interest holders in Carlyle Holdings	—				(143.2		)

Payment of deferred consideration for Carlyle Holdings units	(68.8		)		—			Payment of deferred consideration for Carlyle Holdings units	(68.8)		(68.8)

Contributions from non-controlling interest holders	14.0				9.1			Contributions from non-controlling interest holders	44.4		14.0
Distributions to non-controlling interest holders	(35.2		)		(31.9		)	Distributions to non-controlling interest holders	(42.9)		(35.2)
Common shares repurchased	(26.4		)		(12.0		)	Common shares repurchased	(25.0)		(26.4)
Change in due to/from affiliates financing activities	30.0				114.5			Change in due to/from affiliates financing activities	12.8		30.0
Net cash used in financing activities	(160.0		)		(202.3		)

Net cash provided by (used in) financing activities								Net cash provided by (used in) financing activities	69.7		(160.0)
Effect of foreign exchange rate changes	(8.4		)		2.3			Effect of foreign exchange rate changes	(25.7)		(8.4)
Increase (decrease) in cash, cash equivalents and restricted cash	(269.0		)		45.3			Increase (decrease) in cash, cash equivalents and restricted cash	627.6		(269.0)
Cash, cash equivalents and restricted cash, beginning of period	828.0				638.3			Cash, cash equivalents and restricted cash, beginning of period	989.6		828.0
Cash, cash equivalents and restricted cash, end of period	$	559.0			$	683.6		Cash, cash equivalents and restricted cash, end of period	$	1,617.2	$	559.0
Supplemental non-cash disclosures								Supplemental non-cash disclosures
Tax effects from the conversion to a Corporation recorded in equity	$	53.6			$	—		Tax effects from the conversion to a Corporation recorded in equity	$	0	$	53.6
Net increase in partners’ capital and accumulated other comprehensive income related to reallocation of ownership interest in Carlyle Holdings	$	—			$	14.1
Non-cash distributions to non-controlling interest holders	$	—			$	(22.4	)

Net asset impact of deconsolidation of Consolidated Funds	$	—			$	(13.1	)	Net asset impact of deconsolidation of Consolidated Funds	$	(34.4)	$	0
Tax effect from acquisition of Carlyle Holdings partnership units:
Deferred tax asset	$	—			$	1.5
Tax receivable agreement liability	$	—			$	1.1
Total partners’ capital	$	—			$	0.4


Reconciliation of cash, cash equivalents and restricted cash, end of period:								Reconciliation of cash, cash equivalents and restricted cash, end of period:
Cash and cash equivalents	$	554.5			$	669.2		Cash and cash equivalents	$	1,586.2	$	554.5
Restricted cash	4.5				14.4			Restricted cash	31.0		4.5
Total cash, cash equivalents and restricted cash, end of period	$	559.0			$	683.6		Total cash, cash equivalents and restricted cash, end of period	$	1,617.2	$	559.0

Cash and cash equivalents held at Consolidated Funds	$	98.0			$	214.3		Cash and cash equivalents held at Consolidated Funds	$	187.5	$	98.0

See accompanying notes.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. Organization and Basis of Presentation

Effective on January 1, 2020, The Carlyle Group L.P. converted from a Delaware limited partnership to a Delaware corporation named The Carlyle Group Inc. (the “Conversion”). As a result of the Conversion, each common unit was converted into a share of common stock. Under the laws of its incorporation, The Carlyle Group Inc. is deemed to be the same entity as The Carlyle Group L.P. (the “Partnership”). Unless the context suggests otherwise, references to “Carlyle” or the “Company,” refer to (i) The Carlyle Group Inc. and its consolidated subsidiaries following the Conversion and (ii) The Carlyle Group L.P. and its consolidated subsidiaries prior to the Conversion. Because the Conversion became effective January 1, 2020, the accompanying consolidated financial statements as of December 31, 2019 and for the three and six months ended June 30, 2019 and related notes reflect the results of a partnership, and not a corporation.

Prior to the Conversion, the Company recorded significant non-controlling interests in Carlyle Holdings I L.P., Carlyle Holdings II L.P. and Carlyle Holdings III L.P. (collectively, “Carlyle Holdings”), the holdings partnerships through which the Company and senior Carlyle professionals and other holders of Carlyle Holdings partnership units owned their respective interests in the business. In the Conversion, the limited partners of the Carlyle Holdings partnerships exchanged their Carlyle Holdings partnership units for an equivalent number of shares of common stock of The Carlyle Group Inc. As a result, in periods following the Conversion, the consolidated balance sheet and statement of operations of The Carlyle Group Inc. does not reflect any non-controlling interests in Carlyle Holdings, and net income (loss) attributable to Carlyle Holdings refers to the net income (loss) of The Carlyle Group Inc. and its consolidated subsidiaries, net of non-controlling interests in consolidated entities.

Carlyle is one of the world’s largest global investment firms that originates, structures, and acts as lead equity investor in management-led buyouts, strategic minority equity investments, equity private placements, consolidations and buildups, growth capital financings, real estate opportunities, bank loans, high-yield debt, distressed assets, mezzanine debt, and other investment opportunities. Carlyle provides investment management services to, and has transactions with, various private equity funds, real estate funds, private credit funds, collateralized loan obligations (“CLOs”), and other investment products sponsored by the Company for the investment of client assets in the normal course of business. Carlyle typically serves as the general partner, investment manager or collateral manager, making day-to-day investment decisions concerning the assets of these products. Carlyle operates its business through 43 reportable segments: ~~Corporate~~Global Private Equity, ~~Real Assets,~~ Global Credit, and Investment Solutions (see Note 14).

Basis of Presentation

The accompanying ~~condensed consolidated~~ financial statements include the accounts of the Company and its consolidated subsidiaries. In addition, certain Carlyle-affiliated funds, related ~~external~~ co-investment entities and certain CLOs managed by the Company (collectively the “Consolidated Funds”) have been consolidated in the accompanying ~~condensed consolidated~~ financial statements pursuant to accounting principles generally accepted in the United States (“U.S. GAAP”), as described in Note 2. The consolidation of the Consolidated Funds generally has a gross-up effect on assets, liabilities and cash flows, and generally has no effect on the net income attributable to the Company. The economic ownership interests of the other investors in the Consolidated Funds are reflected as non-controlling interests in consolidated entities in the accompanying ~~condensed~~ consolidated financial statements (see Note 2).

The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. These statements, including notes, have not been audited, exclude some of the disclosures required for annual financial statements, and should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed with the Securities and Exchange Commission (“SEC”). The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, consisting of normal recurring accruals, which are necessary for the fair presentation of the financial condition and results of operations for the interim periods presented.

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Company consolidates all entities that it controls either through a majority voting interest or as the primary beneficiary of variable interest entities (“VIEs”).

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The Company evaluates (1) whether it holds a variable interest in an entity, (2) whether the entity is a VIE, and (3) whether the Company’s involvement would make it the primary beneficiary. In evaluating whether the Company holds a variable interest, fees (including management fees, incentive fees and performance allocations) that are customary and commensurate with the level of services provided, and where the Company does not hold other economic interests in the entity

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

that would absorb more than an insignificant amount of the expected losses or returns of the entity, are not considered variable interests. The Company considers all economic interests, including indirect interests, to determine if a fee is considered a variable interest.

For those entities where the Company holds a variable interest, the Company determines whether each of these entities qualifies as a VIE and, if so, whether or not the Company is the primary beneficiary. The assessment of whether the entity is a VIE is generally performed qualitatively, which requires judgment. These judgments include: (a) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the economic performance of the entity, (c) determining whether two or more parties’ equity interests should be aggregated, and (d) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity.

For entities that are determined to be VIEs, the Company consolidates those entities where it has concluded it is the primary beneficiary. The primary beneficiary is defined as the variable interest holder with (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly or indirectly by the Company.

As of June 30, ~~2020,~~2021, assets and liabilities of the consolidated VIEs reflected in the unaudited condensed consolidated balance sheets were ~~$4.8~~$6.5 billion and ~~$4.7~~$6.3 billion, respectively. Except to the extent of the consolidated assets of the VIEs, the holders of the consolidated VIEs’ liabilities generally do not have recourse to the Company.

Substantially all of the Company’s Consolidated Funds are CLOs, which are VIEs that issue loans payable that are backed by diversified collateral asset portfolios consisting primarily of loans or structured debt. In exchange for managing the collateral for the CLOs, the Company earns investment management fees, including in some cases subordinated management fees and contingent incentive fees. In cases where the Company consolidates the CLOs (primarily because of a retained interest that is significant to the CLO), those management fees have been eliminated as intercompany transactions. As of June 30, ~~2020,~~2021, the Company held ~~$92.3~~$160.6 million of investments in these CLOs which represents its maximum risk of loss. The Company’s investments in these CLOs are generally subordinated to other interests in the entities and entitle the Company to receive a pro rata portion of the residual cash flows, if any, from the entities. Investors in the CLOs have no recourse against the Company for any losses sustained in the CLO structure.

Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities. Under the voting interest entity model, the Company consolidates those entities it controls through a majority voting interest.

All significant inter-entity transactions and balances of entities consolidated have been eliminated.

Investments in Unconsolidated Variable Interest Entities

The Company holds variable interests in certain VIEs that are not consolidated because the Company is not the primary beneficiary, including its investments in certain Investment Solutions carry funds, certain CLOs and its strategic investment in NGP Management Company, L.L.C. (“NGP Management” and, together with its affiliates, “NGP”). Refer to Note 4 for information on the strategic investment in NGP. The Company’s involvement with such entities is in the form of direct equity interests and fee arrangements. The maximum exposure to loss represents the loss of assets recognized by the Company relating to its variable interests in these unconsolidated entities.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The assets recognized in the Company’s consolidated balance sheets related to the Company’s variable interests in these non-consolidated VIEs were as follows:

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Investments $ 927.3
$ 1,029.5
Accrued performance revenues 103.9
160.2
Management fee receivables 40.9
35.4
Total $ 1,072.1
$ 1,225.1


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)

Investments	$	874.0	$	988.6
Accrued performance revenues	287.9		177.1
Management fee receivables	26.5		26.5
Total	$	1,188.4	$	1,192.2

These amounts represent the Company’s maximum exposure to loss related to the unconsolidated VIEs as of June 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

Basis of Accounting

The accompanying financial statements are prepared in accordance with U.S. GAAP. Management has determined that the Company’s Funds are investment companies under U.S. GAAP for the purposes of financial reporting. U.S. GAAP for an investment company requires investments to be recorded at estimated fair value and the unrealized gains and/or losses in an investment’s fair value are recognized on a current basis in the statements of operations. Additionally, the Funds do not consolidate their majority-owned and controlled investments (the “Portfolio Companies”). In the preparation of these unaudited condensed consolidated financial statements, the Company has retained the specialized accounting for the Funds.

All of the investments held and notes issued by the Consolidated Funds are presented at their estimated fair values in the Company’s condensed consolidated balance sheets. Interest and other income of the Consolidated Funds as well as interest expense and other expenses of the Consolidated Funds are included in the Company’s unaudited condensed consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make assumptions and estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s estimates are based on historical experiences and other factors, including expectations of future events that management believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying the Company’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting impact on performance allocations involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements and the resulting impact on performance allocations and incentive fees. Actual results could differ from these estimates and such differences could be material.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date. Contingent consideration obligations that are elements of consideration transferred are recognized as of the acquisition date as part of the fair value transferred in exchange for the acquired business. Acquisition-related costs incurred in connection with a business combination are expensed as incurred.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those goods or services. ASC 606 includes a five-step framework that requires an entity to: (i) identify the contract(s) with a customer, which includes assessing the collectibility of the consideration to which it will be entitled in exchange for the goods or services transferred to the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The Company accounts for performance allocations that represent a performance-based capital allocation from fund limited partners to the Company (commonly known as “carried interest”, which comprises substantially all of the Company’s previously reported performance fee revenues) as earnings from financial assets within the scope of ASC 323, Investments - Equity Method and Joint Ventures, and therefore are not in the scope of ASC 606. In accordance with ASC 323, the Company records equity method income (losses) as a component of investment income based on the change in its proportionate claim on net assets of the investment fund, including performance allocations, assuming the investment fund was liquidated as of each reporting date pursuant to each fund’s governing agreements. See Note 4 for additional information on the components of investments and investment income. Performance fees that do not meet the definition of performance-based capital allocations are in the scope of ASC 606 and are included in incentive fees in the unaudited condensed consolidated statements of operations. The calculation of unrealized performance revenues utilizes investment valuations of the funds’ underlying investments, which are derived using the policies, methodologies and templates prepared by the Company’s valuation group, as described in Note 3, Fair Value Measurement.

While the determination of who is the customer in a contractual arrangement will be made on a contract-by-contract basis, the customer will generally be the investment fund for the Company’s significant management and advisory contracts. The customer determination impacts the Company’s analysis of the accounting for contract costs. Also, the recovery of certain costs incurred on behalf of Carlyle funds, primarily travel and entertainment costs, are presented gross in the unaudited condensed consolidated statements of operations, as the Company controls the inputs to its investment management performance obligation.

Fund Management Fees

The Company provides management services to funds in which it holds a general partner interest or has a management agreement. The Company considers the performance obligations in its contracts with its funds to be the promise to provide (or to arrange for third parties to provide) investment management services related to the management, policies and operations of the funds.

As it relates to the Company’s performance obligation to provide investment management services, the Company typically satisfies this performance obligation over time as the services are rendered, since the funds simultaneously receive and consume the benefits provided as the Company performs the service. The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised services to the funds. Management fees earned from each investment management contract over the contract life represent variable consideration because the consideration the Company is entitled to varies based on fluctuations in the basis for the management fee, for example fund net asset value (“NAV”) or ~~AUM.~~assets under management (“AUM”). Given that the management fee basis is susceptible to market factors outside of the Company’s influence, management fees are constrained and, therefore, estimates of future period management fees are generally not included in the transaction price. Revenue recognized for the investment management services provided is generally the amount determined at the end of the period because that is when the uncertainty for that period is resolved.

For closed-end carry funds in the ~~Corporate~~Global Private Equity ~~Real Assets~~ and Global Credit segments, management fees generally range from 1.0% to 2.0% of commitments during the fund’s investment period based on limited partners’ capital commitments to the funds. Following the expiration or termination of the investment period, management fees generally are based on the lower of cost or fair value of invested capital and the rate charged may also be reduced to between ~~0.6%~~0.5% and 2.0%. For certain separately managed accounts, longer-dated carry funds, and other closed-end funds, management fees generally range from 0.2% to 1.0% based on contributions for unrealized investments, the current value of the investment, or adjusted book value. The Company will receive management fees during a specified period of time, which is generally ten years from the initial closing date, or, in some instances, from the final closing date, but such termination date may be earlier in certain limited circumstances or later if extended for successive one-year periods, typically up to a maximum of two years. Depending upon the contracted terms of investment advisory or investment management and related agreements, these fees are generally called semi-annually in advance and are recognized as earned over the subsequent six month period. For certain longer-dated carry funds and certain other closed-end funds, management fees are called quarterly over the life of the funds.

Within the Global Credit segment, for CLOs and other structured products, management fees generally range from 0.4% to 0.5% based on the total par amounts of assets or the aggregate principal amount of the notes in the CLO and are due quarterly based on the terms and recognized over the respective period. Management fees for the CLOs and other structured products are governed by indentures and collateral management agreements and are subject to deferral under certain conditions. The Company deferred approximately $3.5 million and $7.0 million of subordinated management fees on its CLOs (after the effect of consolidated CLOs) during the three months and six months ended June 30, 2020, respectively.agreements. The Company will receive management fees for the CLOs until redemption of the securities issued by the CLOs, which is generally five to ten

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

years after issuance. Management fees for the business development companies are due quarterly in arrears at annual rates that range from 1.25% of invested capital to 1.5% of gross assets, excluding cash and cash equivalents.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Management fees for the Company’s ~~private equity and real estate~~ carry fund vehicles in the Investment Solutions segment generally range from 0.25% to 1.0% of the vehicle’s capital commitments during the commitment fee period of the relevant fund or the weighted-average investment period of the underlying funds. Following the expiration of the commitment fee period or weighted-average investment period of such funds, the management fees generally range from 0.25% to 1.0% on (i) the lower of cost or fair value of the capital invested, (ii) the net asset value for unrealized investments, or (iii) the contributions for unrealized investments; however, certain separately managed accounts earn management fees at all times on contributions for unrealized investments or on the initial commitment amount. Management fees for the Investment Solutions carry fund vehicles are generally due quarterly and recognized over the related quarter.

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, management fee receivables, net of allowances for credit losses, were ~~$105.6~~$124.7 million and ~~$88.8~~$102.7 million, respectively, and are included in due from affiliates and other receivables, net, in the unaudited condensed consolidated balance sheets.

The Company also provides transaction advisory and portfolio advisory services to the portfolio companies, and where covered by separate contractual agreements, recognizes fees for these services when the performance obligation has been satisfied and collection is reasonably assured. ~~Transaction fees~~The Company also ~~include~~recognizes underwriting fees from the Company’s loan syndication and capital markets business, Carlyle Global Capital ~~Solutions (“CCS”).~~Markets. Fund management fees include transaction and portfolio advisory fees, as well as capital markets fees, of ~~$17.2~~$14.4 million and ~~$14.2~~$17.2 million for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$21.6~~$32.4 million and ~~$23.1~~$21.6 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, net of any offsets as defined in the respective partnership agreements.

Fund management fees exclude the reimbursement of any partnership expenses paid by the Company on behalf of the Carlyle funds pursuant to the limited partnership agreements, including amounts related to the pursuit of actual, proposed, or unconsummated investments, professional fees, expenses associated with the acquisition, holding and disposition of investments, and other fund administrative expenses. For the professional fees that the Company arranges for the investment funds, the Company concluded that the nature of its promise is to arrange for the services to be provided and it does not control the services provided by third parties before they are transferred to the customer. Therefore, the Company concluded it is acting in the capacity of an agent. Accordingly, the reimbursement for these professional fees paid on behalf of the investment funds is presented on a net basis in general, administrative and other expenses in the unaudited condensed consolidated statements of operations.

The Company also incurs certain costs, primarily employee travel and entertainment costs, employee compensation and systems costs, for which it receives reimbursement from the investment funds in connection with its performance obligation to provide investment and management services. For reimbursable travel, compensation and systems costs, the Company concluded it controls the services provided by its employees and the resources used to develop applicable systems before they are transferred to the customer and therefore is a principal. Accordingly, the reimbursement for these costs incurred by the Company to manage the fund limited partnerships are presented on a gross basis in interest and other income in the unaudited condensed consolidated statements of operations and the expense in general, administrative and other expenses or cash-based compensation and benefits expenses in the unaudited condensed consolidated statements of operations.

Incentive Fees

In connection with management contracts from certain of its Global Credit funds, the Company is also entitled to receive performance-based incentive fees when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, incentive fees are recognized when the performance benchmark has been achieved. Incentive fees are variable consideration because they are contingent upon the investment vehicle achieving stipulated investment return hurdles. Investment returns are highly susceptible to market factors outside of the Company’s influence. Accordingly, incentive fees are constrained until the uncertainty is resolved. Estimates of future period incentive fees are generally not included in the transaction price because these estimates are constrained. The transaction price for incentive fees is generally the amount determined at the end of each accounting period to which they relate because that is when the uncertainty for that period is resolved, as these fees are not subject to clawback.

Investment Income (Loss), including Performance Allocations

Investment income (loss) represents the unrealized and realized gains and losses resulting from the Company’s equity method investments, including any associated general partner performance allocations, and other principal investments, including CLOs.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

General partner performance allocations consist of the allocation of profits from certain of the funds to which the Company is entitled (commonly known as carried interest).

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

For closed-end carry funds in the ~~Corporate~~Global Private Equity ~~Real Assets~~ and Global Credit segments, the Company is generally entitled to a 20% allocation (or 10% to 20% on certain longer-dated carry funds, certain credit funds, and external co-investment vehicles, up to 25% on certain ~~Corporate~~Global Private Equity funds in the event performance benchmarks are achieved, ~~and external co-investment vehicles,~~ or approximately 2% to ~~10%~~12.5% for most of the Investment Solutions segment carry fund vehicles) of the net realized income or gain as a carried interest after returning the invested capital, the allocation of preferred returns of generally 7% to 9% (or 4% to 7% for certain longer-dated carry funds) and return of certain fund costs (generally subject to catch-up provisions as set forth in the fund limited partnership agreement). Carried interest is recognized upon appreciation of the funds’ investment values above certain return hurdles set forth in each respective partnership agreement. The Company recognizes revenues attributable to performance allocations based upon the amount that would be due pursuant to the fund partnership agreement at each period end as if the funds were terminated at that date. Accordingly, the amount recognized as investment income for performance allocations reflects the Company’s share of the gains and losses of the associated funds’ underlying investments measured at their then-current fair values relative to the fair values as of the end of the prior period. Because of the inherent uncertainty, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is reasonably possible that the difference could be material.

Carried interest is ultimately realized when: (i) an underlying investment is profitably disposed of, (ii) certain costs borne by the limited partner investors have been reimbursed, (iii) the fund’s cumulative returns are in excess of the preferred return and (iv) the Company has decided to collect carry rather than return additional capital to limited partner investors. Realized carried interest may be required to be returned by the Company in future periods if the funds’ investment values decline below certain levels. When the fair value of a fund’s investments remains constant or falls below certain return hurdles, previously recognized performance allocations are reversed. In all cases, each fund is considered separately in this regard, and for a given fund, performance allocations can never be negative over the life of a fund. If upon a hypothetical liquidation of a fund’s investments at their then-current fair values, previously recognized and distributed carried interest would be required to be returned, a liability is established for the potential giveback obligation.

Principal investment income (loss) is realized when the Company redeems all or a portion of its investment or when the Company receives or is due cash income, such as dividends or distributions. Principal investment income (loss) also includes the Company’s allocation of earnings from its investment in Fortitude Re through June 2, 2020 (see Note 4). As it relates to the Company’s investments in NGP (see Note 4), principal investment income includes the related amortization of the basis difference between the Company’s carrying value of its investment and the Company’s share of underlying net assets of the investee, as well as the compensation expense associated with compensatory arrangements provided by the Company to employees of its equity method investee. Unrealized principal investment income (loss) results from the Company’s proportionate share of the investee’s unrealized earnings, including changes in the fair value of the underlying investment, as well as the reversal of unrealized gain (loss) at the time an investment is realized.

Interest Income

Interest income is recognized when earned. For debt securities representing non-investment grade beneficial interests in securitizations, the effective yield is determined based on the estimated cash flows of the security. Changes in the effective yield of these securities due to changes in estimated cash flows are recognized on a prospective basis as adjustments to interest income in future periods. Interest income earned by the Company is included in interest and other income in the accompanying unaudited condensed consolidated statements of operations. Interest income of the Consolidated Funds was ~~$53.1~~$56.6 million and ~~$43.7~~$53.1 million for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$104.2~~$113.5 million and ~~$94.7~~$104.2 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and is included in interest and other income of Consolidated Funds in the accompanying unaudited condensed consolidated statements of operations.

Credit Losses

~~In June 2016, the FASB issued~~Under ASU 2016-13,Financial Instruments-Credit Losses (Topic 326),~~, which was adopted by~~ the Company ~~on January 1, 2020. For more information regarding adoption, see “Recent Accounting Pronouncements Recently Issued Accounting Standards Adopted as of January 1, 2020” below.~~

~~Under ASU 2016-13, the Company is required to measure~~measures all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. As part of its adoption process, the Company assessed the collection risk characteristics of the outstanding amounts in its due from affiliates balance to define the following pools of receivables:

•Reimbursable fund expenses receivables,

•Management fee receivables,

•Incentive fee receivables,

•Transaction fee receivables,

•Portfolio fee receivables, and

•Notes receivable.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

~~Reimbursable fund expenses receivables,~~

~~Management fee receivables,~~

~~Incentive fee receivables,~~

~~Transaction fee receivables,~~

~~Portfolio fee receivables, and~~

~~Notes receivable.~~

The Company generally utilizes either historical credit loss information or discounted cash flows to calculate expected credit losses for each pool. ~~Historical credit loss data may be adjusted for current conditions and reasonable and supportable forecasts.~~ The Company’s receivables are predominantly with its investment funds, which have low risk of credit loss based on the Company’s historical experience. ~~Therefore~~Historical credit loss data may be adjusted for current conditions and reasonable and supportable forecasts, including the ~~adoption~~Company’s expectation of ~~ASU 2016-13 did not have a material impact to~~near-term realization based on the ~~accompanying unaudited condensed consolidated financial statements.~~liquidity of the affiliated investment funds.

Compensation and Benefits

Cash-based Compensation and Benefits – Cash-based compensation and benefits includes salaries, bonuses (discretionary awards and guaranteed amounts), performance payment arrangements and benefits paid and payable to Carlyle employees. Bonuses are accrued over the service period to which they relate.

Equity-Based Compensation – Compensation expense relating to the issuance of equity-based awards is measured at fair value on the grant date. The compensation expense for awards that vest over a future service period is recognized over the relevant service period on a straight-line basis. The compensation expense for awards that do not require future service is recognized immediately. Cash settled equity-based awards are classified as liabilities and are re-measured at the end of each reporting period. The compensation expense for awards that contain performance conditions is recognized when it is probable that the performance conditions will be achieved; in certain instances, such compensation expense may be recognized prior to the grant date of the award. The compensation expense for awards that contain market conditions is based on a grant-date fair value that factors in the probability that the market conditions will be achieved and is recognized over the requisite service period on a straight-line basis.

Equity-based awards issued to non-employees are generally recognized as general, administrative and other expenses, except to the extent they are recognized as part of the Company’s equity method earnings because they are issued to employees of equity method investees.

The Company recognizes equity-based award forfeitures in the period they occur as a reversal of previously recognized compensation expense. The reduction in compensation expense is determined based on the specific awards forfeited during that period. Furthermore, the Company recognizes all excess tax benefits and deficiencies as income tax benefit or expense in the unaudited condensed consolidated statements of operations.

Performance Allocations and Incentive Fee Related Compensation – A portion of the performance allocations and incentive fees earned is due to employees and advisors of the Company. These amounts are accounted for as compensation expense in conjunction with the recognition of the related performance allocations and incentive fee revenue and, until paid, are recognized as a component of the accrued compensation and benefits liability. Accordingly, upon a reversal of performance allocations or incentive fee revenue, the related compensation expense, if any, is also reversed. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company had recorded a liability of ~~$1.9~~$4.0 billion and ~~$2.0~~$2.5 billion, respectively, related to the portion of accrued performance allocations and incentive fees due to employees and advisors, respectively, which was included in accrued compensation and benefits in the accompanying unaudited condensed consolidated balance sheets.

Income Taxes

The Carlyle Group Inc. is a corporation for U.S. federal income tax purposes and thus is subject to U.S. federal, state and local corporate income taxes. Prior to the Conversion, The Carlyle Group L.P. was generally organized as a series of pass-through entities and therefore generally not subject to U.S. federal income taxes, with the exception of certain wholly-owned subsidiaries which were subject to federal, state, local and foreign corporate income taxes at the entity level. Tax positions taken by the Company are subject to periodic audit by U.S. federal, state, local and foreign taxing authorities. The interim provision for income taxes is calculated using the discrete effective tax rate method as allowed by ASC 740, Accounting for Income Taxes. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis.

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement reporting and the tax basis of assets and liabilities using enacted tax rates in effect for the period in which the difference is expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

period of the change in the provision for income taxes. Further, deferred tax assets are recognized for the expected realization of available net operating loss and tax credit carry forwards. A valuation allowance is recorded on the Company’s gross deferred tax assets when it is “more likely than not” that such asset will not be realized. When evaluating the realizability of the Company’s deferred tax assets, all evidence, both positive and negative, is evaluated. Items considered in this analysis include the ability to carry back losses, the reversal of temporary differences, tax planning strategies, and expectations of future

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

earnings. Lastly, the Company accounts for the tax on global intangible low-taxed income (“GILTI”) as incurred and therefore has not recorded deferred taxes related to GILTI on its foreign subsidiaries.

Under U.S. GAAP for income taxes, the amount of tax benefit to be recognized is the amount of benefit that is “more likely than not” to be sustained upon examination. The Company analyzes its tax filing positions in all of the U.S. federal, state, local and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established, which is included in accounts payable, accrued expenses and other liabilities in the unaudited condensed consolidated financial statements. The Company recognizes accrued interest and penalties related to unrecognized tax positions in the provision for income taxes. If recognized, the entire amount of unrecognized tax positions would be recorded as a reduction in the provision for income taxes.

~~Tax Receivable Agreement~~

In connection with the Company’s initial public offering, the Company entered into a tax receivable agreement with the limited partners of the Carlyle Holdings partnerships whereby certain subsidiaries of the Partnership agreed to pay to the limited partners of the Carlyle Holdings partnerships involved in any exchange transaction 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax realized as a result of increases in tax basis resulting from exchanges of Carlyle Holdings Partnership units for common units of The Carlyle Group L.P. From and after the consummation of the Conversion, holders of the Carlyle Holdings partnership units do not have any rights to payments under the tax receivable agreement except for payment obligations pre-existing at the time of the Conversion with respect to exchanges that occurred prior to the Conversion.

With respect to exchanges that occurred prior to the Conversion, the Company recorded an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange. All of the effects to the deferred tax asset of changes in any of the Company’s estimates after the tax year of the exchange will be reflected in the provision for income taxes. Similarly, the effect of subsequent changes in the enacted tax rates will be reflected in the provision for income taxes.

Non-controlling Interests

Non-controlling interests in consolidated entities represent the component of equity in consolidated entities held by third-party investors. These interests are adjusted for general partner allocations which occur during the reporting period. Any change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction between the controlling and non-controlling interests. Transaction costs incurred in connection with such changes in ownership of a subsidiary are recorded as a direct charge to equity.

Prior to the Conversion, the Company recorded non-controlling interests in Carlyle Holdings, which relates to the ownership interests of the other limited partners of the Carlyle Holdings partnerships. The Company, through wholly-owned subsidiaries, was the sole general partner of Carlyle Holdings. Accordingly, the Company consolidated the financial position and results of operations of Carlyle Holdings into its consolidated financial statements, and the other ownership interests in Carlyle Holdings were reflected as non-controlling interests in the Company’s unaudited condensed consolidated financial statements. Any change to the Company’s ownership interest in Carlyle Holdings was accounted for as a transaction within partners’ capital as a reallocation of ownership interests in Carlyle Holdings. As part of the Conversion, the limited partners of the Carlyle Holdings partnerships exchanged their Carlyle Holdings partnership units for an equivalent number shares of common stock of The Carlyle Group Inc., which was accounted for as a transaction within equity. As a result, the consolidated balance sheet and consolidated statement of operations of The Carlyle Group Inc. do not reflect any non-controlling interests in Carlyle Holdings following the Conversion.

Earnings Per Common Share

The Company computes earnings per common share in accordance with ASC 260, Earnings Per Share. Basic earnings per common share is calculated by dividing net income (loss) attributable to the common shares of the Company by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all dilutive securities. ~~Prior to the Conversion, we applied the “if-converted” method to Carlyle~~

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Holdings partnership units to determine the dilutive weighted-average common shares outstanding. Net income (loss) attributable to the common shares excludes net income (loss) and dividends attributable to any participating securities under the two-class method of ASC 260. Subsequent to the Conversion, the Company has a single class of stock and therefore, the “if-converted” method is no longer be applied in the computation of diluted earnings per share.

Investments

Investments include (i) the Company’s ownership interests (typically general partner interests) in the Funds, (ii) strategic investments made by the Company (both of which are accounted for as equity method investments), (iii) the investments held by the Consolidated Funds (which are presented at fair value in the Company’s unaudited condensed consolidated financial statements), and (iv) certain credit-oriented investments, including investments in the CLOs and the preferred securities of TCG BDC, Inc. (the “BDC Preferred Shares”) (which are accounted for as trading securities).

The valuation procedures utilized for investments of the Funds vary depending on the nature of the investment. The fair value of investments in publicly-traded securities is based on the closing price of the security with adjustments to reflect appropriate discounts if the securities are subject to restrictions.

The fair value of non-equity securities or other investments, which may include instruments that are not listed on an exchange, considers, among other factors, external pricing sources, such as dealer quotes or independent pricing services, recent trading activity or other information that, in the opinion of the Company, may not have been reflected in pricing obtained from external sources.

When valuing private securities or assets without readily determinable market prices, the Company gives consideration to operating results, financial condition, economic and/or market events, recent sales prices and other pertinent information. These valuation procedures may vary by investment, but include such techniques as comparable public market valuation, comparable acquisition valuation and discounted cash flow analysis. Because of the inherent uncertainty, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is reasonably possible that the difference could be material. Furthermore, there is no assurance that, upon liquidation, the Company will realize the values presented herein.

Upon the sale of a security or other investment, the realized net gain or loss is computed on a weighted average cost basis, with the exception of the investments held by the CLOs, which compute the realized net gain or loss on a first in, first out basis. Securities transactions are recorded on a trade date basis.

Principal Equity Method Investments

The Company accounts for all investments in which it has or is otherwise presumed to have significant influence, including investments in the unconsolidated Funds and strategic investments, using the equity method of accounting. The carrying value of equity method investments is determined based on amounts invested by the Company, adjusted for the equity

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

in earnings or losses of the investee (including performance allocations) allocated based on the respective partnership agreement, less distributions received. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

Cash and Cash Equivalents

Cash and cash equivalents include cash held at banks and cash held for distributions, including investments with original maturities of less than three months when purchased.

Cash and Cash Equivalents Held at Consolidated Funds

Cash and cash equivalents held at Consolidated Funds consists of cash and cash equivalents held by the Consolidated Funds, which, although not legally restricted, is not available to fund the general liquidity needs of the Company.

Restricted Cash

Restricted cash primarily represents cash held by the Company’s foreign subsidiaries due to certain government regulatory capital requirements as well as certain amounts held on behalf of Carlyle funds.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Derivative Instruments

The Company uses derivative instruments primarily to reduce its exposure to changes in foreign currency exchange rates. Derivative instruments are recognized at fair value in the unaudited condensed consolidated balance sheets with changes in fair value recognized in the unaudited condensed consolidated statements of operations for all derivatives not designated as hedging instruments.

Securities Sold Under Agreements to Repurchase

As it relates to certain European CLOs sponsored by the Company, securities sold under agreements to repurchase (“repurchase agreements”) are accounted for as collateralized financing transactions. The Company provides securities to counterparties to collateralize amounts borrowed under repurchase agreements on terms that permit the counterparties to repledge or resell the securities to others. As of June 30, ~~2020, $41.8~~2021, $152.4 million of securities were transferred to counterparties under repurchase agreements and are included within investments in the unaudited condensed consolidated balance sheets. Cash received under repurchase agreements is recognized as a liability within debt obligations in the unaudited condensed consolidated balance sheets. Interest expense is recognized on an effective yield basis and is included within interest expense in the unaudited condensed consolidated statements of operations. See Note 5 for additional information.

Fixed Assets

Fixed assets consist of furniture, fixtures and equipment, leasehold improvements, and computer hardware and software and are stated at cost, less accumulated depreciation and amortization. Depreciation is recognized on a straight-line method over the assets’ estimated useful lives, which for leasehold improvements are the lesser of the lease terms or the life of the asset, and three to seven years for other fixed assets. Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Leases

The Company accounts for its leases in accordance with ASU 2016-2, Leases (Topic 842), and recognizes a lease liability and right-of-use asset in the condensed consolidated balance sheet for contracts that it determines are leases or contain a lease. The Company’s leases primarily consist of operating leases for office space in various countries around the world. The Company also has operating leases for office equipment and vehicles, which are not significant. The Company does not separate non-lease components from lease components for its office space and equipment operating leases and instead accounts for each separate lease component and its associated non-lease component as a single lease component. Right-of-use assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the leases. The Company’s right-of-use assets and lease liabilities are recognized at lease commencement based on the present value of lease payments over the lease term. Lease right-of-use assets include initial direct costs incurred by the Company and are presented net of deferred rent and lease incentives. Absent an implicit interest rate in the lease, the Company uses its incremental borrowing rate, adjusted for the effects of collateralization, based on the information available at commencement in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise those

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

options. Lease expense for lease payments is recognized on a straight-line basis over the lease term. Lease right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

The Company does not recognize a lease liability or right-of-use asset on the balance sheet for short-term leases. Instead, the Company recognizes short-term lease payments as an expense on a straight-line basis over the lease term. A short-term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. When determining whether a lease qualifies as a short-term lease, the Company evaluates the lease term and the purchase option in the same manner as all other leases.

Intangible Assets and Goodwill

The Company’s intangible assets consist of acquired contractual rights to earn future fee income, including management and advisory fees, customer relationships, and acquired trademarks. Finite-lived intangible assets are amortized over their estimated useful lives, which range from four to ten years, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Intangible asset amortization expense was ~~$3.6~~$3.3 million and ~~$3.9~~$3.6 million during the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$7.2~~$6.6 million and ~~$7.7~~$7.2 million during the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and is included in general, administrative, and other expenses in the unaudited condensed consolidated statements of operations.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Goodwill represents the excess of cost over the identifiable net assets of businesses acquired and is recorded in the functional currency of the acquired entity. Goodwill is recognized as an asset and is reviewed for impairment annually as of October 1st and between annual tests when events and circumstances indicate that impairment may have occurred.

Deferred Revenue

Deferred revenue represents management fees and other revenue received prior to the balance sheet date, which has not yet been earned. The ~~decrease~~increase in the deferred revenue balance for the six months ended June 30, ~~2020~~2021 was primarily driven by ~~revenue recognized~~cash payments received in advance of the Company satisfying its performance obligations, partially offset by revenues that ~~was~~were included in the deferred revenue balance at the beginning of the period.

Accumulated Other Comprehensive Income (Loss)

The Company’s accumulated other comprehensive income (loss) is comprised of foreign currency translation adjustments and gains and losses on defined benefit plans sponsored by AlpInvest. The components of accumulated other comprehensive income (loss) as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were as follows:


								As of
	As of							June 30, 2021		December 31, 2020
	June 30, 2020			December 31, 2019				(Dollars in millions)
	(Dollars in millions)
Currency translation adjustments	$	(237.9	)	$	(85.1	)	Currency translation adjustments	$	(204.0)	$	(181.4)
Unrealized losses on defined benefit plans	(21.0		)	(6.6		)	Unrealized losses on defined benefit plans	(24.3)		(27.3)
Fortitude Re available-for-sale securities	—			6.5

Total	$	(258.9	)	$	(85.2	)	Total	$	(228.3)	$	(208.7)

Pursuant to the Conversion and the limited partners of the Carlyle Holdings partnerships exchange of all Carlyle Holdings partnership units for an equivalent number of shares of common stock of The Carlyle Group Inc., the accumulated other comprehensive loss previously attributable to non-controlling interests in Carlyle Holdings is included in the Company’s accumulated other comprehensive loss in the condensed consolidated balance sheet and condensed consolidated statements of changes in equity.

Foreign Currency Translation

Non-U.S. dollar denominated assets and liabilities are translated at period-end rates of exchange, and the unaudited condensed consolidated statements of operations are translated at rates of exchange in effect throughout the period. Foreign currency gains (losses) resulting from transactions outside of the functional currency of an entity of ~~$4.3~~$4.2 million and ~~$7.0~~$4.3 million for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$21.5~~$(1.9) million and ~~$(5.7)~~$21.5 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, are included in general, administrative and other expenses in the unaudited condensed consolidated statements of operations.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Recent Accounting Pronouncements

Recently Issued Accounting Standards Adopted as of January 1, ~~2020~~2021

In ~~August 2018,~~December 2019, the FASB issued ASU ~~2018-13,~~2019-12, ~~Fair Value Measurement~~Income Taxes (Topic ~~820) - Disclosure Framework - Changes to~~740): Simplifying the ~~Disclosure Requirements~~Accounting for ~~Fair Value Measurement~~Income Taxes. ASU ~~2018-13 eliminates, adds~~2019-12, among other changes, (i) removes certain exceptions to the general principles in Topic 740, (ii) provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and ~~modifies certain disclosure requirements for fair value measurements. This~~(iii) provides guidance ~~was adopted by the Company on January 1, 2020.~~

~~In January 2017, the FASB issued ASU 2017-4,~~ ~~Intangibles - Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. ASU 2017-04 simplifies an entity’s annual goodwill test for impairment by eliminating the requirement~~ to ~~calculate the implied fair value~~evaluate whether a step-up in tax basis of goodwill ~~and instead an entity should compare the fair value of~~relates to a ~~reporting unit with its carrying amount. The impairment charge will then be the amount by~~business combination in which ~~the carrying amount exceeds the reporting unit’s fair value. An entity would still have the option to perform~~book goodwill was recognized or a ~~qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary.~~separate transaction. The guidance was adopted by the Company on January 1, ~~2020 using a prospective transition method,~~2021 and the impact was not material.

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Accounting for Financial Instruments - Credit Losses (Topic 326)~~. ASU 2016-13 requires an organization to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Previously, GAAP required an “incurred

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

loss” methodology that delayed recognition until it was probable a loss had been incurred. Under the new standard, the allowance for credit losses must be deducted from the amortized cost of the financial asset to present the net amount expected to be collected. The income statement will reflect the measurement of credit losses for newly recognized financial assets as well as the expected increases or decreases of expected credit losses that have taken place during the period. The Company adopted this guidance using the modified retrospective transition method on January 1, 2020, and the impact was not material.

3. Fair Value Measurement

The fair value measurement accounting guidance establishes a hierarchical disclosure framework which ranks the observability of market price inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, will generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:

Level I – inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date. The types of financial instruments in this category include unrestricted securities, such as equities and derivatives, listed in active markets. The Company does not adjust the quoted price for these instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

Level II – inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. The types of financial instruments in this category include less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

Level III – inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. The types of financial instruments in this category include investments in privately-held entities, non-investment grade residual interests in securitizations, collateralized loan obligations, and certain over-the-counter derivatives where fair value is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement. The Company’s 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.

In certain cases, debt and equity securities are valued on the basis of prices from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices, market transactions in comparable investments and various relationships between investments.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis by the above fair value hierarchy levels as of June 30, ~~2020:~~2021:


(Dollars in millions)	Level I		Level II		Level III		Total		(Dollars in millions)	Level I		Level II		Level III		Total
Assets									Assets
Investments of Consolidated Funds:									Investments of Consolidated Funds:
Equity securities	$	—	$	—	$	108.8	$	108.8	Equity securities	$	0	$	0	$	18.3	$	18.3
Bonds	—		—		438.4		438.4		Bonds	0		0		542.0		542.0
Loans	—		—		4,034.0		4,034.0		Loans	0		0		5,543.6		5,543.6
	—		—		4,581.2		4,581.2
Investments in CLOs and other:

										0		0		6,103.9		6,103.9

Investments in CLOs and other	—		—		515.0		515.0		Investments in CLOs and other	1.4		45.5		431.5		478.4
Partnership and LLC interests ⁽¹⁾	—		—		15.5		15.5

	—		—		530.5		530.5
Foreign currency forward contracts	—		0.4		—		0.4		Foreign currency forward contracts	0		3.7		0		3.7

Subtotal									Subtotal	$	1.4	$	49.2	$	6,535.4	$	6,586.0
Investments measured at net asset value(1)									Investments measured at net asset value(1)							37.1
Total	$	—	$	0.4	$	5,111.7	$	5,112.1	Total							$	6,623.1
Liabilities									Liabilities
Loans payable of Consolidated Funds ⁽²⁾	$	—	$	—	$	4,412.0	$	4,412.0	Loans payable of Consolidated Funds(2)	$	0	$	0	$	5,373.9	$	5,373.9
Foreign currency forward contracts	—		3.1		—		3.1

Total	$	—	$	3.1	$	4,412.0	$	4,415.1	Total	$	0	$	0	$	5,373.9	$	5,373.9


~~(1)~~	~~Balance represents Fund Investments that the Company reports based on the most recent available information which typically has a lag of up to 90 days.~~


~~(2)~~	Senior and subordinated notes issued by CLO vehicles are valued based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

(1)Balance represents Fund Investments that the Company reports based on the most recent available information which typically has a lag of up to 90 days, of which $19.5 million relates to investments of consolidated funds.

(2)Senior and subordinated notes issued by CLO vehicles are valued based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis by the above fair value hierarchy levels as of December 31, ~~2019:~~2020:


(Dollars in millions)	Level I		Level II		Level III		Total		(Dollars in millions)	Level I		Level II		Level III		Total
Assets									Assets
Investments of Consolidated Funds:									Investments of Consolidated Funds:
Equity securities	$	—	$	—	$	19.4	$	19.4	Equity securities	$	0	$	0	$	9.4	$	9.4
Bonds	—		—		574.1		574.1		Bonds	0		0		550.4		550.4
Loans	—		—		4,413.8		4,413.8		Loans	0		0		5,497.1		5,497.1
	—		—		5,007.3		5,007.3

										0		0		6,056.9		6,056.9

Investments in CLOs and other	—		—		496.2		496.2		Investments in CLOs and other	0		0		570.8		570.8

Foreign currency forward contracts									Foreign currency forward contracts	0		0.7		0		0.7
Subtotal									Subtotal	$	0	$	0.7	$	6,627.7	$	6,628.4
Investments measured at net asset value(1)									Investments measured at net asset value(1)							16.4
Total									Total							$	6,644.8
Liabilities									Liabilities
Loans payable of Consolidated Funds(2)									Loans payable of Consolidated Funds(2)	$	0	$	0	$	5,563.0	$	5,563.0

Foreign currency forward contracts	—		0.1		—		0.1		Foreign currency forward contracts	0		0.4		0		0.4
Total	$	—	$	0.1	$	5,503.5	$	5,503.6	Total	$	0	$	0.4	$	5,563.0	$	5,563.4
Liabilities
Loans payable of Consolidated Funds⁽¹⁾	$	—	$	—	$	4,685.2	$	4,685.2
Foreign currency forward contracts	—		0.3		—		0.3
Total	$	—	$	0.3	$	4,685.2	$	4,685.5


~~(1)~~	Senior and subordinated notes issued by CLO vehicles are valued based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

(1)Balance represents Fund Investments that the Company reports based on the most recent available information which typically has a lag of up to 90 days.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Investment professionals with responsibility for the underlying investments are responsible for preparing the investment valuations pursuant to the policies, methodologies and templates prepared by the Company’s valuation group, which is a team

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

made up of dedicated valuation professionals reporting to the Company’s chief accounting officer. The valuation group is responsible for maintaining the Company’s valuation policy and related guidance, templates and systems that are designed to be consistent with the guidance found in ASC 820, Fair Value Measurement. These valuations, inputs and preliminary conclusions are reviewed by the fund accounting teams. The valuations are then reviewed and approved by the respective fund valuation subcommittees, which include the respective fund head(s), segment head, chief financial officer and chief accounting officer, as well as members of the valuation group. The valuation group compiles the aggregate results and significant matters and presents them for review and approval by the global valuation committee, which includes the Company’s ~~co-executive chairmen~~co-chairmen of the board, chairman emeritus, ~~co-chief~~chief executive ~~officers,~~officer, chief risk officer, chief financial officer, chief accounting officer, and the business segment heads, and observed by the chief compliance officer, the director of internal audit, the Company’s audit committee and others. Additionally, each quarter a sample of valuations is reviewed by external valuation firms. Valuations of the funds’ investments are used in the calculation of accrued performance allocations, or “carried interest”.

In the absence of observable market prices, the Company values its investments using valuation methodologies applied on a consistent basis. For some investments little market activity may exist. Management’s determination of fair value is then based on the best information available in the circumstances and may incorporate management’s own assumptions and involve a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks. Investments for which market prices are not observable include private investments in the equity of operating companies and real estate properties, and certain debt positions. The valuation technique for each of these investments is described below:

Private Equity and Real Estate Investments – The fair values of private equity investments are determined by reference to projected net earnings, earnings before interest, taxes, depreciation and amortization (“EBITDA”), the discounted cash flow method, public market or private transactions, valuations for comparable companies or sales of comparable assets, and other measures which, in many cases, are unaudited at the time received. The methods used to estimate the fair value of real estate investments include the discounted cash flow method and/or capitalization rate (“cap rate”) analysis. Valuations may be derived by reference to observable valuation measures for comparable companies or transactions (e.g., applying a key performance metric of the investment such as EBITDA or net operating income to a relevant valuation multiple or cap rate observed in the range of comparable companies or transactions), adjusted by management for differences between the investment and the referenced comparables, and in some instances by reference to option pricing models or other similar models. Adjustments to observable valuation measures are frequently made upon the initial investment to calibrate the initial investment valuation to industry observable inputs. Such adjustments are made to align the investment to observable industry inputs for differences in size, profitability, projected growth rates, geography and capital structure if applicable. The adjustments are reviewed with each subsequent valuation to assess how the investment has evolved relative to the observable inputs. Additionally, the investment may be subject to certain specific risks and/or development milestones which are also taken into account in the valuation assessment. Option pricing models and similar tools do not currently drive a significant portion of private equity or real estate valuations and are used primarily to value warrants, derivatives, certain restrictions and other atypical investment instruments.

Credit-Oriented Investments – The fair values of credit-oriented investments (including corporate treasury investments) are generally determined on the basis of prices between market participants provided by reputable dealers or pricing services. In determining the value of a particular investment, pricing services may use certain information with respect to transactions in such investments, quotations from dealers, pricing matrices, market transactions in comparable investments and various relationships between investments. Specifically, for investments in distressed debt and corporate loans and bonds, the fair values are generally determined by valuations of comparable investments. In some instances, the Company may utilize other valuation techniques, including the discounted cash flow method.

CLO Investments and CLO Loans Payable – The Company measures the financial liabilities of its consolidated CLOs based on the fair value of the financial assets of its consolidated CLOs, as the Company believes the fair value of the financial assets are more observable. The fair values of the CLO ~~loan and bond~~ assets are primarily based on quotations from reputable dealers or relevant pricing services. In situations where valuation quotations are unavailable, the assets are valued based on similar securities, market index changes, and other factors. ~~The Company performs certain procedures to ensure the reliability of the quotations from pricing services.~~ Generally, the ~~loan and bond~~ assets of the CLOs are not publicly traded and are classified as Level III. ~~The~~Similar to the CLO assets, the fair values of the CLO structured asset positions are primarily determined based on ~~both~~relevant pricing services or, in certain instances, discounted cash flow ~~analyses and third party quotes.~~analyses. Those analyses consider the position size, liquidity, current financial condition of the CLOs, the third party financing environment, reinvestment rates, recovery lags, discount rates and default forecasts and are compared to broker quotations from market makers and third party dealers. The Company performs certain procedures to ensure the

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

reliability of the quotations from pricing services for its CLO assets and CLO structured asset positions, which generally includes corroborating prices with a discounted cash flow analysis.

The Company measures the CLO loans payable held by third party beneficial interest holders on the basis of the fair value of the financial assets of the CLO and the beneficial interests held by the Company. The Company continues to measure the

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

CLO loans payable that it holds at fair value based on ~~both~~relevant pricing services or discounted cash flow analyses, ~~and third-party quotes,~~ as described above.

Fund Investments – The Company’s primary and secondary investments in external funds are valued based on its proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days. The terms of the investments generally preclude the ability to redeem the investment. Distributions from these investments will be received as the underlying assets in the funds are liquidated, the timing of which cannot be readily determined.

The changes in financial instruments measured at fair value for which the Company has used Level III inputs to determine fair value are as follows (Dollars in millions):


	Financial Assets
	Three Months Ended June 30, 2021
	Investments of Consolidated Funds
	Equity securities		Bonds		Loans		Investments in CLOs and other			Total
Balance, beginning of period	$	9.5	$	525.2	$	5,271.0	$	538.5		$	6,344.2
Deconsolidation/consolidation of funds (1)	2.4		0		(176.2)		26.1			(147.7)


Purchases	0.4		212.9		1,561.6		33.1			1,808.0
Sales and distributions	(1.7)		(205.8)		(741.8)		(170.0)			(1,119.3)
Settlements	0		0		(403.5)		0			(403.5)
Realized and unrealized gains (losses), net
Included in earnings	7.7		5.6		2.6		4.2			20.1
Included in other comprehensive income	0		4.1		29.9		(0.4)			33.6
Balance, end of period	$	18.3	$	542.0	$	5,543.6	$	431.5		$	6,535.4
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date	$	6.7	$	4.5	$	8.7	$	3.9		$	23.8
Changes in unrealized gains (losses) included in other comprehensive income related to financial assets still held at the reporting date	$	0	$	1.5	$	8.8	$	(0.4)		$	9.9

	Financial Assets
	Six Months Ended June 30, 2021
	Investments of Consolidated Funds
	Equity securities		Bonds		Loans		Investments in CLOs and other (2)		Total
Balance, beginning of period	$	9.4	$	550.4	$	5,497.1	$	570.8		$	6,627.7
Deconsolidation/consolidation of funds (1)	2.4		0		(176.2)		26.1			(147.7)


Purchases	0.5		363.9		2,316.9		62.1			2,743.4
Sales and distributions	(2.3)		(361.2)		(1,418.0)		(240.0)			(2,021.5)
Settlements	0		(3.6)		(641.8)		0			(645.4)
Realized and unrealized gains (losses), net
Included in earnings	8.6		10.0		89.8		9.6			118.0
Included in other comprehensive income	(0.3)		(17.5)		(124.2)		2.9			(139.1)
Balance, end of period	$	18.3	$	542.0	$	5,543.6	$	431.5		$	6,535.4
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date	$	21.7	$	7.0	$	72.7	$	9.0		$	110.4
Changes in unrealized gains (losses) included in other comprehensive income related to financial assets still held at the reporting date	$	(0.5)	$	(13.0)	$	(119.3)	$	2.9		$	(129.9)

Financial Assets
Three Months Ended June 30, 2020
Investments of Consolidated Funds
Equity
securities Bonds Loans Investments in CLOs and other Total
Balance, beginning of period $ 91.2
$ 423.9
$ 3,950.2
$ 396.4
$ 4,861.7
Purchases 8.1
90.3
140.5
105.6
344.5
Sales and distributions (0.2 ) (147.8 ) (522.8 ) (12.4 ) (683.2 )
Settlements —
—
(90.6 ) —
(90.6 )
Realized and unrealized gains (losses), net
Included in earnings 9.7
60.2
470.9
42.0
582.8
Included in other comprehensive income —
11.8
85.8
(1.1 ) 96.5
Balance, end of period $ 108.8
$ 438.4
$ 4,034.0
$ 530.5
$ 5,111.7
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date $ 9.2
$ 1.3
$ 1.2
$ 42.0
$ 53.7
Changes in unrealized gains (losses) included in other comprehensive income related to financial assets still held at the reporting date $ —
$ 8.9
$ 71.9
$ (1.1 ) $ 79.7

Financial Assets
Six Months Ended June 30, 2020
Investments of Consolidated Funds
Equity
securities Bonds Loans Investments in CLOs and other Total
Balance, beginning of period $ 19.4
$ 574.1
$ 4,413.8
$ 496.2
$ 5,503.5
Purchases 87.4
140.9
818.1
123.7
1,170.1
Sales and distributions (0.2 ) (214.9 ) (679.7 ) (56.3 ) (951.1 )
Settlements —
—
(193.8 ) —
(193.8 )
Realized and unrealized gains (losses), net
Included in earnings 2.2
(61.0 ) (330.1 ) (19.4 ) (408.3 )
Included in other comprehensive income —
(0.7 ) 5.7
(13.7 ) (8.7 )
Balance, end of period $ 108.8
$ 438.4
$ 4,034.0
$ 530.5
$ 5,111.7
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date $ 2.2
$ (55.1 ) $ (308.9 ) $ (19.4 ) $ (381.2 )
Changes in unrealized gains (losses) included in other comprehensive income related to financial assets still held at the reporting date $ —
$ (2.1 ) $ (0.7 ) $ (13.7 ) $ (16.5 )

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Financial Assets
Three Months Ended June 30, 2019
Investments of Consolidated Funds
Equity
securities Bonds Loans Investments in CLOs and other Total
Balance, beginning of period $ —
$ 653.4
$ 3,377.6
$ 472.3
$ 4,503.3
Consolidation of funds⁽¹⁾
—
—
588.9
(4.4 ) 584.5
Purchases 1.8
74.8
440.2
4.4
521.2
Sales and distributions —
(109.8 ) (183.9 ) (4.6 ) (298.3 )
Settlements —
—
(140.3 ) —
(140.3 )
Realized and unrealized gains (losses), net
Included in earnings 0.8
5.7
0.3
13.8
20.6
Included in other comprehensive income —
7.9
42.2
(4.2 ) 45.9
Balance, end of period $ 2.6
$ 632.0
$ 4,125.0
$ 477.3
$ 5,236.9
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date $ 0.8
$ 3.1
$ (4.2 ) $ 13.8
$ 13.5

Financial Assets
Six Months Ended June 30, 2019
Investments of Consolidated Funds
Equity
securities Bonds Loans Investments in CLOs and other Total
Balance, beginning of period $ —
$ 690.1
$ 4,596.5
$ 446.4
$ 5,733.0
Deconsolidation/consolidation of funds⁽¹⁾
—
—
(294.8 ) (2.7 ) (297.5 )
Purchases 1.8
144.3
681.1
34.1
861.3
Sales and distributions —
(210.1 ) (552.1 ) (8.6 ) (770.8 )
Settlements —
—
(270.6 ) —
(270.6 )
Realized and unrealized gains (losses), net
Included in earnings 0.8
13.3
(5.5 ) 9.7
18.3
Included in other comprehensive income —
(5.6 ) (29.6 ) (1.6 ) (36.8 )
Balance, end of period $ 2.6
$ 632.0
$ 4,125.0
$ 477.3
$ 5,236.9
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date $ 0.8
$ 9.6
$ (16.7 ) $ 9.7
$ 3.4

(1) As a result of the consolidation of 1 CLO during the three and six months ended June 30, ~~2019,~~2021, the investment that the Company held in that CLO is now eliminated in consolidation and no longer included in investments in CLOs and other. As a result of the deconsolidation of ~~2 CLOs~~1 CLO during the three and six months ended June 30, ~~2019,~~2021, the investments that the Company held in those CLOs are no longer eliminated in consolidation and are now included in investments in CLOs and other.

(2) The beginning balance of Investments in CLOs and other has been revised to reflect the exclusion of Fund Investments measured at fair value using the NAV per share practical expedient from the fair value hierarchy.


	Financial Assets
	Three Months Ended June 30, 2020
	Investments of Consolidated Funds
	Equity securities		Bonds		Loans		Investments in CLOs and other		Total
Balance, beginning of period	$	91.2	$	423.9	$	3,950.2	$	396.4	$	4,861.7



Purchases	8.1		90.3		140.5		105.6		344.5
Sales and distributions	(0.2)		(147.8)		(522.8)		(12.4)		(683.2)
Settlements	0		0		(90.6)		0		(90.6)
Realized and unrealized gains (losses), net
Included in earnings	9.7		60.2		470.9		42.0		582.8
Included in other comprehensive income	0		11.8		85.8		(1.1)		96.5
Balance, end of period	$	108.8	$	438.4	$	4,034.0	$	530.5	$	5,111.7
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date	$	9.2	$	1.3	$	1.2	$	42.0	$	53.7
Changes in unrealized gains (losses) included in other comprehensive income related to financial assets still held at the reporting date	$	0	$	8.9	$	71.9	$	(1.1)	$	79.7

	Financial Assets
	Six Months Ended June 30, 2020
	Investments of Consolidated Funds
	Equity securities		Bonds		Loans		Investments in CLOs and other		Total
Balance, beginning of period	$	19.4	$	574.1	$	4,413.8	$	496.2	$	5,503.5



Purchases	87.4		140.9		818.1		123.7		1,170.1
Sales and distributions	(0.2)		(214.9)		(679.7)		(56.3)		(951.1)
Settlements	0		0		(193.8)		0		(193.8)
Realized and unrealized gains (losses), net
Included in earnings	2.2		(61.0)		(330.1)		(19.4)		(408.3)
Included in other comprehensive income	0		(0.7)		5.7		(13.7)		(8.7)
Balance, end of period	$	108.8	$	438.4	$	4,034.0	$	530.5	$	5,111.7
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date	$	2.2	$	(55.1)	$	(308.9)	$	(19.4)	$	(381.2)
Changes in unrealized gains (losses) included in other comprehensive income related to financial assets still held at the reporting date	$	0	$	(2.1)	$	(0.7)	$	(13.7)	$	(16.5)

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Financial Liabilities
Loans Payable of Consolidated Funds
Three Months Ended June 30,
2020 2019
Balance, beginning of period $ 4,090.8
$ 3,750.0
Consolidation of funds —
584.7
Borrowings 103.3
118.1
Paydowns (361.7 ) (1.3 )
Realized and unrealized (gains) losses, net
Included in earnings 489.0
19.9
Included in other comprehensive income 90.6
34.9
Balance, end of period $ 4,412.0
$ 4,506.3
Changes in unrealized (gains) losses included in earnings related to financial liabilities still held at the reporting date $ (4.8 ) $ 7.8
Changes in unrealized (gains) losses included in other comprehensive income related to financial liabilities still held at the reporting date $ 84.6
$ —

Financial Liabilities
Loans Payable of Consolidated Funds
Six Months Ended June 30,
2020 2019
Balance, beginning of period $ 4,685.2
$ 4,840.1
Deconsolidation/consolidation of funds —
(285.9 )
Borrowings 1,141.7
260.5
Paydowns (1,090.7 ) (300.8 )
Realized and unrealized (gains) losses, net
Included in earnings (327.6 ) 35.1
Included in other comprehensive income 3.4
(42.7 )
Balance, end of period $ 4,412.0
$ 4,506.3
Changes in unrealized (gains) losses included in earnings related to financial liabilities still held at the reporting date $ (371.5 ) $ 1.2
Changes in unrealized (gains) losses included in other comprehensive income related to financial liabilities still held at the reporting date $ 5.0
$ —


	Financial Liabilities
	Loans Payable of Consolidated Funds
	Three Months Ended June 30,
	2021		2020
Balance, beginning of period	$	5,440.7	$	4,090.8
Deconsolidation of funds	(119.2)		0
Borrowings	728.2		103.3
Paydowns	(446.6)		(361.7)
Sales	(277.7)		0
Realized and unrealized (gains) losses, net
Included in earnings	16.1		489.0
Included in other comprehensive income	32.4		90.6
Balance, end of period	$	5,373.9	$	4,412.0
Changes in unrealized (gains) losses included in earnings related to financial liabilities still held at the reporting date	$	26.6	$	(4.8)
Changes in unrealized (gains) losses included in other comprehensive income related to financial liabilities still held at the reporting date	$	18.1	$	84.6

	Financial Liabilities
	Loans Payable of Consolidated Funds
	Six Months Ended June 30,
	2021		2020
Balance, beginning of period	$	5,563.0	$	4,685.2
Deconsolidation of funds	(119.2)		0
Borrowings	833.6		1,141.7
Paydowns	(591.0)		(1,090.7)
Sales	(277.7)		0
Realized and unrealized (gains) losses, net
Included in earnings	93.1		(327.6)
Included in other comprehensive income	(127.9)		3.4
Balance, end of period	$	5,373.9	$	4,412.0
Changes in unrealized (gains) losses included in earnings related to financial liabilities still held at the reporting date	$	106.8	$	(371.5)
Changes in unrealized (gains) losses included in other comprehensive income related to financial liabilities still held at the reporting date	$	(142.3)	$	5.0

Realized and unrealized gains and losses included in earnings for Level III investments for investments in CLOs and other investments are included in investment income (loss), and such gains and losses for investments of Consolidated Funds and loans payable of Consolidated Funds are included in net investment gains (losses) of Consolidated Funds in the unaudited condensed consolidated statements of operations.

Gains and losses included in other comprehensive income for all Level III financial asset and liabilities are included in accumulated other comprehensive loss, non-controlling interests in consolidated ~~entities and, prior to the Conversion, non-controlling interests in Carlyle Holdings in the unaudited condensed consolidated balance sheets.~~entities.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table summarizes quantitative information about the Company’s Level III inputs as of June 30, ~~2020:~~2021:

Fair Value at Valuation Technique(s) Unobservable Input(s) Range
(Weighted Average)
(Dollars in millions) June 30, 2020
Assets
Investments of Consolidated Funds:
Equity securities $ 1.0
Consensus Pricing Indicative Quotes ($ per share) 0.00 - 0.22 (0.03)
107.8
Discounted Cash Flow Discount Rates 8% - 8% (8%)

Bonds 438.4
Consensus Pricing Indicative Quotes (% of Par) 0 - 104 (85)
Loans 4,034.0
Consensus Pricing Indicative Quotes (% of Par) 18 - 99 (90)
4,581.2

Investments in CLOs and other:
Senior secured notes 404.8
Discounted Cash Flow with Consensus Pricing Discount Margins (Basis Points) 120 - 2,170 (275)
Default Rates 0% - 3% (3%)
Recovery Rates 40% - 60% (50%)
Indicative Quotes (% of Par) 36 - 100 (95)
Subordinated notes and preferred shares 33.3
Discounted Cash Flow with Consensus Pricing Discount Rates 10% - 25% (18%)
Default Rates 0% - 3% (3%)
Recovery Rates 40% - 60% (50%)
Indicative Quotes (% of Par) 30 - 46 (37)
Partnership and LLC interests 15.5

NAV of Underlying Fund ⁽¹⁾
N/A N/A
BDC preferred shares 52.9
Discounted Cash Flow Discount Rates 9% - 9% (9%)
Aviation subordinated notes 7.6
Discounted Cash Flow Discount Rates 22% - 22% (22%)
Loans 16.4
Consensus Pricing Indicative Quotes (% of Par) 95 - 99 (98)
Total $ 5,111.7

Liabilities
Loans payable of Consolidated Funds:
Senior secured notes $ 4,300.7

Other ⁽²⁾
N/A N/A
Subordinated notes and preferred shares 111.3
Discounted Cash Flow with Consensus Pricing Discount Rates 10% - 25% (17%)
Default Rates 0% - 3% (3%)
Recovery Rates 40% - 60% (50%)
Indicative Quotes (% of Par) 20 - 67 (39)
Total $ 4,412.0


~~(1)~~	~~Represents the Company’s investments~~Fair Value at		Valuation Technique(s)	Unobservable Input(s)	Range (Weighted Average)
(Dollars in ~~funds that are valued using the NAV~~millions)	June 30, 2021
Assets
Investments of ~~the underlying fund.~~Consolidated Funds:
Equity securities	$	18.3	Consensus Pricing	Indicative Quotes ($ per share)	0.00 - 75.00 (1.22)

Bonds	542.0		Consensus Pricing	Indicative Quotes (% of Par)	86 - 110 (100)
Loans	5,531.6		Consensus Pricing	Indicative Quotes (% of Par)	37 - 126 (98)
	12.0		Consensus Pricing with Discounted Cash Flow	Indicative Quotes (% of Par)	98 - 99 (98)
				Discount Rates	8% - 8% (8%)



	6,103.9
Investments in CLOs and other:
Senior secured notes	286.1		Consensus Pricing with Discounted Cash Flow	Indicative Quotes (% of Par)	84 - 101 (99)
				Discount Margins (Basis Points)	50 - 1,380 (247)
				Default Rates	1% - 2% (1%)
				Recovery Rates	50% - 70% (60%)
Subordinated notes and preferred shares	67.0		Consensus Pricing with Discounted Cash Flow	Indicative Quotes (% of Par)	28 - 94 (52)
				Discount Rates	10% - 25% (17%)
				Default Rates	1% - 2% (1%)
				Recovery Rates	50% - 70% (60%)

BDC preferred shares	71.7		Discounted Cash Flow	Discount Rates	6% - 6% (6%)
Aviation subordinated notes	6.7		Discounted Cash Flow	Discount Rates	18% - 18% (18%)

Total	$	6,535.4
Liabilities
Loans payable of Consolidated Funds:
Senior secured notes	$	5,179.3	Other (1)	N/A	N/A

Subordinated notes and preferred shares	194.6		Consensus Pricing with Discounted Cash Flow	Indicative Quotes (% of Par)	42 - 78 (56)
				Discount Rates	15% - 25% (18%)
				Default Rates	1% - 2% (1%)
				Recovery Rates	50% - 70% (60%)




Total	$	5,373.9

~~(2)~~

(1) Senior and subordinated notes issued by CLO vehicles are classified based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following table summarizes quantitative information about the Company’s Level III inputs as of December 31, ~~2019:~~2020:

Fair Value at Valuation Technique(s) Unobservable Input(s) Range
(Weighted Average)
(Dollars in millions) December 31, 2019
Assets
Investments of Consolidated Funds:
Equity securities $ 1.6
Consensus Pricing Indicative Quotes ($ per share) 0.01 - 25.18 (0.04)
17.8
Discounted Cash Flow Discount Rates 8% - 8% (8%)

Bonds 574.1
Consensus Pricing Indicative Quotes (% of Par) 0 - 108 (98)
Loans 4,413.8
Consensus Pricing Indicative Quotes (% of Par) 38 - 101 (97)
5,007.3

Investments in CLOs and other
Senior secured notes 399.4
Discounted Cash Flow with Consensus Pricing Discount Margins (Basis Points) 50 - 1,450 (210)
Default Rates 1% - 4% (2%)
Recovery Rates 45% - 75% (58%)
Indicative Quotes (% of Par) 75 - 100 (98)
Subordinated notes and preferred shares 55.1
Discounted Cash Flow with Consensus Pricing Discount Rate 10% - 15% (12%)
Default Rates 1% - 4% (2%)
Recovery Rates 45% - 75% (57%)
Indicative Quotes (% of Par) 33 - 89 (57)
Aviation subordinated notes 4.3
Discounted Cash Flow Discount Rates 15% - 15% (15%)
Loans 37.4
Consensus Pricing Indicative Quotes (% of Par) 99 - 100 (99)
Total $ 5,503.5

Liabilities
Loans payable of Consolidated Funds:
Senior secured notes $ 4,446.4

Other ⁽¹⁾
N/A N/A
Subordinated notes and preferred shares 238.8
Discounted Cash Flow with Consensus Pricing Discount Rates 10% - 15% (13%)
Default Rates 1% - 4% (3%)
Recovery Rates 45% - 75% (61%)
Indicative Quotes (% of Par) 40 - 82 (62)
Total $ 4,685.2

~~(1)~~

Fair Value at

Valuation Technique(s)

Unobservable Input(s)

Range
(Weighted Average)

(Dollars in millions)

December 31, 2020

Assets

Investments of Consolidated Funds:

Equity securities

9.4

Consensus Pricing

Indicative Quotes ($ per share)

0.00 - 40.00 (0.57)

Bonds

550.4

Consensus Pricing

Indicative Quotes (% of Par)

85 - 108 (98)

Loans

5,497.1

Consensus Pricing

Indicative Quotes (% of Par)

15 - 108 (97)

6,056.9

Investments in CLOs and other

Senior secured notes

437.0

Discounted Cash Flow with Consensus Pricing

Discount Margins (Basis Points)

85 - 1,725 (227)

Default Rates

1% - 2% (1%)

Recovery Rates

50% - 70% (60%)

Indicative Quotes (% of Par)

71 - 100 (98)

Subordinated notes and preferred shares

52.5

Discounted Cash Flow with Consensus Pricing

Discount Rate

16% - 30% (23%)

Default Rates

1% - 2% (1%)

Recovery Rates

50% - 70% (60%)

Indicative Quotes (% of Par)

31 - 90 (46)

BDC preferred shares

60.0

Discounted Cash Flow

Discount Rates

7% - 7% (7%)

Aviation subordinated notes ~~issued by CLO vehicles are classified based on the more observable fair value~~

7.2

Discounted Cash Flow

Discount Rates

20% - 20% (20%)

Loans

14.1

Consensus Pricing

Indicative Quotes (% of ~~the CLO financial assets, less (i) the fair value~~Par)

98 - 100 (100)

Total

6,627.7

Liabilities

Loans payable of ~~any beneficial interests held by the Company~~Consolidated Funds:

Senior secured notes

5,358.9

Other (1)

N/A

Subordinated notes and ~~(ii) the carrying value~~preferred shares

204.1

Discounted Cash Flow with Consensus Pricing

Discount Rates

16% - 30% (22%)

Default Rates

1% - 2% (1%)

Recovery Rates

50% - 70% (60%)

Indicative Quotes (% of ~~any beneficial interests that represent compensation for services.~~Par)

30 - 91 (50)

Total

5,563.0

The significant unobservable inputs used in the fair value measurement of investments of the Company’s consolidated funds are indicative quotes. Significant decreases in indicative quotes in isolation would result in a significantly lower fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s investments in CLOs and other investments include indicative quotes, discount margins, discount rates, default rates, and recovery ~~rates and indicative quotes.~~rates. Significant decreases in indicative quotes or recovery rates ~~or indicative quotes~~ in isolation would result in a significantly lower fair value measurement. Significant increases in discount margins, discount rates or default rates in isolation would result in a significantly lower fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s loans payable of Consolidated Funds are indicative quotes, discount rates, default rates, and recovery ~~rates and indicative quotes.~~rates. Significant increases in discount rates or default rates in isolation would result in a significantly lower fair value measurement. Significant decreases in indicative quotes or recovery rates ~~or indicative quotes~~ in isolation would result in a significantly lower fair value measurement.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

4. Investments

Investments consist of the following:


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Accrued performance allocations	$	8,145.9	$	4,968.6
Principal equity method investments, excluding performance allocations	1,979.2		1,810.8
Principal investments in CLOs and other	517.2		601.5
Total	$	10,642.3	$	7,380.9

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Accrued performance allocations $ 3,792.2
$ 3,855.6
Principal equity method investments, excluding performance allocations 1,640.3
2,443.6
Principal investments in CLOs and other 543.5
505.2
Total $ 5,976.0
$ 6,804.4

Accrued Performance Allocations

The components of accrued performance allocations are as follows:

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Corporate Private Equity $ 2,578.9
$ 2,107.5
Real Assets 504.7
764.4
Global Credit 70.0
136.9
Investment Solutions ⁽¹⁾
638.6
846.8
Total $ 3,792.2
$ 3,855.6


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Global Private Equity	$	6,679.7	$	3,926.1

Global Credit	231.9		132.3
Investment Solutions (1)	1,234.3		910.2
Total	$	8,145.9	$	4,968.6

(1) The Company’s primary and secondary investments in external funds are generally valued based on its proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days. As a result, amounts presented may not include the impact of economic activity in the current quarter.

Approximately ~~41%~~35% and ~~26%~~41% of accrued performance allocations at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively, are related to Carlyle Partners VI, L.P., ~~one~~1 of the Company’s ~~Corporate~~Global Private Equity funds.

Accrued performance allocations are shown gross of the Company’s accrued performance allocations and incentive fee-related compensation (see Note 6), and accrued giveback obligations, which are separately presented in the unaudited condensed consolidated balance sheets. The components of the accrued giveback obligations are as follows:


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Global Private Equity	$	(18.4)	$	(18.4)

Global Credit	(2.6)		(0.3)
Total	$	(21.0)	$	(18.7)

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Corporate Private Equity $ (6.1 ) $ (5.0 )
Real Assets (16.9 ) (17.2 )
Total $ (23.0 ) $ (22.2 )

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Principal Equity Method Investments, Excluding Performance Allocations

The Company’s principal equity method investments (excluding performance allocations) include its fund investments in ~~Corporate~~Global Private Equity, ~~Real Assets,~~ Global Credit, and Investment Solutions typically as general partner interests, and its strategic investments in Fortitude Re (included within Global Credit) and NGP (included within ~~Real Assets)~~Global Private Equity), which are not consolidated. Principal investments are related to the following segments:

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Corporate Private Equity $ 408.8
$ 420.1
Real Assets 580.0
601.7
Global Credit 611.1
1,299.6
Investment Solutions 40.4
122.2
Total $ 1,640.3
$ 2,443.6


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Global Private Equity	$	1,219.2	$	1,082.1

Global Credit	695.8		671.9
Investment Solutions	64.2		56.8
Total	$	1,979.2	$	1,810.8

Strategic Investment in Fortitude Re (f/k/a DSA Re)

On November 13, 2018, the Company acquired a 19.9% interest in Fortitude Group Holdings, LLC (“Fortitude Holdings”), a wholly owned subsidiary of American International Group, Inc. (“AIG”) (“the Minority Transaction”), pursuant to a Membership Interest Purchase Agreement by and among the Company, AIG and Fortitude Holdings, dated as of July 31, 2018 (the “2018 MIPA”). Fortitude Holdings owns 100% of the outstanding common shares of Fortitude Reinsurance Company Ltd., a Bermuda domiciled reinsurer (“Fortitude Re”, f/k/a “DSA Re”) established to reinsure a portfolio of AIG’s legacy life, annuity and property and casualty liabilities.

The Company paid $381 million in cash at closing of the Minority Transaction (the “Initial Purchase Price”) and expects to pay up to $95 million in additional deferred consideration following December 31, 2023. In May 2020, the Initial Purchase Price was adjusted upward by $99.5 million in accordance with the 2018 MIPA as Fortitude Holdings chose not to distribute a planned non-pro rata dividend to AIG prior to May 13, 2020. The Company paid $79.6 million of such adjustment in May 2020 and will pay the remaining $19.9 million following December 31, 2023.

On June 2, 2020, Carlyle FRL, L.P. (“Carlyle FRL”), a Carlyle-affiliated investment fund, acquired a 51.6% ownership interest in Fortitude Holdings from AIG (the “Control Transaction”) and T&D United Capital Co., Ltd. (“T&D”), a subsidiary of T&D Holdings, Inc., purchased a 25.0% ownership interest as a strategic third-party investor pursuant to a Membership Interest Purchase Agreement by and among the Company, AIG, Carlyle FRL, and T&D, dated as of November 25, 2019 (the “2019 MIPA”). At closing, the Company contributed its existing 19.9% interest in Fortitude Holdings to Carlyle FRL, such that Carlyle FRL holds a 71.5% interest in Fortitude Holdings. Taken together, Carlyle FRL and T&D have 96.5% ownership of Fortitude Holdings. ~~Additionally,~~ AIG initially agreed to a post-closing purchase price adjustment ~~pursuant to which AIG will contribute to Fortitude Re an amount to cover~~in the event of certain adverse reserve developments in the Fortitude ~~Re’s~~Re property and casualty insurance ~~business, based on~~business. Effective June 30, 2021, Fortitude Re and AIG entered into an ~~agreed methodology, that occur on or prior~~agreement resulting in the termination of any obligations of AIG to ~~December 31, 2023, up~~Fortitude Re related to ~~$500 million.~~such adverse reserve development.

The Company has a strategic asset management relationship with Fortitude Holdings pursuant to which Fortitude Holdings committed to allocate assets in asset management strategies and vehicles of the Company and its affiliates. If Fortitude Holdings fails to allocate an agreed upon amount of assets to the Company’s asset management strategies and vehicles within 30 to 36 months of the closing of the Minority Transaction, the Company may be entitled to certain payments from Fortitude Holdings based on the commitment shortfall and assumed customary rates. As of June 30, 2021, Fortitude Holdings and AIG have committed approximately $4.9 billion of capital to-date to various Carlyle strategies.

Prior to the Control Transaction, the Company’s investment was accounted for under the equity method of accounting by recognizing its pro rata share of Fortitude Holdings’ U.S. GAAP earnings, which is included in principal investment income in the unaudited condensed consolidated statements of operations. These amounts are inclusive of unrealized gains (losses) related to the change in fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S. GAAP financial statements. Modified coinsurance is subject to the general accounting principles for hedging, specifically the guidance originally issued as Derivatives Implementation Group Issue No. B36: Embedded Derivatives: Modified Coinsurance Agreements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (“DIG B36”). As of ~~March 31, 2020 and~~ December 31, 2019, the Company’s investment

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

in Fortitude Holdings ~~is $1,077.9 million and~~was $1,200.9 million, ~~respectively,~~ which ~~reflects $539.1 million and~~reflected $628.2 million of cumulative unrealized gains related to the change in the fair value of embedded derivatives.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

At the time the Company contributed its existing 19.9% stake in Fortitude Holdings to Carlyle FRL, the Company’s investment became an ownership interest in the fund. Accordingly, the Company began accounting for its investment under the equity method based on its net asset value in Carlyle FRL, which is an investment company that accounts for its investment in Fortitude Holdings at fair value. The contribution of the Company’s 19.9% interest to Carlyle FRL resulted in a loss in principal investment income (loss) of $620.7 million in the three months ended June 30, 2020. ~~During the six months ended June 30, 2020, the Company recognized principal investment loss of $732.6 million.~~ As of June 30, ~~2020,~~2021, the Company’s investment in Carlyle FRL was ~~$513.6~~$613.3 million, relative to its cost of ~~$465.4~~$465.3 million.

~~Given~~ Following the contribution, the Company no longer records its pro rata share of the U.S. GAAP earnings of Fortitude Holdings. Refer to Note 4 in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 for summarized financial information of Fortitude Holdings for the three and six months ended June 30, 2020, given the significance of the results of Fortitude Holdings relative to the Company’s results prior to the contribution of its interest to Carlyle FRL, summarized financial information of Fortitude Holdings for the three and six months ended June 30, 2020 and 2019 is presented below. Following the contribution, the Company no longer records its pro rata share of the U.S. GAAP earnings of Fortitude Holdings and will not present this information prospectively.

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Revenues $ 445.0
$ 567.0
$ 674.0
$ 1,161.0
Expenses 1,866.0
448.0
2,325.0
888.0
Operating income (loss) (1,421.0 ) 119.0
(1,651.0 ) 273.0
Investment gains 49.0
196.0
138.0
164.0
Change in value of funds withheld embedded derivatives 2,635.0
1,407.0
2,068.0
2,928.0
Income tax expense 267.0
360.0
119.0
705.0
Net income $ 996.0
$ 1,362.0
$ 436.0
$ 2,660.0

FRL.

Strategic Investment in NGP

The Company has equity interests in NGP Management Company, L.L.C. (“NGP Management”), the general partners of certain carry funds advised by NGP, and principal investments in certain NGP funds. The Company accounts for its investments in NGP under the equity method of accounting, and includes these investments in the ~~Real Assets~~Global Private Equity segment. These interests entitle the Company to an allocation of income equal to 55.0% of the management fee-related revenues of NGP Management which serves as the investment advisor to certain NGP funds as well as 47.5% of the performance allocations received by certain current and future NGP fund general partners.

The Company’s investments in NGP as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 are as follows:


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Investment in NGP Management	$	373.8	$	373.5
Investments in NGP general partners - accrued performance allocations	1.1		0
Principal investments in NGP funds	60.5		51.4
Total investments in NGP	$	435.4	$	424.9

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Investment in NGP Management $ 378.2
$ 383.6
Principal investments in NGP funds 49.7
67.9
Total investments in NGP $ 427.9
$ 451.5

Investment in NGP Management. The Company’s equity interests in NGP Management entitle the Company to an allocation of income equal to 55.0% of the management fee-related revenues of NGP Management, which serves as the investment advisor to the NGP Energy Funds. Management fees are generally calculated as 1.0% to 2.0% of the limited partners’ commitments during the fund’s investment period, and ~~0.6%~~0.5% to 2.0% based on the lower of cost or fair market value of invested capital following the expiration or termination of the investment period. Management fee-related revenues from NGP Management are primarily driven by NGP XII, NGP XI and NGP X during the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

The Company records investment income (loss) for its equity income allocation from NGP management fee-related revenues and also records its share of any allocated expenses from NGP Management, expenses associated with the

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

compensatory elements of the strategic investment, and the amortization of the basis differences related to the definite-lived identifiable intangible assets of NGP Management. The net investment income (loss) recognized in the Company’s unaudited condensed consolidated statements of operations for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 were as follows:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Management fee-related revenues from NGP Management $ 19.4
$ 26.4
$ 38.2
$ 51.6
Expenses related to the investment in NGP Management (2.9 ) (2.7 ) (5.7 ) (5.2 )
Amortization of basis differences from the investment in NGP Management (1.0 ) (1.4 ) (2.1 ) (2.8 )
Net investment income from NGP Management $ 15.5
$ 22.3
$ 30.4
$ 43.6

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Management fee-related revenues from NGP Management	$	18.4	$	19.4	$	36.7	$	38.2
Expenses related to the investment in NGP Management	(2.3)		(2.9)		(5.2)		(5.7)
Amortization of basis differences from the investment in NGP Management	(0.7)		(1.0)		(1.4)		(2.1)
Net investment income from NGP Management	$	15.4	$	15.5	$	30.1	$	30.4

The difference between the Company’s remaining carrying value of its investment and its share of the underlying net assets of the investee was ~~$6.4~~$2.8 million and ~~$8.5~~$4.2 million as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively; these differences are amortized over a period of 10 years from the initial investment date. The Company assesses the remaining carrying value of its equity method investment for impairment whenever events or circumstances indicate that the carrying value may not be recoverable, and considers factors including, but not limited to, expected cash flows from its interest in future management fees and NGP’s ability to raise new funds.

Investment in the General Partners of NGP Carry Funds. The Company’s investment in the general partners of the NGP Carry Funds entitle it to 47.5% of the performance allocations received by certain current and future NGP fund general partners. The Company records its equity income allocation from NGP performance allocations in principal investment income (loss) from equity method investments rather than performance allocations in its unaudited condensed consolidated statements of operations. The Company recognized $1.1 million of net investment earnings related to these performance allocations for both the three and six months ended June 30, 2021. There were 0 net investment earnings (losses) related to these performance ~~allocations~~allocation for the three and six months ended June 30, 2020. ~~The Company recognized net investment earnings (losses) related to these performance allocations of $(34.6) million and $(29.9) million for the three and six months ended June 30, 2019, respectively.~~

Principal Investments in NGP Funds. The Company also holds principal investments in the NGP Carry Funds. The Company recognized net investment earnings (losses) of $5.7 million and $1.3 million for the three months ended June 30, 2021 and 2020, respectively, and $11.7 million and $(14.9) million for the six months ended June 30, 2021 and 2020, respectively, related to these investments and which are included in principal investment income in its unaudited condensed consolidated statements of operations of $1.3 million and $(4.0) million for the three months ended June 30, 2020 and 2019, respectively, and $(14.9) million and $(3.6) million for the six months ended June 30, 2020 and 2019, respectively.operations.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Principal Investments in CLOs and Other Investments

Principal investments in CLOs and other investments as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 were ~~$543.5~~$517.2 million and ~~$505.2~~$601.5 million, respectively, and primarily consisted of investments in CLO senior and subordinated notes. A portion of these investments is collateral to CLO term loans (see Note 5). As of June 30, 2021 and December 31, 2020, principal investments in CLOs and other investments also ~~includes~~included the Company’s investment in the ~~preferred securities~~BDC Preferred Shares at fair value of ~~TCG BDC, Inc. (“TCG BDC”), a Carlyle-affiliated business development company, of $52.9~~$71.7 million and $60.0 million, respectively (see Note 8).

Investment Income (Loss)

The components of investment income (loss) are as follows:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Performance allocations
Realized $ 155.1
$ 41.6
$ 328.9
$ 71.4
Unrealized 1,036.7
206.0
(74.7 ) 525.3
1,191.8
247.6
254.2
596.7
Principal investment income (loss) from equity method investments (excluding performance allocations)
Realized 47.8
95.2
78.4
126.5
Unrealized (593.4 ) 242.7
(805.1 ) 514.0
(545.6 ) 337.9
(726.7 ) 640.5
Principal investment income (loss) from investments in CLOs and other investments
Realized —
0.2
0.2
1.1
Unrealized 33.0
3.9
(39.4 ) 2.2
33.0
4.1
(39.2 ) 3.3
Total $ 679.2
$ 589.6
$ (511.7 ) $ 1,240.5


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Performance allocations
Realized	$	456.6	$	155.1	$	627.5	$	328.9
Unrealized	1,624.1		1,036.7		3,239.3		(74.7)
	2,080.7		1,191.8		3,866.8		254.2
Principal investment income (loss) from equity method investments (excluding performance allocations)
Realized	46.6		47.8		87.8		78.4
Unrealized	85.3		(593.4)		208.9		(805.1)
	131.9		(545.6)		296.7		(726.7)
Principal investment income (loss) from investments in CLOs and other investments
Realized	0.4		0		(0.5)		0.2
Unrealized	5.4		33.0		20.6		(39.4)
	5.8		33.0		20.1		(39.2)



Total	$	2,218.4	$	679.2	$	4,183.6	$	(511.7)

The performance allocations included in revenues are derived from the following segments:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Global Private Equity	$	1,798.2	$	1,198.7	$	3,364.7	$	389.4

Global Credit	76.2		22.7		97.2		(40.3)
Investment Solutions	206.3		(29.6)		404.9		(94.9)
Total	$	2,080.7	$	1,191.8	$	3,866.8	$	254.2

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Corporate Private Equity $ 1,165.5
$ 82.5
$ 560.6
$ 215.3
Real Assets 33.2
149.6
(171.2 ) 259.0
Global Credit 22.7
(5.5 ) (40.3 ) 24.1
Investment Solutions (29.6 ) 21.0
(94.9 ) 98.3
Total $ 1,191.8
$ 247.6
$ 254.2
$ 596.7

Approximately 36%, or $740.6 million, of performance allocations for the three months ended June 30, 2021 are related to the following funds along with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income):

•Carlyle Partners VI, L.P. (Global Private Equity segment) - $573.8 million, and

•Carlyle US Equity Opportunities Fund II, L.P. (Global Private Equity segment) - $222.0 million.

Approximately 40%, or $1,545.8 million, of performance allocations for the six months ended June 30, 2021 are related to the following funds along with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income):

•Carlyle Partners VI, L.P. (Global Private Equity segment) - $1,150.2 million, and

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

•Carlyle Europe Partners IV, L.P. (Global Private Equity segment) - $509.0 million.

Performance allocations for the three and six months ended June 30, 2020 are primarily related to Carlyle Partners VI, L.P. ~~(Corporate~~(Global Private Equity segment) with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income) of $1,184.1 million and $631.7 million ~~respectively,~~ for the three and six months ended June 30, ~~2020.~~2020, respectively.

In addition to Carlyle Partners VI, L.P., performance allocations of $(127.7) million for the six months ended June 30, 2020 are related to the following funds along with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income):

•Carlyle Asia Partners IV, L.P. ~~(Corporate~~(Global Private Equity segment) - $211.1 million,

•Carlyle Europe Technology Partners III, L.P. ~~(Corporate~~(Global Private Equity segment) - $39.8 million,

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

•Carlyle Asia Partners V, L.P. ~~(Corporate~~(Global Private Equity segment) - $13.6 million,

•AlpInvest Co- & Secondary Investments 2006-2008 (Investment Solutions segment) - $(30.2) million,

•Carlyle Europe Partners III, L.P. ~~(Corporate~~(Global Private Equity segment) - $(31.3) million,

•Carlyle US Equity Opportunities Fund, L.P. ~~(Corporate~~(Global Private Equity segment) - $(44.8) million,

•Carlyle Partners V, L.P. ~~(Corporate~~(Global Private Equity segment) - $(58.4) million, and

•Carlyle International Energy Partners I, L.P. ~~(Real Assets segment) - $(152.0) million.~~

Approximately 54%, or $133.3 million, of performance allocations for the three months ended June 30, 2019 are related to the following funds along with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income):

•~~Carlyle Realty Partners V, L.P. (Real Assets segment) - $104.9 million,~~

•~~Carlyle Asia Partners IV, L.P. (Corporate~~(Global Private Equity segment) - ~~$70.6 million,~~

•~~Carlyle Realty Partners VII, L.P. (Real Assets segment) - $33.4 million,~~

•~~AlpInvest Co- & Secondary Investments 2006-2008 (Investment Solutions segment) - $(25.2) million, and~~

•~~Carlyle Partners VI, L.P. (Corporate Private Equity segment) - $(16.2) million.~~

Approximately 28%, or $164.2 million, of performance allocations for the six months ended June 30, 2019 are related to the following fund along with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income):

•~~Carlyle Realty Partners V, L.P. (Real Assets segment) - $167.1~~$(152.0) million.

Carlyle’s income (loss) from its principal equity method investments consists of:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Global Private Equity	$	103.5	$	70.0	$	209.1	$	20.0

Global Credit	19.5		(613.2)		73.1		(743.8)
Investment Solutions	8.9		(2.4)		14.5		(2.9)
Total	$	131.9	$	(545.6)	$	296.7	$	(726.7)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Corporate Private Equity $ 45.2
$ 3.5
$ 7.5
$ 11.7
Real Assets 24.8
60.4
12.5
93.9
Global Credit (613.2 ) 269.0
(743.8 ) 525.9
Investment Solutions (2.4 ) 5.0
(2.9 ) 9.0
Total $ (545.6 ) $ 337.9
$ (726.7 ) $ 640.5

The principal investment income (loss) in Global Credit for the three and six months ended June 30, 2021 includes $13.4 million and $58.9 million, respectively, from the Company’s equity method investment in Fortitude Holdings. The principal investment income (loss) in Global Credit for the three and six months ended June 30, 2020 includes $(620.7) million and $(732.6) million, respectively, from ~~our equity method investment in Fortitude Holdings. The principal investment income (loss) in Global Credit for~~ the ~~three and six months ended June 30, 2019 includes $271.0 million and $527.3 million, respectively, from our~~Company’s equity method investment in Fortitude Holdings.

Investments of Consolidated Funds

The Company consolidates the financial positions and results of operations of certain CLOs in which it is the primary beneficiary. During the six months ended June 30, ~~2020,~~2021, the Company ~~formed~~consolidated 1 new CLO for which the Company is the primary beneficiary.

There were no individual investments with a fair value greater than 5 percent of the Company’s total assets for any period presented.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Interest and Other Income of Consolidated Funds

The components of interest and other income of Consolidated Funds are as follows:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Interest income from investments $ 53.1
$ 43.7
$ 104.2
$ 94.7
Other income 2.1
2.1
4.0
3.5
Total $ 55.2
$ 45.8
$ 108.2
$ 98.2


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Interest income from investments	$	56.6	$	53.1	$	113.5	$	104.2
Other income	5.5		2.1		9.7		4.0
Total	$	62.1	$	55.2	$	123.2	$	108.2

Net Investment Gains (Losses) of Consolidated Funds

Net investment gains (losses) of Consolidated Funds include net realized gains (losses) from sales of investments and unrealized gains (losses) resulting from changes in fair value of the Consolidated Funds’ investments. The components of net investment gains (losses) of Consolidated Funds are as follows:

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Gains (losses) from investments of Consolidated Funds $ 550.4
$ 17.1
$ (382.3 ) $ 18.2
Gains (losses) from liabilities of CLOs (500.1 ) (7.9 ) 319.5
(23.2 )
Total $ 50.3
$ 9.2
$ (62.8 ) $ (5.0 )


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Gains (losses) from investments of Consolidated Funds	$	13.5	$	550.4	$	102.8	$	(382.3)
Gains (losses) from liabilities of CLOs	(16.1)		(500.1)		(93.1)		319.5

Total	$	(2.6)	$	50.3	$	9.7	$	(62.8)

The following table presents realized and unrealized gains (losses) earned from investments of the Consolidated Funds:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Realized gains (losses)	$	12.5	$	(39.8)	$	17.2	$	(40.3)
Net change in unrealized gains (losses)	1.0		590.2		85.6		(342.0)
Total	$	13.5	$	550.4	$	102.8	$	(382.3)

5. Borrowings

The Company borrows and enters into credit agreements for its general operating and investment purposes. The Company’s debt obligations consist of the following:


	June 30, 2021				December 31, 2020
	Borrowing Outstanding		Carrying Value		Borrowing Outstanding		Carrying Value
	(Dollars in millions)


CLO Borrowings (See below)	$	210.0	$	205.6	$	356.1	$	353.6
3.875% Senior Notes Due 2/01/2023	250.0		249.6		250.0		249.5
5.625% Senior Notes Due 3/30/2043	600.0		600.6		600.0		600.7
5.650% Senior Notes Due 9/15/2048	350.0		346.1		350.0		346.0
3.500% Senior Notes Due 9/19/2029	425.0		421.4		425.0		421.1
4.625% Subordinated Notes Due 5/15/2061	500.0		484.2		0		0
Total debt obligations	$	2,335.0	$	2,307.5	$	1,981.1	$	1,970.9

June 30, 2020 December 31, 2019
Borrowing
Outstanding Carrying
Value Borrowing
Outstanding Carrying
Value
(Dollars in millions)
Global Credit Revolving Credit Facility $ 4.0
$ 4.0
$ 35.8
$ 35.8
CLO Borrowings(See below)
324.4
322.8
324.9
324.0
3.875% Senior Notes Due 2/01/2023 250.0
249.4
250.0
249.3
5.625% Senior Notes Due 3/30/2043 600.0
600.7
600.0
600.7
5.650% Senior Notes Due 9/15/2048 350.0
345.9
350.0
345.8
3.500% Senior Notes Due 9/19/2029 425.0
420.9
425.0
420.7
Total debt obligations $ 1,953.4
$ 1,943.7
$ 1,985.7
$ 1,976.3

~~Senior Credit Facility~~35

The Company has entered into a senior credit facility which was amended and restated on February 11, 2019 (the “amended and restated senior credit facility”). The amended and restated senior credit facility includes $775.0 million in a

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Senior Credit Facility

As of June 30, 2021, the senior credit facility included $775.0 million in a revolving credit facility. The revolving credit facility ~~which~~ is scheduled to mature on February 11, ~~2024. Principal~~2024, and principal amounts outstanding under the ~~amended and restated senior~~revolving credit facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus an applicable margin not to exceed 0.50% ~~per annum,~~, or (b) at LIBOR plus an applicable margin not to exceed 1.50% ~~per annum~~ (at June 30, ~~2020,~~2021, the interest rate was ~~1.41%~~1.35%). The Company ~~borrowed and repaid $250.0 million~~made 0 borrowings under the ~~revolving~~senior credit facility during ~~the six months ended June 30, 2020. There were 0 amounts outstanding at June 30, 2020. Interest expense under the revolving credit facility was not significant for~~ the three and six months ended June 30, ~~2020.~~2021 and there were 0 amounts outstanding at June 30, 2021.

Global Credit Revolving Credit Facility

On December 17, 2018, certain subsidiaries of the Company established a $250.0 million revolving line of credit, primarily intended to support certain lending activities within the Global Credit segment. The credit facility includes a $125.0 million line of credit with a one-year term, which was amended in December 2020 to extend its maturity to December 2021, and a $125.0 million line of credit with a three-year term. ~~The revolving line of credit was extended by one year in December 2019.~~ Principal amounts outstanding under the facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus an applicable margin not to exceed 1.00%, or (b) at the Eurocurrency rate plus an applicable margin, not to exceed 2.00%.

~~During~~ The Company made 0 borrowings under the credit facility during the three and six months ended June 30, ~~2020, the Company borrowed $12.8 million~~2021, and ~~$13.8 million, respectively, and repaid $9.8 million and $45.6 million, respectively, under the credit facility. As~~there were 0 amounts outstanding as of June 30, ~~2020, there was $4.0 million outstanding under this facility. Interest expense was not significant for the three and six months ended June 30, 2020.~~2021.

CLO Borrowings

For certain of the Company’s CLOs, the Company finances a portion of its investment in the CLOs through the proceeds received from term loans and other financing arrangements with financial institutions. The Company’s outstanding CLO borrowings consist of the following (Dollars in millions):


Formation Date	Borrowing Outstanding June 30, 2021		Borrowing Outstanding December 31, 2020		Maturity Date (1)	Interest Rate as of June 30, 2021

February 28, 2017	$	57.6	$	79.9	November 17, 2031	2.34%	(2)
April 19, 2017	0		22.7		April 22, 2031	N/A	(3) (14)
June 28, 2017	0		22.9		July 22, 2031	N/A	(4) (14)
August 2, 2017	0		22.7		July 23, 2029	N/A	(5) (14)
August 2, 2017	0		21.3		August 3, 2022	N/A	(6)
August 14, 2017	0		22.4		August 15, 2030	N/A	(7) (14)
November 30, 2017	0		22.7		January 16, 2030	N/A	(8)(14)(15)
December 6, 2017	0		19.0		October 16, 2030	N/A	(9)(14)(15)
December 7, 2017	0		20.8		January 19, 2029	N/A	(10)(14)(15)
January 30, 2018	0		19.2		January 23, 2030	N/A	(11)(14)(15)
March 1, 2018	0		15.2		January 16, 2031	N/A	(12)(14)(15)
March 15, 2019	1.9		22.6		March 15, 2032	8.11%	(13)
August 20, 2019	22.2		22.9		August 15, 2032	2.52%	(13)
September 15, 2020	21.1		21.8		April 15, 2033	1.59%	(13)
January 8, 2021	22.2		0		January 15, 2034	2.49%	(13)
March 9, 2021	21.1		0		August 15, 2030	1.37%	(13)
March 30, 2021	19.9		0		March 15, 2032	1.71%	(13)
April 21, 2021	3.8		0		April 15, 2033	5.85%	(13)
May 21, 2021	16.6		0		November 17, 2031	1.36%	(13)
June 4, 2021	22.2		0		January 16, 2034	2.28%	(13)
June 10, 2021	1.4		0		November 17, 2031	2.85%	(13)
	$	210.0	$	356.1

Formation Date Borrowing Outstanding
June 30, 2020 Borrowing Outstanding
December 31, 2019 Maturity Date (1) Interest Rate as of
June 30, 2020
February 28, 2017 $ 75.0
$ 75.3
November 17, 2031 2.33% (2)
April 19, 2017 22.9
22.9
April 22, 2031 3.07% (3) (14)
June 28, 2017 22.9
22.9
July 22, 2031 3.06% (4) (14)
August 2, 2017 22.7
22.8
July 23, 2029 2.94% (5) (14)
August 2, 2017 19.6
19.5
August 3, 2022 1.75% (6)
August 14, 2017 22.4
22.6
August 15, 2030 2.27% (7) (14)
November 30, 2017 22.7
22.7
January 16, 2030 2.95% (8)(14)(16)
December 6, 2017 19.1
19.1
October 16, 2030 2.87% (9)(14)(16)
December 7, 2017 20.8
20.8
January 19, 2029 2.50% (10)(14)(16)
January 30, 2018 19.2
19.2
January 22, 2030 2.76% (11)(14)(16)
March 1, 2018 15.3
15.3
January 15, 2031 2.77% (12)(14)(16)
March 15, 2019 20.8
20.8
March 15, 2032 2.63% (13)
August 20, 2019 21.0
21.0
August 15, 2032 2.52% (15)
$ 324.4
$ 324.9

(1) Maturity date is earlier of date indicated or the date that the CLO is dissolved.


~~(2)~~	~~Outstanding borrowing of €66.7 million; incurs interest at EURIBOR plus applicable margins as defined in the agreement.~~


~~(3)~~	~~Incurs interest at LIBOR plus 1.932%.~~


~~(4)~~	~~Incurs interest at LIBOR plus 1.923%.~~


~~(5)~~	~~Incurs interest at LIBOR plus 1.808%.~~


~~(6)~~	~~Original borrowing of €17.4 million; incurs interest at EURIBOR plus 1.75% and has full recourse to the Company.~~


~~(7)~~	~~Incurs interest at LIBOR plus 1.848%.~~


~~(8)~~	~~Incurs interest at LIBOR plus 1.7312%.~~


~~(9)~~	~~Incurs interest at LIBOR plus 1.647%.~~


~~(10)~~	~~Incurs interest at LIBOR plus 1.365%.~~


~~(11)~~	~~Incurs interest at LIBOR plus 1.624%.~~

(2) Outstanding borrowing of €48.6 million; incurs interest at EURIBOR plus applicable margins as defined in the agreement.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(3) Incurs interest at LIBOR plus 1.932%. This term loan was fully repaid in April 2021.


~~(12)~~	~~Incurs interest at LIBOR plus 1.552%.~~

(4) Incurs interest at LIBOR plus 1.923%. This term loan was fully repaid in April 2021.

(5) Incurred interest at LIBOR plus 1.808%. This term loan was fully repaid in February 2021.

(6) Original borrowing of €17.4 million; incurred interest at EURIBOR plus 1.75% and had full recourse to the Company. This term loan was fully repaid in March 2021.

(7) Incurred interest at LIBOR plus 1.848%. This term loan was fully repaid in March 2021.

(8) Incurs interest at LIBOR plus 1.731%. This term loan was fully repaid in April 2021.

(9) Incurred interest at LIBOR plus 1.647%. This term loan was fully repaid in May 2021.

(10) Incurred interest at LIBOR plus 1.365%. This term loan was fully repaid in May 2021.

(11) Incurred interest at LIBOR plus 1.624%. This term loan was fully repaid in April 2021.

(12) Incurred interest at LIBOR plus 1.552%. This term loan was fully repaid in May 2021.

(13) Incurs interest at the average effective interest rate of each class of purchased securities plus 0.50% spread ~~percentage and 0.08% class A-1 periodic adjustment rate up to €54,120.~~


~~(14)~~	~~Term loan issued under master credit agreement.~~

~~(15) Incurs interest at the average effective interest rate of each class of purchased securities plus 0.50% spread~~ percentage.

~~(16)~~(14) Term loan issued under master credit agreement.

(15) CLO Indentures for the respective CLO borrowings entered on November 30, 2017 and after ~~provide~~provided for an alternative rate framework determined at the Company’s discretion upon a trigger event of LIBOR.

The CLO term loans are secured by the Company’s investments in the respective CLO, have a general unsecured interest in the Carlyle entity that manages the CLO, and generally do not have recourse to any other Carlyle entity. Interest expense for the three months ended June 30, 2021 and 2020 was $1.2 million and ~~2019 was~~ $2.2 million, ~~and $3.0 million, respectively, and~~respectively. Interest expense for the six months ended June 30, 2021 and 2020 ~~and 2019~~ was ~~$4.7~~$3.2 million and ~~$5.9~~$4.7 million, respectively. The fair value of the outstanding balance of the CLO term loans at June 30, ~~2020~~2021 approximated par value based on current market rates for similar debt instruments. These CLO term loans are classified as Level III within the fair value hierarchy.

European CLO Financing - February 28, 2017

On February 28, 2017, a subsidiary of the Company entered into a financing agreement with several financial institutions under which these financial institutions have provided a ~~€66.7~~€48.6 million term loan ($~~75.0~~57.6 million at June 30, ~~2020)~~2021) to the Company. This term loan is secured by the Company’s investments in the retained notes in certain European CLOs that were formed in 2014 and 2015. This term loan will mature on the earlier of November 17, 2031 or the date that the certain European CLO retained notes have been redeemed. The Company may prepay the term loan in whole or in part at any time after the third anniversary of the date of issuance without penalty. Prepayment of the term loan within the first three years will incur a penalty based on the prepayment amount. Interest on this term loan accrues at EURIBOR plus applicable margins ~~(2.33%~~(2.34% at June 30, ~~2020)~~2021).

Master Credit Agreement - Term Loans

In January 2017, the Company entered into a master credit agreement with a financial institution under which the financial institution ~~expects to provide~~provided term loans to the Company for the purchase of eligible interests in CLOs. Term loans issued under this master credit agreement ~~will be~~were secured by the Company’s investment in the respective CLO as well as any senior management fee and subordinated management fee payable by each CLO. Term loans ~~bear~~bore interest at LIBOR plus a weighted average spread over LIBOR on the CLO notes and an applicable margin, which iswas due quarterly. CLO Indentures for the respective CLO borrowings entered on November 30, 2017 and after ~~provide~~provided for an alternative rate framework determined at the Company’s discretion upon a trigger event of LIBOR. This agreement terminated in January 2020. ~~Outstanding~~As of June 30, 2021, all outstanding CLO term loans ~~will mature at each respective borrowing’s maturity date.~~under this agreement have been fully repaid.

CLO Repurchase Agreements

On February 5, 2019, the Company entered into a ~~€100.0 million~~ master credit facility agreement (the “CLO Financing Facility”) to finance a portion of the risk retention investments in certain European CLOs managed by the Company. ~~Subject~~The maximum facility amount is €100.0 million, but may be expanded on such terms agreed upon by the Company and the counterparty 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.~~Facility. 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, ~~2020, €62.8~~2021, €128.6 million ofwas outstanding under the CLO Financing ~~Facility remained available.~~Facility.

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, if any, or other amounts 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

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

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. 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

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

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.

Senior Notes

Certain indirect subsidiaries of the the Company have issued long term borrowings in the form of senior notes, on which interest is payable semi-annually in arrears. The following table provides information regarding these senior notes (Dollars in millions):


																						Interest Expense
							Interest Expense											Fair Value (1) As of				Three Months Ended June 30,				Six Months Ended June 30,
			Fair Value ⁽¹⁾ As of				Three Months Ended June 30,				Six Months Ended June 30,					Aggregate Principal Amount		June 30, 2021		December 31, 2020		2021		2020		2021		2020
	Aggregate Principal Amount		June 30, 2020		December 31, 2019		2020		2019		2020		2019
3.875% Senior Notes Due 2/1/2023 ⁽²⁾⁽⁶⁾	$	250.0	$	270.5	$	262.8	$	2.5	$	2.4	$	5.0	$	4.8
3.875% Senior Notes Due 2/1/2023 (2)															3.875% Senior Notes Due 2/1/2023 (2)	$	250.0	$	266.2	$	270.0	$	2.5	$	2.5	$	5.0	$	5.0
5.625% Senior Notes Due 3/30/2043⁽³⁾	600.0		732.0		713.4		8.4		8.4		16.9		16.8		5.625% Senior Notes Due 3/30/2043 (3)	600.0		811.7		782.6		8.4		8.4		16.9		16.9
5.650% Senior Notes Due 9/15/2048 ⁽⁴⁾	350.0		435.2		424.0		5.0		4.9		9.9		9.9		5.650% Senior Notes Due 9/15/2048 (4)	350.0		479.9		469.3		5.0		5.0		9.9		9.9
3.500% Senior Notes Due 9/19/2029 ⁽⁵⁾	425.0		447.3		430.2		3.8		—		7.6		—		3.500% Senior Notes Due 9/19/2029 (5)	425.0		462.7		476.6		3.8		3.8		7.6		7.6
							$	19.7	$	15.7	$	39.4	$	31.5								$	19.7	$	19.7	$	39.4	$	39.4

(1) Including accrued interest. Fair value is based on indicative quotes and the notes are classified as Level II within the fair value hierarchy.

(2) Issued in January 2013 at 99.966% of par.

(3) Issued $400.0 million in aggregate principal at 99.583% of par in March 2013. An additional $200.0 million in aggregate principal was issued at 104.315% of par in March 2014, and is treated as a single class with the outstanding $400.0 million in senior notes previously issued.

(4) Issued in September 2018 at 99.914% of par.

(5) Issued in September 2019 at 99.841% of par.

(6) In September 2018, the Company completed a tender offer to re-purchase $250.0 million in aggregate principal amount of the 3.875% senior notes. As a result of this repurchase, the Company recognized $6.9 million of costs in interest expense and $0.9 million of costs in general, administrative and other expenses upon early extinguishment of the debt.

The issuers may redeem the senior notes, in whole at any time or in part from time to time, at a price equal to the greater of (i) 100% of the principal amount of the notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on any notes being redeemed discounted to the redemption date on a semiannual basis at the Treasury Rate plus 40 basis points (30 basis points in the case of the 3.875% and 3.500% senior notes), plus in each case accrued and unpaid interest on the principal amounts being redeemed.

~~Promissory~~

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Subordinated Notes

~~Promissory Notes Due July 15, 2019~~

~~In June 2017, as part of the settlement with investors in 2 commodities investment vehicles managed by an affiliate~~An indirect subsidiary of the Company ~~(disclosed~~issued $500.0 million aggregate principal amount of 4.625% Subordinated Notes due 2061 (the “Subordinated Notes”), on which interest is payable quarterly accruing from May 11, 2021, and which will mature on May 15, 2061. The Subordinated Notes are unsecured and subordinated obligations of the issuer, and are fully and unconditionally guaranteed (the “Guarantees”), jointly and severally, on a subordinated basis, by the Company, each of the Carlyle Holdings partnerships, and CG Subsidiary Holdings L.L.C., an indirect subsidiary of the Company (collectively, the “Guarantors”). The Consolidated Funds are not guarantors, and as such, the assets of the Consolidated Funds are not available to service the Subordinated Notes under the Guarantee. The Subordinated Notes may be redeemed at the issuer’s option in ~~Note 7)~~whole at any time or in part from time to time on or after June 15, 2026 at a redemption price equal to their principal amount plus any accrued and unpaid interest to, but excluding, the date of redemption. If interest due on the Subordinated Notes is deemed no longer to be deductible in the U.S., a “Tax Redemption Event”, the ~~Company issued~~Subordinated Notes may be redeemed, in whole, but not in part, within 120 days of the occurrence of such event at a ~~series~~redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of ~~promissory notes, aggregating~~redemption. In addition, the Subordinated Notes may be redeemed, in whole, but not in part, at any time prior to ~~$53.9 million,~~May 15, 2026, within 90 days of the rating agencies determining that the Subordinated Notes should no longer receive partial equity treatment pursuant to the ~~investors~~rating agency’s criteria, a “rating agency event”, at a redemption price equal to 102% of ~~these commodities investment vehicles. Interest~~their principal amount plus any accrued and unpaid interest to, but excluding, the date of redemption.

As of June 30, 2021, the fair value of the Subordinated Notes was $508.8 million. Fair value is based on ~~these promissory~~active market quotes and the notes ~~accrued at~~are classified as Level I within the ~~three month LIBOR plus 2%. These promissory notes matured on July 15, 2019 and were fully repaid as~~fair value hierarchy. For the period from May 11, 2021 through June 30, 2021, the Company incurred $3.3 million of ~~that date. Interest~~interest expense on ~~these promissory notes was not significant for~~ the ~~three and six months ended June 30, 2019.~~Subordinated Notes.

Debt Covenants

The Company is subject to various financial covenants under its loan agreements including, among other items, maintenance of a minimum amount of management fee-earning assets. The Company is also subject to various non-financial covenants under its loan agreements and the indentures governing its senior and subordinated notes. The Company was in compliance with all financial and non-financial covenants under its various loan agreements as of June 30, ~~2020.~~

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

2021.

Loans Payable of Consolidated Funds

Loans payable of Consolidated Funds primarily represent amounts due to holders of debt securities issued by the CLOs. Several of the CLOs issued preferred shares representing the most subordinated interest, however these tranches are mandatorily redeemable upon the maturity dates of the senior secured loans payable, and as a result have been classified as liabilities and are included in loans payable of Consolidated Funds in the unaudited condensed consolidated balance sheets.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the following borrowings were outstanding, which includes preferred shares classified as liabilities (Dollars in millions):


	As of June 30, 2020									As of June 30, 2021
	Borrowing Outstanding		Fair Value		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years		Borrowing Outstanding		Fair Value		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior secured notes	$	4,626.8	$	4,300.7	1.88	%		10.87	Senior secured notes	$	5,177.0	$	5,179.3	1.68	%		10.42
Subordinated notes, preferred shares and other	108.8		111.3		N/A		(1)	11.02	Subordinated notes, preferred shares and other	219.8		194.6		N/A		(1)	10.62

Total	$	4,735.6	$	4,412.0					Total	$	5,396.8	$	5,373.9


	As of December 31, 2019									As of December 31, 2020
	Borrowing Outstanding		Fair Value		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years		Borrowing Outstanding		Fair Value		Weighted Average Interest Rate			Weighted Average Remaining Maturity in Years
Senior secured notes	$	4,534.3	$	4,446.4	1.87	%		10.78	Senior secured notes	$	5,442.2	$	5,358.9	1.74	%		10.36
Subordinated notes, preferred shares and other	214.9		238.8		N/A		(1)	10.90	Subordinated notes, preferred shares and other	164.2		204.1		N/A		(1)	10.49

Total	$	4,749.2	$	4,685.2					Total	$	5,606.4	$	5,563.0


~~(1)~~	~~The subordinated notes and preferred shares do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs.~~

(1)The subordinated notes and preferred shares do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs.

Loans payable of the CLOs are collateralized by the assets held by the CLOs and the assets of one CLO may not be used to satisfy the liabilities of another. This collateral consisted of cash and cash equivalents, corporate loans, corporate bonds and other securities. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of the CLO assets was ~~$4.7~~$6.5 billion and ~~$5.2~~$6.3 billion, respectively.

6. Accrued Compensation and Benefits

Accrued compensation and benefits consist of the following:

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Accrued performance allocations and incentive fee-related compensation $ 1,946.2
$ 2,038.2
Accrued bonuses 253.4
265.1
Employment-based contingent cash consideration 32.2
31.4
Other 127.7
161.8
Total $ 2,359.5
$ 2,496.5

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Accrued performance allocations and incentive fee related compensation	$	4,043.8	$	2,534.4
Accrued bonuses	267.0		469.6
Employment-based contingent cash consideration	24.3		50.6
Other	231.6		168.0
Total	$	4,566.7	$	3,222.6

The following table presents realized and unrealized performance allocations and incentive fee related compensation:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Realized	$	218.6	$	82.8	$	311.3	$	195.7
Unrealized	775.4		452.8		1,549.3		(102.6)
Total	$	994.0	$	535.6	$	1,860.6	$	93.1

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Realized $ 82.8
$ 24.2
$ 195.7
$ 68.4
Unrealized 452.8
89.4
(102.6 ) 230.6
Total $ 535.6
$ 113.6
$ 93.1
$ 299.0

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

7. Commitments and Contingencies

Capital Commitments

The Company and its unconsolidated affiliates have unfunded commitments to entities within the following segments as of June 30, ~~2020~~2021 (Dollars in millions):

Unfunded
Commitments
Corporate Private Equity $ 2,187.2
Real Assets 924.3
Global Credit 356.9
Investment Solutions 232.5
Total $ 3,700.9


	Unfunded Commitments
Global Private Equity	$	2,701.4

Global Credit	346.6
Investment Solutions	301.2
Total	$	3,349.2

Of the ~~$3.7~~$3.3 billion of unfunded commitments, approximately ~~$3.1~~$2.8 billion is subscribed individually by senior Carlyle professionals, advisors and other professionals, with the balance funded directly by the Company. In addition to these unfunded commitments, the Company may from time to time exercise its right to purchase additional interests in its investment funds that become available in the ordinary course of their operations. ~~Additionally~~

Under the Carlyle Global Capital Markets platform, certain subsidiaries of the Company may act as an underwriter, syndicator or placement agent for security offerings and loan originations. The Company earns fees in connection with these activities and bears the risk of the sale of such securities and placement of such loans, which may be longer dated. As of June 30, ~~2020,~~2021, certain subsidiaries of the Company had ~~$32.8~~$64.0 million in unfunded commitments related to the origination and syndication of loans and securities under the Carlyle Global Capital ~~Solutions~~Markets platform. In July 2021, a subsidiary of the Company entered into a contractual commitment to underwrite approximately $500 million in debt related to a transaction which is expected to close during the fourth quarter of this year.

Guaranteed Loans

~~In December 2019, the Company entered into an agreement with a financial institution pursuant to which the~~

Company provided a guarantee on a revolving credit facility with a capacity of $130.0 million for a fund in the Real Assets segment. The outstanding balance, which was $125.0 million as of June 30, 2020, is secured by uncalled capital commitments of the fund’s limited partners. Subsequent to June 30, 2020, the fund canceled outstanding letters of credit and repaid amounts outstanding totaling $33.5 million. The Company has not funded any amounts under the guarantee to date, and the fair value of the guarantee is not significant to the consolidated financial statements.

On September 3, 2019, the Company entered into an agreement with a financial institution pursuant to which the Company is the guarantor on loans made to eligible employees investing in Carlyle sponsored funds (the “Program”). The Program has an initial period of one year, renewed annually, and accrues interest at either the WSJ Prime Rate minus 1.00% floating or the 12MAT Index plus 2.00% floating, in either case with a floor rate of 3.50% (versus actual rates of 2.25% and ~~3.17%~~2.10%, respectively, as of June 30, ~~2020)~~2021). The aggregate Program limit of all loans is $100.0 million, and is collateralized by each borrower’s interest in the Carlyle sponsored funds. As of June 30, ~~2020,~~2021, approximately ~~$14.0~~$15.5 million was outstanding under the Program and payable by the employees. The Company has not funded any amounts under the guarantee to date, and believes the likelihood of any material funding under this guarantee to be remote. The fair value of the guarantee is not significant to the consolidated financial statements.

The ~~Company is party to an~~Program replaced a similar agreement with aanother financial institution, ~~pursuant to which~~ the ~~Company is the guarantor on a credit facility for eligible employees investing in Carlyle sponsored funds. This credit facility,~~remaining amount outstanding and guaranteed under which was ~~replaced by the Program, renewed on an annual basis, allowed for annual incremental borrowings up to an aggregate of $11.3 million, and accrued interest at the lower of the prime rate,~~immaterial as ~~defined, or three-month LIBOR plus 3%, reset quarterly. Subsequent to September 3, 2019, no incremental borrowings are allowed under the facility, and the remaining balance was substantially~~

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~transferred to the Program. As~~ of June 30, ~~2020, approximately $0.8 million was outstanding under the credit facility and payable by the employees. The amount funded by~~2021.

From time to time, the Company ~~under this~~or its subsidiaries may enter into agreements to guarantee ~~was not material.~~

certain obligations of the investment funds related to, for example, credit facilities or equity commitments. Certain consolidated subsidiaries of the Company are the guarantors of revolving credit facilities for certain funds in the Investment Solutions segment. The guarantee is limited to the lesser of the total amount drawn under the credit facilities or the net asset value of the guarantor subsidiaries, which iswas approximately ~~$25.6~~$4.4 million as of June 30, ~~2020.~~2021. The outstanding balances are secured by uncalled capital commitments from the underlying funds and the Company believes the likelihood of any material funding under this guarantee to be remote.

In June 2021, the Company entered into agreements with financial institutions pursuant to which it provided the guarantee for revolving credit facilities of an investment fund that is actively fundraising in Global Private Equity segment. The maximum aggregate amount available under the facilities is $2.0 billion. These facilities expire upon the earlier of six months or at such time that the investment fund enters into a subscription credit facility with a maximum capacity of at least $2.0 billion. The Company has not funded any amounts under this guarantee to date, and believes the likelihood of any material funding to be remote.

Contingent Obligations (Giveback)

A liability for potential repayment of previously received performance allocations of ~~$23.0~~$21.0 million at June 30, ~~2020~~2021 is shown as accrued giveback obligations in the unaudited condensed consolidated balance sheets, representing the giveback

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

obligation that would need to be paid if the funds were liquidated at their current fair values at June 30, ~~2020.~~2021. However, the ultimate giveback obligation, if any, generally is not paid until the end of a fund’s life or earlier if the giveback becomes fixed and early payment is agreed upon by the fund’s partners (see Note 2). The Company has ~~recorded $1.4 million of~~0 unbilled receivables from former and current employees and senior Carlyle professionals as of June 30, ~~2020 and~~2021 or December 31, ~~2019,~~2020 related to giveback ~~obligations, which are included in due from affiliates and other~~obligations. Any such receivables ~~net in the accompanying unaudited condensed consolidated balance sheets. The receivables are~~would be collateralized by investments made by individual senior Carlyle professionals and employees in Carlyle-sponsored funds. In addition, ~~$166.9~~$147.8 million and ~~$164.4~~$175.9 million have been withheld from distributions of carried interest to senior Carlyle professionals and employees for potential giveback obligations as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Such amounts are held on behalf of the respective current and former Carlyle employees to satisfy any givebacks they may owe and are held by entities not included in the accompanying condensed consolidated balance sheets. Current and former senior Carlyle professionals and employees are personally responsible for their giveback obligations. As of June 30, ~~2020,~~2021, approximately ~~$14.9~~$9.9 million of the Company’s accrued giveback obligation is the responsibility of various current and former senior Carlyle professionals and other former limited partners of the Carlyle Holdings partnerships, and the net accrued giveback obligation attributable to the Company is ~~$8.1~~$11.1 million.

During the year ended December 31, 2019, the Company paid $41.3 million to satisfy giveback obligations related to 2 of its Legacy Energy funds. Approximately $22.1 million of these obligations was paid by current and former senior Carlyle professionals and $19.2 million by the Company.

If, at June 30, ~~2020,~~2021, all of the investments held by the Company’s Funds were deemed worthless, a possibility that management views as remote, the amount of realized and distributed carried interest subject to potential giveback would be ~~$0.4~~$0.7 billion, on an after-tax basis where applicable, of which approximately ~~$0.2~~$0.3 billion would be the responsibility of current and former senior Carlyle professionals.

Leases

The Company’s leases primarily consist of operating leases for office space in various countries around the world, including its headquarters in Washington, D.C. The Company relocated one of its New York City offices in December 2020 to new office space in Midtown New York. These leases have remaining lease terms of 1one year to 15 years, some of which include options to extend for up to 5five years and some of which include an option to terminate the leases within 1one year. The Company also has operating leases for office equipment and vehicles, which are not significant.

In ~~June 2018,~~July 2021, the Company entered into an amended non-cancelable lease agreement for additional office space at its Midtown New York location expiring ~~on March 31, 2030~~September 30, 2036. The estimated amount of annual lease cost associated with this additional office space is $2.7 million.

The Company assesses its lease right-of-use assets for impairment consistent with its ~~Washington, D.C. office.~~impairment assessment of other long-lived assets. In connection with the ~~amended lease,~~April 1, 2021 sale of Metropolitan Real Estate, the Company ~~exercised an option to terminate its office lease in Arlington, Virginia at the end of 2019. The Company is scheduled to relocate 1~~entered into a sublease agreement for a portion of its ~~New York City offices in late 2020 to new~~existing office space in ~~Midtown~~ New ~~York. The new lease was signed in July 2018 and expires in 2036. In connection with this new lease,~~York during the three months ended June 30, 2021. As a result of the sublease transaction, the Company ~~incurred~~recorded a lease impairment charge of ~~$63.5~~$26.8 million ~~(including transaction costs)~~ during ~~2018 related to~~ the ~~assignment~~three months ended June 30, 2021, which was the excess of ~~an existing office~~the carrying value of the associated lease ~~in New York City.~~right-of-use asset over its estimated fair value. The Company estimated the fair value using discounted cash flows from the estimated net sublease rental income. The impairment charge ~~is expected to be paid over approximately 15 years beginning in 2021. This charge (excluding $3.5 million of transaction costs paid) was accounted for as a lease incentive, and~~ is included in ~~accounts payable, accrued expenses~~general, administrative, and other ~~liabilities~~expenses in the ~~accompanying~~ unaudited condensed consolidated ~~balance sheets, since the lease has not yet commenced.~~

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

statements of operations.

The following table summarizes the Company’s lease cost, cash flows and other supplemental information related to its operating leases (Dollars in millions):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021			2020
Operating lease cost	$	13.5	$	11.9	$	27.5		$	23.7
Sublease income	(0.5)		(0.6)		(1.2)			(1.2)
Total operating lease cost	$	13.0	$	11.3	$	26.3		$	22.5

Cash paid for amounts included in the measurement of operating lease liabilities	$	11.4	$	13.9	$	22.7		$	28.8

Weighted-average remaining lease term					12.2 years			9.5 years
Weighted-average discount rate					4.2		%	5.3		%

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Operating lease cost $ 11.9
$ 12.8
$ 23.7
$ 24.3
Sublease income (0.6 ) (0.7 ) (1.2 ) (1.0 )
Total operating lease cost $ 11.3
$ 12.1
$ 22.5
$ 23.3

Cash paid for amounts included in the measurement of operating lease liabilities $ 13.9
$ 16.8
$ 28.8
$ 30.1

Weighted-average remaining lease term

9.5 Years
9.9 Years
Weighted-average discount rate

5.3 % 5.3 %

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Maturities of lease liabilities related to operating leases were as follows (Dollars in millions):

Year ending December 31,
2020 (excluding the six months ended June 30, 2020) $ 27.9
2021 47.8
2022 57.0
2023 51.8
2024 50.0
Thereafter 434.3
Total lease payments $ 668.8
Less payments for leases that have not yet commenced (330.9 )
Less imputed interest (71.0 )
Total lease liabilities $ 266.9


Year ending December 31,
2021 (excluding the six months ended June 30, 2021)	$	27.8
2022	63.4
2023	57.9
2024	54.5
2025	52.3
Thereafter	397.9
Total lease payments	$	653.8

Less imputed interest	(140.0)
Total lease liabilities	$	513.8

Legal Matters

In the ordinary course of business, the Company is a party to litigation, investigations, inquiries, employment-related matters, disputes and other potential claims. Certain of these matters are described below. The Company is not currently able to estimate the reasonably possible amount of loss or range of loss, in excess of amounts accrued, for the matters that have not been resolved. The Company does not believe it is probable that the outcome of any existing litigation, investigations, disputes or other potential claims will materially affect the Company or these financial statements in excess of amounts accrued. The Company believes that the matters described below are without merit.

Along with many other companies and individuals in the financial sector, the Company and Carlyle Mezzanine Partners, L.P. (“CMP”) are named as defendants in Foy v. Austin Capital, a case filed in June 2009 in state court in New Mexico, which purports to be a qui tam suit on behalf of the State of New Mexico under the state Fraud Against Taxpayers Act (“FATA”). The suit alleges that investment decisions by New Mexico public investment funds were improperly influenced by campaign contributions and payments to politically connected placement agents. The plaintiffs seek, among other things, actual damages for lost income, rescission of the investment transactions described in the complaint and disgorgement of all fees received. In September 2017, the Court dismissed the lawsuit and the plaintiffs then filed an appeal seeking to reverse that decision. In June 2020, the Court of Appeals affirmed the decision dismissing the case. On June 24, 2020, plaintiffs filed a motion for rehearing with the Court of Appeals. On June 30, 2020, the Court of Appeals denied that motion. Plaintiffs filed an appeal to the New Mexico Supreme Court. On October 9, 2020, the New Mexico Supreme Court denied Foy’s petition for certiorari. On October 27, 2020, Foy filed two motions for rehearing with the New Mexico Supreme Court. On May 26, 2021, certain other defendants in the actions filed in the New Mexico Supreme Court a motion to dismiss due to the deaths of the two qui tam plaintiffs.

Carlyle Capital Corporation Limited (“CCC”) was a fund sponsored by the Company that invested in AAA-rated residential mortgage backed securities on a highly leveraged basis. ~~In March of 2008, amidst turmoil throughout the mortgage markets and money markets, CCC~~It filed for insolvency protection in ~~Guernsey.~~Guernsey in 2008 during the financial crisis. The Guernsey liquidators who took control of CCC in March 2008 ~~filed a suit on July 7, 2010~~pursued litigation against the Company, certain of its affiliates and the former directors of CCC (collectively, the “Carlyle Defendants”) in the Royal Court of ~~Guernsey seeking more than $1.0 billion in damages in a case styled~~ ~~Carlyle Capital Corporation~~

Guernsey. The Carlyle ~~Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

~~Limited v. Conway et al. On September 4, 2017, the Royal Court of Guernsey ruled that the Company and Directors of CCC acted reasonably and appropriately~~Defendants prevailed in the ~~management~~litigation and ~~governance of CCC and that none of~~also prevailed in the ~~Company, its affiliates or former directors of CCC had any liability. In December 2017, the plaintiff filed a notice of~~liquidator’s appeal of the trial court decision. On April 12, 2019 the Guernsey Court of Appeal dismissed the appeal and affirmed the trial court’s decision. On July 31, 2019, the plaintiffs filed a notice of appeal with the Judicial Committee of the Privy Council. On April 2,21, 2020, the parties ~~entered into a binding Heads of Agreement and on April 21~~ executed a definitive settlement agreement ~~which received court approval on May 1, 2020. Pursuant~~ to ~~this agreement,~~end further appeals. The liquidators paid the Company ~~retains the amounts already received from the plaintiff~~approximately £24.2 million to reimburse ~~the Company for~~ legal fees and expenses ~~incurred~~ to defend ~~against~~ the claims, ~~(approximately £23.3 million)~~ and ~~received~~ the ~~funds deposited as security with the Privy Council (approximately £850,000). All claims have now been dismissed. The~~ Company recognized $29.9 million as a reduction to general, administrative and other expenses in the accompanying unaudited condensed consolidated statements of operations during the six months ended June 30, 2020.

A Luxembourg subsidiary of CEREP I, a real estate fund, has been involved since 2010 in a tax dispute with the French authorities relating to whether gain from the sale of an investment was taxable in France. In April 2015, the French tax court issued an opinion in this matter adverse to CEREP I, holding the Luxembourg subsidiary of CEREP I liable for approximately €105 million (including interest accrued since the beginning of the tax dispute). CEREP I paid approximately €30 million of the tax obligations and the Company paid the remaining approximately €75 million in its capacity as a guarantor. After an appeals process, in July 2019, the parties agreed to settle this matter by reducing the tax claim to €37.1 million of French tax and interest. The remaining €80.5 million will be retained by the Company and CEREP I. Accordingly, the Company recognized $71.5 million in principal investment income during the year ended December 31, 2019.

During 2017, the Company entered into settlement and purchase agreements with investors in a hedge fund and 2 structured finance vehicles managed by Vermillion related to investments of approximately $400 million in petroleum commodities that the Company believes were misappropriated by third parties outside the U.S. During the fourth quarter of 2018, the Company reached an agreement with the primary underwriters in the marine cargo insurance policies for $55 million, of which the Company recognized approximately $32 million in insurance proceeds during the year ended December 31, 2018, with the remaining proceeds to be distributed to former investors. Although additional recovery efforts continue, there is no assurance that the Company will be successful in any of these efforts and the Company will not recognize any amounts in respect of such recoveries until such amounts are probable of payment.

The Company currently is and expects to continue to be, from time to time, subject to examinations, formal and informal inquiries and investigations by various U.S. and non-U.S. governmental and regulatory agencies, including but not limited to, the SEC, Department of Justice, state attorneys general, FINRA, National Futures Association and the U.K. Financial Conduct Authority. The Company routinely cooperates with such examinations, inquiries and investigations, and they may result in the commencement of civil, criminal, or administrative or other proceedings against the Company or its personnel.

It is not possible to predict the ultimate outcome of all pending investigations and legal proceedings and employment-related matters, and some of the matters discussed above involve claims for potentially large and/or indeterminate amounts of damages. Based on information known by management, management does not believe that as of the date of this filing the final resolutions of the matters above will have a material effect upon the Company’s unaudited condensed consolidated financial statements. However, given the potentially large and/or indeterminate amounts of damages sought in certain of these matters

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

and the inherent unpredictability of investigations and litigations, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s financial results in any particular period.

The Company accrues an estimated loss contingency liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated. As of June 30, ~~2020,~~2021, the Company had recorded liabilities aggregating to approximately $35 million for litigation-related contingencies, regulatory examinations and inquiries, and other matters. The Company evaluates its outstanding legal and regulatory proceedings and other matters each quarter to assess its loss contingency accruals, and makes adjustments in such accruals, upward or downward, as appropriate, based on management’s best judgment after consultation with counsel. There is no assurance that the Company’s accruals for loss contingencies will not need to be adjusted in the future or that, in light of the uncertainties involved in such matters, the ultimate resolution of these matters will not significantly exceed the accruals that the Company has recorded.

Indemnifications

In the normal course of business, the Company and its subsidiaries enter into contracts that contain a variety of representations and warranties and provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Company believes the risk of material loss to be remote.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Risks and Uncertainties

Carlyle’s funds seek investment opportunities that offer the possibility of attaining substantial capital appreciation. Certain events particular to each industry in which the underlying investees conduct their operations, as well as general economic, political, regulatory and public health conditions, may have a significant negative impact on the Company’s investments and profitability. For example, the recent COVID-19 outbreak and its implications may have a significant impact on the values of the investments of the funds and the performance of our strategic investments, and therefore the financial results of the Company. The funds managed by the Company may also experience a slowdown in the deployment of capital, which could adversely affect the Company’s ability to raise capital for new or successor funds and could also impact the management fees the Company earns on its carry funds and managed accounts. Such events are beyond the Company’s control, and the likelihood that they may occur and the effect on the Company cannot be predicted.

Furthermore, certain of the funds’ investments are made in private companies and there are generally no public markets for the underlying securities at the current time. The funds’ ability to liquidate their publicly-traded investments are often subject to limitations, including discounts that may be required to be taken on quoted prices due to the number of shares being sold. The funds’ ability to liquidate their investments and realize value is subject to significant limitations and uncertainties, including among others currency fluctuations and natural disasters.

The Company and the funds make investments outside of the United States. Investments outside the United States may be subject to less developed bankruptcy, corporate, partnership and other laws (which may have the effect of disregarding or otherwise circumventing the limited liability structures potentially causing the actions or liabilities of one fund or a portfolio company to adversely impact the Company or an unrelated fund or portfolio company). Non-U.S. investments are subject to the same risks associated with the Company’s U.S. investments as well as additional risks, such as fluctuations in foreign currency exchange rates, unexpected changes in regulatory requirements, heightened risk of political and economic instability, difficulties in managing non-U.S. investments, potentially adverse tax consequences and the burden of complying with a wide variety of foreign laws.

Furthermore, Carlyle is exposed to economic risk concentrations related to certain large investments as well as concentrations of investments in certain industries and geographies.

Additionally, the Company encounters credit risk. Credit risk is the risk of default by a counterparty in the Company’s investments in debt securities, loans, leases and derivatives that result from a borrower’s, lessee’s or derivative counterparty’s inability or unwillingness to make required or expected payments.

The Company considers cash, cash equivalents, securities, receivables, principal equity method investments, accounts payable, accrued expenses, other liabilities, loans, senior notes, assets and liabilities of Consolidated Funds and contingent and other consideration for acquisitions to be its financial instruments. Except for the senior and subordinated notes, the carrying amounts reported in the unaudited condensed consolidated balance sheets for these financial instruments equal or closely approximate their fair values. The fair value of the senior and subordinated notes is disclosed in Note 5.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

8. Related Party Transactions

Due from Affiliates and Other Receivables, Net

The Company had the following due from affiliates and other receivables at June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Accrued incentive fees $ 8.9
$ 8.2
Unbilled receivable for giveback obligations from current and former employees 1.4
1.4
Notes receivable and accrued interest from affiliates 5.7
10.5
Management fee, reimbursable expenses and other receivables from unconsolidated funds and affiliates, net 259.8
253.8
Total $ 275.8
$ 273.9

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Accrued incentive fees	$	10.4	$	9.5

Notes receivable and accrued interest from affiliates	9.7		17.9
Management fee, reimbursable expenses and other receivables from unconsolidated funds and affiliates, net	255.9		245.1
Total	$	276.0	$	272.5

Notes receivable represent loans that the Company has provided to certain unconsolidated funds to meet short-term obligations to purchase investments. Reimbursable expenses and other receivables from certain of the unconsolidated funds and portfolio companies relate to management fees receivable from limited partners, advisory fees receivable and expenses paid on behalf of these entities. These costs represent costs related to the pursuit of actual or proposed investments, professional fees and expenses associated with the acquisition, holding and disposition of the investments. The affiliates are obligated at the discretion of the Company to reimburse the expenses. Based on management’s determination, the Company accrues and charges interest on amounts due from affiliate accounts at interest rates ranging up to ~~6.96%~~6.90% as of June 30, ~~2020.~~2021. The accrued and charged interest to the affiliates was not significant for any period presented.

These receivables are assessed regularly for collectability and amounts determined to be uncollectible are charged directly to general, administrative and other expenses in the condensed consolidated statements of operations. A corresponding allowance for doubtful accounts is recorded and such amounts were not significant for any period presented.

Due to Affiliates

The Company had the following due to affiliates balances at June 30, ~~2020~~2021 and December 31, ~~2019:~~2020:

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Due to non-consolidated affiliates $ 42.1
$ 65.6
Deferred consideration for Carlyle Holdings units 265.3
332.7
Amounts owed under the tax receivable agreement 107.3
107.3
Other 44.1
36.5
Total $ 458.8
$ 542.1


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)

Due to non-consolidated affiliates	$	76.0	$	49.2
Deferred consideration for Carlyle Holdings units	199.4		266.7
Amounts owed under the tax receivable agreement	98.0		98.0
Other	28.7		22.8
Total	$	402.1	$	436.7

The Company has recorded obligations for amounts due to certain of its affiliates. The Company periodically offsets expenses it has paid on behalf of its affiliates against these obligations. The amount owed under the tax receivable agreement is related primarily to the acquisition by the Company of Carlyle Holdings partnership units in June 2015 and March 2014, respectively, the exchange in May 2012 by CalPERS of its Carlyle Holdings partnership units for Company common units, as well as certain unit exchanges by senior Carlyle professionals prior to the Conversion.

Deferred consideration for Carlyle Holdings units relates to the remaining obligation to the ~~former~~ holders of Carlyle Holdings partnership units who will receive cash payments aggregating to $1.50 per Carlyle Holdings partnership unit exchanged in connection with the Conversion, payable in five annual installments of ~~$0.30, the~~$0.30. The first ~~of which~~and second annual installment payments occurred onin January ~~31, 2020.~~2020 and January 2021, respectively. The obligation was initially recorded at fair value, net of a discount of $11.3 million and measured using Level III inputs in the fair value hierarchy.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Other Related Party Transactions

In the normal course of business, the Company has made use of aircraft owned by entities controlled by senior Carlyle professionals. The senior Carlyle professionals paid for their purchases of aircraft and bear all operating, personnel and maintenance costs associated with their operation for personal use. Payment by the Company for the business use of these aircraft by senior Carlyle professionals and other employees ~~which~~ is made at market rates ~~totaled $1.5 million~~throughout the year based on budgeted business usage. When actual business use exceeds budgeted aircraft use, the Company makes additional payments to the aircraft owner and/or the aircraft management company, as appropriate. Similarly, when the aggregate amount paid for budgeted aircraft use exceeds the calculated costs of actual business use, or results in rates which exceed market aircraft charter rates, we receive reimbursement of such excess payments from the aircraft owner and/or the aircraft management company, as appropriate. These adjustments are calculated annually and ~~$2.8 million for~~payments or reimbursements are generally made after year-end. During the three and six months ended June 30, ~~2020 and 2019, respectively, and $3.4~~2021, the Company received net reimbursements of $2.0 million and ~~$3.5~~$1.7 million, ~~for~~respectively. During the three and six months ended June 30, 2020, the Company made payments totaling $1.5 million and ~~2019,~~$3.4 million, respectively. The accrual of aircraft fees is included in general, administrative, and other expenses in the unaudited condensed consolidated statements of operations.

On May 5, 2020, the Company purchased 2,000,000 shares of cumulative convertible preferred stock from TCG BDC in a private placement at a price of $25 per share (the “BDC Preferred ~~Shares��~~Shares”). Dividends are payable on a quarterly basis in an initial amount equal to 7.0% per annum payable in cash, or, at TCG BDC’s option, 9.0% per annual payable in additional shares of BDC Preferred Stock. ~~During~~The Company recorded $0.9 million and $1.8 million during the three and six months ended June 30, 2021, respectively, and $0.5 million for both the three and six months ended June 30, 2020, ~~the Company recorded $0.5 million~~ for the cash ~~dividend~~dividends declared by TCG BDC, ~~on June 30, 2020,~~ which is included in interest and other income in the unaudited condensed consolidated statements of operations. The Company’s investment in the BDC Preferred Shares, which is recorded at fair value, is ~~$52.9~~$71.7 million as of June 30, ~~2020~~2021 and included in investments, including accrued performance allocations, in the unaudited condensed consolidated balance sheets.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Senior Carlyle professionals and employees are permitted to participate in co-investment entities that invest in Carlyle funds or alongside Carlyle funds. In many cases, participation is limited by law to individuals who qualify under applicable legal requirements. These co-investment entities generally do not require senior Carlyle professionals and employees to pay management fees or performance allocations, however, Carlyle professionals and employees are required to pay their portion of partnership expenses.

Carried interest income from the funds can be distributed to senior Carlyle professionals and employees on a current basis, but is subject to repayment by the subsidiary of the Company that acts as general partner of the fund in the event that certain specified return thresholds are not ultimately achieved. The senior Carlyle professionals and certain other investment professionals have personally guaranteed, subject to certain limitations, the obligation of these subsidiaries in respect of this general partner obligation. Such guarantees are several and not joint and are limited to a particular individual’s distributions received.

The Company does business with some of its portfolio companies; all such arrangements are on a negotiated basis.

Substantially all revenue is earned from affiliates of Carlyle.

9. Income Taxes

Following the Conversion on January 1, 2020, all of the income before provision for income taxes attributable to the Company is subject to U.S. federal, state, and local corporate income taxes. Prior to the Conversion, the Company was generally organized as a series of pass through entities pursuant to the United States Internal Revenue Code. As such, the Company was not responsible for the tax liability due on certain income earned during the year. Such income iswas taxed at the unitholder and non-controlling interest holder level, and any income tax iswas the responsibility of the unitholders and iswas paid at that level.

The Conversion resulted in a step-up in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized. The Company recorded an estimated net deferred tax asset of $256.6 million relating to this step-up in tax basis. The Conversion and subsequent exchange of Carlyle Holdings units for an equivalent number of shares of common stock of the Company also resulted in an estimated net reduction of the deferred tax asset of $400.5 million. This amount was generated by: (1) deferred tax liabilities on investments and accrued performance revenue allocations, net of related compensation, which were not previously subject to U.S. corporate income tax, (2) an increase in the historical net deferred tax assets reflecting deferred tax amounts previously allocated to private unitholders, and (3) a decrease in the historical net deferred tax assets reflecting the impact of reducing our effective state tax rate under the corporate structure. Together with the estimated step-up in tax basis, the Conversion resulted in an estimated net reduction to the Company’s net deferred tax asset of $143.9 million on January 1, 2020.

The impact of the Conversion to the Company’s net deferred tax assets is based on information currently available; however, the impact of the Conversion cannot be fully determined until the analysis of the tax and book basis of underlying assets of certain partnerships is complete upon finalization of the Company's 2019 tax return information. As a result, the impact of the Conversion may differ, possibly materially, from the current estimates.

The effect of the exchange of Carlyle Holdings units for an equivalent number of shares of common stock of The Carlyle Group Inc. in the Conversion is accounted for as a transaction with non-controlling shareholders, the direct tax effects of which are recorded in equity. The effect of the termination of the status of the Company as a partnership for U.S. tax purposes in the Conversion is accounted for as a change in tax status and the related deferred tax effects are recorded in the provision (benefit) for income taxes in the three months ended March 31, 2020. Of the estimated $143.9 million net reduction in the net deferred tax asset of the Company resulting from the Conversion, $90.3 million of expense was recorded in the provision (benefit) for income taxes and $53.6 million recorded directly as a reduction to equity in the six months ended June 30, 2020.

The Company’s provision (benefit) for income taxes was ~~$52.3~~$306.2 million and ~~$15.5~~$52.3 million for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and ~~$(27.7)~~$579.6 million and ~~$39.5~~$(27.7) million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. During the six months ended June 30, 2020, the ~~benefit~~provision for income taxes reflects a tax benefit of $118.0 million related to the net loss recorded during the period, net of the $90.3 million expense ~~discussed above~~ related to Conversion. For additional information regarding the impact of Conversion, refer to Note 11 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The Company’s effective tax rate was approximately ~~20%~~24% and 3%20% for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, and 5%24% and 4%5% for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The effective tax rate for the six months ended June 30, 2021 is primarily comprised of the 21% U.S. federal corporate income tax rate plus U.S. state and foreign corporate income taxes, partially offset by non-controlling interests. The effective tax rate for the six

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

months ended June 30, 2020 differs from the statutory rate primarily due to the income tax expense resulting from the Conversion offsetting the tax benefit from the net loss recorded in the period. ~~In periods prior to~~As of June 30, 2021 and December 31, 2020, the ~~Conversion, the effective tax rate differs from the statutory rate because~~Company had federal, state, local and foreign taxes payable of ~~the Company’s status~~$100.9 million and $62.7 million, respectively, which is recorded as a ~~partnership.~~

~~The Carlyle Group Inc.~~

~~Notes to~~component of accounts payable, accrued expenses and other liabilities on the ~~Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

accompanying condensed consolidated balance sheet.

In the normal course of business, the Company is subject to examination by federal and certain state, local and foreign tax regulators. With a few exceptions, as of June 30, ~~2020,~~2021, the Company’s U.S. federal income tax returns for ~~the~~tax years ~~2016~~2017 through ~~2018~~2019 are open under the normal three-year statute of limitations and therefore subject to examination. State and local tax returns are generally subject to audit ~~from 2014~~for tax years 2015 to ~~2018.~~2019. Foreign tax returns are generally subject to audit ~~from~~for tax years 2011 to ~~2018.~~2019. Certain of the Company’s affiliates are currently under audit by federal, state and foreign tax authorities.

The Company does not believe that the outcome of these audits will require it to record material reserves for uncertain tax positions or that the outcome will have a material impact on the consolidated financial statements. The Company does not believe that it has any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

10. Non-controlling Interests in Consolidated Entities

The components of the Company’s non-controlling interests in consolidated entities are as follows:

As of
June 30, 2020 December 31, 2019
(Dollars in millions)
Non-Carlyle interests in Consolidated Funds $ 2.4
$ 0.1
Non-Carlyle interests in majority-owned subsidiaries 177.6
324.5
Non-controlling interest in carried interest, giveback obligations and cash held for carried interest distributions 4.4
8.9
Non-controlling interests in consolidated entities $ 184.4
$ 333.5


	As of
	June 30, 2021		December 31, 2020
	(Dollars in millions)
Non-Carlyle interests in Consolidated Funds	$	18.4	$	1.2
Non-Carlyle interests in majority-owned subsidiaries	244.6		223.3
Non-controlling interest in carried interest, giveback obligations and cash held for carried interest distributions	22.0		16.5
Non-controlling interests in consolidated entities	$	285.0	$	241.0

The components of the Company’s non-controlling interests in income (loss) of consolidated entities are as follows:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Non-Carlyle interests in Consolidated Funds $ 10.8
$ 11.2
$ 3.4
$ 11.2
Non-Carlyle interests in majority-owned subsidiaries 47.3
24.7
(41.7 ) 17.5
Non-controlling interest in carried interest, giveback obligations and cash held for carried interest distributions 0.5
3.9
(0.1 ) 6.6
Non-controlling interests in income (loss) of consolidated entities $ 58.6
$ 39.8
$ (38.4 ) $ 35.3


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Non-Carlyle interests in Consolidated Funds	$	0.3	$	10.8	$	0.2	$	3.4
Non-Carlyle interests in majority-owned subsidiaries	14.3		47.3		33.4		(41.7)
Non-controlling interest in carried interest, giveback obligations and cash held for carried interest distributions	6.9		0.5		9.5		(0.1)



Non-controlling interests in income (loss) of consolidated entities	$	21.5	$	58.6	$	43.1	$	(38.4)

11. Earnings Per Common Share

Basic and diluted net income (loss) per common share are calculated as follows:


	Three Months Ended June 30, 2021				Six Months Ended June 30, 2021
	Basic		Diluted		Basic		Diluted



Net income attributable to common shares	$	925,000,000	$	925,000,000	$	1,794,300,000	$	1,794,300,000
Weighted-average common shares outstanding	354,506,335		362,151,588		354,368,976		361,328,946
Net income per common share	$	2.61	$	2.55	$	5.06	$	4.97

Three Months Ended
June 30, 2020 Six Months Ended
June 30, 2020
Basic Diluted Basic Diluted
Net income (loss) attributable to common shares $ 145,900,000
$ 145,900,000
$ (466,100,000 ) $ (466,100,000 )
Weighted-average common shares outstanding 348,574,528
357,268,275
348,407,144
348,407,144
Net income (loss) per common share $ 0.42
$ 0.41
$ (1.34 ) $ (1.34 )

Three Months Ended
June 30, 2019 Six Months Ended
June 30, 2019
Basic Diluted Basic Diluted
Net income attributable to common shares $ 148,200,000
$ 148,200,000
$ 285,200,000
$ 285,200,000
Weighted-average common shares outstanding 110,440,227
120,920,439
109,828,740
118,372,885
Net income per common share $ 1.34
$ 1.23
$ 2.60
$ 2.41

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Three Months Ended June 30, 2020				Six Months Ended June 30, 2020
	Basic		Diluted		Basic		Diluted



Net loss attributable to common shares	$	145,900,000	$	145,900,000	$	(466,100,000)	$	(466,100,000)
Weighted-average common shares outstanding	348,574,528		357,268,275		348,407,144		348,407,144
Net income (loss) per common share	$	0.42	$	0.41	$	(1.34)	$	(1.34)

The weighted-average common shares outstanding, basic and diluted, are calculated as follows:

Three Months Ended
June 30, 2020 Six Months Ended
June 30, 2020
Basic Diluted Basic Diluted
The Carlyle Group Inc. weighted-average common shares outstanding 348,574,528
348,574,528
348,407,144
348,407,144
Unvested restricted stock units —
6,106,056
—
—
Issuable Carlyle Group Inc. common shares —
2,587,691
—
—
Weighted-average common shares outstanding 348,574,528
357,268,275
348,407,144
348,407,144


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
	Basic	Diluted	Basic	Diluted
The Carlyle Group Inc. weighted-average common shares outstanding	354,506,335	354,506,335	354,368,976	354,368,976
Unvested restricted stock units	0	5,607,545	0	5,015,266
Issuable The Carlyle Group Inc. common shares	0	2,037,708	0	1,944,704



Weighted-average common shares outstanding	354,506,335	362,151,588	354,368,976	361,328,946


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019			Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
	Basic	Diluted	Basic	Diluted		Basic	Diluted	Basic	Diluted
The Carlyle Group Inc. weighted-average common shares outstanding	110,440,227	110,440,227	109,828,740	109,828,740	The Carlyle Group Inc. weighted-average common shares outstanding	348,574,528	348,574,528	348,407,144	348,407,144
Unvested restricted stock units	—	9,531,711	—	7,595,644	Unvested restricted stock units	0	6,106,056	0	0
Issuable Carlyle Group Inc. common shares	—	948,501	—	948,501
Issuable The Carlyle Group Inc. common shares					Issuable The Carlyle Group Inc. common shares	0	2,587,691	0	0

Weighted-average common shares outstanding	110,440,227	120,920,439	109,828,740	118,372,885	Weighted-average common shares outstanding	348,574,528	357,268,275	348,407,144	348,407,144

The Company applies the treasury stock method to determine the dilutive weighted-average common shares represented by the unvested restricted stock units. Also included in the determination of dilutive weighted-average common shares are issuable common shares associated with the Company’s acquisitions, strategic ~~investments~~investment in NGP and performance-vesting restricted stock units. All such awards ~~are~~were antidilutive and excluded from the computation of diluted earnings per share given the net loss attributable to common stockholders for the six months ended June 30, 2020.

Prior to the Conversion, the Company also included contingently issuable Carlyle Holdings partnership units in the determination of dilutive weighted-average common shares. The Company applied the “if-converted” method to the vested Carlyle Holdings partnership units to determine the dilutive weighted-average common shares outstanding in 2019. The Company applied the treasury stock method to the unvested Carlyle Holdings partnership units and the “if-converted” method on the resulting number of additional Carlyle Holdings partnership units to determine the dilutive weighted-average common shares represented by the unvested Carlyle Holdings partnership units.

In computing the dilutive effect that the exchange of Carlyle Holdings partnership units would have on earnings per common share in 2019, the Company considered that net income available to holders of common shares would increase due to the elimination of non-controlling interests in Carlyle Holdings (including any tax impact). Based on these calculations, 230,681,668 of vested Carlyle Holdings partnership units and 3,112 of unvested Carlyle Holdings partnership units for the three months ended June 30, 2019 and 230,784,908 of vested Carlyle Holdings partnership units and 1,556 of unvested Carlyle Holdings partnership units for the six months ended June 30, 2019 were antidilutive, and therefore have been excluded.

12. Equity

~~Preferred Unit Issuance and Redemption~~

On September 13, 2017, the Company issued 16,000,000 of 5.875% Series A Preferred Units (the “Preferred Units”) for gross proceeds of $400.0 million, or $387.5 million, net of issuance costs and expenses. Distributions on the Preferred Units were payable quarterly on March 15, June 15, September 15, and December 15 of each year, beginning on December 15, 2017, when, as and if declared by the Board of Directors, at a rate per annum of 5.875%. Distributions on the Preferred Units were discretionary and non-cumulative.

On October 7, 2019, the Company redeemed the Preferred Units in full pursuant to the tax redemption provisions of the Preferred Units at a price of $25.339757 per unit, which is equal to $25.25 per Preferred Unit plus declared and unpaid distributions to, but excluding, the redemption date.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Stock Repurchase Program

In December 2018, the Board of Directors of the Company authorized the repurchase of up to $200.0 million of common units and/or Carlyle Holdings ~~units.~~units, inclusive of amounts under the February 2016 repurchase program described below. As part of the Conversion, in January 2020 the Board of Directors re-authorized the December 2018 repurchase program. In February 2021, the Board of Directors replenished the repurchase program to its limit of $200 million of common stock from its maximum remaining repurchase amount of $139.1 million. Under ~~the~~this repurchase program, shares of common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and actual number of shares of common stock repurchased will depend on a variety of factors, including legal requirements, price, and economic and market conditions. This repurchase program may be suspended or discontinued at any time and does not have a specified expiration date. ~~The Company did 0t repurchase any shares of common stock during~~During the three ~~months ended June 30, 2020. During the~~and six months ended June 30, ~~2020,~~2021, the Company paid an aggregate of ~~$26.4~~$15.0 million and $25.0 million, respectively, to repurchase and retire approximately ~~1.1~~0.3 million and 0.6 million shares, respectively, with all of the repurchases done via open market and brokered transactions. As of June 30, ~~2020, $139.1~~2021, $175.0 million of repurchase capacity remains under the program.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Dividends

The table below presents information regarding the quarterly dividends on the common shares, which were made at the sole discretion of the Board of Directors of the Company.

Dividend Record Date Dividend Payment Date
Dividend per Common Share ⁽¹⁾
Dividend to Common Stockholders
(Dollars in millions, except per share data)
May 13, 2019 May 20, 2019 $ 0.19
$ 21.0
August 12, 2019 August 19, 2019 0.43
49.9
November 12, 2019 November 19, 2019 0.31
36.5
February 18, 2020 February 25, 2020 0.25
87.4
Total 2019 Dividend Year $ 1.18
$ 194.8

May 12, 2020 May 19, 2020 $ 0.25
$ 87.2
August 11, 2020 August 18, 2020 0.25
88.3
Total 2020 Dividend Year (through Q2 2020) $ 0.50
$ 175.5

(1) The dividends to common stockholders beginning in Q4 2019 reflect the exchange of all Carlyle Holdings partnership units to shares of common stock in The Carlyle Group Inc. in connection with the Conversion on January 1, 2020.


Dividend Record Date	Dividend Payment Date	Dividend per Common Share		Dividend to Common Stockholders
		(Dollars in millions, except per share data)
May 12, 2020	May 19, 2020	$	0.25	$	87.2
August 11, 2020	August 18, 2020	0.25		88.3
November 10, 2020	November 17, 2020	0.25		88.4
February 16, 2021	February 23, 2021	0.25		88.7
Total 2020 Dividend Year		$	1.00	$	352.6

May 11, 2021	May 19, 2021	$	0.25	$	88.7
August 10, 2021	August 17, 2021	0.25		89.3


Total 2021 Dividend Year (through Q2 2021)		$	0.50	$	178.0

The Board of Directors will take into account general economic and business conditions, as well as the Company’s strategic plans and prospects, business and investment opportunities, financial condition and obligations, legal, tax and regulatory restrictions, other constraints on the payment of dividends by the Company to its common stockholders or by subsidiaries to the Company, and other such factors as the Board of Directors may deem relevant. In addition, the terms of the Company’s credit facility provide certain limits on the Company’s ability to pay dividends.

13. Equity-Based Compensation

In May 2012, Carlyle Group Management L.L.C., the general partner of the Partnership, adopted the Equity Incentive Plan. The Equity Incentive Plan, which was amended on January 1, 2020 in connection with the Conversion to reflect shares of the Company’s common stock, is a source of equity-based awards permitting the Company to grant to Carlyle employees, directors and consultants non-qualified options, share appreciation rights, common shares, restricted stock units and other awards based on the Company’s common shares. The total number of the Company’s common shares which were initially available for grant under the Equity Incentive Plan was 30,450,000. ~~The~~Prior to June 1, 2021, the Equity Incentive Plan ~~contains~~contained a provision which automatically ~~increases~~increased the number of the Company’s common shares available for grant based on a pre-determined formula; this increase ~~occurs~~occurred annually on January 1. As of January 1, ~~2020,~~2021, pursuant to the formula, the total number of the Company’s common shares available for grant under the Equity Incentive Plan was ~~34,715,889.~~

~~The Carlyle Group Inc.~~

~~Notes~~35,352,057. On June 1, 2021, the shareholders of the Company approved an amended and restated Equity Incentive Plan to establish a new 16,000,000 share reserve for awards granted under the ~~Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

plan, to replace the former automatic share reserve formula.

A summary of the status of the Company’s non-vested equity-based awards as of June 30, ~~2020~~2021 and a summary of changes for the six months ended June 30, ~~2020,~~2021, are presented below:

Unvested Shares Restricted
Stock
Units Weighted-
Average
Grant Date
Fair Value
Unvested
Common
Shares ⁽¹⁾
Weighted-
Average
Grant Date
Fair Value
Balance, December 31, 2019 14,622,159
$ 17.09
788,290
$ 20.30
Granted 3,311,876
$ 29.45
299,401
$ 33.40
Vested 2,625,422
$ 18.03
—
$ —
Forfeited 490,029
$ 18.54
—
$ —
Balance, June 30, 2020 14,818,584
$ 19.95
1,087,691
$ 23.90




Unvested Shares	Restricted Stock Units	Weighted- Average Grant Date Fair Value		Unvested Common Shares (1)	Weighted- Average Grant Date Fair Value
Balance, December 31, 2020	8,523,082	$	21.70	748,344	$	25.39
Granted	10,622,239	$	31.16	291,396	$	32.93
Vested	1,573,395	$	25.00	0	$	0
Forfeited	108,423	$	24.40	0	$	0
Balance, June 30, 2021	17,463,503	$	28.80	1,039,740	$	27.50

(1) Includes common shares issued in connection with the Company’s strategic investment in NGP.

During the six months ended June 30, 2021, the Company granted 7.0 million long-term, strategic restricted stock units to certain senior professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years. Compensation cost will be recognized over the requisite service period if it is probable that the performance condition will be satisfied.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The Company recorded compensation expense for restricted stock units of ~~$30.5~~$47.1 million and ~~$35.2~~$30.5 million for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, with ~~$7.7~~$10.6 million and ~~$3.2~~$7.7 million of corresponding deferred tax benefits, respectively. The Company recorded compensation expense for restricted stock units of ~~$59.6~~$79.5 million and ~~$71.1~~$59.6 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, with ~~$15.0~~$17.3 million and ~~$6.7~~$15.0 million of corresponding deferred tax benefits, respectively. As of June 30, ~~2020,~~2021, the total unrecognized equity-based compensation expense related to unvested restricted stock units ~~is $184.4~~was $358.1 million, which is expected to be recognized over a weighted-average term of ~~2.1~~2.4 years.

14. Segment Reporting

Carlyle conducts its operations through 43 reportable segments:

~~Corporate~~Global Private Equity – The ~~Corporate~~Global Private Equity segment is comprised of the Company’s operations that advise a diverse group of funds that invest in buyout, middle market and growth capital, ~~transactions that focus on either a particular geography, industry, or strategy.~~

~~Real Assets~~ ~~– The Real Assets segment is comprised of the Company’s operations that advise U.S. and international funds focused on~~ real estate ~~infrastructure,~~ and ~~energy~~natural resources transactions.

Global Credit – The Global Credit segment advises a group of funds that pursue investment opportunities across various types of credit, including loans and structured credit, direct lending, opportunistic credit, energy credit, distressed credit, aircraft financing and servicing, and capital solutions.

Investment Solutions – The Investment Solutions segment advises global private equity fund of funds programs and related co-investment and secondary activities through AlpInvest. This segment also ~~includes~~included Metropolitan Real Estate (“MRE”), a global manager of real estate fund of funds and related co-investment and secondary ~~activities.~~activities, prior to its sale on April 1, 2021.

The Company’s reportable business segments are differentiated by their various investment focuses and strategies. Overhead costs are generally allocated based on cash-based compensation and benefits expense for each segment. The Company’s earnings from its investment in NGP are presented in the respective operating captions within the ~~Real Assets~~Global Private Equity segment.

Distributable Earnings. Distributable Earnings, or “DE,” is a key performance benchmark used in the Company’s industry and is evaluated regularly by management in making resource deployment and compensation decisions and in assessing performance of the Company’s 43 reportable segments. Management also uses DE in budgeting, forecasting, and the overall management of the Company’s segments. Management believes that reporting DE is helpful to understanding the Company’s business and that investors should review the same supplemental financial measure that management uses to analyze the Company’s segment performance. DE is intended to show the amount of net realized earnings without the effects of the consolidation of the Consolidated Funds. DE is derived from the Company’s segment reported results and is used to assess performance.

Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it includes certain tax expenses associated with certain foreign performance revenues (comprised of performance allocations and incentive fees), and does not include unrealized performance allocations and related compensation expense, unrealized principal investment income, equity-based compensation expense, net income (loss) attributable to non-Carlyle interests in consolidated entities, or charges (credits) related to Carlyle corporate actions and non-recurring items. Charges

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

(credits) related to Carlyle corporate actions and non-recurring items include: charges (credits) associated with acquisitions, dispositions, or strategic investments, changes in the tax receivable agreement liability, corporate conversion costs, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earnouts and contingent consideration including gains and losses associated with the estimated fair value of contingent considerations issued in conjunction with acquisitions or strategic investments, impairment charges associated with lease right-of-use assets, gains and losses from the retirement of debt, charges associated with contract terminations and employee severance. Management believes the inclusion or exclusion of these items provides investors with a meaningful indication of the Company’s core operating performance.

Fee Related Earnings. Fee Related Earnings, or “FRE,” is used to assess the ability of the business to cover direct base compensation and operating expenses from total fee revenues. FRE differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it adjusts for the items included in the calculation of DE and also adjusts DE to exclude net realized performance revenues, realized principal investment income, net interest (interest income less interest expense), and certain general, administrative and other expenses when the timing of any future payment is uncertain.

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The following tables present the financial data for the Company’s 43 reportable segments for the three and six months ended June 30, ~~2020:~~

2021:

Three Months Ended June 30, 2020
Corporate
Private
Equity Real Assets Global
Credit Investment
Solutions Total
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 187.7
$ 74.8
$ 78.3
$ 45.6
$ 386.4
Portfolio advisory and transaction fees, net and other 2.8
0.3
15.2
—
18.3
Total fund level fee revenues 190.5
75.1
93.5
45.6
404.7
Realized performance revenues 40.5
75.5
5.5
30.7
152.2
Realized principal investment income 14.8
1.5
5.3
0.5
22.1
Interest income 0.3
0.2
2.6
0.1
3.2
Total revenues 246.1
152.3
106.9
76.9
582.2
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 94.8
35.8
54.5
25.0
210.1
Realized performance revenues related compensation 18.2
33.6
2.5
27.0
81.3
Total compensation and benefits 113.0
69.4
57.0
52.0
291.4
General, administrative, and other indirect expenses 22.7
14.9
13.1
7.4
58.1
Depreciation and amortization expense 4.4
1.7
1.8
1.3
9.2
Interest expense 10.2
5.6
6.9
2.4
25.1
Total expenses 150.3
91.6
78.8
63.1
383.8
Distributable Earnings $ 95.8
$ 60.7
$ 28.1
$ 13.8
$ 198.4
(-) Realized Net Performance Revenues 22.3
41.9
3.0
3.7
70.9
(-) Realized Principal Investment Income 14.8
1.5
5.3
0.5
22.1
(+) Net Interest 9.9
5.4
4.3
2.3
21.9
(=) Fee Related Earnings $ 68.6
$ 22.7
$ 24.1
$ 11.9
$ 127.3

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Three Months Ended June 30, 2021
	Global Private Equity		Global Credit		Investment Solutions		Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	263.4	$	86.1	$	60.3	$	409.8
Portfolio advisory and transaction fees, net and other	6.2		9.4		0		15.6
Total fund level fee revenues	269.6		95.5		60.3		425.4
Realized performance revenues	428.9		0		25.1		454.0
Realized principal investment income	24.0		9.8		4.0		37.8
Interest income	0.5		1.2		0.1		1.8
Total revenues	723.0		106.5		89.5		919.0
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	133.6		55.6		28.2		217.4
Realized performance revenues related compensation	193.6		0		23.0		216.6
Total compensation and benefits	327.2		55.6		51.2		434.0
General, administrative, and other indirect expenses	36.4		13.0		6.2		55.6
Depreciation and amortization expense	6.1		2.0		1.1		9.2
Interest expense	15.7		6.3		2.8		24.8
Total expenses	385.4		76.9		61.3		523.6
Distributable Earnings	$	337.6	$	29.6	$	28.2	$	395.4
(-) Realized Net Performance Revenues	235.3		0		2.1		237.4
(-) Realized Principal Investment Income	24.0		9.8		4.0		37.8
(+) Net Interest	15.2		5.1		2.7		23.0
(=) Fee Related Earnings	93.5		24.9		24.8		143.2

Six Months Ended June 30, 2020
Corporate
Private
Equity Real
Assets Global
Credit Investment Solutions Total
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 376.2
$ 155.0
$ 151.3
$ 85.4
$ 767.9
Portfolio advisory and transaction fees, net and other 6.7
0.6
17.8
—
25.1
Total fund level fee revenues 382.9
155.6
169.1
85.4
793.0
Realized performance revenues 94.1
87.1
26.5
116.1
323.8
Realized principal investment income 24.4
2.1
10.4
1.1
38.0
Interest income 1.5
0.8
5.7
0.5
8.5
Total revenues 502.9
245.6
211.7
203.1
1,163.3
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 189.0
71.3
103.6
50.0
413.9
Realized performance revenues related compensation 42.5
39.0
12.2
111.0
204.7
Total compensation and benefits 231.5
110.3
115.8
161.0
618.6
General, administrative, and other indirect expenses 40.2
34.6
18.7
12.9
106.4
Depreciation and amortization expense 7.8
3.1
3.4
2.3
16.6
Interest expense 20.2
9.5
13.9
4.7
48.3
Total expenses 299.7
157.5
151.8
180.9
789.9
Distributable Earnings $ 203.2
$ 88.1
$ 59.9
$ 22.2
$ 373.4
(-) Realized Net Performance Revenues 51.6
48.1
14.3
5.1
119.1
(-) Realized Principal Investment Income 24.4
2.1
10.4
1.1
38.0
(+) Net Interest 18.7
8.7
8.2
4.2
39.8
(=) Fee Related Earnings 145.9
46.6
43.4
20.2
256.1
Segment assets as of June 30, 2020 $ 3,794.9
$ 1,323.8
$ 1,573.9
$ 906.9
$ 7,599.5

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Six Months Ended June 30, 2021
	Global Private Equity		Global Credit		Investment Solutions		Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	523.6	$	166.1	$	112.3	$	802.0
Portfolio advisory and transaction fees, net and other	16.8		18.2		0.3		35.3
Total fund level fee revenues	540.4		184.3		112.6		837.3
Realized performance revenues	563.0		0.1		59.3		622.4
Realized principal investment income	47.7		15.7		4.4		67.8
Interest income	0.7		3.2		0.1		4.0
Total revenues	1,151.8		203.3		176.4		1,531.5
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	262.7		109.3		57.6		429.6
Realized performance revenues related compensation	253.8		0		55.2		309.0
Total compensation and benefits	516.5		109.3		112.8		738.6
General, administrative, and other indirect expenses	77.8		24.8		14.6		117.2
Depreciation and amortization expense	12.2		3.9		2.2		18.3
Interest expense	29.5		12.6		5.0		47.1
Total expenses	636.0		150.6		134.6		921.2
Distributable Earnings	$	515.8	$	52.7	$	41.8	$	610.3
(-) Realized Net Performance Revenues	309.2		0.1		4.1		313.4
(-) Realized Principal Investment Income	47.7		15.7		4.4		67.8
(+) Net Interest	28.8		9.4		4.9		43.1
(=) Fee Related Earnings	187.7		46.3		38.2		272.2
Segment assets as of June 30, 2021	$	9,822.8	$	1,881.5	$	1,612.9	$	13,317.2

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following tables present the financial data for the Company’s 43 reportable segments for the three and six months ended June 30, ~~2019:~~2020:


	Three Months Ended June 30, 2020
	Global Private Equity		Global Credit		Investment Solutions		Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	262.5	$	78.3	$	45.6	$	386.4
Portfolio advisory and transaction fees, net and other	3.1		15.2		0		18.3
Total fund level fee revenues	265.6		93.5		45.6		404.7
Realized performance revenues	116.0		5.5		30.7		152.2
Realized principal investment income	16.3		5.3		0.5		22.1
Interest income	0.5		2.6		0.1		3.2
Total revenues	398.4		106.9		76.9		582.2
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	130.6		54.5		25.0		210.1
Realized performance revenues related compensation	51.8		2.5		27.0		81.3
Total compensation and benefits	182.4		57.0		52.0		291.4
General, administrative, and other indirect expenses	37.6		13.1		7.4		58.1
Depreciation and amortization expense	6.1		1.8		1.3		9.2
Interest expense	15.8		6.9		2.4		25.1
Total expenses	241.9		78.8		63.1		383.8
Distributable Earnings	$	156.5	$	28.1	$	13.8	$	198.4
(-) Realized Net Performance Revenues	64.2		3.0		3.7		70.9
(-) Realized Principal Investment Income	16.3		5.3		0.5		22.1
(+) Net Interest	15.3		4.3		2.3		21.9
(=) Fee Related Earnings	$	91.3	$	24.1	$	11.9	$	127.3

Three Months Ended June 30, 2019
Corporate
Private
Equity Real Assets Global
Credit Investment
Solutions Total
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 190.3
$ 105.8
$ 79.2
$ 39.2
$ 414.5
Portfolio advisory and transaction fees, net and other 11.0
0.5
3.4
—
14.9
Total fund level fee revenues 201.3
106.3
82.6
39.2
429.4
Realized performance revenues 11.2
24.6
0.1
6.0
41.9
Realized principal investment income 1.0
70.1
1.4
1.4
73.9
Interest income 1.2
0.7
3.4
0.2
5.5
Total revenues 214.7
201.7
87.5
46.8
550.7
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 101.1
34.0
49.5
22.5
207.1
Realized performance revenues related compensation 5.4
11.2
—
4.5
21.1
Total compensation and benefits 106.5
45.2
49.5
27.0
228.2
General, administrative, and other indirect expenses 33.3
17.0
20.5
9.2
80.0
Depreciation and amortization expense 4.5
1.8
2.0
1.3
9.6
Interest expense 7.9
3.1
6.7
1.8
19.5
Total expenses 152.2
67.1
78.7
39.3
337.3
Distributable Earnings $ 62.5
$ 134.6
$ 8.8
$ 7.5
$ 213.4
(-) Realized Net Performance Revenues 5.8
13.4
0.1
1.5
20.8
(-) Realized Principal Investment Income 1.0
70.1
1.4
1.4
73.9
(+) Net Interest 6.7
2.4
3.3
1.6
14.0
(=) Fee Related Earnings $ 62.4
$ 53.5
$ 10.6
$ 6.2
$ 132.7

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

Six Months Ended June 30, 2019
Corporate
Private
Equity Real
Assets Global
Credit Investment Solutions Total
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 380.3
$ 183.2
$ 154.0
$ 78.6
$ 796.1
Portfolio advisory and transaction fees, net and other 14.8
3.8
6.3
—
24.9
Total fund level fee revenues 395.1
187.0
160.3
78.6
821.0
Realized performance revenues 34.6
29.5
0.1
26.9
91.1
Realized principal investment income (1.3 ) 71.7
6.0
1.6
78.0
Interest income 2.4
1.2
7.2
0.7
11.5
Total revenues 430.8
289.4
173.6
107.8
1,001.6
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 197.8
69.8
96.1
45.7
409.4
Realized performance revenues related compensation 15.8
23.2
—
24.3
63.3
Total compensation and benefits 213.6
93.0
96.1
70.0
472.7
General, administrative, and other indirect expenses 67.4
33.8
37.0
17.5
155.7
Depreciation and amortization expense 9.4
3.7
4.1
2.7
19.9
Interest expense 15.8
6.2
13.4
3.7
39.1
Total expenses 306.2
136.7
150.6
93.9
687.4
Distributable Earnings $ 124.6
$ 152.7
$ 23.0
$ 13.9
$ 314.2
(-) Realized Net Performance Revenues 18.8
6.3
0.1
2.6
27.8
(-) Realized Principal Investment Income (Loss) (1.3 ) 71.7
6.0
1.6
78.0
(+) Net Interest 13.4
5.0
6.2
3.0
27.6
(=) Fee Related Earnings $ 120.5
$ 79.7
$ 23.1
$ 12.7
$ 236.0


	Six Months Ended June 30, 2020
	Global Private Equity		Global Credit		Investment Solutions		Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	531.2	$	151.3	$	85.4	$	767.9
Portfolio advisory and transaction fees, net and other	7.3		17.8		0		25.1
Total fund level fee revenues	538.5		169.1		85.4		793.0
Realized performance revenues	181.2		26.5		116.1		323.8
Realized principal investment income	26.5		10.4		1.1		38.0
Interest income	2.3		5.7		0.5		8.5
Total revenues	748.5		211.7		203.1		1,163.3
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	260.3		103.6		50.0		413.9
Realized performance revenues related compensation	81.5		12.2		111.0		204.7
Total compensation and benefits	341.8		115.8		161.0		618.6
General, administrative, and other indirect expenses	74.8		18.7		12.9		106.4
Depreciation and amortization expense	10.9		3.4		2.3		16.6
Interest expense	29.7		13.9		4.7		48.3
Total expenses	457.2		151.8		180.9		789.9
Distributable Earnings	$	291.3	$	59.9	$	22.2	$	373.4
(-) Realized Net Performance Revenues	99.7		14.3		5.1		119.1
(-) Realized Principal Investment Income	26.5		10.4		1.1		38.0
(+) Net Interest	27.4		8.2		4.2		39.8
(=) Fee Related Earnings	$	192.5	$	43.4	$	20.2	$	256.1

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

The following tables reconcile the Total Segments to the Company’s Income (Loss) Before Provision for Taxes for the three months ended June 30, ~~2020~~2021 and ~~2019 .~~2020.


	Three Months Ended June 30, 2021
	Total Reportable Segments		Consolidated Funds		Reconciling Items			Carlyle Consolidated

	(Dollars in millions)
Revenues	$	919.0	$	62.1	$	1,725.2	(a)	$	2,706.3
Expenses	$	523.6	$	54.2	$	873.2	(b)	$	1,451.0
Other income	$	0	$	(2.6)	$	0	(c)	$	(2.6)
Distributable earnings	$	395.4	$	5.3	$	852.0	(d)	$	1,252.7

Three Months Ended June 30, 2020
Total Reportable Segments Consolidated Funds Reconciling Items Carlyle Consolidated

(Dollars in millions)
Revenues $ 582.2
$ 55.2
$ 493.6
(a) $ 1,131.0
Expenses $ 383.8
$ 47.1
$ 493.6
(b) $ 924.5
Other income (loss) $ —
$ 50.3
$ —
(c) $ 50.3
Distributable earnings $ 198.4
$ 58.4
$ —
(d) $ 256.8

Three Months Ended June 30, 2019
Total Reportable Segments Consolidated Funds Reconciling Items Carlyle Consolidated

(Dollars in millions)
Revenues $ 550.7
$ 45.8
$ 464.6
(a) $ 1,061.1
Expenses $ 337.3
$ 36.8
$ 154.2
(b) $ 528.3
Other income (loss) $ —
$ 9.2
$ —
(c) $ 9.2
Distributable earnings $ 213.4
$ 18.2
$ 310.4
(d) $ 542.0


	Three Months Ended June 30, 2020
	Total Reportable Segments		Consolidated Funds		Reconciling Items			Carlyle Consolidated

	(Dollars in millions)
Revenues	$	582.2	$	55.2	$	493.6	(a)	$	1,131.0
Expenses	$	383.8	$	47.1	$	493.6	(b)	$	924.5
Other income	$	0	$	50.3	$	0	(c)	$	50.3
Distributable earnings	$	198.4	$	58.4	$	0	(d)	$	256.8

The following tables reconcile the Total Segments to the Company’s Income (Loss) Before Provision for Taxes for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, and Total Assets as of June 30, ~~2020.~~2021.


	Six Months Ended June 30, 2021
	Total Reportable Segments		Consolidated Funds		Reconciling Items			Carlyle Consolidated

	(Dollars in millions)
Revenues	$	1,531.5	$	123.2	$	3,488.8	(a)	$	5,143.5
Expenses	$	921.2	$	110.7	$	1,704.3	(b)	$	2,736.2
Other income (loss)	$	0	$	9.7	$	0	(c)	$	9.7
Distributable earnings	$	610.3	$	22.2	$	1,784.5	(d)	$	2,417.0
Total assets	$	13,317.2	$	6,500.0	$	(168.0)	(e)	$	19,649.2

Six Months Ended June 30, 2020
Total Reportable Segments Consolidated Funds Reconciling Items Carlyle Consolidated

(Dollars in millions)
Revenues $ 1,163.3
$ 108.2
$ (886.2 ) (a) $ 385.3
Expenses $ 789.9
$ 100.9
$ (36.1 ) (b) $ 854.7
Other income (loss) $ —
$ (62.8 ) $ —
(c) $ (62.8 )
Distributable earnings $ 373.4
$ (55.5 ) $ (850.1 ) (d) $ (532.2 )
Total assets $ 7,599.5
$ 4,822.0
$ (98.8 ) (e) $ 12,322.7

Six Months Ended June 30, 2019
Total Reportable Segments Consolidated Funds Reconciling Items Carlyle Consolidated

(Dollars in millions)
Revenues $ 1,001.6
$ 98.2
$ 1,048.3
(a) $ 2,148.1
Expenses $ 687.4
$ 80.5
$ 362.9
(b) $ 1,130.8
Other income (loss) $ —
$ (5.0 ) $ —
(c) $ (5.0 )
Distributable earnings $ 314.2
$ 12.7
$ 685.4
(d) $ 1,012.3


	Six Months Ended June 30, 2020
	Total Reportable Segments		Consolidated Funds		Reconciling Items			Carlyle Consolidated

	(Dollars in millions)
Revenues	$	1,163.3	$	108.2	$	(886.2)	(a)	$	385.3
Expenses	$	789.9	$	100.9	$	(36.1)	(b)	$	854.7
Other income (loss)	$	0	$	(62.8)	$	0	(c)	$	(62.8)
Distributable earnings	$	373.4	$	(55.5)	$	(850.1)	(d)	$	(532.2)

~~(a)~~

The Revenues adjustment principally represents unrealized performance revenues, unrealized principal investment income (loss) (including Fortitude Re), revenues earned from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total revenues, adjustments for amounts attributable to non-controlling interests in consolidated entities, adjustments related to expenses associated with the investments in NGP Management

(a)The ~~Carlyle Group Inc.~~

~~Notes~~Revenues adjustment principally represents unrealized performance revenues, unrealized principal investment income (loss) (including Fortitude Re), revenues earned from the Consolidated Funds which were eliminated in consolidation to arrive at the ~~Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

Company’s total revenues, adjustments for amounts attributable to non-controlling interests in consolidated entities, adjustments related to expenses associated with the investments in NGP Management and its affiliates that are included in operating captions or are excluded from the segment results, adjustments to reflect the reimbursement of certain costs incurred on behalf of Carlyle funds on a net basis, and the inclusion of tax expenses associated with certain foreign performance revenues, as detailed below:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Unrealized performance revenues $ 1,037.1
$ 167.3
$ (71.9 ) $ 469.1
Unrealized principal investment income (loss) (459.5 ) 234.9
(724.2 ) 473.5
Adjusted unrealized principal investment income (loss) from investment in Fortitude Re (81.6 ) 40.1
(104.4 ) 67.1
Adjustments related to expenses associated with investments in NGP Management and its affiliates (3.9 ) (4.1 ) (7.8 ) (8.1 )
Tax expense associated with certain performance revenues 0.1
—
0.1
—
Non-Carlyle economic interests in acquired businesses and other adjustments to present certain costs on a net basis 56.8
42.7
(20.9 ) 63.1
Elimination of revenues of Consolidated Funds (55.4 ) (16.3 ) 42.9
(16.4 )
$ 493.6
$ 464.6
$ (886.2 ) $ 1,048.3

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Unrealized performance revenues	$	1,620.7	$	1,037.1	$	3,242.5	$	(71.9)
Unrealized principal investment income (loss)	78.8		(459.5)		210.1		(724.2)
Adjusted unrealized principal investment income (loss) from investment in Fortitude Re	0		(81.6)		0		(104.4)
Adjustments related to expenses associated with investments in NGP Management and its affiliates	(3.0)		(3.9)		(6.6)		(7.8)
Tax expense associated with certain performance revenues	0.3		0.1		0.2		0.1
Non-Carlyle economic interests in acquired businesses and other adjustments to present certain costs on a net basis	41.1		56.8		86.4		(20.9)
Elimination of revenues of Consolidated Funds	(12.7)		(55.4)		(43.8)		42.9
	$	1,725.2	$	493.6	$	3,488.8	$	(886.2)

The following table reconciles the total segments fund level fee revenue to the most directly comparable U.S. GAAP measure, the Company’s consolidated fund management fees, for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Total Reportable Segments - Fund level fee revenues	$	425.4	$	404.7	$	837.3	$	793.0
Adjustments (1)	(31.0)		(32.9)		(61.9)		(65.3)
Carlyle Consolidated - Fund management fees	$	394.4	$	371.8	$	775.4	$	727.7

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Total Reportable Segments - Fund level fee revenues $ 404.7
$ 429.4
$ 793.0
$ 821.0
Adjustments⁽¹⁾
(32.9 ) (38.5 ) (65.3 ) (76.7 )
Carlyle Consolidated - Fund management fees $ 371.8
$ 390.9
$ 727.7
$ 744.3

(1) Adjustments represent the reclassification of NGP management fees from principal investment income, the reclassification of certain incentive fees from business development companies and other credit products, management fees earned from consolidated CLOs which were eliminated in consolidation to arrive at the Company’s fund management fees, and the reclassification of certain amounts included in portfolio advisory fees, net and other in the segment results that are included in interest and other income in the U.S. GAAP results.

~~(b)~~

The Expenses adjustment represents the elimination of intercompany expenses of the Consolidated Funds payable to the Company, the inclusion of equity-based compensation, certain tax expenses associated with realized performance revenues related compensation, and unrealized performance revenues related compensation, adjustments related to expenses associated with the investment in NGP Management that are included in operating captions, adjustments to reflect the reimbursement of certain costs incurred on behalf of Carlyle funds on a net basis, changes in the tax receivable agreement liability, and charges and credits associated with Carlyle corporate actions and non-recurring items, as detailed below:

(b)The Expenses adjustment represents the elimination of intercompany expenses of the Consolidated Funds payable to the Company, the inclusion of equity-based compensation, certain tax expenses associated with realized performance revenues related compensation, and unrealized performance revenues related compensation, adjustments related to expenses associated with the investment in NGP Management that are included in operating captions, adjustments to reflect the reimbursement of certain costs incurred on behalf of Carlyle funds on a net basis, changes in the tax receivable agreement liability, and charges and credits associated with Carlyle corporate actions and non-recurring items, as detailed below:

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Unrealized performance revenues related compensation	$	776.8	$	449.7	$	1,552.1	$	(130.4)
Equity-based compensation	50.3		34.6		85.2		66.3
Acquisition or disposition-related charges (credits) and amortization of intangibles	11.3		7.1		30.3		10.1

Tax expense associated with certain foreign performance revenues related compensation	(3.7)		0.7		(9.6)		11.9
Non-Carlyle economic interests in acquired businesses and other adjustments to present certain costs on a net basis	17.4		5.2		37.3		13.2
Right-of-use asset impairment	26.8		0		26.8		0

Other adjustments including severance and C-Corp. conversion costs in 2020	2.0		4.1		4.0		8.8
Elimination of expenses of Consolidated Funds	(7.7)		(7.8)		(21.8)		(16.0)
	$	873.2	$	493.6	$	1,704.3	$	(36.1)

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Unrealized performance revenues related compensation $ 449.7
$ 84.9
$ (130.4 ) $ 230.9
Equity-based compensation 34.6
38.3
66.3
77.7
Acquisition related charges and amortization of intangibles and impairment 7.1
15.4
10.1
27.4
Other non-operating expense 0.5
0.4
0.7
0.7
Tax expense associated with certain foreign performance revenues related compensation 0.7
3.6
11.9
(2.5 )
Non-Carlyle economic interests in acquired businesses and other adjustments to present certain costs on a net basis 5.2
10.0
13.2
30.9
Debt extinguishment costs —
—
—
0.1
Corporate conversion costs, severance and other adjustments 3.6
10.9
8.1
12.6
Elimination of expenses of Consolidated Funds (7.8 ) (9.3 ) (16.0 ) (14.9 )
$ 493.6
$ 154.2
$ (36.1 ) $ 362.9

(c)The Other Income (Loss) adjustment results from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total Other Income (Loss).


~~(c)~~	~~The Other Income (Loss) adjustment results from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total Other Income (Loss).~~

(d)The following table is a reconciliation of Income (Loss) Before Provision for Income Taxes to Distributable Earnings and to Fee Related Earnings:


~~(d)~~	~~The following table is a reconciliation of Income (Loss) Before Provision for Income Taxes to Distributable Earnings and to Fee Related Earnings:~~


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Income (loss) before provision for income taxes	$	1,252.7	$	256.8	$	2,417.0	$	(532.2)
Adjustments:
Net unrealized performance revenues	(844.0)		(587.4)		(1,690.4)		(58.5)
Unrealized principal investment (income) loss (1)	(78.8)		459.5		(210.1)		724.2
Adjusted unrealized principal investment (income) loss from investment in Fortitude Re (2)	0		81.6		0		104.4
Equity-based compensation (3)	50.3		34.6		85.2		66.3
Acquisition or disposition-related charges (credits), including amortization of intangibles	11.3		7.1		30.3		10.1

Tax (expense) benefit associated with certain foreign performance revenues	(3.4)		0.7		(9.4)		11.9
Net (income) loss attributable to non-controlling interests in consolidated entities	(21.5)		(58.6)		(43.1)		38.4
Right-of-use asset impairment	26.8		0		26.8		0

Other adjustments including severance and C-Corp. conversion costs in 2020	2.0		4.1		4.0		8.8
Distributable Earnings	$	395.4	$	198.4	$	610.3	$	373.4
Realized performance revenues, net of related compensation (4)	237.4		70.9		313.4		119.1
Realized principal investment income (4)	37.8		22.1		67.8		38.0
Net interest	23.0		21.9		43.1		39.8
Fee Related Earnings	$	143.2	$	127.3	$	272.2	$	256.1

(1)Adjustments to unrealized principal investment income (loss) during the three and six months ended June 30, 2020 are inclusive of $300.9 million and $211.8 million, respectively, of unrealized gains, resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S. GAAP financial statements prior to the contribution of the Company’s investment in Fortitude Holdings to Carlyle FRL on June 2, 2020. At the time of the contribution of the Company’s investment to Carlyle FRL, the Company began accounting for its investment under the equity method based on its net asset value in the fund, which is an investment company that accounts for its investment in Fortitude Holdings at fair value.

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Income (loss) before provision for income taxes $ 256.8
$ 542.0
$ (532.2 ) $ 1,012.3
Adjustments:
Net unrealized performance revenues (587.4 ) (82.4 ) (58.5 ) (238.2 )
Unrealized principal investment (income) loss 459.5
(234.9 ) 724.2
(473.5 )
Adjusted unrealized principal investment (income) loss from investment in Fortitude Re 81.6
(40.1 ) 104.4
(67.1 )
Equity-based compensation ⁽¹⁾
34.6
38.3
66.3
77.7
Acquisition related charges, including amortization of intangibles and impairment 7.1
15.4
10.1
27.4
Other non-operating expense 0.5
0.4
0.7
0.7
Tax (expense) benefit associated with certain foreign performance revenues 0.7
3.6
11.9
(2.5 )
Net (income) loss attributable to non-controlling interests in consolidated entities (58.6 ) (39.8 ) 38.4
(35.3 )
Debt extinguishment costs —
—
—
0.1
Corporate conversion costs, severance and other adjustments 3.6
10.9
8.1
12.6
Distributable Earnings $ 198.4
$ 213.4
$ 373.4
$ 314.2
Realized performance revenues, net of related compensation⁽²⁾
70.9
20.8
119.1
27.8
Realized principal investment income⁽²⁾
22.1
73.9
38.0
78.0
Net interest 21.9
14.0
39.8
27.6
Fee Related Earnings $ 127.3
$ 132.7
$ 256.1
$ 236.0


~~(1)~~	Equity-based compensation for the three and six months ended June 30, 2020 and 2019 includes amounts that are presented in principal investment income and general, administrative and other expenses in our U.S. GAAP statement of operations.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

(2)Adjusted unrealized principal investment income (loss) from the investment in Fortitude Re represents 19.9% of Fortitude Holdings’ estimated net income (loss), excluding the unrealized gains (losses) related to embedded derivatives, prior to the contribution of the Company’s investment in Fortitude Holdings to Carlyle FRL on June 2, 2020.

~~(2)~~ (3)Equity-based compensation for the three and six months ended June 30, 2021 and 2020 includes amounts that are presented in principal investment income and general, administrative and other expenses in the Company’s U.S. GAAP statement of operations.

(4)See reconciliation to most directly comparable U.S. GAAP measure below:


	Three Months Ended June 30, 2021
	Carlyle Consolidated		Adjustments (3)		Total Reportable Segments
	(Dollars in millions)
Performance revenues	$	2,080.7	$	(1,626.7)	$	454.0
Performance revenues related compensation expense	994.0		(777.4)		216.6
Net performance revenues	$	1,086.7	$	(849.3)	$	237.4

Principal investment income (loss)	$	137.7	$	(99.9)	$	37.8

	Six Months Ended June 30, 2021
	Carlyle Consolidated		Adjustments (5)		Total Reportable Segments
	(Dollars in millions)
Performance revenues	$	3,866.8	$	(3,244.4)	$	622.4
Performance revenues related compensation expense	1,860.6		(1,551.6)		309.0
Net performance revenues	$	2,006.2	$	(1,692.8)	$	313.4

Principal investment income (loss)	$	316.8	$	(249.0)	$	67.8


	Three Months Ended June 30, 2020									Three Months Ended June 30, 2020
	Carlyle Consolidated			Adjustments⁽³⁾			Total Reportable Segments			Carlyle Consolidated		Adjustments (3)		Total Reportable Segments
	(Dollars in millions)									(Dollars in millions)
Performance revenues	$	1,191.8		$	(1,039.6	)	$	152.2	Performance revenues	$	1,191.8	$	(1,039.6)	$	152.2
Performance revenues related compensation expense	535.6			(454.3		)	81.3		Performance revenues related compensation expense	535.6		(454.3)		81.3
Net performance revenues	$	656.2		$	(585.3	)	$	70.9	Net performance revenues	$	656.2	$	(585.3)	$	70.9

Principal investment income (loss)	$	(512.6	)	$	534.7		$	22.1	Principal investment income (loss)	$	(512.6)	$	534.7	$	22.1

	Six Months Ended June 30, 2020									Six Months Ended June 30, 2020
	Carlyle Consolidated			Adjustments⁽³⁾			Total Reportable Segments			Carlyle Consolidated		Adjustments (3)		Total Reportable Segments
	(Dollars in millions)									(Dollars in millions)
Performance revenues	$	254.2		$	69.6		$	323.8	Performance revenues	$	254.2	$	69.6	$	323.8
Performance revenues related compensation expense	93.1			111.6			204.7		Performance revenues related compensation expense	93.1		111.6		204.7
Net performance revenues	$	161.1		$	(42.0	)	$	119.1	Net performance revenues	$	161.1	$	(42.0)	$	119.1

Principal investment income (loss)	$	(765.9	)	$	803.9		$	38.0	Principal investment income (loss)	$	(765.9)	$	803.9	$	38.0

Three Months Ended June 30, 2019
Carlyle
Consolidated
Adjustments⁽³⁾
Total
Reportable
Segments
(Dollars in millions)
Performance revenues $ 247.6
$ (205.7 ) $ 41.9
Performance revenues related compensation expense 113.6
(92.5 ) 21.1
Net performance revenues $ 134.0
$ (113.2 ) $ 20.8

Principal investment income (loss) $ 342.0
$ (268.1 ) $ 73.9

Six Months Ended June 30, 2019
Carlyle
Consolidated
Adjustments ⁽³⁾
Total
Reportable
Segments
(Dollars in millions)
Performance revenues $ 596.7
$ (505.6 ) $ 91.1
Performance revenues related compensation expense 299.0
(235.7 ) 63.3
Net performance revenues $ 297.7
$ (269.9 ) $ 27.8

Principal investment income (loss) $ 643.8
$ (565.8 ) $ 78.0

(3)5) Adjustments to performance revenues and principal investment income (loss) relate to (i) unrealized performance allocations net of related compensation expense and unrealized principal investment income, which are excluded from the segment results, (ii) amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

included in the segment results, (iii) amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results, (iv) the reclassification of NGP performance revenues, which are included in principal investment income in U.S. GAAP financial statements, (v) the reclassification of certain incentive fees from business development companies, which are included in fund management fees in the segment results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues. Adjustments to principal investment income (loss) also

~~The Carlyle Group Inc.~~

~~Notes to the Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

include the reclassification of earnings for the investments in NGP Management and its affiliates to the appropriate operating captions for the segment results, and the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the segment results.

(e) The Total Assets adjustment represents the addition of the assets of the Consolidated Funds that were eliminated in consolidation to arrive at the Company’s total assets.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

15. Subsequent Events

Dividends

In July ~~2020,~~2021, the Company’s Board of Directors declared a quarterly dividend of $0.25 per share of common stock to common stockholders of record at the close of business on August ~~11, 2020,~~10, 2021, payable on August ~~18, 2020.~~17, 2021.

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

16. Supplemental Financial Information

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company’s financial position as of June 30, ~~2020~~2021 and December 31, ~~2019~~2020 and results of operations for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. The supplemental statement of cash flows is presented without effects of the Consolidated Funds.


	As of June 30, 2021
	Consolidated Operating Entities		Consolidated Funds		Eliminations		Consolidated
	(Dollars in millions)
Assets
Cash and cash equivalents	$	1,586.2	$	0	$	0	$	1,586.2
Cash and cash equivalents held at Consolidated Funds	0		187.5		0		187.5
Restricted cash	31.0		0		0		31.0



Investments, including performance allocations of $8,145.9 million	10,803.7		0		(161.4)		10,642.3
Investments of Consolidated Funds	0		6,123.4		0		6,123.4
Due from affiliates and other receivables, net	282.6		0		(6.6)		276.0
Due from affiliates and other receivables of Consolidated Funds, net	0		189.0		0		189.0

Fixed assets, net	142.0		0		0		142.0
Lease right-of-use assets, net	336.6		0		0		336.6
Deposits and other	76.8		0.1		0		76.9

Intangible assets, net	38.9		0		0		38.9
Deferred tax assets	19.4		0		0		19.4
Total assets	$	13,317.2	$	6,500.0	$	(168.0)	$	19,649.2
Liabilities and equity
Debt obligations	$	2,307.5	$	0	$	0	$	2,307.5
Loans payable of Consolidated Funds	0		5,393.2		(0.1)		5,393.1

Accounts payable, accrued expenses and other liabilities	309.8		0		0		309.8
Accrued compensation and benefits	4,566.7		0		0		4,566.7
Due to affiliates	402.1		0		0		402.1
Deferred revenue	123.1		0		0		123.1
Deferred tax liabilities	466.5		0		0		466.5
Other liabilities of Consolidated Funds	0		923.6		0		923.6

Lease liabilities	513.8		0		0		513.8
Accrued giveback obligations	21.0		0		0		21.0

Total liabilities	8,710.5		6,316.8		(0.1)		15,027.2

Common stock	3.5		0		0		3.5
Additional paid-in capital	2,621.7		163.4		(163.4)		2,621.7
Retained earnings (deficit)	1,940.1		0		0		1,940.1
Accumulated other comprehensive income (loss)	(225.2)		1.4		(4.5)		(228.3)

Non-controlling interests in consolidated entities	266.6		18.4		0		285.0

Total equity	4,606.7		183.2		(167.9)		4,622.0
Total liabilities and equity	$	13,317.2	$	6,500.0	$	(168.0)	$	19,649.2

As of June 30, 2020
Consolidated
Operating
Entities Consolidated
Funds Eliminations Consolidated
(Dollars in millions)
Assets
Cash and cash equivalents $ 554.5
$ —
$ —
$ 554.5
Cash and cash equivalents held at Consolidated Funds —
98.0
—
98.0
Restricted cash 4.5
—
—
4.5
Investments, including performance allocations of $3,792.2 million 6,069.1
—
(93.1 ) 5,976.0
Investments of Consolidated Funds —
4,581.2
—
4,581.2
Due from affiliates and other receivables, net 281.5
—
(5.7 ) 275.8
Due from affiliates and other receivables of Consolidated Funds, net —
142.5
—
142.5
Fixed assets, net 122.3
—
—
122.3
Lease right-of-use assets, net 189.6
—
—
189.6
Deposits and other 56.4
0.3
—
56.7
Intangible assets, net 55.1
—
—
55.1
Deferred tax assets 266.5
—
—
266.5
Total assets $ 7,599.5
$ 4,822.0
$ (98.8 ) $ 12,322.7
Liabilities and equity
Debt obligations $ 1,943.7
$ —
$ —
$ 1,943.7
Loans payable of Consolidated Funds —
4,517.5
—
4,517.5
Accounts payable, accrued expenses and other liabilities 316.6
—
—
316.6
Accrued compensation and benefits 2,359.5
—
—
2,359.5
Due to affiliates 458.8
—
—
458.8
Deferred revenue 51.6
—
—
51.6
Deferred tax liabilities 36.9
—
—
36.9
Other liabilities of Consolidated Funds —
205.5
—
205.5
Lease liabilities 266.9
—
—
266.9
Accrued giveback obligations 23.0
—
—
23.0
Total liabilities 5,457.0
4,723.0
—
10,180.0
Common stock 3.5
—
—
3.5
Additional paid-in capital 2,679.8
98.6
(98.6 ) 2,679.8
Retained earnings (deficit) (466.1 ) —
—
(466.1 )
Accumulated other comprehensive loss (256.7 ) (2.0 ) (0.2 ) (258.9 )
Non-controlling interests in consolidated entities 182.0
2.4
—
184.4
Total equity 2,142.5
99.0
(98.8 ) 2,142.7
Total liabilities and equity $ 7,599.5
$ 4,822.0
$ (98.8 ) $ 12,322.7

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	As of December 31, 2020
	Consolidated Operating Entities		Consolidated Funds		Eliminations		Consolidated
	(Dollars in millions)
Assets
Cash and cash equivalents	$	987.6	$	0	$	0	$	987.6
Cash and cash equivalents held at Consolidated Funds	0		148.6		0		148.6
Restricted cash	2.0		0		0		2.0



Investments, including performance allocations of $4,968.6 million	7,551.7		0		(170.8)		7,380.9
Investments of Consolidated Funds	0		6,056.9		0		6,056.9
Due from affiliates and other receivables, net	278.9		0		(6.4)		272.5
Due from affiliates and other receivables of Consolidated Funds, net	0		89.1		0		89.1

Fixed assets, net	149.2		0		0		149.2
Lease right-of-use assets, net	361.1		0		0		361.1
Deposits and other	51.7		0		0		51.7

Intangible assets, net	48.7		0		0		48.7
Deferred tax assets	96.5		0		0		96.5
Total assets	$	9,527.4	$	6,294.6	$	(177.2)	$	15,644.8
Liabilities and equity
Debt obligations	$	1,970.9	$	0	$	0	$	1,970.9
Loans payable of Consolidated Funds	0		5,563.0		0		5,563.0

Accounts payable, accrued expenses and other liabilities	286.3		0		0		286.3
Accrued compensation and benefits	3,222.6		0		0		3,222.6
Due to affiliates	436.7		0		0		436.7
Deferred revenue	89.0		0		0		89.0
Deferred tax liabilities	57.8		0		0		57.8
Other liabilities of Consolidated Funds	0		556.1		0		556.1

Lease liabilities	513.5		0		0		513.5
Accrued giveback obligations	18.7		0		0		18.7
Total liabilities	6,595.5		6,119.1		0		12,714.6

Common stock	3.5		0		0		3.5
Additional paid-in capital	2,546.2		167.6		(167.6)		2,546.2
Retained earnings	348.2		0		0		348.2
Accumulated other comprehensive income (loss)	(205.8)		6.7		(9.6)		(208.7)

Non-controlling interests in consolidated entities	239.8		1.2		0		241.0

Total equity	2,931.9		175.5		(177.2)		2,930.2
Total liabilities and equity	$	9,527.4	$	6,294.6	$	(177.2)	$	15,644.8

As of December 31, 2019
Consolidated
Operating
Entities Consolidated
Funds Eliminations Consolidated
(Dollars in millions)
Assets
Cash and cash equivalents $ 793.4
$ —
$ —
$ 793.4
Cash and cash equivalents held at Consolidated Funds —
122.4
—
122.4
Restricted cash 34.6
—
—
34.6
Investments, including performance allocations of $3,855.6 million 6,982.7
—
(178.3 ) 6,804.4
Investments of Consolidated Funds —
5,007.3
—
5,007.3
Due from affiliates and other receivables, net 279.0
—
(5.1 ) 273.9
Due from affiliates and other receivables of Consolidated Funds, net —
74.4
—
74.4
Fixed assets, net 108.2
—
—
108.2
Lease right-of-use assets, net 203.8
—
—
203.8
Deposits and other 53.8
0.2
—
54.0
Intangible assets, net 62.3
—
—
62.3
Deferred tax assets 270.1
—
—
270.1
Total assets $ 8,787.9
$ 5,204.3
$ (183.4 ) $ 13,808.8
Liabilities and partners’ capital
Debt obligations $ 1,976.3
$ —
$ —
$ 1,976.3
Loans payable of Consolidated Funds —
4,706.7
—
4,706.7
Accounts payable, accrued expenses and other liabilities 354.9
—
—
354.9
Accrued compensation and benefits 2,496.5
—
—
2,496.5
Due to affiliates 542.1
—
—
542.1
Deferred revenue 71.0
—
—
71.0
Deferred tax liabilities 65.2
—
—
65.2
Other liabilities of Consolidated Funds —
316.1
—
316.1
Lease liabilities 288.2
—
—
288.2
Accrued giveback obligations 22.2
—
—
22.2
Total liabilities 5,816.4
5,022.8
—
10,839.2
Partners’ capital 703.8
61.7
(61.7 ) 703.8
Accumulated other comprehensive loss (84.5 ) (0.1 ) (0.6 ) (85.2 )
Non-controlling interests in consolidated entities 333.4
0.1
—
333.5
Non-controlling interests in Carlyle Holdings 2,018.8
119.8
(121.1 ) 2,017.5
Total partners’ capital 2,971.5
181.5
(183.4 ) 2,969.6
Total liabilities and partners’ capital $ 8,787.9
$ 5,204.3
$ (183.4 ) $ 13,808.8

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Three Months Ended June 30, 2021
	Consolidated Operating Entities		Consolidated Funds		Eliminations		Consolidated
	(Dollars in millions)
Revenues
Fund management fees	$	400.4	$	0	$	(6.0)	$	394.4
Incentive fees	10.4		0		0		10.4



Investment income
Performance allocations	2,080.7		0		0		2,080.7


Principal investment income	139.5		0		(1.8)		137.7


Total investment income	2,220.2		0		(1.8)		2,218.4
Interest and other income	25.9		0		(4.9)		21.0
Interest and other income of Consolidated Funds	0		62.1		0		62.1

Total revenues	2,656.9		62.1		(12.7)		2,706.3
Expenses
Compensation and benefits
Cash-based compensation and benefits	231.8		0		0		231.8
Equity-based compensation	47.2		0		0		47.2
Performance allocations and incentive fee related compensation	994.0		0		0		994.0


Total compensation and benefits	1,273.0		0		0		1,273.0
General, administrative and other expenses	109.1		0		0		109.1
Interest	25.5		0		0		25.5
Interest and other expenses of Consolidated Funds	0		54.2		(7.7)		46.5

Other non-operating income	(3.1)		0		0		(3.1)
Total expenses	1,404.5		54.2		(7.7)		1,451.0
Other income
Net investment loss of Consolidated Funds	0		(2.6)		0		(2.6)
Income before provision for income taxes	1,252.4		5.3		(5.0)		1,252.7
Provision for income taxes	306.2		0		0		306.2
Net income	946.2		5.3		(5.0)		946.5
Net income attributable to non-controlling interests in consolidated entities	21.2		0		0.3		21.5


Net income attributable to The Carlyle Group Inc.	$	925.0	$	5.3	$	(5.3)	$	925.0

Three Months Ended June 30, 2020
Consolidated
Operating
Entities Consolidated
Funds Eliminations Consolidated
(Dollars in millions)
Revenues
Fund management fees $ 377.4
$ —
$ (5.6 ) $ 371.8
Incentive fees 9.0
—
—
9.0
Investment income (loss)
Performance allocations 1,191.8
—
—
1,191.8
Principal investment income (loss) (463.0 ) —
(49.6 ) (512.6 )
Total investment income (loss) 728.8
—
(49.6 ) 679.2
Interest and other income 16.0
—
(0.2 ) 15.8
Interest and other income of Consolidated Funds —
55.2
—
55.2
Total revenues 1,131.2
55.2
(55.4 ) 1,131.0
Expenses
Compensation and benefits
Cash-based compensation and benefits 212.5
—
—
212.5
Equity-based compensation 30.5
—
—
30.5
Performance allocations and incentive fee related compensation 535.6
—
—
535.6
Total compensation and benefits 778.6
—
—
778.6
General, administrative and other expenses 80.2
—
—
80.2
Interest 25.9
—
—
25.9
Interest and other expenses of Consolidated Funds —
47.1
(7.8 ) 39.3
Other non-operating expenses 0.5
—
—
0.5
Total expenses 885.2
47.1
(7.8 ) 924.5
Other income
Net investment income of Consolidated Funds —
50.3
—
50.3
Income before provision for income taxes 246.0
58.4
(47.6 ) 256.8
Provision for income taxes 52.3
—
—
52.3
Net income 193.7
58.4
(47.6 ) 204.5
Net income attributable to non-controlling interests in consolidated entities 47.8
—
10.8
58.6
Net income attributable to The Carlyle Group Inc. $ 145.9
$ 58.4
$ (58.4 ) $ 145.9

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Six Months Ended June 30, 2021
	Consolidated Operating Entities		Consolidated Funds		Eliminations		Consolidated
	(Dollars in millions)
Revenues
Fund management fees	$	787.2	$	0	$	(11.8)	$	775.4
Incentive fees	19.9		0		0		19.9



Investment income
Performance allocations	3,866.8		0		0		3,866.8


Principal investment income	337.9		0		(21.1)		316.8


Total investment income	4,204.7		0		(21.1)		4,183.6
Interest and other income	52.3		0		(10.9)		41.4
Interest and other income of Consolidated Funds	0		123.2		0		123.2

Total revenues	5,064.1		123.2		(43.8)		5,143.5
Expenses
Compensation and benefits
Cash-based compensation and benefits	460.3		0		0		460.3
Equity-based compensation	79.6		0		0		79.6
Performance allocations and incentive fee related compensation	1,860.6		0		0		1,860.6


Total compensation and benefits	2,400.5		0		0		2,400.5
General, administrative and other expenses	200.8		0		0		200.8
Interest	48.5		0		0		48.5
Interest and other expenses of Consolidated Funds	0		110.7		(21.8)		88.9

Other non-operating income	(2.5)		0		0		(2.5)
Total expenses	2,647.3		110.7		(21.8)		2,736.2
Other income
Net investment gain of Consolidated Funds	0		9.7		0		9.7
Income before provision for income taxes	2,416.8		22.2		(22.0)		2,417.0
Provision for income taxes	579.6		0		0		579.6
Net income	1,837.2		22.2		(22.0)		1,837.4
Net income attributable to non-controlling interests in consolidated entities	42.9		0		0.2		43.1


Net income attributable to The Carlyle Group Inc.	$	1,794.3	$	22.2	$	(22.2)	$	1,794.3

Six months ended June 30, 2020
Consolidated
Operating
Entities Consolidated
Funds Eliminations Consolidated
(Dollars in millions)
Revenues
Fund management fees $ 738.5
$ —
$ (10.8 ) $ 727.7
Incentive fees 17.9
—
—
17.9
Investment income (loss)
Performance allocations 254.2
—
—
254.2
Principal investment income (loss) (826.2 ) —
60.3
(765.9 )
Total investment income (loss) (572.0 ) —
60.3
(511.7 )
Interest and other income 49.8
—
(6.6 ) 43.2
Interest and other income of Consolidated Funds —
108.2
—
108.2
Total revenues 234.2
108.2
42.9
385.3
Expenses
Compensation and benefits
Cash-based compensation and benefits 416.8
—
—
416.8
Equity-based compensation 59.6
—
—
59.6
Performance allocations and incentive fee related compensation 93.1
—
—
93.1
Total compensation and benefits 569.5
—
—
569.5
General, administrative and other expenses 149.8
—
—
149.8
Interest 49.8
—
—
49.8
Interest and other expenses of Consolidated Funds —
100.9
(16.0 ) 84.9
Other non-operating expenses 0.7
—
—
0.7
Total expenses 769.8
100.9
(16.0 ) 854.7
Other loss
Net investment loss of Consolidated Funds —
(62.8 ) —
(62.8 )
Loss before provision for income taxes (535.6 ) (55.5 ) 58.9
(532.2 )
Benefit for income taxes (27.7 ) —
—
(27.7 )
Net loss (507.9 ) (55.5 ) 58.9
(504.5 )
Net loss attributable to non-controlling interests in consolidated entities (41.8 ) —
3.4
(38.4 )
Net loss attributable to The Carlyle Group Inc. $ (466.1 ) $ (55.5 ) $ 55.5
$ (466.1 )

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Three months ended June 30, 2020
	Consolidated Operating Entities		Consolidated Funds		Eliminations		Consolidated
	(Dollars in millions)
Revenues
Fund management fees	$	377.4	$	0	$	(5.6)	$	371.8
Incentive fees	9.0		0		0		9.0



Investment income (loss)
Performance allocations	1,191.8		0		0		1,191.8


Principal investment income	(463.0)		0		(49.6)		(512.6)


Total investment income (loss)	728.8		0		(49.6)		679.2
Interest and other income	16.0		0		(0.2)		15.8
Interest and other income of Consolidated Funds	0		55.2		0		55.2

Total revenues	1,131.2		55.2		(55.4)		1,131.0
Expenses
Compensation and benefits
Cash-based compensation and benefits	212.5		0		0		212.5
Equity-based compensation	30.5		0		0		30.5
Performance allocations and incentive fee related compensation	535.6		0		0		535.6


Total compensation and benefits	778.6		0		0		778.6
General, administrative and other expenses	80.2		0		0		80.2
Interest	25.9		0		0		25.9
Interest and other expenses of Consolidated Funds	0		47.1		(7.8)		39.3

Other non-operating expenses	0.5		0		0		0.5
Total expenses	885.2		47.1		(7.8)		924.5
Other income
Net investment income of Consolidated Funds	0		50.3		0		50.3
Income before provision for income taxes	246.0		58.4		(47.6)		256.8
Provision for income taxes	52.3		0		0		52.3
Net income	193.7		58.4		(47.6)		204.5
Net income attributable to non-controlling interests in consolidated entities	47.8		0		10.8		58.6
Net income attributable to The Carlyle Group Inc.	145.9		58.4		(58.4)		145.9

Three months ended June 30, 2019
Consolidated
Operating
Entities Consolidated
Funds Eliminations Consolidated
(Dollars in millions)
Revenues
Fund management fees $ 396.4
$ —
$ (5.5 ) $ 390.9
Incentive fees 8.8
—
—
8.8
Investment income (loss)
Performance allocations 247.6
—
—
247.6
Principal investment income 346.2
—
(4.2 ) 342.0
Total investment income 593.8
—
(4.2 ) 589.6
Interest and other income 32.6
—
(6.6 ) 26.0
Interest and other income of Consolidated Funds —
45.8
—
45.8
Total revenues 1,031.6
45.8
(16.3 ) 1,061.1
Expenses
Compensation and benefits
Cash-based compensation and benefits 221.4
—
—
221.4
Equity-based compensation 35.2
—
—
35.2
Performance allocations and incentive fee related compensation 113.6
—
—
113.6
Total compensation and benefits 370.2
—
—
370.2
General, administrative and other expenses 110.7
—
—
110.7
Interest 19.5
—
—
19.5
Interest and other expenses of Consolidated Funds —
36.8
(9.3 ) 27.5
Other non-operating expenses 0.4
—
—
0.4
Total expenses 500.8
36.8
(9.3 ) 528.3
Other income
Net investment income of Consolidated Funds —
9.2
—
9.2
Income before provision for income taxes 530.8
18.2
(7.0 ) 542.0
Provision for income taxes 15.5
—
—
15.5
Net income 515.3
18.2
(7.0 ) 526.5
Net income attributable to non-controlling interests in consolidated entities 28.6
—
11.2
39.8
Net income attributable to Carlyle Holdings 486.7
18.2
(18.2 ) 486.7
Net income attributable to non-controlling interests in Carlyle Holdings 332.6
—
—
332.6
Net income attributable to The Carlyle Group Inc. 154.1
18.2
(18.2 ) 154.1
Net income attributable to Series A Preferred Unitholders 5.9
—
—
5.9
Net income attributable to The Carlyle Group Inc. Common Stockholders $ 148.2
$ 18.2
$ (18.2 ) $ 148.2

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Six Months Ended June 30, 2020
	Consolidated Operating Entities		Consolidated Funds		Eliminations		Consolidated
	(Dollars in millions)
Revenues
Fund management fees	$	738.5	$	0	$	(10.8)	$	727.7
Incentive fees	17.9		0		0		17.9



Investment income (loss)
Performance allocations	254.2		0		0		254.2


Principal investment income (loss)	(826.2)		0		60.3		(765.9)


Total investment income (loss)	(572.0)		0		60.3		(511.7)
Interest and other income	49.8		0		(6.6)		43.2
Interest and other income of Consolidated Funds	0		108.2		0		108.2

Total revenues	234.2		108.2		42.9		385.3
Expenses
Compensation and benefits
Cash-based compensation and benefits	416.8		0		0		416.8
Equity-based compensation	59.6		0		0		59.6
Performance allocations and incentive fee related compensation	93.1		0		0		93.1


Total compensation and benefits	569.5		0		0		569.5
General, administrative and other expenses	149.8		0		0		149.8
Interest	49.8		0		0		49.8
Interest and other expenses of Consolidated Funds	0		100.9		(16.0)		84.9

Other non-operating expenses	0.7		0		0		0.7
Total expenses	769.8		100.9		(16.0)		854.7
Other loss
Net investment losses of Consolidated Funds	0		(62.8)		0		(62.8)
Loss before provision for income taxes	(535.6)		(55.5)		58.9		(532.2)
Benefit for income taxes	(27.7)		0		0		(27.7)
Net loss	(507.9)		(55.5)		58.9		(504.5)
Net loss attributable to non-controlling interests in consolidated entities	(41.8)		0		3.4		(38.4)
Net loss attributable to The Carlyle Group Inc.	(466.1)		(55.5)		55.5		(466.1)

Six months ended June 30, 2019
Consolidated
Operating
Entities Consolidated
Funds Eliminations Consolidated
(Dollars in millions)
Revenues
Fund management fees $ 755.1
$ —
$ (10.8 ) $ 744.3
Incentive fees 16.9
—
—
16.9
Investment income (loss)
Performance allocations 596.7
—
—
596.7
Principal investment income 635.8
—
8.0
643.8
Total investment income 1,232.5
—
8.0
1,240.5
Interest and other income 61.8
—
(13.6 ) 48.2
Interest and other income of Consolidated Funds —
98.2
—
98.2
Total revenues 2,066.3
98.2
(16.4 ) 2,148.1
Expenses
Compensation and benefits
Cash-based compensation and benefits 431.9
—
—
431.9
Equity-based compensation 71.2
—
—
71.2
Performance allocations and incentive fee related compensation 299.0
—
—
299.0
Total compensation and benefits 802.1
—
—
802.1
General, administrative and other expenses 223.2
—
—
223.2
Interest 39.2
—
—
39.2
Interest and other expenses of Consolidated Funds —
80.5
(14.9 ) 65.6
Other non-operating expenses 0.7
—
—
0.7
Total expenses 1,065.2
80.5
(14.9 ) 1,130.8
Other income
Net investment losses of Consolidated Funds —
(5.0 ) —
(5.0 )
Income before provision for income taxes 1,001.1
12.7
(1.5 ) 1,012.3
Provision for income taxes 39.5
—
—
39.5
Net income 961.6
12.7
(1.5 ) 972.8
Net income attributable to non-controlling interests in consolidated entities 24.1
—
11.2
35.3
Net income attributable to Carlyle Holdings 937.5
12.7
(12.7 ) 937.5
Net income attributable to non-controlling interests in Carlyle Holdings 640.5
—
—
640.5
Net income attributable to The Carlyle Group Inc. 297.0
12.7
(12.7 ) 297.0
Net income attributable to Series A Preferred Unitholders 11.8
—
—
11.8
Net income attributable to The Carlyle Group Inc. Common Stockholders $ 285.2
$ 12.7
$ (12.7 ) $ 285.2

The Carlyle Group Inc.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)


	Six Months Ended June 30,
	2021		2020
	(Dollars in millions)
Cash flows from operating activities
Net income (loss)	$	1,837.2	$	(507.9)
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization	26.8		26.0
Right-of-use asset impairment, net of broker fees	24.8		0
Equity-based compensation	79.6		59.6

Non-cash performance allocations and incentive fees	(1,703.9)		28.7
Non-cash principal investment (income) loss	(313.3)		841.2
Other non-cash amounts	5.5		(10.7)
Purchases of investments	(161.3)		(255.1)
Proceeds from the sale of investments	418.5		190.8
Payments of contingent consideration	(49.9)		0


Change in deferred taxes, net	481.9		(61.6)
Change in due from affiliates and other receivables	(14.8)		(19.2)

Change in deposits and other	(26.6)		(4.8)

Change in accounts payable, accrued expenses and other liabilities	25.4		(46.5)
Change in accrued compensation and benefits	(113.9)		(125.4)
Change in due to affiliates	24.5		(28.2)

Change in lease right-of-use asset and lease liability	4.6		(5.9)
Change in deferred revenue	35.6		(19.2)
Net cash provided by operating activities	580.7		61.8
Cash flows from investing activities

Purchases of fixed assets, net	(17.6)		(23.7)
Proceeds from sale of MRE, net of cash sold	5.9		0
Net cash used in investing activities	(11.7)		(23.7)
Cash flows from financing activities

Borrowings under credit facilities	0		263.8
Repayments under credit facilities	0		(295.6)
Issuance of 4.625% subordinated notes due 2061, net of financing costs	484.2		0





Payments on debt obligations	(229.4)		(1.5)
Proceeds from debt obligations, net of financing costs	87.6		0

Payments of contingent consideration	0		(0.3)

Dividends to common stockholders	(177.4)		(174.6)


Payment of deferred consideration for Carlyle Holdings units	(68.8)		(68.8)
Contributions from non-controlling interest holders	7.4		14.0
Distributions to non-controlling interest holders	(22.9)		(34.1)

Common shares repurchased	(25.0)		(26.4)
Change in due to/from affiliates financing activities	12.8		30.0
Net cash provided by (used in) financing activities	68.5		(293.5)
Effect of foreign exchange rate changes	(9.9)		(13.6)
Increase (decrease) in cash, cash equivalents and restricted cash	627.6		(269.0)
Cash, cash equivalents and restricted cash, beginning of period	989.6		828.0
Cash, cash equivalents and restricted cash, end of period	$	1,617.2	$	559.0

Reconciliation of cash, cash equivalents and restricted cash, end of period:
Cash and cash equivalents	$	1,586.2	$	554.5
Restricted cash	31.0		4.5
Total cash, cash equivalents and restricted cash, end of period	$	1,617.2	$	559.0

Cash and cash equivalents held at Consolidated Funds	$	187.5	$	98.0

Six Months Ended June 30,
2020 2019
(Dollars in millions)
Cash flows from operating activities
Net income (loss) $ (507.9 ) $ 961.6
Adjustments to reconcile net income (loss) to net cash flows from operating activities:
Depreciation and amortization 26.0
28.8
Equity-based compensation 59.6
71.2
Non-cash performance allocations and incentive fees 28.7
(268.3 )
Non-cash principal investment (income) loss 841.2
(628.3 )
Other non-cash amounts (10.7 ) 4.6
Purchases of investments (175.5 ) (120.4 )
Payment of purchase price adjustment in Fortitude Re (79.6 ) —
Proceeds from the sale of investments 190.8
231.0
Change in deferred taxes, net (61.6 ) 20.3
Change in due from affiliates and other receivables (19.2 ) 31.8
Change in deposits and other (4.8 ) (13.9 )
Change in accounts payable, accrued expenses and other liabilities (46.5 ) (44.4 )
Change in accrued compensation and benefits (125.4 ) (23.2 )
Change in due to affiliates (28.2 ) (1.2 )
Change in lease right-of-use asset and lease liability (5.9 ) 2.9
Change in deferred revenue (19.2 ) (18.7 )
Net cash provided by operating activities 61.8
233.8
Cash flows from investing activities
Purchases of fixed assets, net (23.7 ) (23.7 )
Net cash used in investing activities (23.7 ) (23.7 )
Cash flows from financing activities
Borrowings under credit facilities 263.8
—
Repayments under credit facilities (295.6 ) —
Repayment of term loan —
(25.0 )
Payments on debt obligations (1.5 ) (13.6 )
Proceeds from debt obligations, net of financing costs —
20.4
Payments of contingent consideration (0.3 ) —
Dividends to common stockholders (174.6 ) (68.5 )
Distributions to preferred unitholders —
(11.8 )
Distributions to non-controlling interest holders in Carlyle Holdings —
(143.2 )
Contributions from non-controlling interest holders 14.0
9.1
Distributions to non-controlling interest holders (34.1 ) (31.9 )
Payment of deferred consideration for Carlyle Holdings units (68.8 ) —
Common shares repurchased (26.4 ) (12.0 )
Change in due to/from affiliates financing activities 30.0
114.5
Net cash used in financing activities (293.5 ) (162.0 )
Effect of foreign exchange rate changes (13.6 ) (2.8 )
Increase (decrease) in cash, cash equivalents and restricted cash (269.0 ) 45.3
Cash, cash equivalents and restricted cash, beginning of period 828.0
638.3
Cash, cash equivalents and restricted cash, end of period $ 559.0
$ 683.6

Reconciliation of cash, cash equivalents and restricted cash, end of period:
   Cash and cash equivalents $ 554.5
$ 669.2
   Restricted cash 4.5
14.4
   Total cash, cash equivalents and restricted cash, end of period $ 559.0
$ 683.6

   Cash and cash equivalents held at Consolidated Funds $ 98.0
$ 214.3

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

On January 1, 2020, we completed our conversion from a Delaware limited partnership named The Carlyle Group L.P. into a Delaware corporation named The Carlyle Group Inc. Pursuant to the Conversion, at the specified effective time on January 1, 2020, each common unit of The Carlyle Group L.P. outstanding immediately prior to the effective time converted into one share of common stock of The Carlyle Group Inc. and each special voting unit and general partner unit was canceled for no consideration. In addition, holders of the partnership units in Carlyle Holdings I L.P., Carlyle Holdings II L.P., and Carlyle Holdings III L.P. exchanged such units for an equivalent number of shares of common stock and certain other restructuring steps occurred (the conversion, together with such restructuring steps and related transactions, the “Conversion”).

The following discussion analyzes the financial condition and results of operations of The Carlyle Group Inc. (the “Company”). Such analysis should be read in conjunction with the consolidated financial statements and the related notes included in this Quarterly Report on Form 10-Q and the Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Overview

We conduct our operations through ~~four~~three reportable segments: ~~Corporate~~Global Private Equity, ~~Real Assets,~~ Global Credit, and Investment Solutions.

•

~~Corporate Private Equity~~ — Our Corporate Private Equity segment advises our buyout, middle market and growth capital funds, which seek a wide variety of investments of different sizes and growth potentials. As of June 30, 2020, our Corporate Private Equity segment had $84 billion in AUM and $57

•Global Private Equity — Our Global Private Equity segment advises our buyout, middle market and growth capital funds, our U.S. and internationally focused real estate funds, our natural resources funds, and our Legacy Energy funds (as defined below). The segment also includes the NGP Predecessor Funds and NGP Carry Funds advised by NGP. As of June 30, 2021, our Global Private Equity segment had $150 billion in AUM and $90 billion in Fee-earning AUM.

•Global Credit — Our Global Credit segment advises funds and vehicles that pursue investment strategies including loans and structured credit, direct lending, opportunistic credit, distressed credit, and aircraft financing and servicing. As of June 30, 2021, our Global Credit segment had $61 billion in AUM and $46 billion in Fee-earning AUM.

•Investment Solutions — Our Investment Solutions segment advises fund of funds programs and related co-investment and secondary activities. As of June 30, 2021, our Investment Solutions segment had $65 billion in AUM and $38 billion in Fee-earning AUM. Our Investment Solutions segment also included Metropolitan Real Estate (“MRE”) prior to its sale on April 1, 2021.


•	~~Real Assets~~ — Our Real Assets segment advises our U.S. and internationally focused real estate funds, our infrastructure funds, and our international energy funds. The segment also includes the NGP Predecessor Funds and NGP Carry Funds advised by NGP. As of June 30, 2020, our Real Assets segment had $40 billion in AUM and $32 billion in Fee-earning AUM.


•	~~Global Credit~~ — Our Global Credit segment advises funds and vehicles that pursue investment strategies including loans and structured credit, direct lending, opportunistic credit, energy credit, distressed credit, aircraft financing and servicing, and insurance. As of June 30, 2020, our Global Credit segment had $50 billion in AUM and $42 billion in Fee-earning AUM.


•	~~Investment Solutions~~ — Our Investment Solutions segment advises global private equity and real estate fund of funds programs and related co-investment and secondary activities across 260 fund vehicles. As of June 30, 2020, our Investment Solutions segment had $47 billion in AUM and $32 billion in Fee-earning AUM.

We earn management fees pursuant to contractual arrangements with the investment funds that we manage and fees for transaction advisory and oversight services provided to portfolio companies of these funds. We also typically receive from an investment fund either an incentive fee or a special residual allocation of income, which we refer to as a performance allocation, or carried interest, in the event that specified investment returns are achieved by the fund. Under U.S. generally accepted accounting principles (“U.S. GAAP”), we are required to consolidate some of the investment funds that we advise. However, for segment reporting purposes, we present revenues and expenses on a basis that deconsolidates these investment funds. Accordingly, our segment revenues primarily consist of fund management and related advisory fees, realized performance revenues (consisting of incentive fees and performance allocations), realized principal investment income, including realized gains on our investments in our funds and other trading securities, as well as interest and other income. Our segment expenses primarily consist of compensation and benefits expenses, including salaries, bonuses, realized performance payment arrangements, and general and administrative expenses. While our segment expenses include depreciation and interest expense, our segment expenses exclude ~~acquisition-related~~acquisition and disposition related charges and amortization of intangibles and impairment. Refer to Note 14 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on the differences between our financial results reported pursuant to U.S. GAAP and our financial results for segment reporting purposes.

Our Family of Funds

The following chart presents the name (acronym), total capital commitments (in the case of our carry funds, structured credit funds, and the NGP Predecessor Funds), assets under management (open-end products and non-carry Aviation vehicles), gross assets (in the case of our BDCs)~~, assets under management (in the case of certain other products as noted)~~ and vintage year of the active funds in each of our segments, as of June 30, ~~2020.~~2021. We present total capital commitments (as opposed to assets under management) for our closed-end investment funds because we

believe this metric provides the most useful information regarding the relative size and scale of such funds. In the case of our products which are open-ended and accordingly do not have permanent committed capital, we generally believe the most useful metric regarding relative size and scale is assets under management.

Corporate Private Equity Global Credit
Real Assets ⁴
Buyout Carry Funds Loans & Structured Credit Real Estate Carry Funds
Carlyle Partners (U.S.) Cash CLO’s Carlyle Realty Partners (U.S.)
CP VII $18.5 bn 2018 U.S. $19.2 bn 2012-2020 CRP VIII $5.5 bn 2017
CP VI $13.0 bn 2014 Europe €7.3 bn 2013-2020 CRP VII $4.2 bn 2014
CP V $13.7 bn 2007 Structured Credit Carry Funds CRP VI $2.3 bn 2011
Global Financial Services Partners CREV $0.5 bn 2020 CRP V $3.0 bn 2006
CGFSP III $1.0 bn 2018 CSC $0.8 bn 2017 CRP IV $1.0 bn 2005
CGFSP II $1.0 bn 2013 Direct Lending CRP III $0.6 bn 2001
Carlyle Europe Partners
Business Development Companies¹
Core Plus Real Estate (U.S.)
CEP V €6.4 bn 2018 TCG BDC II, Inc. $1.9 bn 2017
CPI²
$3.5 bn 2016
CEP IV €3.7 bn 2014 TCG BDC, Inc. $2.0 bn 2013 International Real Estate
CEP III €5.3 bn 2007 Opportunistic Credit Carry Fund CER €0.5 bn 2017
CEP II €1.8 bn 2003 CCOF $2.4 bn 2017 CEREP III €2.2 bn 2007
Carlyle Asia Partners Energy Credit Carry Funds Natural Resources Funds
CAP V $6.6 bn 2018 CEMOF II $2.8 bn 2015 NGP Energy Carry Funds
CBPF II RMB 2.0 bn 2017 CEMOF I $1.4 bn 2011 NGP XII $4.3 bn 2017
CAP IV $3.9 bn 2014 Distressed Credit Carry Funds NGP XI $5.3 bn 2014
CAP III $2.6 bn 2008 CSP IV $2.5 bn 2016 NGP X $3.6 bn 2012
Carlyle Japan Partners CSP III $0.7 bn 2011 NGP Other Carry Funds
CJP IV ¥258.0 bn 2020 CSP II $1.4 bn 2007 NGP Minerals $0.2 bn 2020
CJP III ¥119.5 bn 2013 Carlyle Aviation Partners NGP GAP $0.4 bn 2014
CJP II ¥165.6 bn 2006 SASOF V $0.9 bn 2020 NGP Predecessor Funds
Carlyle Global Partners SASOF IV $1.0 bn 2018
Various³
$5.7 bn 2007-2008
CGP II $1.2 bn 2020 SASOF III $0.8 bn 2015 International Energy Carry Funds
CGP I $3.6 bn 2015 SASOF II $0.6 bn 2012 CIEP II $2.3 bn 2019
Carlyle MENA Partners
Securitization vehicles²
$2.1 bn Various CIEP I $2.5 bn 2013
MENA I $0.5 bn 2008
9 other vehicles²
$2.0 bn Various Infrastructure Carry Funds
Carlyle South American Buyout Fund Other Credit CRSEF $0.3 bn 2019
CSABF I $0.8 bn 2009
Fortitude⁵
$2.4 bn 2020 CGIOF $2.2 bn 2019
Carlyle Sub-Saharan Africa Fund CPP II $1.5 bn 2014
CSSAF I $0.7 bn 2012 Investment Solutions CPOCP $0.5 bn 2013
Carlyle Peru Fund AlpInvest
CPF I $0.3 bn 2012 Fund of Private Equity Funds
Middle Market & Growth Carry Funds 94 vehicles €44.4 bn 2000-2020
Carlyle U.S. Venture/Growth Partners Secondary Investments
CEOF II $2.4 bn 2015 68 vehicles €20.8 bn 2002-2020
CEOF I $1.1 bn 2011 Co-Investments
CVP II $0.6 bn 2001 62 vehicles €15.6 bn 2002-2020
Carlyle Europe Technology Partners Metropolitan Real Estate
CETP IV €1.4 bn 2019 36 vehicles $5.0 bn 2002-2020
CETP III €0.7 bn 2014
Carlyle Asia Venture/Growth Partners
CAGP V $0.3 bn 2017
CAGP IV $1.0 bn 2008
Carlyle Cardinal Ireland
CCI €0.3 bn 2014

Global Private Equity1

Global Credit

Corporate Private Equity

Real Estate Carry Funds

Liquid Credit

Carlyle Partners (U.S.)

Carlyle Realty Partners (U.S.)

Cash CLOs

CP VII

$18.5 bn

2018

CRP IX

$5.4 bn

2021

U.S.

$22.2 bn

2012-2021

CP VI

$13.0 bn

2014

CRP VIII

$5.5 bn

2017

Europe

€8.1 bn

2013-2021

CP V

$13.7 bn

2007

CRP VII

$4.2 bn

2014

Structured Credit Funds

Global Financial Services Partners

CRP VI

$2.3 bn

2011

CREV

$0.5 bn

2020

CGFSP III

$1.0 bn

2018

CRP V

$3.0 bn

2006

CSC

$0.8 bn

2017

CGFSP II

$1.0 bn

2013

CRP IV

$1.0 bn

2005

Illiquid Credit

Carlyle Europe Partners

Core Plus Real Estate (U.S.)

Business Development Companies3

CEP V

€6.4 bn

2018

CPI4

$5.7 bn

2016

TCG BDC II, Inc.

$2.2 bn

2017

CEP IV

€3.8 bn

2014

International Real Estate

TCG BDC, Inc.

$2.0 bn

2013

CEP III

€5.3 bn

2007

CER

€0.5 bn

2017

Opportunistic Credit Carry Funds

CEP II

€1.8 bn

2003

CEREP III

€2.2 bn

2007

CCOF II

$2.5 bn

2020

Carlyle Asia Partners

Natural Resources Funds

CCOF

$2.4 bn

2017

CAP V

$6.6 bn

2018

NGP Energy Carry Funds

Distressed Credit Carry Funds

CBPF II

RMB 2.0 bn

2017

NGP XII

$4.3 bn

2017

CSP IV

$2.5 bn

2016

CAP IV

$3.9 bn

2014

NGP XI

$5.3 bn

2014

CSP III

$0.7 bn

2011

CAP III

$2.6 bn

2008

NGP X

$3.6 bn

2012

CSP II

$1.4 bn

2007

Carlyle Japan Partners

Other NGP Carry Funds

Real Assets Credit

CJP IV

¥258.0 bn

2020

NGP Minerals

$0.3 bn

2020

Energy Credit Carry Funds

CJP III

¥119.5 bn

2013

NGP GAP

$0.4 bn

2014

CEMOF II

$2.8 bn

2015

CJP II

¥165.6 bn

2006

NGP Predecessor Funds

CEMOF I

$1.4 bn

2011

Carlyle Global Partners

Various2

$5.7 bn

2007-2008

Carlyle Aviation Partners

CGP II

$1.8 bn

2020

International Energy Carry Funds

SASOF V

$1.0 bn

2020

CGP I

$3.6 bn

2015

CIEP II

$2.3 bn

2019

SASOF IV

$1.0 bn

2018

Carlyle MENA Partners

CIEP I

$2.5 bn

2013

SASOF III

$0.8 bn

2015

MENA I

$0.5 bn

2008

Infrastructure Funds

SASOF II

$0.6 bn

2012

Carlyle South American Buyout Fund

CRSEF

$0.7 bn

2019

Securitization Vehicles4

$1.8 bn

Various

CSABF I

$0.8 bn

2009

CGIOF

$2.2 bn

2019

9 Other Vehicles4

$2.8 bn

Various

Carlyle Sub-Saharan Africa Fund

CPP II

$1.5 bn

2014

Other Credit

CSSAF I

$0.7 bn

2012

CPOCP

$0.5 bn

2013

Fortitude5

$2.8 bn

2020

Carlyle Peru Fund

CPF I

$0.3 bn

2012

Investment Solutions6

Carlyle U.S. Venture/Growth Partners

AlpInvest

CEOF II

$2.4 bn

2015

Fund of Private Equity Funds

CEOF I

$1.1 bn

2011

110 vehicles

€47.0 bn

2000-2021

CVP II

$0.6 bn

2001

Secondary Investments

Carlyle Europe Technology Partners

85 vehicles

€25.1 bn

2002-2021

CETP IV

€1.4 bn

2019

Co-Investments

CETP III

€0.7 bn

2014

80 vehicles

€19.7 bn

2002-2021

Carlyle Asia Venture/Growth Partners

CAP Growth II

$0.5 bn

2021

CAP Growth I

$0.3 bn

2017

CAGP IV

$1.0 bn

2008

Carlyle Cardinal Ireland

CCI

€0.3 bn

2014

Note: All amounts shown represent total capital commitments as of June 30, ~~2020~~2021 unless otherwise noted. Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change. In addition, certain carry funds included herein may be disclosed which are not included in fund performance if they have not made an initial capital call or commenced investment activity. The NGP funds are advised by NGP Energy Capital Management, LLC, a separately registered investment adviser, and we do not serve as an investment adviser to those funds.


~~(1)~~	~~Amounts represent gross assets plus any available capital as of June 30, 2020.~~


~~(2)~~	~~Amounts represent Total AUM as of June 30, 2020.~~


~~(3)~~	~~Includes NGP M&R, NGP ETP II, and NGP IX, on which we are not entitled to a share of carried interest.~~


~~(4)~~	~~Real Assets also includes the Legacy Energy funds, which we jointly advise with Riverstone Holdings L.L.C. The impact of these funds is no longer significant to our results of operations.~~


~~(5)~~	~~Reflects AUM related to capital raised from third-party investors to acquire a 76.6% interest in Fortitude Holdings.~~

(1)Global Private Equity also includes funds which we jointly advise with Riverstone Holdings L.L.C. (the “Legacy Energy funds”). The impact of these funds is no longer significant to our results of operations.

(2)Includes NGP M&R, NGP ETP II, and NGP IX, on which we are not entitled to a share of carried interest.

(3)Amounts represent gross assets plus any available capital as of June 30, 2021.

(4)Amounts represent Total AUM as of June 30, 2021.

(5)Reflects AUM related to capital raised from third-party investors to acquire a 76.6% interest in Fortitude Holdings.

(6)On April 1, 2021, we completed the sale of our interest in Metropolitan Real Estate.

Trends Affecting our Business

AtGlobal growth in the second quarter of 2021 was largely consistent with upward revisions from earlier this year as advanced economies experienced strong sequential growth driven by vaccine distribution and government stimulus. Our proprietary data suggest that U.S. gross domestic product (GDP) grew at a 9.1% annualized rate from the first quarter of 2021, while the euro zone economy expanded at a 6% annualized rate. Growth in much of the rest of the world also strengthened relative to the first quarter, with China’s economy expanding at a 5.3% annualized rate, up from just 1.6% in Q1 2021.

The acceleration in economic activity and pandemic-related disruptions caused inflation to reach levels not seen in over a decade, with the consumer price index increasing by 5.4% in the twelve months ending in June. Above-forecast inflation has translated into increased volatility in financial markets, as market participants react to both the data and central banks’ expected response to it. Expectations that the Fed would have to raise policy rates sooner than previously expected caused yields on the 10-year U.S. Treasury note to fall by more than 25 basis points from March 2021, stabilizing between 1.3% and 1.4%. Market participants expected that higher short-term rates in 2022 and 2023 will translate to less inflation in future years. Sub-investment grade corporate bond yields declined in tandem with U.S. treasuries as spreads continued to tighten. As of late July, B-rated U.S. corporate spreads had declined by roughly 40 basis points since the start of the ~~second~~year.

The broad economic reopening has also resulted in a tightening of labor markets. During the quarter, of 2020, our proprietary portfolio company data pointed to substantial economic contraction globally, with sharp declines in services activity, consumption, and industrial output across geographies excluding China, which had emerged from its pandemic-driven lockdown months before Europe and the U.S. As of April 2020, on a year over year basis, discretionary retail sales in Europe plummeted by nearly 70%, hiring in the U.S. pulled back by over 40% and industrial equipment sales in India fell 34%. This widespread disruption is reflected in the limited second quarter official data released to date: second quarter GDPbusinesses in the U.S. and ~~Germany declined 9.5% and 11.7% from year-ago levels, respectively,~~globally found it increasingly difficult to fill open positions, across a wide variety of skill levels. While this will likely increase technological utilization, it will also result in higher compensation expense than many firms anticipated entering the ~~largest declines on records back to~~year.

The second quarter was a record setting period for equity markets as the ~~1940s. Since April, the global economy has taken~~S&P 500 breached 4,300 for the first ~~steps in its recovery,~~time, driven by strong corporate earnings and low interest rates. Second quarter corporate earnings estimates are expected to increase 70% from year over year recession levels but ~~the ultimate severity and duration of the crisis remain uncertain. While there~~ are encouraging signs of a rebound in economic activity, particularly in China and Europe, other indicators highlight the potential for lingering weakness, especially in the U.S. and Latin America where the virus remains largely uncontained.also up 7.2% from strong Q1 2021 results. In its June 2020 World Economic Outlook update, the International Monetary Fund (“IMF”) forecasts that the global economy will contract 4.9% in 2020, a 1.9% downward revision of its initial estimate in April 2020. The IMF does not expect gross domestic product of advanced economies to reach 2019 levels again until 2022.

The pace and magnitude of economic decline and recovery across regions has varied based on the stringency of lockdowns, the scale and manner of stimulus measures, and consumer attitudes. China led the global economic recovery into the second quarter, ~~with official GDP growth recorded at a 3.2% year-over-year rate after declining by 6.8% year-over-year in~~ the ~~first quarter of 2020. Our proprietary portfolio data also point to continued strength in its economic rebound. After falling by 33% during the lockdown in January~~Dow Jones, S&P 500, and ~~February of 2020, logistics volumes in China have grown by 30% or more year-over-year for each of April, May~~NASDAQ 100 rose 4.6%, 8.2%, and ~~June. Industrial orders also have been strong, hitting and even slightly exceeding prior year levels after contracting by~~11.2% respectively. Globally, over 60% in February 2020. Despite supply-side strength, there is evidence that Chinese consumers remain cautious. Our portfolio data indicate that after rapid improvement through March and April 2020, discretionary retail spending in China has plateaued at levels roughly 5-8% below corresponding 2019 levels, and real estate transactions remain subdued. Continued recovery in China and the rest of Asia remains vulnerable to recurrences of the virus and resulting economic lockdowns as recently occurred in Hong Kong in July.

Early and strict lockdowns across much of Europe in March 2020 led to a sharper initial contraction in economic activity as compared to the U.S., but the spread of the virus in Europe now seems largely contained. The deployment of direct state aid programs has also helped to sustain employment levels across Europe and limit broader economic disruption from the pandemic. From February to May 2020, Eurozone unemployment rose just 0.2 percentage points, a sharp contrast to the U.S. where the unemployment rate stands 7.6 percentage points above its February 2020 low. Consequently, initial indicators of the post-lockdown recovery in Europe are strong with discretionary retail sales across our portfolio surging in June and finishing the month just 2% below June 2019 levels while retail foot traffic increased by 15% over the month to reach 84% of June 2019 levels. Gasoline sales in Europe rose by 50% between May 31 and June 30, 2020 as restrictions eased and normal activity resumed. Online sales in Europe continued to grow at a 25% annual rate in June 2020 despite the simultaneous increase in brick-and-mortar traffic and broader mobility. Additionally, on July 21, the EU’s leaders agreed to a €750 billion Recovery Fund that will channel aid in the form of grants and low interest loans to its member countries over the next three years. The Fund could help both to boost regional confidence and to enable more vulnerable economies, such as Italy and Spain, to increase fiscal stimulus despite existing high national debt levels.

~~In the U.S., economic activity also improved into June 2020. Gasoline demand rebounded steadily throughout~~ the second quarter from being down approximately 50% year-over-year in early April to levels just 9.8% below year-ago demand in June. After declining by a record 20% year-over-year in April, official U.S. retail sales posted a record month-over-month surge of 18.2% in May 2020 led by recoveries in durable goods purchases such as furniture and automobiles, and finished June 1% ahead of prior year levels. Business spending also improved, particularly for technology-related companies.

~~Since~~2021, the rapid resurgence of the virus across Sun Belt states in mid-June 2020, however, real-time data sources indicate that the economic recovery may have significantly slowed or even reversed. U.S. commercial airline travel slowed from a monthly growth rate of 100% in late-April and May 2020 (i.e. a doubling of traffic every 30 days) to a 15% growth rate in June 2020 and full stagnation (0% growth) by mid-July, while passenger volumes remain 75-80% below corresponding 2019 levels. Some of the largest U.S. airlines have recently announced that staffing cuts representing 30% to 45% of their respective workforces will be necessary by the end of September when federal aid expires, and several airlines abandoned their wide body fleets, namely

Boeing 747 and Airbus A380 aircraft, reflecting lower demand for travel, in particular international travel. This is a noticeable reversal in sentiment from as recently as the end of June, when airlines announced preliminary plans to substantially increase flight capacity in July and August on what was at the time improving data. Of particular note are risks to the outlooks for the transportation industry – where recovery in metrics such as discretionary air travel and public transit ridership lags other macro indicators – and the infrastructure sector – where the pandemic has materially altered the financial models on current and future development projects, as well as caused severe projected budget shortfalls at the state and local level which limit the capacity for additional spending and thus the likelihood of new projects. The potential for a sustained period of severely depressed commercial air travel may have significant implications not just for the airlines, but for the myriad companies – aircraft suppliers, their vendors and airport services firms – that depend on the aviation industry for all or much of their revenues. The likelihood of financial hardship for aviation- and aerospace-exposed companies within our portfolios will likely rise the longer commercial air travel remains substantially below prior year levels.

Other indicators also point to increased risks to the U.S. outlook for the rest of the year. Research led by Harvard University and Brown University indicates that while the percentage of small businesses in operation hit 90% of pre-COVID levels by late-June, recent retrenchment reduced the percentage towards 80%. Real-time data on U.S. hotel occupancy rates and seated restaurant diners indicate that activity has plateaued at 55% and 60% below comparable year-ago levels, respectively. After declining steadily through June, weekly initial jobless claims have risen two weeks in a row to stand at 1.43 million for the week ending July 25, and remain at levels roughly double those of the worst week recorded during the Global Financial Crisis. This increases the possibility that, at a still double-digit unemployment rate of 11.1%, the recovery in the labor market might lose momentum after just two months of rapid improvement in May and June. Record high levels of unemployment and suppressed business activity have in turn strained state and local finances. The Tax Policy Center estimates that combined state revenue shortfalls for fiscal years 2020 and 2021 could total $200 billion, which will consequently necessitate substantial budget cuts and leave little to no room for infrastructure spending or other improvement projects. The commercial real estate and financials sectors also face notable stress. Over 17% of commercial mortgages have either missed payments or are in delinquency, while the ratio is much higher for those concentrated in the hospitality (60%) and retail (40%) sectors.

This slowdown is of some concern when compared to the recovery observed in Europe, where no such retrenchment is currently apparent, and in China, where 95% of comparable businesses had reopened at a similar point in its recovery. While mixed economic data subject any forecasts to wide margins of error, analysts currently estimate that U.S. second quarter 2020 earnings for companies in the S&P 500 fell by 44.0% year-over-year, which would be the largest drop since the fourth quarter of 2008 when earnings fell by 69.1%. The largest estimated declines are concentrated in the consumer discretionary (which includes the leisure and hospitality industries), energy, industrials (which includes the transportation industry), and financials sectors. Real risks, however, pertain to the potential for a much lower than expected recovery in the second half of 2020 because of the prospective resurgence in coronavirus cases throughout the U.S. Data to date have shown that local economic activity cannot reach full potential while coronavirus case counts are substantially increasing, due to a combination of both consumer reluctance and required lockdown measures. A protracted second wave of the pandemic in the U.S. could therefore result in total economic output by year-end that remains substantially below 2019 levels.

The disconnect that emerged between equity markets and underlying fundamentals at the end of the first quarter continued into the second quarter. Despite weak earnings outlooks and patchy macroeconomic developments, global equity markets outperformed in Q2 2020 and the S&P 500 experienced its largest quarterly percentage gain since 1998. At nearly 25 times the next 12 months’ EBITDA as of June 30, 2020, S&P 500 forward earnings multiples are higher than they were in February 2020 before the market rout. From March 31 through June 30, 2020, the S&P 500, MSCI ACWI, EuroStoxx 600 and Shanghai Composite rose ~~20%~~5.0%, ~~19%, 13%~~5.4%, and ~~9%,~~4.3% respectively. In

Our carry fund portfolio extended the ~~U.S., large technology stocks in particular excelled with~~strong positive trend experienced since the ~~NASDAQ 100 and S&P 500 Information Technology Sector indexes each rising 30% from March 31 through June 30, 2020 compared to a 17% gain for the overall S&P 500 index excluding technology.~~

Developed market government bond yields remain near historical lows due to accommodative monetary policy and considerable central bank asset purchases. Since the end of March 2020, the 10-year Treasury yield has hovered between 60 and 70 basis points. U.S. corporate bonds have recovered strongly, largely in response to significant support from the Federal Reserve and its decision to purchase both investment grade and the highest-rated speculative grade debt. Investment grade yields are now below where they were at the beginningfirst quarter of 2020, ~~while speculative grade yields are only 90 basis points above where they stood~~appreciating 11% in ~~January 2020. Despite the stabilization in bond markets throughout~~ the second quarter ~~global mergers~~ and acquisitions (M&A) activity in the first half of 2020 slumped by roughly a third relative to the same period in 2019. Financing is available for transactions on generally favorable terms, but broad uncertainty and differing expectations around both the nature and timing of the economic recovery have resulted in wide bid-ask spreads, particularly for larger assets. Potential buyers and sellers are often in disagreement on valuation, given the scale of the economic uncertainty over the next 6 to 12 months. The abundance of readily available financing, however, suggests that M&A activity will likely increase once the dispersion around economic projections narrows. Large amounts

~~of dry powder and several consecutive years of successful fundraising efforts position Carlyle well to take advantage of this eventual expected uptick in activity.~~

Global geopolitical tensions, already strained pre-pandemic, have been exacerbated by the widespread economic disruption. U.S.-China relations, which had appeared to reach a détente at the end of 2019, have soured anew in recent months with mutual escalations in harsh rhetoric and sanctions. The imposition of a new national security law on Hong Kong has prompted backlash from various global players, thereby increasing overall uncertainty about risks associated with international trade with Hong Kong, the potential for increased taxation on Hong Kong-related transactions, and new regulatory restrictions and data protection concerns for businesses operated in Hong Kong (including25% year-to-date. Within our Hong Kong operations). Renewed nationalist sentiment has risen globally in the aftermath of a pandemic-driven breakdown in supply chains which in some cases has left countries and regions short of crucial goods such as medical equipment. Disputes over digital services taxes and import tariffs on luxury goods imports have reignited U.S.-EU trade tensions. Political instability and the potential for a broader pullback in global trade introduce risks to the economic growth of most economies, and particularly those with significant export-dependence. Domestically within the U.S., continued pressure from heightened unemployment, coupled with increasing political divisiveness and unrest related to social injustice as the U.S. approaches the November elections creates significant uncertainty in pace of economic recovery. Carlyle is a global firm that depends on the ability to execute cross-border transactions and to collaborate freely between our offices around the world. While the rise of geopolitical tensions and the possibility of deglobalization introduces risks to future performance and we expect that the global recovery will continue to be uneven with differing impacts across asset classes, industries and regions, we currently believe this environment will create investment opportunities that we plan to strategically pursue as they arise while also remaining circumspect in certain more troubled asset classes, industries and regions.

In the second quarter, our portfolio benefited from the reopening of global economies and the rebound in the public markets, resulting in strong carry fund appreciation. Generally consistent with past patterns, Carlyle’s overall portfolio was less volatile than the public markets, appreciating 5% following the first quarter’s 7% decline (compared to the MSCI ACWI’s 19% increase following the first quarter’s 23% decline). Our CorporateGlobal Private Equity segment, our corporate private equity funds appreciated ~~by 13%~~12% in the second quarter driven by strong ~~performance~~gains in our U.S. ~~buyout portfolio. In our Real Assets funds,~~, Europe and Asia portfolios, our real estate funds appreciated 2%11% in the second quarter, continuing their ~~stable performance. Our~~attractive performance, and our natural resources funds appreciated ~~3% due to~~9%, boosted by the ~~rebound~~effect of rising commodity prices ~~from the extreme volatility experienced during the latter part of the first quarter and early part of the second quarter.~~on our energy-focused investments. In our Global Credit segment, our carry funds (which represent approximately ~~23%~~17% of the total Global Credit ~~assets under management)~~remaining fair value) appreciated 8% in the second quarter, ~~due to more normalized benchmarks and trading levels across credit markets.~~reflecting continued positive portfolio company performance. Our Investment Solutions funds ~~depreciated 6%~~appreciated 12% in the second quarter, ~~though~~which generally reflects investment fair values on a one-quarter lag in the valuations of our primary and secondary fund of ~~funds generally reflect investment fair values on a one-quarter lag. As a result of improved valuation levels~~funds.

With continued positive impact from valuations across ~~a number of funds,~~the portfolio, net accrued performance revenues on our balance sheet ~~increased to $1.8~~reached another high at $4.0 billion at June 30, ~~2020~~2021, up 72% from ~~$1.2 billion at March~~December 31, 2020. ~~Significant IPO activity in our portfolio during the first half of 2020 has increased the~~The portion of our traditional carry funds attributable to publicly traded companies ~~to 14%~~is 18% of fair value ~~in the current quarter,~~as of June 30, 2021, compared to 15% as of December 31, 2020 and 6% ~~at the end~~as of December 31, 2019. While ~~these IPOs~~our publicly traded investments have performed well to date overall, ~~and with certain of them showing particular strength,~~ this shift may result in an increasing correlation to public market performance and a significant concentration of investment gains in individual investments for certain funds. To the extent that there is volatility in public equity markets and/or the prices of our publicly-traded portfolio companies, there may be elevated volatility in our performance revenue accrual in the coming quarters.

~~Generally, the investment period for~~ For example, as of June 30, 2021, approximately 40% of our ~~funds enables us to be patient~~net accrued performance revenues were generated by Carlyle Partners VI, L.P. (“CP VI”), which has over 65% of its remaining fair value in deploying capital. During the second quarter, our carry funds invested $2.9 billion in new or follow-on transactions, and we have invested $5.9 billion year to date. In addition, our investment teams in Corporate Private Equity have recently signed or announced transactions for an additional $1.3 billion of capital to be deployed in the coming quarters. While the pace of new investments has increased from near zero in March and April, we expect our full year deployment to be below the past few years. Large and complex transactions remain difficult to complete, and though it is likely to improve over time, there remains a headwind. Additionally, challenges in certain specific industries could lead to a longer term slowdown in certain areas such as energy and infrastructure, and the disruptive effects on the finances of many municipalities has slowed development projects, especially where public-private partnership is required, such as our terminal rebuilding project at JFK.publicly-traded portfolio companies.

We generated ~~$5.7~~$8.7 billion in realized proceeds from our carry funds in the second ~~quarter and realized $10.2 billion year to date.~~quarter. We ~~expect near-term exit activity to depend on the trajectory of multiple and varied macro environment factors, but we~~ believe that ~~our recent IPO activity~~the high level of public securities and maturing portfolio position us well to deliver higher levels of both realized proceeds and realized performance revenue over the long term. Although it is still too soon to assess the overall impact from the continuing health crisis and economic uncertainty, our investment professionals have worked closely with portfolio management teams to best position our global, diverse portfolio.

Approximately 98% of our fee-earning assets under management is located in closed-end fund structures with no redemption risk. With respect to our fee revenue, about 90% is in the form of management fees from traditional closed-end, long-dated funds,

which are highly predictable and stable, and do not have significant exposure to the underlying fund valuations. Growth of these fees relies on new vintages or new carry fund families, and to the extent fundraising for these products is delayed, growth of this revenue base will be similarly delayed. With regard to the other 10% of fee revenue, a portion includes about $120 million annually from management fees on our CLOs in the form of base fees and subordinated fees. Subordinated fees represent approximately 70% of this revenue base. Credit rating downgrades across the industry may cause the subordinated fees to be deferred. These deferred fees can be subsequently turned back on and recaptured based on the actual default rates and cash returns within the CLO structures. DuringFor example, during the second quarter we ~~did not recognize~~realized performance revenues for the first time from our fourth Asia Buyout fund and our eighth U.S. Real Estate fund, and approximately ~~$3.6 million of subordinated fees which were deferred, and as of the second quarter we have cumulatively deferred subordinated fees of approximately $7.6 million. The performance~~70% of our ~~CLOs is thus far stronger than we expected at the beginning of the pandemic and~~net accrued performance revenues are in funds from which we are ~~optimistic~~currently realizing performance revenues. We have announced several exit transactions that ~~they~~we expect will ~~continue to improve. However, if the economy worsens over~~close during the second half of the year, ~~ratings agencies could downgrade further assets~~which we anticipate will generate at least $500 million of net realized performance revenues. These exits include Atotech, Pharmaceutical Product Development and Novetta in CP VI, AMEOS Group in Carlyle Europe Partners III, L.P. (“CEP III”) and The Bountiful Company in Carlyle Partners V, L.P. and CEP III.

During the second quarter, our carry funds invested $8.1 billion in new or follow-on transactions, and we have announced or signed an additional $6.0 billion of new or follow-on transactions expected to close in the ~~CLO portfolios, thereby increasing the risk that CLO subordinated fees could be deferred.~~

coming quarters. We have ~~had~~deployed capital at a ~~good start to~~pace faster than in recent years, investing more than $26 billion over the last twelve months, and we anticipate the high level of market activity and opportunities for large buyouts will facilitate strong deployment activity throughout the remainder of 2021, particularly in the healthcare, technology, and consumer sectors.

At our Investor Day in February 2021, we announced our goal of raising at least $130 billion by the end of 2024. Fundraising has been strong during the first half of the year, and we are ahead of schedule in fundraising ~~with approximately $12.4~~for some of our large successor funds. We raised $10.4 billion in new capital in the second quarter, with the first ~~half of the year, with particular~~closing in our ninth U.S. Real Estate fund, as well as continued strength in Global Credit and Investment ~~Solutions and Global Credit. We do expect to see some slowdown as~~Solutions. Additionally, we ~~completed several large capital raises~~launched fundraising on our eighth flagship U.S. Buyout fund in the ~~first half of~~second quarter. We have raised $18.2 billion year to date.

We are closely evaluating the ~~year,~~financial and other proposals put forth by the new Administration and Congress and their potential impacts on our ~~funds remain well capitalized,~~business. While there may be changes to current tax and ~~we have not yet started our next major fundraising program. That said, fundraising has remained generally resilient since the onset of the pandemic.~~

~~Since the pandemic started, our top priority has been the health~~regulatory regimes, recent fiscal stimulus and ~~well-being of our people, and the people at~~proposed infrastructure packages could be followed by longer-term spending increases. The potential for policy changes may create regulatory uncertainty for our portfolio companies and inour investment strategies and could adversely affect our profitability and the ~~broader community. They will remain our top priority as we transition back to in-office operations. While our U.S. employees continue to work remotely, most~~profitability of our offices in Asia and Europe have reopened in varying degrees of capacity. We are following local government advice on the ability to safely transition our U.S. workforce back to our offices, but until such time, we continue to operate our business and address the needs of our investors and portfolio ~~companies through our remote-work technology in line with our business continuity plan.~~companies.

Recent Transactions

~~Fortitude Re Transaction~~

On June 2, 2020, the Company and our partners completed the acquisition of an incremental 76.6% ownership interest in Fortitude Group Holdings, LLC (“Fortitude Holdings”) from American International Group, Inc. (“AIG”), bringing our combined ownership to 96.5%. The Company’s interest in Fortitude Holdings remains 19.9% (see Note 4 to the accompanying unaudited condensed consolidated financial statements for more information).

Dividends

In July ~~2020,~~2021, the Company’s Board of Directors declared a quarterly dividend of $0.25 per share to common stockholders of record at the close of business on August ~~11, 2020,~~10, 2021, payable on August ~~18, 2020.~~17, 2021.

Key Financial Measures

Our key financial measures are discussed in the following pages. Additional information regarding these key financial measures and our other significant accounting policies can be found in Note 2 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Revenues

Revenues primarily consist of fund management fees, incentive fees, investment income (including performance allocations), realized and unrealized gains of our investments in our funds and other principal investments, as well as interest and other income.

Fund Management Fees. Fund management fees include management fees and transaction and portfolio advisory fees. We earn management fees for advisory services we provide to funds in which we hold a general partner interest or with which we have an investment advisory or investment management agreement. Additionally, management fees include catch-up management fees, which are episodic in nature and represent management fees charged to fund investors in subsequent closings of a fund which apply to the time period between the fee initiation date and the subsequent closing date. Approximately 90% of our fee revenue is in the form of management fees from traditional closed-end, long-dated funds, which are highly predictable and stable, and do not have significant exposure to the underlying fund valuations.

Management fees attributable to Carlyle Partners VII, L.P. (“CP VII”), our seventh U.S. buyout fund with $17.5 billion of Fee-earning AUM as of June 30, ~~2020~~2021 were approximately 15% and 16% of total management fees recognized during the three and six months ended June 30, 2021, respectively, and 17% of total management fees recognized during both the three and six months ended June 30, ~~2020, and 16% of total management fees recognized during both the three and six months ended June 30, 2019.~~2020. No other fund generated over 10% of total management fees in the periods presented.

Transaction and Portfolio Advisory Fees. Transaction and portfolio advisory fees generally include fees we receive for the transaction and portfolio advisory services we provide to our portfolio companies, as well as underwriting fees from our loan syndication and capital markets business, Carlyle Capital Solutions (“CCS”). Underwriting fees include gains, losses and fees arising from securities offerings in which we participate in the underwriter syndicate, and are generally not subject to the rebate offset as described below.companies. When covered by separate contractual agreements, we recognize transaction and portfolio advisory fees for these services when the performance obligation has been satisfied and collection is reasonably assured. We are required to offset our fund management fees earned by a percentage of the transaction and advisory fees earned, which we refer to as the “rebate offsets.” Historically, such rebate offset percentages generally approximated 80% of the fund’s portion of the transaction and advisory fees earned. However, the percentage of transaction and portfolio advisory fees we share with our investors on our recent vintage funds has generally increased, and as such the rebate offset percentages generally range from 80% to 100% of the fund’s portion of the transaction and advisory fees earned, such that a larger share of the transaction fee revenue we retain is driven by co-investment activity. In addition, Carlyle

Global Capital Markets (“GCM”) generates capital markets fees in connection with activities related to the underwriting, issuance and ~~underwriting activity.~~placement of debt and equity securities, and loan syndication for our portfolio companies and third-party clients, which are generally not subject to rebate offsets with respect to our most recent vintages (but are subject to the rebate offsets set forth above for older funds). Underwriting fees include gains, losses and fees arising from securities offerings in which we participate in the underwriter syndicate. The recognition of portfolio advisory fees, transactions fees, and ~~transactions~~capital markets fees can be volatile as they are primarily generated by investment activity within our funds, and therefore are impacted by our investment pace.

Incentive Fees. Incentive fees consist of performance-based incentive arrangements pursuant to management contracts, primarily from certain of our Global Credit funds, when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, incentive fees are recognized when the performance benchmark has been achieved.

Investment Income. Investment income consists of our performance allocations as well as the realized and unrealized gains and losses resulting from our equity method investments and other principal investments.

Performance allocations consist principally of the performance-based capital allocation from fund limited partners to us, commonly referred to as carried interest, from certain of our investment funds, which we refer to as the “carry funds.” Carried interest revenue is recognized by Carlyle upon appreciation of the valuation of our funds’ investments above certain return hurdles as set forth in each respective partnership agreement and is based on the amount that would be due to us pursuant to the fund partnership agreement at each period end as if the funds were liquidated at such date. Accordingly, the amount of carried interest recognized as performance allocations reflects our share of the fair value gains and losses of the associated funds’ underlying investments measured at their then-current fair values relative to the fair values as of the end of the prior period. As a result, the performance allocations earned in an applicable reporting period are not indicative of any future period, as fair values are based on conditions prevalent as of the reporting date. Refer to “— Trends Affecting our Business” for further discussion.

In addition to the performance allocations from our ~~Corporate~~Global Private Equity ~~and Real Assets~~ funds and closed-end carry funds in the Global Credit segment, we are also entitled to receive performance allocations from our Investment Solutions, Carlyle Aviation and NGP Carry Funds. We also retained our interest in the net accrued performance allocations of existing funds at the time of the sale of MRE. The timing of performance allocations realizations for these funds is typically later than in our other carry funds based on the terms of such arrangements.

Our performance allocations are generated by a diverse set of funds with different vintages, geographic concentration, investment strategies and industry specialties. For an explanation of the fund acronyms used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations section, refer to “— Our Family of Funds.”

Performance allocations in excess of 10% of the total for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 were generated from the following funds:


Three Months Ended June 30,	Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended June 30,						Six Months Ended June 30,
2020			2019				2020				2019
2021														2021			2020			2021			2020
(Dollars in millions)	(Dollars in millions)													(Dollars in millions)

CP VI	$	1,126.2	CRP V	$	103.5		CP VI	$	567.6		CRP V	$	164.2	CP VI	$	532.2	CP VI	$	1,126.2	CP VI	$	1,067.8	CP VI	$	567.6
CEOF II														CEOF II	208.4					CEP IV	478.0		CAP IV	190.5
			CAP IV	61.3			CAP IV	190.5															CETP III	34.7
			CRP VII	28.2			CETP III	34.7															CIEP	(160.1)
			Alpinvest Co - & Secondary Investments 2006-2008	(25.2		)	CIEP I	(160.1		)													CP V	(57.3)
			CP VI	(34.5		)	CP V	(57.3		)													CEOF	(45.7)
							CEOF	(45.7		)													Alpinvest Co - & Secondary Investments 2006-2008	(30.2)
							Alpinvest Co - & Secondary Investments 2006-2008	(30.2		)													CEP III	(30.2)
							CEP III	(30.2		)													CAP V	(29.4)
							CAP V	(29.4		)

No other fund generated over 10% of performance allocations in the periods presented above. Performance allocations from CP VI during the three and six months ended June 30, ~~2020~~2021 were ~~primarily~~ driven by appreciation across the portfolio, with notable increases in athe values of the publicly traded ~~investment~~investments in the ~~portfolio.~~portfolio and private investments with pending sale

transactions. During the three months ended March 31, 2020, our carry fund portfolio experienced depreciation driven by the turbulence in the global economies, which resulted in the reversal of $558.6 million in previously recognized performance allocations in CP VI, which it subsequently more than recovered during the three months ended June 30, 2020. As a result, performance allocations generated by CP VI during the three months ended June 30, 2020 were in excess of performance allocations generated during the six months ended June 30, 2020.

Under our arrangements with the historical owners and management team of AlpInvest, we generally do not retain any carried interest in respect of the historical investments and commitments to our fund vehicles that existed as of July 1, 2011 (including any options to increase any such commitments exercised after such date). We are entitled to 15% of the carried interest in respect of commitments from the historical owners of AlpInvest for the period between 2011 and 2020, except in certain instances, and 40% of the carried interest in respect of all other commitments (including all future commitments from third parties). In certain instances, carried interest associated with the AlpInvest fund vehicles is subject to entity level income taxes in the Netherlands.

Realized carried interest may be clawed back or given back to the fund if the fund’s investment values decline below certain return hurdles, which vary from fund to fund. When the fair value of a fund’s investments remains constant or falls below certain return hurdles, previously recognized performance allocations are reversed. In all cases, each investment fund is considered separately in evaluating carried interest and potential giveback obligations. For any given period, performance allocations revenue on our statement of operations may include reversals of previously recognized performance allocations due to a decrease in the value of a particular fund that results in a decrease of cumulative performance allocations earned to date. Since fund return hurdles are cumulative, previously recognized performance allocations also may be reversed in a period of appreciation that is lower than the particular fund’s hurdle rate. For the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the reversals of performance allocations were ~~$97.5~~$8.1 million and ~~$80.1~~$97.5 million, respectively. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the reversals of performance allocations were ~~$638.3~~$10.0 million and ~~$31.9~~$638.3 million, respectively. Additionally, unrealized performance allocations reverse when performance allocations are realized, and unrealized performance allocations can be negative if the amount of realized performance allocations exceed total performance allocations generated in the period.

As of June 30, ~~2020,~~2021, accrued performance allocations and accrued giveback obligations were ~~$3.8~~$8.1 billion and ~~$23.0~~$21.0 million, respectively. Each balance assumes a hypothetical liquidation of the funds’ investments at June 30, ~~2020~~2021 at their then current fair values. These assets and liabilities will continue to fluctuate in accordance with the fair values of the funds’ investments until they are realized. As of June 30, ~~2020, $14.9~~2021, $9.9 million of the accrued giveback obligation is the responsibility of various current and former senior Carlyle professionals and other limited partners of the Carlyle Holdings partnerships, and the net accrued giveback obligation attributable to the Company is ~~$8.1~~$11.1 million. The Company uses “net accrued performance revenues” to refer to the aggregation of the accrued performance allocations and incentive fees net of (i) accrued giveback obligations, (ii) accrued performance allocations and incentive fee-related compensation, (iii) performance allocations and incentive fee-related tax obligations, and (iv) accrued performance allocations and incentive fees attributable to non-controlling interests and excludes any net accrued performance allocations and incentive fees that have been realized but will be collected in subsequent periods. Net accrued performance revenues as of June 30, ~~2020~~2021 are ~~$1.8~~$4.0 billion.

In addition, realized performance allocations may be reversed in future periods to the extent that such amounts become subject to a giveback obligation. If, at June 30, ~~2020,~~2021, all investments held by our carry funds were deemed worthless, the amount of realized and previously distributed performance allocations subject to potential giveback would be approximately ~~$0.4~~$0.7 billion on an after-tax basis where ~~applicable.~~applicable, of which approximately $0.3 billion would be the responsibility of current and former senior Carlyle professionals. See the related discussion of “Contingent Obligations (Giveback)” within “— Liquidity and Capital Resources.”

The following table summarizes the total amount of aggregate giveback obligations that we have realized since Carlyle’s inception. Given various current and former senior Carlyle professionals and other former limited partners of the Carlyle Holdings partnerships are responsible for paying the majority of the realized giveback obligation, the table below also summarizes the amount that was attributable to the Company:


	Inception through June 30, 2021
	Total Giveback		Giveback Attributable to Carlyle
	(Dollars in millions)
Various Legacy Energy Funds	$	158.0	$	55.0
All other Carlyle Funds	58.1		0.6
Aggregate Giveback since Inception	$	216.1	$	55.6

Inception through June 30, 2020
Total Giveback Giveback Attributable to Carlyle
(Dollars in millions)
Various Legacy Energy Funds $ 155.2
$ 55.0
All other Carlyle Funds 58.1
0.6
Aggregate Giveback since Inception $ 213.3
$ 55.6

~~The amounts above include $40.6 million attributable to Legacy Energy Fund IV that was realized during the year ended December 31, 2019, of which $19.9 million was attributable to the Company.~~

The funding for employee obligations and givebacks related to carry realized pre-IPO is primarily through a collection of employee receivables related to giveback obligations and from non-controlling interests for their portion of the obligation. The realization of giveback obligations for the Company’s portion of such obligations reduces Distributable Earnings in the period realized and negatively impacts earnings available for distributions to unitholders in the period realized. Further, each individual recipient of realized carried interest typically signs a guarantee agreement or partnership agreement that personally obligates such person to return his/her pro rata share of any amounts of realized carried interest previously distributed that are later clawed back. Accordingly, carried interest as performance allocation compensation is subject to return to the Company in the event a giveback obligation is funded. Generally, the actual giveback liability, if any, does not become due until the end of a fund’s life.

Each investment fund is considered separately in evaluating carried interest and potential giveback obligations. As a result, performance allocations within funds will continue to fluctuate primarily due to certain investments within each fund constituting a material portion of the carry in that fund. Additionally, the fair value of investments in our funds may have substantial fluctuations from period to period.

In addition, in our discussion of our non-GAAP results, we use the term “realized net performance revenues” to refer to realized performance allocations and incentive fees from our funds, net of the portion allocated to our investment professionals, if any, and certain tax expenses associated with carried interest attributable to certain partners and employees, which are reflected as realized performance allocations and incentive fees related compensation expense. See “— Non-GAAP Financial Measures” for the amount of realized net performance revenues recognized each period. See “— Segment Analysis” for the realized net performance revenues by segment and related discussion for each period.

Investment income also represents the realized and unrealized gains and losses on our principal investments, including our investments in Carlyle funds that are not consolidated, as well as any interest and other income. Investment income also includes the related amortization of the basis difference between the carrying value of our investment and our share of the underlying net assets of the investee, as well as the compensation expense associated with compensatory arrangements provided by us to employees of our equity method investee, as it relates to our investments in NGP. Principal investment income also included our proportionate share of U.S. GAAP earnings from our strategic investment in Fortitude Holdings prior to the contribution of our investment to a Carlyle-affiliated investment fund (see Note 4). Realized principal investment income (loss) is recorded when we redeem all or a portion of our investment or when we receive or are due cash income, such as dividends or distributions. A realized principal investment loss is also recorded when an investment is deemed to be worthless. Unrealized principal investment income (loss) results from changes in the fair value of the underlying investment, as well as the reversal of previously recognized unrealized gains (losses) at the time an investment is realized.

Fair Value Measurement. U.S. GAAP establishes a ~~hierarchal~~hierarchical disclosure framework which ranks the observability of market price inputs used in measuring financial instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants. Financial instruments with

readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, will generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

The table below summarizes the valuation of investments and other financial instruments included within our AUM, by segment and fair value hierarchy levels, as of June 30, ~~2020:~~2021:


	As of June 30, 2020											As of June 30, 2021
	Corporate Private Equity		Real Assets		Global Credit		Investment Solutions		Total			Global Private Equity		Global Credit		Investment Solutions		Total
Consolidated Results	(Dollars in millions)										Consolidated Results	(Dollars in millions)
Level I	$	713	$	1,699	$	153	$	1,617	$	4,182	Level I	$	9,918	$	256	$	1,885	$	12,059
Level II	8,532		—		1,248		—		9,780		Level II	10,656		1,513		194		12,363
Level III	42,592		22,852		41,334		27,400		134,178		Level III	87,412		48,830		38,554		174,796
Fair Value of Investments	51,837		24,551		42,735		29,017		148,140		Fair Value of Investments	107,986		50,599		40,633		199,218
Available Capital	32,453		15,625		7,257		17,857		73,192		Available Capital	42,162		10,482		24,015		76,659
Total AUM	$	84,290	$	40,176	$	49,992	$	46,874	$	221,332	Total AUM	$	150,148	$	61,081	$	64,648	$	275,877

Interest and Other Income of Consolidated Funds. Interest and other income of Consolidated Funds primarily represents the interest earned on CLO assets. However, the Consolidated Funds are not the same entities in all periods presented. The Consolidated Funds in future periods may change due to changes in fund terms, formation of new funds, and terminations of funds.

Net Investment Gains (Losses) of Consolidated Funds. Net investment gains (losses) of Consolidated Funds measures the change in the difference in fair value between the assets and the liabilities of the Consolidated Funds. A gain (loss) indicates that the fair value of the assets of the Consolidated Funds appreciated more (less), or depreciated less (more), than the fair value of the liabilities of the Consolidated Funds. A gain or loss is not necessarily indicative of the investment performance of the Consolidated Funds and does not impact the management or incentive fees received by Carlyle for its management of the Consolidated Funds. The portion of the net investment gains (losses) of Consolidated Funds attributable to the limited partner investors is allocated to non-controlling interests. Therefore a gain or loss is not expected to have a material impact on the revenues or profitability of the Company. Moreover, although the assets of the Consolidated Funds are consolidated onto our balance sheet pursuant to U.S. GAAP, ultimately we do not have recourse to such assets and such liabilities are generally non-recourse to us. Therefore, a gain or loss from the Consolidated Funds generally does not impact the assets available to our equity holders.

Expenses

Compensation and Benefits. Compensation includes salaries, bonuses, equity-based compensation, and performance payment arrangements. Bonuses are accrued over the service period to which they relate.

We recognize as compensation expense the portion of performance allocations and incentive fees that are due to our employees, senior Carlyle professionals, advisors, and operating executives in a manner consistent with how we recognize the performance allocations and incentive fee revenue. These amounts are accounted for as compensation expense in conjunction with the related performance allocations and incentive fee revenue and, until paid, are recognized as a component of the accrued compensation and benefits liability. Compensation in respect of performance allocations and incentive fees is paid when the related performance allocations and incentive fees are realized, and not when such performance allocations and incentive fees are accrued. The funds do not have a uniform allocation of performance allocations and incentive fees to our employees, senior Carlyle professionals, advisors, and operating executives. Therefore, for any given period, the ratio of performance allocations and incentive fee compensation to performance allocations and incentive fee revenue may vary based on the funds generating the performance allocations and incentive fee revenue for that period and their particular allocation percentages.

In addition, we have implemented various equity-based compensation arrangements that require senior Carlyle professionals and other employees to vest ownership of a portion of their equity interests over a service period of generally ~~six~~

~~months~~one to ~~three and a half~~four years, which under U.S. GAAP will result in compensation charges over current and future periods. ~~We intend to grant~~During 2019 and 2020, we granted fewer equity awards ~~to employees~~ than we ~~have~~had previously. For example, in ~~February~~ 2018, 2019 and 2020, we granted approximately 13.3 million, 6.7 million and ~~3.2~~3.7 million of restricted stock units and other awards, respectively. In 2021, we granted 7.0 million long-term strategic restricted stock units to certain senior professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years, with a larger proportion of the awards vesting based on the 2024 performance year. As a result, the number of restricted stock units granted in 2021 is higher than in 2020, which, combined with a higher share price than in prior periods, will result in higher equity-based compensation expense in the coming years. Compensation charges associated with all equity-based compensation grants are excluded from Fee Related Earnings and Distributable Earnings.

We may hire additional individuals and overall compensation levels may correspondingly increase, which could result in an increase in compensation and benefits expense. As a result of acquisitions, we have charges associated with contingent consideration taking the form of earn-outs and profit participation, some of which are reflected as compensation expense.

General, Administrative and Other Expenses. General, administrative and other expenses include occupancy and equipment expenses and other expenses, which consist principally of professional fees, including those related to our global regulatory compliance program, external costs of fundraising, travel and related expenses, communications and information services, depreciation and amortization (including intangible asset amortization and impairment) and foreign currency transactions. We expect that general, administrative and other expenses will vary due to infrequently occurring or unusual items, such as impairment of intangible assets and expenses or insurance recoveries associated with litigation and contingencies. Also, in periods of significant fundraising, to the extent that we use third parties to assist in our fundraising efforts, our general, administrative and other expenses may increase accordingly. Additionally, we anticipate that general, administrative and other expenses will fluctuate from period to period due to the impact of foreign exchange transactions.

Interest and Other Expenses of Consolidated Funds. The interest and other expenses of Consolidated Funds consist primarily of interest expenses related primarily to our CLO loans, professional fees and other third-party expenses.

Income Taxes. Following the Conversion on January 1, 2020, all of the income before provision for income taxes attributable to The Carlyle Group Inc. is subject to U.S. federal, state, and local corporate income taxes. Prior to the Conversion, the Company was generally organized as a series of pass through entities pursuant to the United States Internal Revenue Code. As such, the Company was not responsible for the tax liability due on certain income earned during the year. Such income iswas taxed at the unitholder and non-controlling interest holder level, and any income tax iswas the responsibility of the unitholders

and is paid at that level. See Note 9 to the accompanying unaudited condensed consolidated financial statements for more information regarding the impact of the Conversion.

Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis, using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period in which the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized.

The interim provision for income taxes is calculated using the discrete effective tax rate method as allowed by ASC 740, Accounting for Income Taxes. The discrete method is applied when the application of the estimated annual effective tax rate is impractical because it is not possible to reliably estimate the annual effective tax rate. The discrete method treats the year to date period as if it was the annual period and determines the income tax expense or benefit on that basis.

In the normal course of business, we are subject to examination by federal and certain state, local and foreign tax regulators. With a few exceptions, as of June 30, ~~2020,~~2021, our U.S. federal income tax returns for ~~the~~tax years ~~2016~~2017 through ~~2018~~2019 are open under the normal three-year statute of limitations and therefore subject to examination. State and local tax returns are generally subject to audit ~~from 2014~~for tax years 2015 to ~~2018.~~2019. Foreign tax returns are generally subject to audit ~~from~~for tax years 2011 to ~~2018.~~2019. Certain of our affiliates are currently under audit by federal, state and foreign tax authorities. We do not believe the outcome of any future audit will have a material impact on our consolidated financial statements.

Non-controlling Interests in Consolidated Entities. Non-controlling interests in consolidated entities represent the component of equity in consolidated entities not held by us. These interests are adjusted for general partner allocations.

~~Non-controlling Interests in Carlyle Holdings.~~Earnings Per Common Share. ~~Prior~~We compute earnings per common share in accordance with ASC 260, Earnings Per Share. Basic earnings per common share is calculated by dividing net income (loss) attributable to the ~~Conversion, we recorded significant non-controlling interests in Carlyle Holdings relating to the ownership interests~~common shares of the ~~limited partners of~~Company by the Carlyle Holdings partnerships. The Company, through wholly owned subsidiaries, was the sole general partner of Carlyle Holdings. Accordingly, the Company consolidated the financial position and results of operations of Carlyle Holdings into its financial statements, and the other ownership interests in Carlyle Holdings were reflected as a non-controlling interest in the Company’s financial statements. The limited partners of the Carlyle Holdings partnerships exchanged their Carlyle Holdings partnership units for an equivalentweighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all dilutive securities. We apply the treasury stock method to determine the dilutive weighted-average common shares represented by unvested restricted stock of The Carlyle Group Inc. as part of the Conversion. As a result, following the Conversion, the consolidated balance sheet and consolidated statement of operations of The Carlyle Group Inc. do not reflect any non-controlling interests in Carlyle Holdings.units.

Non-GAAP Financial Measures

Distributable Earnings. Distributable Earnings, or “DE”, is a key performance benchmark used in our industry and is evaluated regularly by management in making resource deployment and compensation decisions, and in assessing the performance of our ~~four~~three segments. We also use DE in our budgeting, forecasting, and the overall management of our segments. We believe that reporting DE is helpful to understanding our business and that investors should review the same supplemental financial measure that management uses to analyze our segment performance. DE is intended to show the amount of net realized earnings without the effects of consolidation of the Consolidated Funds. DE is derived from our segment reported results and is an additional measure to assess performance and determine amounts potentially available for distribution to the Company’s common stockholders.

Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it includes tax expenses associated with certain foreign performance revenues (comprised of performance allocations and incentive fees), and does not include unrealized performance allocations and related compensation expense, unrealized principal investment income, equity-based compensation expense, net income (loss) attributable to non-Carlyle interest in consolidated entities, or charges (credits) related to Carlyle corporate actions and non-recurring items. Charges (credits) related to Carlyle corporate actions and non-recurring items include: charges (credits) associated with acquisitions, dispositions, or strategic investments, changes in the tax receivable agreement liability, corporate conversion costs, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earnouts and contingent consideration including gains and losses associated with the estimated fair value of contingent consideration issued in conjunction with acquisitions or strategic investments, impairment charges associated with lease right-of-use assets, gains and losses from the retirement of debt, charges associated with contract terminations and employee severance. We believe the inclusion or exclusion of these items provides investors with a meaningful indication of our core operating performance. This measure supplements and should be considered in addition to and not in lieu of the results of operations discussed further under “Consolidated Results of Operations” prepared in accordance with U.S. GAAP.

Fee Related Earnings. Fee Related Earnings, or “FRE”, is a component of DE and is used to assess the ability of the business to cover direct base compensation and operating expenses from total fee revenues. FRE differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it adjusts for the items included in the calculation of DE and also adjusts DE to exclude net realized performance revenues, realized principal investment income from investments in Carlyle funds, net interest (interest income less interest expense), and certain general, administrative and other expenses when the timing of any future payment is uncertain.

Operating Metrics

We monitor certain operating metrics that are common to the asset management industry.

Fee-earning Assets under Management. Fee-earning assets under management or Fee-earning AUM refers to the assets we manage or advise from which we derive recurring fund management fees. Our Fee-earning AUM is generally based on one of the following, once fees have been activated:

~~(a)~~

the amount of limited partner capital commitments, generally for carry funds where the original investment period has not expired, for AlpInvest carry funds during the commitment fee period and for Metropolitan carry funds during the weighted-average investment period of the underlying funds (see “Fee-earning AUM based on capital commitments” in the table below for the amount of this component at each period);

~~(b)~~

the remaining amount of limited partner invested capital at cost, generally for carry funds and certain co-investment vehicles where the original investment period has expired, Metropolitan carry funds after the expiration of the weighted-average investment period of the underlying funds, and one of our business development companies (see “Fee-earning AUM based on invested capital” in the table below for the amount of this component at each period);


~~(c)~~	the amount of aggregate fee-earning collateral balance of our CLOs and other securitization vehicles, as defined in the fund indentures (typically exclusive of equities and defaulted positions) as of the quarterly cut-off date;


~~(d)~~	the external investor portion of the net asset value of our open-ended funds (pre redemptions and subscriptions), as well as certain carry funds (see “Fee-earning AUM based on net asset value” in the table below for the amount of this component at each period);


~~(e)~~	the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our business development companies and certain carry funds (see “Fee-earning AUM based on lower of cost or fair value and other” in the table below for the amount of this component at each period); and


~~(f)~~	the lower of cost or fair value of invested capital, generally for AlpInvest carry funds where the commitment fee period has expired and certain carry funds where the investment period has expired, (see “Fee-earning AUM based on lower of cost or fair value and other” in the table below for the amount of this component at each period).

(a)the amount of limited partner capital commitments, generally for carry funds where the original investment period has not expired, for AlpInvest carry funds during the commitment fee period (see “Fee-earning AUM based on capital commitments” in the table below for the amount of this component at each period);

(b)the remaining amount of limited partner invested capital at cost, generally for carry funds and certain co-investment vehicles where the original investment period has expired and one of our business development companies (see “Fee-earning AUM based on invested capital” in the table below for the amount of this component at each period);

(d)the external investor portion of the net asset value of our open-ended funds (pre redemptions and subscriptions), as well as certain carry funds (see “Fee-earning AUM based on net asset value” in the table below for the amount of this component at each period);

(e)the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our business development companies and certain carry funds (see “Fee-earning AUM based on lower of cost or fair value and other” in the table below for the amount of this component at each period); and

(f)the lower of cost or fair value of invested capital, generally for AlpInvest carry funds where the commitment fee period has expired and certain carry funds where the investment period has expired, (see “Fee-earning AUM based on lower of cost or fair value and other” in the table below for the amount of this component at each period).

The table below details Fee-earning AUM by its respective components at each period.


	As of June 30,
	2021		2020
Consolidated Results	(Dollars in millions)
Components of Fee-earning AUM
Fee-earning AUM based on capital commitments (1)	$	76,238	$	71,792
Fee-earning AUM based on invested capital (2)	40,901		38,801
Fee-earning AUM based on collateral balances, at par (3)	28,111		25,811
Fee-earning AUM based on net asset value (4)	8,935		6,679
Fee-earning AUM based on lower of cost or fair value and other (5)	20,671		19,306
Balance, End of Period (6) (7)	$	174,856	$	162,389

(1)Reflects limited partner capital commitments where the original investment period, weighted-average investment period, or commitment fee period has not expired.

(2)Reflects limited partner invested capital at cost and includes amounts committed to or reserved for investments for certain Global Private Equity and Investment Solutions funds.

(3)Represents the amount of aggregate Fee-earning collateral balances and principal balances, at par, for our CLOs/structured products.

(4)Reflects the net asset value of certain other carry funds.

(5)Includes funds with fees based on gross asset value.

As of June 30,
2020 2019
Consolidated Results (Dollars in millions)
Components of Fee-earning AUM
Fee-earning AUM based on capital commitments (1) $ 71,792
$ 68,634
Fee-earning AUM based on invested capital (2) 38,801
43,262
Fee-earning AUM based on collateral balances, at par (3) 25,811
23,970
Fee-earning AUM based on net asset value (4) 6,679
3,799
Fee-earning AUM based on lower of cost or fair value and other (5) 19,306
18,777
Balance, End of Period (6) (7) $ 162,389
$ 158,442
(7)Ending balances as of June 30, 2021 and 2020 exclude $17.3 billion and $8.5 billion, respectively, of pending Fee-earning AUM for which fees have not yet been activated.


~~(1)~~	~~Reflects limited partner capital commitments where the original investment period, weighted-average investment period, or commitment fee period has not expired.~~


~~(2)~~	~~Reflects limited partner invested capital at cost and includes amounts committed to or reserved for investments for certain Real Assets and Investment Solutions funds.~~


~~(3)~~	~~Represents the amount of aggregate Fee-earning collateral balances and principal balances, at par, for our CLOs/structured products.~~


~~(4)~~	~~Reflects the net asset value (pre-redemptions and subscriptions) of our hedge funds, mutual fund and fund of hedge funds vehicles, as well as certain other carry funds.~~


~~(5)~~	~~Includes funds with fees based on gross asset value.~~

~~(6)~~

Energy III, Energy IV, and Renew II (collectively, the “Legacy Energy Funds”), are managed with Riverstone Holdings LLC and its affiliates. Affiliates of both Carlyle and Riverstone act as investment advisors to each of the Legacy Energy Funds. Carlyle has a minority representation on the management committees of Energy IV and Renew II. Carlyle and Riverstone each hold half of the seats on the management committee of Energy III, but the investment period for this fund has expired and the remaining investments in such fund are being disposed of in the ordinary course of business. As of June 30, 2020, the Legacy Energy Funds had, in the aggregate, approximately $1.6 billion in AUM and $1.5 billion in Fee-earning AUM. We are no longer raising capital for the Legacy Energy Funds and expect these balances to continue to decrease over time as the funds wind down.


~~(7)~~	~~Ending balance excludes $8.5 billion of pending Fee-earning AUM for which fees have not yet been activated.~~

The table below provides the period to period rollforward of Fee-earning AUM.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Consolidated Results	(Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period	$	173,132	$	158,246	$	170,102	$	161,057
Inflows (1)	6,092		9,671		14,051		12,568
Outflows (including realizations) (2)	(5,771)		(5,865)		(9,345)		(10,521)
Market Activity & Other (3)	1,078		(1,197)		1,586		(1,168)
Foreign Exchange (4)	325		1,534		(1,538)		453
Balance, End of Period	$	174,856	$	162,389	$	174,856	$	162,389

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Consolidated Results (Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period $ 158,246
$ 160,023
$ 161,057
$ 159,552
Inflows (1) 9,671
4,339
12,568
7,570
Outflows (including realizations) (2) (5,865 ) (6,752 ) (10,521 ) (9,020 )
Market Activity & Other (3) (1,197 ) 366
(1,168 ) 661
Foreign Exchange (4) 1,534
466
453
(321 )
Balance, End of Period $ 162,389
$ 158,442
$ 162,389
$ 158,442

(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of new CLO issuances, as well as gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

~~(1)~~

~~Inflows represents limited partner capital raised by our carry funds or separately managed accounts~~

(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for ~~which management~~ fees, based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of new CLO issuances, as well as gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.


~~(2)~~	Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross

redemptions in our ~~open-ended~~open-end funds, and runoff of CLO collateral balances. Distributions for funds earning management fees based on commitments during the period do not affect Fee-earning AUM. Outflows during the three and six months ended June 30, 2021 also reflect the sale of MRE on April 1, 2021, which had $2.3 billion of Fee-earning AUM as of March 31, 2021.


~~(3)~~	Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value, as well as activity of funds with fees based on gross asset value.


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value, as well as activity of funds with fees based on gross asset value.

(4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Fee-earning AUM for each of the periods presented by segment.

Assets under Management. Assets under management or AUM refers to the assets we manage or advise. Our AUM generally equals the sum of the following:


~~(b)~~	~~the amount of aggregate collateral balance and principal cash or aggregate principal amount of the notes of our CLOs and other structured products (inclusive of all positions);~~


~~(c)~~	~~the net asset value (pre-redemptions and subscriptions) of our open-ended funds; and~~


~~(d)~~	the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that Carlyle is entitled to call from investors in those vehicles pursuant to the terms of their capital commitments to those vehicles.

(b) the amount of aggregate collateral balance and principal cash or aggregate principal amount of the notes of our CLOs and other structured products (inclusive of all positions);

We include in our calculation of AUM and Fee-earning AUM certain energy and renewable resources funds that we jointly advise with Riverstone, the NGP Energy Funds that are advised by NGP, as well as capital raised from third-party investors to acquire a 76.6% interest in Fortitude Holdings.

Our calculations of Fee-earning AUM and AUM may differ from the calculations of other asset managers. As a result, these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of AUM (but not Fee-earning AUM) includes uncalled commitments to, and the fair value of invested capital in, our investment funds from Carlyle and our personnel, regardless of whether such commitments or invested capital are subject to management fees or performance allocations. Our calculations of AUM or Fee-earning AUM are not based on any definition of AUM or Fee-earning AUM that is set forth in the agreements governing the investment funds that we manage or advise.

We generally use Fee-earning AUM as a metric to measure changes in the assets from which we earn recurring management fees. Total AUM tends to be a better measure of our investment and fundraising performance as it reflects investments at fair value plus available capital.

Available Capital. “Available Capital” refers to the amount of capital commitments available to be called for investments, which may be reduced for equity invested that is funded via a fund credit facility and expected to be called from investors at a later date, plus any additional assets/liabilities at the fund level other than active investments. Amounts previously called may be added back to available capital following certain distributions. “Expired Available Capital” occurs when a fund has passed the investment and follow-on periods and can no longer invest capital into new or existing deals. Any remaining Available Capital, typically a result of either recycled distributions or specific reserves established for the follow-on period that are not drawn, can only be called for fees and expenses and is therefore removed from the Total AUM calculation.

The table below provides the period to period rollforward of Total AUM.


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Consolidated Results	(Dollars in millions)
Total AUM Rollforward
Balance, Beginning of Period	$	259,844	$	245,769
Inflows (1)	10,445		18,238
Outflows (including realizations) (2)	(10,795)		(18,651)
Market Activity & Other (3)	15,802		32,992
Foreign Exchange (4)	581		(2,471)
Balance, End of Period	$	275,877	$	275,877

Three Months Ended June 30, 2020 Six Months Ended
June 30, 2020
Consolidated Results (Dollars in millions)
Total AUM Rollforward
Balance, Beginning of Period $ 216,933
$ 224,442
Inflows (1) 4,596
11,729
Outflows (including realizations) (2) (6,635 ) (10,559 )
Market Activity & Other (3) 4,929
(4,211 )
Foreign Exchange (4) 1,509
(69 )
Balance, End of Period $ 221,332
$ 221,332
(1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

~~(1)~~

Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing. New CLO warehouse assets are recognized as an inflow to AUM, while corresponding fundraising will not be recognized until CLO issuance.


~~(2)~~	Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts and the NGP Predecessor Funds, gross redemptions in our open-ended funds, runoff of CLO collateral balances and the expiration of available capital.


~~(3)~~	Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and related co-investment vehicles, the NGP Predecessor Funds and separately managed accounts, as well as the net impact of fees, expenses and non-investment income, change in gross asset value for our business development companies and other changes in AUM.


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

(2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts and the NGP Predecessor Funds, gross redemptions in our open-end funds, runoff of CLO collateral balances and the expiration of available capital. Outflows during the three and six months ended June 30, 2021 also reflect the sale of MRE on April 1, 2021, which had $2.4 billion of Total AUM as of March 31, 2021.

(3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and related co-investment vehicles, the NGP Predecessor Funds and separately managed accounts, as well as the net impact of fees, expenses and non-investment income, change in gross asset value for our business development companies and other changes in AUM.

Please refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Total AUM for each of the periods presented.

Portfolio Appreciation (Depreciation). The overall portfolio appreciation of 11% for the three months ended June 30, 2021 is comprised of 12% appreciation for carry funds within our Global Private Equity segment focusing on corporate private equity, 11% for funds focusing on real estate, and 9% for funds focusing on natural resources; 8% appreciation for carry funds in the Global Credit segment; and 12% appreciation for carry funds in the Investment Solutions segment. Overall portfolio appreciation for the six months ended June 30, 2021 of 25% is comprised of 28% appreciation for carry funds within our Global

The table below presents the change in appreciation on portfolio investments of our carry funds. Please refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Total AUM for each of the periods presented.

~~Carlyle Portfolio Appreciation~~

^(1,2)
~~vs. % Change~~

Private Equity segment focusing on corporate private equity, 15% for funds focusing on real estate, and 17% for funds focusing on natural resources; 16% appreciation for carry funds in the Global Credit segment; and 28% appreciation for carry funds in the Investment Solutions segment.

While there is no perfectly comparable market index benchmark for the overall portfolio or any of its segments or strategies, we would note that S&P 500 and MSCI ~~All Country World~~ACWI appreciation for the three months ended June 30, 2021 were 8.2% and 6.9%, respectively, while the FTSE NAREIT Composite appreciation was 10.9%, the S&P Oil and Gas Exploration and Production Index ~~- All Cap~~was 15.6%, and the S&P Leveraged Loan Index appreciation was 1.1%. S&P 500 and MSCI ACWI appreciation for the six months ended June 30, 2021 were 14.4% and 11.4%, respectively, while the FTSE NAREIT Composite appreciation was 19.3%, the S&P Oil and Gas Exploration and Production Index was 58.8%, and the S&P Leveraged Loan Index appreciation was 1.6%.


~~(1)~~	~~Reflects carry funds only. Appreciation/Depreciation is fund only, and excludes the impact of external co-investment.~~

~~(2)~~

For Carlyle returns, “Appreciation/Depreciation” represents realized and unrealized gain / loss for the period on a total return basis before fees and expenses. The percentage of return is calculated as the sum of ending remaining investment fair market value (“FMV”) and net investment outflow (sales proceeds less net purchases) less beginning remaining investment FMV divided by beginning remaining investment FMV.

~~(3)~~

In the Corporate Private Equity, Real Assets, and Global Credit carry funds, public investments made up 14% of remaining fair value at June 30, 2020 and 7% of remaining fair value at June 30, 2019. For Q2 2020, public investments appreciated 86% while private investments appreciated 2%, compared to 5% public depreciation and 2% private appreciation for Q2 2019. Public portfolio includes initial public offerings (“IPO”) that occurred in the quarter. Investments may be reported as private in quarters prior to the IPO quarter.


~~(4)~~	~~Carry funds comprise approximately 23% of the AUM in Global Credit at June 30, 2020.~~

~~(5)~~

The MSCI ACWI - All Cap Index represents the performance of the MSCI All Country World Index across all market capitalization sizes of the global equity market. There are significant differences between the types of securities and assets typically acquired by our carry funds and the investments covered by the MSCI All Country World Index. Specifically, our carry funds may make investments in securities and other assets that have a greater degree of risk and volatility, and less liquidity, than those securities included in the MSCI All Country World Index. Moreover, investors in the securities included in the MSCI All Country World Index may not be subject to the management fees, carried interest or expenses to which investors in our carry funds are typically subject. Comparisons between the carry fund appreciation and the MSCI All Country World Index are included for informational purposes only.

~~Consolidation~~Non-GAAP Financial Measures

Distributable Earnings. Distributable Earnings, or “DE”, is a key performance benchmark used in our industry and is evaluated regularly by management in making resource deployment and compensation decisions, and in assessing the performance of ~~Certain~~our three segments. We also use DE in our budgeting, forecasting, and the overall management of our segments. We believe that reporting DE is helpful to understanding our business and that investors should review the same supplemental financial measure that management uses to analyze our segment performance. DE is intended to show the amount of net realized earnings without the effects of consolidation of the Consolidated Funds. DE is derived from our segment reported results and is an additional measure to assess performance and determine amounts potentially available for distribution to the Company’s common stockholders.

Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it includes tax expenses associated with certain foreign performance revenues (comprised of performance allocations and incentive fees), and does not include unrealized performance allocations and related compensation expense, unrealized principal investment income, equity-based compensation expense, net income (loss) attributable to non-Carlyle interest in consolidated entities, or charges (credits) related to Carlyle ~~Funds~~corporate actions and non-recurring items. Charges (credits) related to Carlyle corporate actions and non-recurring items include: charges (credits) associated with acquisitions, dispositions, or strategic investments, changes in the tax receivable agreement liability, corporate conversion costs, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earnouts and contingent consideration including gains and losses associated with the estimated fair value of contingent consideration issued in conjunction with acquisitions or strategic investments, impairment charges associated with lease right-of-use assets, gains and losses from the retirement of debt, charges associated with contract terminations and employee severance. We believe the inclusion or exclusion of these items provides investors with a meaningful indication of our core operating performance. This measure supplements and should be considered in addition to and not in lieu of the results of operations discussed further under “Consolidated Results of Operations” prepared in accordance with U.S. GAAP.

Operating Metrics

We monitor certain operating metrics that are common to the asset management industry.

The ~~Company consolidates all entities that it controls either through~~table below details Fee-earning AUM by its respective components at each period.


	As of June 30,
	2021		2020
Consolidated Results	(Dollars in millions)
Components of Fee-earning AUM
Fee-earning AUM based on capital commitments (1)	$	76,238	$	71,792
Fee-earning AUM based on invested capital (2)	40,901		38,801
Fee-earning AUM based on collateral balances, at par (3)	28,111		25,811
Fee-earning AUM based on net asset value (4)	8,935		6,679
Fee-earning AUM based on lower of cost or fair value and other (5)	20,671		19,306
Balance, End of Period (6) (7)	$	174,856	$	162,389

(1)Reflects limited partner capital commitments where the original investment period, weighted-average investment period, or commitment fee period has not expired.

(2)Reflects limited partner invested capital at cost and includes amounts committed to or reserved for investments for certain Global Private Equity and Investment Solutions funds.

(3)Represents the amount of aggregate Fee-earning collateral balances and principal balances, at par, for our CLOs/structured products.

(4)Reflects the net asset value of certain other carry funds.

(5)Includes funds with fees based on gross asset value.

(6)Energy III, Energy IV, and Renew II (collectively, the “Legacy Energy Funds”), are managed with Riverstone Holdings LLC and its affiliates. Affiliates of both Carlyle and Riverstone act as investment advisors to each of the Legacy Energy Funds. Carlyle has a ~~majority voting interest or as~~minority representation on the ~~primary beneficiary~~management committees of ~~variable interest entities. The entities we consolidate~~Energy IV and Renew II. Carlyle and Riverstone each hold half of the seats on the management committee of Energy III, but the investment period for this fund has expired and the remaining investments in such fund are ~~referred to collectively as~~being disposed of in the ~~Consolidated Funds in our unaudited condensed consolidated financial statements.~~ordinary course of business. As of June 30, ~~2020, our Consolidated~~2021, the Legacy Energy Funds ~~represent~~had, in the aggregate, approximately ~~3% of our AUM; 2%~~$0.6 billion in AUM and ~~1% of our management fees~~$0.7 billion in Fee-earning AUM. We are no longer raising capital for the ~~three months ended June 30, 2020~~Legacy Energy Funds and ~~six months ended June 30, 2020, respectively; 7% and 12% of our principal investment income or loss for~~expect these balances to continue to decrease over time as the ~~three and six months ended June 30, 2020, respectively.~~funds wind down.

~~We are not required under the consolidation guidance to consolidate in our financial statements most of the investment funds we advise. However, we consolidate certain CLOs that we advise. As~~

(7)Ending balances as of June 30, 2021 and 2020 ~~our consolidated CLOs held approximately $4.7~~exclude $17.3 billion and $8.5 billion, respectively, of total assets and comprised substantially all of the assets and loans payable of the Consolidated Funds. The assets and liabilities of the Consolidated Funds are generally held within separate legal entities and, as a result, the liabilities of the Consolidated Funds are non-recourse to us.

Generally, the consolidation of the Consolidated Funds has a gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to the Company and equity. The majority of the net economic ownership interests of the Consolidated Funds are reflected as non-controlling interests in consolidated entities in the consolidated financial statements. Because only a small portion of our funds are consolidated, the performance of the Consolidated Funds ispending Fee-earning AUM for which fees have not ~~necessarily consistent with or representative of the combined performance trends of all of our funds.~~

For further information on our consolidation policy and the consolidation of certain funds, see Note 2 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

~~Consolidated Results of Operations~~yet been activated.

The ~~following~~ table ~~and discussion sets forth information regarding~~below provides the period to period rollforward of Fee-earning AUM.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Consolidated Results	(Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period	$	173,132	$	158,246	$	170,102	$	161,057
Inflows (1)	6,092		9,671		14,051		12,568
Outflows (including realizations) (2)	(5,771)		(5,865)		(9,345)		(10,521)
Market Activity & Other (3)	1,078		(1,197)		1,586		(1,168)
Foreign Exchange (4)	325		1,534		(1,538)		453
Balance, End of Period	$	174,856	$	162,389	$	174,856	$	162,389

(1)Inflows represents limited partner capital raised by our ~~unaudited condensed consolidated results~~carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of ~~operations~~new CLO issuances, as well as gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the ~~three and six months ended June 30, 2020 and 2019. The unaudited condensed consolidated financial statements~~period for which fees have not yet been ~~prepared on substantially the same basis for all historical periods presented; however, the consolidated funds~~activated, which are not the same entities in all periods shown due to changes in U.S. GAAP, changes in fund terms and the creation and termination of funds. As further described above, the consolidation of these funds primarily hasreferenced as Pending Fee-earning AUM.

(2)Outflows represents the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds, and net investment gains (losses) of Consolidated Funds in the year that the fund is initially consolidated. The consolidation of these funds had no effectrealizations from vehicles with management fees based on ~~net income attributable to the Company for the periods presented.~~

Furthermore, the Conversion on January 1, 2020 increases the significance of our provision (benefit) for income taxes in 2020 and eliminated the attribution of earnings to non-controlling interests in Carlyle Holdings given the exchange of the Carlyle Holdings partnership units for an equivalent number of shares of common stock in The Carlyle Group Inc.

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions, except share and per share data)
Revenues
Fund management fees $ 371.8
$ 390.9
$ 727.7
$ 744.3
Incentive fees 9.0
8.8
17.9
16.9
Investment income (loss)
Performance allocations 1,191.8
247.6
254.2
596.7
Principal investment income (loss) (512.6 ) 342.0
(765.9 ) 643.8
Total investment income (loss) 679.2
589.6
(511.7 ) 1,240.5
Interest and other income 15.8
26.0
43.2
48.2
Interest and other income of Consolidated Funds 55.2
45.8
108.2
98.2
Total revenues 1,131.0
1,061.1
385.3
2,148.1
Expenses
Compensation and benefits
Cash-based compensation and benefits 212.5
221.4
416.8
431.9
Equity-based compensation 30.5
35.2
59.6
71.2
Performance allocations and incentive fee related compensation 535.6
113.6
93.1
299.0
Total compensation and benefits 778.6
370.2
569.5
802.1
General, administrative and other expenses 80.2
110.7
149.8
223.2
Interest 25.9
19.5
49.8
39.2
Interest and other expenses of Consolidated Funds 39.3
27.5
84.9
65.6
Other non-operating expenses 0.5
0.4
0.7
0.7
Total expenses 924.5
528.3
854.7
1,130.8
Other income (loss)
Net investment income (losses) of Consolidated Funds 50.3
9.2
(62.8 ) (5.0 )
Income (Loss) before provision for income taxes 256.8
542.0
(532.2 ) 1,012.3
Provision (Benefit) for income taxes 52.3
15.5
(27.7 ) 39.5
Net income (loss) 204.5
526.5
(504.5 ) 972.8
Net income (loss) attributable to non-controlling interests in consolidated entities 58.6
39.8
(38.4 ) 35.3
Net income (loss) attributable to Carlyle Holdings 145.9
486.7
(466.1 ) 937.5
Net income attributable to non-controlling interests in Carlyle Holdings —
332.6
—
640.5
Net income (loss) attributable to The Carlyle Group Inc. 145.9
154.1
(466.1 ) 297.0
Net income attributable to Series A Preferred Unitholders —
5.9
—
11.8
Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders $ 145.9
$ 148.2
$ (466.1 ) $ 285.2

Net income (loss) attributable to The Carlyle Group Inc. per common share
Basic $ 0.42
$ 1.34
$ (1.34 ) $ 2.60
Diluted $ 0.41
$ 1.23
$ (1.34 ) $ 2.41
Weighted-average common shares
Basic 348,574,528
110,440,227
348,407,144
109,828,740
Diluted 357,268,275
120,920,439
348,407,144
118,372,885

~~Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019 and Six Months Ended June 30, 2020 Compared to the Six Months Ended June 30, 2019~~

~~Revenues~~

~~Total revenues increased $69.9 million,~~remaining invested capital at cost or 6.6%, for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $1.8 billion, or 82.1%, for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The following table provides the components of thefair value, changes in ~~total revenues~~basis for funds where the ~~three~~investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-end funds, and ~~six months ended June 30, 2020:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Total Revenues, June 30, 2019 $ 1,061.1
$ 2,148.1
Increases (Decreases):
Decrease in fund management fees (19.1 ) (16.6 )
Increase in incentive fees 0.2
1.0
Increase (decrease) in investment income, including performance allocations 89.6
(1,752.2 )
Decrease in interest and other income (10.2 ) (5.0 )
Increase in interest and other income of Consolidated Funds 9.4
10.0
Total increase (decrease) 69.9
(1,762.8 )
Total Revenues, June 30, 2020 $ 1,131.0
$ 385.3

~~Fund Management Fees.~~ ~~Fund~~runoff of CLO collateral balances. Distributions for funds earning management fees ~~decreased $19.1 million, or 4.9%, for~~based on commitments during the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $16.6 million, or 2.2%, for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due to the following:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Higher management fees from the commencement of the
investment period for certain newly raised funds $ 25.9
$ 48.6
Lower management fees resulting from the change in basis for
earning management fees from commitments to invested capital
for certain funds and from distributions from funds whose
management fees are based on invested capital (1) (23.7 ) (47.2 )
Decrease in catch-up management fees from
subsequent closes of funds that are in the fundraising period (23.8 ) (17.4 )
Higher (lower) transaction and portfolio advisory fees 3.0
(1.5 )
All other changes (0.5 ) 0.9
Total increase in fund management fees $ (19.1 ) $ (16.6 )

~~(1) Includes the impact of the deferral of approximately $3.5 million and $7.0 million of subordinated management fees on our CLOs (after the effect of consolidated CLOs), respectively,~~period do not affect Fee-earning AUM. Outflows during the three and six months ended June 30, ~~2020.~~2021 also reflect the sale of MRE on April 1, 2021, which had $2.3 billion of Fee-earning AUM as of March 31, 2021.

~~Fund management fees include transaction~~(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio advisory fees, net of rebate offsets, of $17.2 million and $14.2 million for the three months ended June 30, 2020 and 2019, respectively, an increase primarily from transaction fees related to our investment in Carlyle FRL, partially offset by transaction fees earned related to investments in our ~~international energy~~carry funds based on the lower of cost or fair value and net asset value, as well as activity of funds with fees based on gross asset value.

Refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Fee-earning AUM for each of the periods presented by segment.

Assets under Management. Assets under management or AUM refers to the assets we manage or advise. Our AUM generally equals the sum of the following:

(a) the aggregate fair value of our carry funds and ~~CCS underwriting fees~~related co-investment vehicles, NGP Predecessor Funds and separately managed accounts, plus the capital that Carlyle is entitled to call from investors in ~~2019. Transaction~~those funds and ~~portfolio advisory fees, net~~vehicles (including Carlyle commitments to those funds and vehicles and those of ~~rebate offsets, were $21.6 million~~senior Carlyle professionals and ~~$23.1 million for the six months ended June 30, 2020 and 2019, respectively.~~

~~Investment Income.~~ ~~Investment income increased $89.6 million to $679.2 million for the three months ended June 30, 2020 as compared~~employees) pursuant to the ~~three months ended June 30, 2019~~terms of their capital commitments to those funds and ~~decreased $1.8 billion~~vehicles;

(b) the amount of aggregate collateral balance and principal cash or aggregate principal amount of the notes of our CLOs and other structured products (inclusive of all positions);

(d) the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that Carlyle is entitled to ~~an investment loss of $511.7 million for the six months ended June 30, 2020 as compared~~call from investors in those vehicles pursuant to the ~~six months ended June 30, 2019, primarily due~~terms of their capital commitments to ~~the following:~~those vehicles.

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Increase (decrease) in performance allocations, excluding NGP $ 944.2
$ (342.5 )
Increase in investment income from NGP, which includes performance allocations from the investments in NGP 33.1
5.4
Increase (decrease) in investment income from our buyout and growth funds 38.8
(6.2 )
Increase in losses on foreign currency hedges (6.2 ) (2.3 )
Increase (decrease) in investment income from our real assets funds, excluding NGP 1.5
(15.0 )
Decrease from the settlement of CEREP I tax matter in 2019 (71.5 ) (71.5 )
Increase in investment income from our distressed debt funds, energy mezzanine funds and opportunistic credit funds 8.0
1.9
Increase (decrease) in investment income from our direct lending funds, interval funds and CCS 5.3
(3.8 )
Increase in investment income from Aviation Partners 0.4
1.8
Increase (decrease) in investment income from CLOs 27.6
(43.6 )
Decrease in investment income from Fortitude Re (891.8 ) (1,260.0 )
All other changes 0.2
(16.4 )
Total increase (decrease) in investment income $ 89.6
$ (1,752.2 )

~~Prior~~We include in our calculation of AUM and Fee-earning AUM certain energy and renewable resources funds that we jointly advise with Riverstone, the NGP Energy Funds that are advised by NGP, as well as capital raised from third-party investors to ~~the Control Transaction which closed on June 2, 2020, as described in Note 4 to the unaudited condensed consolidated financial statements, we accounted for our investment~~acquire a 76.6% interest in Fortitude ~~Re under the equity method~~Holdings.

For most of ~~accounting by recognizing~~ our pro rata share of Fortitude Holdings’ U.S. GAAP earnings, which is included in principal investment income (loss) in the unaudited condensed consolidated statements of operations. These amounts were inclusive of unrealized gains (losses) resulting from changes incarry funds, total AUM includes the fair value of ~~embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S. GAAP financial statements. Modified coinsurance is subject to~~ the ~~general accounting principles~~capital invested, whereas Fee-earning AUM includes the amount of capital commitments or the remaining amount of invested capital, depending on whether the original investment period for ~~hedging, specifically~~ the ~~guidance originally issued as Derivatives Implementation Group Issue No. B36:~~ ~~Embedded Derivatives: Modified Coinsurance Agreements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to~~fund has expired. As such, Fee-earning AUM may be greater than total AUM when the ~~Creditworthiness~~aggregate fair value of the ~~Obligor under Those Instruments~~ ~~(“DIG B36”).~~remaining investments is less than the cost of those investments.

Our calculations of Fee-earning AUM and AUM may differ from the calculations of other asset managers. As a result, these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of ~~March 31, 2020~~AUM (but not Fee-earning AUM) includes uncalled commitments to, and December 31, 2019, our investment in Fortitude Holdings was $1,077.9 million and $1,200.9 million, respectively, which reflects $539.1 million and $628.2 million, respectively, of cumulative unrealized gains related to the change in the fair value of ~~embedded derivatives.~~

~~At the time we contributed our existing 19.9% interest~~invested capital in, ~~Fortitude Holdings to Carlyle FRL, a Carlyle-affiliated investment fund, we began accounting for~~ our investment ~~under the equity method~~funds from Carlyle and our personnel, regardless of whether such commitments or invested capital are subject to management fees or performance allocations. Our calculations of AUM or Fee-earning AUM are not based on ~~our net asset value~~any definition of AUM or Fee-earning AUM that is set forth in the ~~fund. Our~~agreements governing the investment funds that we manage or advise.

We generally use Fee-earning AUM as a metric to measure changes in ~~Carlyle FRL,~~the assets from which ~~is an investment company, reflects~~we earn recurring management fees. Total AUM tends to be a better measure of our investment ~~in Fortitude Holdings~~and fundraising performance as it reflects investments at fair ~~value. Although fair~~ value ~~reflects~~plus available capital.

Available Capital. “Available Capital” refers to the amount of capital commitments available to be called for investments, which may be reduced for equity invested that is funded via a ~~10% appreciation over our cost, this resulted in~~fund credit facility and expected to be called from investors at a ~~loss in principal investment income (loss) of $620.7 million in~~later date, plus any additional assets/liabilities at the ~~three months ended June 30, 2020. As of June 30, 2020, our investment in Carlyle FRL was $513.6 million, relative~~fund level other than active investments. Amounts previously called may be added back to ~~our cost of $465.4 million.~~

~~We recorded an increase in~~available capital following certain distributions. “Expired Available Capital” occurs when a fund has passed the investment ~~income~~and follow-on periods and can no longer invest capital into new or existing deals. Any remaining Available Capital, typically a result of either recycled distributions or specific reserves established for the follow-on period that are not drawn, can only be called for fees and expenses and is therefore removed from ~~CLOs~~the Total AUM calculation.

The table below provides the period to period rollforward of Total AUM.


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Consolidated Results	(Dollars in millions)
Total AUM Rollforward
Balance, Beginning of Period	$	259,844	$	245,769
Inflows (1)	10,445		18,238
Outflows (including realizations) (2)	(10,795)		(18,651)
Market Activity & Other (3)	15,802		32,992
Foreign Exchange (4)	581		(2,471)
Balance, End of Period	$	275,877	$	275,877

(1)Inflows reflects the impact of gross fundraising during the ~~three months ended June 30, 2020~~period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

(2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts and ~~a decrease~~the NGP Predecessor Funds, gross redemptions in our open-end funds, runoff of CLO collateral balances and the ~~investment income from CLOs~~expiration of available capital. Outflows during the six months ended June 30 2020 relative to the comparable periods in 2019. The fair value of the CLO investments held by the firm (before the effects of consolidation) increased 13% during the quarter, comprised of 19% appreciation on subordinated notes and 6% appreciation on senior notes, as liability spreads tightened in the second quarter after March’s rapid decline in asset prices and extreme widening of liability spreads.

~~Performance Allocations.~~ Performance allocations increased $944.2 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $342.5 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. Performance allocations by segment on a consolidated U.S. GAAP basis for the three and six months ended June 30, ~~2020~~2021 also reflect the sale of MRE on April 1, 2021, which had $2.4 billion of Total AUM as of March 31, 2021.

(3)Market Activity & Other generally represents realized and ~~2019 comprised the following:~~

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Corporate Private Equity $ 1,165.5
$ 82.5
$ 560.6
$ 215.3
Real Assets 33.2
149.6
(171.2 ) 259.0
Global Credit 22.7
(5.5 ) (40.3 ) 24.1
Investment Solutions ⁽¹⁾
(29.6 ) 21.0
(94.9 ) 98.3
Total performance allocations $ 1,191.8
$ 247.6
$ 254.2
$ 596.7

Total carry fund appreciation (depreciation) 5% 2% (3 )% 5 %

~~(1)~~ ~~The Company’s primary and secondary~~unrealized gains (losses) on portfolio investments in external funds are generally valued based on its proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days. As a result, amounts presented may not include the impact of economic activity in the current quarter.

~~Refer to “— Key Financial Measures” for a listing of the funds with performance allocations in excess of 10% of the total for the periods presented.~~

~~During the first quarter, the global economy faced historic levels of turmoil and dislocation resulting from the COVID-19 pandemic, and the resultant market dislocation adversely impacted the value of~~ our carry ~~fund portfolio. Since April,~~funds and related co-investment vehicles, the ~~global economy has taken the first steps in its recovery, though the ultimate severity~~NGP Predecessor Funds and ~~duration of the crisis remains uncertain. Our portfolio benefited from the reopening of the global economies in the second quarter~~separately managed accounts, as well as the ~~rebound~~net impact of fees, expenses and non-investment income, change in gross asset value for our business development companies and other changes in AUM.

(4)Foreign Exchange represents the ~~public markets, which generally resulted in strong carry fund appreciation. Our Corporate Private Equity funds appreciated by 13% in~~impact of foreign exchange rate fluctuations on the ~~quarter, driven largely by appreciation in a publicly traded company in~~translation of our non-U.S. dollar denominated funds. Activity during the ~~portfolio. In our Real Assets segment, Real Estate funds appreciated by 2% and our Natural Resources funds appreciated by 3% in~~period is translated at the ~~quarter, due to~~average rate for the ~~rebound of commodity prices following~~period. Ending balances are translated at the ~~extreme volatility in the first quarter and early part~~spot rate as of the ~~second quarter. In our Global Credit~~period end.

Please refer to “— Segment Analysis” for a detailed discussion by segment ~~our carry funds, which represent approximately 25%~~ of the ~~total Global Credit assets under management, appreciated by 8% in~~activity affecting Total AUM for each of the ~~second quarter, due to more normalized benchmarks and trading levels across credit markets. Our Investment Solutions funds depreciated by 6%, though our primary and secondary fund~~periods presented.

Portfolio Appreciation (Depreciation). The overall portfolio appreciation of funds generally reflect investment fair values on a one-quarter lag. Significant IPO activity in our portfolio during the first half of 2020 has increased the portion of our traditional carry funds attributable to publicly traded companies to 14% of fair value in the current quarter, compared to 6% at the end of 2019. While these IPOs have performed well to date overall, and with certain of them showing particular strength, this shift may result in an increasing correlation to public market performance and a significant concentration of investment gains in individual investments for certain funds. To the extent that there is volatility in public equity markets and/or the prices of our publicly-traded portfolio companies, there may be elevated volatility in our performance revenue accrual in the coming quarters.

~~Interest and Other Income.~~ ~~Interest and other income decreased $10.2 million~~11% for the three months ended June 30, ~~2020 as compared to~~2021 is comprised of 12% appreciation for carry funds within our Global Private Equity segment focusing on corporate private equity, 11% for funds focusing on real estate, and 9% for funds focusing on natural resources; 8% appreciation for carry funds in the ~~three months ended June 30, 2019~~Global Credit segment; and ~~decreased $5.0 million~~12% appreciation for carry funds in the Investment Solutions segment. Overall portfolio appreciation for the six months ended June 30, ~~2020 as compared to the six months ended June 30, 2019, primarily as result~~2021 of ~~decreases from the reimbursement~~25% is comprised of ~~certain costs incurred on behalf of Carlyle~~28% appreciation for carry funds ~~and interest income from investments in CLO subordinated notes.~~within our Global

~~Interest~~

Private Equity segment focusing on corporate private equity, 15% for funds focusing on real estate, and ~~Other Income~~17% for funds focusing on natural resources; 16% appreciation for carry funds in the Global Credit segment; and 28% appreciation for carry funds in the Investment Solutions segment.

While there is no perfectly comparable market index benchmark for the overall portfolio or any of ~~Consolidated Funds.~~ ~~Interest~~its segments or strategies, we would note that S&P 500 and ~~other income of Consolidated Funds increased $9.4 million~~MSCI ACWI appreciation for the three months ended June 30, ~~2020 as compared to~~2021 were 8.2% and 6.9%, respectively, while the ~~three months ended June 30, 2019~~FTSE NAREIT Composite appreciation was 10.9%, the S&P Oil and ~~increased $10.0 million~~Gas Exploration and Production Index was 15.6%, and the S&P Leveraged Loan Index appreciation was 1.1%. S&P 500 and MSCI ACWI appreciation for the six months ended June 30, ~~2020 as compared to~~2021 were 14.4% and 11.4%, respectively, while the ~~six months ended June 30, 2019. Substantially all of~~FTSE NAREIT Composite appreciation was 19.3%, the ~~increase in interest~~S&P Oil and ~~other income of Consolidated Funds relates to increased interest income from CLOs.~~

~~Our CLOs generate interest income primarily from investments in bonds~~Gas Exploration and loans inclusive of amortization of discounts and generate other income from consent and amendment fees. Substantially all interest and other income of the CLOs and other consolidated funds together with interest expense of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company.

~~Expenses~~

Total expenses increased $396.2 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $276.1 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The following table provides the components of the changes in total expenses for the three and six months ended June 30, 2020:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Total Expenses, June 30, 2019 $ 528.3
$ 1,130.8
Increases (Decreases):
Increase (decrease) in total compensation and benefits 408.4
(232.6 )
Decrease in general, administrative and other expenses (30.5 ) (73.4 )
Increase in interest and other expenses of Consolidated Funds 11.8
19.3
All other changes 6.5
10.6
Total increase (decrease) 396.2
(276.1 )
Total Expenses, June 30, 2020 $ 924.5
$ 854.7

~~Total Compensation and Benefits.~~ Total compensation and benefits increased $408.4 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $232.6 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, due to the following:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Decrease in cash-based compensation and benefits $ (8.9 ) $ (15.1 )
Decrease in equity-based compensation (4.7 ) (11.6 )
Increase (decrease) in performance allocations and incentive fee related compensation 422.0
(205.9 )
Increase (decrease) in total compensation and benefits $ 408.4
$ (232.6 )

~~Cash-based Compensation and Benefits.~~ Cash-based compensation and benefits decreased $8.9 million, or 4%, for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $15.1 million, or 3%, for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due to the following:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
(Decrease) increase in headcount and bonuses $ (1.2 ) $ 0.9
Contingent earnout associated with Carlyle Aviation Partners acquisition (7.7 ) (16.0 )
Total decrease in cash-based compensation and benefits $ (8.9 ) $ (15.1 )

~~Equity-based Compensation.~~ Equity-based compensation decreased $4.7 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $11.6 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 primarily due to the lower rate of ongoing grants of restricted stock units.

~~Performance allocations and incentive fee related compensation expense.~~ Performance allocations and incentive fee related compensation expense increased $422.0 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $205.9 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. Performance allocations and incentive fee related compensation as a percentage of performance

~~allocations and incentive fees~~Production Index was 45% and 37% for the three and six months ended June 30, 2020, respectively, and 46% and 50% for the three and six months ended June 30, 2019, respectively. Performance allocations and incentive fee related compensation as a percentage of performance allocations and incentive fees fluctuates depending on the mix of funds contributing to performance allocations and incentive fees in a given period. For our largest segment, Corporate Private Equity, our performance allocations and incentive fee related compensation expense as a percentage of performance allocations and incentive fees is generally around 45%. Performance allocations from our Investment Solutions segment pay a higher ratio of performance allocations and incentive fees as compensation, primarily as a result of the terms of our acquisition of AlpInvest. Conversely, performance allocations from the Legacy Energy funds in our Real Assets segment are primarily allocated to Carlyle because the investment teams for the Legacy Energy funds are employed by Riverstone and not Carlyle.

~~General, Administrative and Other Expenses.~~ General, administrative and other expenses decreased $30.5 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $73.4 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due to:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
CCC litigation cost recovery⁽¹⁾
$ —
$ (29.9 )
Lower depreciation and intangible asset amortization (0.6 ) (2.7 )
Lower professional fees, including corporate conversion costs (11.7 ) (1.6 )
Higher external fundraising costs 3.2
4.2
Lower travel and entertainment expenses (15.7 ) (14.3 )
Foreign exchange and other changes (5.7 ) (29.1 )
Total decrease in general, administrative and other expenses $ (30.5 ) $ (73.4 )

~~(1) See Note~~ 7 ~~to our unaudited condensed consolidated financial statements.~~

~~Interest and Other Expenses of Consolidated Funds.~~ Interest and other expenses of Consolidated Funds increased $11.8 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and increased $19.3 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due to higher interest expense on the consolidated CLOs.

The CLOs incur interest expense on their loans payable and incur other expenses consisting of trustee fees, rating agency fees and professional fees. Substantially all interest and other income of our CLOs together with interest expense of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company.

~~Net Investment Gains of Consolidated Funds~~

For the three months ended June 30, 2020, net investment gains of Consolidated Funds were $50.3 million as compared to net investment gains of $9.2 million for the three months ended June 30, 2019. For six months ended June 30, 2020, net investment losses of Consolidated Funds were $62.8 million as compared to net investment losses of $5.0 million for the six months ended June 30, 2019. For both the three and six months ended June 30, 2020 and 2019, net investment gains (losses) comprise the activity of the consolidated CLOs and certain other funds. For the consolidated CLOs, the amount reflects the net gain or loss on the fair value adjustment of both the assets and liabilities. The six months ended June 30, 2020 include significant losses on the CLO assets and gains on the CLO liabilities resulting from the rapid decline in asset prices and widening of credit spreads. The components of net investment gains (losses) of Consolidated Funds for the respective periods are:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Realized losses $ (39.8 ) $ (3.4 ) $ (40.3 ) $ (11.4 )
Net change in unrealized gains (losses) 590.2
20.5
(342.0 ) 29.6
Total gains (losses) 550.4
17.1
(382.3 ) 18.2
Gains (losses) from liabilities of CLOs (500.1 ) (7.9 ) 319.5
(23.2 )
Total net investment gains (losses) of Consolidated Funds $ 50.3
$ 9.2
$ (62.8 ) $ (5.0 )

~~Net Income Attributable to Non-controlling Interests in Consolidated Entities~~

Net income attributable to non-controlling interests in consolidated entities was $58.6 million for the three months ended June 30, 2020 as compared to net income of $39.8 million for the three months ended June 30, 2019. Net loss attributable to non-controlling interests in consolidated entities was $38.4 million for the six months ended June 30, 2020 as compared to net income of $35.3 million for the six months ended June 30, 2019. These amounts primarily reflect the net income attributable to non-controlling interests in carried interest, giveback obligations, and cash held for carried interest distributions. This balance also includes the net earnings or losses of the Consolidated Funds for each period, which are substantially all allocated to the related funds’ limited partners or CLO investors.

~~Net Income Attributable to The Carlyle Group Inc. Common Stockholders~~

The net income (loss) attributable to The Carlyle Group Inc. common stockholders was $145.9 million for the three months ended June 30, 2020 as compared to $148.2 million for the three months ended June 30, 2019. The net income (loss) attributable to The Carlyle Group Inc. common stockholders was $(466.1) million for the six months ended June 30, 2020 as compared to $285.2 million for the six months ended June 30, 2019. Prior to the Conversion, the Company was allocated a portion of the net income (loss) attributable to Carlyle Holdings based on the Company’s ownership in Carlyle Holdings (which was approximately 32% as of June 30, 2019). Net income or loss attributable to the Company also included 100% of the net income (loss) attributable to the Company’s wholly-owned taxable subsidiary, Carlyle Holdings I GP Inc.58.8%, which was $(11.5) million and $(21.3) million for the three and six months ended June 30, 2019, respectively. As a result, the total net income or loss attributable to the Company has historically varied as a percentage of the net income or loss attributable to Carlyle Holdings, and is not comparable to net income (loss) attributable to The Carlyle Group Inc. common stockholders following the Conversion. See Note 9 to the accompanying unaudited condensed consolidated financial statements for more information regarding the impact of Conversion and the ~~effective tax rate for the six months ended June 30, 2020.~~S&P Leveraged Loan Index appreciation was 1.6%.

Non-GAAP Financial Measures

Distributable Earnings. Distributable Earnings, or “DE”, is a key performance benchmark used in our industry and is evaluated regularly by management in making resource deployment and compensation decisions, and in assessing the performance of our three segments. We also use DE in our budgeting, forecasting, and the overall management of our segments. We believe that reporting DE is helpful to understanding our business and that investors should review the same supplemental financial measure that management uses to analyze our segment performance. DE is intended to show the amount of net realized earnings without the effects of consolidation of the Consolidated Funds. DE is derived from our segment reported results and is an additional measure to assess performance and determine amounts potentially available for distribution to the Company’s common stockholders.

Operating Metrics

We monitor certain operating metrics that are common to the asset management industry.

The table below details Fee-earning AUM by its respective components at each period.


	As of June 30,
	2021		2020
Consolidated Results	(Dollars in millions)
Components of Fee-earning AUM
Fee-earning AUM based on capital commitments (1)	$	76,238	$	71,792
Fee-earning AUM based on invested capital (2)	40,901		38,801
Fee-earning AUM based on collateral balances, at par (3)	28,111		25,811
Fee-earning AUM based on net asset value (4)	8,935		6,679
Fee-earning AUM based on lower of cost or fair value and other (5)	20,671		19,306
Balance, End of Period (6) (7)	$	174,856	$	162,389

(1)Reflects limited partner capital commitments where the original investment period, weighted-average investment period, or commitment fee period has not expired.

(2)Reflects limited partner invested capital at cost and includes amounts committed to or reserved for investments for certain Global Private Equity and Investment Solutions funds.

(3)Represents the amount of aggregate Fee-earning collateral balances and principal balances, at par, for our CLOs/structured products.

(4)Reflects the net asset value of certain other carry funds.

(5)Includes funds with fees based on gross asset value.

(7)Ending balances as of June 30, 2021 and 2020 exclude $17.3 billion and $8.5 billion, respectively, of pending Fee-earning AUM for which fees have not yet been activated.

The table below provides the period to period rollforward of Fee-earning AUM.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Consolidated Results	(Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period	$	173,132	$	158,246	$	170,102	$	161,057
Inflows (1)	6,092		9,671		14,051		12,568
Outflows (including realizations) (2)	(5,771)		(5,865)		(9,345)		(10,521)
Market Activity & Other (3)	1,078		(1,197)		1,586		(1,168)
Foreign Exchange (4)	325		1,534		(1,538)		453
Balance, End of Period	$	174,856	$	162,389	$	174,856	$	162,389

(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-end funds, and runoff of CLO collateral balances. Distributions for funds earning management fees based on commitments during the period do not affect Fee-earning AUM. Outflows during the three and six months ended June 30, 2021 also reflect the sale of MRE on April 1, 2021, which had $2.3 billion of Fee-earning AUM as of March 31, 2021.

Refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Fee-earning AUM for each of the periods presented by segment.

Assets under Management. Assets under management or AUM refers to the assets we manage or advise. Our AUM generally equals the sum of the following:

(b) the amount of aggregate collateral balance and principal cash or aggregate principal amount of the notes of our CLOs and other structured products (inclusive of all positions);

The table below provides the period to period rollforward of Total AUM.


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
Consolidated Results	(Dollars in millions)
Total AUM Rollforward
Balance, Beginning of Period	$	259,844	$	245,769
Inflows (1)	10,445		18,238
Outflows (including realizations) (2)	(10,795)		(18,651)
Market Activity & Other (3)	15,802		32,992
Foreign Exchange (4)	581		(2,471)
Balance, End of Period	$	275,877	$	275,877

(1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

Please refer to “— Segment Analysis” for a detailed discussion by segment of the activity affecting Total AUM for each of the periods presented.

While there is no perfectly comparable market index benchmark for the overall portfolio or any of its segments or strategies, we would note that S&P 500 and MSCI ACWI appreciation for the three months ended June 30, 2021 were 8.2% and 6.9%, respectively, while the FTSE NAREIT Composite appreciation was 10.9%, the S&P Oil and Gas Exploration and Production Index was 15.6%, and the S&P Leveraged Loan Index appreciation was 1.1%. S&P 500 and MSCI ACWI appreciation for the six months ended June 30, 2021 were 14.4% and 11.4%, respectively, while the FTSE NAREIT Composite appreciation was 19.3%, the S&P Oil and Gas Exploration and Production Index was 58.8%, and the S&P Leveraged Loan Index appreciation was 1.6%.

Consolidation of Certain Carlyle Funds

The Company consolidates all entities that it controls either through a majority voting interest or as the primary beneficiary of variable interest entities. The entities we consolidate are referred to collectively as the Consolidated Funds in our unaudited condensed consolidated financial statements. As of June 30, 2021, our Consolidated Funds represent approximately 2% of our AUM; 2% of our management fees for both the three and six months ended June 30, 2021; 1% of our total investment income or loss for the six months ended June 30, 2021.

We are not required under the consolidation guidance to consolidate in our financial statements most of the investment funds we advise. However, we consolidate certain CLOs that we advise. As of June 30, 2021, our consolidated CLOs held approximately $6.5 billion of total assets and comprised substantially all of the assets and loans payable of the Consolidated Funds. The assets and liabilities of the Consolidated Funds are generally held within separate legal entities and, as a result, the liabilities of the Consolidated Funds are non-recourse to us.

Generally, the consolidation of the Consolidated Funds has a gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to the Company and equity. The majority of the net economic ownership interests of the Consolidated Funds are reflected as non-controlling interests in consolidated entities in the consolidated financial statements. Because only a small portion of our funds are consolidated, the performance of the Consolidated Funds is not necessarily consistent with or representative of the combined performance trends of all of our funds.

Consolidated Results of Operations

The following table and discussion sets forth information regarding our unaudited condensed consolidated results of operations for the three and six months ended June 30, 2021 and 2020. The unaudited condensed consolidated financial statements have been prepared on substantially the same basis for all historical periods presented; however, the consolidated funds are not the same entities in all periods shown due to changes in U.S. GAAP, changes in fund terms and the creation and termination of funds. As further described above, the consolidation of these funds primarily has the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds, and net investment gains (losses) of Consolidated Funds in the year that the fund is initially consolidated. The consolidation of these funds had no effect on net income attributable to the Company for the periods presented.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions, except share and per share data)
Revenues
Fund management fees	$	394.4	$	371.8	$	775.4	$	727.7
Incentive fees	10.4		9.0		19.9		17.9



Investment income (loss)
Performance allocations	2,080.7		1,191.8		3,866.8		254.2


Principal investment income (loss)	137.7		(512.6)		316.8		(765.9)


Total investment income (loss)	2,218.4		679.2		4,183.6		(511.7)
Interest and other income	21.0		15.8		41.4		43.2
Interest and other income of Consolidated Funds	62.1		55.2		123.2		108.2

Total revenues	2,706.3		1,131.0		5,143.5		385.3
Expenses
Compensation and benefits
Cash-based compensation and benefits	231.8		212.5		460.3		416.8
Equity-based compensation	47.2		30.5		79.6		59.6
Performance allocations and incentive fee related compensation	994.0		535.6		1,860.6		93.1


Total compensation and benefits	1,273.0		778.6		2,400.5		569.5
General, administrative and other expenses	109.1		80.2		200.8		149.8
Interest	25.5		25.9		48.5		49.8
Interest and other expenses of Consolidated Funds	46.5		39.3		88.9		84.9

Other non-operating expenses	(3.1)		0.5		(2.5)		0.7
Total expenses	1,451.0		924.5		2,736.2		854.7
Other income (loss)
Net investment income (losses) of Consolidated Funds	(2.6)		50.3		9.7		(62.8)
Income (Loss) before provision for income taxes	1,252.7		256.8		2,417.0		(532.2)
Provision (Benefit) for income taxes	306.2		52.3		579.6		(27.7)
Net income (loss)	946.5		204.5		1,837.4		(504.5)
Net income (loss) attributable to non-controlling interests in consolidated entities	21.5		58.6		43.1		(38.4)





Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders	$	925.0	$	145.9	$	1,794.3	$	(466.1)

Net income (loss) attributable to The Carlyle Group Inc. per common share
Basic	$	2.61	$	0.42	$	5.06	$	(1.34)
Diluted	$	2.55	$	0.41	$	4.97	$	(1.34)
Weighted-average common shares
Basic	354,506,335		348,574,528		354,368,976		348,407,144
Diluted	362,151,588		357,268,275		361,328,946		348,407,144

Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020 and Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

Revenues

Total revenues increased $1.6 billion, or 139.3%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $4.8 billion, or 1,234.9%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The following table provides the components of the changes in total revenues for the three and six months ended June 30, 2021:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Total Revenues, June 30, 2020	$	1,131.0	$	385.3
Increases (Decreases):
Increase in fund management fees	22.6		47.7
Increase in incentive fees	1.4		2.0
Increase in investment income, including performance allocations	1,539.2		4,695.3
Increase (decrease) in interest and other income	5.2		(1.8)
Increase in interest and other income of Consolidated Funds	6.9		15.0


Total increase	1,575.3		4,758.2
Total Revenues, June 30, 2021	$	2,706.3	$	5,143.5

Fund Management Fees. Fund management fees increased $22.6 million, or 6.1%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $47.7 million, or 6.6%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to the following:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Higher management fees from the commencement of the investment period for certain newly raised funds	$	41.4	$	72.5
Lower management fees resulting from the change in basis for earning management fees from commitments to invested capital for certain funds and from distributions from funds whose management fees are based on invested capital	(22.9)		(46.5)
Increase in catch-up management fees from subsequent closes of funds that are in the fundraising period	3.1		3.2
Higher management fees on CLOs (after the effect of consolidation) due to the deferral of subordinated fees in 2020	3.5		7.0
(Lower) higher transaction and portfolio advisory fees	(2.8)		10.8
All other changes	0.3		0.7
Total increase in fund management fees	$	22.6	$	47.7

Fund management fees include transaction and portfolio advisory fees, net of rebate offsets, of $14.4 million and $17.2 million for the three months ended June 30, 2021 and 2020, respectively. The decrease was primarily driven by transaction fees related to our investment in Carlyle FRL during the three months ended June 30, 2020, partially offset by higher underwriting and placement fees generated by Carlyle Global Capital Markets during the three months ended June 30, 2021. Transaction and portfolio advisory fees, net of rebate offsets, were $32.4 million and $21.6 million for the six months ended June 30, 2021 and 2020, respectively. The increase was primarily driven by higher underwriting and placement fees generated by Carlyle Global Capital Markets and transaction fees related to investments in CJP IV during the three and six months ended June 30, 2021, partially offset by transaction fees related to our investment in Carlyle FRL during the three months ended June 30, 2020.

Investment Income. Investment income increased $1.5 billion to $2.2 billion for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $4.7 billion to $4.2 billion for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to the following:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Increase in performance allocations, excluding NGP	$	888.9	$	3,612.6
Increase in investment income from NGP, which includes performance allocations from the investments in NGP	5.4		27.4
Increase in investment income from our corporate private equity funds	25.1		138.2
Decrease in losses on foreign currency hedges	4.0		9.7
Increase in investment income from our real estate funds	0.9		4.9
Increase in investment income from our natural resources funds, excluding NGP	1.8		14.0

Increase in investment income from our Global Credit carry funds	0.7		12.7
(Decrease) increase in investment income from our direct lending funds and interval funds	(1.9)		18.4
Increase in investment income from Carlyle Aviation	0.2		1.2
(Decrease) increase in investment income from our CLOs	(28.0)		51.0
Increase in investment income from Fortitude Re	634.2		791.6
All other changes	7.9		13.6
Total increase in investment income	$	1,539.2	$	4,695.3

Prior to the Control Transaction which closed on June 2, 2020, as described in Note 4 to the unaudited condensed consolidated financial statements, we accounted for our investment in Fortitude Re under the equity method of accounting by recognizing our pro rata share of Fortitude Holdings’ U.S. GAAP earnings, which is included in principal investment income (loss) in the unaudited condensed consolidated statements of operations. These amounts were inclusive of unrealized gains (losses) resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S. GAAP financial statements. Modified coinsurance is subject to the general accounting principles for hedging, specifically the guidance originally issued as Derivatives Implementation Group Issue No. B36: Embedded Derivatives: Modified Coinsurance Agreements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (“DIG B36”). At the time we contributed our existing 19.9% interest in Fortitude Holdings to Carlyle FRL, a Carlyle-affiliated investment fund, we began accounting for our investment under the equity method based on our net asset value in the fund, which resulted in a loss in principal investment income (loss) of $620.7 million during the three months ended June 30, 2020, as compared to principal investment income of $13.5 million during the three months ended June 30, 2021. As of June 30, 2021, our investment in Carlyle FRL was $613.3 million, relative to our cost of $465.3 million.

We recorded a decrease in the investment income from CLOs during the three months ended June 30, 2021 and an increase in the investment income from CLOs during the six months ended June 30, 2021 relative to the comparable periods in 2020. The fair value of the CLO investments held by the firm (before the effects of consolidation) decreased 1% during the quarter, with our investments in subordinated notes depreciating 3% during the three months ended June 30, 2021, while our investments in the senior notes were flat quarter over quarter. The fair value of the CLO investments held by the firm (before the effects of consolidation) decreased 2% year-to-date, with our investments in subordinated notes appreciating 2% during the six months ended June 30, 2021, while our investments in the senior notes depreciated 3% year-to-date.

Performance Allocations. Performance allocations increased $888.9 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and $3.6 billion for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. Performance allocations by segment on a consolidated U.S. GAAP basis for the three and six months ended June 30, 2021 and 2020 comprised the following:


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	(Dollars in millions)
Global Private Equity	$	1,798.2		$	1,198.7		$	3,364.7		$	389.4

Global Credit	76.2			22.7			97.2			(40.3)
Investment Solutions (1)	206.3			(29.6)			404.9			(94.9)
Total performance allocations	$	2,080.7		$	1,191.8		$	3,866.8		$	254.2

Total carry fund appreciation (depreciation)	11		%	5		%	25		%	(3)		%

Refer to “— Key Financial Measures” for a listing of the funds with performance allocations in excess of 10% of the total for the periods presented.

Global growth in the second quarter of 2021 was largely consistent with upward revisions from earlier this year as advanced economies experienced strong sequential growth driven by vaccine distribution and government stimulus. Proprietary data suggest that U.S. gross domestic product (GDP) grew at a 9.1% annualized rate from the first quarter of 2021, while the euro zone economy expanded at a 6% annualized rate in the second quarter. The acceleration in economic activity and pandemic-related disruptions caused inflation to reach levels not seen in over a decade and above-forecast inflation has translated into increased volatility in financial markets.

The second quarter was a record setting period for equity markets as the S&P 500 breached 4,300 for the first time, driven by strong corporate earnings, combined with low interest rates. Second quarter corporate earnings estimates are expected to increase 70% from year over year recession levels but are also up 7.2% from strong Q1 2021 results. Similarly, our carry fund portfolio extended the strong positive trend experienced since the first quarter of 2020. Within our Global Private Equity segment, our corporate private equity funds appreciated by 12% in the quarter, driven by strong gains in our U.S., Europe and Asia buyout portfolio, our real estate funds appreciated by 11% in the quarter, continuing their attractive performance, and our natural resources funds appreciated by 9% in the quarter, boosted by the effect of rising commodity prices on our energy-focused investments. In our Global Credit segment, our carry funds, which represent approximately 17% of the total Global Credit remaining fair value, appreciated by 8% in the second quarter, reflecting continued positive portfolio company performance. Our Investment Solutions funds appreciated by 12%, though our primary and secondary fund of funds generally reflect investment fair values on a one-quarter lag. The portion of our traditional carry funds attributable to publicly traded companies is 18% of fair value as of June 30, 2021, compared to 15% as of December 31, 2020 and 6% as of December 31, 2019. While our publicly traded investments have performed well to date overall, this shift may result in an increasing correlation to public market performance and a significant concentration of investment gains in individual investments for certain funds. To the extent that there is volatility in public equity markets and/or the prices of our publicly-traded portfolio companies, there may be elevated volatility in our performance revenue accrual in the coming quarters. For example, as of June 30, 2021, approximately 40% of our net accrued performance revenues were generated by Carlyle Partners VI, L.P. (“CP VI”), which has over 65% of its remaining fair value in publicly-traded portfolio companies.

Interest and Other Income. Interest and other income increased $5.2 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020, primarily as result of increases from the reimbursement of certain costs incurred on behalf of Carlyle funds and interest income from investments in CLO subordinated notes.

Interest and other income decreased $1.8 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily as result of decreases from the reimbursement of certain costs incurred on behalf of Carlyle funds and interest income from investments in CLO subordinated notes.

Interest and Other Income of Consolidated Funds. Interest and other income of Consolidated Funds increased $6.9 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $15.0

million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. Substantially all of the increase in interest and other income of Consolidated Funds relates to increased interest income from CLOs.

Our CLOs generate interest income primarily from investments in bonds and loans inclusive of amortization of discounts and generate other income from consent and amendment fees. Substantially all interest and other income of the CLOs and other consolidated funds together with interest expense of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company.

Expenses

Total expenses increased $526.5 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $1.9 billion for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The following table provides the components of the changes in total expenses for the three and six months ended June 30, 2021:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Total Expenses, June 30, 2020	$	924.5	$	854.7
Increases (Decreases):
Increase in total compensation and benefits	494.4		1,831.0
Increase in general, administrative and other expenses	28.9		51.0
Increase in interest and other expenses of Consolidated Funds	7.2		4.0
Increase in other non-operating income	(3.6)		(3.2)
All other changes	(0.4)		(1.3)
Total increase	526.5		1,881.5
Total Expenses, June 30, 2021	$	1,451.0	$	2,736.2

Total Compensation and Benefits. Total compensation and benefits increased $494.4 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $1.8 billion for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, due to the following:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Increase in cash-based compensation and benefits	$	19.3	$	43.5
Increase in equity-based compensation	16.7		20.0
Increase in performance allocations and incentive fee related compensation	458.4		1,767.5
Increase in total compensation and benefits	$	494.4	$	1,831.0

Cash-based Compensation and Benefits. Cash-based compensation and benefits increased $19.3 million, or 9%, for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $43.5 million, or 10.4%, for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to the following:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Increase in headcount and bonuses	$	10.8	$	25.5




Contingent earnout associated with Carlyle Aviation Partners acquisition(1)	8.5		18.0

Total increase in cash-based compensation and benefits	$	19.3	$	43.5

(1) The Carlyle Aviation Partners acquisition included an earn-out of up to $150.0 million, under which we have paid $49.9 million through June 30, 2021. For additional information, refer to “—Liquidity and Capital Resources—Contingent Cash Payments For Business Acquisitions and Strategic Investments.”

Equity-based Compensation. Equity-based compensation increased $16.7 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $20.0 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to a larger number of unvested restricted stock units with a higher weighted average grant date fair value. During the three months ended June 30, 2021, we also recorded an increase in equity-based compensation related to 2021 performance-based awards to reflect the impact of positive year-to-date performance on the number of shares projected to vest under these awards. During the six months ended June 30, 2021, we granted 7.0 million long-term strategic restricted stock units to certain senior professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years, with a larger proportion of the awards vesting based on the 2024 performance year. As a result, the number of restricted stock units granted in 2021 is higher than in 2020, which, combined with a higher share price than in prior periods, will result in higher equity-based compensation expense in the coming years.

Performance allocations and incentive fee related compensation expense. Performance allocations and incentive fee related compensation expense increased $458.4 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $1.8 billion for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. Performance allocations and incentive fee related compensation as a percentage of performance allocations and incentive fees was 48% for both the three and six months ended June 30, 2021 and 45% and 37% for the three and six months ended June 30, 2020, respectively. Performance allocations and incentive fee related compensation as a percentage of performance allocations and incentive fees fluctuates depending on the mix of funds contributing to performance allocations and incentive fees in a given period. For our largest segment, Global Private Equity, our performance allocations and incentive fee related compensation expense as a percentage of performance allocations and incentive fees is generally around 45%. Performance allocations from our Investment Solutions segment pay a higher ratio of performance allocations and incentive fees as compensation, primarily as a result of the terms of our acquisition of AlpInvest. Conversely, performance allocations from the Legacy Energy funds in our Global Private Equity segment are primarily allocated to Carlyle because the investment teams for the Legacy Energy funds are employed by Riverstone and not Carlyle.

General, Administrative and Other Expenses. General, administrative and other expenses increased $28.9 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $51.0 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)

CCC litigation cost recovery in 2020 (1)	$	—	$	29.9
Right-of-use asset impairment(1)	26.8		26.8



Lower intangible asset amortization	(0.3)		(0.6)
Higher depreciation and amortization	0.3		1.4
Higher (lower) professional fees, including corporate conversion costs	0.2		(16.2)

Higher (lower) travel and conference expenses	1.4		(10.6)
Foreign exchange adjustments(2)	0.1		23.4
Other changes	0.4		(3.1)
Total increase in general, administrative and other expenses	$	28.9	$	51.0

(1) General, administrative and other expenses included the positive impact of a $29.9 million recovery of litigation costs during the six months ended June 30, 2020 and $26.8 million right-of-use asset impairment during the six months ended June 30, 2021. See Note 7 to our unaudited condensed consolidated financial statements.

(2) Foreign exchange adjustments for the six months ended June 30, 2021 as compared to six months ended June 30, 2020 are primarily driven by the revaluation in our European CLOs investments.

In connection with the April 1, 2021 sale of MRE, we entered into a sublease of certain office space in New York which resulted in a $26.8 million right-of-use asset impairment charge during the three and six months ended June 30, 2021. We expect general, administrative and other costs to benefit from lower rent expense and leasehold improvement amortization in future years as a result of the sublease.

Interest and Other Expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased $7.2 million for the three months ended June 30, 2021 as compared to the three months ended June 30, 2020 and increased $4.0 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020, primarily due to higher interest expense on the consolidated CLOs.

Other Non-operating Expenses (Income). For the three and six months ended June 30, 2021, this includes a $5.0 million gain on the sale of our interest in MRE.

Net Investment Gains of Consolidated Funds. For the three months ended June 30, 2021, net investment losses of Consolidated Funds were $2.6 million as compared to net investment gains of $50.3 million for the three months ended June 30, 2020. For six months ended June 30, 2021, net investment gains of Consolidated Funds were $9.7 million as compared to net investment losses of $62.8 million for the six months ended June 30, 2020. For both the three and six months ended June 30, 2021 and 2020, net investment gains (losses) comprise the activity of the consolidated CLOs and certain other funds. For the consolidated CLOs, the amount reflects the net gain or loss on the fair value adjustment of both the assets and liabilities. The six months ended June 30, 2020 include significant losses on the CLO assets and gains on the CLO liabilities resulting from the rapid decline in asset prices and widening of credit spreads. The components of net investment gains (losses) of Consolidated Funds for the respective periods are:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Realized gains (losses)	$	12.5	$	(39.8)	$	17.2	$	(40.3)
Net change in unrealized gains (losses)	1.0		590.2		85.6		(342.0)
Total gains (losses)	13.5		550.4		102.8		(382.3)
Gains (losses) from liabilities of CLOs	(16.1)		(500.1)		(93.1)		319.5

Total net investment gains (losses) of Consolidated Funds	$	(2.6)	$	50.3	$	9.7	$	(62.8)

Provision (Benefit) for Income Taxes. The Company’s provision (benefit) for income taxes was $306.2 million and $52.3 million for the three months ended June 30, 2021 and 2020, respectively, and $579.6 million and $(27.7) million for the six months ended June 30, 2021 and 2020, respectively. During the six months ended June 30, 2020, the provision for income taxes reflects a tax benefit of $118.0 million related to the net loss recorded during the period, net of the $90.3 million expense related to Conversion (see Note 9 to the accompanying unaudited condensed consolidated financial statements for more information regarding the impact of Conversion). The Company’s effective tax rate was approximately 24% and 20% for the three months ended June 30, 2021 and 2020, respectively, and 24% and 5% for the six months ended June 30, 2021 and 2020, respectively. The effective tax rate for the six months ended June 30, 2021 is primarily comprised of the 21% U.S. federal corporate income tax rate plus U.S. state and foreign corporate income taxes, partially offset by non-controlling interests. U.S. federal taxes relate to both current and deferred taxes, as we fully utilized our remaining net operating loss carryforwards during the three months ended June 30, 2021. The effective tax rate for the six months ended June 30, 2020 differs from the statutory rate primarily due to the income tax expense resulting from the Conversion offsetting the tax benefit from the net loss recorded in the period.

Net Income Attributable to Non-controlling Interests in Consolidated Entities. Net income attributable to non-controlling interests in consolidated entities was $21.5 million for the three months ended June 30, 2021 as compared to net income of $58.6 million for the three months ended June 30, 2020. Net income attributable to non-controlling interests in consolidated entities was $43.1 million for the six months ended June 30, 2021 as compared to net loss of $38.4 million for the six months ended June 30, 2020. These amounts primarily reflect the net income attributable to non-controlling interests in carried interest, giveback obligations, and cash held for carried interest distributions. This balance also includes the net earnings or losses of the Consolidated Funds for each period, which are substantially all allocated to the related funds’ limited partners or CLO investors.

Net Income Attributable to The Carlyle Group Inc. Common Stockholders. The net income (loss) attributable to The Carlyle Group Inc. common stockholders was $925.0 million for the three months ended June 30, 2021 as compared to $145.9 million for the three months ended June 30, 2020. The net income (loss) attributable to The Carlyle Group Inc. common stockholders was $1.8 billion for the six months ended June 30, 2021, a $2.3 billion increase from a net loss of $466.1 million for the six months ended June 30, 2020, reflecting strong portfolio appreciation in the first half of 2021 as compared to depreciation at the onset of the pandemic in the first half of 2020.

Non-GAAP Financial Measures

The following tables set forth information in the format used by management when making resource deployment decisions and in assessing performance of our segments. These non-GAAP financial measures are presented for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. Our Non-GAAP financial measures exclude the effects of unrealized performance allocations net of related compensation expense, unrealized principal investment income, consolidated funds, ~~acquisition-related~~acquisition and disposition-related items including amortization and any impairment charges of acquired intangible assets and contingent consideration taking the form of earn-outs, charges associated with equity-based compensation, changes in the tax receivable agreement liability, corporate actions and infrequently occurring or unusual events.

The following table shows our total segment DE and FRE for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Total Segment Revenues	$	919.0	$	582.2	$	1,531.5	$	1,163.3
Total Segment Expenses	523.6		383.8		921.2		789.9
Distributable Earnings	$	395.4	$	198.4	$	610.3	$	373.4
(-) Realized Net Performance Revenues	237.4		70.9		313.4		119.1
(-) Realized Principal Investment Income	37.8		22.1		67.8		38.0
(+) Net Interest	23.0		21.9		43.1		39.8
(=) Fee Related Earnings	$	143.2	$	127.3	$	272.2	$	256.1

Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Total Segment Revenues $ 582.2
$ 550.7
$ 1,163.3
$ 1,001.6
Total Segment Expenses 383.8
337.3
789.9
687.4
Distributable Earnings $ 198.4
$ 213.4
$ 373.4
$ 314.2
(-) Realized Net Performance Revenues 70.9
20.8
119.1
27.8
(-) Realized Principal Investment Income 22.1
73.9
38.0
78.0
(+) Net Interest 21.9
14.0
39.8
27.6
(=) Fee Related Earnings $ 127.3
$ 132.7
$ 256.1
$ 236.0

The following table sets forth our total segment revenues for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.


	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019			2021		2020		2021		2020
	(Dollars in millions)									(Dollars in millions)
Segment Revenues									Segment Revenues
Fund level fee revenues									Fund level fee revenues
Fund management fees	$	386.4	$	414.5	$	767.9	$	796.1	Fund management fees	$	409.8	$	386.4	$	802.0	$	767.9
Portfolio advisory and transaction fees, net and other	18.3		14.9		25.1		24.9		Portfolio advisory and transaction fees, net and other	15.6		18.3		35.3		25.1
Total fund level fee revenues	404.7		429.4		793.0		821.0		Total fund level fee revenues	425.4		404.7		837.3		793.0
Realized performance revenues	152.2		41.9		323.8		91.1		Realized performance revenues	454.0		152.2		622.4		323.8
Realized principal investment income	22.1		73.9		38.0		78.0		Realized principal investment income	37.8		22.1		67.8		38.0
Interest income	3.2		5.5		8.5		11.5		Interest income	1.8		3.2		4.0		8.5
Total Segment Revenues	$	582.2	$	550.7	$	1,163.3	$	1,001.6	Total Segment Revenues	$	919.0	$	582.2	$	1,531.5	$	1,163.3

The following table sets forth our total segment expenses for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	$	217.4	$	210.1	$	429.6	$	413.9
Realized performance revenue related compensation	216.6		81.3		309.0		204.7
Total compensation and benefits	434.0		291.4		738.6		618.6
General, administrative, and other indirect expenses	55.6		58.1		117.2		106.4
Depreciation and amortization expense	9.2		9.2		18.3		16.6
Interest expense	24.8		25.1		47.1		48.3
Total Segment Expenses	$	523.6	$	383.8	$	921.2	$	789.9

Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits $ 210.1
$ 207.1
$ 413.9
$ 409.4
Realized performance revenue related compensation 81.3
21.1
204.7
63.3
Total compensation and benefits 291.4
228.2
618.6
472.7
General, administrative, and other indirect expenses 58.1
80.0
106.4
155.7
Depreciation and amortization expense 9.2
9.6
16.6
19.9
Interest expense 25.1
19.5
48.3
39.1
Total Segment Expenses $ 383.8
$ 337.3
$ 789.9
$ 687.4

Income (loss) before provision for income taxes is the U.S. GAAP financial measure most comparable to Distributable Earnings and Fee Related Earnings. The following table is a reconciliation of income (loss) before provision for income taxes to Distributable Earnings and to Fee Related Earnings.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Income (loss) before provision for income taxes	$	1,252.7	$	256.8	$	2,417.0	$	(532.2)
Adjustments:
Net unrealized performance revenues	(844.0)		(587.4)		(1,690.4)		(58.5)
Unrealized principal investment (income) loss(1)	(78.8)		459.5		(210.1)		724.2
Adjusted unrealized principal investment (income) loss from investment in Fortitude Re(2)	—		81.6		—		104.4
Equity-based compensation(3)	50.3		34.6		85.2		66.3
Acquisition or disposition-related charges (credits), including amortization of intangibles	11.3		7.1		30.3		10.1

Tax expense (benefit) associated with certain foreign performance fee revenues	(3.4)		0.7		(9.4)		11.9
Net (income) loss attributable to non-controlling interests in consolidated entities	(21.5)		(58.6)		(43.1)		38.4
Right-of-use asset impairment	26.8		—		26.8		—

Other adjustments including severance and C-Corp. conversion costs in 2020	2.0		4.1		4.0		8.8
(=) Distributable Earnings	$	395.4	$	198.4	$	610.3	$	373.4
(-) Realized net performance revenues(4)	237.4		70.9		313.4		119.1
(-) Realized principal investment income(4)	37.8		22.1		67.8		38.0
(+) Net Interest	23.0		21.9		43.1		39.8
(=) Fee Related Earnings	$	143.2	$	127.3	$	272.2	$	256.1

Three Months Ended June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Income (loss) before provision for income taxes $ 256.8
$ 542.0
$ (532.2 ) $ 1,012.3
Adjustments:
Net unrealized performance revenues (587.4 ) (82.4 ) (58.5 ) (238.2 )
Unrealized principal investment (income) loss⁽¹⁾
459.5
(234.9 ) 724.2
(473.5 )
Adjusted unrealized principal investment (income) loss from investment in Fortitude Re⁽²⁾
81.6
(40.1 ) 104.4
(67.1 )
Equity-based compensation⁽³⁾
34.6
38.3
66.3
77.7
Acquisition related charges, including amortization of intangibles and impairment 7.1
15.4
10.1
27.4
Other non-operating expense 0.5
0.4
0.7
0.7
Tax expense (benefit) associated with certain foreign performance fee revenues 0.7
3.6
11.9
(2.5 )
Net loss attributable to non-controlling interests in consolidated entities (58.6 ) (39.8 ) 38.4
(35.3 )
Debt extinguishment costs —
—
—
0.1
Corporate conversion costs, severance and other adjustments 3.6
10.9
8.1
12.6
(=) Distributable Earnings $ 198.4
$ 213.4
$ 373.4
$ 314.2
(-) Realized net performance revenues⁽⁴⁾
70.9
20.8
119.1
27.8
(-) Realized principal investment income⁽⁴⁾
22.1
73.9
38.0
78.0
(+) Net Interest 21.9
14.0
39.8
27.6
(=) Fee Related Earnings $ 127.3
$ 132.7
$ 256.1
$ 236.0

(1) Adjustments to unrealized principal investment income (loss) during the three and six months ended June 30, 2020 are inclusive of $300.9 million and $211.8 million of unrealized gains, respectively, resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S. GAAP financial statements prior to the contribution of our investment in Fortitude Holdings to Carlyle FRL on June 2, 2020. At the time of the contribution of our investment to Carlyle FRL, we began accounting for our investment under the equity method based on our net asset value in the fund, which is an investment company that accounts for its investment in Fortitude Holdings at fair value. This resulted in an unrealized loss in principal investment income (loss) of $620.7 million during the three and six months ended June 30, 2020.

(2) Adjusted unrealized principal investment income (loss) from the investment in Fortitude Re represents 19.9% of Fortitude Holdings’ estimated net income (loss), excluding the unrealized gains (losses) related to embedded derivatives, prior to the contribution of our investment in Fortitude Holdings to Carlyle FRL on June 2, 2020.

(3) Equity-based compensation includes amounts presented in principal investment income and general, administrative and other expenses in our U.S. GAAP statement of operations.

~~(1)~~

Adjustments to unrealized principal investment income (loss) during the three and six months ended June 30, 2020 are inclusive of $300.9 million and $211.8 million of unrealized gains (losses), respectively, resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S. GAAP financial statements prior to the contribution of our investment in Fortitude Holdings to Carlyle FRL on June 2, 2020. At the time of the contribution of our investment to Carlyle FRL, we began accounting for our investment under the equity method based on our net asset value in the fund, which is an investment company that accounts for its investment in Fortitude Holdings at fair value. This resulted in an unrealized loss in principal investment income (loss) of $620.7 million during the three and six months ended June 30, 2020. Adjustments to unrealized principal investment income (loss) during the three and six months ended June 30, 2019 are inclusive of $230.9 million and $460.2 million of unrealized gains on embedded derivatives.


~~(2)~~	Adjusted unrealized principal investment income (loss) from the investment in Fortitude Re represents 19.9% of Fortitude Holdings’ estimated net income (loss) for the respective periods through June 2, 2020, excluding the unrealized gains (losses) related to embedded derivatives.


~~(3)~~	~~Equity-based compensation includes amounts presented in principal investment income and general, administrative and other expenses in our U.S. GAAP statement of operations.~~

(4) See reconciliation to most directly comparable U.S. GAAP measure below:


	Three Months Ended June 30, 2020									Three Months Ended June 30, 2021
	Carlyle Consolidated			Adjustments ⁽⁵⁾			Total Reportable Segments			Carlyle Consolidated		Adjustments (5)		Total Reportable Segments
	(Dollars in millions)									(Dollars in millions)
Performance revenues	$	1,191.8		$	(1,039.6	)	$	152.2	Performance revenues	$	2,080.7	$	(1,626.7)	$	454.0
Performance revenues related compensation expense	535.6			(454.3		)	81.3		Performance revenues related compensation expense	994.0		(777.4)		216.6
Net performance revenues	$	656.2		$	(585.3	)	$	70.9	Net performance revenues	$	1,086.7	$	(849.3)	$	237.4

Principal investment income (loss)	$	(512.6	)	$	534.7		$	22.1	Principal investment income (loss)	$	137.7	$	(99.9)	$	37.8

	Six Months Ended June 30, 2020									Six Months Ended June 30, 2021
	Carlyle Consolidated			Adjustments ⁽⁵⁾			Total Reportable Segments			Carlyle Consolidated		Adjustments (5)		Total Reportable Segments
	(Dollars in millions)									(Dollars in millions)
Performance revenues	$	254.2		$	69.6		$	323.8	Performance revenues	$	3,866.8	$	(3,244.4)	$	622.4
Performance revenues related compensation expense	93.1			111.6			204.7		Performance revenues related compensation expense	1,860.6		(1,551.6)		309.0
Net performance revenues	$	161.1		$	(42.0	)	$	119.1	Net performance revenues	$	2,006.2	$	(1,692.8)	$	313.4

Principal investment income (loss)	$	(765.9	)	$	803.9		$	38.0	Principal investment income (loss)	$	316.8	$	(249.0)	$	67.8


	Three Months Ended June 30, 2019								Three Months Ended June 30, 2020
	Carlyle Consolidated		Adjustments ⁽⁵⁾			Total Reportable Segments			Carlyle Consolidated		Adjustments (5)		Total Reportable Segments
	(Dollars in millions)								(Dollars in millions)
Performance revenues	$	247.6	$	(205.7	)	$	41.9	Performance revenues	$	1,191.8	$	(1,039.6)	$	152.2
Performance revenues related compensation expense	113.6		(92.5		)	21.1		Performance revenues related compensation expense	535.6		(454.3)		81.3
Net performance revenues	$	134.0	$	(113.2	)	$	20.8	Net performance revenues	$	656.2	$	(585.3)	$	70.9

Principal investment income (loss)	$	342.0	$	(268.1	)	$	73.9	Principal investment income (loss)	$	(512.6)	$	534.7	$	22.1

	Six Months Ended June 30, 2019								Six Months Ended June 30, 2020
	Carlyle Consolidated		Adjustments ⁽⁵⁾			Total Reportable Segments			Carlyle Consolidated		Adjustments (5)		Total Reportable Segments
	(Dollars in millions)								(Dollars in millions)
Performance revenues	$	596.7	$	(505.6	)	$	91.1	Performance revenues	$	254.2	$	69.6	$	323.8
Performance revenues related compensation expense	299.0		(235.7		)	63.3		Performance revenues related compensation expense	93.1		111.6		204.7
Net performance revenues	$	297.7	$	(269.9	)	$	27.8	Net performance revenues	$	161.1	$	(42.0)	$	119.1

Principal investment income (loss)	$	643.8	$	(565.8	)	$	78.0	Principal investment income (loss)	$	(765.9)	$	803.9	$	38.0

(5) Adjustments to performance revenues and principal investment income (loss) relate to (i) unrealized performance allocations net of related compensation expense and unrealized principal investment income, which are excluded from our Non-GAAP results, (ii) amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the Non-GAAP results, (iii) amounts attributable to non-controlling interests in consolidated entities, which were excluded from the Non-GAAP results, (iv) the reclassification of NGP performance revenues, which are included in investment income in the U.S. GAAP financial statements, (v) the reclassification of certain incentive fees from business development companies, which are included in fund management fees in the segment results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues. Adjustments to principal investment income (loss) also include the reclassification of earnings for the investment in NGP Management and its affiliates to the appropriate operating captions for the Non-GAAP results, the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the Non-GAAP results (see Note 4 to our unaudited condensed consolidated financial statements).

Distributable Earnings for our reportable segments are as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Global Private Equity	$	337.6	$	156.5	$	515.8	$	291.3

Global Credit	29.6		28.1		52.7		59.9
Investment Solutions	28.2		13.8		41.8		22.2
Distributable Earnings	$	395.4	$	198.4	$	610.3	$	373.4

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
(Dollars in millions)
Corporate Private Equity $ 95.8
$ 62.5
$ 203.2
$ 124.6
Real Assets 60.7
134.6
88.1
152.7
Global Credit 28.1
8.8
59.9
23.0
Investment Solutions 13.8
7.5
22.2
13.9
Distributable Earnings $ 198.4
$ 213.4
$ 373.4
$ 314.2

Segment Analysis

Discussed below is our DE and FRE for our segments for the periods presented. Our segment information is reflected in the manner used by our senior management to make operating and compensation decisions, assess performance and allocate resources.

For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our Consolidated Funds. As a result, segment revenues from management fees, realized performance revenues and realized principal investment income (loss) are different than those presented on a consolidated U.S. GAAP basis because these revenues recognized in certain segments are received from Consolidated Funds and are eliminated in consolidation when presented on a consolidated U.S. GAAP basis. Furthermore, segment expenses are different than related amounts presented on a consolidated U.S. GAAP basis due to the exclusion of fund expenses that are paid by the Consolidated Funds.

~~Corporate~~

Global Private Equity

The following table presents our results of operations for our ~~Corporate~~Global Private Equity segment:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	263.4	$	262.5	$	523.6	$	531.2
Portfolio advisory and transaction fees, net and other	6.2		3.1		16.8		7.3
Total fund level fee revenues	269.6		265.6		540.4		538.5
Realized performance revenues	428.9		116.0		563.0		181.2
Realized principal investment income	24.0		16.3		47.7		26.5
Interest income	0.5		0.5		0.7		2.3
Total revenues	723.0		398.4		1,151.8		748.5
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	133.6		130.6		262.7		260.3
Realized performance revenues related compensation	193.6		51.8		253.8		81.5
Total compensation and benefits	327.2		182.4		516.5		341.8
General, administrative, and other indirect expenses	36.4		37.6		77.8		74.8
Depreciation and amortization expense	6.1		6.1		12.2		10.9
Interest expense	15.7		15.8		29.5		29.7
Total expenses	385.4		241.9		636.0		457.2
Distributable Earnings	$	337.6	$	156.5	$	515.8	$	291.3
(-) Realized Net Performance Revenues	235.3		64.2		309.2		99.7
(-) Realized Principal Investment Income	24.0		16.3		47.7		26.5
(+) Net Interest	15.2		15.3		28.8		27.4
(=) Fee Related Earnings	$	93.5	$	91.3	$	187.7	$	192.5

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 187.7
$ 190.3
$ 376.2
$ 380.3
Portfolio advisory and transaction fees, net and other 2.8
11.0
6.7
14.8
Total fund level fee revenues 190.5
201.3
382.9
395.1
Realized performance revenues 40.5
11.2
94.1
34.6
Realized principal investment income (loss) 14.8
1.0
24.4
(1.3 )
Interest income 0.3
1.2
1.5
2.4
Total revenues 246.1
214.7
502.9
430.8
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 94.8
101.1
189.0
197.8
Realized performance revenues related compensation 18.2
5.4
42.5
15.8
Total compensation and benefits 113.0
106.5
231.5
213.6
General, administrative, and other indirect expenses 22.7
33.3
40.2
67.4
Depreciation and amortization expense 4.4
4.5
7.8
9.4
Interest expense 10.2
7.9
20.2
15.8
Total expenses 150.3
152.2
299.7
306.2
Distributable Earnings $ 95.8
$ 62.5
$ 203.2
$ 124.6
(-) Realized Net Performance Revenues 22.3
5.8
51.6
18.8
(-) Realized Principal Investment Income (Loss) 14.8
1.0
24.4
(1.3 )
(+) Net Interest 9.9
6.7
18.7
13.4
(=) Fee Related Earnings $ 68.6
$ 62.4
$ 145.9
$ 120.5

Three Months Ended June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020 and Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

Distributable Earnings

Distributable Earnings increased ~~$33.3~~$181.1 million for the three months ended June 30, ~~2020~~2021 as compared to the three months ended June 30, ~~2019~~2020 and increased ~~$78.6~~$224.5 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019.~~2020. The following table provides the components of the changes in Distributable Earnings for the three and six months ended June 30, ~~2020:~~2021:


	Three Months Ended June 30,		Six Months Ended June 30,

	(Dollars in millions)
Distributable Earnings, June 30, 2020	$	156.5	$	291.3
Increases (decreases):
Increase (decrease) in fee related earnings	2.2		(4.8)
Increase in realized net performance revenues	171.1		209.5
Increase in realized principal investment income	7.7		21.2
(Decrease) increase in net interest	0.1		(1.4)
Total increase	181.1		224.5
Distributable Earnings, June 30, 2021	$	337.6	$	515.8

Three Months Ended
June 30, Six Months Ended
June 30,
(Dollars in millions)
Distributable Earnings, June 30, 2019 $ 62.5
$ 124.6
Increases (decreases):
Increase in fee related earnings 6.2
25.4
Increase in realized net performance revenues 16.5
32.8
Increase in realized principal investment income 13.8
25.7
Increase in net interest (3.2 ) (5.3 )
Total increase 33.3
78.6
Distributable Earnings, June 30, 2020 $ 95.8
$ 203.2

Realized Net Performance Revenues. Realized net performance revenues increased ~~$16.5~~$171.1 million for the three months ended June 30, ~~2020~~2021 as compared to the three months ended June 30, ~~2019 primarily due to higher realizations in one of our Europe growth funds.~~

~~Realized net performance revenues~~2020 and increased ~~$32.8~~$209.5 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019, primarily due to higher realizations~~2020, driven by exit activity in our U.S. and Asia buyout funds, as well as our U.S. real estate and financial services ~~buyout funds and Europe growth funds, partially offset by lower realizations in~~funds. During the six months ended June 30, 2021 we realized performance revenues for the first time on our eighth U.S. real estate fund, our fourth Asia buyout ~~funds.~~fund, and our third Japan buyout fund. Realized net performance revenues were primarily generated by the following funds for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020.

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

CP VI

CETP II

CP VI

CP IV

CAP IV

CGFSP II

CAP IV

CGFSP I

CRP V

CERF

CRP VII

CGFSP II

CRP VIII

CRP VII

CRP VIII

CJP III

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
CETP III CP V CP IV CAP III
CETP III CP V
CGFSP I

Realized Principal Investment Income. Realized principal investment income was ~~$14.8~~$24.0 million for the three months ended June 30, ~~2020~~2021 as compared to realized principal investment income ~~$1.0~~of $16.3 million for the three months ended June 30, ~~2019. Realized principal investment income was $24.4 million for the six months ended June 30,~~ 2020, ~~as compared to realized principal investment loss of $1.3 million for the six months ended June 30, 2019. The increases were~~ primarily due to higher realized gains from our investments in ~~Europe~~U.S. buyout, U.S. real estate and ~~Asia~~international energy funds, partially offset by lower realized gains from investments in our Europe buyout and Europe growth funds.

Realized principal investment income was $47.7 million for the six months ended June 30, 2021 as compared to realized principal investment income of $26.5 million for the six months ended June 30, 2020, primarily due to higher realized gains from investments in our U.S. buyout, financial services, U.S. real estate and international energy funds, as well as realized gains compared to realized losses in 2020 from our investments in our U.S. growth funds, partially offset by lower realized gains from our investments in ~~U.S.~~our Europe growth and Asia buyout ~~and higher losses at U.S. growth~~ funds.

Fee Related Earnings

Fee Related Earnings increased $2.2 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and ~~increased $6.2 million and increased $25.4~~decreased $4.8 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019.~~2020. The following table provides the components of the changes in Fee Related Earnings for the three and six months ended June 30, ~~2020:~~2021:


	Three Months Ended June 30,		Six Months Ended June 30,

	(Dollars in millions)
Fee Related Earnings, June 30, 2020	$	91.3	$	192.5
Increases (decreases):
Increase in fee revenues	4.0		1.9
Increase in cash-based compensation and benefits	(3.0)		(2.4)
CCC litigation cost recovery in 2020(1)	—		(20.3)
Decrease in general, administrative and other indirect expenses	1.2		17.3
All other changes	—		(1.3)
Total increase (decrease)	2.2		(4.8)
Fee Related Earnings, June 30, 2021	$	93.5	$	187.7

Three Months Ended
June 30, Six Months Ended
June 30,
(Dollars in millions)
Fee Related Earnings, June 30, 2019 $ 62.4
$ 120.5
Increases (decreases):
Decrease in fee revenues (10.8 ) (12.2 )
Decrease in cash-based compensation and benefits 6.3
8.8
Decrease in general, administrative and other indirect expenses 10.6
27.2
All other changes 0.1
1.6
Total increase 6.2
25.4
Fee Related Earnings, June 30, 2020 $ 68.6
$ 145.9
(1) General, administrative and other indirect expenses during the six months ended June 30, 2020 included the allocated portion of the cost recovery associated with the CCC litigation costs. See Note 7 to our unaudited condensed consolidated financial statements.

Fee Revenues. Total fee revenues ~~decreased $10.8~~increased $4.0 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and ~~decreased $12.2~~increased $1.9 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019,~~2020, due to the following:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Higher (lower) fund management fees	$	0.9	$	(7.6)
Higher portfolio advisory and transaction fees, net and other	3.1		9.5
Total increase in fee revenues	$	4.0	$	1.9

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Lower fund management fees $ (2.6 ) $ (4.1 )
Lower portfolio advisory and transaction fees, net and other (8.2 ) (8.1 )
Total decrease in fee revenues $ (10.8 ) $ (12.2 )

The increase in total fee revenues for the three months ended June 30, 2021 as compared to three months ended June 30, 2020 was primarily due to higher management fees on CJP IV, which activated management fees in Q4 2020, as well as CRSEF, which had catch-up management fees of $3.1 million from its final closing in three months ended June 30, 2021, and CPI and CEP V. This increase was partially offset by lower management fees for funds on which management fees are based on invested capital and have had realizations over the last twelve months.

The decrease in fund management fees for the ~~three and~~six months ended June 30, 2021 as compared to the six months ended June 30, 2020 ~~as compared to the three and six months ended June 30, 2019~~ was primarily due to ~~lower fee rates and a lower basis for CP VI, CP V, CEP III, CEP IV, CETP III and CEOF I as they have exited the investment period, and~~CIEP II, which had catch-up management fees ~~from subsequent closes~~of $6.3 million in ~~CEP V in 2019. These decreases were~~Q2 2020, and lower management fees for funds on which management fees are based on invested capital and have had realizations over the last twelve months. This decrease was partially offset by ~~the activation of~~higher management fees ~~during the third quarter of 2019 on our fourth Europe technology fund (“CETP IV”).~~for CJP IV, CRSEF, which had catch-up management fees in Q2 2021 mentioned above, as well as CPI and CEP V.

The ~~decrease~~increases in portfolio advisory and transaction fees, net and other for the three and six months ended June 30, ~~2020~~2021 as compared to the three and six months ended June 30, ~~2019~~2020 was primarily due to transaction fees related to ~~one of our~~ investments in ~~U.S. buyout funds~~CJP IV and CEP V, as well as portfolio fees related to investments in ~~2019.~~CEOF II and CIEP II.

The total weighted-average management fee rates as of June 30, 2021 and 2020 were 1.25% and ~~2019 were~~ 1.26% ~~and 1.23%, respectively, with the increase driven by new funds raised with higher fee rates.~~. Fee-earning assets under management were ~~$57.2~~$90.5 billion and ~~$60.5~~$88.8 billion as of June 30, 2021 and 2020, ~~and 2019,~~ respectively, ~~a decrease~~an increase of ~~$3.3~~$1.7 billion.

Cash-based compensation and benefits expense. Cash-based compensation and benefits expense ~~decreased $6.3~~increased $3.0 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and ~~decreased $8.8~~increased $2.4 million for the

six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019,~~2020, primarily due to ~~lower~~higher projected year-end ~~bonuses in 2020.~~bonuses.

General, administrative and other indirect expenses. General, administrative and other indirect expenses decreased ~~$10.6~~$17.3 million, excluding the impact of litigation cost recoveries in 2020, for the ~~three~~six months ended June 30, ~~2020~~2021 as compared to the ~~three~~six months ended June 30, ~~2019~~2020, primarily due to lower professional fees and ~~lower~~ travel and entertainment expenses as a result of travel restrictions during the COVID-19 ~~pandemic.~~

General, administrative and other indirect expenses decreased $27.2 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due to the allocated portion of the cost recovery associated with the CCC matter of $14.6 million during the three months ended March 31, 2020 (see Note 7 to the accompanying unaudited

~~condensed consolidated financial statements for more information), positive~~pandemic, partially offset by negative foreign currency ~~adjustments, and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.~~adjustments.

Fee-earning AUM as of and for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Fee-earning AUM is presented below for each period together with the components of change during each respective period.

The table below breaks out Fee-earning AUM by its respective components at each period.


	As of June 30,
	2021			2020
Global Private Equity	(Dollars in millions)
Components of Fee-earning AUM (1)
Fee-earning AUM based on capital commitments	$	54,502		$	52,530
Fee-earning AUM based on invested capital	29,406			31,409
Fee-earning AUM based on net asset value	3,817			2,475
Fee-earning AUM based on lower of cost or fair value	2,752			2,378
Total Fee-earning AUM	$	90,477		$	88,792
Weighted Average Management Fee Rates (2)
All Funds	1.25		%	1.26		%
Funds in Investment Period	1.37		%	1.39		%

As of June 30,
2020 2019
Corporate Private Equity (Dollars in millions)
Components of Fee-earning AUM (1)
Fee-earning AUM based on capital commitments $ 35,209
$ 36,539
Fee-earning AUM based on invested capital 19,984
21,927
Fee-earning AUM based on lower of cost or fair value 2,030
2,052
Total Fee-earning AUM $ 57,223
$ 60,518
Weighted Average Management Fee Rates (2)
All Funds 1.26 % 1.23 %
Funds in Investment Period 1.44 % 1.46 %
(1)For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”


~~(1)~~	~~For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”~~


~~(2)~~	~~Represents the aggregate effective management fee rate of each fund in the segment, weighted by each fund’s Fee-earning AUM, as of the end of each period presented.~~

(2)Represents the aggregate effective management fee rate of each fund in the segment, weighted by each fund’s Fee-earning AUM, as of the end of each period presented.

The table below provides the period to period rollforward of Fee-earning AUM.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Global Private Equity	(Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period	$	90,559	$	91,979	$	91,571	$	94,811
Inflows (1)	966		804		1,602		1,604
Outflows (including realizations) (2)	(1,493)		(3,911)		(2,476)		(6,963)
Market Activity & Other (3)	316		(434)		412		(570)
Foreign Exchange (4)	129		354		(632)		(90)
Balance, End of Period	$	90,477	$	88,792	$	90,477	$	88,792

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Corporate Private Equity (Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period $ 61,088
$ 61,901
$ 61,660
$ 62,358
Inflows (1) 45
250
88
578
Outflows (including realizations) (2) (3,845 ) (1,797 ) (4,102 ) (2,322 )
Market Activity & Other (3) (346 ) (7 ) (346 ) (26 )
Foreign Exchange (4) 281
171
(77 ) (70 )
Balance, End of Period $ 57,223
$ 60,518
$ 57,223
$ 60,518

(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, and the fee-earning commitments invested in vehicles for which management fees are based on invested capital. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

~~(1)~~

Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, and the fee-earning commitments invested in vehicles for which management fees are based on invested capital. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

~~(2)~~

Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, and reductions for funds that are no longer calling for fees. Realizations for funds earning management fees based on commitments during the period do not affect Fee-earning AUM.


~~(3)~~	~~Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value.~~


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value.

Fee-earning AUM was ~~$57.2~~$90.5 billion at June 30, ~~2020, a decrease of $3.9 billion, or approximately 6%, compared~~2021, generally flat to ~~$61.1 billion at~~ March 31, ~~2020. The decrease was driven by outflows~~2021, as realizations of ~~$3.8~~$1.5 billion ~~primarily due to CP V no longer charging management fees, as well as dispositions~~ in funds which charge fees based on invested ~~capital.~~capital were offset by $1.0 billion of inflows from new fee-paying commitments raised in CAP Growth II and CRSEF and capital deployment for funds that charge management fees on invested capital, as well as $0.4 billion of market activity and positive foreign exchange activity from the translation of our EUR-denominated funds’ AUM to USD. Investment and distribution activity has no impact for funds still in the original investment period where Fee-earning AUM is based on commitments.

Fee-earning AUM was ~~$57.2~~$90.5 billion at June 30, ~~2020,~~2021, a decrease of ~~$4.5~~$1.1 billion, or approximately 7%1%, compared to ~~$61.7~~$91.6 billion at December 31, ~~2019.~~2020. The decrease was driven by outflows of ~~$4.1~~$2.5 billion primarily due to ~~CP V no longer charging management~~dispositions in funds which charge fees based on invested capital, as well as ~~dispositions~~$0.6 billion in negative foreign exchange activity from the translation of our EUR-denominated funds’ AUM to USD. Partially offsetting the decrease were inflows of $1.6 billion primarily from new fee-paying commitments raised in CAP Growth II and CRSEF as well as investments in other funds which charge fees based on invested capital.

Fee-earning AUM was ~~$57.2~~$90.5 billion at June 30, ~~2020, a decrease~~2021, an increase of ~~$3.3~~$1.7 billion, or approximately 5%2%, compared to ~~$60.5~~$88.8 billion at June 30, ~~2019.~~2020. The ~~decrease~~increase was driven by inflows of $5.4 billion primarily from new fee-paying commitments raised in CJP IV, CAP Growth II, and CRSEF, as well as investments in other funds which charge fees based on invested capital, $0.7 billion of market appreciation and $0.6 billion of positive foreign exchange activity from the translation of our EUR-denominated funds’ AUM to USD. Partially offsetting the increase were outflows of ~~$5.6~~$5.0 billion primarily due to ~~CP V no longer charging management fees, as well as~~ dispositions in funds which charge fees based on invested capital. ~~Partially offsetting the decrease were inflows of $3.0 billion primarily from new fee-paying commitments raised in CETP IV and CEP V.~~

Fee-earning AUM was $60.5 billion at June 30, 2019, a decrease of $1.4 billion, or approximately 2%, compared to $61.9 billion at March 31, 2019. The decrease was driven by outflows of $1.8 billion primarily in our U.S. buyout funds. This was partially offset by inflows of $0.3 billion primarily from capital invested in CP VI and CGP, and $0.2 billion of foreign exchange gains from from the translation of our EUR- and JPY-denominated funds' AUM to USD.

Fee-earning AUM was $60.5 billion at June 30, 2019, a decrease of $1.9 billion, or approximately 3.0%, compared to $62.4 billion at December 31, 2018. The decrease was driven by outflows of $2.3 billion primarily in our U.S. buyout funds. This was partially offset by inflows of $0.6 billion from new fee-earning commitments raised in CEP V and capital invested in CP VI and CGP.

Total AUM as of and for the Three and Six Months Ended June 30, ~~2020~~2021

The table below provides the period to period rollforward of Total AUM.


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
	(Dollars in millions)
Global Private Equity
Total AUM Rollforward
Balance, Beginning of Period	$	137,451	$	131,780
Inflows (1)	6,747		8,144
Outflows (including realizations) (2)	(4,415)		(9,195)
Market Activity & Other (3)	10,202		20,258
Foreign Exchange (4)	163		(839)
Balance, End of Period	$	150,148	$	150,148

Three Months Ended
June 30, 2020 Six Months Ended June 30, 2020
(Dollars in millions)
Corporate Private Equity
Total AUM Rollforward
Balance, Beginning of Period $ 80,383
$ 86,429
Inflows (1) —
492
Outflows (including realizations) (2) (2,177 ) (3,555 )
Market Activity & Other (3) 5,727
999
Foreign Exchange (4) 357
(75 )
Balance, End of Period $ 84,290
$ 84,290
(1) Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

(2) Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts, and the NGP Predecessor Funds, gross redemptions in our open-end funds, and the expiration of available capital.

(3) Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles, separately managed accounts, and the NGP Predecessor Funds, as well as the impact of fees, expenses and non-investment income, and other changes in AUM.

(4) Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.


~~(1)~~	Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.


~~(2)~~	Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles and separately managed accounts, as well as the expiration of available capital.


~~(3)~~	Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles and separately managed accounts, as well as the impact of fees, expenses and non-investment income, and other changes in AUM.


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Total AUM was ~~$84.3~~$150.1 billion at June 30, ~~2020,~~2021, an increase of ~~$3.9~~$12.6 billion compared to ~~$80.4~~$137.5 billion as of March 31, ~~2020.~~2021. The ~~decrease~~increase was driven by overall segment appreciation of ~~$5.7~~$10.2 billion ~~or 13%, for the period. The carry funds driving appreciation~~ for the period, ~~included $4.4~~driven by appreciation of $3.0 billion ~~attributable to~~in CP VI, ~~$0.5~~$0.7 billion ~~attributable to~~in CEOF II, $0.7 billion in CP VII, and ~~$0.2~~$0.5 billion in CAP IV. Total AUM also increased as a result of $6.7 billion of fundraising, largely attributable to ~~CAP V.~~the first closing in CRP IX. Partially offsetting the increase were

outflows of ~~$2.2~~$4.4 billion primarily from distributions of investment proceeds in our U.S. Buyout, Asia Buyout and U.S. ~~Buyout~~Real Estate funds.

Total AUM was ~~$84.3~~$150.1 billion at June 30, ~~2020, a decrease~~2021, an increase of ~~$2.1~~$18.3 billion compared to ~~$86.4~~$131.8 billion as of December 31, ~~2019. Driving~~2020. The increase was driven by overall segment appreciation of $20.3 billion for the ~~decrease were~~period, as well as $8.1 billion of fundraising, partially offset by outflows of ~~$3.6~~$9.2 billion primarily from distributions of investment proceeds in our Asia Buyout and U.S. Buyout funds. Offsetting this was overall segment appreciation of $1.0 billion, or 3%, for the period. The carry funds driving appreciation for the period included $3.1 billion attributable to CP VI, $0.5 billion attributable to CAP IV, and $0.2 billion attributable to CETP III, partially offset by depreciation in CEP IV, CGP, and CP V.proceeds.

Fund Performance Metrics

Fund performance information for our investment funds that generally have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of June 30, ~~2020,~~2021, which we refer to as our “significant funds” is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.

The following tables reflect the performance of our significant funds in our ~~Corporate~~Global Private Equity business. Please see “— Our Family of Funds” for a legend of the fund acronyms listed below.

TOTAL INVESTMENTS REALIZED/PARTIALLY REALIZED INVESTMENTS(7)
As of June 30, 2020 As of June 30, 2020
Fund Vintage (1)
Investment Period End/Fee Stepdown
(2)
Committed
Capital
Cumulative
Invested
Capital(3)
Realized
Value(4)
Remaining Fair Value(5) MOIC(6)
Gross IRR
(9)(17)
Net IRR
(10)(17)
In Accrued Carry/(Clawback)(11) LTM Realized Carry (12)
Cumulative
Invested
Capital(3)
Total
Fair
Value(13)
MOIC(6)
Gross
IRR
(9)(17)
Corporate
Private Equity
(Reported in Local Currency, in Millions) (Reported in Local Currency, in Millions)
Fully Invested/Committed Funds(8)
CP V
2007
$ 13,719.7
$ 13,190.9
$ 26,089.2
$ 1,599.3
2.1x 18 % 14 % X X
$ 10,777.9
$ 26,593.7
2.5x 24 %
CP VI
2014
$ 13,000.0
$ 12,895.7
$ 6,476.6
$ 15,879.1
1.7x 18 % 13 % X

$ 3,948.3
$ 6,072.8
1.5x 16 %
CEP II
2003
€ 1,805.4
€ 2,048.4
€ 4,113.3
€ 23.8
2.0x 36 % 20 % X X
€ 1,888.9
€ 4,121.1
2.2x 43 %
CEP III
2007
€ 5,294.9
€ 5,155.5
€ 10,982.2
€ 389.8
2.2x 19 % 14 % X

€ 4,667.5
€ 11,232.4
2.4x 20 %
CEP IV
2014
€ 3,669.5
€ 3,745.5
€ 1,909.5
€ 2,702.2
1.2x 8 % 4 %

€ 888.8
€ 1,596.1
1.8x 23 %
CAP III
2008
$ 2,551.6
$ 2,543.2
$ 4,416.5
$ 210.4
1.8x 16 % 11 % X X
$ 2,149.0
$ 4,416.7
2.1x 19 %
CAP IV
2014
$ 3,880.4
$ 4,044.5
$ 2,975.5
$ 3,197.6
1.5x 14 % 9 % X

$ 1,415.1
$ 3,850.6
2.7x 33 %
CJP II
2006
¥ 165,600.0
¥ 141,866.7
¥ 205,301.1
¥ 1,080.0
1.5x 7 % 3 %

¥ 134,666.7
¥ 203,831.2
1.5x 7 %
CGFSP II
2013
$ 1,000.0
$ 942.7
$ 942.5
$ 776.4
1.8x 22 % 15 % X X
$ 446.1
$ 889.1
2.0x 28 %
CEOF I
2011
$ 1,119.1
$ 1,173.1
$ 1,407.2
$ 328.2
1.5x 12 % 8 % X

$ 766.2
$ 1,321.7
1.7x 23 %
CETP III
2014
€ 656.6
€ 580.1
€ 1,062.6
€ 340.8
2.4x 42 % 28 % X X
€ 236.6
€ 1,063.7
4.5x 53 %
CAGP IV
2008
$ 1,041.4
$ 954.1
$ 1,076.5
$ 152.0
1.3x 7 % 2 %

$ 589.8
$ 1,010.4
1.7x 13 %
All Other Active Funds, Coinvestments and SMAs(14) Various $ 10,350.0
$ 10,199.9
$ 4,883.7
1.5x 11 % 9 %

$ 5,527.0
$ 10,337.2
1.9x 16 %
Fully Realized Funds, Coinvestments and SMAs(15) Various $ 24,978.2
$ 63,557.5
$ 11.0
2.5x 33 % 28 %

$ 24,978.2
$ 63,568.6
2.5x 33 %
Total Fully Invested/Committed Funds $ 85,351.4
$ 139,359.9
$ 30,934.1
2.0x 26 % 18 %

$ 60,483.8
$ 140,204.6
2.3x 27 %
Funds in the Investment Period(8)
CP VII
2018 May-24 $ 18,510.0
$ 8,281.3
$ 262.7
$ 8,317.1
1.0x NM
NM

CEP V
2018 Oct-24 € 6,416.4
€ 1,683.3
€ 8.0
€ 1,584.1
0.9x NM
NM

CAP V
2018 Jun-24 $ 6,554.2
$ 1,186.0
$ 280.2
$ 1,175.1
1.2x NM
NM

CGP
2015 Mar-21 $ 3,588.0
$ 2,806.5
$ 194.6
$ 2,713.7
1.0x 1 % 0 %

CJP III
2013 Aug-20 ¥ 119,505.1
¥ 91,191.7
¥ 73,829.1
¥ 92,565.9
1.8x 20 % 12 % X

CGFSP III
2018 Dec-23 $ 1,004.6
$ 441.4
$ 2.7
$ 518.0
1.2x NM
NM

CEOF II
2015 Aug-20 $ 2,400.0
$ 2,055.9
$ 163.8
$ 1,949.9
1.0x 1 % Neg

CETP IV
2019 Jul-25 € 1,350.0
€ 254.4
€ —
€ 226.3
0.9x NM
NM

All Other Funds, Coinvestments and SMAs(16) Various $ 3,673.7
$ 693.8
$ 3,482.8
1.1x NM
NM

Total Funds in the Investment Period $ 21,469.3
$ 2,291.5
$ 21,050.7
1.1x 5 % Neg

$ 572.4
$ 1,558.3
2.7x 37 %
TOTAL CORPORATE PRIVATE EQUITY(18) $ 106,820.6
$ 141,651.4
$ 51,984.8
1.8x 25 % 17 %

$ 61,056.2
$ 141,762.8
2.3x 27 %


						TOTAL INVESTMENTS									REALIZED/PARTIALLY REALIZED INVESTMENTS(5)
						As of June 30, 2021									As of June 30, 2021
Fund (Fee Initiation Date/Stepdown Date)(19)	Committed Capital		Cumulative Invested Capital(1)		Percent Invested	Realized Value(2)		Remaining Fair Value(3)		MOIC (4)	Gross IRR (6)(12)	Net IRR (7)(12)	Net Accrued Carry/(Clawback) (8)		Total Fair Value(9)		MOIC (4)	Gross IRR (6)(12)
Corporate Private Equity
CP VII (May 2018 / May 2024)	$	18,510	$	13,466	73%	$	544	$	15,937	1.2x	20%	9%	$	175	$	905	2.6x	56%
CP VI (May 2013 / May 2018)	$	13,000	$	13,078	101%	$	10,490	$	20,879	2.4x	23%	18%	$	1,558	$	14,133	2.6x	28%
CP V (Jun 2007 / May 2013)	$	13,720	$	13,238	96%	$	26,225	$	2,229	2.1x	18%	14%	$	211	$	27,121	2.5x	24%
CEP V (Oct 2018 / Sep 2024)	€	6,436	€	2,987	46%	€	12	€	3,353	1.1x	NM	NM	$	—	n/a		n/a	n/a
CEP IV (Sep 2014 / Oct 2018)	€	3,752	€	3,758	100%	€	2,816	€	3,539	1.7x	17%	11%	$	261	€	2,673	2.2x	27%
CEP III (Jul 2007 / Dec 2012)	€	5,295	€	5,177	98%	€	10,997	€	698	2.3x	19%	14%	$	61	€	11,563	2.5x	20%
CEP II (Sep 2003 / Sep 2007)	€	1,805	€	2,048	113%	€	4,113	€	26	2.0x	36%	20%	$	4	€	4,123	2.2x	43%
CAP V (Jun 2018 / Jun 2024)	$	6,554	$	3,412	52%	$	724	$	4,307	1.5x	57%	31%	$	120	$	923	1.9x	164%
CAP IV (Jul 2013 / Jun 2018)	$	3,880	$	4,044	104%	$	4,168	$	3,924	2.0x	20%	14%	$	328	$	4,677	3.3x	35%
CAP III (Jun 2008 / Jul 2013)	$	2,552	$	2,543	100%	$	4,417	$	419	1.9x	17%	12%	$	43	$	4,417	2.1x	19%
CJP IV (Oct 2020 / Oct 2026)	¥	258,000	¥	24,472	9%	¥	—	¥	26,919	1.1x	NM	NM	$	—	n/a		n/a	n/a
CJP III (Sep 2013 / Aug 2020)	¥	119,505	¥	91,192	76%	¥	96,501	¥	80,862	1.9x	20%	12%	$	49	¥	117,140	3.1x	33%
CJP II (Oct 2006 / Jul 2013)	¥	165,600	¥	141,867	86%	¥	205,301	¥	4,680	1.5x	7%	4%	$	—	¥	203,831	1.5x	7%
CGFSP III (Dec 2017 / Dec 2023)	$	1,005	$	870	87%	$	13	$	1,227	1.4x	34%	21%	$	29	n/a		n/a	n/a
CGFSP II (Jun 2013 / Dec 2017)	$	1,000	$	943	94%	$	1,602	$	525	2.3x	26%	19%	$	39	$	1,600	2.3x	28%
CEOF II (Nov 2015 / Mar 2020)	$	2,400	$	2,103	88%	$	500	$	2,964	1.6x	18%	12%	$	114	$	728	2.3x	43%
CEOF I (Sep 2011 / Nov 2015)	$	1,119	$	1,174	105%	$	1,505	$	281	1.5x	12%	8%	$	33	$	1,359	1.8x	23%
CETP IV (Jul 2019 / Jul 2025)	€	1,350	€	762	56%	€	—	€	993	1.3x	50%	25%	$	19	n/a		n/a	n/a
CETP III (Jul 2014 / Jul 2019)	€	657	€	602	92%	€	1,063	€	741	3.0x	46%	33%	$	60	€	1,064	4.5x	53%
CGP II (Dec 2020 / Jan 2025)	$	1,840	$	175	10%	$	—	$	184	1.1x	NM	NM	$	—	n/a		n/a	n/a
CGP (Jan 2015 / Mar 2021)	$	3,588	$	2,933	82%	$	389	$	3,358	1.3x	6%	5%	$	39	$	444	3.0x	70%
CAGP IV (Aug 2008 / Dec 2014)	$	1,041	$	954	92%	$	1,123	$	120	1.3x	7%	2%	$	—	$	1,122	1.3x	7%
All Other Active Funds & Vehicles(10)			$	17,052	n/a	$	16,891	$	11,224	1.6x	13%	10%	$	66	$	17,148	2.1x	17%
Fully Realized Funds & Vehicles(11)			$	23,441	n/a	$	59,581	$	—	2.5x	28%	21%	$	3	$	59,581	2.5x	28%
TOTAL CORPORATE PRIVATE EQUITY(13)			$	119,912	n/a	$	153,400	$	79,668	1.9x	26%	18%	$	3,213	$	160,058	2.4x	27%
Real Estate
CRP VIII (Aug 2017 / May 2022)	$	5,505	$	3,524	64%	$	1,341	$	3,602	1.4x	40%	20%	$	129	$	1,351	1.8x	51%
CRP VII (Jun 2014 / Dec 2017)	$	4,162	$	3,789	91%	$	4,085	$	2,070	1.6x	19%	12%	$	85	$	4,072	1.8x	25%
CRP VI (Mar 2011 / Jun 2014)	$	2,340	$	2,167	93%	$	3,636	$	284	1.8x	27%	18%	$	4	$	3,535	2.0x	31%
CRP V (Nov 2006 / Mar 2011)	$	3,000	$	3,318	111%	$	5,276	$	697	1.8x	12%	9%	$	120	$	5,908	1.8x	13%
CRP IV (Jan 2005 / Nov 2006)	$	950	$	1,216	128%	$	1,954	$	15	1.6x	7%	4%	$	—	$	1,952	1.7x	7%
CPI (May 2016 / n/a)	$	5,743	$	3,580	62%	$	792	$	3,891	1.3x	16%	14%	$	31	$	469	1.7x	NM
CEREP III (Jun 2007 / May 2012)	€	2,230	€	2,053	92%	€	2,447	€	47	1.2x	4%	1%	$	—	€	2,447	1.2x	4%
All Other Active Funds & Vehicles(14)			$	3,361	n/a	$	3,038	$	2,169	1.5x	10%	8%	$	8	$	2,763	1.7x	11%
Fully Realized Funds & Vehicles(15)			$	5,228	n/a	$	6,913	$	2	1.3x	13%	6%	$	—	$	6,915	1.3x	13%
TOTAL REAL ESTATE(13)			$	28,615	n/a	$	29,934	$	12,786	1.5x	12%	8%	$	376	$	29,864	1.6x	13%
Natural Resources
CIEP II (Apr 2019 / Apr 2025)	$	2,286	$	841	37%	$	203	$	806	1.2x	NM	NM	$	5	n/a		n/a	n/a
CIEP I (Sep 2013 / Jun 2019)	$	2,500	$	2,339	94%	$	960	$	2,476	1.5x	15%	8%	$	33	$	1,467	2.2x	23%
CPP II (Sep 2014 / Apr 2021)	$	1,527	$	1,269	83%	$	324	$	1,381	1.3x	11%	6%	$	—	n/a		n/a	n/a
CGIOF (Dec 2018 / Sep 2023)	$	2,201	$	914	42%	$	90	$	743	0.9x	NM	NM	$	—	$	37	2.1x	NM
NGP XII (Jul 2017 / Jul 2022)	$	4,278	$	2,311	54%	$	99	$	2,746	1.2x	10%	5%	$	—	n/a		n/a	n/a
NGP XI (Oct 2014 / Jul 2017)	$	5,325	$	4,961	93%	$	1,951	$	4,039	1.2x	6%	4%	$	—	$	1,930	1.2x	22%
NGP X (Jan 2012 / Dec 2014)	$	3,586	$	3,346	93%	$	3,062	$	476	1.1x	2%	Neg	$	—	$	2,938	1.2x	8%
All Other Active Funds & Vehicles(17)			$	3,146	n/a	$	1,357	$	2,810	1.3x	12%	10%	$	8	$	1,494	2.2x	26%
Fully Realized Funds & Vehicles(18)			$	1,190	n/a	$	1,435	$	1	1.2x	3%	1%	$	—	$	1,436	1.2x	3%
TOTAL NATURAL RESOURCES			$	20,318	n/a	$	9,482	$	15,476	1.2x	7%	3%	$	46	$	39,166	1.6x	11%

Legacy Energy Funds(16)			$	16,741	n/a	$	23,759	$	413	1.4x	12%	6%	$	(4)	$	23,605	1.5x	14%

~~(1)~~

The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Corporate Private Equity segment our first fund was formed in 1990.

(1)Represents the original cost of investments since inception of the fund.

(2)Represents all realized proceeds since inception of the fund.

(3)Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments.

(4)Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.

(5)


~~(2)~~	Represents the fund's investment period end date or, if different, the date at which the management fee calculation basis is scheduled to step down from commitments to remaining invested capital at cost (where applicable). This measure is only relevant and reported for funds currently in the investment period.


~~(3)~~	~~Represents the original cost of investments since inception of the fund.~~


~~(4)~~	~~Represents all realized proceeds since inception of the fund.~~


~~(5)~~	~~Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments.~~


~~(6)~~	~~Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.~~

~~(7)~~

An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, represents at least 85% of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. We do not present Realized/Partially Realized performance information separately for funds that are still in the investment period because of the relatively insignificant level of realizations for funds of this type. However, to the extent such funds have had realizations, they are included in the Realized/Partially Realized performance information presented for Total Corporate Private Equity.


~~(8)~~	Fully Invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested.


~~(9)~~	Gross Internal Rate of Return (“Gross IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest.

~~(10)~~

Net Internal Rate of Return (“Net IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund.


~~(11)~~	~~Fund has a net accrued performance fee balance/(giveback obligation) as of the current quarter end, driven by a significant portion of the fund's asset base.~~


~~(12)~~	~~Fund has generated realized net performance fees/(realized giveback) in the last twelve months.~~


~~(13)~~	~~Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest.~~


~~(14)~~	Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CVP II, MENA, CCI, CSSAF I, CSABF, and CPF.


~~(15)~~	Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CP I, CP II, CP III, CP IV, CEP I, CAP I, CAP II, CBPF I, CJP I, CMG, CVP I, CUSGF III, CGFSP I, CEVP I, CETP I, CETP II, CAVP I, CAVP II, CAGP III and Mexico.


~~(16)~~	~~Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CAGP V and CBPF II.~~


~~(17)~~	For funds marked “NM,” IRR may be positive or negative, but is considered not meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is negative as of reporting period end.


~~(18)~~	~~For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate.~~

~~Real Assets~~

For purposes of presenting our results of operations for this segment, our earnings from our investments in NGP are presented in the respective operating captions. The following table presents our results of operations for our Real Assets segment:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 74.8
$ 105.8
$ 155.0
$ 183.2
Portfolio advisory and transaction fees, net and other 0.3
0.5
0.6
3.8
Total fund level fee revenues 75.1
106.3
155.6
187.0
Realized performance revenues 75.5
24.6
87.1
29.5
Realized principal investment income 1.5
70.1
2.1
71.7
Interest income 0.2
0.7
0.8
1.2
Total revenues 152.3
201.7
245.6
289.4
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 35.8
34.0
71.3
69.8
Realized performance revenues related compensation 33.6
11.2
39.0
23.2
Total compensation and benefits 69.4
45.2
110.3
93.0
General, administrative, and other indirect expenses 14.9
17.0
34.6
33.8
Depreciation and amortization expense 1.7
1.8
3.1
3.7
Interest expense 5.6
3.1
9.5
6.2
Total expenses 91.6
67.1
157.5
136.7
(=) Distributable Earnings $ 60.7
$ 134.6
$ 88.1
$ 152.7
(-) Realized Net Performance Revenues 41.9
13.4
48.1
6.3
(-) Realized Principal Investment Income 1.5
70.1
2.1
71.7
(+) Net Interest 5.4
2.4
8.7
5.0
(=) Fee Related Earnings $ 22.7
$ 53.5
$ 46.6
$ 79.7

~~Three Months Ended June 30, 2020 Compared to Three Months Ended June 30, 2019 and Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019~~

~~Distributable Earnings~~

Distributable Earnings decreased $73.9 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $64.6 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The following table provides the components of the changes in Distributable Earnings for the three and six months ended June 30, 2020:

Three Months Ended
June 30, Six Months Ended
June 30,
(Dollars in millions)
Distributable Earnings, June 30, 2019 $ 134.6
$ 152.7
Increases (decreases):
Decrease in fee related earnings (30.8 ) (33.1 )
Increase in realized net performance revenues 28.5
41.8
Decrease in realized principal investment income (68.6 ) (69.6 )
Increase in net interest (3.0 ) (3.7 )
Total decrease (73.9 ) (64.6 )
Distributable Earnings, June 30, 2020 $ 60.7
$ 88.1

~~Realized Net Performance Revenues.~~ Realized net performance revenues increased $28.5 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 primarily due to higher realizations in our U.S. real estate funds.

Realized net performance revenues increased $41.8 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 primarily due to the $19.9 million realized giveback on Riverstone Legacy Energy Fund IV in the six months ended June 30, 2019 and higher realizations in our U.S. real estate and Europe real estate funds in the six months ended June 30, 2020. Realized net performance revenues were primarily generated by the following funds for the three and six months ended June 30, 2020 and 2019:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
CRP III CRP VII CRP III Energy IV (giveback)
CRP VII CRP VII CPI
CERF CRP VII
CPOCP

~~Realized Principal Investment Income.~~ Realized principal investment income decreased $68.6 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $69.6 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 primarily due to the recovery of $71.5 million from the final resolution of French tax litigation concerning a European real estate fund, which reversed a portion of an investment loss recognized in 2015. See Note 7 of our unaudited condensed consolidated financial statements for more information on this matter.

~~Fee Related Earnings~~

Fee Related Earnings decreased $30.8 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $33.1 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019. The following table provides the components of the changes in Fee Related Earnings for the three and six months ended June 30, 2020:

Three Months Ended
June 30, Six Months Ended
June 30,
(Dollars in millions)
Fee Related Earnings, June 30, 2019 $ 53.5
$ 79.7
Increases (decreases):
Decrease in fee revenues (31.2 ) (31.4 )
Increase in cash-based compensation and benefits (1.8 ) (1.5 )
Decrease (increase) in general, administrative and other indirect expenses 2.1
(0.8 )
All other changes 0.1
0.6
Total decrease (30.8 ) (33.1 )
Fee Related Earnings, June 30, 2020 $ 22.7
$ 46.6

~~Fee Revenues.~~ Fee revenues decreased $31.2 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and decreased $31.4 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, due to the following:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Lower fund management fees $ (31.0 ) $ (28.2 )
Lower portfolio advisory and transaction fees, net and other (0.2 ) (3.2 )
Total decrease in fee revenues $ (31.2 ) $ (31.4 )

The decrease in fund management fees for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 primarily reflects the decreased management fees from CGIOF and NGP XII, including $25.9 million in catch up management fees from subsequent closes for the three months ended June 30, 2019.

The decrease in fund management fees for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 primarily reflects the decreased management fees from CGIOF and NGP XII, including $26.7 million in catch up management fees from subsequent closes for the six months ended June 30, 2019 partially offset by increased management fees from CIEP II, including $6.3 million in catch up management fees from subsequent closes for the six months ended June 30, 2020.

The decrease in portfolio advisory and transaction fees, net and other for the for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 is primarily from transaction fees associated with investments at CIEP I and CPP II in six months ended June 30, 2019.

The weighted average management fee rate for funds in the investment period increased to 1.30% at June 30, 2020 from 1.28% at June 30, 2019 primarily due to additional funds raised in CIEP II which has a higher fee rate. The total weighted average management fee rate was 1.24% at June 30, 2020, an increase from 1.22% at June 30, 2019.

~~Cash-based compensation and benefits expense.~~ Cash-based compensation and benefits expense increased $1.8 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019 and increased $1.5 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due to increased headcount and higher projected year-end bonuses.

~~General, administrative and other indirect expenses.~~ General, administrative and other indirect expense decreased $2.1 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019, primarily due to lower professional fees and travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

General, administrative and other indirect expense increased $0.8 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due to increased professional fees driven by fund organization costs, partially offset by the allocated portion of the cost recovery associated with the CCC matter of $5.7 million (see Note 7 to the accompanying unaudited condensed consolidated financial statements for more information), positive foreign currency adjustments and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

~~Fee-earning AUM as of and for the Three and Six Months Ended June 30, 2020 and 2019~~

~~Fee-earning AUM is presented below for each period together with the components of change during each respective period.~~

~~The table below breaks out Fee-earning AUM by its respective components at each period.~~

As of June 30,
2020 2019
Real Assets (Dollars in millions)
Components of Fee-earning AUM (1)
Fee-earning AUM based on capital commitments $ 17,321
$ 15,338
Fee-earning AUM based on invested capital (2) 11,425
15,663
Fee-earning AUM based on net asset value 2,475
1,832
Fee-earning AUM based on lower of cost or fair value and other (3) 348
364
Total Fee-earning AUM (4) $ 31,569
$ 33,197
Weighted Average Management Fee Rates (5)
All Funds 1.24 % 1.22 %
Funds in Investment Period 1.30 % 1.28 %


~~(1)~~	~~For additional information concerning the components of Fee-earning AUM, See “—Fee-earning Assets under Management.”~~


~~(2)~~	~~Includes amounts committed to or reserved for investments for certain real estate funds.~~


~~(3)~~	~~Includes certain funds that are calculated on gross asset value.~~

~~(4)~~

Energy III, Energy IV, and Renew II (collectively, the “Legacy Energy Funds”), are managed with Riverstone Holdings LLC and its affiliates. Affiliates of both Carlyle and Riverstone act as investment advisors to each of the Legacy Energy Funds. Carlyle has a minority representation on the management committees of Energy IV and Renew II. Carlyle and Riverstone each hold half of the seats on the management committee of Energy III, but the investment period for this fund has expired and the remaining investments in such fund are being disposed of in the ordinary course of business. As of June 30, 2020, the Legacy Energy Funds had, in the aggregate, approximately $1.6 billion in AUM and $1.5 billion in Fee-earning AUM. NGP IX, or in the case of NGP M&R and NGP ETP II, certain affiliated entities (collectively, the “NGP Predecessor Funds”) and NGP X, NGP GAP, NGP XI, and NGP XII (referred to herein as the “NGP Carry Funds”, collectively with the NGP Predecessor Funds, the “NGP Energy Funds”), are managed by NGP Energy Capital Management (“NGP”). As of June 30, 2020, the NGP Energy Funds had, in the aggregate, approximately $9.6 billion in AUM and $9.8 billion in Fee-earning AUM.


~~(5)~~	Represents the aggregate effective management fee rate of each fund in the segment, weighted by each fund’s Fee-earning AUM, as of the end of each period presented. Calculation reflects Carlyle’s 10% and 55% interest in management fees earned by the Legacy Energy funds and the NGP Energy Funds, respectively.

~~The table below provides the period to period rollforward of Fee-earning AUM.~~

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Real Assets (Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period $ 30,891
$ 32,908
$ 33,151
$ 32,977
Inflows (1) 759
2,756
1,516
3,146
Outflows (including realizations) (2) (66 ) (2,314 ) (2,861 ) (2,867 )
Market Activity & Other (3) (88 ) (156 ) (224 ) (49 )
Foreign Exchange (4) 73
3
(13 ) (10 )
Balance, End of Period $ 31,569
$ 33,197
$ 31,569
$ 33,197

~~(1)~~

Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, and gross subscriptions in open-ended vehicles with management fees based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

~~(2)~~

Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, and gross redemptions in open-ended vehicles with management fees based on net asset value. Realizations for funds earning management fees based on commitments during the period do not affect Fee-earning AUM.


~~(3)~~	~~Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value.~~


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Fee-earning AUM was $31.6 billion at June 30, 2020, an increase of $0.7 billion compared to $30.9 billion at March 31, 2020. The increase was driven by inflows of $0.8 billion primarily related to purchases in CPI. Changes in fair value have no material impact on Fee-earning AUM for Real Assets as substantially all of the funds generate management fees based on either commitments or invested capital at cost, neither of which is impacted by fair value movements. Investment and distribution activity has no impact for funds still in the original investment period where Fee-earning AUM is based on commitments.

Fee-earning AUM was $31.6 billion at June 30, 2020, a decrease of $1.6 billion, or approximately 5%, compared to $33.2 billion at December 31, 2019. This decrease was driven by outflows of $2.9 billion primarily in our NGP Energy and Legacy Energy funds. Partially offsetting the decrease were inflows of $1.5 billion primarily related to new fee-paying commitments raised in CIEP II and new limited partner capital invested in CPI.

Fee-earning AUM was $31.6 billion at June 30, 2020, a decrease of $1.6 billion, or approximately 5%, compared to $33.2 billion at June 30, 2019. This decrease was driven by outflows of $4.8 billion primarily in our NGP Energy, Legacy Energy, and U.S. Real Estate funds. Partially offsetting the decrease were inflows of $3.2 billion primarily related to new fee-paying commitments raised in CIEP II and CRSEF, and new limited partner capital invested in CPI.

Fee-earning AUM was $33.2 billion at June 30, 2019, an increase of $0.3 billion compared to $32.9 billion at March 31, 2019. The increase was driven by inflows of $2.8 billion primarily related to new fee-paying commitments in CIEP II and CGI, and new limited partner capital invested in CPI. This was partially offset by outflows of $2.3 billion primarily in our NGP Predecessor Funds and CIEP I.

Fee-earning AUM was $33.2 billion at June 30, 2019, an increase of $0.2 billion compared to $33.0 billion at December 31, 2018. The increase was driven by inflows of $3.1 billion primarily related to new fee-paying commitments in CGI, the activation of management fees in CIEP II, and new limited partner capital invested in CPI. This was partially offset by outflows of $2.9 billion primarily in our NGP Predecessor Funds and CIEP I.

~~Total AUM as of and for the Three and Six Months Ended June 30, 2020~~

~~The table below provides the period to period rollforward of Total AUM.~~

Three Months Ended
June 30, 2020 Six Months Ended
June 30, 2020
(Dollars in millions)
Real Assets
Total AUM Rollforward
Balance, Beginning of Period $ 39,794
$ 43,355
Inflows (1) 536
1,650
Outflows (including realizations) (2) (780 ) (1,257 )
Market Activity & Other (3) 501
(3,552 )
Foreign Exchange (4) 125
(20 )
Balance, End of Period $ 40,176
$ 40,176


~~(1)~~	Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.


~~(2)~~	Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts and the NGP Predecessor Funds, gross redemptions in our open-ended funds, and the expiration of available capital.


~~(3)~~	Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and related co-investment vehicles, the NGP Predecessor Funds and separately managed accounts, as well as the net impact of fees, expenses and non-investment income, and other changes in AUM.


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Total AUM was $40.2 billion at June 30, 2020, an increase of $0.4 billion, or approximately 1%, compared to $39.8 billion at March 31, 2020. This increase was mainly due to inflows of $0.5 billion primarily from fundraising in CPI and NGP Minerals, as well as appreciation of $0.5 billion. Appreciation was driven by $0.1 billion attributable to NGP XII, $0.1 billion attributable to CIEP I, and $0.1 billion attributable to CRP VIII. This was partially offset by outflows of $0.8 billion related to distributions in our U.S. Real Estate and Legacy Energy funds.

Total AUM was $40.2 billion at June 30, 2020, a decrease of $3.2 billion, or approximately 7%, compared to $43.4 billion at December 31, 2019. This decrease was primarily due to depreciation of $3.6 billion which was driven by $1.0 billion attributable to NGP XI, $0.5 billion attributable to CIEP I, and $0.3 billion attributable to NGP XII. Also driving the decrease were outflows of $1.3 billion related to distributions in our U.S. Real Estate and Legacy Energy funds. This was partially offset by inflows of $1.7 billion from fundraising in CPI, CIEP II, and NGP Minerals.

~~Fund Performance Metrics~~

Fund performance information for our carry funds that generally have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of June 30, 2020, which we refer to as our “significant funds,” is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. The following tables reflect the performance of our significant funds in our Real Assets business. Please see “— Our Family of Funds” for a legend of the fund acronyms listed below.

TOTAL INVESTMENTS REALIZED/PARTIALLY REALIZED INVESTMENTS(7)
As of June 30, 2020 As of June 30, 2020
Fund Vintage (1)
Investment Period End/Fee Stepdown
(2)
Committed
Capital
Cumulative
Invested
Capital(3)
Realized
Value(4)
Remaining Fair Value(5) MOIC(6)
Gross IRR
(9)(17)
Net IRR
(10)(17)
In Accrued Carry/(Clawback)(11) LTM Realized Carry/Clawback (12)
Cumulative
Invested
Capital(3)
Total
Fair
Value(13)
MOIC(6)
Gross
IRR
(9)(17)
Real Assets (Reported in Local Currency, in Millions) (Reported in Local Currency, in Millions)
Fully Invested/Committed Funds(8)
CRP III
2000
$ 564.1
$ 522.5
$ 1,880.0
$ 14.5
3.6x 44 % 30 % X X
$ 522.5
$ 1,894.5
3.6x 44 %
CRP IV
2004
$ 950.0
$ 1,264.2
$ 1,984.7
$ 26.5
1.6x 7 % 4 %

$ 1,206.2
$ 1,997.2
1.7x 8 %
CRP V
2006
$ 3,000.0
$ 3,349.2
$ 5,081.9
$ 812.7
1.8x 12 % 9 % X X
$ 3,227.1
$ 5,800.7
1.8x 13 %
CRP VI
2010
$ 2,340.0
$ 2,160.5
$ 3,600.0
$ 316.5
1.8x 27 % 18 % X X
$ 1,705.9
$ 3,450.6
2.0x 32 %
CRP VII
2014
$ 4,161.6
$ 3,707.3
$ 3,625.0
$ 2,177.4
1.6x 19 % 12 % X X
$ 1,938.1
$ 3,511.7
1.8x 26 %
CEREP III
2007
€ 2,229.5
€ 2,052.7
€ 2,381.2
€ 100.0
1.2x 4 % 1 %

€ 1,911.6
€ 2,394.0
1.3x 5 %
CIEP I
2013
$ 2,500.0
$ 2,278.5
$ 860.6
$ 2,093.8
1.3x 14 % 6 %

$ 665.4
$ 1,337.2
2.0x 23 %
NGP X
2012
$ 3,586.0
$ 3,343.9
$ 2,967.4
$ 575.2
1.1x 2 % Neg

$ 2,231.6
$ 2,899.2
1.3x 10 %
NGP XI
2014
$ 5,325.0
$ 4,925.7
$ 1,645.7
$ 3,483.0
1.0x 1 % Neg

$ 1,428.4
$ 1,586.7
1.1x 24 %
Energy III
2005
$ 3,800.0
$ 3,569.7
$ 5,248.6
$ 152.3
1.5x 9 % 5 %

$ 3,152.1
$ 5,044.9
1.6x 11 %
Energy IV
2007
$ 5,979.1
$ 6,372.8
$ 6,950.8
$ 443.1
1.2x 5 % 1 %
(X)
$ 5,990.5
$ 7,233.7
1.2x 6 %
Renew II
2008
$ 3,417.5
$ 2,833.5
$ 3,008.4
$ 911.5
1.4x 6 % 3 % (X)

$ 2,376.5
$ 2,948.8
1.2x 5 %
All Other Active Funds, Coinvestments and SMAs(14) Various $ 5,369.3
$ 6,628.8
$ 2,215.1
1.6x 8 % 7 %

$ 3,567.0
$ 6,632.1
1.9x 11 %
Fully Realized Funds, Coinvestments and SMAs(15) Various $ 8,060.5
$ 10,650.1
$ 8.7
1.3x 18 % 9 %

$ 8,060.5
$ 10,658.8
1.3x 18 %
Total Fully Invested/Committed Funds $ 50,065.5
$ 56,809.5
$ 13,342.6
1.4x 11 % 6 %

$ 38,221.1
$ 57,687.9
1.5x 13 %
Funds in the Investment Period(8)
CRP VIII
2017 May-22 $ 5,505.1
$ 2,350.3
$ 251.3
$ 2,496.9
1.2x NM
NM

NGP XII
2017 Jul-22 $ 4,277.6
$ 2,035.7
$ 0.1
$ 1,844.4
0.9x NM
NM

CIEP II
2019 Apr-25 $ 2,256.9
$ 363.6
$ —
$ 342.3
0.9x NM
NM

CPP II
2014 Apr-21 $ 1,526.7
$ 1,244.0
$ 298.4
$ 1,193.4
1.2x 9 % 3 %

CPI
2016 n/a $ 3,266.6
$ 2,714.8
$ 511.2
$ 2,678.5
1.2x 12 % 11 % X X

CGIOF
2018 Sep-23 $ 2,201.4
$ 301.1
$ 28.8
$ 252.4
0.9x NM
NM

All Other Funds, Coinvestments and SMAs(16) Various $ 1,881.1
$ 245.5
$ 1,705.2
1.0x NM
NM

Total Funds in the Investment Period $ 10,890.7
$ 1,335.3
$ 10,513.0
1.1x 7 % 0 %

$ 353.3
$ 646.5
1.8x NM
TOTAL REAL ASSETS(18) $ 60,956.1
$ 58,144.7
$ 23,855.6
1.3x 11 % 6 %

$ 38,574.3
$ 58,334.4
1.5x 13 %


~~(1)~~	The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Real Assets segment our first fund was formed in 1997.


~~(2)~~	Represents the fund's investment period end date or, if different, the date at which the management fee calculation basis is scheduled to step down from commitments to remaining invested capital at cost (where applicable). This measure is only relevant and reported for funds currently in the investment period.


~~(3)~~	~~Represents the original cost of investments since inception of the fund.~~


~~(4)~~	~~Represents all realized proceeds since inception of the fund.~~


~~(5)~~	~~Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments.~~


~~(6)~~	~~Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.~~

~~(7)~~

investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. ~~We do~~

(6)Gross Internal Rate of Return (“Gross IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, before the impact of management fees, partnership expenses and carried interest. For fund vintages 2017 and after, Gross IRR includes the impact of interest expense related to the funding of investments on fund lines of credit. Gross IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Subtotal Gross IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.

(7)Net Internal Rate of Return (“Net IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, after the impact of all management fees, partnership expenses and carried interest, including current accruals. Net IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund. Subtotal Net IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.

(8)Represents the net accrued performance fee balance/(giveback obligation) as of the current quarter end.

(9)Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest.

(10)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: CVP II, MENA, CCI, CSSAF I, CSABF, CPF, CAP Growth I, and CBPF II.

(11)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CP I, CP II, CP III, CP IV, CEP I, CAP I, CAP II, CBPF I, CJP I, CMG, CVP I, CUSGF III, CGFSP I, CEVP I, CETP I, CETP II, CAVP I, CAVP II, CAGP III and Mexico.

(12)For funds marked “NM,” IRR may be positive or negative, but is not ~~present Realized/Partially Realized performance information separately for funds that are still in the investment period~~considered meaningful because of the ~~relatively insignificant level~~limited time since initial investment and early stage of ~~realizations~~capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end.

(13)For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate.

(14)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: CCR and CER.

100

(15)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CRP I, CRP II, CRP III, CRCP I, CAREP I, CAREP II, CEREP I, and CEREP II.

(16)Aggregate includes the following Legacy Energy funds and related co-investments: Energy I, Energy II, Energy III, Energy IV, Renew I, and Renew II.

(17)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: NGP GAP, CPOCP, CRSEF, and NGP RP.

(18)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CIP.

(19)The fund stepdown date represents the contractual stepdown date under the respective fund agreements for funds ~~of this type. However, to~~on which the ~~extent such funds have had realizations, they are included in the Realized/Partially Realized performance information presented for Total Real Assets.~~


~~(8)~~	Fully Invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested.fee basis stepdown has not yet occurred.


~~(9)~~	Gross Internal Rate of Return (“Gross IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest.

~~(10)~~


~~(11)~~	~~Fund has a net accrued performance fee balance/(giveback obligation) as of the current quarter end, driven by a significant portion of the fund's asset base.~~


~~(12)~~	~~Fund has generated realized net performance fees/(realized giveback) in the last twelve months.~~


~~(13)~~	~~Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest.~~


~~(14)~~	~~Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: NGP GAP and CPOCP.~~


~~(15)~~	~~Aggregate includes the following funds: CRP I, CRP II, CRCP I, CAREP I, CAREP II, CEREP I, CEREP II, Energy I, Energy II, Renew I, and CIP.~~


~~(16)~~	~~Aggregate includes CCR, CRSEF, and CER. Return is not considered meaningful, as the investment period commenced in October 2016 for CCR, December 2019 for CRSEF, and December 2017 for CER.~~


~~(17)~~	For funds marked “NM,” IRR may be positive or negative, but is considered not meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is negative as of reporting period end.


~~(18)~~	~~For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate.~~

Global Credit

~~We continue to invest in growing our Global Credit business, and in the near to mid term, this segment will incur additional expenses to build the credit business and raise additional capital.~~

The following table presents our results of operations for our Global Credit segment:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	86.1	$	78.3	$	166.1	$	151.3
Portfolio advisory and transaction fees, net and other	9.4		15.2		18.2		17.8
Total fund level fee revenues	95.5		93.5		184.3		169.1
Realized performance revenues	—		5.5		0.1		26.5
Realized principal investment income	9.8		5.3		15.7		10.4
Interest income	1.2		2.6		3.2		5.7
Total revenues	106.5		106.9		203.3		211.7
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	55.6		54.5		109.3		103.6
Realized performance revenues related compensation	—		2.5		—		12.2
Total compensation and benefits	55.6		57.0		109.3		115.8
General, administrative, and other indirect expenses	13.0		13.1		24.8		18.7
Depreciation and amortization expense	2.0		1.8		3.9		3.4
Interest expense	6.3		6.9		12.6		13.9
Total expenses	76.9		78.8		150.6		151.8
(=) Distributable Earnings	$	29.6	$	28.1	$	52.7	$	59.9
(-) Realized Net Performance Revenues	—		3.0		0.1		14.3
(-) Realized Principal Investment Income	9.8		5.3		15.7		10.4
(+) Net Interest	5.1		4.3		9.4		8.2
(=) Fee Related Earnings	$	24.9	$	24.1	$	46.3	$	43.4

101

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 78.3
$ 79.2
$ 151.3
$ 154.0
Portfolio advisory and transaction fees, net and other 15.2
3.4
17.8
6.3
Total fund level fee revenues 93.5
82.6
169.1
160.3
Realized performance revenues 5.5
0.1
26.5
0.1
Realized principal investment income 5.3
1.4
10.4
6.0
Interest income 2.6
3.4
5.7
7.2
Total revenues 106.9
87.5
211.7
173.6
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 54.5
49.5
103.6
96.1
Realized performance revenues related compensation 2.5
—
12.2
—
Total compensation and benefits 57.0
49.5
115.8
96.1
General, administrative, and other indirect expenses 13.1
20.5
18.7
37.0
Depreciation and amortization expense 1.8
2.0
3.4
4.1
Interest expense 6.9
6.7
13.9
13.4
Total expenses 78.8
78.7
151.8
150.6
(=) Distributable Earnings $ 28.1
$ 8.8
$ 59.9
$ 23.0
(-) Realized Net Performance Revenues 3.0
0.1
14.3
0.1
(-) Realized Principal Investment Income 5.3
1.4
10.4
6.0
(+) Net Interest 4.3
3.3
8.2
6.2
(=) Fee Related Earnings $ 24.1
$ 10.6
$ 43.4
$ 23.1

Three Months Ended June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020 and Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

Distributable Earnings

Distributable Earnings increased ~~$19.3~~$1.5 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and ~~increased $36.9~~decreased $7.2 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019.~~2020. The following table provides the components of the changes in Distributable Earnings for the three and six months ended June 30, ~~2020:~~2021:


								Three Months Ended June 30,		Six Months Ended June 30,
	Three Months Ended June 30,			Six Months Ended June 30,
	(Dollars in millions)							(Dollars in millions)
Distributable Earnings, June 30, 2019	$	8.8		$	23.0
Distributable Earnings, June 30, 2020							Distributable Earnings, June 30, 2020	$	28.1	$	59.9
Increases (decreases):							Increases (decreases):
Increase in fee related earnings	13.5			20.3			Increase in fee related earnings	0.8		2.9
Increase in realized net performance revenues	2.9			14.2
Decrease in realized net performance revenues							Decrease in realized net performance revenues	(3.0)		(14.2)
Increase in realized principal investment income	3.9			4.4			Increase in realized principal investment income	4.5		5.3
Increase in net interest	(1.0		)	(2.0		)	Increase in net interest	(0.8)		(1.2)
Total increase	19.3			36.9
Distributable Earnings, June 30, 2020	$	28.1		$	59.9
Total increase (decrease)							Total increase (decrease)	1.5		(7.2)
Distributable Earnings, June 30, 2021							Distributable Earnings, June 30, 2021	$	29.6	$	52.7

Realized Net Performance Revenues.Realized net performance revenues ~~increased $2.9~~decreased $3.0 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019, primarily driven by our Asia structured credit funds.~~

~~Realized net performance revenues increased~~2020 and decreased $14.2 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019,~~2020, primarily ~~driven~~due to realized net performance revenues generated by our Asia structured credit fund in the three months ended June 30, 2020 and Carlyle Aviation Partners in the six months ended June 30, 2020.

Realized Principal Investment Income. Realized principal investment income increased ~~$3.9~~$4.5 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and increased ~~$4.4~~$5.3 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019,~~2020, primarily due to higher ~~realizations~~gains on investments in our ~~business development companies and our carry and~~ structured credit ~~funds.~~funds, distressed credit carry funds and BDCs. The increase for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019~~2020 was partially offset by ~~higher dividends from~~realized losses on investments in Carlyle Global Capital Markets and in our ~~Interval Fund in the six months ended June 30, 2019.~~energy credit carry funds.

102

Fee Related Earnings

Fee Related Earnings increased ~~$13.5~~$0.8 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and increased ~~$20.3~~$2.9 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019.~~2020. The following table provides the components of the changes in Fee Related Earnings for the three and six months ended June 30, ~~2020:~~2021:


	Three Months Ended June 30,		Six Months Ended June 30,

	(Dollars in millions)
Fee Related Earnings, June 30, 2020	$	24.1	$	43.4
Increases (decreases):
Increase in fee revenues	2.0		15.2
Increase in cash-based compensation and benefits	(1.1)		(5.7)
CCC litigation cost recovery in 2020(1)	—		(6.3)
Decrease in general, administrative and other indirect expenses	0.1		0.2

All other changes	(0.2)		(0.5)
Total increase	0.8		2.9
Fee Related Earnings, June 30, 2021	$	24.9	$	46.3

Three Months Ended
June 30, Six Months Ended
June 30,
(Dollars in millions)
Fee Related Earnings, June 30, 2019 $ 10.6
$ 23.1
Increases (decreases):
Increase in fee revenues 10.9
8.8
Increase in cash-based compensation and benefits (5.0 ) (7.5 )
Decrease in general, administrative and other indirect expenses 7.4
18.3
All other changes 0.2
0.7
Total increase 13.5
20.3
Fee Related Earnings, June 30, 2020 $ 24.1
$ 43.4
(1) General, administrative and other indirect expenses during the six months ended June 30, 2020 included the allocated portion of the cost recovery associated with the CCC litigation costs. See Note 7 to our unaudited condensed consolidated financial statements.

Fee Revenues. Fee revenues increased ~~$10.9~~$2.0 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and increased ~~$8.8~~$15.2 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019,~~2020, due to the following:

Three Months Ended
June 30, Six Months Ended
June 30,
2020 v. 2019
(Dollars in millions)
Lower fund management fees $ (0.9 ) $ (2.7 )
Higher portfolio advisory and transaction fees, net and other 11.8
11.5
Total increase in fee revenues $ 10.9
$ 8.8


	Three Months Ended June 30,		Six Months Ended June 30,
	2021 v. 2020
	(Dollars in millions)
Higher fund management fees	$	7.8	$	14.8
(Lower) higher portfolio advisory and transaction fees, net and other	(5.8)		0.4
Total increase in fee revenues	$	2.0	$	15.2

The ~~decrease~~increase in fund management fees for the three and six months ended June 30, ~~2020~~2021 as compared to the three and six months ended June 30, ~~2019 is~~2020 was primarily driven by ~~lower management fees from our energy mezzanine carry funds and~~ the deferral of $3.6 million and $7.6 million of subordinated management fees in certain of our ~~U.S.~~ CLOs ~~for~~during the three and six months ended June 30, 2020, respectively, ~~due to rating agency downgrades on bonds and loans in~~ which were subsequently recognized during the ~~CLOs are invested. The performance~~third quarter of our CLOs is thus far stronger than we expected at the beginning of the pandemic and we are optimistic that they will continue to improve. However, if the economy worsens over the second half of the year, ratings agencies could downgrade further assets in the CLO portfolios, thereby increasing the risk that CLO subordinated fees could be deferred. The impact of the deferral of CLO subordinated management fees was partially offset by2020, as well as increased management fees from our structured credit funds, opportunistic credit carry funds, interval fund ~~direct lending platform, Carlyle Aviation Partners~~ and Carlyle ~~Insurance Solutions.~~FRL. These increases were partially offset by lower management fees from our distressed credit and our energy credit carry funds.

The ~~increase~~decrease in portfolio advisory and transaction fees, net and other for the three and six months ended June 30, ~~2020~~2021 as compared to the three and six months ended June 30, ~~2019 is~~2020 was primarily from transaction fees associated with Carlyle FRL during the three and six months ended June 30, 2020, ~~(see Note 4 to~~partially offset by higher underwriting and placement fees associated with Carlyle Global Capital Markets during the ~~accompanying unaudited condensed consolidated financial statements for more information).~~three and six months ended June 30, 2021.

The weighted average management fee rate on our carry funds ~~increased~~decreased from ~~1.22% at June 30, 2019 to~~ 1.27% at June 30, ~~2020.~~2020 to 1.24% at June 30, 2021. The rate ~~increase~~decrease was primarily due to ~~runoff~~the stepdown of ~~an early vintage fund with a lower fee rate and~~CSP IV from commitments to invested capital, partially offset by new fee-paying commitments raised in SASOF V with a higher effective fee rate.

Cash-based compensation and benefits expense. Cash-based compensation and benefits expense increased ~~$5.0~~$1.1 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and increased ~~$7.5~~$5.7 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019,~~2020, primarily due to increased ~~headcount and higher projected year-end bonuses.~~headcount.

~~General, administrative and other indirect expenses.~~ General, administrative and other indirect expenses decreased $7.4 million for the three months ended June 30, 2020 as compared to the three months ended June 30, 2019, primarily due to lower professional fees due in part to expense recoveries from Carlyle FRL, as well as lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

General, administrative and other indirect expenses decreased $18.3 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019, primarily due the allocated portion of the cost recovery associated with the CCC matter of $6.3 million, during the three months ended March 31, 2020 (see Note 7 to the accompanying unaudited condensed consolidated financial statements for more information), as well as positive foreign currency adjustments and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

103

Fee-earning AUM as of and for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Fee-earning AUM is presented below for each period together with the components of change during each respective period.

The table below breaks out Fee-earning AUM by its respective components at each period.


	As of June 30,
	2021			2020
Global Credit	(Dollars in millions)
Components of Fee-earning AUM (1)
Fee-earning AUM based on capital commitments	$	2,758		$	5,018
Fee-earning AUM based on invested capital	8,025			5,286
Fee-earning AUM based on collateral balances, at par	28,111			25,811
Fee-earning AUM based on net asset value	1,645			1,407
Fee-earning AUM based on other (2)	5,346			4,308
Total Fee-earning AUM	$	45,885		$	41,830
Weighted Average Management Fee Rates (3)
All Funds, excluding CLOs	1.24		%	1.27		%

As of June 30,
2020 2019
Global Credit (Dollars in millions)
Components of Fee-earning AUM (1)
Fee-earning AUM based on capital commitments $ 5,018
$ 4,727
Fee-earning AUM based on invested capital 5,286
3,867
Fee-earning AUM based on collateral balances, at par 25,811
23,970
Fee-earning AUM based on net asset value 1,407
1,185
Fee-earning AUM based on other (2) 4,308
2,153
Total Fee-earning AUM $ 41,830
$ 35,902
Weighted Average Management Fee Rates (3)
All Funds, excluding CLOs 1.27 % 1.22 %
(1)For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”


~~(1)~~	~~For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”~~


~~(2)~~	~~Includes funds with fees based on gross asset value.~~


~~(3)~~	Represents the aggregate effective management fee rate for carry funds, weighted by each fund’s Fee-earning AUM, as of the end of each period presented. Management fees for CLOs are based on the total par amount of the assets (collateral) and principal balance of the notes in the fund and are not calculated as a percentage of equity and are therefore not included.

(2)Includes funds with fees based on gross asset value.

(3) Represents the aggregate effective management fee rate for carry funds, weighted by each fund’s Fee-earning AUM, as of the end of each period presented. Management fees for CLOs are based on the total par amount of the assets (collateral) and principal balance of the notes in the fund and are not calculated as a percentage of equity and are therefore not included.

The table below provides the period to period rollforward of Fee-earning AUM.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Global Credit	(Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period	$	43,286	$	38,065	$	42,133	$	37,862

Inflows (1)	3,244		3,457		5,938		4,517
Outflows (including realizations) (2)	(955)		(412)		(2,276)		(1,310)


Market Activity & Other (3)	247		61		369		270
Foreign Exchange (4)	63		659		(279)		491
Balance, End of Period	$	45,885	$	41,830	$	45,885	$	41,830

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Global Credit (Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period $ 38,065
$ 36,544
$ 37,862
$ 35,152
Inflows (1) 3,457
372
4,517
1,696
Outflows (including realizations) (2) (412 ) (1,555 ) (1,310 ) (1,625 )
Market Activity & Other (3) 61
456
270
733
Foreign Exchange (4) 659
85
491
(54 )
Balance, End of Period $ 41,830
$ 35,902
$ 41,830
$ 35,902

~~(1)~~

Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of new CLO issuances, as well as gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

~~(2)~~

Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-ended funds, and runoff of CLO collateral balances. Realizations for funds earning management fees based on commitments during the period do not affect Fee-earning AUM.


~~(3)~~	Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in funds or vehicles based on the lower of cost or fair value or net asset value, as well as activity of funds with fees based on gross asset value.


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

104

(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in funds or vehicles based on the lower of cost or fair value or net asset value, as well as activity of funds with fees based on gross asset value.

Fee-earning AUM was ~~$41.8~~$45.9 billion at June 30, ~~2020,~~2021, an increase of ~~$3.7~~$2.6 billion compared to ~~$38.1~~$43.3 billion at March 31, ~~2020.~~2021. This increase was driven by inflows of ~~$3.5~~$3.2 billion primarily from investment activity in CCOF II and the ~~onboarding~~closings of ~~fee-earning AUM in our insurance~~

~~business~~one new U.S. CLO and ~~activation of management fees in SASOF V.~~one new Europe CLO. This increase was partially offset by outflows of ~~$0.4~~$1.0 billion due to runoff of CLO collateral ~~balances and in other funds with fees tied to asset value.~~balances. Investment and distribution activity has no impact for funds still in the original investment period where Fee-earning AUM is based on commitments.

Fee-earning AUM was ~~$41.8~~$45.9 billion at June 30, ~~2020,~~2021, an increase of ~~$3.9~~$3.8 billion, or approximately 9%, compared to ~~$37.9~~$42.1 billion at December 31, 2019. This increase was driven by inflows of $4.5 billion primarily from the onboarding of fee-earning AUM in our insurance business, activation of management fees in SASOF V, and new investments made in CCOF. This was partially offset by outflows of $1.3 billion due to runoff of CLO collateral balances and in other funds with fees tied to asset value.

~~Fee-earning AUM was $41.8 billion at June 30, 2020, an increase of $5.9 billion, or approximately 16%, compared to $35.9 billion at June 30, 2019.~~2020. The increase was driven by inflows of ~~$7.3~~$5.9 billion primarily related to the raising of additional U.S. and Europe CLOs ~~the onboarding of fee-earning AUM~~and investment activity in our ~~insurance business, purchases in CCOF and CSC, and the activation of management fees in SASOF V.~~credit opportunities funds. This was partially offset by outflows of $2.3 billion primarily due to runoff of our CLO collateral balances and dispositions in other funds with fees tied to ~~asset value.~~invested capital including CCOF I and CEMOF I.

Fee-earning AUM was ~~$35.9~~$45.9 billion at June 30, ~~2019, a decrease~~2021, an increase of ~~$0.6~~$4.1 billion, or approximately 2%10%, compared to $36.5 billion at March 31, 2019. The decrease was driven by outflows of $1.6 billion primarily due to a fee-basis stepdown in CEMOF II. This was partially offset by foreign exchange and other activity of $0.5 billion primarily due to the onboarding of a new Aviation securitization vehicle and inflows of $0.4 billion primarily related to purchases in various funds with fees based on invested capital.

~~Fee-earning AUM was $35.9~~$41.8 billion at June 30, ~~2019, an increase of $0.7 billion, or approximately 2%, compared to $35.2 billion at December 31, 2018.~~2020. The increase was driven by inflows of ~~$1.7~~$7.8 billion primarily related to the ~~closing~~raising of ~~our latest~~additional U.S. and Europe CLOs ~~as well as purchases~~and investment activity in ~~CCOF. Also driving the increase was $0.7 billion of foreign exchange and other activity primarily due to the onboarding of a new Aviation securitization vehicle.~~our credit opportunities funds. This was partially offset by ~~$1.6~~outflows of $4.9 billion ~~of outflows~~ primarily due to ~~a fee-basis~~runoff of our CLO collateral balances, the stepdown of CSP IV from commitments to invested capital, and dispositions in ~~CEMOF II.~~other funds with fees tied to invested capital.

Total AUM as of and for the Three and Six Months Ended June 30, ~~2020.~~2021.

The table below provides the period to period rollforward of Total AUM.

Three Months Ended
June 30, 2020 Six Months Ended
June 30, 2020
(Dollars in millions)
Global Credit
Total AUM Rollforward
Balance, Beginning of Period $ 48,802
$ 49,412
Inflows (1) 2,615
3,873
Outflows (including realizations) (2) (2,019 ) (2,533 )
Market Activity & Other (3) 395
(777 )
Foreign Exchange (4) 199
17
Balance, End of Period $ 49,992
$ 49,992

~~(1)~~


~~(2)~~	Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately managed accounts, gross redemptions in our open-ended funds, runoff of CLO collateral balances, and the expiration of available capital.


~~(3)~~	Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles, and separately managed accounts, as well as the impact of fees, expenses and non-investment income, change in gross asset value for our business development companies and other changes in AUM.


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
	(Dollars in millions)
Global Credit
Total AUM Rollforward
Balance, Beginning of Period	$	58,837	$	55,881
Inflows (1)	2,450		5,648
Outflows (including realizations) (2)	(1,110)		(2,085)
Market Activity & Other (3)	835		1,927
Foreign Exchange (4)	69		(290)
Balance, End of Period	$	61,081	$	61,081

(1) Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

(2) Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately managed accounts, gross redemptions in our open-end funds, runoff of CLO collateral balances, and the expiration of available capital.

(3) Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles, and separately managed accounts, as well as the impact of fees, expenses and non-investment income, change in gross asset value for our business development companies and other changes in AUM.

(4) Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Total AUM was ~~$50.0~~$61.1 billion at June 30, ~~2020,~~2021, an increase of ~~$1.2~~$2.3 billion, or approximately 2%4%, compared to ~~$48.8~~$58.8 billion at March 31, ~~2020.~~2021. The increase was driven by ~~$2.6~~$2.5 billion of inflows primarily related to the closing of one new U.S. CLO and one new Europe CLO, as well as fundraising in ~~in our insurance business.~~infrastructure credit, aviation, and credit opportunities, and $0.8

105

billion of market appreciation and other activity primarily driven by carry fund appreciation. This increase was partially offset by ~~$2.0~~$1.1 billion of outflows primarily due to runoff of CLO and other collateral ~~balances and the expiration of dry powder in CEMOF II and SASOF IV.~~balances.

Total AUM was ~~$50.0~~$61.1 billion at June 30, ~~2020,~~2021, an increase of ~~$0.6~~$5.2 billion, or approximately 1%9%, compared to ~~$49.4~~$55.9 billion at December 31, ~~2019.~~2020. The increase was driven by ~~$3.9~~$5.6 billion of inflows primarily related to the raising of additional U.S. and Europe CLOs, as well as fundraising in ~~our insurance business, SASOF V,~~infrastructure credit, aviation, and ~~CREV.~~credit opportunities, and $1.9 billion of market appreciation and other activity primarily driven by carry fund appreciation. This increase was partially offset by $2.1 billion of outflows ~~of $2.5 billion related~~primarily due to runoff of CLO and other collateral balances and the expiration of dry powder in CEMOF II and SASOF IV, as well as $0.8 billion of market and other activity primarily attributable to depreciation in our carry funds. The carry funds driving depreciation were CEMOF II ($0.2 billion), CEMOF I ($0.1 billion), and CSP IV ($0.1 billion).balances.

Fund Performance Metrics

Fund performance information for certain of our Global Credit funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.

The following table reflects the performance of carry funds in our Global Credit business. These tables separately present carry funds that, as of June 30, ~~2020,~~2021, had at least $1.0 billion in capital commitments, cumulative equity invested or total equity value. Please see “— Our Family of Funds” for a legend of the fund acronyms listed below.


(Dollars in millions)						TOTAL INVESTMENTS
						As of June 30, 2021
Fund (Fee Initiation Date/Stepdown Date)(11)	Committed Capital		Cumulative Invested Capital (1)		Percent Invested	Realized Value (2)		Remaining Fair Value (3)		MOIC (4)	Gross IRR (5) (8)	Net IRR (6) (8)	Net Accrued Carry/(Clawback) (7)
Global Credit Carry Funds
CSP IV (Apr 2016 / Dec 2020)	$	2,500	$	2,381	95%	$	1,156	$	1,755	1.2x	20%	8%	$	20
CSP III (Dec 2011 / Aug 2015)	$	703	$	703	100%	$	837	$	174	1.4x	20%	10%	$	(2)
CSP II (Dec 2007 / Jun 2011)	$	1,352	$	1,352	100%	$	2,431	$	62	1.8x	17%	11%	$	7
CCOF II (Nov 2020 / Oct 2025)	$	2,491	$	833	33%	$	6	$	855	1.0x	NM	NM	$	2
CCOF I (Nov 2017 / Sep 2022)	$	2,373	$	3,182	134%	$	1,252	$	2,541	1.2x	21%	15%	$	48
CEMOF II (Dec 2015 / Jun 2019)	$	2,819	$	1,699	60%	$	786	$	1,174	1.2x	6	1	$	—
CEMOF I (Dec 2010 / Dec 2015)	$	1,383	$	1,606	116%	$	894	$	185	0.7x	Neg	Neg	$	—
CSC (Mar 2017/ n/a)	$	838	$	1,303	155%	$	834	$	769	1.2x	18%	13%	$	28
All Other Active Funds & Vehicles(9)			$	3,526	n/a	$	2,926	$	1,178	1.2x	8%	3%	$	19
Fully Realized Funds & Vehicles(10)			$	1,447	n/a	$	1,988	$	—	1.4x	12%	7%	$	—
TOTAL GLOBAL CREDIT			$	18,032	n/a	$	13,111	$	8,693	1.2x	11%	5%	$	124

(1)Represents the original cost of investments since the inception of the fund. For CSP II and CSP III, reflects amounts net of investment level recallable proceeds which is adjusted to reflect recyclability of invested capital for the purpose of calculating the fund MOIC.

(2)Represents all realized proceeds since inception of the fund.

(3)Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments.

(4)Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.

(5)Gross Internal Rate of Return (“Gross IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, before the impact of management fees, partnership expenses and carried interest. For fund vintages 2017 and after, Gross IRR includes the impact of interest expense related to the funding of investments on fund lines of credit. Gross IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Subtotal Gross IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.

106

(Dollars in millions) TOTAL INVESTMENTS
As of June 30, 2020
Global Credit
(Carry Funds Only) Fund
Vintage (1) Investment Period End/Fee Stepdown(2) Committed
Capital Cumulative
Invested
Capital (3) Realized
Value (4) Remaining Fair Value (5) MOIC (6) Gross IRR
(7) (13) Net IRR
(8) (13) In Accrued Carry/(Clawback) (14) LTM Realized Carry/(Clawback) (15)
Active Fully Invested/Committed Funds (9)
CSP II
2007
$ 1,352.3
$ 1,352.3
$ 2,430.8
$ 66.2
1.8x 17 % 11 % X
CSP III
2011
$ 702.8
$ 702.8
$ 846.0
$ 199.6
1.5x 22 % 12 % X
CEMOF I
2011
$ 1,382.5
$ 1,603.4
$ 864.2
$ 137.8
0.6x Neg
Neg

CEMOF II
2015
$ 2,819.2
$ 1,682.0
$ 655.2
$ 918.3
0.9x Neg
Neg

All Other Active Funds, Coinvestments and SMAs (10) Various $ 2,472.3
$ 2,465.5
$ 362.8
1.1x 7 % 2 %

Fully Realized Funds, Coinvestments and SMAs (11) Various $ 1,446.5
$ 1,988.4
$ —
1.4x 12 % 7 %

Total Fully Invested/Committed Funds $ 9,259.2
$ 9,250.2
$ 1,684.8
1.2x 8 % 2 %

Funds in the Investment Period (9)
CSP IV
2016 Dec-20 $ 2,500.0
$ 1,491.5
$ 592.9
$ 981.8
1.1x NM
NM

CCOF
2017 Jun-22 $ 2,373.4
$ 1,988.2
$ 448.7
$ 1,730
1.1x 16 % 10 % X
CSC
2017 Aug-20 $ 838.2
$ 1,107.4
$ 469.0
$ 614.2
1.0x Neg
Neg

All Other Funds, Coinvestments and SMAs (12) Various $ 871.5
$ 284.4
$ 615.8
1.0x NM
NM

Total Funds in the Investment Period $ 5,458.7
$ 1,795.0
$ 3,941.8
1.1x NM
NM

TOTAL Global Credit $ 14,717.9
$ 11,045.2
$ 5,626.6
1.1x 8 % 1 %


~~(1)~~	The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Global Credit segment our first carry fund was formed in 2004.


~~(2)~~	Represents the fund's investment period end date or, if different, the date at which the management fee calculation basis is scheduled to step down from commitments to remaining invested capital at cost (where applicable). This measure is only relevant and reported for funds currently in the investment period.


~~(3)~~	~~Represents the original cost of investments net of investment level recallable proceeds which is adjusted to reflect recyclability of invested capital for the purpose of calculating the fund MOIC.~~

~~(4)~~

~~Represents all realized proceeds since inception~~(6)Net Internal Rate of Return (“Net IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, after the impact of all management fees, partnership expenses and carried interest, including current accruals. Net IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund. Subtotal Net IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.


~~(5)~~	~~Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments.~~


~~(6)~~	~~Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.~~


~~(7)~~	Gross Internal Rate of Return (“Gross IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest.

~~(8)~~


~~(9)~~	Fully Invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested.


~~(10)~~	~~Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: SASOF II and SASOF III.~~


~~(11)~~	Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CSP I, CMP I, CMP II, and CASCOF.


~~(12)~~	~~Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: SASOF IV.~~


~~(13)~~	For funds marked “NM,” IRR may be positive or negative, but is considered not meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is negative as of reporting period end.


~~(14)~~	~~Fund has a net accrued performance fee balance/(giveback obligation) as of the current quarter end, driven by a significant portion of the fund's asset base.~~


~~(15)~~	~~Fund has generated realized net performance fees/(realized giveback) in the last twelve months.~~

(7)Represents the net accrued performance fee balance/(giveback obligation) as of the current quarter end.

(8)For funds marked “NM,” IRR may be positive or negative, but is not considered meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end.

(9)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: SASOF II, SASOF III, SASOF IV, and SASOF V.

(10)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CSP I, CMP I, CMP II, and CASCOF.

(11)The fund stepdown date represents the contractual stepdown date under the respective fund agreements for funds on which the fee basis stepdown has not yet occurred.

107

Investment Solutions

The following table presents our results of operations for our Investment Solutions(1) segment:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	60.3	$	45.6	$	112.3	$	85.4
Portfolio advisory and transaction fees, net and other	—		—		0.3		—
Total fund level fee revenues	60.3		45.6		112.6		85.4
Realized performance revenues	25.1		30.7		59.3		116.1
Realized principal investment income	4.0		0.5		4.4		1.1
Interest income	0.1		0.1		0.1		0.5
Total revenues	89.5		76.9		176.4		203.1
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits	28.2		25.0		57.6		50.0
Realized performance revenues related compensation	23.0		27.0		55.2		111.0
Total compensation and benefits	51.2		52.0		112.8		161.0
General, administrative, and other indirect expenses	6.2		7.4		14.6		12.9
Depreciation and amortization expense	1.1		1.3		2.2		2.3
Interest expense	2.8		2.4		5.0		4.7
Total expenses	61.3		63.1		134.6		180.9
(=) Distributable Earnings	$	28.2	$	13.8	$	41.8	$	22.2
(-) Realized Net Performance Revenues	2.1		3.7		4.1		5.1
(-) Realized Principal Investment Income	4.0		0.5		4.4		1.1
(+) Net Interest	2.7		2.3		4.9		4.2
(=) Fee Related Earnings	$	24.8	$	11.9	$	38.2	$	20.2

(1) On April 1, 2021, we closed on the sale of our interest in Metropolitan Real Estate (“MRE”). Distributable Earnings and Fee Related Earnings attributable to MRE in periods prior to the sale were immaterial to the Investment Solutions segment. The $5.0 million gain on the sale and the $26.8 million right-of-use asset impairment, as a result of the sublease transaction (see Note 7), are not included in DE or FRE. See “Non-GAAP Financial Measures” for the reconciliation of Total DE and FRE to the U.S. GAAP financial statements.

108

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 45.6
$ 39.2
$ 85.4
$ 78.6
Total fund level fee revenues 45.6
39.2
85.4
78.6
Realized performance revenues 30.7
6.0
116.1
26.9
Realized principal investment income 0.5
1.4
1.1
1.6
Interest income 0.1
0.2
0.5
0.7
Total revenues 76.9
46.8
203.1
107.8
Segment Expenses
Compensation and benefits
Cash-based compensation and benefits 25.0
22.5
50.0
45.7
Realized performance revenues related compensation 27.0
4.5
111.0
24.3
Total compensation and benefits 52.0
27.0
161.0
70.0
General, administrative, and other indirect expenses 7.4
9.2
12.9
17.5
Depreciation and amortization expense 1.3
1.3
2.3
2.7
Interest expense 2.4
1.8
4.7
3.7
Total expenses 63.1
39.3
180.9
93.9
(=) Distributable Earnings $ 13.8
$ 7.5
$ 22.2
$ 13.9
(-) Realized Net Performance Revenues 3.7
1.5
5.1
2.6
(-) Realized Principal Investment Income 0.5
1.4
1.1
1.6
(+) Net Interest 2.3
1.6
4.2
3.0
(=) Fee Related Earnings $ 11.9
$ 6.2
$ 20.2
$ 12.7

Three Months Ended June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020 and Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

Distributable Earnings

Distributable Earnings increased ~~$6.3~~$14.4 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and increased ~~$8.3~~$19.6 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019.~~2020. The following table provides the components of the changes in Distributable Earnings for the three and six months ended June 30, ~~2020:~~2021:


								Three Months Ended June 30,		Six Months Ended June 30,
	Three Months Ended June 30,			Six Months Ended June 30,
	(Dollars in millions)							(Dollars in millions)
Distributable Earnings, June 30, 2019	$	7.5		$	13.9
Distributable Earnings, June 30, 2020							Distributable Earnings, June 30, 2020	$	13.8	$	22.2
Increases (decreases):							Increases (decreases):
Increase in fee related earnings	5.7			7.5			Increase in fee related earnings	12.9		18.0
Increase in realized net performance revenues	2.2			2.5
Decrease in realized principal investment income	(0.9		)	(0.5		)
Decrease in realized net performance revenues							Decrease in realized net performance revenues	(1.6)		(1.0)
Increase in realized principal investment income							Increase in realized principal investment income	3.5		3.3
Increase in net interest	(0.7		)	(1.2		)	Increase in net interest	(0.4)		(0.7)
Total increase	6.3			8.3			Total increase	14.4		19.6
Distributable Earnings, June 30, 2020	$	13.8		$	22.2
Distributable Earnings, June 30, 2021							Distributable Earnings, June 30, 2021	$	28.2	$	41.8

Investment Solutions had realized performance revenues of ~~$116.1~~$59.3 million during the six months ended June 30, ~~2020.~~2021. However, most of these realizations are from AlpInvest fund vehicles in which we generally do not retain any carried interest, therefore our net realized performance revenues were ~~$5.1~~$4.1 million during the six months ended June 30, ~~2020.~~2021.

~~Fee Related Earnings~~

~~Fee Related Earnings~~Realized Principal Investment Income. Realized principal investment income increased ~~$5.7~~$3.5 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and ~~increased $7.5~~$3.3 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019.~~2020 primarily due to higher realized gains on investments on our secondaries funds.

Fee Related Earnings

Fee Related Earnings increased $12.9 million for the three months ended June 30, 2021 as compared to three months ended June 30, 2020 and increased $18.0 million for the six months ended June 30, 2021 as compared to the six months ended June 30, 2020. The following table provides the components of the changes in Fee Related Earnings for the three and six months ended June 30, ~~2020:~~2021:


	Three Months Ended June 30,		Six Months Ended June 30,

	(Dollars in millions)
Fee Related Earnings, June 30, 2020	$	11.9	$	20.2
Increases (decreases):
Increase in fee revenues	14.7		27.2
Increase in cash-based compensation and benefits	(3.2)		(7.6)
CCC litigation cost recovery in 2020(1)	—		(3.3)
Decrease in general, administrative and other indirect expenses	1.2		1.6
All other changes	0.2		0.1
Total increase	12.9		18.0
Fee Related Earnings, June 30, 2021	$	24.8	$	38.2

Three Months Ended
June 30, Six Months Ended
June 30,
(Dollars in millions)
Fee Related Earnings, June 30, 2019 $ 6.2
$ 12.7
Increases (decreases):
Increase in fee revenues 6.4
6.8
Increase in cash-based compensation and benefits (2.5 ) (4.3 )
Decrease in general, administrative and other indirect expenses 1.8
4.6
All other changes —
0.4
Total increase 5.7
7.5
Fee Related Earnings, June 30, 2020 $ 11.9
$ 20.2
(1) General, administrative and other indirect expenses during the six months ended June 30, 2020 included the allocated portion of the cost recovery associated with the CCC litigation costs. See Note 7 to our unaudited condensed consolidated financial statements.

Fee Revenues. Total fee revenues increased~~$6.4~~ $14.7 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and increased ~~$6.8~~$27.2 million for the six months ended June 30, ~~2020~~2021 as compared to the six months

109

ended June 30, ~~2019~~2020 primarily due to increased management fees from our private equity fund vehicles driven by the activation of management fees on our latest secondaries fund in the second quarter of 2020 and ~~higher~~our latest coinvestment fund in the second quarter of 2021, as well as $4.4 million in catch-up fees. These increases were partially offset by the impact of the sale of MRE on April 1, 2021, which had management fees ~~on our real estate fund-of-fund vehicles.~~of $5.9 million for the three months ended June 30, 2020.

Cash-based compensation and benefits expense. Cash-based compensation and benefits expense increased ~~$2.5~~$3.2 million for the three months ended June 30, ~~2020~~2021 as compared to ~~the~~ three months ended June 30, ~~2019~~2020 and increased ~~$4.3~~$7.6 million for the six months ended June 30, ~~2020~~2021 as compared to the six months ended June 30, ~~2019~~2020 primarily due to ~~an increase in~~increased headcount and higher projected year-end bonuses.

General, administrative and other indirect expenses decreased $4.6 million for the six months ended June 30, 2020 as compared to the six months ended June 30, 2019 primarily due to the allocated portion of the cost recovery associated with the CCC matter of $3.3 million during the three months ended March 31, 2020 (see Note 7 to the accompanying unaudited condensed consolidated financial statements for more information), positive foreign currency adjustments and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

Fee-earning AUM as of and for the Three and Six Months Ended June 30, ~~2020~~2021 and ~~2019~~2020

Fee-earning AUM is presented below for each period together with the components of change during each respective period.


	As of June 30,
	2021		2020
Investment Solutions	(Dollars in millions)
Components of Fee-earning AUM (1)
Fee-earning AUM based on capital commitments	$	18,978	$	14,244
Fee-earning AUM based on invested capital (2)	3,470		2,106
Fee-earning AUM based on net asset value	3,473		2,797
Fee-earning AUM based on lower of cost or fair market value	12,573		12,620
Total Fee-earning AUM	$	38,494	$	31,767

As of June 30,
2020 2019
Investment Solutions (Dollars in millions)
Components of Fee-earning AUM (1)
Fee-earning AUM based on capital commitments $ 14,244
$ 12,030
Fee-earning AUM based on invested capital (2) 2,106
1,805
Fee-earning AUM based on net asset value 2,797
782
Fee-earning AUM based on lower of cost or fair market value 12,620
14,208
Total Fee-earning AUM $ 31,767
$ 28,825
(1)For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”


~~(1)~~	~~For additional information concerning the components of Fee-earning AUM, see “—Fee-earning Assets under Management.”~~


~~(2)~~	~~Includes amounts committed to or reserved for certain AlpInvest and Metropolitan carry funds.~~

(2)Includes amounts committed to or reserved for certain AlpInvest funds

The table below provides the period to period rollforward of Fee-earning AUM.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Investment Solutions	(Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period	$	39,287	$	28,202	$	36,398	$	28,384
Inflows (1)	1,882		5,410		6,511		6,447
Outflows (including realizations) (2)	(3,323)		(1,542)		(4,593)		(2,248)
Market Activity & Other (3)	515		(824)		805		(868)
Foreign Exchange (4)	133		521		(627)		52
Balance, End of Period	$	38,494	$	31,767	$	38,494	$	31,767

(1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period and the fee-earning commitments invested in vehicles for which management fees are based on invested capital. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

(2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, and reductions for funds that are no longer calling for fees. Distributions for funds earning management fees based on commitments during the period do not affect Fee-earning AUM. Outflows during the three and six months ended June 30, 2021 also reflect the sale of MRE on April 1, 2021, which had $2.3 billion of Fee-earning AUM as of March 31, 2021.

(3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value.

110

Three Months Ended
June 30, Six Months Ended
June 30,
2020 2019 2020 2019
Investment Solutions (Dollars in millions)
Fee-earning AUM Rollforward
Balance, Beginning of Period $ 28,202
$ 28,670
$ 28,384
$ 29,065
Inflows (1) 5,410
961
6,447
2,150
Outflows (including realizations) (2) (1,542 ) (1,086 ) (2,248 ) (2,206 )
Market Activity & Other (3) (824 ) 73
(868 ) 3
Foreign Exchange (4) 521
207
52
(187 )
Balance, End of Period $ 31,767
$ 28,825
$ 31,767
$ 28,825

~~(1)~~

Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period and the fee-earning commitments invested in vehicles for which management fees are based on invested capital. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

~~(2)~~

Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, and reductions for funds that are no longer calling for fees. Distributions for funds earning management fees based on commitments during the period do not affect Fee-earning AUM.


~~(3)~~	~~Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value.~~


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

Fee-earning AUM was ~~$31.8~~$38.5 billion at June 30, ~~2020, an increase~~2021, a decrease of ~~$3.6~~$0.8 billion compared to ~~$28.2~~$39.3 billion at March 31, ~~2020.~~2021. This was driven by outflows of $3.3 billion, including the sale of MRE, which had Fee-Earning AUM of $2.3 billion as of March 31, 2021, as well as distributions in our AlpInvest carry funds. This decrease was partially offset by inflows ~~including~~of $1.9 billion primarily from new fee-paying commitments ~~of $5.4 billion primarily due to~~raised, the activation of previously raised mandates, and purchases in our AlpInvest vehicles, ~~namely AlpInvest Secondaries Fund VII. Partially offsetting the increase were outflows, including distributions,~~as well as appreciation of ~~$1.5 billion and market depreciation of $0.8 billion primarily in our AlpInvest carry funds.~~$0.5 billion. Distributions from funds still in the commitment or weighted-average investment period do not impact Fee-earning AUM as these funds are based on commitments and not invested capital. Increases in fair value have an impact on Fee-earning AUM for Investment Solutions as fully committed funds are based on the lower of cost or fair value of the underlying investments.

Fee-earning AUM was ~~$31.8~~$38.5 billion at June 30, ~~2020,~~2021, an increase of ~~$3.4~~$2.1 billion, or approximately ~~12%~~6%, compared to ~~$28.4~~$36.4 billion at December 31, ~~2019.~~2020. The increase was driven by inflows, including fee-paying commitments, of ~~$6.4~~$6.5 billion due to activation of previously raised mandates and purchases in our AlpInvest ~~and MRE~~ carry funds, ~~namely AlpInvest Secondaries Fund VII. This was~~and $0.8 billion of appreciation. These increases were partially offset by outflows of $4.6 billion, including ~~distributions,~~the sale of ~~$2.2~~MRE, as well as $0.6 billion ~~and market depreciation~~ of ~~$0.9 billion primarily in~~negative foreign exchange activity from the translation of our AlpInvest ~~carry funds.~~Fee-earning AUM from EUR to USD.

Fee-earning AUM was $38.5 billion at June 30, 2021, an increase of $6.7 billion, or approximately 21%, compared to $31.8 billion at June 30, ~~2020, an increase of $3.0 billion, or approximately 10%, compared to $28.8 billion at June 30, 2019.~~2020. The increase was driven by inflows, including fee-paying commitments, of ~~$8.0~~$10.8 billion due to activation of previously raised mandates and purchases in our AlpInvest ~~and~~carry funds, as well as the MRE carry funds ~~namely AlpInvest Secondaries Fund VII. This~~prior to the sale of MRE on April 1, 2021. Also driving the increase was ~~partially offset by outflows, including distributions,~~$0.9 billion of ~~$4.1 billion and market depreciation of $0.8 billion~~appreciation primarily in our AlpInvest carry ~~funds.~~

Fee-earning AUM was $28.8 billion at June 30, 2019, an increase of $0.1 billion compared to $28.7 billion at March 31, 2019. This was driven by inflows, including fee-paying commitments, of $1.0 billion primarily due to activation of previously raised mandatesfunds and ~~purchases in our AlpInvest vehicles, as well as $0.2~~$1.1 billion of positive foreign exchange ~~gains~~activity from the translation of our AlpInvest Fee-earning AUM from EUR to USD. This was partially offset by outflows ~~including distributions,~~ of ~~$1.1 billion which were primarily attributable to our AlpInvest carry funds.~~

Fee-earning AUM was $28.8 billion at June 30, 2019, a decrease of $0.3 billion, or approximately 1%, compared to $29.1 billion at December 31, 2018. The decrease was driven by outflows, including distributions, of $2.2$6.1 billion primarily from distributions in our AlpInvest carry funds and ~~$0.2 billion~~the sale of foreign exchange losses due to the translation of our AlpInvest Fee-earning AUM from EUR to USD. This was offset by inflows, including fee-paying commitments, of $2.2 billion due to activation of previously raised mandates and purchases in our AlpInvest and MRE carry funds.MRE.

Total AUM as of and for the Three and Six Months Ended June 30, ~~2020~~2021

The table below provides the period to period rollforward of Total AUM.


	Three Months Ended June 30, 2021		Six Months Ended June 30, 2021
	(Dollars in millions)
Investment Solutions
Total AUM Rollforward
Balance, Beginning of Period	$	63,556	$	58,108
Inflows (1)	1,248		4,446
Outflows (including realizations) (2)	(5,270)		(7,371)
Market Activity & Other (3)	4,765		10,807
Foreign Exchange (4)	349		(1,342)
Balance, End of Period	$	64,648	$	64,648

Three Months Ended
June 30, 2020 Six Months Ended
June 30, 2020
(Dollars in millions)
Investment Solutions
Total AUM Rollforward
Balance, Beginning of Period $ 47,954
$ 45,246
Inflows (1) 1,445
5,714
Outflows (including realizations) (2) (1,659 ) (3,214 )
Market Activity & Other (3) (1,694 ) (881 )
Foreign Exchange (4) 828
9
Balance, End of Period $ 46,874
$ 46,874
(1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.


~~(1)~~	Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing.

~~(2)~~

(2)Outflows includes distributions in our carry funds, related co-investment vehicles and separately managed accounts, as well as the expiration of available capital. Outflows also reflect the sale of MRE on April 1, 2021, which had $2.4 billion in Total AUM as of March 31, 2021.

(3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles and separately managed accounts, the net impact of fees, expenses and non-investment income, as well as other changes in AUM. The fair market values for our Investment Solutions primary and secondary carry funds are based on the latest available valuations of the underlying limited partnership interests as ~~well as the expiration of available capital.~~

~~(3)~~

Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles and separately managed accounts, the net impact of fees, expenses and non-investment income, as well as other changes in AUM. The fair market values for our Investment Solutions primary and secondary carry funds are based on the latest available valuations of the underlying limited partnership interests as

provided by their general partners which typically has a lag of up to 90 days, plus the net cash flows since the latest valuation, up to June 30, ~~2020.~~2021.


~~(4)~~	Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

111

Total AUM was ~~$46.9~~$64.6 billion at June 30, ~~2020, a decrease~~2021, an increase of ~~$1.1~~$1.0 billion, or approximately 2%, compared to ~~$48.0~~$63.6 billion at March 31, ~~2020.~~2021. The ~~decrease~~increase was driven by ~~$1.7~~$4.8 billion of market ~~depreciation and outflows of $1.7 billion~~appreciation primarily in our AlpInvest carry ~~funds. Partially offsetting the decrease were~~funds and inflows of ~~$1.4~~$1.2 billion ~~primarily~~billion related to fundraising in our AlpInvest ~~funds, namely AlpInvest Secondaries Fund VII.~~

Total AUM was $46.9 billion at June 30, 2020, an increase of $1.7 billion, or approximately 4%, compared to $45.2 billion at December 31, 2019. The increase was driven by inflows of $5.7 billion primarily related to fundraising in our AlpInvest funds, namely AlpInvest Secondaries Fund VII.funds. This was partially offset by outflows of ~~$3.2~~$5.3 billion, including the sale of MRE, which had $2.4 billion in Total AUM as of March 31, 2021, and distributions in our AlpInvest carry funds.

Total AUM was $64.6 billion at June 30, 2021, an increase of $6.5 billion, or approximately 11%, compared to $58.1 billion at December 31, 2020. The increase was driven by $10.8 billion of market ~~depreciation of $0.9 billion~~appreciation primarily in our AlpInvest carry funds and inflows of $4.4 billion related to fundraising in our AlpInvest funds. This was partially offset by outflows of $7.4 billion, including the sale of MRE, as well as $1.3 billion of negative foreign exchange activity from the translation of our AlpInvest Total AUM from EUR to USD.

Fund Performance Metrics

Fund performance information for our ~~AlpInvest and Metropolitan~~Investment Solutions funds that have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of June 30, ~~2020,~~2021, which we refer to as our “significant funds” is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. Primary and secondary investments in external funds are generally valued based on the proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days. As a result, amounts presented may not include the impact of economic activity in the current quarter.

112

The following tables reflect the performance of our significant funds in our Investment Solutions business.


				TOTAL INVESTMENTS
				As of June 30, 2021
Investment Solutions (1)(8)(13)	Vintage Year	Fund Size		Cumulative Invested Capital (2)(3)		Realized Value (3)		Remaining Fair Value(3)		Total Fair Value(3)(4)		MOIC (5)	Gross IRR (6)(10)	Net IRR (7)(10)	Net Accrued Carry/(Clawback) (12)
				(Reported in Local Currency, in Millions)

Main Fund VI - Fund Investments	2015	€	1,106	€	984	€	605	€	1,241	€	1,846	1.9x	27%	25%	$	3
Main Fund V - Fund Investments	2012	€	5,080	€	5,363	€	4,816	€	5,919	€	10,735	2.0x	20%	19%	$	19
Main Fund IV - Fund Investments	2009	€	4,877	€	5,427	€	7,645	€	3,874	€	11,519	2.1x	18%	18%	$	2
Main Fund III - Fund Investments	2005	€	11,500	€	12,760	€	19,547	€	2,389	€	21,936	1.7x	10%	10%	$	—
Main Fund II - Fund Investments	2003	€	4,545	€	4,781	€	7,447	€	264	€	7,711	1.6x	10%	9%	$	—
Main Fund I - Fund Investments	2000	€	5,175	€	4,195	€	6,880	€	60	€	6,940	1.7x	12%	11%	$	—
Main Fund VII - Secondary Investments	2020	$	8,388	$	2,013	$	252	$	2,155	$	2,407	1.2x	NM	NM	$	14
AlpInvest Secondaries Fund VII	2020	$	6,769	$	1,414	$	179	$	1,516	$	1,695	1.2x	NM	NM	$	10
Main Fund VI - Secondary Investments	2017	$	6,017	$	4,928	$	1,545	$	5,348	$	6,892	1.4x	17%	15%	$	51
AlpInvest Secondaries Fund VI	2017	$	3,333	$	2,725	$	808	$	2,949	$	3,757	1.4x	17%	13%	$	34
Main Fund V - Secondary Investments	2011	€	4,273	€	4,143	€	5,662	€	1,678	€	7,341	1.8x	21%	19%	$	34
AlpInvest Secondaries Fund V	2012	$	756	$	652	$	753	$	317	$	1,070	1.6x	17%	14%	$	14
Main Fund IV - Secondary Investments	2010	€	1,859	€	1,925	€	3,187	€	127	€	3,315	1.7x	19%	18%	$	—
Main Fund III - Secondary Investments	2006	€	2,250	€	2,328	€	3,526	€	61	€	3,588	1.5x	11%	10%	$	—
Main Fund II - Secondary Investments	2003	€	998	€	993	€	1,812	€	8	€	1,820	1.8x	27%	26%	$	—
Main Fund VIII - Co-Investments	2021	$	3,815	$	127	$	—	$	126	$	126	1.0x	NM	NM	$	—��
AlpInvest Co-Investment Fund VIII	2021	$	3,614	$	124	$	—	$	124	$	124	1.0x	NM	NM	$	—
Main Fund VII - Co-Investments	2017	$	2,842	$	2,487	$	135	$	3,715	$	3,850	1.5x	23%	19%	$	46
AlpInvest Co-Investment Fund VII	2017	$	1,688	$	1,500	$	75	$	2,291	$	2,366	1.6x	23%	19%	$	31
Main Fund VI - Co-Investments	2014	€	1,115	€	937	€	1,351	€	1,078	€	2,429	2.6x	28%	26%	$	13
Main Fund V - Co-Investments	2012	€	1,124	€	1,029	€	2,221	€	790	€	3,012	2.9x	29%	27%	$	7
Main Fund IV - Co-Investments	2010	€	1,475	€	1,331	€	3,244	€	556	€	3,799	2.9x	24%	22%	$	—
Main Fund III - Co-Investments	2006	€	2,760	€	2,734	€	3,734	€	329	€	4,063	1.5x	6%	5%	$	—
Main Fund III - Mezzanine Investments	2006	€	2,000	€	1,950	€	2,512	€	165	€	2,676	1.4x	10%	9%	$	—
Main Fund II - Mezzanine Investments	2004	€	700	€	747	€	1,030	€	9	€	1,040	1.4x	8%	7%	$	—
All Other Active Funds & Vehicles(9)	Various			$	6,751	$	2,703	$	6,648	$	9,351	1.4x	11%	10%	$	61
Fully Realized Funds & Vehicles	Various			€	2,126	€	4,803	€	2	€	4,805	2.3x	35%	32%	$	—
TOTAL INVESTMENT SOLUTIONS (USD)(11)				$	79,994	$	99,448	$	39,972	$	139,420	1.7x	14%	13%	$	250

(1)Includes private equity and mezzanine primary fund investments, secondary fund investments and co-investments originated by the AlpInvest team. Excluded from the performance information shown are a) investments that were not originated by AlpInvest, b) Direct Investments, which was spun off from AlpInvest in 2005, and c) LP co-investment vehicles advised by AlpInvest. As of June 30, 2021, these excluded investments represent $2.5 billion of AUM at AlpInvest.

(2)Represents the original cost of investments since inception of the fund.

(3)To exclude the impact of FX, all foreign currency cash flows have been converted to the currency representing a majority of the capital committed to the relevant fund at the reporting period spot rate.

(4)Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest.

(5)Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.

113

TOTAL INVESTMENTS
As of June 30, 2020
Investment Solutions (1) Vintage Year Fund Size
Cumulative
Invested
Capital
(2)(3)
Realized Value (3) Remaining Fair Value
Total Fair
Value (4)
MOIC
(5)
Gross
IRR (7) (9)
Net
IRR
(8) (9)
(Reported in Local Currency, in Millions)
AlpInvest
Fully Committed Funds (6)
Main Fund I - Fund Investments
2000 € 5,174.6
€ 4,344.8
€ 7,080.7
€ 77.9
€ 7,158.6
1.6x 12 % 11 %
Main Fund II - Fund Investments
2003 € 4,545.0
€ 4,917.6
€ 7,571.4
€ 285.8
€ 7,857.2
1.6x 10 % 9 %
Main Fund III - Fund Investments
2005 € 11,500.0
€ 13,201.7
€ 19,350.0
€ 2,245.0
€ 21,595.0
1.6x 10 % 9 %
Main Fund IV - Fund Investments
2009 € 4,877.3
€ 5,502.9
€ 6,806.9
€ 2,939.0
€ 9,745.9
1.8x 16 % 15 %
Main Fund V - Fund Investments
2012 € 5,080.0
€ 5,344.0
€ 3,300.4
€ 4,813.0
€ 8,113.5
1.5x 14 % 14 %
Main Fund VI - Fund Investments
2015 € 1,106.4
€ 907.2
€ 309.0
€ 903.0
€ 1,212.0
1.3x 15 % 14 %
Main Fund II - Secondary Investments
2003 € 998.4
€ 1,028.3
€ 1,863.2
€ 16.3
€ 1,879.5
1.8x 27 % 26 %
Main Fund III - Secondary Investments
2006 € 2,250.0
€ 2,399.0
€ 3,611.2
€ 57.2
€ 3,668.4
1.5x 11 % 10 %
Main Fund IV - Secondary Investments
2010 € 1,859.1
€ 1,979.6
€ 3,189.6
€ 157.1
€ 3,346.7
1.7x 19 % 18 %
Main Fund V - Secondary Investments
2011 € 4,272.8
€ 4,208.3
€ 5,191.7
€ 1,667.3
€ 6,859.0
1.6x 19 % 18 %
Main Fund III - Co-Investments
2006 € 2,760.0
€ 2,838.5
€ 3,611.1
€ 448.8
€ 4,059.8
1.4x 6 % 5 %
Main Fund IV - Co-Investments
2010 € 1,475.0
€ 1,374.3
€ 3,262.4
€ 327.5
€ 3,589.9
2.6x 23 % 21 %
Main Fund V - Co-Investments
2012 € 1,124.2
€ 1,059.4
€ 1,871.6
€ 909.8
€ 2,781.4
2.6x 29 % 27 %
Main Fund VI - Co-Investments
2014 € 1,114.6
€ 950.7
€ 1,262.3
€ 896.3
€ 2,158.6
2.3x 27 % 25 %
Main Fund II - Mezzanine Investments
2004 € 700.0
€ 767.7
€ 1,051.0
€ 8.7
€ 1,059.6
1.4x 7 % 7 %
Main Fund III - Mezzanine Investments
2006 € 2,000.0
€ 2,018.3
€ 2,562.6
€ 153.2
€ 2,715.9
1.3x 10 % 9 %
All Other Active Funds (10) Various € 2,754.3
€ 1,709.5
€ 1,499.8
€ 3,209.3
1.2x 5 % 3 %
Fully Realized Funds Various € 2,140.0
€ 4,845.4
€ 1.5
€ 4,846.9
2.3x 35 % 32 %
Total Fully Committed Funds € 57,736.6
€ 78,450.0
€ 17,407.3
€ 95,857.3
1.7x 13 % 12 %
Funds in the Commitment Period (6)
Main Fund VI - Secondary Investments
2017 € 5,180.6
€ 3,837.2
€ 585.0
€ 3,736.8
€ 4,321.8
1.1x 9 % 6 %
Main Fund VII - Secondary Investments
2020 € 4,333.4
€ 96.2
€ 0.1
€ 96.0
€ 96.1
1.0x NM
NM
Main Fund VII - Co-Investments
2017 € 2,491.3
€ 1,649.1
€ 52.9
€ 1,715.7
€ 1,768.6
1.1x 5 % 2 %
All Other Funds (10) Various € 1,652.1
€ 29.7
€ 1,773.8
€ 1,803.5
1.1x 8 % 6 %
Total Funds in the Commitment Period € 7,234.5
€ 667.8
€ 7,322.2
€ 7,990.0
1.1x 8 % 5 %
TOTAL ALPINVEST € 64,971.1
€ 79,117.8
€ 24,729.5
€ 103,847.3
1.6x 13 % 12 %
TOTAL ALPINVEST (USD) (11) $ 73,050.5
$ 88,956.3
$ 27,804.7
$ 116,761.1
1.6x

Metropolitan Real Estate
Active Fully Committed Funds Various $ 2,746.9
$ 1,008.0
$ 860.4
$ 442.1
$ 1,302.6
1.3x 7 % 4 %
Fully Realized Funds Various $ 611.2
$ 2,128.2
$ 2,590.4
$ 136.6
$ 2,727.0
1.3x 4 % 2 %
Total Fully Committed Funds (6)

$ 3,136.2
$ 3,450.9
$ 578.7
$ 4,029.6
1.3x 6 % 4 %
MRE Secondaries Fund II
2017 $ 1,198.2
$ 304.6
$ 70.7
$ 261.5
$ 332.1
1.1x 7 % Neg
All Other Funds in the Commitment Period Various $ 555.1
$ 126.1
$ 8.9
$ 117.8
$ 126.7
1.0x NM
NM
Total Funds in the Commitment Period (6)

$ 430.7
$ 79.5
$ 379.3
$ 458.8
1.1x 6 % Neg
TOTAL METROPOLITAN REAL ESTATE

$ 3,566.9
$ 3,530.4
$ 958.0
$ 4,488.4
1.3x 6 % 3 %
(6)Gross Internal Rate of Return (“Gross IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on investment contributions, distributions and unrealized value of the underlying funds, before management fees, expenses and carried interest at the AlpInvest level.

(7)Net Internal Rate of Return (“Net IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund.

~~(1)~~

Includes private equity and mezzanine primary fund investments, secondary fund investments and co-investments originated by the AlpInvest team, as well as real estate primary fund investments, secondary fund investments and co-investments originated by the Metropolitan Real Estate team. Excluded from the performance information shown are a) investments that were not originated by AlpInvest, and b) Direct Investments, which was spun off from AlpInvest in 2005, and c) LP co-investment vehicles advised by AlpInvest. As of June 30, 2020, these excluded investments represent $0.4 billion of AUM at AlpInvest.(8)As used herein, ‘Main Funds’ are each comprised of (i) an anchor mandate(s) (i.e., generally the largest account(s) within a strategy’s investment program) and (ii) AlpInvest’s other advisory client mandates with investment periods that fall within the relevant investment periods under the mandate of the anchor mandate(s) (but do not overlap with more than one such investment period). AlpInvest’s commingled funds, AlpInvest Secondaries Fund VI (“ASF VI”), ASF VII and AlpInvest Co-Investment Fund VII (“ACF VII”) are part of the Main Funds. Mezzanine Main Funds include mezzanine investments across all strategies (i.e., Primary Funds, Secondaries, and Co-Investments).


~~(2)~~	~~Represents the original cost of investments since inception of the fund.~~


~~(3)~~	~~To exclude the impact of FX, all AlpInvest foreign currency cash flows have been converted to Euro at the reporting period spot rate.~~


~~(4)~~	Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest. To exclude the impact of FX, all AlpInvest foreign currency cash flows have been converted to Euro at the reporting period spot rate.


~~(5)~~	~~Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.~~


~~(6)~~	~~Fully Committed funds are past the expiration date of the commitment period as defined in the respective limited partnership agreement.~~


~~(7)~~	Gross Internal Rate of Return (“Gross IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on investment contributions, distributions and unrealized value of the underlying investments, before management fees, expenses and carried interest at the AlpInvest/Metropolitan Real Estate level.

~~(8)~~


~~(9)~~	For funds marked “NM,” IRR may be positive or negative, but is considered not meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is negative as of reporting period end.


~~(10)~~	Aggregate includes Main Fund VII - Fund Investments, Main Fund VIII - Fund Investments, Main Fund IX - Fund Investments, Main Fund X - Fund Investments, Main Fund XI - Fund Investments, Main Fund IV - Mezzanine Investments, Main Fund V - Mezzanine Investments, AlpInvest CleanTech Funds and funds which are not included as part of a main fund.


~~(11)~~	~~Represents the U.S. dollar equivalent balance translated at the spot rate as of period end.~~

(9)Aggregate includes Main Fund VII - Fund Investments, Main Fund VIII - Fund Investments, Main Fund IX - Fund Investments, Main Fund X - Fund Investments, Main Fund XI - Fund Investments, Main Fund XII - Fund Investments, Main Fund IV - Mezzanine Investments, Main Fund V - Mezzanine Investments, all ‘clean technology’ private equity investments, all strategic co-investment mandates that invest in co-investment opportunities arising out of an investor’s own separate private equity relationships and invitations, all strategic capital mandates, any state-focused investment mandates, and all other investors whose investments are not reflected in a Main Fund.

(10)For funds marked “NM,” IRR may be positive or negative, but is not considered meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end.

(11)For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate.

(12)Represents the net accrued performance fee balance/(giveback obligation) as of the current quarter end. Total Net Accrued Carry excludes approximately $1.1 million of net accrued carry which was retained as part of the sale of MRE on April 1, 2021.

(13)"Main Fund" entries represent a combination of a commingled fund and SMA vehicles which together comprise a "program" vintage. Indented lines shown for AlpInvest Secondaries Funds VII, VI, V and AlpInvest Co-Investment Funds VII and VIII reflect a breakout of the commingled fund, which is part of the larger program vintage.

Liquidity and Capital Resources

Historical Liquidity and Capital Resources

We have historically required limited capital resources to support the working capital and operating needs of our business. Our management fees have largely covered our operating costs and all realized performance allocations, after covering the related compensation, are available for distribution to equityholders. Approximately 95% – 97% of all capital commitments to our funds are provided by our fund investors, with the remaining amount typically funded by Carlyle, our senior Carlyle professionals, advisors and other professionals.

We expect that the continued disruption in business activity and the financial markets created by the COVID-19 global pandemic may impact several sources of our liquidity, and we are therefore continuously and critically reviewing our liquidity and anticipated capital requirements. For example, limited opportunities to successfully exit investments due to, among other things, lower valuations, a lack of potential buyers with the financial resources to pursue acquisitions, and limited ability to conduct initial public offerings or follow-on offerings in equity capital markets, will impact cash flows from realized performance revenues. Additionally, cash flows from management fees may be impacted by, among other things, a slowdown in fundraising activity which would generate new fee-earning assets under management, the temporary deferral, or permanent loss, of management fees in our CLO business due to defaults or downgrades of underlying collateral, and lower transaction and advisory fees due to a slower pace of investment activity. On March 9, 2020, as a proactive and cautionary measure, we borrowed $250.0 million from our senior credit facility, which we subsequently repaid in June 2020. We believe that our current cash on hand, remaining available capacity under the senior credit facility and our other sources of liquidity provide sufficient liquidity to meet our obligations for at least the next twelve months.

Our Sources of Liquidity

We have multiple sources of liquidity to meet our capital needs, including cash on hand, annual cash flows, accumulated earnings and funds from our senior credit facility, which has $775.0 million of available capacity as of June 30, ~~2020. If we determine that market conditions are favorable after taking into account~~2021. We believe these sources will be sufficient to fund our ~~liquidity requirements, including~~capital needs for at least the amounts available under our senior credit facility, we may seek to issue and sell common shares in a registered public offering or a privately negotiated transaction, or we may issue additional senior notes, other debt or preferred equity.

next twelve months.

Cash and cash equivalents. Cash and cash equivalents were approximately ~~$555 million~~$1.6 billion at June 30, ~~2020.~~2021. However, a portion of this cash is allocated for specific business purposes, including, but not limited to, (i) performance allocations and incentive fee-related cash that has been received but not yet distributed as performance allocations and incentive fee-related compensation and amounts owed to non-controlling interests; (ii) proceeds received from realized investments that are allocable to non-controlling interests; and (iii) regulatory capital.

~~Corporate Treasury Investments.~~ These investments represent investments in U.S. Treasury and government agency obligations, commercial paper, certificates of deposit, other investment grade securities and other investments with original maturities of greater than three months when purchased. There were no corporate treasury investments at June 30, 2020.

After deducting cash amounts allocated to the specific requirements mentioned above, the remaining cash and cash equivalents, is approximately ~~$457 million~~$1.4 billion as of June 30, ~~2020.~~2021. This remaining amount will be used towards our primary liquidity needs, as outlined in the next section. This amount does not take into consideration ordinary course of business payables and reserves for specific business purposes.

114

Senior Revolving Credit Facility. On February 11, 2019, the Company entered into an amendment and restatement of its senior revolving credit facility. The capacity under the revolving credit facility is $775.0 million and is scheduled to mature on February 11, ~~2024, of which $775.0 million is available at June 30, 2020.~~2024. Principal amounts outstanding under the amended and restated revolving credit facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus an applicable margin not to exceed 0.50% ~~per annum,~~, or (b) at LIBOR plus an applicable margin not to exceed 1.50% per annum ~~(1.41%~~(1.35% at June 30, ~~2020)~~2021). As of June 30, ~~2020,~~2021, there was no balance outstanding under the senior revolving credit facility.

The senior revolving credit facility is unsecured. We are required to maintain management fee earning assets (as defined in the amended and restated senior revolving credit facility) of at least $75.0 billion and a total leverage ratio of less than 3.0 to 1.0, in each case, tested on a quarterly basis. Non-compliance with any of the financial or non-financial covenants without cure or waiver would constitute an event of default under the senior revolving credit facility. An event of default resulting from a breach of certain financial or non-financial covenants may result, at the option of the lenders, in an acceleration of the principal and interest outstanding, and a termination of the senior revolving credit facility. The senior credit facility also contains other customary events of default, including defaults based on events of bankruptcy and insolvency, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control and material inaccuracy of representations and warranties.

Global Credit Revolving Credit Facility. In December 2018, certain subsidiaries of the Company established a $250.0 million revolving line of credit, primarily intended to support certain lending activities within the Global Credit segment. The credit facility includes a $125.0 million line of credit with a one-year term, which was amended in December 2020 to extend its maturity to December 2021, and a $125.0 million line of credit with a three-year term. ~~The revolving line of credit was extended by one year in December 2019.~~ Principal amounts outstanding under the facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus applicable margin not to exceed 1.00%, or (b) at the Eurocurrency rate plus an applicable margin not to exceed 2.00%. As of June 30, 2021, there was no balance outstanding under the revolving credit facility.

CLO Borrowings. For certain of our CLOs, the Company finances a portion of its investment in the CLOs through the proceeds received from term loans and other financing arrangements with financial institutions or other financing arrangements. The Company’s outstanding CLO borrowings were ~~$324.4~~$210.0 million and ~~$324.9~~$356.1 million at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The CLO borrowings are secured by the Company’s investments in the respective CLO, have a general unsecured interest in the Carlyle entity that manages the CLO, and generally do not have recourse to any other Carlyle entity. As of June 30, ~~2020, $306.4~~2021, $191.0 million of these borrowings are secured by investments attributable to The Carlyle Group Inc. See Note 5 of the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on our CLO borrowings.

Senior Notes. Certain indirect finance subsidiaries of the Company have issued senior notes, on which interest is payable semi-annually, as discussed below. The senior notes are unsecured and unsubordinated obligations of the respective subsidiary and are fully and unconditionally guaranteed, jointly and severally, by the Company and each of the Carlyle Holdings partnerships. The indentures governing each of the senior notes contain customary covenants that, among other things, limit the issuers’ and the guarantors’ ability, subject to certain exceptions, to incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease assets. The notes also contain customary events of default. All or a portion of the notes may be redeemed at our option, in whole or in part, at any time and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the notes. If a change of control repurchase event occurs, the notes are subject to repurchase at the repurchase price as set forth in the notes.

3.500% Senior Notes. In September 2019, Carlyle Finance Subsidiary L.L.C. issued $425.0 million of 3.500% senior notes due September 19, 2029 at 99.841% of par.

5.650% Senior Notes. In September 2018, Carlyle Finance L.L.C. issued $350.0 million of 5.650% senior notes due September 15, 2048 at 99.914% of par.

3.875% Senior Notes. In January 2013, Carlyle Holdings Finance L.L.C. issued $500.0 million of 3.875% senior notes due February 1, 2023 at 99.966% of par. In September 2018, we completed a tender offer to purchase $250.0 million in aggregate principal amount of these notes. As of June 30, ~~2020,~~2021, $250.0 million of these notes remain outstanding.

5.625% Senior Notes. In March 2013, Carlyle Holdings II Finance L.L.C. issued $400.0 million of 5.625% senior notes due March 30, 2043 at 99.583% of par. In March 2014, an additional $200.0 million of these notes were issued at 104.315% of par and are treated as a single class with the already outstanding $400.0 million aggregate principal amount of these notes.

Subordinated Notes. In May 2021, Carlyle Finance L.L.C. issued $435.0 million aggregate principal amount of 4.625% subordinated notes due May 15, 2061. In June 2021, an additional $65.0 million aggregate principal amount of these subordinated notes were issued and are treated as a single series with the already outstanding $435.0 million aggregate principal amount. The subordinated notes are unsecured and subordinated obligations of the issuer and are fully and unconditionally guaranteed, jointly and severally, on a subordinated basis, by the Company, each of the Carlyle Holdings partnerships, and CG Subsidiary Holdings L.L.C., an indirect subsidiary of the Company. The indentures governing the subordinated notes contain

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customary covenants that, among other things, limit the issuers’ and the guarantors’ ability, subject to certain exceptions, to incur indebtedness ranking on a parity with the subordinated notes or indebtedness ranking junior to the subordinated notes secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease all or substantially all of their assets. The subordinated notes also contain customary events of default. All or a portion of the notes may be redeemed at our option, in whole or in part, at any time and from time to time on or after June 15, 2026, prior to their stated maturity, at a redemption price equal to their principal amount plus any accrued and unpaid interest to, but excluding, the date of redemption. If interest due on the Subordinated Notes is deemed to no longer be deductible in the U.S., a “Tax Redemption Event”, the subordinated notes may be redeemed, in whole, but not in part, within 120 days of the occurrence of such event at a redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, the subordinated notes may be redeemed, in whole, but not in part, at any time prior to May 15, 2026, within 90 days of the rating agencies determining that the Subordinated Notes should no longer receive partial equity treatment pursuant to the rating agency’s criteria, a “rating agency event”, at a redemption price equal to 102% of their principal amount plus any accrued and unpaid interest to, but excluding, the date of redemption.

Obligations of CLOs. Loans payable of the Consolidated Funds represent amounts due to holders of debt securities issued by the CLOs. We are not liable for any loans payable of the CLOs. Several of the CLOs issued preferred shares representing the most subordinated interest, however these tranches are mandatorily redeemable upon the maturity dates of the senior secured loans payable, and as a result have been classified as liabilities under U.S. GAAP, and are included in loans payable of Consolidated Funds in our unaudited condensed consolidated balance sheets. Loans payable of the CLOs are collateralized by the assets held by the CLOs and the assets of one CLO may not be used to satisfy the liabilities of another. This collateral consists of cash and cash equivalents, corporate loans, corporate bonds and other securities.

Realized Performance Allocation Revenues. Another source of liquidity we may use to meet our capital needs is the realized performance allocation revenues generated by our investment funds. Performance allocations are generally realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return. For certain funds, performance allocations are realized once all invested capital and expenses have been returned to the fund’s investors and the fund’s cumulative returns are in excess of the preferred return. Incentive fees earned on our CLO vehicles generally are paid upon the dissolution of such vehicles.

Our accrued performance allocations by segment as of June 30, ~~2020,~~2021, gross and net of accrued giveback obligations, are set forth below:


Asset Class	Accrued Performance Allocations		Accrued Giveback Obligation		Net Accrued Performance Revenues
	(Dollars in millions)
Global Private Equity	$	6,679.7	$	(18.4)	$	6,661.3
Global Credit	231.9		(2.6)		229.3
Investment Solutions (1)	1,234.3		—		1,234.3
Total	$	8,145.9	$	(21.0)	$	8,124.9
Plus: Accrued performance allocations from NGP Carry Funds					1.1
Less: Accrued performance allocation-related compensation					(4,043.8)

Less: Deferred taxes on certain foreign accrued performance allocations					(62.3)
Less: Net accrued performance allocations attributable to non-controlling interests in consolidated entities					(14.5)
Net accrued performance revenues before timing differences					4,005.4

Less/Plus: Timing differences between the period when accrued performance allocations are realized and the period they are collected/distributed					1.2
Net accrued performance revenues attributable to The Carlyle Group Inc.					$	4,006.6

Asset Class
Accrued
Performance Allocations

Accrued
Giveback
Obligation

Net Accrued
Performance
Revenues
(Dollars in millions)
Corporate Private Equity $ 2,578.9
$ (6.1 ) $ 2,572.8
Real Assets 504.7
(16.9 ) 487.8
Global Credit 70.0
—
70.0
Investment Solutions ⁽¹⁾
638.6
—
638.6
Total $ 3,792.2
$ (23.0 ) $ 3,769.2
Less: Accrued performance allocation-related compensation (1,946.2 )
Plus: Receivable for giveback obligations from current and former employees 1.4
Less: Deferred taxes on accrued performance allocations (41.6 )
Less: Net accrued performance allocations attributable to non-controlling interests in consolidated entities 0.6
Net accrued performance revenues before timing differences 1,783.4
Less/Plus: Timing differences between the period when accrued performance allocations are realized
and the period they are collected/distributed
(0.1 )
Net accrued performance revenues attributable to The Carlyle Group Inc. $ 1,783.3

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The net accrued performance revenues attributable to The Carlyle Group Inc., excluding realized amounts, related to our carry funds and our other vehicles as of June 30, ~~2020,~~2021, as well as the carry fund appreciation (depreciation), is set forth below by segment (Dollars in millions):


														Carry Fund Appreciation/(Depreciation)(1)							Net Accrued Performance Revenues
	Carry Fund Appreciation/(Depreciation)⁽¹⁾										Net Accrued Performance Revenues			Quarter-to-Date		Year-to-Date	Last Twelve Months
	Q2 2019		Q3 2019		Q4 2019		Q1 2020		Q2 2020					Q2 2020			Q2 2021		Q2 2020				Q2 2021			Q2 2020			Q2 2021
Overall Carry Fund Appreciation/(Depreciation)	2	%	2	%	2	%	(7	)%	5	%			Overall Carry Fund Appreciation/(Depreciation)	5	%		11	%	(3)	%	25	%		1	%		43	%

Global Private Equity(2):													Global Private Equity(2):																	$	3,631.6
Corporate Private Equity	1	%	1	%	3	%	(8	)%	13	%	$	1,399.6	Corporate Private Equity	13	%		12	%	3	%	28	%		7	%		51	%		3,213.2

Real Assets⁽²⁾:	—	%	—	%	—	%	(12	)%	3	%	261.9
Real Estate	6	%	3	%	1	%	(1	)%	2	%	258.6		Real Estate	2	%		11	%	1	%	15	%		6	%		24	%		376.3
Natural Resources	(4	)%	(3	)%	(1	)%	(22	)%	3	%	5.9		Natural Resources	3	%		9	%	(19)	%	17	%		(23)	%		23	%		45.7

Global Credit Carry Funds ⁽³⁾	1	%	(2	)%	(1	)%	(21	)%	8	%	38.1

Investment Solutions Carry Funds ⁽⁴⁾	4	%	7	%	1	%	1	%	(6	)%	83.7
Global Credit Carry Funds													Global Credit Carry Funds	8	%		8	%	(13)	%	16	%		(17)	%		32	%		123.6

Investment Solutions Carry Funds (3)													Investment Solutions Carry Funds (3)	(6)	%		12	%	(4)	%	28	%		3	%		47	%		251.4

Net Accrued Performance Revenues											$	1,783.3	Net Accrued Performance Revenues																	$	4,006.6

(1) Appreciation/(Depreciation) represents unrealized gain/(loss) for the period on a total return basis before fees and expenses. The percentage of return is calculated as: ending remaining investment fair market value plus net investment outflow (sales proceeds minus net purchases) minus beginning remaining investment fair market value divided by beginning remaining investment fair market value. Amounts are fund only, and do not include coinvestments.

(2) Includes $~~2.6~~3.6 million of net accrued clawback from our Legacy Energy funds.

(3) Global Credit carry funds account for 23% of Global Credit AUM as of June 30, 2020, and include our Energy Mezzanine funds, which experienced appreciation of 9% during the second quarter, following depreciation of 30% in the first quarter.

~~(4)~~ The Company’s primary and secondary investments in external funds are generally valued based on its proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days. As a result, amounts presented may not include the impact of economic activity in the current quarter.

Realized Principal Investment Income. Another source of liquidity we may use to meet our capital needs is the realized principal investment income generated by our equity method investments and other principal investments. Principal investment income is realized when we redeem all or a portion of our investment or when we receive or are due cash income, such as dividends or distributions. Certain of the investments attributable to The Carlyle Group Inc. (excluding certain general partner interests, strategic investments, and investments in certain CLOs) may be sold at our discretion as a source of liquidity. During the three months ended June 30, 2021, we sold approximately $142.5 million of investments in U.S. CLOs and used the proceeds to repay outstanding CLO borrowings (see Note 5 to the condensed consolidated financial statements).

Investments as of June 30, ~~2020~~2021 consist of the following:

Investments in Carlyle Funds
Investments
in NGP⁽¹⁾
Total
(Dollars in millions)
Investments, excluding performance allocations $ 1,805.6
$ 378.2
$ 2,183.8
Less: Amounts attributable to non-controlling interests in consolidated entities (165.2 ) —
(165.2 )
Plus: Investments in Consolidated Funds, eliminated in consolidation 93.1
—
93.1
Less: Strategic equity method investments in NGP Management —
(378.2 ) (378.2 )
Total investments attributable to The Carlyle Group Inc., exclusive of NGP Management $ 1,733.5
$ —
$ 1,733.5


	Investments in Carlyle Funds		Investments in NGP(1)		Total
	(Dollars in millions)
Investments, excluding performance allocations	$	2,121.5	$	374.9	$	2,496.4
Less: Amounts attributable to non-controlling interests in consolidated entities	(233.3)		—		(233.3)
Plus: Investments in Consolidated Funds, eliminated in consolidation	161.4		—		161.4
Less: Strategic equity method investments in NGP Management	—		(373.8)		(373.8)
Less: Investment in NGP general partners - accrued performance allocations	—		(1.1)		(1.1)

Total investments attributable to The Carlyle Group Inc., exclusive of NGP Management	$	2,049.6	$	—	$	2,049.6

(1) See Note 4 to our unaudited condensed consolidated financial statements.

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Our investments as of June 30, ~~2020,~~2021, can be further attributed as follows (Dollars in millions):

Investments in Carlyle Funds, excluding CLOs:
Corporate Private Equity funds $ 390.9
Real Assets funds⁽¹⁾
188.8
Global Credit funds ⁽²⁾
610.4
Investment Solutions funds ⁽³⁾
40.6
Total investments in Carlyle Funds, excluding CLOs 1,230.7
Investments in CLOs 420.2
Other investments 82.6
Total investments attributable to The Carlyle Group Inc. 1,733.5
CLO loans and other borrowings attributable to The Carlyle Group Inc. ⁽⁴⁾
(310.4 )
Total investments attributable to The Carlyle Group Inc., net of CLO loans and other borrowings $ 1,423.1



Investments in Carlyle Funds, excluding CLOs:
Global Private Equity funds(1)	$	807.0

Global Credit funds (2)	742.1
Investment Solutions funds (3)	63.9
Total investments in Carlyle Funds, excluding CLOs	1,613.0
Investments in CLOs	345.7
Other investments	90.9
Total investments attributable to The Carlyle Group Inc.	2,049.6
CLO loans and other borrowings attributable to The Carlyle Group Inc. (4)	(191.0)
Total investments attributable to The Carlyle Group Inc., net of CLO loans and other borrowings	$	1,858.6

(1) Excludes our strategic equity method investment in NGP Management and investments in NGP general partners - accrued performance allocations.

(2) Includes the Company’s investment in Fortitude Re, which was contributed to Carlyle FRL, a Carlyle-affiliated investment fund, in June 2020 as discussed in Note 4 to the consolidated financial statements. This investment has a carrying value of $613.3 million as of June 30, 2021.

(3) The Company’s primary and secondary investments in external funds are generally valued based on its proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days. As a result, amounts presented may not include the impact of economic activity in the current quarter.

(4) Of the ~~$324.4~~$210.0 million in total CLO borrowings as of June 30, ~~2020~~2021 and as disclosed in Note 5 to the consolidated financial statements, ~~$306.4~~$191.0 million are collateralized by investments attributable to The Carlyle Group Inc. ~~Also includes $4.0~~The remaining $19.0 million ofin total CLO borrowings ~~under a credit facility~~are collateralized by investments attributable to ~~fund Carlyle Capital Solutions investments.~~non-controlling interests.

Our Liquidity Needs

We generally use our working capital and cash flows to invest in growth initiatives, service our debt, fund the working capital needs of our business and investment funds and pay dividends to our common stockholders.

In the future, we expect that our primary liquidity needs will be to:

•provide capital to facilitate the growth of our existing business lines;

•provide capital to facilitate our expansion into new, complementary business lines, including acquisitions;

•pay operating expenses, including compensation and compliance costs and other obligations as they arise;

•fund costs of litigation and contingencies, including related legal costs;

•fund the capital investments of Carlyle in our funds;

•fund capital expenditures;

•repay borrowings and related interest costs and expenses;

•pay earnouts and contingent cash consideration associated with our acquisitions and strategic investments;

•pay income taxes, including corporate income taxes following the Conversion;

•pay dividends to our common stockholders in accordance with our dividend policy, and;

•make installment payments under the deferred obligation to former holders of Carlyle Holdings partnership units,

which were exchanged in the Conversion, and;

•repurchase our common stock.

~~Preferred Unit Distributions and Redemption.~~ With respect to distribution year 2019, the Board of Directors declared a distribution to preferred unitholders totaling approximately $19.1 million. In October 2019, we completed the redemption of our preferred units for $25.339757 per unit, which is equal to $25.25 per Preferred Unit plus declared and unpaid distributions to, but excluding, the redemption date.

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Common Stockholder Dividends. Our intention is to pay dividends to holders of our common stock in an ~~initial~~ amount of $0.25 per share of common stock ($1.00 per share annually), subject to the discretion of our Board of Directors and compliance with applicable law. For U.S. federal income tax purposes, any dividends we pay following the Conversion generally will be treated as qualified dividend income (generally taxable to U.S. individual stockholders at capital gain rates) paid by a domestic corporation to the extent paid out of or current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, with any excess dividends treated as return of capital to the extent of the stockholder’s basis. The declaration and payment of dividends to holders of our common stock will be at the sole discretion of our Board of Directors, and our dividend policy may be changed at any time.

With respect to distribution year ~~2020,~~2021, the Board of Directors has declared a dividend to common stockholders totaling approximately ~~$175.5~~$178.0 million, or $0.50 per share, consisting of the following:


Common Stock Dividends - Dividend Year 2021
Quarter	Dividend per Common Share		Dividend to Common Stockholders		Record Date	Payment Date
(Dollars in millions, except per share data)
Q1 2021	$	0.25	$	88.7	May 11, 2021	May 19, 2021
Q2 2021	0.25		89.3		August 10, 2021	August 17, 2021


Total	$	0.50	$	178.0

Common Stock Dividends - Dividend Year 2020
Quarter Dividend per Common Share Dividend to Common Stockholders Record Date Payment Date
(Dollars in millions, except per share data)
Q1 2020 $ 0.25
$ 87.2
May 12, 2020 May 19, 2020
Q2 2020 0.25
88.3
August 11, 2020 August 18, 2020
Total $ 0.50
$ 175.5

With respect to distribution year ~~2019,~~2020, the Board of Directors declared cumulative dividends to common stockholders totaling approximately ~~$194.8~~$352.6 million, consisting of the following:


Common Stock Dividends - Dividend Year 2020
Quarter	Dividend per Common Share		Dividend to Common Stockholders		Record Date	Payment Date
(Dollars in millions, except per share data)
Q1 2020	$	0.25	$	87.2	May 12, 2020	May 19, 2020
Q2 2020	0.25		88.3		August 11, 2020	August 18, 2020
Q3 2020	0.25		88.4		November 10, 2020	November 17, 2020
Q4 2020	0.25		88.7		February 16, 2021	February 23, 2021
Total	$	1.00	$	352.6

Common Stock Dividends - Dividend Year 2019
Quarter Dividend per Common Share
Dividend to Common Stockholders⁽¹⁾
Record Date Payment Date
(Dollars in millions, except per share data)
Q1 2019 $ 0.19
$ 21.0
May 13, 2019 May 20, 2019
Q2 2019 0.43
49.9
August 12, 2019 August 19, 2019
Q3 2019 0.31
36.5
November 12, 2019 November 19, 2019
Q4 2019 0.25
87.4
February 18, 2020 February 25, 2020
Total $ 1.18
$ 194.8

~~(1) The dividend~~Dividends to common stockholders ~~for Q4 2019 reflects~~paid during the ~~exchange~~six months ended June 30, 2021 totaled $177.4 million, including the amount paid in February 2021 of ~~all Carlyle Holdings partnership units to shares~~$0.25 per common share in respect of ~~common stock in The Carlyle Group Inc. in connection with~~ the ~~Conversion on January 1,~~fourth quarter of 2020.

Dividends to common stockholders paid during the six months ended June 30, 2020 totaled $174.6 million, including the amount paid in February 2020 of $0.25 per common share in respect of the fourth quarter of 2019. Distributions to common stockholders paid during the six months ended June 30, 2019 totaled $68.5 million, including the amount paid in February 2019 of $0.43 per common share in respect of the fourth quarter of 2018.

Fund Commitments. Generally, we intend to have Carlyle commit to fund approximately 0.75% ~~to 1%~~ of the capital commitments to our future carry funds, although we may elect to invest additional amounts in funds focused on new investment areas. We may, from time to time, exercise our right to purchase additional interests in our investment funds that become available in the ordinary course of their operations. We expect our senior Carlyle professionals and employees to continue to make significant capital contributions to our funds based on their existing commitments, and to make capital commitments to future funds consistent with the level of their historical commitments. We also intend to make investments in our open-end funds and our CLO vehicles. Our investments in our European CLO vehicles will comply with the risk retention rules as discussed in “Risk Retention Rules” later in this section.

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Since our inception through June 30, ~~2020,~~2021, we and our senior Carlyle professionals, operating executives and other professionals have invested or committed to invest in or alongside our funds. Approximately 3% to 5% of all capital commitments to our funds are funded collectively by us and our senior Carlyle professionals, operating executives and other professionals. The current unfunded commitment of Carlyle and our senior Carlyle professionals, operating executives and other professionals to our investment funds as of June 30, ~~2020,~~2021, consisted of the following (Dollars in millions):

Asset Class
Unfunded
Commitment
Corporate Private Equity $ 2,187.2
Real Assets 924.3
Global Credit 356.9
Investment Solutions 232.5
Total $ 3,700.9


Asset Class	Unfunded Commitment

Global Private Equity	$	2,701.4

Global Credit	346.6
Investment Solutions	301.2
Total	$	3,349.2

A substantial majority of the remaining commitments are expected to be funded by senior Carlyle professionals, operating executives and other professionals through our internal co-investment program. Of the ~~$3.7~~$3.3 billion of unfunded commitments, approximately ~~$3.1~~$2.8 billion is subscribed individually by senior Carlyle professionals, operating executives and other professionals, with the balance funded directly by the Company.

Repurchase Program. In December 2018, the Board of Directors authorized the repurchase of up to $200 million of common stock and/or Carlyle Holdings units. In connection with the Conversion, in January 2020 our Board of Directors re-authorized the repurchase ~~program.~~program with regard to our common stock. In February 2021, the Board of Directors replenished the repurchase program to its limit of $200 million of common stock in aggregate from its maximum remaining repurchase amount of $139.1 million. This program authorizes the repurchase of shares of common stock from time to time in open market transactions, in privately negotiated transactions or otherwise. During the six months ended June 30, ~~2020,~~2021, we paid an aggregate of ~~$26.4~~$25.0 million to repurchase and retire approximately ~~1.1~~0.6 million shares of common stock with all of the repurchases done via open market and brokered transactions. As of June 30, ~~2020, $139.1~~2021, $175.0 million of repurchase capacity remains under the program.

Cash Flows

The significant captions and amounts from our consolidated statements of cash flows which include the effects of our Consolidated Funds and CLOs in accordance with U.S. GAAP are summarized below.


	Six Months Ended June 30,
	2021		2020
	(Dollars in millions)
Statements of Cash Flows Data
Net cash provided by (used in) operating activities, including investments in Carlyle funds	$	595.3	$	(76.9)
Net cash used in investing activities	(11.7)		(23.7)
Net cash provided by (used in) financing activities	69.7		(160.0)
Effect of foreign exchange rate changes	(25.7)		(8.4)
Net change in cash, cash equivalents and restricted cash	$	627.6	$	(269.0)

Six Months Ended June 30,
2020 2019
(Dollars in millions)
Statements of Cash Flows Data
Net cash provided by (used in) operating activities, including investments in Carlyle funds $ (76.9 ) $ 269.0
Net cash used in investing activities (23.7 ) (23.7 )
Net cash used in financing activities (160.0 ) (202.3 )
Effect of foreign exchange rate changes (8.4 ) 2.3
Net change in cash, cash equivalents and restricted cash $ (269.0 ) $ 45.3

Net Cash Provided by (Used In) Operating Activities. Net cash provided by (used in) operating activities includes the investment activity of our Consolidated Funds. Excluding this activity, net cash provided by operating activities was primarily driven by our earnings in the respective periods after adjusting for significant non-cash activity, including non-cash performance allocations and incentive fees, the related non-cash performance allocations and incentive fee related compensation, non-cash equity-based compensation, and depreciation, amortization and impairments, all of which are included in earnings.

Cash flows from operating activities during the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, excluding the activities of our Consolidated Funds, ~~was $61.8~~were $580.7 million and ~~$233.8~~$61.8 million, respectively. Operating cash inflows primarily include the receipt of management fees, realized performance allocations and incentive fees, while operating cash outflows primarily include payments for operating expenses, including compensation and general, administrative, and other expenses. During both the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, net cash provided by operating activities primarily included the receipt of management fees and realized performance allocations and incentive fees, totaling approximately ~~$1.1~~$1.4 billion and ~~$0.8~~$1.1 billion, respectively. These inflows were offset by payments for compensation and general, administrative and other expenses of approximately ~~$0.6~~$0.7 billion ~~and $0.8 billion~~ for both the six months ended June 30, ~~2020~~2021 and ~~2019, respectively.~~2020.

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Cash used to purchase investments as well as the proceeds from the sale of such investments are also reflected in our operating activities as investments are a normal part of our operating activities. During the six months ended June 30, ~~2020,~~2021, investment proceeds were ~~$166.2~~$398.2 million while investment purchases were ~~$244.2~~$103.4 million. During the six months ended June 30, ~~2019,~~2020, investment proceeds were ~~$214.6~~$166.2 million as compared to purchases of ~~$107.0~~$244.2 million.

The net cash provided by operating activities for the six months ended June 30, ~~2020~~2021 and ~~2019~~2020 also reflects the investment activity of our Consolidated Funds. For the six months ended June 30, 2021, purchases of investments by the Consolidated Funds were $2,700.4 million, while proceeds from the sales and settlements of investments by the Consolidated Funds were $2,426.9 million. For the six months ended June 30, 2020, purchases of investments by the Consolidated Funds were $1,046.4 million, while proceeds from the sales and settlements of investments by the Consolidated Funds were $1,088.6 million. For the six months ended June 30, 2019, purchases of investments by the Consolidated Funds were $827.2 million, while proceeds from the sales and settlements of investments by the Consolidated Funds were $1,032.8 million.

Net Cash Used In Investing Activities. Our investing activities generally reflect cash used for acquisitions, fixed assets and software for internal use. For the six months ended June 30, ~~2020,~~2021, cash used in investing activities principally reflects purchases of fixed ~~assets.~~assets, partially offset by proceeds received from the sale of MRE of $5.9 million. Purchases of fixed assets were $17.6 million and $23.7 million for ~~both~~ the six months ended June 30, 2021 and 2020, ~~and 2019.~~respectively.

Net Cash Provided by (Used in) Financing Activities. Net cash provided by (used in) financing activities during the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, excluding the activities of our Consolidated Funds, was $68.5 million and $(293.5) million, respectively. During the six months ended June 30, 2021, the Company received proceeds of $484.2 million from the issuance of subordinated notes, and ~~$(162.0) million.~~made $141.8 million of net repayments on borrowings used to finance a portion of our investments in the CLOs. We made no borrowings or repayments under the revolving credit facilities during the six months ended June 30, 2021. For the six months ended June 30, 2020, the Company received net proceeds of $263.8 million from borrowings and made $295.6 million in repayments under the revolving credit facilities, and repaid $295.6 million. For the six months ended June 30, 2019, the Company received net proceeds of $20.4 million from the issuance of various CLO borrowings, and repaid a $25.0 million term loan under its senior credit facility. See Note 5 to the unaudited condensed consolidated financial statements for more information on these borrowings.facilities. The Company also paid $68.8 million in both January 2020 and 2021, representing the first and second annual ~~installment~~installments of the deferred consideration payable to former Carlyle Holdings unitholders in connection with the Conversion.

~~Distributions~~Dividends paid to our common stockholders were ~~$174.6~~$177.4 million and ~~$68.5~~$174.6 million for the six months ended June 30, 2021 and 2020, respectively. The Company paid $25.0 million and ~~2019, respectively. Distributions to the non-controlling interest holders in Carlyle Holdings were $143.2~~$26.4 million for the six months ended June 30, ~~2019. Distributions~~2021 and 2020, respectively, to ~~our preferred unitholders were $11.8~~repurchase and retire 0.6 million ~~for the six months ended June 30, 2019.~~and 1.1 million shares, respectively.

The net borrowings (payments) on loans payable by our Consolidated Funds during the six months ended June 30, 2021 and 2020 ~~and 2019~~ were ~~$134.6~~$(15.9) million and ~~$(40.3)~~$134.6 million, respectively. Contributions from non-controlling interest holders were ~~$14.0~~$44.4 million and ~~$9.1~~$14.0 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively, which relate primarily to contributions from the non-controlling interest holders in Consolidated Funds. For the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, distributions to non-controlling interest holders were ~~$35.2~~$42.9 million and ~~$31.9~~$35.2 million, respectively, which relate primarily to distributions to the non-Carlyle interests in majority-owned subsidiaries.

Our Balance Sheet

Total assets were ~~$12.3~~$19.6 billion at June 30, ~~2020, a decrease~~2021, an increase of ~~$1.5~~$4.0 billion from December 31, ~~2019.~~2020. The ~~decrease~~increase in total assets was primarily attributable to a ~~decrease~~$3.3 billion increase in investments, including ~~accrued~~ performance ~~allocations, of $0.8 billion~~allocation and ~~a decrease~~an increase in cash and cash equivalents of ~~$238.9 million.~~$0.6 billion. The ~~decrease~~increase in investments, including performance allocations, was largely driven by appreciation across our portfolio. The increase in cash was primarily due to the issuance of $500 million in subordinated notes and the receipt of management fees and realized performance revenues, partially offset by the payment of a deferred ~~purchase price adjustment for~~consideration related to our ~~investment in Fortitude Re, a $50.0 million investment in~~acquisition of Carlyle Aviation Partners, payment of the ~~preferred stock of TCG BDC, Inc., payment to the first~~second installment of deferred consideration to the former Carlyle Holdings unitholders, and payments for bonuses and payroll, dividends and income taxes, partially offset by the receipt of management fees and realized performance revenues. Investments of Consolidated Funds decreased $426.1 million due to fair value depreciation in our CLOs during the six months ended June 30, 2020, partially offset by the consolidation of one CLO.taxes. Cash and cash equivalents were approximately ~~$554.5 million~~$1.6 billion and ~~$793.4 million~~$1.0 billion at June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. ~~Our cash balance tends to be lower at June 30 and December 31 relative to other parts of the year given that many of our large funds pay management fees in July and January.~~

Total liabilities were ~~$10.2~~$15.0 billion at June 30, ~~2020, a decrease~~2021, an increase of ~~$659.2 million~~$2.3 billion from December 31, ~~2019.~~2020. The ~~decrease~~increase in liabilities was primarily attributable to ~~a decrease~~an increase in accrued compensation and benefits of ~~$137.0 million~~$1.3 billion due to the corresponding ~~decrease~~increase in accrued performance allocations as well as ~~a decrease~~an increase in debt obligations of ~~$32.6~~$336.6 million ~~(see Note 5). The decrease was also attributable to a decrease~~driven by the issuance of $500 million in ~~loans payable~~subordinated notes, partially offset by the repayment of ~~Consolidated Funds of $189.2 million and a decrease in other liabilities of Consolidated Funds of $110.6 million from December 31, 2019 to June 30, 2020.~~our U.S. CLO term loans.

The assets and liabilities of the Consolidated Funds are generally held within separate legal entities and, as a result, the assets of the Consolidated Funds are not available to meet our liquidity requirements and similarly the liabilities of the Consolidated Funds are non-recourse to us. For example, as previously discussed, the CLO term loans generally are secured by the Company’s investment in the CLO, have a general unsecured interest in the Carlyle entity that manages the CLO, and do not have recourse to any other Carlyle entity.

Our balance sheet without the effect of the Consolidated Funds can be seen in Note 16 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q. At June 30, ~~2020,~~2021, our total assets without the

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effect of the Consolidated Funds were ~~$7.6~~$13.3 billion, including cash and cash equivalents of ~~$0.6~~$1.6 billion and net accrued performance revenues of ~~$1.8~~$4.0 billion.

Unconsolidated Entities

Certain of our funds have entered into lines of credit secured by their investors’ unpaid capital commitments or by a pledge of the equity of the underlying investment. These lines of credit are used primarily to reduce the overall number of capital calls to investors or for working capital needs. In certain instances, however, they may be used for other investment related activities, including serving as bridge financing for investments. The degree of leverage employed varies among our funds.

Off-balance Sheet Arrangements

In the normal course of business, we enter into various off-balance sheet arrangements including sponsoring and owning limited or general partner interests in consolidated and non-consolidated funds, entering into derivative transactions, ~~entering into operating leases~~ and entering into guarantee arrangements. We also have ongoing capital commitment arrangements with certain of our consolidated and non-consolidated funds. We do not have any other off-balance sheet arrangements that would require us to fund losses or guarantee target returns to investors in any of our other investment funds.

For further information regarding our off-balance sheet arrangements, see Note 2 and Note 7 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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Contractual Obligations

The following table sets forth information relating to our contractual obligations as of June 30, ~~2020~~2021 on a consolidated basis and on a basis excluding the obligations of the Consolidated Funds:


	Jul. 1, 2021 to Dec. 31, 2021		2022-2023		2024-2025		Thereafter		Total
	(Dollars in millions)
Debt obligations (1)	$	—	$	271.2	$	16.6	$	2,047.2	$	2,335.0
Interest payable (2)	54.3		202.7		191.8		1,912.8		2,361.6
Other consideration (3)	1.6		196.4		83.8		—		281.8
Operating lease obligations (4)	27.8		121.3		106.8		397.9		653.8
Capital commitments to Carlyle funds (5)	3,353.5		—		—		—		3,353.5
Tax receivable agreement payments (6)	—		23.1		6.3		68.6		98.0
Loans payable of Consolidated Funds (7)	44.3		175.7		175.9		5,908.6		6,304.5
Unfunded commitments of the CLOs (8)	4.7		—		—		—		4.7

Consolidated contractual obligations	3,486.2		990.4		581.2		10,335.1		15,392.9
Loans payable of Consolidated Funds (7)	(44.3)		(175.7)		(175.9)		(5,908.6)		(6,304.5)
Capital commitments to Carlyle funds (5)	(2,819.3)		—		—		—		(2,819.3)
Unfunded commitments of the CLOs (8)	(4.7)		—		—		—		(4.7)

Carlyle Operating Entities contractual obligations	$	617.9	$	814.7	$	405.3	$	4,426.5	$	6,264.4

Jul. 1, 2020 to
Dec. 31, 2020 2021-2022 2023-2024 Thereafter Total
(Dollars in millions)
Debt obligations (including senior notes) (1) $ 4.0
$ 19.6
$ 250.0
$ 1,679.8
$ 1,953.4
Interest payable (2) 43.5
172.3
149.9
1,158.8
1,524.5
Other consideration (3) 3.0
227.9
161.5
—
392.4
Operating lease obligations (4) 27.9
104.8
101.8
434.3
668.8
Capital commitments to Carlyle funds (5) 3,733.7
—
114.9
—
3,848.6
Tax receivable agreement payments (6) —
2.4
23.4
81.6
107.4
Loans payable of Consolidated Funds (7) 43.7
173.5
173.8
5,202.7
5,593.7
Unfunded commitments of the CLOs (8) 1.7
—
—
—
1.7
Consolidated contractual obligations 3,857.5
700.5
975.3
8,557.2
14,090.5
Loans payable of Consolidated Funds (7) (43.7 ) (173.5 ) (173.8 ) (5,202.7 ) (5,593.7 )
Capital commitments to Carlyle funds (5) (3,147.5 ) —
—
—
(3,147.5 )
Unfunded commitments of the CLOs (8) (1.7 ) —
—
—
(1.7 )
Carlyle Operating Entities contractual obligations $ 664.6
$ 527.0
$ 801.5
$ 3,354.5
$ 5,347.6

(1)The table above assumes that no prepayments are made on the senior notes and that the outstanding balance, if any, on the senior credit facility is repaid on the maturity date of the senior credit facility, which is February 11, 2024. The CLO term loans are included in the table above based on the earlier of the stated maturity date or the date the CLO is expected to be dissolved. See Note 5 to the unaudited condensed consolidated financial statements for the various maturity dates of the CLO term loans and senior notes.

~~(1)~~

The table above assumes that no prepayments are made on the senior notes and that any outstanding balance on the senior credit facility is repaid on the maturity date of the senior credit facility, which is February 11, 2024. The CLO term loans are included in the table above based on the earlier of the stated maturity date or the date the CLO is expected to be dissolved. See Note 5 to the unaudited condensed consolidated financial statements for the various maturity dates of the CLO term loans and senior notes.

~~(2)~~

The interest rates on the debt obligations as of June 30, 2020 consist of: 3.500% on $425.0 million of senior notes, 5.650% on $350.0 million of senior notes, 3.875% on $250.0 million of senior notes, 5.625% on $600.0 million of senior notes, 1.41% on $250.0 million under the revolving credit facility, and a range of approximately 1.75% to 3.07% for our CLO term loans. Interest payments assume that no prepayments are made and loans are held until maturity with the exception of the CLO term loans, which are based on the earlier of the stated maturity date or the date the CLO is expected to be dissolved.

~~(3)~~

These obligations represent our estimate of amounts to be paid on the contingent cash obligations associated with our acquisition of Carlyle Aviation Partners and other obligations, as well as the deferred payment obligations described below. In connection with the Conversion, former holders of Carlyle Holdings partnership units will receive cash payments aggregating to approximately $344 million, which is equivalent to $1.50 per Carlyle Holdings partnership unit exchanged in the Conversion, payable in five annual installments of $0.30, the first of which occurred during the first quarter of 2020. The payment obligations are unsecured obligations of the Company or a subsidiary thereof, subordinated in right of payment to indebtedness of the Company and its subsidiaries, and do not bear interest.

~~(4)~~

We lease office space in various countries around the world and maintain our headquarters in Washington, D.C., where in June 2018, we entered into an amended non-cancelable lease agreement expiring on March 31, 2030. In July 2018, we entered into a new non-cancelable lease agreement expiring in 2036 for new office space in New York City. Our office leases in other locations expire in various years through 2032. The amounts in this table represent the minimum lease payments required over the term of the lease.

~~(5)~~

These obligations generally represent commitments by us to fund a portion of the purchase price paid for each investment made by our funds. These amounts are generally due on demand and are therefore presented in the less than one year category. A substantial majority of these investments is expected to be funded by senior Carlyle professionals and other professionals through our internal co-investment program. Of the $3.7 billion of unfunded commitments, approximately $3.1 billion is subscribed individually by senior Carlyle professionals, advisors and other professionals, with the balance funded directly by the Company. The amounts also include performance-based contingent cash and deferred payment obligations associated with our strategic investment in Fortitude Re, which would be payable to Carlyle FRL for further payment to AIG (see Note 4).

~~(6)~~

In connection with our initial public offering, we entered into a tax receivable agreement with the limited partners of the Carlyle Holdings partnerships whereby we agreed to pay such limited partners 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax realized as a result of increases in tax basis resulting from exchanges of Carlyle Holdings partnership units for common units of The Carlyle Group L.P. From and after the consummation of the Conversion, former holders of Carlyle Holdings partnership units do not have any rights to payments under the tax receivable agreement except for payment obligations pre-existing at the time of the Conversion with respect to exchanges that occurred prior to the Conversion. These obligations are more than offset by the future cash tax savings that we are expected to realize.

~~(7)~~

These obligations represent amounts due to holders of debt securities issued by the consolidated CLO vehicles. These obligations include interest to be paid on debt securities issued by the consolidated CLO vehicles. Interest payments assume that no prepayments are made and loans are held until maturity. For debt securities with rights only to the residual value of the CLO and no stated interest, no interest payments were included in this calculation. Interest payments on variable-rate debt securities are based on interest rates in effect as of June 30, 2020, at spreads to market rates pursuant to the debt agreements, and range from 0.40% to 8.87%.


~~(8)~~	~~These obligations represent commitments of the CLOs to fund certain investments. These amounts are generally due on demand and are therefore presented in the less than one year category.~~

(2)The interest rates on the debt obligations as of June 30, 2021 consist of: 3.500% on $425.0 million of senior notes, 5.650% on $350.0 million of senior notes, 3.875% on $250.0 million of senior notes, 5.625% on $600.0 million of senior notes, 4.625% on $500.0 million of subordinated notes, 3.875% on $250.0 million under the revolving credit facility, and a range of approximately 1.36% to 8.11% for our CLO term loans. Interest payments assume that no prepayments are made and loans are held until maturity with the exception of the CLO term loans, which are based on the earlier of the stated maturity date or the date the CLO is expected to be dissolved.

(3)These obligations represent our estimate of amounts to be paid on the contingent cash obligations associated with our acquisition of Carlyle Aviation Partners and other obligations, as well as the deferred payment obligations described below. In connection with the Conversion, former holders of Carlyle Holdings partnership units will receive cash payments aggregating to approximately $344 million, which is equivalent to $1.50 per Carlyle Holdings partnership unit exchanged in the Conversion, payable in five annual installments of $0.30, the second of which occurred during the first quarter of 2021. The payment obligations are unsecured obligations of the Company or a subsidiary thereof, subordinated in right of payment to indebtedness of the Company and its subsidiaries, and do not bear interest.

(4)We lease office space in various countries around the world and maintain our headquarters in Washington, D.C., where we entered into an amended non-cancelable lease agreement expiring on March 31, 2030. We entered into a new non-cancelable lease agreement expiring in 2036 for new office space in New York City. Our office leases in other locations expire in various years through 2032. The amounts in this table represent the minimum lease payments required over the term of the lease.

(5)These obligations generally represent commitments by us to fund a portion of the purchase price paid for each investment made by our funds. These amounts are generally due on demand and are therefore presented in the less than one year category. A substantial majority of these investments is expected to be funded by senior Carlyle professionals and other professionals through our internal co-investment program. Of the $3.3 billion of unfunded commitments, approximately $2.8 billion is subscribed individually by senior Carlyle professionals, advisors and other professionals, with the balance funded directly by the Company.

(6)In connection with our initial public offering, we entered into a tax receivable agreement with the limited partners of the Carlyle Holdings partnerships whereby we agreed to pay such limited partners 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax realized as a result of increases in tax basis resulting from exchanges of Carlyle Holdings partnership units for common units of The Carlyle Group L.P. From and after the consummation of the Conversion, former holders of Carlyle Holdings partnership units do not have any rights to payments under the tax receivable agreement except for payment obligations pre-existing at the time of the Conversion with respect to exchanges that occurred prior to the Conversion. These obligations are more than offset by the future cash tax savings that we are expected to realize.

(7)These obligations represent amounts due to holders of debt securities issued by the consolidated CLO vehicles. These obligations include interest to be paid on debt securities issued by the consolidated CLO vehicles. Interest payments assume that no prepayments are made and loans are held until maturity. For debt securities with rights only to the residual value of the CLO and no stated interest, no interest payments were included in this calculation. Interest payments on variable-rate debt securities are based on interest rates in effect as of June 30, 2021, at spreads to market rates pursuant to the debt agreements, and range from 0.30% to 8.76%.

(8)These obligations represent commitments of the CLOs to fund certain investments. These amounts are generally due on demand and are therefore presented in the less than one year category.

Excluded from the table above are liabilities for uncertain tax positions of ~~$16.5~~$25.1 million at June 30, ~~2020~~2021 as we are unable to estimate when such amounts may be paid.

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Contingent Cash Payments For Business Acquisitions and Strategic Investments

We have certain contingent cash obligations associated with our acquisition of Carlyle Aviation Partners and our strategic investment in Fortitude Re. For our acquisition of Carlyle Aviation Partners, the contingent cash payments relate to an earn-out of up to $150.0 million that is payable upon the achievement of certain revenue and earnings performance targets during 2020 through 2025, which ~~will be~~are accounted for as compensation expense. We accrue the compensation liability over the service period. If earned, payments would be made in the year following the performance year to which the payments relate. In March 2021, we paid $49.9 million related to the Carlyle Aviation Partners earn-out for the performance period ended December 31, 2020.

For our strategic investment in Fortitude Re, the contingent cash payments relate to performance-based contingent cash consideration payable to Carlyle FRL for further payment to AIG following December 31, 2023.

Based on the terms of the underlying contracts, the maximum amount that could be paid from contingent cash obligations associated with the acquisition of Carlyle Aviation Partners and the strategic investment in Fortitude Re as of June 30, ~~2020~~2021 is ~~$245.0~~$195.1 million versus the ~~liabilities~~amounts recognized on the balance sheet of ~~$32.1~~$119.3 million.

Risk Retention Rules

We will continue to comply with the risk retention rules governing CLOs issued in Europe for which we are a sponsor, which require a combination of capital from our balance sheet, commitments from senior Carlyle professionals, and/or third party financing.

Guarantees

In December 2019, we entered into an agreement with a financial institution pursuant to which we provided a guarantee on a revolving credit facility with a capacity of $130.0 million for a fund in the Real Assets segment. The outstanding balance, which was $125.0 million as of June 30, 2020, is secured by uncalled capital commitments of the fund’s limited partners. Subsequent to June 30, 2020, the fund canceled outstanding letters of credit and repaid amounts outstanding totaling $39.5 million. We have not funded any amounts under the guarantee to date, and the fair value of the guarantee is not significant to the consolidated financial statements.

See Note 7 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for information related to all of our material guarantees.

Indemnifications

In many of our service contracts, we agree to indemnify the third-party service provider under certain circumstances. The terms of the indemnities vary from contract to contract, and the amount of indemnification liability, if any, cannot be determined and has not been included in the table above or recorded in our unaudited condensed consolidated financial statements as of June 30, ~~2020.~~2021.

Other Contingencies

In the ordinary course of business, we are a party to litigation, investigations, inquiries, employment-related matters, disputes and other potential claims. We discuss certain of these matters in Note 7 to the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Carlyle Common Stock ~~and Carlyle Holdings Partnership Units~~

A rollforward of our common stock outstanding ~~and Carlyle Holdings partnership units~~ from December 31, ~~2019~~2020 through June 30, ~~2020~~2021 is as follows:

Shares as of December 31, 2019
Shares
Issued
Shares
Forfeited Shares
Exchanged Shares Repurchased / Retired Shares as of June 30, 2020
The Carlyle Group Inc. common shares 117,840,651
2,625,422
—
229,318,248
(1,090,437 ) 348,693,884
Carlyle Holdings partnership units 229,318,248
—
—
(229,318,248 ) —
—
Total 347,158,899
2,625,422
—
—
(1,090,437 ) 348,693,884


	Shares as of December 31, 2020	Shares Issued	Shares Forfeited	Shares Repurchased / Retired	Shares as of June 30, 2021
The Carlyle Group Inc. common shares	353,520,576	1,571,706	—	(630,133)	354,462,149

Shares of The Carlyle Group Inc. common stock issued during the period from December 31, ~~2019~~2020 through June 30, ~~2020~~2021 relate to the vesting of the Company’s restricted stock units during the six months ended June 30, 2020. The Carlyle Holdings partnership units exchanged relate to the exchange of Carlyle Holdings partnership units for an equivalent number of shares of common stock of the Company on January 1, 2020 pursuant to the Conversion.2021.

The total shares as of June 30, ~~2020~~2021 as shown above exclude approximately ~~4.6~~2.9 million common shares in connection with the vesting of restricted stock units subsequent to June 30, ~~2020~~2021 that will participate in the common shareholder dividend that will be paid August ~~18, 2020.~~17, 2021.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our primary exposure to market risk is related to our role as general partner or investment advisor to our investment funds and the sensitivities to movements in the fair value of their investments, including the effect on management fees, incentive fees and investment income, including performance allocations. Although our investment funds share many common themes, each of our asset management asset classes runs its own investment and risk management processes, subject to our overall risk tolerance and philosophy. The investment process of our investment funds involves a comprehensive due diligence approach, including review of reputation of shareholders and management, company size and sensitivity of cash flow

124

generation, business sector and competitive risks, portfolio fit, exit risks and other key factors highlighted by the deal team. Key investment decisions are subject to approval by both the fund-level managing directors, as well as the investment committee, which is generally comprised of one or more of the three founding partners, one “sector” head, one or more operating executives and senior investment professionals associated with that particular fund. Once an investment in a portfolio company has been made, our fund teams closely monitor the performance of the portfolio company, generally through frequent contact with management and the receipt of financial and management reports.

There was no material change in our market risks during the three months ended June 30, ~~2020.~~2021. For additional information, refer to our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports 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 ~~co-principal~~principal executive ~~officers~~officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon 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. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives.

Our management, with the participation of our ~~co-principal~~principal executive ~~officers~~officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation and subject to the foregoing, our ~~co-principal~~principal executive ~~officers~~officer and principal financial officer concluded that, as of the end of the period covered by this report, the design and operation of our disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended June 30, ~~2020~~2021 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

125

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

The information required with respect to this item can be found under “Legal Matters” in Note 7, Commitments and Contingencies, of the notes to the Company’s unaudited condensed consolidated financial statements contained in this quarterly report, and such information is incorporated by reference into this Item 1.

Item 1A. Risk Factors

For a discussion of our potential risks and uncertainties, see the information under Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2019 and our Quarterly Report on Form 10-Q for the period ended March 31,~~ 2020.

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

Issuer Purchases of Equity Securities

~~We did not repurchase any shares~~The following table sets forth repurchases of our common stock during the three months ended June 30, ~~2020.~~2021 for the periods indicated:


Period	(a) Total number of shares purchased	(b) Average price paid per share		(c) Total number of shares purchased as part of publicly announced plans or programs	(d) Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs
	(Dollars in millions, except unit and per unit data)
April 1, 2021 to April 30, 2021 (1)	—	$	—	—	$	190.0
May 1, 2021 to May 31, 2021 (1)(2)	349,961	$	42.86	349,961	$	175.0
June 1, 2021 to June 30, 2021 (1)	—	$	—	—	$	175.0
Total	349,961			349,961

(1)In December 2018, our Board of Directors authorized the repurchase of up to $200 million of common stock and/or Carlyle Holdings units. ~~As part of the Conversion, in~~In January 2020 our Board of Directors re-authorized the December 2018 repurchase program with regard to our common ~~stock.~~stock, and in February 2021, our Board of Directors replenished the repurchase program to its limit of $200 million of common stock in aggregate. The timing and actual number of shares of common stock repurchased will depend on a variety of factors, including legal requirements, price, and economic and market conditions. This share repurchase program may be suspended or discontinued at any time and does not have a specified expiration date.

(2)All of the shares of common stock purchased during this period were purchased in open market and brokered transactions and were subsequently retired.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On July 21, 2020, we announced that Glenn A. Youngkin will retire as Co-Chief Executive Officer of the Company, effective September 30, 2020, and will also step down from the Board of Directors of the Company at that time. Kewsong Lee has been appointed as sole Chief Executive Officer following Mr. Youngkin’s retirement. Following his retirement, we expect that Mr. Youngkin (and his family members and investment vehicles, as applicable) will continue to fulfill the existing approximately $79 million of outstanding unfunded commitments to invest in and alongside the investment funds we advise or manage in accordance with the partnership agreements and related governing documentation for such coinvestments. Such coinvestment commitments generally do not require the payment of management fees or performance allocations, however, they do require payment of a pro-rata portion of partnership expenses.Not applicable.

126

Item 6. Exhibits

The following is a list of all exhibits filed or furnished as part of this report:


Exhibit No.		Description

~~Exhibit No.~~		~~Description~~

3.1	Certificate of Conversion of The Carlyle Group L.P. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 2, 2020).

3.2		Certificate of Incorporation of The Carlyle Group Inc. (incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 2, 2020).

3.3		Bylaws of The Carlyle Group Inc. (incorporated by reference to Exhibit 3.3 to the Registrant's Current Report on Form 8-K filed with the SEC on January 2, 2020).

4.1		Subordinated Indenture dated as of May 11, 2021 among Carlyle Finance L.L.C., the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.1 to The Carlyle Group Inc. Current Report on Form 8-K filed on May 11, 2021).

4.2		First Supplemental Indenture dated as of May 11, 2021 among Carlyle Finance L.L.C., the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.2 to The Carlyle Group Inc. Current Report on Form 8-K filed on May 11, 2021).

4.3		Second Supplemental Indenture dated as of June 8, 2021 among Carlyle Finance L.L.C., the Guarantors named therein and The Bank of New York Mellon Trust Company, N.A., as trustee (incorporated by reference to Exhibit 4.3 to The Carlyle Group Inc. Current Report on Form 8-K filed on June 8, 2021).

4.4		Form of 4.625% Subordinated Note due 2061 (incorporated by reference to Exhibit 4.4 to The Carlyle Group Inc. Current Report on Form 8-K filed on June 8, 2021).

10.1+		The Carlyle Group Inc. Amended and Restated 2012 Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to The Carlyle Group Inc. Current Report on Form 8-K filed on June 1, 2021).

22 *		Senior and Subordinated Notes, Issuers and Guarantors

31.1 *		Certification of the ~~co-principal~~principal executive officer pursuant to Rule 13a – 14(a).

31.2 *		~~Certification of the co-principal executive officer pursuant to Rule 13a – 14(a).~~

31.3 *	Certification of the principal financial officer pursuant to Rule 13a – 14(a).

32.1 *		Certification of the ~~co-principal~~principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 *		~~Certification of the co-principal executive officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

32.3 *	Certification of the principal financial officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH		Inline XBRL Taxonomy Extension Schema Document.

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		The cover page from The Carlyle Group Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, ~~2020,~~2021, formatted in Inline XBRL (included within the Exhibit 101 attachments).


*		Filed herewith.
+		Management contract or compensatory plan or arrangement in which directors and/or executive officers are eligible to participate.

*	~~Filed herewith.~~

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

127

SIGNATURE

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.

The Carlyle Group Inc.

Date: July ~~30, 2020~~29, 2021

By:

/s/ Curtis L. Buser

Name:

Curtis L. Buser

Title:

Chief Financial Officer

(Principal Financial Officer and Authorized Officer)

~~140~~

128



	Common Units		Preferred Equity			Partners’ Capital			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interests in Consolidated Entities			Non- controlling Interests in Carlyle Holdings			Total Partners’ Capital
Balance at March 31, 2019	110.1		$	387.5		$	779.2		$	(81.5	)	$	290.0		$	1,760.6		$	3,135.8
Reallocation of ownership interests in Carlyle Holdings	—		—			2.1			(0.2		)	—			(1.9		)	—
Exchange of Carlyle Holdings units for common units	0.2		—			1.9			(0.1		)	—			(1.8		)	—
Units repurchased	—		—			(1.6		)	—			—			—			(1.6		)
Deferred tax effects resulting from acquisition of interests in Carlyle Holdings	—		—			0.3			—			—			—			0.3
Equity-based compensation	—		—			12.2			—			—			24.5			36.7
Issuances of common units for equity-based awards	0.4		—			—			—			—			—			—
Contributions	—		—			—			—			6.9			—			6.9
Distributions	—		(5.9		)	(21.1		)	—			(22.1		)	(43.8		)	(92.9		)
Net income	—		5.9			148.2			—			39.8			332.6			526.5
Currency translation adjustments	—		—			—			1.6			(6.1		)	3.8			(0.7		)
Unrealized gains on Fortitude Re available-for-sale securities	—		—			—			2.2			—			4.6			6.8
Defined benefit plans, net	—		—			—			0.2			—			0.3			0.5
Balance at June 30, 2019	110.7		$	387.5		$	921.2		$	(77.8	)	$	308.5		$	2,078.9		$	3,618.3


	Common Units		Preferred Equity			Partners’ Capital			Accumulated Other Comprehensive Income (Loss)			Non- controlling Interests in Consolidated Entities			Non- controlling Interests in Carlyle Holdings			Total Partners’ Capital
Balance at December 31, 2018	107.7		$	387.5		$	673.4		$	(83.3	)	$	324.2		$	1,534.5		$	2,836.3
Reallocation of ownership interests in Carlyle Holdings	—		—			15.4			(1.3		)	—			(14.1		)	—
Exchange of Carlyle Holdings units for common units	0.4		—			3.3			(0.3		)	—			(3.0		)	—
Units repurchased	(0.6	)	—			(12.0		)	—			—			—			(12.0		)
Deferred tax effects resulting from acquisition of interests in Carlyle Holdings	—		—			0.4			—			—			—			0.4
Equity-based compensation	—		—			24.2			—			—			49.9			74.1
Issuances of common units for equity-based awards	3.2		—			—			—			—			—			—
Contributions	—		—			—			—			9.1			—			9.1
Distributions	—		(11.8		)	(68.5		)	—			(54.3		)	(143.2		)	(277.8		)
Net income	—		11.8			285.2			—			35.3			640.5			972.8
Cumulative effect adjustment upon adoption of ASU 2016-2	—		—			(0.2		)	—			—			(0.5		)	(0.7		)
Currency translation adjustments	—		—			—			2.3			(5.8		)	4.7			1.2
Unrealized gains on Fortitude Re available-for-sale securities	—		—			—			4.0			—			8.4			12.4
Defined benefit plans, net	—		—			—			0.8			—			1.7			2.5
Balance at June 30, 2019	110.7		$	387.5		$	921.2		$	(77.8	)	$	308.5		$	2,078.9		$	3,618.3



Formation Date	Borrowing Outstanding June 30, 2020		Borrowing Outstanding December 31, 2019		Maturity Date (1)	Interest Rate as of June 30, 2020
February 28, 2017	$	75.0	$	75.3	November 17, 2031	2.33%	(2)
April 19, 2017	22.9		22.9		April 22, 2031	3.07%	(3) (14)
June 28, 2017	22.9		22.9		July 22, 2031	3.06%	(4) (14)
August 2, 2017	22.7		22.8		July 23, 2029	2.94%	(5) (14)
August 2, 2017	19.6		19.5		August 3, 2022	1.75%	(6)
August 14, 2017	22.4		22.6		August 15, 2030	2.27%	(7) (14)
November 30, 2017	22.7		22.7		January 16, 2030	2.95%	(8)(14)(16)
December 6, 2017	19.1		19.1		October 16, 2030	2.87%	(9)(14)(16)
December 7, 2017	20.8		20.8		January 19, 2029	2.50%	(10)(14)(16)
January 30, 2018	19.2		19.2		January 22, 2030	2.76%	(11)(14)(16)
March 1, 2018	15.3		15.3		January 15, 2031	2.77%	(12)(14)(16)
March 15, 2019	20.8		20.8		March 15, 2032	2.63%	(13)
August 20, 2019	21.0		21.0		August 15, 2032	2.52%	(15)
	$	324.4	$	324.9



	Unfunded Commitments
Corporate Private Equity	$	2,187.2
Real Assets	924.3
Global Credit	356.9
Investment Solutions	232.5
Total	$	3,700.9



Year ending December 31,
2020 (excluding the six months ended June 30, 2020)	$	27.9
2021	47.8
2022	57.0
2023	51.8
2024	50.0
Thereafter	434.3
Total lease payments	$	668.8
Less payments for leases that have not yet commenced	(330.9		)
Less imputed interest	(71.0		)
Total lease liabilities	$	266.9



Dividend Record Date	Dividend Payment Date	Dividend per Common Share ⁽¹⁾		Dividend to Common Stockholders
		(Dollars in millions, except per share data)
May 13, 2019	May 20, 2019	$	0.19	$	21.0
August 12, 2019	August 19, 2019	0.43		49.9
November 12, 2019	November 19, 2019	0.31		36.5
February 18, 2020	February 25, 2020	0.25		87.4
Total 2019 Dividend Year		$	1.18	$	194.8

May 12, 2020	May 19, 2020	$	0.25	$	87.2
August 11, 2020	August 18, 2020	0.25		88.3
Total 2020 Dividend Year (through Q2 2020)		$	0.50	$	175.5



Corporate Private Equity			Global Credit			Real Assets ⁴
Buyout Carry Funds			Loans & Structured Credit			Real Estate Carry Funds
Carlyle Partners (U.S.)			Cash CLO’s			Carlyle Realty Partners (U.S.)
CP VII	$18.5 bn	2018	U.S.	$19.2 bn	2012-2020	CRP VIII	$5.5 bn	2017
CP VI	$13.0 bn	2014	Europe	€7.3 bn	2013-2020	CRP VII	$4.2 bn	2014
CP V	$13.7 bn	2007	Structured Credit Carry Funds			CRP VI	$2.3 bn	2011
Global Financial Services Partners			CREV	$0.5 bn	2020	CRP V	$3.0 bn	2006
CGFSP III	$1.0 bn	2018	CSC	$0.8 bn	2017	CRP IV	$1.0 bn	2005
CGFSP II	$1.0 bn	2013	Direct Lending			CRP III	$0.6 bn	2001
Carlyle Europe Partners			Business Development Companies¹			Core Plus Real Estate (U.S.)
CEP V	€6.4 bn	2018	TCG BDC II, Inc.	$1.9 bn	2017	CPI²	$3.5 bn	2016
CEP IV	€3.7 bn	2014	TCG BDC, Inc.	$2.0 bn	2013	International Real Estate
CEP III	€5.3 bn	2007	Opportunistic Credit Carry Fund			CER	€0.5 bn	2017
CEP II	€1.8 bn	2003	CCOF	$2.4 bn	2017	CEREP III	€2.2 bn	2007
Carlyle Asia Partners			Energy Credit Carry Funds			Natural Resources Funds
CAP V	$6.6 bn	2018	CEMOF II	$2.8 bn	2015	NGP Energy Carry Funds
CBPF II	RMB 2.0 bn	2017	CEMOF I	$1.4 bn	2011	NGP XII	$4.3 bn	2017
CAP IV	$3.9 bn	2014	Distressed Credit Carry Funds			NGP XI	$5.3 bn	2014
CAP III	$2.6 bn	2008	CSP IV	$2.5 bn	2016	NGP X	$3.6 bn	2012
Carlyle Japan Partners			CSP III	$0.7 bn	2011	NGP Other Carry Funds
CJP IV	¥258.0 bn	2020	CSP II	$1.4 bn	2007	NGP Minerals	$0.2 bn	2020
CJP III	¥119.5 bn	2013	Carlyle Aviation Partners			NGP GAP	$0.4 bn	2014
CJP II	¥165.6 bn	2006	SASOF V	$0.9 bn	2020	NGP Predecessor Funds
Carlyle Global Partners			SASOF IV	$1.0 bn	2018	Various³	$5.7 bn	2007-2008
CGP II	$1.2 bn	2020	SASOF III	$0.8 bn	2015	International Energy Carry Funds
CGP I	$3.6 bn	2015	SASOF II	$0.6 bn	2012	CIEP II	$2.3 bn	2019
Carlyle MENA Partners			Securitization vehicles²	$2.1 bn	Various	CIEP I	$2.5 bn	2013
MENA I	$0.5 bn	2008	9 other vehicles²	$2.0 bn	Various	Infrastructure Carry Funds
Carlyle South American Buyout Fund			Other Credit			CRSEF	$0.3 bn	2019
CSABF I	$0.8 bn	2009	Fortitude⁵	$2.4 bn	2020	CGIOF	$2.2 bn	2019
Carlyle Sub-Saharan Africa Fund						CPP II	$1.5 bn	2014
CSSAF I	$0.7 bn	2012	Investment Solutions			CPOCP	$0.5 bn	2013
Carlyle Peru Fund			AlpInvest
CPF I	$0.3 bn	2012	Fund of Private Equity Funds
Middle Market & Growth Carry Funds			94 vehicles	€44.4 bn	2000-2020
Carlyle U.S. Venture/Growth Partners			Secondary Investments
CEOF II	$2.4 bn	2015	68 vehicles	€20.8 bn	2002-2020
CEOF I	$1.1 bn	2011	Co-Investments
CVP II	$0.6 bn	2001	62 vehicles	€15.6 bn	2002-2020
Carlyle Europe Technology Partners			Metropolitan Real Estate
CETP IV	€1.4 bn	2019	36 vehicles	$5.0 bn	2002-2020
CETP III	€0.7 bn	2014
Carlyle Asia Venture/Growth Partners
CAGP V	$0.3 bn	2017
CAGP IV	$1.0 bn	2008
Carlyle Cardinal Ireland
CCI	€0.3 bn	2014



	Inception through June 30, 2020
	Total Giveback		Giveback Attributable to Carlyle
	(Dollars in millions)
Various Legacy Energy Funds	$	155.2	$	55.0
All other Carlyle Funds	58.1		0.6
Aggregate Giveback since Inception	$	213.3	$	55.6



	Three Months Ended June 30,			Six Months Ended June 30,
	2020 v. 2019
	(Dollars in millions)
Total Revenues, June 30, 2019	$	1,061.1		$	2,148.1
Increases (Decreases):
Decrease in fund management fees	(19.1		)	(16.6		)
Increase in incentive fees	0.2			1.0
Increase (decrease) in investment income, including performance allocations	89.6			(1,752.2		)
Decrease in interest and other income	(10.2		)	(5.0		)
Increase in interest and other income of Consolidated Funds	9.4			10.0
Total increase (decrease)	69.9			(1,762.8		)
Total Revenues, June 30, 2020	$	1,131.0		$	385.3



	Investments in Carlyle Funds			Investments in NGP⁽¹⁾			Total
	(Dollars in millions)
Investments, excluding performance allocations	$	1,805.6		$	378.2		$	2,183.8
Less: Amounts attributable to non-controlling interests in consolidated entities	(165.2		)	—			(165.2		)
Plus: Investments in Consolidated Funds, eliminated in consolidation	93.1			—			93.1
Less: Strategic equity method investments in NGP Management	—			(378.2		)	(378.2		)
Total investments attributable to The Carlyle Group Inc., exclusive of NGP Management	$	1,733.5		$	—		$	1,733.5



Investments in Carlyle Funds, excluding CLOs:
Corporate Private Equity funds	$	390.9
Real Assets funds⁽¹⁾	188.8
Global Credit funds ⁽²⁾	610.4
Investment Solutions funds ⁽³⁾	40.6
Total investments in Carlyle Funds, excluding CLOs	1,230.7
Investments in CLOs	420.2
Other investments	82.6
Total investments attributable to The Carlyle Group Inc.	1,733.5
CLO loans and other borrowings attributable to The Carlyle Group Inc. ⁽⁴⁾	(310.4		)
Total investments attributable to The Carlyle Group Inc., net of CLO loans and other borrowings	$	1,423.1



	Jul. 1, 2020 to Dec. 31, 2020			2021-2022			2023-2024			Thereafter			Total
	(Dollars in millions)
Debt obligations (including senior notes) (1)	$	4.0		$	19.6		$	250.0		$	1,679.8		$	1,953.4
Interest payable (2)	43.5			172.3			149.9			1,158.8			1,524.5
Other consideration (3)	3.0			227.9			161.5			—			392.4
Operating lease obligations (4)	27.9			104.8			101.8			434.3			668.8
Capital commitments to Carlyle funds (5)	3,733.7			—			114.9			—			3,848.6
Tax receivable agreement payments (6)	—			2.4			23.4			81.6			107.4
Loans payable of Consolidated Funds (7)	43.7			173.5			173.8			5,202.7			5,593.7
Unfunded commitments of the CLOs (8)	1.7			—			—			—			1.7
Consolidated contractual obligations	3,857.5			700.5			975.3			8,557.2			14,090.5
Loans payable of Consolidated Funds (7)	(43.7		)	(173.5		)	(173.8		)	(5,202.7		)	(5,593.7		)
Capital commitments to Carlyle funds (5)	(3,147.5		)	—			—			—			(3,147.5		)
Unfunded commitments of the CLOs (8)	(1.7		)	—			—			—			(1.7		)
Carlyle Operating Entities contractual obligations	$	664.6		$	527.0		$	801.5		$	3,354.5		$	5,347.6



	Shares as of December 31, 2019	Shares Issued	Shares Forfeited	Shares Exchanged		Shares Repurchased / Retired		Shares as of June 30, 2020
The Carlyle Group Inc. common shares	117,840,651	2,625,422	—	229,318,248		(1,090,437	)	348,693,884
Carlyle Holdings partnership units	229,318,248	—	—	(229,318,248	)	—		—
Total	347,158,899	2,625,422	—	—		(1,090,437	)	348,693,884