Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Feb. 20, 2014 | Jun. 30, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'KKR Financial Holdings LLC | ' | ' |
Entity Central Index Key | '0001386926 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $2,095,884,047 |
Entity Common Stock, Shares Outstanding | ' | 204,824,159 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets | ' | ' |
Cash and cash equivalents | $157,167 | $237,606 |
Restricted cash and cash equivalents | 350,385 | 896,396 |
Securities | 573,312 | 533,520 |
Corporate loans, net (includes $237,480 and $35,879 measured at estimated fair value and $279,748 and $128,289 loans held for sale as of December 31, 2013 and December 31, 2012, respectively) | 6,466,720 | 5,947,857 |
Equity investments, at estimated fair value (zero and $7,187 pledged as collateral as of December 31, 2013 and December 31, 2012, respectively) | 181,212 | 161,621 |
Oil and gas properties, net | 400,369 | 289,929 |
Interests in joint ventures and partnerships | 436,241 | 149,534 |
Derivative assets | 30,224 | 23,207 |
Interest and principal receivable | 33,570 | 46,960 |
Other assets | 87,998 | 72,249 |
Total assets | 8,717,198 | 8,358,879 |
Liabilities | ' | ' |
Credit facilities | 125,289 | 107,789 |
Convertible senior notes | ' | 166,028 |
Senior notes | 362,276 | 362,178 |
Junior subordinated notes | 283,517 | 283,517 |
Accounts payable, accrued expenses and other liabilities | 58,215 | 25,931 |
Related party payable | 5,574 | 10,998 |
Derivative liabilities | 81,635 | 117,270 |
Total liabilities | 6,189,464 | 6,519,757 |
Shareholders' equity | ' | ' |
Preferred shares, no par value, 50,000,000 shares authorized and 14,950,000 and zero issued and outstanding as of December 31, 2013 and December 31, 2012, respectively | 0 | 0 |
Common shares, no par value, 500,000,000 shares authorized, and 204,824,159 and 178,437,078 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively | 0 | 0 |
Paid-in-capital | 3,315,117 | 2,762,584 |
Accumulated other comprehensive loss | -15,652 | -70,226 |
Accumulated deficit | -771,731 | -853,236 |
Total shareholders' equity | 2,527,734 | 1,839,122 |
Total liabilities and shareholders' equity | 8,717,198 | 8,358,879 |
Affiliates | ' | ' |
Liabilities | ' | ' |
Collateralized loan obligation junior secured notes to affiliates | ' | 296,557 |
Accrued interest payable | ' | 6,632 |
Nonaffiliates | ' | ' |
Liabilities | ' | ' |
Collateralized loan obligation secured notes | 5,249,383 | 5,122,338 |
Accrued interest payable | $23,575 | $20,519 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
Consolidated Balance Sheets | ' | ' |
Corporate loans, estimated fair value (in dollars) | $237,480 | $35,879 |
Corporate loans, held for sale (in dollars) | 279,748 | 128,289 |
Equity investments, at estimated fair value, pledged as collateral (in dollars) | $0 | $7,187 |
Preferred shares, no par value (in dollars per share) | ' | ' |
Preferred shares, shares authorized | 50,000,000 | 50,000,000 |
Preferred shares, shares issued | 14,950,000 | 0 |
Preferred shares, shares outstanding | 14,950,000 | 0 |
Common shares, no par value | ' | ' |
Common shares, shares authorized | 500,000,000 | 500,000,000 |
Common shares, shares issued | 204,824,159 | 178,437,078 |
Common shares, shares outstanding | 204,824,159 | 178,437,078 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (USD $) | 12 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Revenues | ' | ' | ' |
Loan interest income | $360,287 | $411,736 | $418,142 |
Securities interest income | 49,518 | 76,642 | 87,851 |
Oil and gas revenue | 119,178 | 64,535 | 30,629 |
Other | 16,923 | 2,560 | 5,399 |
Total revenues | 545,906 | 555,473 | 542,021 |
Investment costs and expenses | ' | ' | ' |
Provision for loan losses | 32,812 | 46,498 | 14,194 |
Oil and gas production costs | 35,814 | 28,980 | 7,766 |
Oil and gas depreciation, depletion and amortization | 44,061 | 21,931 | 8,015 |
Other | 2,859 | 4,358 | 2,120 |
Total investment costs and expenses | 305,705 | 318,375 | 215,162 |
Other income | ' | ' | ' |
Net realized and unrealized gain on investments | 157,074 | 193,056 | 91,780 |
Net realized and unrealized loss on derivatives and foreign exchange | -6,838 | -2,091 | -3,812 |
Net loss on restructuring and extinguishment of debt | -20,015 | -445 | -1,736 |
Other income | 20,704 | 15,302 | 7,215 |
Total other income | 150,925 | 205,822 | 93,447 |
Other expenses | ' | ' | ' |
Related party management compensation | 68,576 | 72,339 | 68,185 |
General, administrative and directors expenses | 19,524 | 19,157 | 19,840 |
Professional services | 9,329 | 6,661 | 6,198 |
Total other expenses | 97,429 | 98,157 | 94,223 |
Income before income taxes | 293,697 | 344,763 | 326,083 |
Income tax expense (benefit) | 467 | -3,467 | 8,011 |
Net income | 293,230 | 348,230 | 318,072 |
Preferred share distributions | 27,411 | ' | ' |
Net income available to common shareholders | 265,819 | 348,230 | 318,072 |
Net income per common share: | ' | ' | ' |
Basic (in dollars per share) | $1.31 | $1.95 | $1.79 |
Diluted (in dollars per share) | $1.31 | $1.87 | $1.75 |
Weighted-average number of common shares outstanding: | ' | ' | ' |
Basic (in shares) | 202,411 | 177,838 | 177,560 |
Diluted (in shares) | 202,411 | 187,423 | 180,897 |
Distributions declared per common share (in dollars per share) | $0.90 | $0.86 | $0.67 |
Affiliates | ' | ' | ' |
Investment costs and expenses | ' | ' | ' |
Interest expense | 26,943 | 51,586 | 49,458 |
Nonaffiliates | ' | ' | ' |
Investment costs and expenses | ' | ' | ' |
Interest expense | $163,216 | $165,022 | $133,609 |
Consolidated_Statements_of_Com
Consolidated Statements of Comprehensive Income (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Consolidated Statements of Comprehensive Income | ' | ' | ' |
Net income | $293,230 | $348,230 | $318,072 |
Other comprehensive income (loss): | ' | ' | ' |
Unrealized gains (losses) on securities available-for-sale | 6,095 | -44,776 | -126,891 |
Unrealized gains (losses) on cash flow hedges | 48,479 | 10,169 | -42,324 |
Total other comprehensive income (loss) | 54,574 | -34,607 | -169,215 |
Comprehensive income | $347,804 | $313,623 | $148,857 |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Shareholders' Equity (USD $) | Total | Preferred Shares | Preferred Shares Paid-In Capital | Common Shares | Common Shares Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
In Thousands, unless otherwise specified | USD ($) | USD ($) | USD ($) | USD ($) | USD ($) | ||
Balance at Dec. 31, 2010 | $1,643,048 | ' | ' | ' | $2,756,200 | $133,596 | ($1,246,748) |
Balance (in shares) at Dec. 31, 2010 | ' | ' | ' | 177,849 | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Net income | 318,072 | ' | ' | ' | ' | ' | 318,072 |
Other comprehensive income (loss) | -169,215 | ' | ' | ' | ' | -169,215 | ' |
Distributions declared on common shares | -119,351 | ' | ' | ' | ' | ' | -119,351 |
Grant of restricted common shares (in shares) | ' | ' | ' | 291 | ' | ' | ' |
Cancellation of restricted common shares (in shares) | ' | ' | ' | -25 | ' | ' | ' |
Repurchase and cancellation of common shares | -1,297 | ' | ' | ' | -1,297 | ' | ' |
Repurchase and cancellation of common shares (in shares) | ' | ' | ' | -141 | ' | ' | ' |
Issuance of shares | ' | ' | ' | ' | 1,297 | ' | ' |
Issuance of shares (in shares) | ' | ' | ' | 171 | ' | ' | ' |
Share-based compensation expense related to restricted common shares | 3,278 | ' | ' | ' | 3,278 | ' | ' |
Balance at Dec. 31, 2011 | 1,675,832 | ' | ' | ' | 2,759,478 | -35,619 | -1,048,027 |
Balance (in shares) at Dec. 31, 2011 | ' | ' | ' | 178,145 | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Net income | 348,230 | ' | ' | ' | ' | ' | 348,230 |
Other comprehensive income (loss) | -34,607 | ' | ' | ' | ' | -34,607 | ' |
Distributions declared on common shares | -153,439 | ' | ' | ' | ' | ' | -153,439 |
Grant of restricted common shares (in shares) | ' | ' | ' | 302 | ' | ' | ' |
Repurchase and cancellation of common shares | -96 | ' | ' | ' | -96 | ' | ' |
Repurchase and cancellation of common shares (in shares) | ' | ' | ' | -10 | ' | ' | ' |
Share-based compensation expense related to restricted common shares | 3,202 | ' | ' | ' | 3,202 | ' | ' |
Balance at Dec. 31, 2012 | 1,839,122 | ' | ' | ' | 2,762,584 | -70,226 | -853,236 |
Balance (in shares) at Dec. 31, 2012 | ' | ' | ' | 178,437 | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' | ' |
Net income | 293,230 | ' | ' | ' | ' | ' | 293,230 |
Other comprehensive income (loss) | 54,574 | ' | ' | ' | ' | 54,574 | ' |
Distributions declared on preferred shares | -27,411 | ' | ' | ' | ' | ' | -27,411 |
Distributions declared on common shares | -184,314 | ' | ' | ' | ' | ' | -184,314 |
Grant of restricted common shares (in shares) | ' | ' | ' | 331 | ' | ' | ' |
Repurchase and cancellation of common shares | -223 | ' | ' | ' | -223 | ' | ' |
Repurchase and cancellation of common shares (in shares) | ' | ' | ' | -25 | ' | ' | ' |
Issuance of common shares in exchange for convertible notes | 186,254 | ' | ' | ' | 186,254 | ' | ' |
Issuance of common shares in exchange for convertible notes (in shares) | ' | ' | ' | 26,051 | ' | ' | ' |
Issuance of shares | ' | ' | 361,622 | ' | 321 | ' | ' |
Issuance of shares (in shares) | ' | 14,950 | ' | 30 | ' | ' | ' |
Share-based compensation expense related to restricted common shares | 4,559 | ' | ' | ' | 4,559 | ' | ' |
Balance at Dec. 31, 2013 | $2,527,734 | ' | $361,622 | ' | $2,953,495 | ($15,652) | ($771,731) |
Balance (in shares) at Dec. 31, 2013 | ' | 14,950 | ' | 204,824 | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from operating activities | ' | ' | ' |
Net income | $293,230 | $348,230 | $318,072 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' |
Net realized and unrealized loss on derivatives and foreign exchange | 6,838 | 2,091 | 3,812 |
Net loss on restructuring and extinguishment of debt | 20,015 | 445 | 1,736 |
Write-off of debt issuance costs | 6,674 | 4,224 | 2,194 |
Lower of cost or estimated fair value adjustment on corporate loans held for sale | 5,899 | 2,656 | 65,163 |
Provision for loan losses | 32,812 | 46,498 | 14,194 |
Impairment charges | 19,512 | 12,067 | 7,705 |
Share-based compensation | 4,559 | 3,202 | 3,278 |
Net realized and unrealized gain on investments | -182,485 | -207,779 | -164,648 |
Depreciation and net amortization | 7,123 | -51,982 | -83,630 |
Changes in assets and liabilities: | ' | ' | ' |
Interest receivable | 3,333 | 11,415 | 1,902 |
Other assets | -37,660 | 5,329 | 6,608 |
Related party payable | -4,144 | -80 | -1,910 |
Accounts payable, accrued expenses and other liabilities | -13,674 | 1,304 | 9,417 |
Preferred share distribution payable | -6,891 | ' | ' |
Net cash provided by operating activities | 151,565 | 172,674 | 186,828 |
Cash flows from investing activities | ' | ' | ' |
Principal payments from corporate loans | 1,437,139 | 1,829,492 | 1,441,426 |
Principal payments from securities | 169,646 | 92,920 | 113,463 |
Proceeds from sales of corporate loans | 270,204 | 349,279 | 654,379 |
Proceeds from sales of securities | 39,431 | 505,015 | 202,059 |
Proceeds from equity and other investments | 155,132 | 113,365 | 90,714 |
Purchases of corporate loans | -2,099,033 | -1,595,317 | -2,228,360 |
Purchases of securities | -228,131 | -135,354 | -321,087 |
Purchases of equity and other investments | -513,933 | -376,831 | -244,513 |
Net change in proceeds, purchases and settlements of derivatives | -3,110 | -6,401 | 1,926 |
Net change in restricted cash and cash equivalents | 546,011 | -496,776 | 172,156 |
Net cash (used in) provided by investing activities | -226,644 | 279,392 | -117,837 |
Cash flows from financing activities | ' | ' | ' |
Issuance of collateralized loan obligation secured notes | 665,188 | 489,480 | 439,409 |
Proceeds from credit facilities | 79,200 | 69,489 | 19,900 |
Repayment of credit facilities | -61,700 | ' | ' |
Repayment of convertible senior notes | ' | -135,531 | -47,197 |
Net proceeds from senior notes | ' | 111,418 | 250,669 |
Net proceeds from issuance of preferred shares | 361,622 | ' | ' |
Distributions on common shares | -184,314 | -153,439 | -119,351 |
Distributions on preferred shares | -20,520 | ' | ' |
Issuance of common shares | ' | ' | 1,297 |
Repurchase and cancellation of common shares | ' | -96 | -1,297 |
Other capitalized costs | -5,211 | -8,268 | -2,760 |
Net cash (used in) provided by financing activities | -5,360 | -606,614 | 9,334 |
Net (decrease) increase in cash and cash equivalents | -80,439 | -154,548 | 78,325 |
Cash and cash equivalents at beginning of year | 237,606 | 392,154 | 313,829 |
Cash and cash equivalents at end of year | 157,167 | 237,606 | 392,154 |
Supplemental cash flow information | ' | ' | ' |
Cash paid for interest | 155,184 | 186,131 | 147,750 |
Net cash paid (refunded) for income taxes | 7,685 | -274 | 2,081 |
Non-cash investing and financing activities | ' | ' | ' |
Issuance of restricted common shares | 3,282 | 2,849 | 2,755 |
Loans transferred from held for investment to held for sale | 323,416 | 114,995 | 862,244 |
Loans transferred from held for sale to held for investment | ' | 114,871 | 448,329 |
Conversion of convertible senior notes to common shares | 186,254 | ' | ' |
Affiliates | ' | ' | ' |
Changes in assets and liabilities: | ' | ' | ' |
Accrued interest payable | -6,632 | 71 | 245 |
Cash flows from financing activities | ' | ' | ' |
Retirement of collateralized loan obligation junior secured notes to affiliates | ' | ' | -276 |
Nonaffiliates | ' | ' | ' |
Changes in assets and liabilities: | ' | ' | ' |
Accrued interest payable | 3,056 | -5,017 | 2,690 |
Cash flows from financing activities | ' | ' | ' |
Retirement of collateralized loan obligation secured notes | ($839,625) | ($979,667) | ($531,060) |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2013 | |
ORGANIZATION | ' |
ORGANIZATION | ' |
NOTE 1. ORGANIZATION | |
KKR Financial Holdings LLC together with its subsidiaries (the "Company" or "KFN") is a specialty finance company with expertise in a range of asset classes. The Company's core business strategy is to leverage the proprietary resources of KKR Financial Advisors LLC (the "Manager") with the objective of generating both current income and capital appreciation by deploying capital to its strategies, which include bank loans and high yield securities, natural resources, special situations, mezzanine, commercial real estate and private equity with a focus on specialty lending. The Company's holdings across these strategies primarily consist of below investment grade syndicated corporate loans, also known as leveraged loans, high yield debt securities, private equity, interests in joint ventures and partnerships, and working and royalty interests in oil and gas properties. The corporate loans that the Company holds are typically purchased via assignment or participation in the primary or secondary market. | |
The majority of the Company's holdings consist of corporate loans and high yield debt securities held in collateralized loan obligation ("CLO") transactions that are structured as on-balance sheet securitizations and are used as long term financing for the Company's investments in corporate debt. The senior secured debt issued by the CLO transactions is generally owned by unaffiliated third party investors and the Company owns the majority of the subordinated notes in the CLO transactions. The Company executes its core business strategy through its majority-owned subsidiaries, including CLOs. | |
The Manager, a wholly-owned subsidiary of KKR Asset Management LLC, manages the Company pursuant to a management agreement (the "Management Agreement"). KKR Asset Management LLC is a wholly-owned subsidiary of Kohlberg Kravis Roberts & Co. L.P. ("KKR"). | |
Proposed Merger with KKR & Co. | |
On December 16, 2013, the Company announced the signing of a definitive merger agreement pursuant to which KKR & Co. L.P. ("KKR & Co.") has agreed to acquire all of KFN's outstanding common shares through an exchange of equity through which the Company's shareholders will receive 0.51 common units representing the limited partnership interests of KKR & Co. for each common share of KFN. The transaction is subject to approval by the Company's common shareholders, customary regulatory approvals and other customary closing conditions, as well as the satisfaction of other certain conditions specified in the merger agreement. The merger agreement contains certain termination rights for both KFN and KKR & Co., and provides that under certain circumstances, KFN will be required to pay a termination fee of $26.25 million to KKR & Co. or will be required to reimburse KKR & Co. for its expenses up to $7.5 million. Subject to certain exceptions, KFN's board of directors has agreed not to withhold, modify or qualify in a manner adverse to KKR & Co. the recommendation of the board that KFN's shareholders approve the merger agreement. | |
Upon closing of the transaction, which is expected to occur in the first half of 2014, the Company will become a subsidiary of KKR & Co. The Company's 7.375% Series A LLC Preferred Shares ("Series A LLC Preferred Shares"), senior notes and junior subordinated notes will remain outstanding following the merger. Accordingly, the Company will remain a registered filer under the Securities Exchange Act of 1934. | |
Pursuant to the merger agreement, upon the effective time of the merger, (i) each outstanding option to purchase a KFN common share will be cancelled and converted into the right to receive an amount in cash equal to the excess of the cash value of the number of KKR & Co. common units that a holder of one KFN common share would be entitled to in the merger over the exercise price per KFN common share subject to such option, (ii) each outstanding restricted KFN common share will be converted into 0.51 KKR & Co. common units having the same terms and conditions as applied immediately prior to the effective time, and (iii) each phantom share under KFN's Non-Employee Directors' Deferred Compensation and Share Award Plan will be converted into a phantom share in respect of 0.51 KKR & Co. common units and otherwise remain subject to the terms of the plan. | |
Under the terms of the merger agreement, the Company has agreed to conduct its business in the ordinary course and in a manner consistent in all material respects with past practice, subject to certain conditions and restrictions including, but not limited to the entry into certain material contracts or the incurrence of certain indebtedness. In addition, the Company is restricted in the amount of distributions that it can pay to its common shareholders without the prior consent of KKR & Co. In particular, the Company may not declare a quarterly distribution in excess of $0.22 per common share without KKR & Co.'s prior consent. The merger agreement also requires that the Company and KKR & Co. coordinate the timing of the declaration of distributions on its respective common equity prior to the closing of the merger so that, in any quarter, a holder of its common shares will not receive distributions in respect of both KFN common shares and in respect of the KKR & Co. common units that such holder will receive in the merger. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | |
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP"). The consolidated financial statements include the accounts of the Company and entities established to complete secured financing transactions that are considered to be variable interest entities ("VIEs") and for which the Company is the primary beneficiary. | |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company's consolidated financial statements and accompanying notes. Actual results could differ from management's estimates. | |
The Company uses historical experience and various other assumptions and information that are believed to be reasonable under the circumstances in developing its estimates and judgments. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. While the Company believes that the estimates and assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates. | |
Estimates of oil, natural gas and natural gas liquid ("NGL") reserves and their values, future production rates and future costs and expenses are inherently uncertain, including many factors beyond the Company's control. Reservoir engineering is a subjective process of estimating underground accumulations of oil, natural gas and NGL that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of many factors including the following: the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions and the judgments of the individuals preparing the estimates. In addition, reserve estimates are a function of many assumptions, all of which could deviate significantly from actual results. As such, reserve estimates may materially vary from the ultimate quantities of oil, natural gas and NGL eventually recovered, and could materially affect the Company's future depreciation, depletion and amortization expense ("DD&A"), its asset retirement obligations or impairment considerations. | |
Consolidation | |
KKR Financial CLO 2005-1, Ltd. ("CLO 2005-1"), KKR Financial CLO 2005-2, Ltd. ("CLO 2005-2"), KKR Financial CLO 2006-1, Ltd. ("CLO 2006-1"), KKR Financial CLO 2007-1, Ltd. ("CLO 2007-1"), KKR Financial CLO 2007-A, Ltd. ("CLO 2007-A"), KKR Financial CLO 2011-1, Ltd. ("CLO 2011-1"), KKR Financial CLO 2012-1, Ltd. ("CLO 2012-1"), and KKR Financial CLO 2013-1, Ltd. ("CLO 2013-1") (collectively the "Cash Flow CLOs") are entities established to complete secured financing transactions. These entities are VIEs which the Company consolidates as the Company has determined it has the power to direct the activities that most significantly impact these entities' economic performance and the Company has both the obligation to absorb losses of these entities and the right to receive benefits from these entities that could potentially be significant to these entities. In CLO transactions, subordinated notes have the first risk of loss and conversely, the residual value upside of the transactions. | |
The Company finances the majority of its corporate debt investments through its CLOs. As of December 31, 2013, the Company's eight CLOs held $6.7 billion par amount, or $6.4 billion estimated fair value, of corporate debt investments. As of December 31, 2012, the Company had seven CLOs that held $6.3 billion par amount, or $6.0 billion estimated fair value, of corporate debt investments. The assets in each CLO can be used only to settle the debt of the related CLO. As of December 31, 2013, the aggregate CLO debt totaled $5.2 billion of secured debt outstanding held by unaffiliated third parties. As of December 31, 2012, the aggregate CLO debt totaled $5.1 billion of secured debt outstanding held by unaffiliated third parties and $296.6 million of junior secured notes outstanding held by an affiliate of the Manager. | |
The Company consolidates all non-VIEs in which it holds a greater than 50 percent voting interest. | |
In addition, the Company has non-controlling interests in joint ventures and partnerships that do not qualify as VIEs and do not meet the control requirements for consolidation as defined by GAAP. | |
All inter-company balances and transactions have been eliminated in consolidation. | |
Fair Value of Financial Instruments | |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments' complexity for disclosure purposes. Assets and liabilities in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined under GAAP, are directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, and are as follows: | |
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | |
The types of assets generally included in this category are equity securities listed in active markets. | |
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. | |
The types of assets and liabilities generally included in this category are certain corporate debt securities, certain corporate loans held for sale, certain equity investments at estimated fair value and certain financial instruments classified as derivatives. | |
Level 3: Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. | |
The types of assets and liabilities generally included in this category are certain corporate debt securities, certain corporate loans held for sale, certain equity investments at estimated fair value, residential mortgage-backed securities ("RMBS"), certain interests in joint ventures and partnerships and certain financial instruments classified as derivatives. | |
A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value. | |
The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset. The variability of the observable inputs affected by the factors described above may cause transfers between Levels 1, 2, and/or 3, which the Company recognizes at the end of the reporting period. | |
Many financial assets and liabilities have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that the Company and others are willing to pay for an asset. Ask prices represent the lowest price that the Company and others are willing to accept for an asset. For financial assets and liabilities whose inputs are based on bid-ask prices, the Company does not require that fair value always be a predetermined point in the bid-ask range. The Company's policy is to allow for mid-market pricing and adjusting to the point within the bid-ask range that meets the Company's best estimate of fair value. | |
Depending on the relative liquidity in the markets for certain assets, the Company may transfer assets to Level 3 if it determines that observable quoted prices, obtained directly or indirectly, are not available. The valuation techniques used for the assets and liabilities that are valued using Level 3 of the fair value hierarchy are described below. | |
Securities and Corporate Loans, at Estimated Fair Value: Securities and corporate loans, at estimated fair value are initially valued at transaction price and are subsequently valued using market data for similar instruments (e.g., recent transactions or broker quotes), comparisons to benchmark derivative indices or valuation models. Valuation models are based on yield analysis techniques, where the key inputs are based on relative value analyses, which incorporate similar instruments from similar issuers. In addition, an illiquidity discount is applied where appropriate. | |
Equity Investments, at Estimated Fair Value: Equity investments, at estimated fair value, are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on market and income (discounted cash flow) approaches, in which various internal and external factors are considered. Factors include key financial inputs and recent public and private transactions for comparable investments. Key inputs used for the discounted cash flow approach include the weighted average cost of capital and assumed inputs used to calculate terminal values, such as earnings before interest, taxes, depreciation and amortization ("EBIDTA") exit multiples. The fair value recorded for a particular investment will generally be within the range suggested by the two approaches. Upon completion of the valuations conducted, an illiquidity discount is applied where appropriate. | |
Interests in Joint Ventures and Partnerships: Interests in joint ventures and partnerships include certain equity investments related to the oil and gas, commercial real estate and specialty lending sectors. Interests in joint ventures and partnerships are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on an income (discounted cash flow) approach, in which various internal and external factors are considered and key inputs include the weighted average cost of capital. In addition, an illiquidity discount is applied where appropriate. | |
Over-the-counter ("OTC") Derivative Contracts: OTC derivative contracts include forward, swap and option contracts related to interest rates, foreign currencies, credit standing of reference entities and equity prices. OTC derivatives are initially valued using quoted market prices, if available, or models using a series of techniques, including closed-form analytic formulae, such as the Black-Scholes option-pricing model, and/or simulation models in the absence of quoted market prices. Many pricing models employ methodologies that have pricing inputs observed from actively quoted markets, as is the case for generic interest rate swap and option contracts. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value: RMBS are initially valued at transaction price and are subsequently valued using a third party valuation servicer. The most significant inputs to the valuation of these instruments are default and loss expectations and constant prepayment rates. | |
Key unobservable inputs that have a significant impact on the Company's Level 3 valuations as described above are included in Note 14 to these consolidated financial statements. The Company utilizes several unobservable pricing inputs and assumptions in determining the fair value of its Level 3 investments. These unobservable pricing inputs and assumptions may differ by asset and in the application of the Company's valuation methodologies. The reported fair value estimates could vary materially if the Company had chosen to incorporate different unobservable pricing inputs and other assumptions or, for applicable investments, if the Company only used either the discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies. | |
Valuation Process | |
The valuation process involved in Level 3 measurements for assets and liabilities is completed on a quarterly basis and is designed to subject the valuation of Level 3 investments to an appropriate level of consistency, oversight and review. The Company utilizes a valuation committee, whose members consist of the Company's Chief Executive Officer, Chief Financial Officer, General Counsel and certain other employees of the Manager. The valuation committee is responsible for coordinating and implementing the Company's quarterly valuation process. | |
Investments are generally valued based on quotations from third party pricing services, unless such a quotation is unavailable or is determined to be unreliable or inadequately representing the fair value of the particular assets. In that case, valuations are based on either valuation data obtained from one or more other third party pricing sources, including broker dealers, or will reflect the valuation committee's good faith determination of estimated fair value based on other factors considered relevant. For assets classified as Level 3, the investment professionals are responsible for documenting preliminary valuations based on various factors including their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and model projections discussed above. All valuations are approved by the valuation committee. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on hand, cash held in banks and highly liquid investments with original maturities of three months or less. Interest income earned on cash and cash equivalents is recorded in other within total revenues on the consolidated statements of operations. | |
Restricted Cash and Cash Equivalents | |
Restricted cash and cash equivalents represent amounts that are held by third parties under certain of the Company's financing and derivative transactions. Interest income earned on restricted cash and cash equivalents is recorded in other within total revenues on the consolidated statements of operations. | |
On the consolidated statements of cash flows, net additions or reductions to restricted cash and cash equivalents are classified as an investing activity as restricted cash and cash equivalents reflect the receipts from collections or sales of investments, as well as payments made to acquire investments held by third parties. | |
Securities | |
Securities Available-for-Sale | |
The Company classifies its investments in securities as available-for-sale as the Company may sell them prior to maturity and does not hold them principally for the purpose of selling them in the near term. These investments are carried at estimated fair value, with unrealized gains and losses reported in accumulated other comprehensive income. Estimated fair values are based on quoted market prices, when available, on estimates provided by independent pricing sources or dealers who make markets in such securities, or internal valuation models when external sources of fair value are not available. Upon the sale of a security, the realized net gain or loss is computed on a weighted average cost basis. Purchases and sales of securities are recorded on the trade date. | |
The Company monitors its available-for-sale securities portfolio for impairments. A loss is recognized when it is determined that a decline in the estimated fair value of a security below its amortized cost is other-than-temporary. The Company considers many factors in determining whether the impairment of a security is deemed to be other-than-temporary, including, but not limited to, the length of time the security has had a decline in estimated fair value below its amortized cost and the severity of the decline, the amount of the unrealized loss, recent events specific to the issuer or industry, external credit ratings and recent changes in such ratings. In addition, for debt securities, the Company considers its intent to sell the debt security, the Company's estimation of whether or not it expects to recover the debt security's entire amortized cost if it intends to hold the debt security, and whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery. For equity securities, the Company also considers its intent and ability to hold the equity security for a period of time sufficient for a recovery in value. | |
The amount of the loss that is recognized when it is determined that a decline in the estimated fair value of a security below its amortized cost is other-than-temporary is dependent on certain factors. If the security is an equity security or if the security is a debt security that the Company intends to sell or estimates that it is more likely than not that the Company will be required to sell before recovery of its amortized cost, then the impairment amount recognized in earnings is the entire difference between the estimated fair value of the security and its amortized cost. For debt securities that the Company does not intend to sell or estimates that it is not more likely than not to be required to sell before recovery, the impairment is separated into the estimated amount relating to credit loss and the estimated amount relating to all other factors. Only the estimated credit loss amount is recognized in earnings, with the remainder of the loss amount recognized in accumulated other comprehensive loss. | |
Unamortized premiums and unaccreted discounts on securities available-for-sale are recognized in interest income over the contractual life, adjusted for actual prepayments, of the securities using the effective interest method. | |
Other Securities, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for certain securities for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these securities. Other securities, at estimated fair value are included within securities on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for its residential mortgage investments for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of its residential mortgage investments. RMBS, at estimated fair value are included within securities on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Equity Investments, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for certain marketable equity securities and private equity investments. The Company elects the fair value option of accounting for private equity investments received through restructuring debt transactions or issued by an entity in which the Company may have significant influence. The Company elected the fair value option for certain equity investments for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these equity investments. Equity investments, at fair value, are managed based on overall value and potential returns. These equity investments carried at estimated fair value are presented separately on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Interests in Joint Ventures and Partnerships | |
The Company has elected the fair value option of accounting for certain non-controlling interests in joint ventures and partnerships for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these interests. These interests in joint ventures and partnerships are presented separately on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Securities Sold, Not Yet Purchased | |
Securities sold, not yet purchased consist of equity and debt securities that the Company has sold short. In order to facilitate a short sale, the Company borrows the securities from another party and delivers the securities to the buyer. The Company will be required to "cover" its short sale in the future through the purchase of the security in the market at the prevailing market price and deliver it to the counterparty from which it borrowed. The Company is exposed to a loss to the extent that the security price increases during the time from when the Company borrowed the security to when the Company purchases it in the market to cover the short sale. Securities sold, not yet purchased are presented within accounts payable, accrued expenses and other liabilities on the consolidated balance sheets with gains and losses reported in net realized and unrealized gain on investments on the consolidated statement of operations. | |
Corporate Loans, Net | |
Corporate Loans | |
Corporate loans are generally held for investment and the Company initially records corporate loans at their purchase prices. The Company subsequently accounts for corporate loans based on their outstanding principal plus or minus unaccreted purchase discounts and unamortized purchase premiums. Corporate loans that the Company transfers to held for sale are transferred at the lower of cost or estimated fair value. | |
Interest income on corporate loans includes interest at stated coupon rates adjusted for accretion of purchase discounts and the amortization of purchase premiums. Unamortized premiums and unaccreted discounts are recognized in interest income over the contractual life, adjusted for actual prepayments, of the corporate loans using the effective interest method. | |
Other than corporate loans measured at estimated fair value, corporate loans acquired with deteriorated credit quality are recorded at initial cost and interest income is recognized as the difference between the Company's estimate of all cash flows that it will receive from the loan in excess of its initial investment on a level-yield basis over the life of the corporate loan (accretable yield) using the effective interest method. | |
A corporate loan is typically placed on non-accrual status at such time as: (i) management believes that scheduled debt service payments may not be paid when contractually due; (ii) the corporate loan becomes 90 days delinquent; (iii) management determines the borrower is incapable of, or has ceased efforts toward, curing the cause of the impairment; or (iv) the net realizable value of the collateral securing the corporate loan decreases below the Company's carrying value of such corporate loan. As such, corporate loans placed on non-accrual status may or may not be contractually past due at the time of such determination. While on non-accrual status, previously recognized accrued interest is reversed if it is determined that such amounts are not collectible and interest income is recognized using the cost-recovery method, cash-basis method or some combination of the two methods. A corporate loan is placed back on accrual status when the ultimate collectability of the principal and interest is not in doubt. | |
The Company may modify corporate loans in transactions where the borrower is experiencing financial difficulty and a concession is granted to the borrower as part of the modification. These concessions may include one or a combination of the following: a reduction of the stated interest rate; payment extensions; forgiveness of principal; or an exchange of assets. Such modifications typically qualify as troubled debt restructurings ("TDRs"). In order to determine whether the borrower is experiencing financial difficulty, an evaluation is performed including the following considerations: whether the borrower is or will be in payment default on any of its debt in the foreseeable future without the modification; whether there is a potential for a bankruptcy filing; whether there is a going-concern issue; or whether the borrower is unable to secure financing elsewhere. | |
Corporate loans whose terms have been modified in a TDR are considered impaired, unless accounted for at fair value or the lower of cost or estimated fair value, and are typically placed on non-accrual status, but can be moved to accrual status when, among other criteria, payment in full of all amounts due under the restructured terms is expected and the borrower has demonstrated a sustained period of repayment performance, typically six months. | |
TDRs are separately identified for impairment disclosures and are measured at either the estimated fair value or the present value of estimated future cash flows using the respective corporate loan's effective rate at inception. Impairments associated with TDRs are included within the allocated component of the Company's allowance for loan losses. | |
The Company may also identify receivables that are newly considered impaired and discloses the total amount of receivables and the allowance for credit losses as of the end of the period of adoption related to those receivables that are newly considered impaired. | |
In addition to TDRs, the Company may also modify corporate loans which usually involve changes in existing interest rates combined with changes of existing maturities to prevailing market rates/maturities for similar instruments at the time of modification. Such modifications typically do not meet the definition of a TDR since the respective borrowers are neither experiencing financial difficulty nor are seeking a concession as part of the modification. | |
The corporate loans the Company invests in are generally deemed in default upon the non-payment of a single interest payment or as a result of the violation of a covenant in the respective corporate loan agreement. The Company charges-off a portion or all of its amortized cost basis in a corporate loan when it determines that it is uncollectible due to either: (i) the estimation based on a recovery value analysis of a defaulted corporate loan that less than the amortized cost amount will be recovered through the agreed upon restructuring of the corporate loan or as a result of a bankruptcy process of the issuer of the corporate loan; or (ii) the determination by the Company to transfer a corporate loan to held for sale with the corporate loan having an estimated market value below the amortized cost basis of the corporate loan. | |
Allowance for Loan Losses | |
The Company's corporate loan portfolio is comprised of a single portfolio segment which includes one class of financing receivables, that is, high yield loans that are typically purchased via assignment or participation in either the primary or secondary market and are held primarily for investment. High yield loans are generally characterized as having below investment grade ratings or being unrated. | |
The Company's allowance for loan losses represents its estimate of probable credit losses inherent in its corporate loan portfolio held for investment as of the balance sheet date. Estimating the Company's allowance for loan losses involves a high degree of management judgment and is based upon a comprehensive review of the Company's corporate loan portfolio that is performed on a quarterly basis. The Company's allowance for loan losses consists of two components, an allocated component and an unallocated component. The allocated component of the allowance for loan losses pertains to specific corporate loans that the Company has determined are impaired. The Company determines a corporate loan is impaired when management estimates that it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the corporate loan agreement. On a quarterly basis the Company performs a comprehensive review of its entire corporate loan portfolio and identifies certain corporate loans that it has determined are impaired. Once a corporate loan is identified as being impaired, the Company places the corporate loan on non-accrual status, unless the corporate loan is already on non-accrual status, and records an allowance that reflects management's best estimate of the loss that the Company expects to recognize from the corporate loan. The expected loss is estimated as being the difference between the Company's current cost basis of the corporate loan, including accrued interest receivable, and the present value of expected future cash flows discounted at the corporate loan's effective interest rate, except as a practical expedient, the corporate loan's observable estimated fair value may be used. The Company also estimates the probable credit losses inherent in its unfunded loan commitments as of the balance sheet date. Any credit loss reserve for unfunded loan commitments is recorded in accounts payable, accrued expenses and other liabilities on the Company's consolidated balance sheets. | |
The unallocated component of the Company's allowance for loan losses represents its estimate of probable losses inherent in the corporate loan portfolio as of the balance sheet date where the specific loan that the loan loss relates to is indeterminable. The Company estimates the unallocated component of the allowance for loan losses through a comprehensive review of its loan portfolio and identifies certain corporate loans that demonstrate possible indicators of impairment, including internally assigned credit quality indicators. This assessment excludes all corporate loans that are determined to be impaired and as a result, an allocated reserve has been recorded as described in the preceding paragraph. Such indicators include the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may impact the issuer, and the observable trading price of the corporate loan if available. All corporate loans are first categorized based on their assigned risk grade and further stratified based on the seniority of the corporate loan in the issuer's capital structure. The seniority classifications assigned to corporate loans are senior secured, second lien and subordinate. Senior secured consists of corporate loans that are the most senior debt in an issuer's capital structure and therefore have a lower estimated loss severity than other debt that is subordinate to the senior secured loan. Senior secured corporate loans often have a first lien on some or all of the issuer's assets. Second lien consists of corporate loans that are secured by a second lien interest on some or all of the issuer's assets; however, the corporate loan is subordinate to the first lien debt in the issuer's capital structure. Subordinate consists of corporate loans that are generally unsecured and subordinate to other debt in the issuer's capital structure. | |
There are three internally assigned risk grades that are applied to loans that have not been identified as being impaired: high, moderate and low. High risk means that there is evidence of possible loss due to the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may impact the issuer, observable trading price of the corporate loan if available, or other factors that indicate that the breach of a covenant contained in the related loan agreement is possible. Moderate risk means that while there is not observable evidence of possible loss, there are issuer and/or industry specific trends that indicate a loss may have occurred. Low risk means that while there is no identified evidence of loss, there is the risk of loss inherent in the loan that has not been identified. All loans held for investment, with the exception of loans that have been identified as impaired, are assigned a risk grade of high, moderate or low. | |
The Company applies a range of default and loss severity estimates in order to estimate a range of loss outcomes upon which to base its estimate of probable losses that results in the determination of the unallocated component of the Company's allowance for loan losses. | |
Corporate Loans Held for Sale | |
From time to time the Company makes the determination to transfer certain of its corporate loans from held for investment to held for sale. The decision to transfer a loan to held for sale is generally as a result of the Company determining that the respective loan's credit quality in relation to the loan's expected risk-adjusted return no longer meets the Company's investment objective and/or the Company deciding to reduce or eliminate its exposure to a particular loan for risk management purposes. Corporate loans held for sale are stated at lower of cost or estimated fair value and are assessed on an individual basis. Prior to transferring a loan to held for sale, any difference between the carrying amount of the loan and its outstanding principal balance is recognized as an adjustment to the yield by the effective interest method. The loan is transferred from held for investment to held for sale at the lower of its cost or estimated fair value and is carried at the lower of its cost or estimated fair value thereafter. Subsequent to transfer and while the loan is held for sale, recognition as an adjustment to yield by the effective interest method is discontinued for any difference between the carrying amount of the loan and its outstanding principal balance. | |
From time to time the Company also makes the determination to transfer certain of its corporate loans from held for sale back to held for investment. The decision to transfer a loan back to held for investment is generally as a result of the circumstances that led to the initial transfer to held for sale no longer being present. Such circumstances may include deteriorated market conditions often resulting in price depreciation or assets becoming illiquid, changes in restrictions on sales and certain loans amending their terms to extend the maturity, whereby the Company determined that selling the asset no longer met its investment objective and strategy. The loan is transferred from held for sale back to held for investment at the lower of its cost or estimated fair value, whereby a new cost basis is established based on this amount. | |
Interest income on corporate loans held for sale is recognized through accrual of the stated coupon rate for the loans, unless the loans are placed on non-accrual status, at which point previously recognized accrued interest is reversed if it is determined that such amounts are not collectible and interest income is recognized using either the cost-recovery method or on a cash-basis. | |
Corporate Loans, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for certain corporate loans for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these corporate loans. Corporate loans carried at estimated fair value are included within corporate loans, net on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statement of operations. | |
Oil and Natural Gas Properties | |
Oil and natural gas producing activities are accounted for under the successful efforts method of accounting. Under this method, exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Costs that are associated with the drilling of successful exploration wells are capitalized if proved reserves are found. Lease acquisition costs are capitalized when incurred. Costs associated with the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs and costs of certain nonproducing leasehold costs are expensed as incurred. | |
Expenditures for repairs and maintenance, including workovers, are charged to expense as incurred. | |
The capitalized costs of producing oil and natural gas properties are depleted on a field-by-field basis using the units-of production method based on the ratio of current production to estimated total net proved oil, natural gas and NGL reserves. Proved developed reserves are used in computing depletion rates for drilling and development costs and total proved reserves are used for depletion rates of leasehold costs. | |
Estimated dismantlement and abandonment costs for oil and natural gas properties, net of salvage value, are capitalized at their estimated net present value and amortized on a unit-of-production basis over the remaining life of the related proved developed reserves. | |
Oil and Gas Revenue Recognition | |
Oil, natural gas and NGL revenues are recognized when production is sold to a purchaser at fixed or determinable prices, when delivery has occurred and title has transferred and collectability of the revenue is reasonably assured. The Company follows the sales method of accounting for natural gas revenues. Under this method of accounting, revenues are recognized based on volumes sold, which may differ from the volume to which we are entitled based on the Company's working interest. An imbalance is recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the under-produced owners to recoup its entitled share through future production. Under the sales method, no receivables are recorded when the Company has taken less than its share of production and no payables are recorded when the Company has taken more than its share of production. | |
Long-Lived Assets | |
Whenever events or changes in circumstances indicate that the carrying amounts of such properties may not be recoverable, the Company evaluates its proved oil and natural gas properties and related equipment and facilities for impairment on a field-by-field basis. The determination of recoverability is made based upon estimated undiscounted future net cash flows. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flow analysis, with the carrying value of the related asset. The factors used to determine fair value include, but are not limited to, estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, future operating costs and a discount rate commensurate with the risk on the properties and cost of capital. Unproved oil and natural gas properties are assessed periodically and, at a minimum, annually on a property-by-property basis, and any impairment in value is recognized when incurred. | |
Borrowings | |
The Company finances the majority of its investments through the use of secured borrowings in the form of securitization transactions structured as non-recourse secured financings and other secured and unsecured borrowings. In addition, the Company finances certain of its oil and gas asset acquisitions through borrowings. The Company recognizes interest expense on all borrowings on an accrual basis. | |
Trust Preferred Securities | |
Trusts formed by the Company for the sole purpose of issuing trust preferred securities are not consolidated by the Company as the Company has determined that it is not the primary beneficiary of such trusts. The Company's investment in the common securities of such trusts is included within other assets on the consolidated balance sheets. | |
Preferred Shares | |
Distributions on the Company's Series A LLC Preferred Shares are cumulative and payable quarterly when and if declared by the Company's board of directors at a 7.375% rate per annum. The Company accrues for the distribution upon declaration and is included within accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. | |
Derivative Instruments | |
The Company recognizes all derivatives on the consolidated balance sheet at estimated fair value. On the date the Company enters into a derivative contract, the Company designates and documents each derivative contract as one of the following at the time the contract is executed: (i) a hedge of a recognized asset or liability ("fair value" hedge); (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge); (iii) a hedge of a net investment in a foreign operation; or (iv) a derivative instrument not designated as a hedging instrument ("free-standing derivative"). For a fair value hedge, the Company records changes in the estimated fair value of the derivative instrument and, to the extent that it is effective, changes in the fair value of the hedged asset or liability in the current period earnings in the same financial statement category as the hedged item. For a cash flow hedge, the Company records changes in the estimated fair value of the derivative to the extent that it is effective in accumulated other comprehensive loss and subsequently reclassifies these changes in estimated fair value to net income in the same period(s) that the hedged transaction affects earnings. The effective portion of the cash flow hedges is recorded in the same financial statement category as the hedged item. For free-standing derivatives, the Company reports changes in the fair values in net realized and unrealized loss on derivatives and foreign exchange on the consolidated statements of operations. | |
The Company formally documents at inception its hedge relationships, including identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and the Company's evaluation of effectiveness of its hedged transactions. Periodically, the Company also formally assesses whether the derivative it designated in each hedging relationship is expected to be and has been highly effective in offsetting changes in estimated fair values or cash flows of the hedged item using either the dollar offset or the regression analysis method. If the Company determines that a derivative is not highly effective as a hedge, it discontinues hedge accounting. | |
Foreign Currency | |
The Company makes investments in non-United States dollar denominated assets including securities, loans and equity investments, at estimated fair value. As a result, the Company is subject to the risk of fluctuation in the exchange rate between the United States dollar and the foreign currency in which it makes an investment. In order to reduce the currency risk, the Company may hedge the applicable foreign currency. All investments denominated in a foreign currency are converted to the United States dollar using prevailing exchange rates on the balance sheet date. | |
Income, expenses, gains and losses on investments denominated in a foreign currency are converted to the United States dollar using the prevailing exchange rates on the dates when they are recorded. Foreign exchange gains and losses are recorded in net realized and unrealized loss on derivatives and foreign exchange on the consolidated statements of operations. | |
Manager Compensation | |
The Management Agreement provides for the payment of a base management fee to the Manager, as well as an incentive fee if the Company's financial performance exceeds certain benchmarks. Additionally, the Management Agreement provides for the Manager to be reimbursed for certain expenses incurred on the Company's behalf. The base management fee and the incentive fee are accrued and expensed during the period for which they are earned by the Manager. | |
Share-Based Compensation | |
The Company accounts for share-based compensation issued to its directors and to its Manager using the fair value based methodology in accordance with relevant accounting guidance. Compensation cost related to restricted common shares issued to the Company's directors is measured at its estimated fair value at the grant date, and is amortized and expensed over the vesting period on a straight-line basis. Compensation cost related to restricted common shares and common share options issued to the Manager is initially measured at estimated fair value at the grant date, and is remeasured on subsequent dates to the extent the awards are unvested. The Company has elected to use the graded vesting attribution method to amortize compensation expense for the restricted common shares and common share options granted to the Manager. | |
Income Taxes | |
The Company intends to continue to operate so as to qualify, for United States federal income tax purposes, as a partnership and not as an association or publicly traded partnership taxable as a corporation. Therefore, the Company generally is not subject to United States federal income tax at the entity level, but is subject to limited state and foreign taxes. Holders of the Company's common and preferred shares will be required to take into account their allocable share of each item of the Company's income, gain, loss, deduction, and credit for the taxable year of the Company ending within or with their taxable year. | |
The Company owns equity interests in entities that have elected or intend to elect to be taxed as a real estate investment trust (a "REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). A REIT generally is not subject to United States federal income tax to the extent that it currently distributes its income and satisfies certain asset, income and ownership tests, and recordkeeping requirements, but it may be subject to some amount of federal, state, local and foreign taxes based on its taxable income. | |
The Company has wholly-owned domestic and foreign subsidiaries that are taxable as corporations for United States federal income tax purposes and thus are not consolidated with the Company for United States federal income tax purposes. For financial reporting purposes, current and deferred taxes are provided for on the portion of earnings recognized by the Company with respect to its interest in the domestic taxable corporate subsidiaries, because each is taxed as a regular corporation under the Code. Deferred income tax assets and liabilities are computed based on temporary differences between the GAAP consolidated financial statements and the United States federal income tax basis of assets and liabilities as of each consolidated balance sheet date. The foreign corporate subsidiaries were formed to make certain foreign and domestic investments from time to time. The foreign corporate subsidiaries are organized as exempted companies incorporated with limited liability under the laws of the Cayman Islands, and are anticipated to be exempt from United States federal and state income tax at the corporate entity level because they restrict their activities in the United States to trading in stock and securities for their own account. However, the Company will be required to include their current taxable income in the Company's calculation of its taxable income allocable to shareholders. | |
The Company must recognize the tax impact from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax impact recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Penalties and interest related to uncertain tax positions are recorded as tax expense. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. If it is determined that recognition for an uncertain tax provision is necessary, the Company would record a liability for an unrecognized tax expense from an uncertain tax position taken or expected to be taken. | |
Earnings Per Common Share | |
The Company presents both basic and diluted earnings per common share ("EPS") in its consolidated financial statements and footnotes thereto. Basic earnings per common share ("Basic EPS") excludes dilution and is computed by dividing net income or loss available to common shareholders by the weighted average number of common shares, including vested restricted common shares, outstanding for the period. The Company calculates EPS using the more dilutive of the two-class method or the if-converted method. The two-class method is an earnings allocation formula that determines EPS for common shares and participating securities. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS using the two-class method. Accordingly, all earnings (distributed and undistributed) are allocated to common shares, preferred shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share ("Diluted EPS") reflects the potential dilution of common share options, unvested restricted common shares and convertible senior notes using the treasury method or if-converted method. | |
EARNINGS_PER_COMMON_SHARE
EARNINGS PER COMMON SHARE | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
EARNINGS PER COMMON SHARE | ' | ||||||||||
EARNINGS PER COMMON SHARE | ' | ||||||||||
NOTE 3. EARNINGS PER COMMON SHARE | |||||||||||
The following table presents a reconciliation of basic and diluted net income per common share for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands, except per share information): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Net income | $ | 293,230 | $ | 348,230 | $ | 318,072 | |||||
Less: Preferred share distributions | 27,411 | — | — | ||||||||
| | | | | | | | | | | |
Net income available to common shareholders | $ | 265,819 | $ | 348,230 | $ | 318,072 | |||||
Less: Dividends and undistributed earnings allocated to participating securities | 904 | 1,116 | 1,082 | ||||||||
| | | | | | | | | | | |
Net income allocated to common shareholders | $ | 264,915 | $ | 347,114 | $ | 316,990 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Effect of dilutive securities: | |||||||||||
Interest on convertible senior notes | — | 3,234 | — | ||||||||
| | | | | | | | | | | |
Net income allocated to common shareholders for diluted earnings per share | $ | 264,915 | $ | 350,348 | $ | 316,990 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic: | |||||||||||
Basic weighted average common shares outstanding | 202,411 | 177,838 | 177,560 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income per common share | $ | 1.31 | $ | 1.95 | $ | 1.79 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted: | |||||||||||
Basic weighted average common shares outstanding | 202,411 | 177,838 | 177,560 | ||||||||
Dilutive effect of convertible senior notes(1) | — | 9,585 | 3,337 | ||||||||
| | | | | | | | | | | |
Diluted weighted average common shares outstanding(2) | 202,411 | 187,423 | 180,897 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income per common share | $ | 1.31 | $ | 1.87 | $ | 1.75 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | |||||||||||
The if-converted method was applied during the fourth quarter of 2012 reflecting the assumption that the convertible senior notes would be settled in common shares. During the first quarter of 2013, $172.5 million of the Company's outstanding convertible notes had been tendered for conversion and were settled with 26.1 million common shares. | |||||||||||
-2 | |||||||||||
Potential anti-dilutive common shares excluded from diluted earnings per share related to common share options were 1,932,279 for the years ended December 31, 2013, 2012 and 2011. | |||||||||||
SECURITIES
SECURITIES | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
SECURITIES | ' | |||||||||||||||||||
SECURITIES | ' | |||||||||||||||||||
NOTE 4. SECURITIES | ||||||||||||||||||||
The Company accounts for securities based on the following categories: (i) securities available-for-sale, which are carried at estimated fair value, with unrealized gains and losses reported in accumulated other comprehensive loss; (ii) other securities, at estimated fair value, with unrealized gains and losses recorded in the consolidated statements of operations; and (iii) RMBS, at estimated fair value, with unrealized gains and losses recorded in the consolidated statements of operations. | ||||||||||||||||||||
The following table summarizes the Company's securities as of December 31, 2013, which are carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||||||||
Gains | Losses | Value | ||||||||||||||||||
Securities available-for-sale | $ | 326,775 | $ | 24,791 | $ | (1,225 | ) | $ | 350,341 | |||||||||||
Other securities, at estimated fair value(1) | 135,968 | 12,436 | (1,437 | ) | 146,967 | |||||||||||||||
Residential mortgage-backed securities, at estimated fair value(1) | 138,284 | 2,809 | (65,089 | ) | 76,004 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total securities | $ | 601,027 | $ | 40,036 | $ | (67,751 | ) | $ | 573,312 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
-1 | ||||||||||||||||||||
Unrealized gains and losses presented represent amounts as of period-end. Unrealized gains and losses recognized during the year for these securities are recorded in earnings. | ||||||||||||||||||||
The following table summarizes the Company's securities as of December 31, 2012, which are carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||||||||
Gains | Losses | Value | ||||||||||||||||||
Securities available-for-sale | $ | 394,821 | $ | 27,281 | $ | (9,809 | ) | $ | 412,293 | |||||||||||
Other securities, at estimated fair value(1) | 27,991 | 9,768 | (374 | ) | 37,385 | |||||||||||||||
Residential mortgage-backed securities, at estimated fair value(1) | 171,385 | 3,762 | (91,305 | ) | 83,842 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total securities | $ | 594,197 | $ | 40,811 | $ | (101,488 | ) | $ | 533,520 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
-1 | ||||||||||||||||||||
Unrealized gains and losses presented represent amounts as of period-end. Unrealized gains and losses recognized during the year for these securities are recorded in earnings. | ||||||||||||||||||||
The following table shows the gross unrealized losses and fair value of the Company's available-for-sale securities, aggregated by length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2013 and 2012 (amounts in thousands): | ||||||||||||||||||||
Less Than 12 months | 12 Months or More | Total | ||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Securities available-for-sale | $ | 25,543 | $ | (658 | ) | $ | 30,034 | $ | (567 | ) | $ | 55,577 | $ | (1,225 | ) | |||||
December 31, 2012 | ||||||||||||||||||||
Securities available-for-sale | $ | 45,900 | $ | (4,398 | ) | $ | 37,500 | $ | (5,411 | ) | $ | 83,400 | $ | (9,809 | ) | |||||
The unrealized losses in the table above are considered to be temporary impairments due to market factors and are not reflective of credit deterioration. The Company considers many factors when evaluating whether impairment is other-than-temporary. For securities available-for-sale included in the table above, the Company does not intend to sell or believe that it is more likely than not that the Company will be required to sell any of its securities available-for-sale prior to recovery. In addition, based on the analyses performed by the Company on each of its securities available-for-sale, the Company believes that it is able to recover the entire amortized cost amount of the securities available-for-sale included in the table above. | ||||||||||||||||||||
During the year ended December 31, 2013, the Company recognized a loss totaling $19.5 million for securities available-for-sale that it determined to be other-than-temporarily impaired. During the years ended December 31, 2012 and 2011, the Company recognized losses totaling $8.2 million and $1.5 million, respectively, for securities available-for-sale that it determined to be other-than-temporarily impaired. The Company intends to sell these securities and as a result, the entire amount of the loss is recorded through earnings in net realized and unrealized gain on investments in the consolidated statements of operations. | ||||||||||||||||||||
For common and preferred stock, the Company considers many factors when evaluating whether impairment is other-than-temporary, including its intent and ability to hold the common and preferred stock for a period of time sufficient for recovery to cost. If the Company believes it will not recover the cost basis based on its intent or ability, an other-than-temporary loss will be recorded through earnings in net realized and unrealized gain on investments in the consolidated statements of operations. | ||||||||||||||||||||
During the year ended December 31, 2013, the Company did not recognize a loss for common and preferred stock that it determined to be other-than-temporarily impaired. As of December 31, 2013, the Company had no investments in common or preferred stock classified as available-for-sale. During the years ended December 31, 2012 and 2011, the Company recognized losses totaling $0.2 million and $2.2 million, respectively, for common and preferred stock that it determined to be other-than-temporary impaired. | ||||||||||||||||||||
As of December 31, 2013, the Company had a corporate debt security from one issuer in default with an estimated fair value of $25.4 million, which was on non-accrual status. As of December 31, 2012, the Company had no corporate debt securities in default. | ||||||||||||||||||||
Securities available-for-sale sold at a loss typically include those that the Company determined to be other-than-temporarily impaired or had a deterioration in credit quality. The following table shows the net realized gains on the sales of securities available-for-sale (amounts in thousands): | ||||||||||||||||||||
Year ended | Year ended | Year ended | ||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Gross realized gains | $ | 2,829 | $ | 85,982 | $ | 100,565 | ||||||||||||||
Gross realized losses | (42 | ) | (12 | ) | (559 | ) | ||||||||||||||
| | | | | | | | | | | ||||||||||
Net realized gains | $ | 2,787 | $ | 85,970 | $ | 100,006 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
The following table summarizes the amortized cost and estimated fair value of securities available-for-sale by remaining contractual maturity and weighted average coupon based on par values as of December 31, 2013 (dollar amounts in thousands): | ||||||||||||||||||||
Description | Amortized | Estimated | Weighted | |||||||||||||||||
Cost | Fair | Average | ||||||||||||||||||
Value | Coupon | |||||||||||||||||||
Due within one year | $ | 23,702 | $ | 24,517 | 7.9 | % | ||||||||||||||
One to five years | 207,987 | 221,393 | 8.2 | |||||||||||||||||
Five to ten years | 92,329 | 101,341 | 8.5 | |||||||||||||||||
Greater than ten years | 2,757 | 3,090 | 1.1 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total | $ | 326,775 | $ | 350,341 | ||||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
The remaining contractual maturities in the table above were allocated assuming no prepayments. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties. | ||||||||||||||||||||
Concentration Risk | ||||||||||||||||||||
The Company's corporate debt securities portfolio, which includes securities available-for-sale and other securities at estimated fair value, has certain credit risk concentrated in a limited number of issuers. As of December 31, 2013, approximately 55% of the estimated fair value of the Company's corporate debt securities portfolio was concentrated in ten issuers, with the three largest concentrations of debt securities in securities issued by LCI Helicopters Limited, JC Penney Corp. Inc. and NXP Semiconductor NV, which combined represented $104.5 million, or approximately 21% of the estimated fair value of the Company's corporate debt securities. As of December 31, 2012, approximately 51% of the estimated fair value of the Company's corporate debt securities portfolio, was concentrated in ten issuers, with the three largest concentrations of debt securities in securities issued by Sanmina Corporation, Avaya, Inc. and iPayment, Inc., which combined represented $87.0 million, or approximately 19% of the estimated fair value of the Company's corporate debt securities. | ||||||||||||||||||||
Pledged Assets | ||||||||||||||||||||
Note 7 to these consolidated financial statements describes the Company's borrowings under which the Company has pledged securities for borrowings. The following table summarizes the estimated fair value of securities pledged as collateral as of December 31, 2013 and 2012 (amounts in thousands): | ||||||||||||||||||||
As of | As of | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt and junior secured notes to affiliates | $ | 324,830 | $ | 354,088 | ||||||||||||||||
| | | | | | | | |||||||||||||
Total | $ | 324,830 | $ | 354,088 | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
CORPORATE_LOANS_AND_ALLOWANCE_
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | ' | ||||||||||||||||||||||||||||
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | ' | ||||||||||||||||||||||||||||
NOTE 5. CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | |||||||||||||||||||||||||||||
The Company accounts for loans based on the following categories (i) corporate loans held for investment, which are measured based on their principal plus or minus unaccreted purchase discounts and unamortized purchase premiums, net of an allowance for loan losses; (ii) corporate loans held for sale, which are measured at lower of cost or estimated fair value; and (iii) corporate loans, at estimated fair value, which are measured at fair value. | |||||||||||||||||||||||||||||
The following table summarizes the Company's corporate loans as of December 31, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||
Corporate | Corporate | Corporate | Total | ||||||||||||||||||||||||||
Loans Held | Loans Held | Loans, at | Corporate | ||||||||||||||||||||||||||
for Investment | for Sale | Estimated | Loans | ||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||
Principal(1) | $ | 6,280,470 | $ | 315,738 | $ | 277,458 | $ | 6,873,666 | |||||||||||||||||||||
Net unamortized discount | (105,979 | ) | (20,070 | ) | (54,997 | ) | (181,046 | ) | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Total amortized cost | 6,174,491 | 295,668 | 222,461 | 6,692,620 | |||||||||||||||||||||||||
Lower of cost or fair value adjustment | — | (15,920 | ) | — | (15,920 | ) | |||||||||||||||||||||||
Allowance for loan losses | (224,999 | ) | — | — | (224,999 | ) | |||||||||||||||||||||||
Net unrealized gains | — | — | 15,019 | 15,019 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Net carrying value | $ | 5,949,492 | $ | 279,748 | $ | 237,480 | $ | 6,466,720 | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Principal amounts of corporate loans and corporate loans held for sale are net of cumulative charge-offs and other adjustments totaling $18.1 million as of December 31, 2013. | |||||||||||||||||||||||||||||
The following table summarizes the Company's corporate loans as of December 31, 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, 2012 | |||||||||||||||||||||||||||||
Corporate | Corporate | Corporate | Total | ||||||||||||||||||||||||||
Loans Held | Loans Held | Loans, at | Corporate | ||||||||||||||||||||||||||
for Investment | for Sale | Estimated | Loans | ||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||
Principal(1) | $ | 6,143,599 | $ | 231,231 | $ | 56,931 | $ | 6,431,761 | |||||||||||||||||||||
Net unamortized discount | (136,438 | ) | (88,895 | ) | (23,277 | ) | (248,610 | ) | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Total amortized cost | 6,007,161 | 142,336 | 33,654 | 6,183,151 | |||||||||||||||||||||||||
Lower of cost or fair value adjustment | — | (14,047 | ) | — | (14,047 | ) | |||||||||||||||||||||||
Allowance for loan losses | (223,472 | ) | — | — | (223,472 | ) | |||||||||||||||||||||||
Net unrealized gains | — | — | 2,225 | 2,225 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Net carrying value | $ | 5,783,689 | $ | 128,289 | $ | 35,879 | $ | 5,947,857 | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Principal amounts of corporate loans and corporate loans held for sale are net of cumulative charge-offs and other adjustments totaling $51.6 million as of December 31, 2012. | |||||||||||||||||||||||||||||
Allowance for Loan Losses | |||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, the Company had an allowance for loan losses of $225.0 million and $223.5 million, respectively. As described in Note 2 to these consolidated financial statements, the allowance for loan losses represents the Company's estimate of probable credit losses inherent in its loan portfolio as of the balance sheet date. The Company's allowance for loan losses consists of two components, an allocated component and an unallocated component. The allocated component of the allowance for loan losses consists of individual loans that are impaired. The unallocated component of the allowance for loan losses represents the Company's estimate of losses inherent, but not identified, in its portfolio as of the balance sheet date. | |||||||||||||||||||||||||||||
The following table summarizes the changes in the allowance for loan losses for the Company's corporate loan portfolio during the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Beginning balance | $ | 223,472 | $ | 191,407 | $ | 209,030 | |||||||||||||||||||||||
Provision for loan losses | 32,812 | 46,498 | 14,194 | ||||||||||||||||||||||||||
Charge-offs | (31,285 | ) | (14,433 | ) | (31,817 | ) | |||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Ending balance | $ | 224,999 | $ | 223,472 | $ | 191,407 | |||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
The following table summarizes the ending balances of the allowance and corporate loans portfolio by basis of impairment method as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012(1) | ||||||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 142,682 | $ | 94,863 | |||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | 82,317 | 128,609 | |||||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality | — | — | |||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
$ | 224,999 | $ | 223,472 | ||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
Corporate loans (recorded investment)(2): | |||||||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 554,442 | $ | 445,437 | |||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | 5,638,790 | 5,583,622 | |||||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality | — | — | |||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
$ | 6,193,232 | $ | 6,029,059 | ||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Certain prior period information has been reclassified to conform to the current year presentation to segregate the Company's corporate loan portfolio between those that are included in the allocated component of the allowance for loan losses (individually evaluated) and those included in the unallocated component of the allowance for loan losses (collectively evaluated). | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
As of December 31, 2013, the allocated component of the allowance for loan losses totaled $142.7 million and relates to investments in certain loans issued by four issuers with an aggregate par amount of $594.4 million and an aggregate recorded investment of $554.4 million. Of the allocated component totaling $142.7 million, $66.9 million related to Texas Competitive Electric Holdings Company LLC ("TXU"), which had an aggregate amortized cost of $311.6 million as of December 31, 2013. As of December 31, 2012, the allocated component of the allowance for loan losses totaled $94.9 million and related to investments in certain loans issued by six issuers with an aggregate par amount of $484.1 million and an aggregate recorded investment of $445.4 million. During the year ended December 31, 2012, the Company determined that its TXU loans, with an aggregate amortized cost of $310.9 million as of December 31, 2012, were impaired. Accordingly, the Company increased the allocated component of its allowance for loan losses to account for the impairment of TXU. As of December 31, 2012, $49.1 million of the Company's allocated reserve was for TXU. | |||||||||||||||||||||||||||||
The following table summarizes the Company's recorded investment and unpaid principal balance in impaired loans, as well as the related allowance for credit losses as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||
Recorded | Unpaid | Related | Recorded | Unpaid | Related | ||||||||||||||||||||||||
Investment(1) | Principal | Allowance | Investment(1) | Principal | Allowance | ||||||||||||||||||||||||
Balance | Balance | ||||||||||||||||||||||||||||
With no related allowance recorded | $ | — | $ | — | $ | — | $ | 6,490 | $ | 19,931 | $ | — | |||||||||||||||||
With an allowance recorded | 554,442 | 594,416 | 142,682 | 438,947 | 464,214 | 94,863 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
Total | $ | 554,442 | $ | 594,416 | $ | 142,682 | $ | 445,437 | $ | 484,145 | $ | 94,863 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
The following table summarizes the Company's average recorded investment in impaired loans and interest income recognized for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
For the year ended | For the year ended | For the year ended | |||||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||||||||
Average | Interest | Average | Interest | Average | Interest | ||||||||||||||||||||||||
Recorded | Income | Recorded | Income | Recorded | Income | ||||||||||||||||||||||||
Investment(1) | Recognized | Investment(1) | Recognized | Investment(1) | Recognized | ||||||||||||||||||||||||
With no related allowance recorded | $ | 1,298 | $ | — | $ | 3,540 | $ | 208 | $ | 3,244 | $ | — | |||||||||||||||||
With an allowance recorded | 524,924 | 18,194 | 199,083 | 9,310 | 76,933 | 2,645 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
Total | $ | 526,222 | $ | 18,194 | $ | 202,623 | $ | 9,518 | $ | 80,177 | $ | 2,645 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, the allocated component of the allowance for loan losses included all impaired loans. While all of the Company's impaired loans are on non-accrual status, the Company's non-accrual loans also include (i) other loans held for investment, (ii) corporate loans held for sale and (iii) loans carried at estimated fair value, which are not reflected in the table above. Any of these three classifications may include those loans modified in a TDR, which are typically designated as being non-accrual (see "Troubled Debt Restructurings" section below). | |||||||||||||||||||||||||||||
The following table summarizes the Company's recorded investment in non-accrual loans as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||
Loans held for investment | $ | 554,442 | $ | 445,437 | |||||||||||||||||||||||||
Loans held for sale | 44,823 | 90,840 | |||||||||||||||||||||||||||
Loans at estimated fair value | 24,883 | — | |||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
Total non-accrual loans | $ | 624,148 | $ | 536,277 | |||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
The amount of interest income recognized using the cash-basis method during the time within the period that the loans were impaired was $25.1 million, which included $18.2 million for impaired loans that were held for investment and $6.9 million for non-accrual loans held for sale for the year ended December 31, 2013. The amount of interest income recognized using the cash-basis method during the time within the period that the loans were impaired was $19.6 million, which included $9.5 million for impaired loans that were held for investment and $10.1 million for non-accrual loans held for sale for the year ended December 31, 2012. | |||||||||||||||||||||||||||||
A loan is considered past due if any required principal and interest payments have not been received as of the date such payments were required to be made under the terms of the loan agreement. A loan may be placed on non-accrual status regardless of whether or not such loan is considered past due. As of December 31, 2013, the Company held a total recorded investment of $237.2 million of non-accrual and past due loans held for investment from three issuers, certain of which were in default as of December 31, 2013. The associated past due interest payments related to the $237.2 million recorded investment was $5.6 million, of which $0.9 million was less than 30 days past due, $2.3 million was 60-89 days past due, and $2.4 million was 90 or more days past due. In addition, as of December 31, 2013, the Company held $15.5 million par amount and $12.2 million estimated fair value of non-accrual and past due loans carried at estimated fair value from one issuer, which was also in default as of December 31, 2013. The associated interest payments related to the $12.2 million loans at estimated fair value that were 90 or more days past due was $0.2 million. As of December 31, 2012, the Company held a total recorded investment of $50.4 million of non-accrual and past due loans held for investment from one issuer, which was in default as of December 31, 2012 as a result of a missed interest payment due in December 2012 (see "Defaulted Loans" section below). The associated past due interest payments related to the $50.4 million recorded investment was $1.1 million, which was less than 30 days past due. | |||||||||||||||||||||||||||||
The unallocated component of the allowance for loan losses totaled $82.3 million and $128.6 million as of December 31, 2013 and 2012, respectively. As described in Note 2 to these consolidated financial statements, the Company estimates the unallocated components of the allowance for loan losses through a comprehensive review of its loan portfolio and identifies certain loans that demonstrate possible indicators of impairments, including credit quality indicators. The following table summarizes how the Company determines internally assigned grades related to credit quality based on a combination of concern as to probability of default and the seniority of the loan in the issuer's capital structure for the years ended December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
Internally Assigned Grade | Capital Hierarchy | Recorded Investment | Recorded Investment | ||||||||||||||||||||||||||
December 31, 2013(1) | December 31, 2012(1) | ||||||||||||||||||||||||||||
High | Senior Secured Loan | $ | 26,886 | $ | 525,562 | ||||||||||||||||||||||||
Second Lien Loan | 286,996 | 287,892 | |||||||||||||||||||||||||||
Subordinated | 11,643 | 10,621 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
$ | 325,525 | $ | 824,075 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Moderate | Senior Secured Loan | $ | 1,033,065 | $ | 826,107 | ||||||||||||||||||||||||
Second Lien Loan | 27,504 | 27,585 | |||||||||||||||||||||||||||
Subordinated | 39,329 | 38,374 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
$ | 1,099,898 | $ | 892,066 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Low | Senior Secured Loan | $ | 4,148,913 | $ | 3,716,831 | ||||||||||||||||||||||||
Second Lien Loan | 25,864 | 68,917 | |||||||||||||||||||||||||||
Subordinated | 38,590 | 81,733 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
$ | 4,213,367 | $ | 3,867,481 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total Unallocated | $ | 5,638,790 | $ | 5,583,622 | |||||||||||||||||||||||||
Total Allocated | 554,442 | 445,437 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total Loans Held for Investment | $ | 6,193,232 | $ | 6,029,059 | |||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
During the years ended December 31, 2013, 2012 and 2011, the Company recorded charge-offs totaling $31.3 million, $14.4 million and $31.8 million, respectively, comprised primarily of loans modified in TDRs and loans transferred to loans held for sale. | |||||||||||||||||||||||||||||
Loans Held For Sale and the Lower of Cost or Fair Value Adjustment | |||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, the Company had $279.7 million and $128.3 million of loans held for sale, respectively. During the years ended December 31, 2013 and 2012, the Company transferred $323.4 million and $115.0 million amortized cost amount of loans from held for investment to held for sale, respectively. The transfers of certain loans to held for sale were due to the Company's determination that credit quality of a loan in relation to its expected risk-adjusted return no longer met the Company's investment objective and the determination by the Company to reduce or eliminate the exposure for certain loans as part of its portfolio risk management practices. Also, during the years ended December 31, 2013 and 2012, the Company transferred zero and $114.9 million amortized cost amount from loans held for sale back to loans held for investment at the lower of cost or estimated fair value, respectively. These transfers back to held for investment occurred as the circumstances that led to the initial transfer to held for sale were no longer present. Such circumstances may include deteriorated market conditions often resulting in price depreciation or assets becoming illiquid, changes in restrictions on sales and certain loans amending their terms to extend the maturity, whereby the Company determined that selling the asset no longer met its investment objective and strategy. | |||||||||||||||||||||||||||||
The Company recorded a $5.9 million net charge to earnings during the year ended December 31, 2013 for the lower of cost or estimated fair value adjustment for certain loans held for sale, which had a carrying value of $279.7 million as of December 31, 2013. Comparatively, the Company recorded a $2.7 million and $65.2 million net charge to earnings during the years ended December 31, 2012 and 2011, respectively, for the lower of cost or estimated fair value adjustment for certain loans held for sale, which had a carrying value of $128.3 million and $317.3 million as of December 31, 2012 and 2011, respectively. | |||||||||||||||||||||||||||||
Defaulted Loans | |||||||||||||||||||||||||||||
As of December 31, 2013, the Company held six corporate loans that were in default with a total amortized cost of $215.7 million from two issuers. Of the $215.7 million total amortized cost, $203.7 million were included in the loans that comprised the allocated component of the Company's allowance for loan losses and $12.0 million were included in loans carried at estimated fair value. As of December 31, 2012, the Company held two corporate loans that were in default with a total amortized cost of $50.4 million from one issuer and were included in the loans that comprised the allocated component of the Company's allowance for loan losses. | |||||||||||||||||||||||||||||
Troubled Debt Restructurings | |||||||||||||||||||||||||||||
The recorded investment balance of TDRs at December 31, 2013 totaled $55.4 million, related to three TDRs. Comparatively, the recorded investment balance of TDRs at December 31, 2012 totaled $25.5 million, related to one TDR. Loans whose terms have been modified in a TDR are considered impaired, unless accounted for at fair value or the lower of cost or estimated fair value, and are typically placed on non-accrual status, but can be moved to accrual status when, among other criteria, payment in full of all amounts due under the restructured terms is expected and the borrower has demonstrated a sustained period of repayment performance, typically six months. As of December 31, 2013 and 2012, $55.4 million and $25.5 million of TDRs were included in non-accrual loans, respectively (see "Non-Accrual Loans" section above). As of December 31, 2013 and 2012, the allowance for loan losses included specific reserves of $22.1 million and $0.5 million related to TDRs, respectively. | |||||||||||||||||||||||||||||
The following table presents the aggregate balance of loans whose terms have been modified in a TDR during the years ended December 31, 2013, 2012 and 2011 (dollar amounts in thousands): | |||||||||||||||||||||||||||||
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||||
Number | Pre- | Post- | Number | Pre- | Post- | Number | Pre- | Post- | |||||||||||||||||||||
of TDRs | modification | modification | of TDRs | modification | modification | of TDRs | modification | modification | |||||||||||||||||||||
outstanding | outstanding | outstanding | outstanding | outstanding | outstanding | ||||||||||||||||||||||||
recorded | recorded | recorded | recorded | recorded | recorded | ||||||||||||||||||||||||
investment(1) | investment(1)(2) | investment(1) | investment(1) | investment(1) | investment(1)(3) | ||||||||||||||||||||||||
Troubled debt restructurings: | |||||||||||||||||||||||||||||
Loans held for investment | 2 | $ | 68,358 | $ | 39,430 | 1 | $ | 13,807 | $ | 4,679 | — | $ | — | $ | — | ||||||||||||||
Loans held for sale | — | — | — | 1 | 53,875 | 20,886 | — | — | — | ||||||||||||||||||||
Loans at estimated fair value | 1 | 1,670 | 1,229 | — | — | — | 1 | 11,158 | — | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | 3 | $ | 70,028 | $ | 40,659 | 2 | $ | 67,682 | $ | 25,565 | 1 | $ | 11,158 | $ | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Excludes equity securities received from the TDRs with an estimated fair value of $2.1 million. | |||||||||||||||||||||||||||||
-3 | |||||||||||||||||||||||||||||
Excludes equity securities received from the TDRs with an estimated fair value of $9.5 million. | |||||||||||||||||||||||||||||
During the year ended December 31, 2013, the Company modified an aggregate recorded investment of $70.0 million related to three issuers in restructurings which qualified as TDRs. These restructurings occurred during the first quarter of 2013 and involved conversions of the loans into one of the following: (i) new term loans with extended maturities and fixed, rather than floating, interest rates, (ii) equity carried at estimated fair value, or (iii) a combination of equity and loans carried at estimated fair value. The modification involving an extension of maturity date was for an additional four-year period with a higher coupon of 6.8%. Prior to the restructurings, two of the TDRs described above were already identified as impaired and had specific allocated reserves, while the third was a loan carried at estimated fair value. Upon restructuring the impaired loans held for investment, the difference between the recorded investment of the pre-modified loans and the estimated fair value of the new assets was charged-off against the allowance for loan losses. The TDRs resulted in $26.8 million of charge-offs for the year ended December 31, 2013, which comprised 86% of the total $31.3 million of charge-offs recorded during the year ended December 31, 2013. | |||||||||||||||||||||||||||||
During the year ended December 31, 2012, the Company exchanged an aggregate recorded investment of $67.7 million of loans from a single issuer for new loans of varying extended maturities and equity, with a combined estimated fair value of $25.6 million, in a modification which qualified as a TDR. The interest rate did not change as a result of this modification. Prior to the TDR, certain of the loans were included in the allocated component of the allowance for loan losses, while the remaining loans were in loans held for sale and were on non-accrual status. The difference between the recorded investment of the loans and the estimated fair value of the new loans and equity was charged-off against the allowance for loan losses and the lower of cost or estimated fair value allowance. The new loans were included in the allocated component of the allowance for loan losses and in loans held for sale and will be maintained on non-accrual status until performance has been demonstrated by the borrower for a suitable period of time, while the equity was carried at estimated fair value. The loans modified in the TDR were not in default at December 31, 2012. | |||||||||||||||||||||||||||||
During the year ended December 31, 2011, the Company modified loans with an aggregate recorded investment of $11.2 million related to a single issuer which qualified as a TDR and resulted in the Company recording an $0.8 million loss. This modification involved the restructuring of a debt instrument to equity investment, resulting in a new asset. The loans modified in the TDR were not in default at December 31, 2011. | |||||||||||||||||||||||||||||
As of December 31, 2013, 2012 and 2011, there were no commitments to lend additional funds to the issuers whose loans had been modified in a TDR. | |||||||||||||||||||||||||||||
As of December 31, 2013, 2012 and 2011, no loans modified as TDRs were in default within a twelve month period subsequent to their original restructuring. | |||||||||||||||||||||||||||||
During the years ended December 31, 2013 and 2012, the Company modified $2.4 billion and $1.7 billion amortized cost of corporate loans, respectively, that did not qualify as TDRs. These modifications involved changes in existing rates and maturities to prevailing market rates/maturities for similar instruments and did not qualify as TDRs as the respective borrowers were not experiencing financial difficulty or seeking (or granted) a concession as part of the modification. In addition, these modifications of non-troubled debt holdings were accomplished with modified loans that were not substantially different from the loans prior to modification. | |||||||||||||||||||||||||||||
Concentration Risk | |||||||||||||||||||||||||||||
The Company's corporate loan portfolio has certain credit risk concentrated in a limited number of issuers. As of December 31, 2013, approximately 46% of the total amortized cost basis of the Company's corporate loan portfolio was concentrated in twenty issuers, with the three largest concentrations of corporate loans in loans issued by TXU, Modular Space Corporation and U.S. Foods Inc., which combined represented $935.2 million or approximately 14% of the aggregated amortized cost basis of the Company's corporate loans. As of December 31, 2012, approximately 46% of the total amortized cost basis of the Company's corporate loan portfolio was concentrated in twenty issuers, with the three largest concentrations of corporate loans in loans issued by U.S. Foods Inc., TXU and Modular Space Corporation, which combined represented $1.0 billion, or approximately 16% of the aggregated amortized cost basis of the Company's corporate loans. | |||||||||||||||||||||||||||||
Pledged Assets | |||||||||||||||||||||||||||||
Note 7 to these consolidated financial statements describes the Company's borrowings under which the Company has pledged loans for borrowings. The following table summarizes the amortized cost of corporate loans pledged as collateral as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt and junior secured notes to affiliates | $ | 6,231,541 | $ | 5,804,026 | |||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
Total | $ | 6,231,541 | $ | 5,804,026 | |||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
NATURAL_RESOURCES_ASSETS
NATURAL RESOURCES ASSETS | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
NATURAL RESOURCES ASSETS | ' | |||||||
NATURAL RESOURCES ASSETS | ' | |||||||
NOTE 6. NATURAL RESOURCES ASSETS | ||||||||
Natural Resources Properties | ||||||||
The following table summarizes the Company's oil and gas properties as of December 31, 2013 and 2012 (amounts in thousands): | ||||||||
As of | As of | |||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Proved oil and natural gas properties (successful efforts method) | $ | 451,909 | $ | 315,446 | ||||
Unproved oil and natural gas properties | 16,913 | 2,596 | ||||||
Less: Accumulated depreciation, depletion and amortization | (68,453 | ) | (28,113 | ) | ||||
| | | | | | | | |
Oil and gas properties, net | $ | 400,369 | $ | 289,929 | ||||
| | | | | | | | |
| | | | | | | | |
For the years ended December 31, 2013 and 2012, the Company recorded $10.4 million and $3.3 million, respectively, of impairments, which are included in net realized and unrealized gain on investments in the consolidated statements of operations. | ||||||||
Acquisitions | ||||||||
The Company accounts for certain of its oil and natural gas properties as business combinations under the acquisition method of accounting. | ||||||||
During 2012, the Company completed the acquisition of certain oil and natural gas properties located in Louisiana, Mississippi and Texas (most notably in the Barnett and Eagle Ford Shale), by funding approximately $178.3 million including working capital and costs, partially financed through its asset-based borrowing facility. | ||||||||
The results of operations of these properties have been included in the consolidated financial statements since the acquisition dates. As these acquisitions were accounted for under the acquisition method of accounting, the Company conducted assessments of net assets acquired and recognized amounts for identifiable assets acquired and liabilities assumed at their estimated acquisition date fair values. Transaction and integration costs associated with the acquisitions were expensed as incurred. | ||||||||
The initial accounting for the 2012 business combinations was not complete and adjustments were subsequently recorded as additional information was obtained about the facts and circumstances that existed as of the acquisition dates. During the year ended December 31, 2013, the Company recorded adjustments to the recognized fair values of the identifiable assets acquired and liabilities assumed in connection with the Company's acquisitions as of their respective acquisition dates. The table below reflects updated 2012 information including an increase of $3.8 million to both proved property and accounts payable and accrued liabilities (amounts in thousands): | ||||||||
2013 | 2012 | |||||||
Proved property | $ | — | $ | 164,557 | ||||
Unproved property | — | 2,658 | ||||||
Other assets | — | 16,789 | ||||||
Risk management liabilities | — | (1,037 | ) | |||||
Accounts payable and accrued liabilities | — | (9,030 | ) | |||||
Asset retirement obligation | — | (5,491 | ) | |||||
| | | | | | | | |
Total | $ | — | $ | 168,446 | ||||
| | | | | | | | |
| | | | | | | | |
Development and Other Purchases | ||||||||
Separate from the acquisitions above, which the Company accounts for as business combinations under the acquisition method of accounting, the Company deployed capital to develop and purchase other interests and assets in the natural resources sector. | ||||||||
During 2013, the Company capitalized an additional $154.5 million as a result of purchasing natural resources assets or covering costs related to the development of oil and gas properties. Accordingly, this balance is included in oil and gas properties, net on the consolidated balance sheets. | ||||||||
In addition, during 2012, the Company participated and earned working interests in oil and natural gas properties located in Texas by funding approximately $1.4 million including costs. This amount is included in oil and gas properties, net on the consolidated balance sheets. | ||||||||
BORROWINGS
BORROWINGS | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
BORROWINGS | ' | ||||||||||||||||
BORROWINGS | ' | ||||||||||||||||
NOTE 7. BORROWINGS | |||||||||||||||||
Certain information with respect to the Company's borrowings as of December 31, 2013 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||||
Outstanding | Weighted | Weighted | Collateral(1) | ||||||||||||||
Borrowings | Average | Average | |||||||||||||||
Borrowing | Remaining | ||||||||||||||||
Rate | Maturity | ||||||||||||||||
(in days) | |||||||||||||||||
CLO 2005-1 senior secured notes | $ | 193,909 | 0.73 | % | 1,212 | $ | 303,104 | ||||||||||
CLO 2005-2 senior secured notes | 335,570 | 0.63 | 1,426 | 496,917 | |||||||||||||
CLO 2006-1 senior secured notes | 384,925 | 0.69 | 1,698 | 649,894 | |||||||||||||
CLO 2007-1 senior secured notes | 2,075,040 | 0.79 | 2,692 | 2,354,938 | |||||||||||||
CLO 2007-1 mezzanine notes | 406,428 | 3.65 | 2,692 | 461,250 | |||||||||||||
CLO 2007-1 subordinated notes(2) | 136,097 | 18.15 | 2,692 | 154,456 | |||||||||||||
CLO 2007-A senior secured notes | 428,152 | 1.57 | 1,384 | 540,677 | |||||||||||||
CLO 2007-A mezzanine notes | 55,327 | 7.44 | 1,384 | 69,867 | |||||||||||||
CLO 2007-A subordinated notes(2) | 15,096 | 42.22 | 1,384 | 19,063 | |||||||||||||
CLO 2011-1 senior debt | 388,703 | 1.25 | 1,688 | 517,597 | |||||||||||||
CLO 2012-1 senior secured notes | 362,727 | 2.34 | 4,002 | 376,603 | |||||||||||||
CLO 2012-1 subordinated notes(2) | 18,000 | 11.67 | 4,002 | 18,689 | |||||||||||||
CLO 2013-1 senior secured notes | 449,409 | 1.98 | 4,214 | 468,915 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total collateralized loan obligation secured debt | 5,249,383 | 6,431,970 | |||||||||||||||
Senior secured credit facility(3) | 75,000 | 1.39 | 699 | — | |||||||||||||
2015 Asset-based borrowing facility | 50,289 | 2.42 | 674 | 213,935 | |||||||||||||
2018 Asset-based borrowing facility(4) | — | — | 1,519 | — | |||||||||||||
| | | | | | | | | | | | | | ||||
Total credit facilities | 125,289 | 213,935 | |||||||||||||||
8.375% Senior notes | 250,800 | 8.38 | 10,181 | — | |||||||||||||
7.500% Senior notes | 111,476 | 7.5 | 10,306 | — | |||||||||||||
Junior subordinated notes | 283,517 | 5.39 | 8,347 | — | |||||||||||||
| | | | | | | | | | | | | | ||||
Total borrowings | $ | 6,020,465 | $ | 6,645,905 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
-1 | |||||||||||||||||
Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities available-for-sale and equity investments at estimated fair value. Also includes the carrying value of oil and gas assets. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the outstanding borrowings for each respective CLO. | |||||||||||||||||
-2 | |||||||||||||||||
Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on year-to-date estimated distributions, if any. | |||||||||||||||||
-3 | |||||||||||||||||
Capital stock of material domestic and foreign subsidiaries, as defined by the senior secured credit facility agreement, are eligible to be pledged as collateral. As of December 31, 2013, the total investments held within these eligible subsidiaries exceeded the amount of the outstanding debt. | |||||||||||||||||
-4 | |||||||||||||||||
Borrowing rates range from 1.75% to 3.25% plus London interbank offered rate ("LIBOR") per annum based on the amount outstanding. | |||||||||||||||||
Certain information with respect to the Company's borrowings as of December 31, 2012 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||||
Outstanding | Weighted | Weighted | Collateral(1) | ||||||||||||||
Borrowings | Average | Average | |||||||||||||||
Borrowing | Remaining | ||||||||||||||||
Rate | Maturity | ||||||||||||||||
(in days) | |||||||||||||||||
CLO 2005-1 senior secured notes | $ | 427,317 | 0.69 | % | 1,577 | $ | 510,187 | ||||||||||
CLO 2005-2 senior secured notes | 470,516 | 0.66 | 1,791 | 618,000 | |||||||||||||
CLO 2006-1 senior secured notes | 601,091 | 0.69 | 2,063 | 846,365 | |||||||||||||
CLO 2007-1 senior secured notes | 2,075,040 | 0.86 | 3,057 | 2,298,373 | |||||||||||||
CLO 2007-1 mezzanine notes | 203,727 | 2.81 | 3,057 | 225,654 | |||||||||||||
CLO 2007-1 subordinated notes(2) | 5,828 | 26.22 | 3,057 | 6,455 | |||||||||||||
CLO 2007-A senior secured notes | 601,375 | 1.5 | 1,749 | 698,569 | |||||||||||||
CLO 2007-A mezzanine notes | 5,580 | 7.02 | 1,749 | 6,482 | |||||||||||||
CLO 2007-A subordinated notes(2) | 4,599 | 60.24 | 1,749 | 5,342 | |||||||||||||
CLO 2011-1 senior debt | 343,485 | 1.67 | 2,053 | 421,584 | |||||||||||||
CLO 2012-1 senior secured notes(3) | 362,280 | 2.58 | 4,367 | 40,180 | |||||||||||||
CLO 2012-1 subordinated notes(2)(3) | 21,500 | — | 4,367 | 2,351 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total collateralized loan obligation secured debt | 5,122,338 | 5,679,542 | |||||||||||||||
CLO 2007-1 mezzanine notes to affiliates | 118,845 | 6.29 | 3,057 | 131,636 | |||||||||||||
CLO 2007-1 subordinated notes to affiliates(2) | 130,270 | 25.89 | 3,057 | 144,291 | |||||||||||||
CLO 2007-A mezzanine notes to affiliates | 36,945 | 7.53 | 1,749 | 42,916 | |||||||||||||
CLO 2007-A subordinated notes to affiliates(2) | 10,497 | 60.24 | 1,749 | 12,194 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total collateralized loan obligation junior secured notes to affiliates | 296,557 | 331,037 | |||||||||||||||
Senior secured credit facility | — | 2.56 | 1,064 | — | |||||||||||||
2015 Asset-based borrowing facility | 107,789 | 2.71 | 1,039 | 227,415 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total credit facilities | 107,789 | 227,415 | |||||||||||||||
7.5% Convertible senior notes | 166,028 | 7.5 | 1,476 | — | |||||||||||||
8.375% Senior notes | 250,735 | 8.38 | 10,546 | — | |||||||||||||
7.500% Senior notes | 111,443 | 7.5 | 10,671 | — | |||||||||||||
Junior subordinated notes | 283,517 | 5.43 | 8,712 | — | |||||||||||||
| | | | | | | | | | | | | | ||||
Total borrowings | $ | 6,338,407 | $ | 6,237,994 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
-1 | |||||||||||||||||
Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities available-for-sale and equity investments at estimated fair value. Also includes the carrying value of oil and gas assets. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the outstanding borrowing for each respective CLO. | |||||||||||||||||
-2 | |||||||||||||||||
Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on year-to-date estimated distributions, if any. | |||||||||||||||||
-3 | |||||||||||||||||
In addition to the fair value of collateral, CLO 2012-1 held $357.7 million of principal cash as of December 31, 2012 as it was closed on December 21, 2012. | |||||||||||||||||
CLO Debt | |||||||||||||||||
The indentures governing the Company's CLO transactions stipulate the reinvestment period during which the collateral manager, which is an affiliate of the Company's Manager, can generally sell or buy assets at its discretion and can reinvest principal proceeds into new assets. CLO 2007-A, CLO 2005-1, CLO 2005-2 and CLO 2006-1 are no longer in their reinvestment periods. As a result, principal proceeds from the assets held in each of these transactions are generally used to amortize the outstanding balance of senior notes outstanding. During the years ended December 31, 2013 and 2012, $759.2 million and $886.6 million, respectively, of original CLO 2007-A, CLO 2005-1, CLO 2005-2 and CLO 2006-1 senior notes were repaid. CLO 2007-1, CLO 2012-1 and CLO 2013-1 will end their reinvestment periods during May 2014, December 2016 and July 2017, respectively. CLO 2011-1 does not have a reinvestment period and all principal proceeds from holdings in CLO 2011-1 are used to amortize the transaction. During the years ended December 31, 2013 and 2012, $77.2 million and $93.0 million, respectively, of original CLO 2011-1 senior notes were repaid. | |||||||||||||||||
On September 27, 2013, the Company amended the CLO 2011-1 senior loan agreement (the "CLO 2011-1 Agreement") to upsize the transaction by $300.0 million, of which CLO 2011-1 is now able to borrow up to an incremental $225.0 million. Under the amended CLO 2011-1 Agreement, CLO 2011-1 matures on August 15, 2020 and borrowings under the CLO 2011-1 Agreement bear interest at a rate of the three-month LIBOR plus 1.35%. | |||||||||||||||||
On June 25, 2013, the Company closed CLO 2013-1, a $519.4 million secured financing transaction maturing on July 15, 2025. The Company issued $458.5 million par amount of senior secured notes to unaffiliated investors, of which $442.0 million was floating rate with a weighted-average coupon of three-month LIBOR plus 1.67% and $16.5 million was fixed rate at 3.73%. The investments that are owned by CLO 2013-1 collateralize the CLO 2013-1 debt, and as a result, those investments are not available to the Company, its creditors or shareholders. | |||||||||||||||||
On December 21, 2012, the Company closed CLO 2012-1, a $412.4 million secured financing transaction maturing December 16, 2024. The Company issued $367.5 million par amount of senior secured notes to unaffiliated investors, of which $342.5 million was floating rate with a weighted-average coupon of three-month LIBOR plus 2.09% and $25.0 million was fixed rate at 2.39%. The Company also issued $21.5 million of subordinated notes to unaffiliated third party investors. During 2013, the Company purchased $3.5 million of CLO 2012-1 subordinated notes from unaffiliated third party investors, therefore, reducing the subordinates notes issued to unaffiliated third party investors from $21.5 million to $18.0 million, as of December 31, 2013. This transaction resulted in the Company recording a one-time gain on extinguishment of debt totaling $0.3 million for the year ended December 31, 2013. CLO 2012-1's debt is collateralized by the investments that are owned by CLO 2012-1, and as a result, those investments are not available to the Company, its creditors or shareholders. | |||||||||||||||||
During the year ended December 31, 2013, the Company issued $84.8 million par amount of CLO 2007-1 class D notes for proceeds of $81.1 million. In addition, during the year ended December 31, 2013, the Company issued $12.4 million par amount of CLO 2007-A class F notes for proceeds of $12.7 million. Comparatively, during the year ended December 31, 2012, the Company issued $119.7 million par amount of CLO 2007-1 class D notes for proceeds of $95.1 million and $11.3 million par amount of CLO 2007-A class C notes for proceeds of $10.6 million. | |||||||||||||||||
Credit Facilities | |||||||||||||||||
Senior Secured Credit Facility | |||||||||||||||||
On November 30, 2012, the Company entered into a credit agreement for a three-year $150.0 million revolving credit facility, maturing on November 30, 2015 (the "2015 Facility"). The Company may obtain additional commitments under the 2015 Facility so long as the aggregate amount of commitments at any time does not exceed $350.0 million. The Company has the right to prepay loans under the 2015 Facility in whole or in part at any time. In connection with entering into the 2015 Facility, the Company terminated the commitments under its existing asset-based revolving credit facility. Loans under the 2015 Facility bear interest at a rate equal to, at the Company's option, LIBOR plus 2.25% per annum, or an alternate base rate plus 1.25% per annum. The 2015 Facility contains customary covenants, including ones that require the Company to satisfy a net worth financial test and maintain certain ratios relating to leverage and consolidated total assets. In addition, the 2015 Facility contains customary negative covenants applicable to the Company. As of December 31, 2013 and 2012, the Company had $75.0 million and zero, respectively of borrowings outstanding under the 2015 Facility. | |||||||||||||||||
Asset-Based Borrowing Facility | |||||||||||||||||
On November 14, 2013, the Company's five-year nonrecourse, asset-based revolving credit facility (the "2015 Natural Resources Facility"), maturing on November 5, 2015, was adjusted and reduced to $94.6 million, which is subject to, among other things, the terms of a borrowing base derived from the value of eligible specified oil and gas assets. The borrowing base is subject to certain caps and concentration limits customary for financings of this type. The Company has the right to prepay loans under the 2015 Natural Resources Facility in whole or in part at any time. Loans under the 2015 Natural Resources Facility bear interest at a rate equal to LIBOR plus a tiered applicable margin ranging from 1.75% to 2.75% per annum. The 2015 Natural Resources Facility contains customary covenants applicable to the Company. As of December 31, 2013 and 2012, the Company had $50.3 million and $107.8 million, respectively, of borrowings outstanding under the 2015 Natural Resources Facility. | |||||||||||||||||
On February 27, 2013, the Company entered into a separate credit agreement for a five-year $6.0 million non-recourse, asset-based revolving credit facility, maturing on February 27, 2018 (the "2018 Natural Resources Facility"), that is subject to, among other things, the terms of a borrowing base derived from the value of eligible specified oil and gas assets. On December 20, 2013, the 2018 Natural Resources Facility was adjusted and increased to $42.0 million. The Company has the right to prepay loans under the 2018 Natural Resources Facility in whole or in part at any time. Loans under the 2018 Natural Resources Facility bear interest at a rate equal to LIBOR plus a tiered applicable margin ranging from 1.75% to 3.25% per annum. The 2018 Natural Resources Facility contains customary covenants applicable to the Company. As of December 31, 2013, the Company had no borrowings outstanding under the 2018 Natural Resources Facility. | |||||||||||||||||
As of December 31, 2013 and 2012, the Company believes it was in compliance with the covenant requirements for its credit facilities. | |||||||||||||||||
Convertible Debt | |||||||||||||||||
7.5% Convertible Senior Notes | |||||||||||||||||
On January 18, 2013, in accordance with the indenture relating to the Company's $172.5 million 7.5% convertible senior notes due January 15, 2017 ("7.5% Notes"), the Company issued a conversion rights termination notice ("Termination Notice") to holders of the 7.5% Notes whereby it terminated the right to convert the 7.5% Notes to common shares. The conversion rate as of January 18, 2013 was equal to 141.8256 common shares for each $1,000 principal amount of 7.5% Notes, plus an additional 9.2324 common shares per $1,000 principal amount to account for the make-whole premium. Holders of $172.5 million 7.5% Notes submitted their notes for conversion for which the Company satisfied by physical settlement with 26.1 million common shares. | |||||||||||||||||
In accordance with accounting for convertible debt instruments that may be settled in cash upon conversion, the Company had separately accounted for the liability and equity components to reflect the nonconvertible debt borrowing rate. The Company determined that the equity component of the 7.5% Notes totaled $10.0 million and was included in paid-in-capital on the Company's consolidated balance sheet as of December 31, 2012. The remaining liability component of $166.0 million, included within convertible senior notes on the Company's consolidated balance sheets as of December 31, 2012, was comprised of the principal $172.5 million less the unamortized debt discount of $6.5 million as of December 31, 2012. The total debt discount amortization recognized for the years ended December 31, 2013, 2012 and 2011 was zero, $1.3 million and $1.2 million, respectively. The debt discount was amortized at the effective interest rate of 8.6%. For the years ended December 31, 2013, 2012 and 2011, the total interest expense recognized on the 7.5% Notes was $0.5 million, $12.9 million and $12.9 million, respectively. | |||||||||||||||||
7.0% Convertible Senior Notes | |||||||||||||||||
During the first quarter of 2012, the Company repurchased $23.1 million par amount of its 7.0% convertible senior notes due July 15, 2012 (the "7.0% Notes"). These transactions resulted in the Company recording a loss of $0.4 million and a $0.2 million write-off of unamortized debt issuance costs. During 2011, the Company repurchased $45.5 million par amount of its 7.0% Notes, which resulted in the Company recording a loss of $1.7 million and a write-off of $0.1 million of unamortized debt issuance costs. On July 13, 2012, the Company repaid in full its $112.0 million of outstanding 7.0% Notes, which matured on July 15, 2012. | |||||||||||||||||
Senior Notes | |||||||||||||||||
On March 20, 2012, the Company issued $115.0 million par amount of 7.500% senior notes due March 20, 2042 ("7.500% Senior Notes"), resulting in net proceeds of $111.4 million. Interest on the 7.500% Senior Notes is payable quarterly in arrears on June 20, September 20, December 20 and March 20 of each year. | |||||||||||||||||
Contractual Obligations | |||||||||||||||||
The table below summarizes the Company's contractual obligations (excluding interest) under borrowing agreements as of December 31, 2013 (amounts in thousands): | |||||||||||||||||
Payments Due by Period | |||||||||||||||||
Total | Less than | 1 - 3 | 3 - 5 | More than | |||||||||||||
1 year | years | years | 5 years | ||||||||||||||
CLO 2005-1 notes | $ | 195,897 | $ | — | $ | — | $ | 195,897 | $ | — | |||||||
CLO 2005-2 notes | 338,773 | — | — | 338,773 | — | ||||||||||||
CLO 2006-1 notes | 384,925 | — | — | 384,925 | — | ||||||||||||
CLO 2007-1 notes | 2,641,442 | — | — | — | 2,641,442 | ||||||||||||
CLO 2007-A notes | 498,843 | — | — | 498,843 | — | ||||||||||||
CLO 2011-1 debt | 388,703 | — | — | 388,703 | — | ||||||||||||
CLO 2012-1 notes | 385,500 | — | — | — | 385,500 | ||||||||||||
CLO 2013-1 notes | 458,500 | — | — | — | 458,500 | ||||||||||||
Credit facilities | 125,289 | — | 125,289 | — | — | ||||||||||||
Senior notes | 373,750 | — | — | — | 373,750 | ||||||||||||
Junior subordinated notes | 283,517 | — | — | — | 283,517 | ||||||||||||
| | | | | | | | | | | | | | | | | |
Total | $ | 6,075,139 | $ | — | $ | 125,289 | $ | 1,807,141 | $ | 4,142,709 | |||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
The remaining contractual maturities in the table above were allocated assuming no prepayments and represent the principal amount of all notes, excluding any discount and accounting adjustments. Expected maturities may differ from contractual maturities because the Company, as the borrower, may have the right to call or prepay certain obligations, with or without call or prepayment penalties. | |||||||||||||||||
DERIVATIVE_INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | ' | ||||||||||||||||||||||||||||
DERIVATIVE INSTRUMENTS | ' | ||||||||||||||||||||||||||||
NOTE 8. DERIVATIVE INSTRUMENTS | |||||||||||||||||||||||||||||
The Company enters into derivative transactions in order to hedge its interest rate risk exposure to the effects of interest rate changes. Additionally, the Company enters into derivative transactions in the course of its portfolio management activities. The counterparties to the Company's derivative agreements are major financial institutions with which the Company and its affiliates may also have other financial relationships. In the event of nonperformance by the counterparties, the Company is potentially exposed to losses. The counterparties to the Company's derivative agreements have investment grade ratings and, as a result, the Company does not anticipate that any of the counterparties will fail to fulfill their obligations. | |||||||||||||||||||||||||||||
The table below summarizes the aggregate notional amount and estimated net fair value of the derivative instruments as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||
Notional | Estimated | Notional | Estimated | ||||||||||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||||||||||||
Cash Flow Hedges: | |||||||||||||||||||||||||||||
Interest rate swaps | $ | 478,333 | $ | (42,078 | ) | $ | 503,833 | $ | (90,618 | ) | |||||||||||||||||||
Free-Standing Derivatives: | |||||||||||||||||||||||||||||
Commodity swaps | — | 1,493 | — | 7,056 | |||||||||||||||||||||||||
Credit default swaps—protection sold | — | — | — | 19 | |||||||||||||||||||||||||
Credit default swaps—protection purchased | (100,000 | ) | (2,019 | ) | (47,321 | ) | (1,140 | ) | |||||||||||||||||||||
Foreign exchange forward contracts | (320,380 | ) | (25,258 | ) | (338,313 | ) | (20,975 | ) | |||||||||||||||||||||
Foreign exchange options | 129,900 | 8,941 | 130,207 | 8,277 | |||||||||||||||||||||||||
Common stock warrants | — | 945 | — | 3,318 | |||||||||||||||||||||||||
Total rate of return swaps | — | (229 | ) | — | — | ||||||||||||||||||||||||
Options | — | 6,794 | — | — | |||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Total | $ | (51,411 | ) | $ | (94,063 | ) | |||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Cash Flow Hedges | |||||||||||||||||||||||||||||
The Company uses interest rate swaps to hedge a portion of the interest rate risk associated with its borrowings under CLO senior secured notes as well as certain of its floating rate junior subordinated notes. The Company designates these interest rate swaps as cash flow hedges. As of December 31, 2013 and 2012, the Company had interest rate swaps with notional amounts totaling $478.3 million and $503.8 million, respectively. Changes in the estimated fair value of the interest rate swaps are recorded through accumulated other comprehensive loss, with gains or losses representing hedge ineffectiveness, if any, recognized in earnings during the reporting period. | |||||||||||||||||||||||||||||
The following table shows the net gains (losses) recognized in other comprehensive loss related to derivatives in cash flow hedging relationships for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | |||||||||||||||||||||||||||
December 31, | December 31, | December 31, | |||||||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||||||||
Net gains (losses) recognized in other comprehensive loss on cash flow hedges | $ | 48,479 | $ | 10,169 | $ | (42,324 | ) | ||||||||||||||||||||||
For all hedges where hedge accounting is being applied, effectiveness testing and other procedures to ensure the ongoing validity of the hedges are performed at least quarterly. During the years ended December 31, 2013, 2012 and 2011, the Company did not recognize any ineffectiveness in income on the consolidated statements of operations from its cash flow hedges. | |||||||||||||||||||||||||||||
Free-Standing Derivatives | |||||||||||||||||||||||||||||
Free-standing derivatives are derivatives that the Company has entered into in conjunction with its investment and risk management activities, but for which the Company has not designated the derivative contract as a hedging instrument for accounting purposes. Such derivative contracts may include credit default swaps ("CDS"), foreign exchange contracts and options, interest rate swaps and commodity derivatives. Free-standing derivatives also include investment financing arrangements (total rate of return swaps) whereby the Company receives the sum of all interest, fees and any positive change in fair value amounts from a reference asset with a specified notional amount and pays interest on such notional amount plus any negative change in fair value amounts from such reference asset. | |||||||||||||||||||||||||||||
Gains and losses on free-standing derivatives are reported in net realized and unrealized loss on derivatives and foreign exchange in the consolidated statements of operations. Unrealized gains (losses) represent the change in fair value of the derivative instruments and are noncash items. | |||||||||||||||||||||||||||||
Commodity Derivatives | |||||||||||||||||||||||||||||
In an effort to minimize the effects of the volatility of oil, natural gas and NGL prices, the Company will from time to time enter into derivative instruments such as swap contracts to hedge its forecasted commodities sales. The Company does not designate these contracts as cash flow hedges and as such, the changes in fair value of these instruments are recorded in current period earnings. | |||||||||||||||||||||||||||||
The following table summarizes open positions as of December 31, 2013, and represents, as of such date, derivatives in place through December 31, 2016, on expected annual production volumes: | |||||||||||||||||||||||||||||
2014 | 2015 | 2016 | |||||||||||||||||||||||||||
Natural gas positions: | |||||||||||||||||||||||||||||
Fixed price swaps: | |||||||||||||||||||||||||||||
Hedged volume (MMMBtu) | 5,821 | 4,277 | 1,805 | ||||||||||||||||||||||||||
Average price ($/MMBtu) | $ | 4.34 | $ | 4.73 | $ | 4.44 | |||||||||||||||||||||||
Natural gas liquid positions: | |||||||||||||||||||||||||||||
Fixed price swaps: | |||||||||||||||||||||||||||||
Hedged volume (MBbls) | 145 | — | — | ||||||||||||||||||||||||||
Average price ($/Bbl) | $ | 31.21 | $ | — | $ | — | |||||||||||||||||||||||
Oil positions: | |||||||||||||||||||||||||||||
Fixed price swaps: | |||||||||||||||||||||||||||||
Hedged volume (MBbls) | 639 | 500 | — | ||||||||||||||||||||||||||
Average price ($/Bbl) | $ | 92.27 | $ | 88.24 | $ | — | |||||||||||||||||||||||
Credit Default Swaps | |||||||||||||||||||||||||||||
A CDS is a contract in which the contract buyer pays, in the case of a short position, or receives, in the case of long position, a periodic premium until the contract expires or a credit event occurs. In return for this premium, the contract seller receives a payment from or makes a payment to the buyer if there is a credit default or other specified credit event with respect to the issuer (also known as the reference entity) of the underlying credit instrument referenced in the CDS. Typical credit events include bankruptcy, dissolution or insolvency of the reference entity, failure to pay and restructuring of the obligations of the reference entity. | |||||||||||||||||||||||||||||
As of December 31, 2013 and 2012, the Company had purchased protection with a notional amount of $100.0 million and $47.3 million, respectively. The Company sells or purchases protection to replicate fixed income securities and to complement the spot market when cash securities of the reference entity of a particular maturity are not available or when the derivative alternative is less expensive compared to other purchasing alternatives. In addition, the Company may purchase protection to hedge economic exposure to declines in value of certain credit positions. The Company purchases its protection from banks and broker dealers, other financial institutions and other counterparties. | |||||||||||||||||||||||||||||
Foreign Exchange Derivatives | |||||||||||||||||||||||||||||
The Company holds certain positions that are denominated in a foreign currency, whereby movements in foreign currency exchange rates may impact earnings if the United States dollar significantly strengthens or weakens against foreign currencies. In an effort to minimize the effects of these fluctuations on earnings, the Company will from time to time enter into foreign exchange options or foreign exchange forward contracts related to the assets denominated in a foreign currency. As of December 31, 2013 and 2012, the net contractual notional balance of our foreign exchange options and forward contracts totaled $190.5 million and $208.1 million, respectively, all of which related to certain of our foreign currency denominated assets. | |||||||||||||||||||||||||||||
Free-Standing Derivatives Income (Loss) | |||||||||||||||||||||||||||||
The following table presents the amounts recorded in net realized and unrealized loss on derivatives and foreign exchange on the consolidated statements of operations for the years ended December 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||||
Realized | Unrealized | Total | Realized | Unrealized | Total | Realized | Unrealized | Total | |||||||||||||||||||||
gains | gains | gains | gains | gains | gains | ||||||||||||||||||||||||
(losses)(1) | (losses) | (losses)(1) | (losses) | (losses)(1) | (losses) | ||||||||||||||||||||||||
Commodity swaps | $ | 1,296 | $ | (5,562 | ) | $ | (4,266 | ) | $ | 3,554 | $ | 721 | $ | 4,275 | $ | 352 | $ | 7,596 | $ | 7,948 | |||||||||
Credit default swaps | (4,408 | ) | 188 | (4,220 | ) | (6,079 | ) | 942 | (5,137 | ) | 1,033 | (7,063 | ) | (6,030 | ) | ||||||||||||||
Foreign exchange forward contracts and options(2) | 1,104 | (2,096 | ) | (992 | ) | (503 | ) | (2,544 | ) | (3,047 | ) | 11 | (4,806 | ) | (4,795 | ) | |||||||||||||
Common stock warrants | 2,327 | (1,503 | ) | 824 | 691 | 986 | 1,677 | 2,184 | (3,074 | ) | (890 | ) | |||||||||||||||||
Total rate of return swaps | 1,803 | (229 | ) | 1,574 | — | 141 | 141 | — | 49 | 49 | |||||||||||||||||||
Options | (91 | ) | 333 | 242 | — | — | — | (94 | ) | — | (94 | ) | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net realized and | $ | 2,031 | $ | (8,869 | ) | $ | (6,838 | ) | $ | (2,337 | ) | $ | 246 | $ | (2,091 | ) | $ | 3,486 | $ | (7,298 | ) | $ | (3,812 | ) | |||||
unrealized | |||||||||||||||||||||||||||||
gains (losses) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||
Includes related income and expense on the derivatives. | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Net of foreign exchange remeasurement gain or loss on foreign denominated assets. | |||||||||||||||||||||||||||||
The Company is not subject to a master netting arrangement and the Company's derivative instruments are presented on a gross basis on its consolidated balance sheets. | |||||||||||||||||||||||||||||
ACCUMULATED_OTHER_COMPREHENSIV
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ' | ||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ' | ||||||||||||||||||||||||||||
NOTE 9. ACCUMULATED OTHER COMPREHENSIVE LOSS | |||||||||||||||||||||||||||||
The components of changes in accumulated other comprehensive loss were as follows (amounts in thousands): | |||||||||||||||||||||||||||||
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||||
Net unrealized | Net | Total | Net unrealized | Net | Total | Net unrealized | Net | Total | |||||||||||||||||||||
gains on | unrealized | gains on | unrealized | gains on | unrealized | ||||||||||||||||||||||||
available- | losses on cash | available- | losses on cash | available- | losses on cash | ||||||||||||||||||||||||
for-sale | flow hedges | for-sale | flow hedges | for-sale | flow hedges | ||||||||||||||||||||||||
securities | securities | securities | |||||||||||||||||||||||||||
Beginning balance | $ | 17,472 | $ | (87,698 | ) | $ | (70,226 | ) | $ | 62,248 | $ | (97,867 | ) | $ | (35,619 | ) | $ | 189,139 | $ | (55,543 | ) | $ | 133,596 | ||||||
Other comprehensive (loss) income before reclassifications | (9,668 | ) | 48,479 | 38,811 | 48,358 | 10,169 | 58,527 | (30,799 | ) | (42,324 | ) | (73,123 | ) | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss(2) | 15,763 | — | 15,763 | (93,134 | ) | — | (93,134 | ) | (96,092 | ) | — | (96,092 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net current-period other comprehensive income (loss) | 6,095 | 48,479 | 54,574 | (44,776 | ) | 10,169 | (34,607 | ) | (126,891 | ) | (42,324 | ) | (169,215 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 23,567 | $ | (39,219 | ) | $ | (15,652 | ) | $ | 17,472 | $ | (87,698 | ) | $ | (70,226 | ) | $ | 62,248 | $ | (97,867 | ) | $ | (35,619 | ) | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||
The Company's gross and net of tax amounts are the same. | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Includes impairment charges of $19.5 million, $8.4 million and $3.7 million for investments which were determined to be other-than-temporary for the years ended December 31, 2013, 2012 and 2011, respectively. These reclassified amounts are included in net realized and unrealized gain on investments on the consolidated statements of operations. | |||||||||||||||||||||||||||||
COMMITMENTS_CONTINGENCIES
COMMITMENTS & CONTINGENCIES | 12 Months Ended |
Dec. 31, 2013 | |
COMMITMENTS & CONTINGENCIES | ' |
COMMITMENTS & CONTINGENCIES | ' |
NOTE 10. COMMITMENTS & CONTINGENCIES | |
Commitments | |
As part of its strategy of investing in corporate loans, the Company commits to purchase interests in primary market loan syndications, which obligate the Company, subject to certain conditions, to acquire a predetermined interest in such loans at a specified price on a to-be-determined settlement date. Consistent with standard industry practices, once the Company has been informed of the amount of its syndication allocation in a particular loan by the syndication agent, the Company bears the risks and benefits of changes in the fair value of the syndicated loan from that date forward. In addition, the Company also commits to purchase corporate loans in the secondary market that similar to the above, the Company bears the risks and benefits of changes in the fair value from the trade date forward. As of December 31, 2013 and 2012, the Company had committed to purchase corporate loans with aggregate par amounts totaling $62.7 million and $254.2 million, respectively. In addition, the Company participates in certain contingent financing arrangements, whereby the Company is committed to provide funding of up to a specific predetermined amount at the discretion of the borrower or has entered into an agreement to acquire interests in certain assets. As of December 31, 2013 and 2012, the Company had unfunded financing commitments for corporate loans totaling $17.4 million and $9.8 million, respectively. The Company did not have any significant losses as of December 31, 2013, nor does it expect any significant losses related to those assets for which it committed to purchase and fund. | |
The Company participates in joint ventures and partnerships alongside KKR and its affiliates through which the Company contributes capital for assets, including development projects related to the Company's interests in joint ventures and partnerships that hold commercial real estate and natural resources investments, as well as specialty lending focused businesses. The Company estimated these future contributions to total approximately $325.5 million as of December 31, 2013 and $203.0 million as of December 31, 2012. | |
Guarantees | |
As of December 31, 2013, the Company had investments, held alongside KKR and its affiliates, in real estate entities that were financed with non-recourse debt totaling $231.7 million. Under non-recourse debt, the lender generally does not have recourse against any other assets owned by the borrower or any related parties of the borrower, except for certain specified exceptions listed in the respective loan documents including customary "bad boy" acts. In connection with these investments, joint and several non-recourse "bad boy" guarantees were provided for losses relating solely to specified bad faith acts that damage the value of the real estate being used as collateral. The Company does not expect any related losses. As of both December 31 2013 and 2012, the Company also had financial guarantees related to its natural resources investments totaling $17.9 million for which the Company does not expect any significant losses. | |
Contingencies | |
The Company has been named as a party in various legal actions in connection with the proposed merger with KKR. It is inherently difficult to predict the ultimate outcome, particularly in cases in which claimants seek substantial or unspecified damages, or where investigations or proceedings are at an early stage and the Company cannot predict with certainty the loss or range of loss that may be incurred. The Company has denied, or believes it has a meritorious defense and will deny liability in the significant cases pending against the Company. Based on current discussion and consultation with counsel, management believes that the resolution of these matters will not have a material impact on the Company's consolidated financial statements. | |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||
NOTE 11. SHAREHOLDERS' EQUITY | |||||||||||
Preferred Shares | |||||||||||
On January 17, 2013, the Company issued 14.95 million of Series A LLC Preferred Shares for gross proceeds of $373.8 million, and net proceeds of $362.0 million. The Series A LLC Preferred Shares trade on the New York Stock Exchange ("NYSE") under the ticker symbol "KFN.PR" and began trading on January 28, 2013. Distributions on the Series A LLC Preferred Shares are cumulative and are payable, when, as, and if declared by the Company's board of directors, quarterly on January 15, April 15, July 15 and October 15 of each year, beginning April 15, 2013, at a rate per annum equal to 7.375%. | |||||||||||
Common Shares | |||||||||||
On May 4, 2007, the Company adopted an amended and restated share incentive plan (the "2007 Share Incentive Plan") that provides for the grant of qualified incentive common share options that meet the requirements of Section 422 of the Code, non-qualified common share options, share appreciation rights, restricted common shares and other share-based awards. The Compensation Committee of the board of directors administers the plan. Share options and other share-based awards may be granted to the Manager, directors, officers and any key employees of the Manager and to any other individual or entity performing services for the Company. | |||||||||||
The exercise price for any share option granted under the 2007 Share Incentive Plan may not be less than 100% of the fair market value of the common shares at the time the common share option is granted. Each option to acquire a common share must terminate no more than ten years from the date it is granted. As of December 31, 2013, the 2007 Share Incentive Plan authorizes a total of 8,839,625 shares that may be used to satisfy awards under the 2007 Share Incentive Plan. On February 14, 2013, the Compensation Committee of the board of directors granted the Manager 292,009 restricted common shares subject to graded vesting over three years with the final vesting date of March 1, 2016. | |||||||||||
The following table summarizes restricted common share transactions: | |||||||||||
Manager | Directors | Total | |||||||||
Unvested shares as of January 1, 2011 | 1,097,000 | 212,604 | 1,309,604 | ||||||||
Issued | 240,845 | 50,566 | 291,411 | ||||||||
Vested | (1,097,000 | ) | (92,903 | ) | (1,189,903 | ) | |||||
Cancelled | — | (24,591 | ) | (24,591 | ) | ||||||
| | | | | | | | | | | |
Unvested shares as of December 31, 2011 | 240,845 | 145,676 | 386,521 | ||||||||
Issued | 258,303 | 43,557 | 301,860 | ||||||||
Vested | (60,211 | ) | (96,980 | ) | (157,191 | ) | |||||
| | | | | | | | | | | |
Unvested shares as of December 31, 2012 | 438,937 | 92,253 | 531,190 | ||||||||
Issued | 292,009 | 39,288 | 331,297 | ||||||||
Vested | (146,312 | ) | (46,347 | ) | (192,659 | ) | |||||
| | | | | | | | | | | |
Unvested shares as of December 31, 2013 | 584,634 | 85,194 | 669,828 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The restricted common shares granted to the directors were valued using the fair value at the time of grant, which was $10.69, $9.26 and $7.91 per share, for the restricted common shares granted in 2013, 2012 and 2011, respectively. The Company is required to value any unvested restricted common shares granted to the Manager at the current market price. The Company valued the unvested restricted common shares granted to the Manager at $12.19, $10.56 and $8.73 per share at December 31, 2013, 2012 and 2011, respectively. There were $3.4 million, $2.9 million and $2.1 million of total unrecognized compensation costs related to unvested restricted common shares granted as of December 31, 2013, 2012 and 2011, respectively. These costs are expected to be recognized through 2016. | |||||||||||
The following table summarizes common share option transactions: | |||||||||||
Number of | Weighted | ||||||||||
Options | Average | ||||||||||
Exercise Price | |||||||||||
Outstanding as of January 1, 2011 | 1,932,279 | $ | 20 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
| | | | | | | | ||||
Outstanding as of December 31, 2011 | 1,932,279 | $ | 20 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
| | | | | | | | ||||
Outstanding as of December 31, 2012 | 1,932,279 | $ | 20 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
| | | | | | | | ||||
Outstanding as of December 31, 2013 | 1,932,279 | $ | 20 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
As of December 31, 2013, 2012 and 2011, 1,932,279 common share options were exercisable. As of December 31, 2013, the common share options were fully vested and expire in August 2014. | |||||||||||
For the years ended December 31, 2013, 2012 and 2011, the components of share-based compensation expense are as follows (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Restricted shares granted to Manager | $ | 3,524 | $ | 2,270 | $ | 2,448 | |||||
Restricted shares granted to certain directors | 1,035 | 932 | 830 | ||||||||
| | | | | | | | | | | |
Total share-based compensation expense | $ | 4,559 | $ | 3,202 | $ | 3,278 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
MANAGEMENT_AGREEMENT_AND_RELAT
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | ' | ||||||||||
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | ' | ||||||||||
NOTE 12. MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS | |||||||||||
The Manager manages the Company's day-to-day operations, subject to the direction and oversight of the Company's board of directors. The Management Agreement expires on December 31 of each year, but is automatically renewed for a one-year term each December 31 unless terminated upon the affirmative vote of at least two-thirds of the Company's independent directors, or by a vote of the holders of a majority of the Company's outstanding common shares, based upon (1) unsatisfactory performance by the Manager that is materially detrimental to the Company or (2) a determination that the management fee payable by the Manager is not fair, subject to the Manager's right to prevent such a termination under this clause (2) by accepting a mutually acceptable reduction of management fees. The Manager must be provided 180 days prior notice of any such termination and will be paid a termination fee equal to four times the sum of the average annual base management fee and the average annual incentive fee for the two 12-month periods immediately preceding the date of termination, calculated as of the end of the most recently completed fiscal quarter prior to the date of termination. | |||||||||||
The Management Agreement contains certain provisions requiring the Company to indemnify the Manager with respect to all losses or damages arising from acts not constituting bad faith, willful misconduct, or gross negligence. The Company has evaluated the impact of these guarantees on its consolidated financial statements and determined that they are not material. | |||||||||||
The following table summarizes the components of related party management compensation on the Company's consolidated statements of operations, which are described in further detail below, for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Base management fees, net | $ | 25,029 | $ | 28,244 | $ | 26,294 | |||||
CLO management fees | 17,282 | 4,237 | 5,289 | ||||||||
Incentive fees | 22,741 | 37,588 | 34,154 | ||||||||
Manager share-based compensation | 3,524 | 2,270 | 2,448 | ||||||||
| | | | | | | | | | | |
Total related party management compensation | $ | 68,576 | $ | 72,339 | $ | 68,185 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Base Management Fees | |||||||||||
The Company pays its Manager a base management fee monthly in arrears. During the year ended December 31, 2013, certain related party fees received by affiliates of the Manager were credited to the Company via an offset to the base management fee ("Fee Credits"). Specifically, as described in further detail under "CLO Management Fees" below, a portion of the CLO management fees received by an affiliate of the Manager for certain of the Company's CLOs were credited to the Company via an offset to the base management fee. | |||||||||||
In addition, during 2013, the Company invested in a transaction that generated placement fees paid to a minority-owned affiliate of KKR. In connection with this transaction, the Manager agreed to reduce the Company's base management fee payable to the Manager for the portion of these placement fees that were earned by KKR as a result of this minority-ownership. Separately, certain third-party expenses accrued by the Company in the fourth quarter of 2013 in connection with the KKR acquisition proposal were used to reduce the Company's base management fees payable to the Manager in an amount equal to such third-party expenses. | |||||||||||
The table below summarizes the aggregate base management fees for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Base management fees, gross | $ | 39,065 | $ | 28,244 | $ | 26,294 | |||||
CLO management fees credit(1) | (10,042 | ) | — | — | |||||||
Other related party fees credit | (3,994 | ) | — | — | |||||||
| | | | | | | | | | | |
Total base management fees, net | $ | 25,029 | $ | 28,244 | $ | 26,294 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | |||||||||||
See "CLO Management Fees" for further discussion. | |||||||||||
The Manager is waiving base management fees related to the $230.4 million common share offering and $270.0 million common share rights offering that occurred during the third quarter of 2007 until such time as the Company's common share closing price on the NYSE is $20.00 or more for five consecutive trading days. Accordingly, the Manager permanently waived approximately $8.8 million of base management fees during each of the years ended December 31, 2013, 2012 and 2011. | |||||||||||
CLO Management Fees | |||||||||||
An affiliate of the Manager entered into separate management agreements with the respective investment vehicles for all of the Company's Cash Flow CLOs pursuant to which it is entitled to receive fees for the services it performs as collateral manager for all of these CLOs, except for CLO 2011-1. The collateral manager has the option to waive the fees it earns for providing management services for the CLO. | |||||||||||
Fees Waived | |||||||||||
During the year ended December 31, 2013, the collateral manager waived CLO management fees totaling $19.7 million for all CLOs, except for CLO 2005-1 and CLO 2012-1, and for partial periods for CLO 2007-1 and CLO 2007-A. During the year ended December 31, 2012, the collateral manager waived CLO management fees totaling $32.2 million for all CLOs, except for CLO 2005-1 and CLO 2012-1. During the year ended December 31, 2011, the collateral manager waived CLO management fees totaling $34.0 million for all CLOs, except for CLO 2005-1. | |||||||||||
Fees Charged and Fee Credits | |||||||||||
The Company recorded management fees expense for CLO 2005-1, CLO 2007-1, CLO 2007-A and CLO 2012-1 during the year ended December 31, 2013. The Company recorded management fees expense for CLO 2005-1 and CLO 2012-1 during the year ended December 31, 2012 and for CLO 2005-1 during the year ended December 31, 2011. | |||||||||||
During the year ended December 31, 2013, the Manager agreed to credit the Company for a portion of the CLO management fees received by an affiliate of the Manager from CLO 2007-1, CLO 2007-A and CLO 2012-1 via an offset to the monthly base management fees payable to the Manager. As the Company owns less than 100% of the subordinated notes of three CLOs (with the remaining subordinated notes held by third parties), the Company received a Fee Credit equal only to the Company's pro rata share of the aggregate CLO management fees paid by these CLOs. Specifically, the amount of the reimbursement for each of these CLOs was calculated by taking the product of (x) the total CLO management fees received by an affiliate of the Manager during the period for such CLO multiplied by (y) the percentage of the subordinated notes of such CLO held by the Company. The remaining portion of the CLO management fees paid by each of these CLOs was not credited to the Company, but instead resulted in a dollar-for-dollar reduction in the interest expense paid by the Company to the third party holder of the CLO's subordinated notes. | |||||||||||
The table below summarizes the aggregate CLO management fees, including the Fee Credits, for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Charged and retained CLO management fees(1) | $ | 7,240 | $ | 4,237 | $ | 5,289 | |||||
CLO management fees credit | 10,042 | — | — | ||||||||
| | | | | | | | | | | |
Total CLO management fees | $ | 17,282 | $ | 4,237 | $ | 5,289 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | |||||||||||
Represents management fees incurred by the senior and subordinated note holders of a CLO, excluding the Fee Credits received by the Company based on its ownership percentage in the CLO. | |||||||||||
Subordinated note holders in CLOs have the first risk of loss and conversely, the residual value upside of the transactions. When CLO management fees are paid by a CLO, the residual economic interests in the CLO transaction are reduced by an amount commensurate with the CLO management fees paid. The Company records any residual proceeds due to subordinated note holders as interest expense on the consolidated statements of operations. Accordingly, the increase in CLO management fees is directly offset by a decrease in interest expense. | |||||||||||
Incentive Fees | |||||||||||
For the year ended December 31, 2013, the Manager earned $22.7 million of incentive fees. As of December 31, 2013, the Company had no incentive fee payable to the Manager. Incentive fees of $37.6 million and $34.2 million were earned by the Manager during the years ended December 31, 2012 and 2011, respectively. | |||||||||||
Manager Share-Based Compensation | |||||||||||
The Company recognized share-based compensation expense related to restricted common shares granted to the Manager of $3.5 million, $2.3 million and $2.4 million for the years ended December 31, 2013, 2012 and 2011, respectively. Refer to Note 11 to these consolidated financial statements for further discussion on share-based compensation. | |||||||||||
Reimbursable General and Administrative Expenses | |||||||||||
Certain general and administrative expenses are incurred by the Company's Manager on its behalf that are reimbursable to the Manager pursuant to the Management Agreement. The Company incurred reimbursable general and administrative expenses to its Manager of $9.8 million, $10.2 million and $8.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. Expenses incurred by the Manager and reimbursed by the Company are reflected in general, administrative and directors expenses on the consolidated statements of operations. | |||||||||||
Affiliated Investments | |||||||||||
The Company has invested in corporate loans, debt securities and other investments of entities that are affiliates of KKR. As of December 31, 2013, the aggregate par amount of these affiliated investments totaled $2.1 billion, or approximately 27% of the total investment portfolio, and consisted of 28 issuers. The total $2.1 billion in affiliated investments was comprised of $1.9 billion of corporate loans, $52.8 million of corporate debt securities and $84.5 million of equity investments, at estimated fair value. As of December 31, 2012, the aggregate par amount of these affiliated investments totaled $2.1 billion, or approximately 29% of the total investment portfolio, and consisted of 32 issuers. The total $2.1 billion in affiliated investments was comprised of $2.0 billion of corporate loans, $39.3 million of corporate debt securities and $73.8 million of equity investments, at estimated fair value. | |||||||||||
In addition, the Company has invested in certain joint ventures and partnerships alongside KKR and its affiliates. As of December 31, 2013 and 2012, the aggregate cost amount of these interests in joint ventures and partnerships totaled $400.3 million and $137.6 million, respectively. | |||||||||||
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
INCOME TAXES | ' | ||||||||||
NOTE 13. INCOME TAXES | |||||||||||
The Company intends to continue to operate so as to qualify, for United States federal income tax purposes, as a partnership, and not as an association or publicly traded partnership taxable as a corporation. As such, the Company generally is not subject to United States federal income tax at the entity level, but is subject to limited state and foreign taxes. | |||||||||||
The Company owns both REIT and domestic taxable corporate subsidiaries. The Company's REIT subsidiaries are not expected to incur federal tax expense but are subject to limited state income tax expense related to the 2013 tax year. The domestic taxable corporate subsidiaries taxed as regular corporations under the Code are expected to incur federal and state tax expense related to the 2013 tax year. The income tax expense (benefit) for the years ended December 31, 2013, 2012 and 2011 consisted of the following components (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Current: | |||||||||||
Federal income tax | $ | 2,988 | $ | 3,514 | $ | 1,267 | |||||
State income tax | 480 | 759 | 629 | ||||||||
| | | | | | | | | | | |
Total | 3,468 | 4,273 | 1,896 | ||||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
Federal income tax | (3,001 | ) | (6,221 | ) | 4,709 | ||||||
State income tax | — | (1,519 | ) | 1,406 | |||||||
| | | | | | | | | | | |
Total | (3,001 | ) | (7,740 | ) | 6,115 | ||||||
| | | | | | | | | | | |
Total income tax expense (benefit) | $ | 467 | $ | (3,467 | ) | $ | 8,011 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The tax provision for domestic taxable corporate subsidiaries taxed as regular corporations was based on a combined federal and state income tax rate of 41.50% at December 31, 2013, 39.55% at December 31, 2012 and 41.02% at December 31, 2011. The tax rate is equivalent to the combined federal statutory income tax rate and the state statutory income tax rate, net of federal benefit. | |||||||||||
The following table presents a reconciliation of income before taxes at the statutory rate to the effective tax expense (benefit) for each of the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, 2013 | December 31, 2012 | December 31, 2011 | |||||||||
Income before taxes at statutory rate | $ | 102,794 | $ | 120,667 | $ | 114,129 | |||||
Income passed through to shareholders | (93,260 | ) | (118,983 | ) | (104,137 | ) | |||||
REIT income not subject to tax | (9,141 | ) | (4,681 | ) | (2,867 | ) | |||||
State and local income taxes, net of federal benefit | (464 | ) | (414 | ) | 705 | ||||||
Withholding taxes | 172 | 72 | 138 | ||||||||
Other | 366 | (128 | ) | 43 | |||||||
| | | | | | | | | | | |
Effective tax expense (benefit) | $ | 467 | $ | (3,467 | ) | $ | 8,011 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Deferred tax assets are recognized if, in management's judgment, their realizability is determined to be more likely than not. If a deferred tax asset is determined to be unrealizable, a valuation allowance is established. The significant components of deferred tax assets and liabilities are reflected in the following table as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||
As of | As of | ||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||
Deferred tax assets: | |||||||||||
Unrealized losses from investments in domestic corporate subsidiaries | $ | 4,329 | $ | 1,328 | |||||||
| | | | | | | | ||||
Total deferred tax assets | 4,329 | 1,328 | |||||||||
Deferred tax liabilities: | |||||||||||
Total deferred tax liabilities | — | — | |||||||||
| | | | | | | | ||||
Net deferred tax assets | $ | 4,329 | $ | 1,328 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
FAIR_VALUE_OF_FINANCIAL_INSTRU
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||||||||||||||
NOTE 14. FAIR VALUE OF FINANCIAL INSTRUMENTS | ||||||||||||||||||||||||||||||||
Financial Instruments Not Carried at Estimated Fair Value | ||||||||||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company's financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Fair Value Hierarchy | ||||||||||||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||||||||||||||||||
Active Markets | Unobservable | |||||||||||||||||||||||||||||||
for Identical | Inputs | |||||||||||||||||||||||||||||||
Carrying | Estimated | Assets (Level 1) | Significant Other | (Level 3) | ||||||||||||||||||||||||||||
Amount | Fair Value | Observable | ||||||||||||||||||||||||||||||
Inputs (Level 2) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 507,552 | $ | 507,552 | $ | 507,552 | $ | — | $ | — | ||||||||||||||||||||||
Corporate loans, net of allowance for loan losses of $224,999 as of December 31, 2013(1) | 5,949,492 | 6,051,641 | — | 5,691,988 | 359,653 | |||||||||||||||||||||||||||
Corporate loans held for sale(1) | 279,748 | 281,278 | — | 267,169 | 14,109 | |||||||||||||||||||||||||||
Private equity investments, at cost(2) | 405 | 4,496 | — | — | 4,496 | |||||||||||||||||||||||||||
Other assets | 5,763 | 5,513 | — | 5,513 | — | |||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Collateralized loan obligation secured debt | $ | 5,249,383 | $ | 5,179,207 | $ | — | $ | — | $ | 5,179,207 | ||||||||||||||||||||||
Credit facilities | 125,289 | 125,289 | — | — | 125,289 | |||||||||||||||||||||||||||
Senior notes | 362,276 | 393,772 | 393,772 | — | — | |||||||||||||||||||||||||||
Junior subordinated notes | 283,517 | 247,416 | — | — | 247,416 | |||||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
Corporate loans held for investment are carried at amortized cost net of allowance for loan losses, while corporate loans held for sale are carried at the lower of cost or estimated fair value. Refer to "Fair Value Measurements" for a table presenting the corporate loans which are measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
Included within other assets on the consolidated balance sheets. | ||||||||||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company's financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of December 31, 2012 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Fair Value Hierarchy | ||||||||||||||||||||||||||||||||
As of December 31, 2012 | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||||||||||||||||||
Active Markets | Unobservable | |||||||||||||||||||||||||||||||
for Identical | Inputs | |||||||||||||||||||||||||||||||
Carrying | Estimated | Assets (Level 1) | Significant Other | (Level 3) | ||||||||||||||||||||||||||||
Amount | Fair Value | Observable | ||||||||||||||||||||||||||||||
Inputs (Level 2) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 1,134,002 | $ | 1,134,002 | $ | 1,134,002 | $ | — | $ | — | ||||||||||||||||||||||
Corporate loans, net of allowance for loan losses of $223,472 as of December 31, 2012(1) | 5,783,689 | 5,831,218 | — | 5,203,763 | 627,455 | |||||||||||||||||||||||||||
Corporate loans held for sale(1) | 128,289 | 195,078 | — | 151,327 | 43,751 | |||||||||||||||||||||||||||
Private equity investments, at cost(2) | 405 | 1,635 | — | — | 1,635 | |||||||||||||||||||||||||||
Other assets | 17,148 | 16,777 | — | 16,439 | 338 | |||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Collateralized loan obligation secured debt | $ | 5,122,338 | $ | 5,020,115 | $ | — | $ | — | $ | 5,020,115 | ||||||||||||||||||||||
Collateralized loan obligation junior secured notes to affiliates | 296,557 | 290,948 | — | — | 290,948 | |||||||||||||||||||||||||||
Credit facilities | 107,789 | 107,789 | — | — | 107,789 | |||||||||||||||||||||||||||
Convertible senior notes | 166,028 | 268,238 | — | 268,238 | — | |||||||||||||||||||||||||||
Senior notes | 362,178 | 412,126 | 412,126 | — | — | |||||||||||||||||||||||||||
Junior subordinated notes | 283,517 | 134,351 | — | — | 134,351 | |||||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
Corporate loans held for investment are carried at amortized cost net of allowance for loan losses, while corporate loans held for sale are carried at the lower of cost or estimated fair value. Refer to "Fair Value Measurements" for a table presenting the corporate loans which are measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
Included within other assets on the consolidated balance sheets. | ||||||||||||||||||||||||||||||||
Fair Value Measurements | ||||||||||||||||||||||||||||||||
The following table presents information about the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | December 31, | |||||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2013 | |||||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | |||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||
Securities available-for-sale | $ | — | $ | 326,940 | $ | 23,401 | $ | 350,341 | ||||||||||||||||||||||||
Other securities, at estimated fair value | — | 39,437 | 107,530 | 146,967 | ||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 76,004 | 76,004 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total securities | — | 366,377 | 206,935 | 573,312 | ||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | — | 84,680 | 152,800 | 237,480 | ||||||||||||||||||||||||||||
Equity investments, at estimated fair value | 39,515 | 3,638 | 138,059 | 181,212 | ||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | 14,836 | — | 415,247 | 430,083 | ||||||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Interest rate swaps | — | 3,290 | — | 3,290 | ||||||||||||||||||||||||||||
Commodity swaps | — | 5,408 | — | 5,408 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 4,846 | — | 4,846 | ||||||||||||||||||||||||||||
Foreign exchange options | — | — | 8,941 | 8,941 | ||||||||||||||||||||||||||||
Common stock warrants | — | 945 | — | 945 | ||||||||||||||||||||||||||||
Options | — | — | 6,794 | 6,794 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | — | 14,489 | 15,735 | 30,224 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | 54,351 | $ | 469,184 | $ | 928,776 | $ | 1,452,311 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Interest rate swaps | — | 45,368 | — | 45,368 | ||||||||||||||||||||||||||||
Commodity swaps | — | 3,915 | — | 3,915 | ||||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 2,019 | — | 2,019 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 30,104 | — | 30,104 | ||||||||||||||||||||||||||||
Total rate of return swaps | — | 229 | — | 229 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | — | 81,635 | — | 81,635 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | — | $ | 81,635 | $ | — | $ | 81,635 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
The following table presents information about the Company's assets measured at fair value on a non-recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands). There were no liabilities measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Observable | Unobservable | December 31, | |||||||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs (Level 3) | 2013 | |||||||||||||||||||||||||||||
Assets (Level 1) | ||||||||||||||||||||||||||||||||
Corporate loans held for sale(1) | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
As of December 31, 2013, total loans held for sale had a carrying value of $279.7 million of which $96.1 million was carried at estimated fair value and the remaining $183.6 million carried at amortized cost. | ||||||||||||||||||||||||||||||||
Whenever events or changes in circumstances indicate that the carrying amounts of such properties may not be recoverable, the Company evaluates its proved oil and natural gas properties and related equipment and facilities for impairment on a field-by-field basis. For the year ended December 31, 2013, the Company recorded impairment charges totaling $10.4 million to write down certain of its oil and natural gas properties with a carrying amount of $16.1 million to an estimated fair value of $5.7 million. | ||||||||||||||||||||||||||||||||
There were no transfers between Level 1 or 2 for the Company's financial assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2013. | ||||||||||||||||||||||||||||||||
The following table presents information about the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | December 31, | |||||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2012 | |||||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | |||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 370,072 | $ | 42,221 | $ | 412,293 | ||||||||||||||||||||||||
Other securities, at estimated fair value | — | 34,476 | 2,909 | 37,385 | ||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 83,842 | 83,842 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total securities | — | 404,548 | 128,972 | 533,520 | ||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | — | 19,738 | 16,141 | 35,879 | ||||||||||||||||||||||||||||
Equity investments, at estimated fair value | 23,790 | 40,085 | 97,746 | 161,621 | ||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | — | — | 142,477 | 142,477 | ||||||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Commodity swaps | — | 8,557 | — | 8,557 | ||||||||||||||||||||||||||||
Credit default swaps—protection sold | — | 19 | — | 19 | ||||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 136 | — | 136 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 2,615 | — | 2,615 | ||||||||||||||||||||||||||||
Foreign exchange options | — | — | 8,562 | 8,562 | ||||||||||||||||||||||||||||
Common stock warrants | 1,744 | — | 1,574 | 3,318 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | 1,744 | 11,327 | 10,136 | 23,207 | ||||||||||||||||||||||||||||
Other assets | — | 319 | — | 319 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | 25,534 | $ | 476,017 | $ | 395,472 | $ | 897,023 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Securities sold, not yet purchased | $ | 1,158 | $ | — | $ | — | $ | 1,158 | ||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Interest rate swaps | — | 90,618 | — | 90,618 | ||||||||||||||||||||||||||||
Commodity swaps | — | 1,501 | — | 1,501 | ||||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 1,276 | — | 1,276 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 23,590 | — | 23,590 | ||||||||||||||||||||||||||||
Foreign exchange options | — | — | 285 | 285 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | — | 116,985 | 285 | 117,270 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | 1,158 | $ | 116,985 | $ | 285 | $ | 118,428 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
The following table presents information about the Company's assets measured at fair value on a non-recurring basis as of December 31, 2012, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands). There were no liabilities measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Observable | Unobservable | December 31, 2012 | |||||||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs (Level 3) | ||||||||||||||||||||||||||||||
Assets (Level 1) | ||||||||||||||||||||||||||||||||
Corporate loans held for sale(1) | $ | — | $ | 49,521 | $ | 24,347 | $ | 73,868 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | — | $ | 49,521 | $ | 24,347 | $ | 73,868 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
As of December 31, 2012, total loans held for sale had a carrying value of $128.3 million of which $73.9 million was carried at estimated fair value and the remaining $54.4 million carried at amortized cost. | ||||||||||||||||||||||||||||||||
There were no transfers between Level 1 or 2 for the Company's financial assets and liabilities measured at fair value on a recurring and non-recurring basis as of December 31, 2012. | ||||||||||||||||||||||||||||||||
Level 3 Fair Value Rollforward | ||||||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the year ended December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate Loans, at | Equity | Interests in | Foreign | Common | Options | ||||||||||||||||||||||||
Available- | Securities, | Mortgage- | Estimated | Investments, | Joint | Exchange | Stock | |||||||||||||||||||||||||
For-Sale: | at Estimated | Backed | Fair | at | Ventures and | Options, | Warrants | |||||||||||||||||||||||||
Corporate | Fair Value | Securities | Value | Estimated | Partnerships | Net | ||||||||||||||||||||||||||
Debt | Fair Value | |||||||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||||||
Beginning balance as of January 1, 2013 | $ | 42,221 | $ | 2,909 | $ | 83,842 | $ | 16,141 | $ | 97,746 | $ | 142,477 | $ | 8,277 | $ | 1,574 | $ | — | ||||||||||||||
Total gains or losses (for the period): | ||||||||||||||||||||||||||||||||
Included in earnings(1) | 1,729 | 3,485 | 7,711 | 8,996 | 10,555 | 21,926 | 664 | 167 | 211 | |||||||||||||||||||||||
Included in other comprehensive loss | (1,808 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Transfers out of Level 3(2) | — | — | — | — | — | — | — | (945 | ) | — | ||||||||||||||||||||||
Purchases | 4,613 | 103,616 | — | 123,409 | 30,113 | 299,039 | — | — | 8,787 | |||||||||||||||||||||||
Sales | — | — | — | — | (198 | ) | — | — | — | — | ||||||||||||||||||||||
Settlements | (23,354 | ) | (2,480 | ) | (15,549 | ) | 4,254 | (157 | ) | (48,195 | ) | — | (796 | ) | (2,204 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Ending balance as of December 31, 2013 | $ | 23,401 | $ | 107,530 | $ | 76,004 | $ | 152,800 | $ | 138,059 | $ | 415,247 | $ | 8,941 | $ | — | $ | 6,794 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 74 | $ | 3,485 | $ | 21,796 | $ | 8,700 | $ | 10,854 | $ | 21,926 | $ | 954 | $ | — | $ | 211 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
-1 | ||||||||||||||||||||||||||||||||
Amounts are included in net realized and unrealized gain on investments or net realized and unrealized loss on derivatives and foreign exchange in the consolidated statements of operations. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
There were no transfers into Level 3. Common stock warrants were transferred out of Level 3 to Level 2 because observable market data became available. The Company's policy is to recognize transfers into and out of Level 3 at the end of the reporting period. | ||||||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the year ended December 31, 2012 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Interest in | Foreign | Common | Total | Other | |||||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, | Investments, | Joint | Exchange | Stock | Rate | Assets | |||||||||||||||||||||||
For-Sale: | at Estimated | Backed | at Estimated | at Estimated | Ventures and | Options, | Warrants | of | ||||||||||||||||||||||||
Corporate | Fair Value | Securities | Fair Value | Fair Value | Partnerships | Net | Return | |||||||||||||||||||||||||
Debt | Swaps | |||||||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||||||
Beginning balance as of January 1, 2012 | $ | 67,233 | $ | 2,778 | $ | 86,479 | $ | — | $ | 150,962 | $ | — | $ | 13,394 | $ | 1,266 | $ | 152 | $ | 567 | ||||||||||||
Total gains or losses (for the period): | ||||||||||||||||||||||||||||||||
Included in earnings(1) | 1,171 | 131 | 6,306 | 429 | 1,708 | 4,391 | (5,117 | ) | 308 | 141 | 342 | |||||||||||||||||||||
Included in other comprehensive loss | 12,202 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Transfers into Level 3(2) | — | — | — | — | — | 34,230 | — | — | — | — | ||||||||||||||||||||||
Transfers out of Level 3(2) | (2,721 | ) | — | — | — | (34,230 | ) | — | — | — | — | — | ||||||||||||||||||||
Purchases | — | — | — | 15,056 | 18,060 | 104,728 | — | — | — | — | ||||||||||||||||||||||
Sales | (24,660 | ) | — | — | — | (4,365 | ) | — | — | — | — | (706 | ) | |||||||||||||||||||
Settlements | (11,004 | ) | — | (8,943 | ) | 656 | (34,389 | ) | (872 | ) | — | — | (293 | ) | (203 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance as of December 31, 2012 | $ | 42,221 | $ | 2,909 | $ | 83,842 | $ | 16,141 | $ | 97,746 | $ | 142,477 | $ | 8,277 | $ | 1,574 | $ | — | $ | — | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 506 | $ | 131 | $ | 28,543 | $ | 429 | $ | 14,579 | $ | 4,391 | $ | (5,117 | ) | $ | 308 | $ | — | $ | — | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | ||||||||||||||||||||||||||||||||
Amounts are included in net realized and unrealized gain on investments or net realized and unrealized loss on derivatives and foreign exchange in the consolidated statements of operations. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
Securities available-for-sale: corporate debt securities were transferred out of Level 3 to Level 2 because observable market data became available. The remaining transfers into and out of Level 3 represented the reclassification of certain assets from equity investments, at estimated fair value to interests in joint ventures and partnerships. The Company's policy is to recognize transfers into and out of Level 3 at the end of the reporting period. | ||||||||||||||||||||||||||||||||
Valuation Techniques and Inputs for Level 3 Fair Value Measurements | ||||||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets and liabilities, including derivatives, that are measured at fair value and categorized within Level 3 as of December 31, 2013 (dollar amounts in thousands): | ||||||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, 2013 | Techniques(1) | Inputs(2) | Average(3) | Valuation | ||||||||||||||||||||||||||||
from an | ||||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities available-for-sale: | $ | 23,401 | Yield Analysis | Yield | 10% | 6% - 12% | Decrease | |||||||||||||||||||||||||
Corporate debt securities | Net leverage | 12x | 11x - 12x | Decrease | ||||||||||||||||||||||||||||
EBITDA multiple | 8x | 8x - 9x | Increase | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 105 | 104 - 105 | Increase | ||||||||||||||||||||||||||||
Other securities, at estimated fair value | $ | 107,530 | Yield Analysis | Yield | 12% | 7% - 17% | Decrease | |||||||||||||||||||||||||
EBITDA multiple | 8x | 7x - 8x | Increase | |||||||||||||||||||||||||||||
Illiquidity discount | 3% | 3% | Decrease | |||||||||||||||||||||||||||||
Net leverage | 1x | 1x - 2x | Decrease | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 102 | 101 - 102 | Increase | ||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 76,004 | Discounted cash flows | Probability of default | 7% | 0% - 21% | Decrease | |||||||||||||||||||||||||
Loss severity | 28% | 16% - 77% | Decrease | |||||||||||||||||||||||||||||
Constant prepayment rate | 15% | 3% - 35% | -5 | |||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | $ | 152,800 | Yield Analysis | Yield | 16% | 14% - 23% | Decrease | |||||||||||||||||||||||||
Net leverage | 7x | 4x - 12x | Decrease | |||||||||||||||||||||||||||||
EBITDA multiple | 8x | 6x - 11x | Increase | |||||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 138,059 | Inputs to both | Weight ascribed to market | 50% | 33% - 100% | -7 | |||||||||||||||||||||||||
market | comparables | |||||||||||||||||||||||||||||||
comparables and | Weight ascribed to | 59% | 50% - 100% | -8 | ||||||||||||||||||||||||||||
discounted cash | discounted cash flows | |||||||||||||||||||||||||||||||
flow | ||||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 12x | 6x - 16x | Increase | ||||||||||||||||||||||||||||
Forward EBITDA multiple | 12x | 10x - 14x | Increase | |||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 11% | 8% - 14% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 4x - 11x | Increase | |||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | $ | 415,247 | Inputs to both | Weight ascribed to market | 50% | 50% - 100% | -7 | |||||||||||||||||||||||||
market | comparables | |||||||||||||||||||||||||||||||
comparables and | Weight ascribed to | 50% | 50% - 100% | -8 | ||||||||||||||||||||||||||||
discounted cash | discounted cash flows | |||||||||||||||||||||||||||||||
flow | ||||||||||||||||||||||||||||||||
Market | Current capitalization rate | 7% | 6% - 9% | Decrease | ||||||||||||||||||||||||||||
comparables | LTM EBITDA | 9x | 9x | Increase | ||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 8% - 24% | Decrease | ||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, 2013 | Techniques(1) | Inputs(2) | Average(3) | Valuation | ||||||||||||||||||||||||||||
from an | ||||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Foreign exchange options | $ | 8,941 | Option pricing model | Forward and spot rates | 1 | 0 - 1 | -9 | |||||||||||||||||||||||||
Options | $ | 6,794 | Inputs to both | Weight ascribed to market | 50% | 50% | -7 | |||||||||||||||||||||||||
market | comparables | |||||||||||||||||||||||||||||||
comparables and | Weight ascribed to | 50% | 50% | -8 | ||||||||||||||||||||||||||||
discounted cash | discounted cash flows | |||||||||||||||||||||||||||||||
flow | ||||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA | 9x | 9x | Increase | ||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 12% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 9x - 10x | Increase | |||||||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
The significant unobservable inputs used in the fair value measurement of the Company's assets and liabilities may include the last twelve months ("LTM") EBITDA multiple, weighted average cost of capital, net leverage, probability of default, loss severity and constant prepayment rate. In determining certain of these inputs, management evaluates a variety of factors including economic, industry and market trends and developments; market valuations of comparable companies; and company specific developments including potential exit strategies and realization opportunities. Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement. | ||||||||||||||||||||||||||||||||
-3 | ||||||||||||||||||||||||||||||||
Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||||||
-4 | ||||||||||||||||||||||||||||||||
Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||||||
-5 | ||||||||||||||||||||||||||||||||
The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||
When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company takes a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||||||
-7 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||||||
-8 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||||||
-9 | ||||||||||||||||||||||||||||||||
The directional change from an increase in forward and spot rates varies and is dependent on the specific option. | ||||||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets and liabilities, including derivatives, that are measured at fair value and categorized within Level 3 as of December 31, 2012 (dollar amounts in thousands): | ||||||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable Inputs(2) | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, | Techniques(1) | Average(3) | Valuation | |||||||||||||||||||||||||||||
2012 | from an | |||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities available-for-sale: | $ | 42,221 | Yield Analysis | Yield | 16% | 11% - 46% | Decrease | |||||||||||||||||||||||||
Corporate debt securities | Discount margin | 1450bps | 1100bps - 4550bps | Decrease | ||||||||||||||||||||||||||||
Net leverage | 6x | 3x - 13x | Decrease | |||||||||||||||||||||||||||||
Illiquidity discount | 3% | 3% | Decrease | |||||||||||||||||||||||||||||
EBITDA multiple | 7x | 6x - 8x | Increase | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 88 | 69 - 105 | Increase | ||||||||||||||||||||||||||||
Other securities, at estimated fair value | $ | 2,909 | Yield Analysis | Yield | 10% | 10% | Decrease | |||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 83,842 | Discounted cash flows | Probability of default | 6% | 0% - 21% | Decrease | |||||||||||||||||||||||||
Loss severity | 30% | 18% - 80% | Decrease | |||||||||||||||||||||||||||||
Constant prepayment rate | 13% | 1% - 35% | -5 | |||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | $ | 16,141 | Yield Analysis | Illiquidity discount | 15% | 15% | Decrease | |||||||||||||||||||||||||
Net leverage | 9x | 8x - 9x | Decrease | |||||||||||||||||||||||||||||
EBITDA multiple | 10x | 9x - 10x | Increase | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 39 | 8 - 40 | Increase | ||||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 97,746 | Inputs to both | Weight ascribed to market | 43% | 25% - 50% | -7 | |||||||||||||||||||||||||
market comparables | comparables | |||||||||||||||||||||||||||||||
and discounted | Weight ascribed to | 57% | 50% - 75% | -8 | ||||||||||||||||||||||||||||
cash flows | discounted cash flows | |||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 10x | 7x - 12x | Increase | ||||||||||||||||||||||||||||
Forward EBITDA multiple | 10x | 6x - 12x | Increase | |||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 10% | 6% - 16% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 9x | 7x - 12x | Increase | |||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | $ | 142,477 | Discounted cash flows | Illiquidity discount | 10% | 10% - 15% | Decrease | |||||||||||||||||||||||||
Weighted average cost of capital | 18% | 13% - 30% | Decrease | |||||||||||||||||||||||||||||
Foreign exchange options | $ | 8,562 | Option pricing model | Forward and spot rates | 1 | 0 - 2 | -9 | |||||||||||||||||||||||||
Common stock warrants | $ | 1,574 | Inputs to both | Weight ascribed to market | 50% | 50% | -7 | |||||||||||||||||||||||||
market comparables | comparables | |||||||||||||||||||||||||||||||
and discounted | Weight ascribed to | 50% | 50% | -8 | ||||||||||||||||||||||||||||
cash flows | discounted cash flows | |||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 7x | 7x | Increase | ||||||||||||||||||||||||||||
Forward EBITDA multiple | 7x | 7x | Increase | |||||||||||||||||||||||||||||
Illiquidity discount | 15% | 15% | Decrease | |||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable Inputs(2) | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, | Techniques(1) | Average(3) | Valuation | |||||||||||||||||||||||||||||
2012 | from an | |||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 12% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 7x | 7x | Increase | |||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Foreign exchange options | $ | 285 | Option pricing model | Forward and spot rates | 0.02 | 0.02 | -9 | |||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
The significant unobservable inputs used in the fair value measurement of the Company's assets and liabilities may include the last twelve months ("LTM") EBITDA multiple, weighted average cost of capital, discount margin, probability of default, loss severity and constant prepayment rate. In determining certain of these inputs, management evaluates a variety of factors including economic, industry and market trends and developments; market valuations of comparable companies; and company specific developments including potential exit strategies and realization opportunities. Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement. | ||||||||||||||||||||||||||||||||
-3 | ||||||||||||||||||||||||||||||||
Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||||||
-4 | ||||||||||||||||||||||||||||||||
Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||||||
-5 | ||||||||||||||||||||||||||||||||
The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||
When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company takes a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||||||
-7 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||||||
-8 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||||||
-9 | ||||||||||||||||||||||||||||||||
The directional change from an increase in forward and spot rates varies and is dependent on the specific option. | ||||||||||||||||||||||||||||||||
SEGMENT_REPORTING
SEGMENT REPORTING | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | ' | ||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | ' | ||||||||||||||||||||||||||||||||||||||||||||||
NOTE 15. SEGMENT REPORTING | |||||||||||||||||||||||||||||||||||||||||||||||
Operating segments are defined as components of a company that engage in business activities that may earn revenues and incur expenses for which separate financial information is available and reviewed by the chief operating decision maker or group in determining how to allocate resources and assessing performance. The Company operates its business through the following reportable segments: credit ("Credit"), natural resources ("Natural Resources") and other segments ("Other"). | |||||||||||||||||||||||||||||||||||||||||||||||
The Company's reportable segments are differentiated primarily by their investment focuses. The Credit segment consists primarily of below investment grade corporate debt comprised of senior secured and unsecured loans, mezzanine loans, high yield bonds, private and public equity investments, and distressed and stressed debt securities. The Natural Resources segment consists of non-operated working and overriding royalty interests in oil and natural gas properties. The Other segment includes all other portfolio holdings, consisting solely of commercial real estate. The segments currently reported are consistent with the way decisions regarding the allocation of resources are made, as well as how operating results are reviewed by the Company. | |||||||||||||||||||||||||||||||||||||||||||||||
The Company evaluates the performance of its reportable segments based on several net income components. Net income includes (i) revenues, (ii) related investment costs and expenses, (iii) other income (loss), which is comprised primarily of unrealized and realized gains and losses on investments and derivatives, and (iv) other expenses, including related party management compensation and general and administrative expenses. Certain corporate assets and expenses that are not directly related to the individual segments, including interest expense and related costs on borrowings, base management fees and professional services are allocated to individual segments based on the investment portfolio balance in each respective segment as of the most recent period-end. Certain other corporate assets and expenses, including prepaid insurance, incentive fees, insurance expenses, directors' expenses and share-based compensation expense are not allocated to individual segments in the Company's assessment of segment performance. Collectively, these items are included as reconciling items between reported segment amounts and consolidated totals. | |||||||||||||||||||||||||||||||||||||||||||||||
The following table presents the net income (loss) components of our reportable segments reconciled to amounts reflected in the consolidated financial statements for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | |||||||||||||||||||||||||||||||||||||||||||
For the years ended | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||||||
December 31 | |||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 425,209 | $ | 490,861 | $ | 511,392 | $ | 119,178 | $ | 64,535 | $ | 30,629 | $ | 1,519 | $ | 77 | $ | — | $ | — | $ | — | $ | — | $ | 545,906 | $ | 555,473 | $ | 542,021 | |||||||||||||||||
Total investment costs and expenses | 218,600 | 257,269 | 196,415 | 86,174 | 60,668 | 18,747 | 931 | 438 | — | — | — | — | 305,705 | 318,375 | 215,162 | ||||||||||||||||||||||||||||||||
Total other income (loss) | 171,006 | 199,723 | 87,235 | (13,642 | ) | 1,881 | 7,948 | 13,576 | 4,663 | — | (20,015 | ) | (445 | ) | (1,736 | ) | 150,925 | 205,822 | 93,447 | ||||||||||||||||||||||||||||
Total other expenses | 60,870 | 48,640 | 46,371 | 4,835 | 5,111 | 3,823 | 606 | 217 | — | 31,118 | 44,189 | 44,029 | 97,429 | 98,157 | 94,223 | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 450 | (3,468 | ) | 7,941 | — | — | 70 | 17 | 1 | — | — | — | — | 467 | (3,467 | ) | 8,011 | ||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 316,295 | $ | 388,143 | $ | 347,900 | $ | 14,527 | $ | 637 | $ | 15,937 | $ | 13,541 | $ | 4,084 | $ | — | $ | (51,133 | ) | $ | (44,634 | ) | $ | (45,765 | ) | $ | 293,230 | $ | 348,230 | $ | 318,072 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||||||||||||||||||||
Consists of certain expenses not allocated to individual segments including (i) other income (loss) comprised of losses on restructuring and extinguishment of debt of $20.0 million, $0.4 million and $1.7 million for the years ended December 31, 2013, 2012 and 2011, respectively and (ii) other expenses comprised of incentive fees of $22.7 million, $37.6 million and $34.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. The remaining reconciling items include insurance expenses, directors' expenses and share-based compensation expense. | |||||||||||||||||||||||||||||||||||||||||||||||
The following table shows total assets of reportable segments reconciled to amounts reflected in the consolidated financial statements as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling | Total Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Items | |||||||||||||||||||||||||||||||||||||||||||||||
As of December 31 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||
Total assets | $ | 8,020,353 | $ | 7,904,116 | $ | 505,029 | $ | 399,225 | $ | 190,946 | $ | 53,742 | $ | 870 | $ | 1,796 | $ | 8,717,198 | $ | 8,358,879 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SUMMARY_OF_QUARTERLY_INFORMATI
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) | ' | |||||||||||||
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) | ' | |||||||||||||
NOTE 16. SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) | ||||||||||||||
The following is a presentation of the quarterly results of operations for the years ended December 31, 2013 and 2012: | ||||||||||||||
2013 | ||||||||||||||
(amounts in thousands, except per share information) | Fourth | Third | Second | First | ||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Total revenues | $ | 139,510 | $ | 128,702 | $ | 137,244 | $ | 140,450 | ||||||
Total investment costs and expenses | 81,586 | 77,877 | 65,193 | 81,049 | ||||||||||
Total other income | 33,244 | 6,226 | 37,235 | 74,220 | ||||||||||
Total other expenses | 22,259 | 17,147 | 23,196 | 34,827 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 68,909 | 39,904 | 86,090 | 98,794 | ||||||||||
Income tax expense (benefit) | 33 | 18 | (42 | ) | 458 | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 68,876 | $ | 39,886 | $ | 86,132 | $ | 98,336 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Preferred share distributions | 6,891 | 6,891 | 6,891 | 6,738 | ||||||||||
| | | | | | | | | | | | | | |
Net income available to common shareholders | $ | 61,985 | $ | 32,995 | $ | 79,241 | $ | 91,598 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share: | ||||||||||||||
Basic(1) | $ | 0.3 | $ | 0.16 | $ | 0.39 | $ | 0.46 | ||||||
Diluted(1) | $ | 0.3 | $ | 0.16 | $ | 0.39 | $ | 0.46 | ||||||
Weighted average number of common shares outstanding: | ||||||||||||||
Basic | 204,154 | 204,134 | 204,108 | 197,153 | ||||||||||
Diluted | 204,154 | 204,134 | 204,108 | 197,153 | ||||||||||
-1 | ||||||||||||||
Summation of the quarters' earnings per share may not equal the annual amounts due to the averaging effect of the number of shares and share equivalents throughout the year. | ||||||||||||||
2012 | ||||||||||||||
(amounts in thousands, except per share information) | Fourth | Third | Second | First | ||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Total revenues | $ | 133,655 | $ | 143,334 | $ | 140,550 | $ | 137,934 | ||||||
Total investment costs and expenses | 72,568 | 70,900 | 67,115 | 107,792 | ||||||||||
Total other income | 37,398 | 73,043 | 16,543 | 78,838 | ||||||||||
Total other expenses | 21,391 | 33,196 | 18,570 | 25,000 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 77,094 | 112,281 | 71,408 | 83,980 | ||||||||||
Income tax expense (benefit) | 81 | 317 | 203 | (4,068 | ) | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 77,013 | $ | 111,964 | $ | 71,205 | $ | 88,048 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share: | ||||||||||||||
Basic(1) | $ | 0.43 | $ | 0.63 | $ | 0.4 | $ | 0.49 | ||||||
Diluted(1)(2) | $ | 0.4 | $ | 0.61 | $ | 0.39 | $ | 0.48 | ||||||
Weighted average number of common shares outstanding: | ||||||||||||||
Basic | 177,906 | 177,862 | 177,809 | 177,775 | ||||||||||
Diluted | 202,371 | 183,431 | 181,642 | 182,247 | ||||||||||
-1 | ||||||||||||||
Summation of the quarters' earnings per share may not equal the annual amounts due to the averaging effect of the number of shares and share equivalents throughout the year. | ||||||||||||||
-2 | ||||||||||||||
The fourth quarter of 2012 diluted EPS includes the impact of the convertible senior notes settled in common shares using the if-converted method (refer to Notes 3 and 7 to these consolidated financial statements). | ||||||||||||||
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2013 | |
SUBSEQUENT EVENTS | ' |
SUBSEQUENT EVENTS | ' |
NOTE 17. SUBSEQUENT EVENTS | |
On February 25, 2014, Modular Space Corporation paid off at par its outstanding second lien term loan facility. As of December 31, 2013, Modular Space Corporation was a top three holding in the Company's corporate loan portfolio and totaled an aggregate amortized cost of $313.8 million, all of which was classified as high risk within the Company's internally assigned risk grades for purposes of determining the unallocated component of its allowance for loan losses. Following this pay off, the Company held approximately $26.8 million amortized cost of corporate loans in Modular Space Corporation. | |
On January 30, 2014, the Company's board of directors declared a cash distribution for the quarter ended December 31, 2013 on its common shares of $0.22 per common share. The distribution was paid on February 27, 2014 to common shareholders of record as of the close of business on February 13, 2014. | |
On December 24, 2013, the Company's board of directors declared a cash distribution of $0.460938 per share on its Series A LLC Preferred Shares. The distribution was paid on January 15, 2014 to preferred shareholders as of the close of business on January 8, 2014. | |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2013 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company's consolidated financial statements and accompanying notes. Actual results could differ from management's estimates. | |
The Company uses historical experience and various other assumptions and information that are believed to be reasonable under the circumstances in developing its estimates and judgments. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company's operating environment changes. While the Company believes that the estimates and assumptions used in the preparation of the consolidated financial statements are appropriate, actual results could differ from those estimates. | |
Estimates of oil, natural gas and natural gas liquid ("NGL") reserves and their values, future production rates and future costs and expenses are inherently uncertain, including many factors beyond the Company's control. Reservoir engineering is a subjective process of estimating underground accumulations of oil, natural gas and NGL that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of many factors including the following: the quality and quantity of available data, the interpretation of that data, the accuracy of various mandated economic assumptions and the judgments of the individuals preparing the estimates. In addition, reserve estimates are a function of many assumptions, all of which could deviate significantly from actual results. As such, reserve estimates may materially vary from the ultimate quantities of oil, natural gas and NGL eventually recovered, and could materially affect the Company's future depreciation, depletion and amortization expense ("DD&A"), its asset retirement obligations or impairment considerations. | |
Consolidation | ' |
Consolidation | |
KKR Financial CLO 2005-1, Ltd. ("CLO 2005-1"), KKR Financial CLO 2005-2, Ltd. ("CLO 2005-2"), KKR Financial CLO 2006-1, Ltd. ("CLO 2006-1"), KKR Financial CLO 2007-1, Ltd. ("CLO 2007-1"), KKR Financial CLO 2007-A, Ltd. ("CLO 2007-A"), KKR Financial CLO 2011-1, Ltd. ("CLO 2011-1"), KKR Financial CLO 2012-1, Ltd. ("CLO 2012-1"), and KKR Financial CLO 2013-1, Ltd. ("CLO 2013-1") (collectively the "Cash Flow CLOs") are entities established to complete secured financing transactions. These entities are VIEs which the Company consolidates as the Company has determined it has the power to direct the activities that most significantly impact these entities' economic performance and the Company has both the obligation to absorb losses of these entities and the right to receive benefits from these entities that could potentially be significant to these entities. In CLO transactions, subordinated notes have the first risk of loss and conversely, the residual value upside of the transactions. | |
The Company finances the majority of its corporate debt investments through its CLOs. As of December 31, 2013, the Company's eight CLOs held $6.7 billion par amount, or $6.4 billion estimated fair value, of corporate debt investments. As of December 31, 2012, the Company had seven CLOs that held $6.3 billion par amount, or $6.0 billion estimated fair value, of corporate debt investments. The assets in each CLO can be used only to settle the debt of the related CLO. As of December 31, 2013, the aggregate CLO debt totaled $5.2 billion of secured debt outstanding held by unaffiliated third parties. As of December 31, 2012, the aggregate CLO debt totaled $5.1 billion of secured debt outstanding held by unaffiliated third parties and $296.6 million of junior secured notes outstanding held by an affiliate of the Manager. | |
The Company consolidates all non-VIEs in which it holds a greater than 50 percent voting interest. | |
In addition, the Company has non-controlling interests in joint ventures and partnerships that do not qualify as VIEs and do not meet the control requirements for consolidation as defined by GAAP. | |
All inter-company balances and transactions have been eliminated in consolidation. | |
Fair Value of Financial Instruments | ' |
Fair Value of Financial Instruments | |
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments' complexity for disclosure purposes. Assets and liabilities in the consolidated balance sheets are categorized based upon the level of judgment associated with the inputs used to measure their value. Hierarchical levels, as defined under GAAP, are directly related to the amount of subjectivity associated with the inputs to fair valuations of these assets and liabilities, and are as follows: | |
Level 1: Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. | |
The types of assets generally included in this category are equity securities listed in active markets. | |
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, and inputs other than quoted prices that are observable for the asset or liability. | |
The types of assets and liabilities generally included in this category are certain corporate debt securities, certain corporate loans held for sale, certain equity investments at estimated fair value and certain financial instruments classified as derivatives. | |
Level 3: Inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. | |
The types of assets and liabilities generally included in this category are certain corporate debt securities, certain corporate loans held for sale, certain equity investments at estimated fair value, residential mortgage-backed securities ("RMBS"), certain interests in joint ventures and partnerships and certain financial instruments classified as derivatives. | |
A significant decrease in the volume and level of activity for the asset or liability is an indication that transactions or quoted prices may not be representative of fair value because in such market conditions there may be increased instances of transactions that are not orderly. In those circumstances, further analysis of transactions or quoted prices is needed, and a significant adjustment to the transactions or quoted prices may be necessary to estimate fair value. | |
The availability of observable inputs can vary depending on the financial asset or liability and is affected by a wide variety of factors, including, for example, the type of product, whether the product is new, whether the product is traded on an active exchange or in the secondary market, and the current market condition. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company's assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and consideration of factors specific to the asset. The variability of the observable inputs affected by the factors described above may cause transfers between Levels 1, 2, and/or 3, which the Company recognizes at the end of the reporting period. | |
Many financial assets and liabilities have bid and ask prices that can be observed in the marketplace. Bid prices reflect the highest price that the Company and others are willing to pay for an asset. Ask prices represent the lowest price that the Company and others are willing to accept for an asset. For financial assets and liabilities whose inputs are based on bid-ask prices, the Company does not require that fair value always be a predetermined point in the bid-ask range. The Company's policy is to allow for mid-market pricing and adjusting to the point within the bid-ask range that meets the Company's best estimate of fair value. | |
Depending on the relative liquidity in the markets for certain assets, the Company may transfer assets to Level 3 if it determines that observable quoted prices, obtained directly or indirectly, are not available. The valuation techniques used for the assets and liabilities that are valued using Level 3 of the fair value hierarchy are described below. | |
Securities and Corporate Loans, at Estimated Fair Value: Securities and corporate loans, at estimated fair value are initially valued at transaction price and are subsequently valued using market data for similar instruments (e.g., recent transactions or broker quotes), comparisons to benchmark derivative indices or valuation models. Valuation models are based on yield analysis techniques, where the key inputs are based on relative value analyses, which incorporate similar instruments from similar issuers. In addition, an illiquidity discount is applied where appropriate. | |
Equity Investments, at Estimated Fair Value: Equity investments, at estimated fair value, are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on market and income (discounted cash flow) approaches, in which various internal and external factors are considered. Factors include key financial inputs and recent public and private transactions for comparable investments. Key inputs used for the discounted cash flow approach include the weighted average cost of capital and assumed inputs used to calculate terminal values, such as earnings before interest, taxes, depreciation and amortization ("EBIDTA") exit multiples. The fair value recorded for a particular investment will generally be within the range suggested by the two approaches. Upon completion of the valuations conducted, an illiquidity discount is applied where appropriate. | |
Interests in Joint Ventures and Partnerships: Interests in joint ventures and partnerships include certain equity investments related to the oil and gas, commercial real estate and specialty lending sectors. Interests in joint ventures and partnerships are initially valued at transaction price and are subsequently valued using observable market prices, if available, or internally developed models in the absence of readily observable market prices. Valuation models are generally based on an income (discounted cash flow) approach, in which various internal and external factors are considered and key inputs include the weighted average cost of capital. In addition, an illiquidity discount is applied where appropriate. | |
Over-the-counter ("OTC") Derivative Contracts: OTC derivative contracts include forward, swap and option contracts related to interest rates, foreign currencies, credit standing of reference entities and equity prices. OTC derivatives are initially valued using quoted market prices, if available, or models using a series of techniques, including closed-form analytic formulae, such as the Black-Scholes option-pricing model, and/or simulation models in the absence of quoted market prices. Many pricing models employ methodologies that have pricing inputs observed from actively quoted markets, as is the case for generic interest rate swap and option contracts. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value: RMBS are initially valued at transaction price and are subsequently valued using a third party valuation servicer. The most significant inputs to the valuation of these instruments are default and loss expectations and constant prepayment rates. | |
Key unobservable inputs that have a significant impact on the Company's Level 3 valuations as described above are included in Note 14 to these consolidated financial statements. The Company utilizes several unobservable pricing inputs and assumptions in determining the fair value of its Level 3 investments. These unobservable pricing inputs and assumptions may differ by asset and in the application of the Company's valuation methodologies. The reported fair value estimates could vary materially if the Company had chosen to incorporate different unobservable pricing inputs and other assumptions or, for applicable investments, if the Company only used either the discounted cash flow methodology or the market comparables methodology instead of assigning a weighting to both methodologies. | |
Valuation Process | |
The valuation process involved in Level 3 measurements for assets and liabilities is completed on a quarterly basis and is designed to subject the valuation of Level 3 investments to an appropriate level of consistency, oversight and review. The Company utilizes a valuation committee, whose members consist of the Company's Chief Executive Officer, Chief Financial Officer, General Counsel and certain other employees of the Manager. The valuation committee is responsible for coordinating and implementing the Company's quarterly valuation process. | |
Investments are generally valued based on quotations from third party pricing services, unless such a quotation is unavailable or is determined to be unreliable or inadequately representing the fair value of the particular assets. In that case, valuations are based on either valuation data obtained from one or more other third party pricing sources, including broker dealers, or will reflect the valuation committee's good faith determination of estimated fair value based on other factors considered relevant. For assets classified as Level 3, the investment professionals are responsible for documenting preliminary valuations based on various factors including their evaluation of financial and operating data, company specific developments, market valuations of comparable companies and model projections discussed above. All valuations are approved by the valuation committee. | |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash on hand, cash held in banks and highly liquid investments with original maturities of three months or less. Interest income earned on cash and cash equivalents is recorded in other within total revenues on the consolidated statements of operations. | |
Restricted Cash and Cash Equivalents | ' |
Restricted Cash and Cash Equivalents | |
Restricted cash and cash equivalents represent amounts that are held by third parties under certain of the Company's financing and derivative transactions. Interest income earned on restricted cash and cash equivalents is recorded in other within total revenues on the consolidated statements of operations. | |
On the consolidated statements of cash flows, net additions or reductions to restricted cash and cash equivalents are classified as an investing activity as restricted cash and cash equivalents reflect the receipts from collections or sales of investments, as well as payments made to acquire investments held by third parties. | |
Securities Available-for-Sale | ' |
Securities Available-for-Sale | |
The Company classifies its investments in securities as available-for-sale as the Company may sell them prior to maturity and does not hold them principally for the purpose of selling them in the near term. These investments are carried at estimated fair value, with unrealized gains and losses reported in accumulated other comprehensive income. Estimated fair values are based on quoted market prices, when available, on estimates provided by independent pricing sources or dealers who make markets in such securities, or internal valuation models when external sources of fair value are not available. Upon the sale of a security, the realized net gain or loss is computed on a weighted average cost basis. Purchases and sales of securities are recorded on the trade date. | |
The Company monitors its available-for-sale securities portfolio for impairments. A loss is recognized when it is determined that a decline in the estimated fair value of a security below its amortized cost is other-than-temporary. The Company considers many factors in determining whether the impairment of a security is deemed to be other-than-temporary, including, but not limited to, the length of time the security has had a decline in estimated fair value below its amortized cost and the severity of the decline, the amount of the unrealized loss, recent events specific to the issuer or industry, external credit ratings and recent changes in such ratings. In addition, for debt securities, the Company considers its intent to sell the debt security, the Company's estimation of whether or not it expects to recover the debt security's entire amortized cost if it intends to hold the debt security, and whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery. For equity securities, the Company also considers its intent and ability to hold the equity security for a period of time sufficient for a recovery in value. | |
The amount of the loss that is recognized when it is determined that a decline in the estimated fair value of a security below its amortized cost is other-than-temporary is dependent on certain factors. If the security is an equity security or if the security is a debt security that the Company intends to sell or estimates that it is more likely than not that the Company will be required to sell before recovery of its amortized cost, then the impairment amount recognized in earnings is the entire difference between the estimated fair value of the security and its amortized cost. For debt securities that the Company does not intend to sell or estimates that it is not more likely than not to be required to sell before recovery, the impairment is separated into the estimated amount relating to credit loss and the estimated amount relating to all other factors. Only the estimated credit loss amount is recognized in earnings, with the remainder of the loss amount recognized in accumulated other comprehensive loss. | |
Unamortized premiums and unaccreted discounts on securities available-for-sale are recognized in interest income over the contractual life, adjusted for actual prepayments, of the securities using the effective interest method. | |
Other Securities, at Estimated Fair Value | ' |
Other Securities, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for certain securities for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these securities. Other securities, at estimated fair value are included within securities on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Residential Mortgage-Backed Securities, at Estimated Fair Value | ' |
Residential Mortgage-Backed Securities, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for its residential mortgage investments for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of its residential mortgage investments. RMBS, at estimated fair value are included within securities on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Equity Investments, at Estimated Fair Value | ' |
Equity Investments, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for certain marketable equity securities and private equity investments. The Company elects the fair value option of accounting for private equity investments received through restructuring debt transactions or issued by an entity in which the Company may have significant influence. The Company elected the fair value option for certain equity investments for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these equity investments. Equity investments, at fair value, are managed based on overall value and potential returns. These equity investments carried at estimated fair value are presented separately on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Interests in Joint Ventures and Partnerships | ' |
Interests in Joint Ventures and Partnerships | |
The Company has elected the fair value option of accounting for certain non-controlling interests in joint ventures and partnerships for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these interests. These interests in joint ventures and partnerships are presented separately on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statements of operations. | |
Securities Sold, Not Yet Purchased | ' |
Securities Sold, Not Yet Purchased | |
Securities sold, not yet purchased consist of equity and debt securities that the Company has sold short. In order to facilitate a short sale, the Company borrows the securities from another party and delivers the securities to the buyer. The Company will be required to "cover" its short sale in the future through the purchase of the security in the market at the prevailing market price and deliver it to the counterparty from which it borrowed. The Company is exposed to a loss to the extent that the security price increases during the time from when the Company borrowed the security to when the Company purchases it in the market to cover the short sale. Securities sold, not yet purchased are presented within accounts payable, accrued expenses and other liabilities on the consolidated balance sheets with gains and losses reported in net realized and unrealized gain on investments on the consolidated statement of operations. | |
Corporate Loans | ' |
Corporate Loans | |
Corporate loans are generally held for investment and the Company initially records corporate loans at their purchase prices. The Company subsequently accounts for corporate loans based on their outstanding principal plus or minus unaccreted purchase discounts and unamortized purchase premiums. Corporate loans that the Company transfers to held for sale are transferred at the lower of cost or estimated fair value. | |
Interest income on corporate loans includes interest at stated coupon rates adjusted for accretion of purchase discounts and the amortization of purchase premiums. Unamortized premiums and unaccreted discounts are recognized in interest income over the contractual life, adjusted for actual prepayments, of the corporate loans using the effective interest method. | |
Other than corporate loans measured at estimated fair value, corporate loans acquired with deteriorated credit quality are recorded at initial cost and interest income is recognized as the difference between the Company's estimate of all cash flows that it will receive from the loan in excess of its initial investment on a level-yield basis over the life of the corporate loan (accretable yield) using the effective interest method. | |
A corporate loan is typically placed on non-accrual status at such time as: (i) management believes that scheduled debt service payments may not be paid when contractually due; (ii) the corporate loan becomes 90 days delinquent; (iii) management determines the borrower is incapable of, or has ceased efforts toward, curing the cause of the impairment; or (iv) the net realizable value of the collateral securing the corporate loan decreases below the Company's carrying value of such corporate loan. As such, corporate loans placed on non-accrual status may or may not be contractually past due at the time of such determination. While on non-accrual status, previously recognized accrued interest is reversed if it is determined that such amounts are not collectible and interest income is recognized using the cost-recovery method, cash-basis method or some combination of the two methods. A corporate loan is placed back on accrual status when the ultimate collectability of the principal and interest is not in doubt. | |
The Company may modify corporate loans in transactions where the borrower is experiencing financial difficulty and a concession is granted to the borrower as part of the modification. These concessions may include one or a combination of the following: a reduction of the stated interest rate; payment extensions; forgiveness of principal; or an exchange of assets. Such modifications typically qualify as troubled debt restructurings ("TDRs"). In order to determine whether the borrower is experiencing financial difficulty, an evaluation is performed including the following considerations: whether the borrower is or will be in payment default on any of its debt in the foreseeable future without the modification; whether there is a potential for a bankruptcy filing; whether there is a going-concern issue; or whether the borrower is unable to secure financing elsewhere. | |
Corporate loans whose terms have been modified in a TDR are considered impaired, unless accounted for at fair value or the lower of cost or estimated fair value, and are typically placed on non-accrual status, but can be moved to accrual status when, among other criteria, payment in full of all amounts due under the restructured terms is expected and the borrower has demonstrated a sustained period of repayment performance, typically six months. | |
TDRs are separately identified for impairment disclosures and are measured at either the estimated fair value or the present value of estimated future cash flows using the respective corporate loan's effective rate at inception. Impairments associated with TDRs are included within the allocated component of the Company's allowance for loan losses. | |
The Company may also identify receivables that are newly considered impaired and discloses the total amount of receivables and the allowance for credit losses as of the end of the period of adoption related to those receivables that are newly considered impaired. | |
In addition to TDRs, the Company may also modify corporate loans which usually involve changes in existing interest rates combined with changes of existing maturities to prevailing market rates/maturities for similar instruments at the time of modification. Such modifications typically do not meet the definition of a TDR since the respective borrowers are neither experiencing financial difficulty nor are seeking a concession as part of the modification. | |
The corporate loans the Company invests in are generally deemed in default upon the non-payment of a single interest payment or as a result of the violation of a covenant in the respective corporate loan agreement. The Company charges-off a portion or all of its amortized cost basis in a corporate loan when it determines that it is uncollectible due to either: (i) the estimation based on a recovery value analysis of a defaulted corporate loan that less than the amortized cost amount will be recovered through the agreed upon restructuring of the corporate loan or as a result of a bankruptcy process of the issuer of the corporate loan; or (ii) the determination by the Company to transfer a corporate loan to held for sale with the corporate loan having an estimated market value below the amortized cost basis of the corporate loan. | |
Allowance for Loan Losses | ' |
Allowance for Loan Losses | |
The Company's corporate loan portfolio is comprised of a single portfolio segment which includes one class of financing receivables, that is, high yield loans that are typically purchased via assignment or participation in either the primary or secondary market and are held primarily for investment. High yield loans are generally characterized as having below investment grade ratings or being unrated. | |
The Company's allowance for loan losses represents its estimate of probable credit losses inherent in its corporate loan portfolio held for investment as of the balance sheet date. Estimating the Company's allowance for loan losses involves a high degree of management judgment and is based upon a comprehensive review of the Company's corporate loan portfolio that is performed on a quarterly basis. The Company's allowance for loan losses consists of two components, an allocated component and an unallocated component. The allocated component of the allowance for loan losses pertains to specific corporate loans that the Company has determined are impaired. The Company determines a corporate loan is impaired when management estimates that it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the corporate loan agreement. On a quarterly basis the Company performs a comprehensive review of its entire corporate loan portfolio and identifies certain corporate loans that it has determined are impaired. Once a corporate loan is identified as being impaired, the Company places the corporate loan on non-accrual status, unless the corporate loan is already on non-accrual status, and records an allowance that reflects management's best estimate of the loss that the Company expects to recognize from the corporate loan. The expected loss is estimated as being the difference between the Company's current cost basis of the corporate loan, including accrued interest receivable, and the present value of expected future cash flows discounted at the corporate loan's effective interest rate, except as a practical expedient, the corporate loan's observable estimated fair value may be used. The Company also estimates the probable credit losses inherent in its unfunded loan commitments as of the balance sheet date. Any credit loss reserve for unfunded loan commitments is recorded in accounts payable, accrued expenses and other liabilities on the Company's consolidated balance sheets. | |
The unallocated component of the Company's allowance for loan losses represents its estimate of probable losses inherent in the corporate loan portfolio as of the balance sheet date where the specific loan that the loan loss relates to is indeterminable. The Company estimates the unallocated component of the allowance for loan losses through a comprehensive review of its loan portfolio and identifies certain corporate loans that demonstrate possible indicators of impairment, including internally assigned credit quality indicators. This assessment excludes all corporate loans that are determined to be impaired and as a result, an allocated reserve has been recorded as described in the preceding paragraph. Such indicators include the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may impact the issuer, and the observable trading price of the corporate loan if available. All corporate loans are first categorized based on their assigned risk grade and further stratified based on the seniority of the corporate loan in the issuer's capital structure. The seniority classifications assigned to corporate loans are senior secured, second lien and subordinate. Senior secured consists of corporate loans that are the most senior debt in an issuer's capital structure and therefore have a lower estimated loss severity than other debt that is subordinate to the senior secured loan. Senior secured corporate loans often have a first lien on some or all of the issuer's assets. Second lien consists of corporate loans that are secured by a second lien interest on some or all of the issuer's assets; however, the corporate loan is subordinate to the first lien debt in the issuer's capital structure. Subordinate consists of corporate loans that are generally unsecured and subordinate to other debt in the issuer's capital structure. | |
There are three internally assigned risk grades that are applied to loans that have not been identified as being impaired: high, moderate and low. High risk means that there is evidence of possible loss due to the current and/or forecasted financial performance, liquidity profile of the issuer, specific industry or economic conditions that may impact the issuer, observable trading price of the corporate loan if available, or other factors that indicate that the breach of a covenant contained in the related loan agreement is possible. Moderate risk means that while there is not observable evidence of possible loss, there are issuer and/or industry specific trends that indicate a loss may have occurred. Low risk means that while there is no identified evidence of loss, there is the risk of loss inherent in the loan that has not been identified. All loans held for investment, with the exception of loans that have been identified as impaired, are assigned a risk grade of high, moderate or low. | |
The Company applies a range of default and loss severity estimates in order to estimate a range of loss outcomes upon which to base its estimate of probable losses that results in the determination of the unallocated component of the Company's allowance for loan losses. | |
Corporate Loans Held for Sale | ' |
Corporate Loans Held for Sale | |
From time to time the Company makes the determination to transfer certain of its corporate loans from held for investment to held for sale. The decision to transfer a loan to held for sale is generally as a result of the Company determining that the respective loan's credit quality in relation to the loan's expected risk-adjusted return no longer meets the Company's investment objective and/or the Company deciding to reduce or eliminate its exposure to a particular loan for risk management purposes. Corporate loans held for sale are stated at lower of cost or estimated fair value and are assessed on an individual basis. Prior to transferring a loan to held for sale, any difference between the carrying amount of the loan and its outstanding principal balance is recognized as an adjustment to the yield by the effective interest method. The loan is transferred from held for investment to held for sale at the lower of its cost or estimated fair value and is carried at the lower of its cost or estimated fair value thereafter. Subsequent to transfer and while the loan is held for sale, recognition as an adjustment to yield by the effective interest method is discontinued for any difference between the carrying amount of the loan and its outstanding principal balance. | |
From time to time the Company also makes the determination to transfer certain of its corporate loans from held for sale back to held for investment. The decision to transfer a loan back to held for investment is generally as a result of the circumstances that led to the initial transfer to held for sale no longer being present. Such circumstances may include deteriorated market conditions often resulting in price depreciation or assets becoming illiquid, changes in restrictions on sales and certain loans amending their terms to extend the maturity, whereby the Company determined that selling the asset no longer met its investment objective and strategy. The loan is transferred from held for sale back to held for investment at the lower of its cost or estimated fair value, whereby a new cost basis is established based on this amount. | |
Interest income on corporate loans held for sale is recognized through accrual of the stated coupon rate for the loans, unless the loans are placed on non-accrual status, at which point previously recognized accrued interest is reversed if it is determined that such amounts are not collectible and interest income is recognized using either the cost-recovery method or on a cash-basis. | |
Corporate Loans, at Estimated Fair Value | ' |
Corporate Loans, at Estimated Fair Value | |
The Company has elected the fair value option of accounting for certain corporate loans for the purpose of enhancing the transparency of its financial condition as fair value is consistent with how the Company manages the risks of these corporate loans. Corporate loans carried at estimated fair value are included within corporate loans, net on the consolidated balance sheets with unrealized gains and losses reported in net realized and unrealized gain on investments in the consolidated statement of operations. | |
Oil and Natural Gas Properties | ' |
Oil and Natural Gas Properties | |
Oil and natural gas producing activities are accounted for under the successful efforts method of accounting. Under this method, exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Costs that are associated with the drilling of successful exploration wells are capitalized if proved reserves are found. Lease acquisition costs are capitalized when incurred. Costs associated with the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs and costs of certain nonproducing leasehold costs are expensed as incurred. | |
Expenditures for repairs and maintenance, including workovers, are charged to expense as incurred. | |
The capitalized costs of producing oil and natural gas properties are depleted on a field-by-field basis using the units-of production method based on the ratio of current production to estimated total net proved oil, natural gas and NGL reserves. Proved developed reserves are used in computing depletion rates for drilling and development costs and total proved reserves are used for depletion rates of leasehold costs. | |
Estimated dismantlement and abandonment costs for oil and natural gas properties, net of salvage value, are capitalized at their estimated net present value and amortized on a unit-of-production basis over the remaining life of the related proved developed reserves. | |
Oil And Gas Revenue Recognition | ' |
Oil and Gas Revenue Recognition | |
Oil, natural gas and NGL revenues are recognized when production is sold to a purchaser at fixed or determinable prices, when delivery has occurred and title has transferred and collectability of the revenue is reasonably assured. The Company follows the sales method of accounting for natural gas revenues. Under this method of accounting, revenues are recognized based on volumes sold, which may differ from the volume to which we are entitled based on the Company's working interest. An imbalance is recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the under-produced owners to recoup its entitled share through future production. Under the sales method, no receivables are recorded when the Company has taken less than its share of production and no payables are recorded when the Company has taken more than its share of production. | |
Long-Lived Assets | ' |
Long-Lived Assets | |
Whenever events or changes in circumstances indicate that the carrying amounts of such properties may not be recoverable, the Company evaluates its proved oil and natural gas properties and related equipment and facilities for impairment on a field-by-field basis. The determination of recoverability is made based upon estimated undiscounted future net cash flows. The amount of impairment loss, if any, is determined by comparing the fair value, as determined by a discounted cash flow analysis, with the carrying value of the related asset. The factors used to determine fair value include, but are not limited to, estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, future operating costs and a discount rate commensurate with the risk on the properties and cost of capital. Unproved oil and natural gas properties are assessed periodically and, at a minimum, annually on a property-by-property basis, and any impairment in value is recognized when incurred. | |
Borrowings | ' |
Borrowings | |
The Company finances the majority of its investments through the use of secured borrowings in the form of securitization transactions structured as non-recourse secured financings and other secured and unsecured borrowings. In addition, the Company finances certain of its oil and gas asset acquisitions through borrowings. The Company recognizes interest expense on all borrowings on an accrual basis. | |
Trust Preferred Securities | ' |
Trust Preferred Securities | |
Trusts formed by the Company for the sole purpose of issuing trust preferred securities are not consolidated by the Company as the Company has determined that it is not the primary beneficiary of such trusts. The Company's investment in the common securities of such trusts is included within other assets on the consolidated balance sheets. | |
Preferred Shares | ' |
Preferred Shares | |
Distributions on the Company's Series A LLC Preferred Shares are cumulative and payable quarterly when and if declared by the Company's board of directors at a 7.375% rate per annum. The Company accrues for the distribution upon declaration and is included within accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. | |
Derivative Instruments | ' |
Derivative Instruments | |
The Company recognizes all derivatives on the consolidated balance sheet at estimated fair value. On the date the Company enters into a derivative contract, the Company designates and documents each derivative contract as one of the following at the time the contract is executed: (i) a hedge of a recognized asset or liability ("fair value" hedge); (ii) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability ("cash flow" hedge); (iii) a hedge of a net investment in a foreign operation; or (iv) a derivative instrument not designated as a hedging instrument ("free-standing derivative"). For a fair value hedge, the Company records changes in the estimated fair value of the derivative instrument and, to the extent that it is effective, changes in the fair value of the hedged asset or liability in the current period earnings in the same financial statement category as the hedged item. For a cash flow hedge, the Company records changes in the estimated fair value of the derivative to the extent that it is effective in accumulated other comprehensive loss and subsequently reclassifies these changes in estimated fair value to net income in the same period(s) that the hedged transaction affects earnings. The effective portion of the cash flow hedges is recorded in the same financial statement category as the hedged item. For free-standing derivatives, the Company reports changes in the fair values in net realized and unrealized loss on derivatives and foreign exchange on the consolidated statements of operations. | |
The Company formally documents at inception its hedge relationships, including identification of the hedging instruments and the hedged items, its risk management objectives, strategy for undertaking the hedge transaction and the Company's evaluation of effectiveness of its hedged transactions. Periodically, the Company also formally assesses whether the derivative it designated in each hedging relationship is expected to be and has been highly effective in offsetting changes in estimated fair values or cash flows of the hedged item using either the dollar offset or the regression analysis method. If the Company determines that a derivative is not highly effective as a hedge, it discontinues hedge accounting. | |
Foreign Currency | ' |
Foreign Currency | |
The Company makes investments in non-United States dollar denominated assets including securities, loans and equity investments, at estimated fair value. As a result, the Company is subject to the risk of fluctuation in the exchange rate between the United States dollar and the foreign currency in which it makes an investment. In order to reduce the currency risk, the Company may hedge the applicable foreign currency. All investments denominated in a foreign currency are converted to the United States dollar using prevailing exchange rates on the balance sheet date. | |
Income, expenses, gains and losses on investments denominated in a foreign currency are converted to the United States dollar using the prevailing exchange rates on the dates when they are recorded. Foreign exchange gains and losses are recorded in net realized and unrealized loss on derivatives and foreign exchange on the consolidated statements of operations. | |
Manager Compensation | ' |
Manager Compensation | |
The Management Agreement provides for the payment of a base management fee to the Manager, as well as an incentive fee if the Company's financial performance exceeds certain benchmarks. Additionally, the Management Agreement provides for the Manager to be reimbursed for certain expenses incurred on the Company's behalf. The base management fee and the incentive fee are accrued and expensed during the period for which they are earned by the Manager. | |
Share-Based Compensation | ' |
Share-Based Compensation | |
The Company accounts for share-based compensation issued to its directors and to its Manager using the fair value based methodology in accordance with relevant accounting guidance. Compensation cost related to restricted common shares issued to the Company's directors is measured at its estimated fair value at the grant date, and is amortized and expensed over the vesting period on a straight-line basis. Compensation cost related to restricted common shares and common share options issued to the Manager is initially measured at estimated fair value at the grant date, and is remeasured on subsequent dates to the extent the awards are unvested. The Company has elected to use the graded vesting attribution method to amortize compensation expense for the restricted common shares and common share options granted to the Manager. | |
Income Taxes | ' |
Income Taxes | |
The Company intends to continue to operate so as to qualify, for United States federal income tax purposes, as a partnership and not as an association or publicly traded partnership taxable as a corporation. Therefore, the Company generally is not subject to United States federal income tax at the entity level, but is subject to limited state and foreign taxes. Holders of the Company's common and preferred shares will be required to take into account their allocable share of each item of the Company's income, gain, loss, deduction, and credit for the taxable year of the Company ending within or with their taxable year. | |
The Company owns equity interests in entities that have elected or intend to elect to be taxed as a real estate investment trust (a "REIT") under the Internal Revenue Code of 1986, as amended (the "Code"). A REIT generally is not subject to United States federal income tax to the extent that it currently distributes its income and satisfies certain asset, income and ownership tests, and recordkeeping requirements, but it may be subject to some amount of federal, state, local and foreign taxes based on its taxable income. | |
The Company has wholly-owned domestic and foreign subsidiaries that are taxable as corporations for United States federal income tax purposes and thus are not consolidated with the Company for United States federal income tax purposes. For financial reporting purposes, current and deferred taxes are provided for on the portion of earnings recognized by the Company with respect to its interest in the domestic taxable corporate subsidiaries, because each is taxed as a regular corporation under the Code. Deferred income tax assets and liabilities are computed based on temporary differences between the GAAP consolidated financial statements and the United States federal income tax basis of assets and liabilities as of each consolidated balance sheet date. The foreign corporate subsidiaries were formed to make certain foreign and domestic investments from time to time. The foreign corporate subsidiaries are organized as exempted companies incorporated with limited liability under the laws of the Cayman Islands, and are anticipated to be exempt from United States federal and state income tax at the corporate entity level because they restrict their activities in the United States to trading in stock and securities for their own account. However, the Company will be required to include their current taxable income in the Company's calculation of its taxable income allocable to shareholders. | |
The Company must recognize the tax impact from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax impact recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate resolution. Penalties and interest related to uncertain tax positions are recorded as tax expense. Significant judgment is required in the identification of uncertain tax positions and in the estimation of penalties and interest on uncertain tax positions. If it is determined that recognition for an uncertain tax provision is necessary, the Company would record a liability for an unrecognized tax expense from an uncertain tax position taken or expected to be taken. | |
Earnings Per Common Share | ' |
Earnings Per Common Share | |
The Company presents both basic and diluted earnings per common share ("EPS") in its consolidated financial statements and footnotes thereto. Basic earnings per common share ("Basic EPS") excludes dilution and is computed by dividing net income or loss available to common shareholders by the weighted average number of common shares, including vested restricted common shares, outstanding for the period. The Company calculates EPS using the more dilutive of the two-class method or the if-converted method. The two-class method is an earnings allocation formula that determines EPS for common shares and participating securities. Unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of EPS using the two-class method. Accordingly, all earnings (distributed and undistributed) are allocated to common shares, preferred shares and participating securities based on their respective rights to receive dividends. Diluted earnings per common share ("Diluted EPS") reflects the potential dilution of common share options, unvested restricted common shares and convertible senior notes using the treasury method or if-converted method. | |
EARNINGS_PER_COMMON_SHARE_Tabl
EARNINGS PER COMMON SHARE (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
EARNINGS PER COMMON SHARE | ' | ||||||||||
Schedule of reconciliation of basic and diluted net income per common share | ' | ||||||||||
The following table presents a reconciliation of basic and diluted net income per common share for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands, except per share information): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Net income | $ | 293,230 | $ | 348,230 | $ | 318,072 | |||||
Less: Preferred share distributions | 27,411 | — | — | ||||||||
| | | | | | | | | | | |
Net income available to common shareholders | $ | 265,819 | $ | 348,230 | $ | 318,072 | |||||
Less: Dividends and undistributed earnings allocated to participating securities | 904 | 1,116 | 1,082 | ||||||||
| | | | | | | | | | | |
Net income allocated to common shareholders | $ | 264,915 | $ | 347,114 | $ | 316,990 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Effect of dilutive securities: | |||||||||||
Interest on convertible senior notes | — | 3,234 | — | ||||||||
| | | | | | | | | | | |
Net income allocated to common shareholders for diluted earnings per share | $ | 264,915 | $ | 350,348 | $ | 316,990 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic: | |||||||||||
Basic weighted average common shares outstanding | 202,411 | 177,838 | 177,560 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income per common share | $ | 1.31 | $ | 1.95 | $ | 1.79 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Diluted: | |||||||||||
Basic weighted average common shares outstanding | 202,411 | 177,838 | 177,560 | ||||||||
Dilutive effect of convertible senior notes(1) | — | 9,585 | 3,337 | ||||||||
| | | | | | | | | | | |
Diluted weighted average common shares outstanding(2) | 202,411 | 187,423 | 180,897 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Net income per common share | $ | 1.31 | $ | 1.87 | $ | 1.75 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | |||||||||||
The if-converted method was applied during the fourth quarter of 2012 reflecting the assumption that the convertible senior notes would be settled in common shares. During the first quarter of 2013, $172.5 million of the Company's outstanding convertible notes had been tendered for conversion and were settled with 26.1 million common shares. | |||||||||||
-2 | |||||||||||
Potential anti-dilutive common shares excluded from diluted earnings per share related to common share options were 1,932,279 for the years ended December 31, 2013, 2012 and 2011. | |||||||||||
SECURITIES_Tables
SECURITIES (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
SECURITIES | ' | |||||||||||||||||||
Summary of the company's securities which are carried at estimated fair value | ' | |||||||||||||||||||
The following table summarizes the Company's securities as of December 31, 2013, which are carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||||||||
Gains | Losses | Value | ||||||||||||||||||
Securities available-for-sale | $ | 326,775 | $ | 24,791 | $ | (1,225 | ) | $ | 350,341 | |||||||||||
Other securities, at estimated fair value(1) | 135,968 | 12,436 | (1,437 | ) | 146,967 | |||||||||||||||
Residential mortgage-backed securities, at estimated fair value(1) | 138,284 | 2,809 | (65,089 | ) | 76,004 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total securities | $ | 601,027 | $ | 40,036 | $ | (67,751 | ) | $ | 573,312 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
-1 | ||||||||||||||||||||
Unrealized gains and losses presented represent amounts as of period-end. Unrealized gains and losses recognized during the year for these securities are recorded in earnings. | ||||||||||||||||||||
The following table summarizes the Company's securities as of December 31, 2012, which are carried at estimated fair value (amounts in thousands): | ||||||||||||||||||||
December 31, 2012 | ||||||||||||||||||||
Amortized | Gross | Gross | Estimated | |||||||||||||||||
Cost | Unrealized | Unrealized | Fair | |||||||||||||||||
Gains | Losses | Value | ||||||||||||||||||
Securities available-for-sale | $ | 394,821 | $ | 27,281 | $ | (9,809 | ) | $ | 412,293 | |||||||||||
Other securities, at estimated fair value(1) | 27,991 | 9,768 | (374 | ) | 37,385 | |||||||||||||||
Residential mortgage-backed securities, at estimated fair value(1) | 171,385 | 3,762 | (91,305 | ) | 83,842 | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Total securities | $ | 594,197 | $ | 40,811 | $ | (101,488 | ) | $ | 533,520 | |||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
-1 | ||||||||||||||||||||
Unrealized gains and losses presented represent amounts as of period-end. Unrealized gains and losses recognized during the year for these securities are recorded in earnings. | ||||||||||||||||||||
Schedule of gross unrealized losses and fair value of securities classified as available-for-sale aggregated by length of time the securities have been in a continuous unrealized loss position | ' | |||||||||||||||||||
The following table shows the gross unrealized losses and fair value of the Company's available-for-sale securities, aggregated by length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2013 and 2012 (amounts in thousands): | ||||||||||||||||||||
Less Than 12 months | 12 Months or More | Total | ||||||||||||||||||
Estimated | Unrealized | Estimated | Unrealized | Estimated | Unrealized | |||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||
December 31, 2013 | ||||||||||||||||||||
Securities available-for-sale | $ | 25,543 | $ | (658 | ) | $ | 30,034 | $ | (567 | ) | $ | 55,577 | $ | (1,225 | ) | |||||
December 31, 2012 | ||||||||||||||||||||
Securities available-for-sale | $ | 45,900 | $ | (4,398 | ) | $ | 37,500 | $ | (5,411 | ) | $ | 83,400 | $ | (9,809 | ) | |||||
Schedule of net realized gains on the sales of available-for-sale securities | ' | |||||||||||||||||||
The following table shows the net realized gains on the sales of securities available-for-sale (amounts in thousands): | ||||||||||||||||||||
Year ended | Year ended | Year ended | ||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||
2013 | 2012 | 2011 | ||||||||||||||||||
Gross realized gains | $ | 2,829 | $ | 85,982 | $ | 100,565 | ||||||||||||||
Gross realized losses | (42 | ) | (12 | ) | (559 | ) | ||||||||||||||
| | | | | | | | | | | ||||||||||
Net realized gains | $ | 2,787 | $ | 85,970 | $ | 100,006 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Schedule of amortized cost and estimated fair value of securities available-for-sale by remaining contractual maturity and weighted average coupon based on par values | ' | |||||||||||||||||||
The following table summarizes the amortized cost and estimated fair value of securities available-for-sale by remaining contractual maturity and weighted average coupon based on par values as of December 31, 2013 (dollar amounts in thousands): | ||||||||||||||||||||
Description | Amortized | Estimated | Weighted | |||||||||||||||||
Cost | Fair | Average | ||||||||||||||||||
Value | Coupon | |||||||||||||||||||
Due within one year | $ | 23,702 | $ | 24,517 | 7.9 | % | ||||||||||||||
One to five years | 207,987 | 221,393 | 8.2 | |||||||||||||||||
Five to ten years | 92,329 | 101,341 | 8.5 | |||||||||||||||||
Greater than ten years | 2,757 | 3,090 | 1.1 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Total | $ | 326,775 | $ | 350,341 | ||||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Schedule of estimated fair value of securities pledged as collateral | ' | |||||||||||||||||||
The following table summarizes the estimated fair value of securities pledged as collateral as of December 31, 2013 and 2012 (amounts in thousands): | ||||||||||||||||||||
As of | As of | |||||||||||||||||||
December 31, | December 31, | |||||||||||||||||||
2013 | 2012 | |||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt and junior secured notes to affiliates | $ | 324,830 | $ | 354,088 | ||||||||||||||||
| | | | | | | | |||||||||||||
Total | $ | 324,830 | $ | 354,088 | ||||||||||||||||
| | | | | | | | |||||||||||||
| | | | | | | | |||||||||||||
CORPORATE_LOANS_AND_ALLOWANCE_1
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | ' | ||||||||||||||||||||||||||||
Schedule of corporate loans | ' | ||||||||||||||||||||||||||||
The following table summarizes the Company's corporate loans as of December 31, 2013 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, 2013 | |||||||||||||||||||||||||||||
Corporate | Corporate | Corporate | Total | ||||||||||||||||||||||||||
Loans Held | Loans Held | Loans, at | Corporate | ||||||||||||||||||||||||||
for Investment | for Sale | Estimated | Loans | ||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||
Principal(1) | $ | 6,280,470 | $ | 315,738 | $ | 277,458 | $ | 6,873,666 | |||||||||||||||||||||
Net unamortized discount | (105,979 | ) | (20,070 | ) | (54,997 | ) | (181,046 | ) | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Total amortized cost | 6,174,491 | 295,668 | 222,461 | 6,692,620 | |||||||||||||||||||||||||
Lower of cost or fair value adjustment | — | (15,920 | ) | — | (15,920 | ) | |||||||||||||||||||||||
Allowance for loan losses | (224,999 | ) | — | — | (224,999 | ) | |||||||||||||||||||||||
Net unrealized gains | — | — | 15,019 | 15,019 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Net carrying value | $ | 5,949,492 | $ | 279,748 | $ | 237,480 | $ | 6,466,720 | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Principal amounts of corporate loans and corporate loans held for sale are net of cumulative charge-offs and other adjustments totaling $18.1 million as of December 31, 2013. | |||||||||||||||||||||||||||||
The following table summarizes the Company's corporate loans as of December 31, 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, 2012 | |||||||||||||||||||||||||||||
Corporate | Corporate | Corporate | Total | ||||||||||||||||||||||||||
Loans Held | Loans Held | Loans, at | Corporate | ||||||||||||||||||||||||||
for Investment | for Sale | Estimated | Loans | ||||||||||||||||||||||||||
Fair Value | |||||||||||||||||||||||||||||
Principal(1) | $ | 6,143,599 | $ | 231,231 | $ | 56,931 | $ | 6,431,761 | |||||||||||||||||||||
Net unamortized discount | (136,438 | ) | (88,895 | ) | (23,277 | ) | (248,610 | ) | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Total amortized cost | 6,007,161 | 142,336 | 33,654 | 6,183,151 | |||||||||||||||||||||||||
Lower of cost or fair value adjustment | — | (14,047 | ) | — | (14,047 | ) | |||||||||||||||||||||||
Allowance for loan losses | (223,472 | ) | — | — | (223,472 | ) | |||||||||||||||||||||||
Net unrealized gains | — | — | 2,225 | 2,225 | |||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Net carrying value | $ | 5,783,689 | $ | 128,289 | $ | 35,879 | $ | 5,947,857 | |||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Principal amounts of corporate loans and corporate loans held for sale are net of cumulative charge-offs and other adjustments totaling $51.6 million as of December 31, 2012. | |||||||||||||||||||||||||||||
Schedule of changes in the allowance for loan losses | ' | ||||||||||||||||||||||||||||
The following table summarizes the changes in the allowance for loan losses for the Company's corporate loan portfolio during the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Beginning balance | $ | 223,472 | $ | 191,407 | $ | 209,030 | |||||||||||||||||||||||
Provision for loan losses | 32,812 | 46,498 | 14,194 | ||||||||||||||||||||||||||
Charge-offs | (31,285 | ) | (14,433 | ) | (31,817 | ) | |||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Ending balance | $ | 224,999 | $ | 223,472 | $ | 191,407 | |||||||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | |||||||||||||||||||
Schedule of ending balances of allowances for loan losses by basis of impairment method | ' | ||||||||||||||||||||||||||||
The following table summarizes the ending balances of the allowance and corporate loans portfolio by basis of impairment method as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012(1) | ||||||||||||||||||||||||||||
Allowance for loan losses: | |||||||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 142,682 | $ | 94,863 | |||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | 82,317 | 128,609 | |||||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality | — | — | |||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
$ | 224,999 | $ | 223,472 | ||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
Corporate loans (recorded investment)(2): | |||||||||||||||||||||||||||||
Ending balance: individually evaluated for impairment | $ | 554,442 | $ | 445,437 | |||||||||||||||||||||||||
Ending balance: collectively evaluated for impairment | 5,638,790 | 5,583,622 | |||||||||||||||||||||||||||
Ending balance: loans acquired with deteriorated credit quality | — | — | |||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
$ | 6,193,232 | $ | 6,029,059 | ||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Certain prior period information has been reclassified to conform to the current year presentation to segregate the Company's corporate loan portfolio between those that are included in the allocated component of the allowance for loan losses (individually evaluated) and those included in the unallocated component of the allowance for loan losses (collectively evaluated). | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
Schedule of investment and unpaid principal balance in impaired loans, as well as the related allowance for credit losses | ' | ||||||||||||||||||||||||||||
The following table summarizes the Company's recorded investment and unpaid principal balance in impaired loans, as well as the related allowance for credit losses as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||
Recorded | Unpaid | Related | Recorded | Unpaid | Related | ||||||||||||||||||||||||
Investment(1) | Principal | Allowance | Investment(1) | Principal | Allowance | ||||||||||||||||||||||||
Balance | Balance | ||||||||||||||||||||||||||||
With no related allowance recorded | $ | — | $ | — | $ | — | $ | 6,490 | $ | 19,931 | $ | — | |||||||||||||||||
With an allowance recorded | 554,442 | 594,416 | 142,682 | 438,947 | 464,214 | 94,863 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
Total | $ | 554,442 | $ | 594,416 | $ | 142,682 | $ | 445,437 | $ | 484,145 | $ | 94,863 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
Schedule of average recorded investment in impaired loans and interest income recognized | ' | ||||||||||||||||||||||||||||
The following table summarizes the Company's average recorded investment in impaired loans and interest income recognized for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
For the year ended | For the year ended | For the year ended | |||||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | December 31, 2011 | |||||||||||||||||||||||||||
Average | Interest | Average | Interest | Average | Interest | ||||||||||||||||||||||||
Recorded | Income | Recorded | Income | Recorded | Income | ||||||||||||||||||||||||
Investment(1) | Recognized | Investment(1) | Recognized | Investment(1) | Recognized | ||||||||||||||||||||||||
With no related allowance recorded | $ | 1,298 | $ | — | $ | 3,540 | $ | 208 | $ | 3,244 | $ | — | |||||||||||||||||
With an allowance recorded | 524,924 | 18,194 | 199,083 | 9,310 | 76,933 | 2,645 | |||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
Total | $ | 526,222 | $ | 18,194 | $ | 202,623 | $ | 9,518 | $ | 80,177 | $ | 2,645 | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | ||||||||||
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
Schedule of recorded investment in non-accrual loans | ' | ||||||||||||||||||||||||||||
The following table summarizes the Company's recorded investment in non-accrual loans as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||
Loans held for investment | $ | 554,442 | $ | 445,437 | |||||||||||||||||||||||||
Loans held for sale | 44,823 | 90,840 | |||||||||||||||||||||||||||
Loans at estimated fair value | 24,883 | — | |||||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
Total non-accrual loans | $ | 624,148 | $ | 536,277 | |||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
Schedule of recorded investment in corporate loans by internally assigned grades | ' | ||||||||||||||||||||||||||||
The following table summarizes how the Company determines internally assigned grades related to credit quality based on a combination of concern as to probability of default and the seniority of the loan in the issuer's capital structure for the years ended December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
Internally Assigned Grade | Capital Hierarchy | Recorded Investment | Recorded Investment | ||||||||||||||||||||||||||
December 31, 2013(1) | December 31, 2012(1) | ||||||||||||||||||||||||||||
High | Senior Secured Loan | $ | 26,886 | $ | 525,562 | ||||||||||||||||||||||||
Second Lien Loan | 286,996 | 287,892 | |||||||||||||||||||||||||||
Subordinated | 11,643 | 10,621 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
$ | 325,525 | $ | 824,075 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Moderate | Senior Secured Loan | $ | 1,033,065 | $ | 826,107 | ||||||||||||||||||||||||
Second Lien Loan | 27,504 | 27,585 | |||||||||||||||||||||||||||
Subordinated | 39,329 | 38,374 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
$ | 1,099,898 | $ | 892,066 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Low | Senior Secured Loan | $ | 4,148,913 | $ | 3,716,831 | ||||||||||||||||||||||||
Second Lien Loan | 25,864 | 68,917 | |||||||||||||||||||||||||||
Subordinated | 38,590 | 81,733 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
$ | 4,213,367 | $ | 3,867,481 | ||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total Unallocated | $ | 5,638,790 | $ | 5,583,622 | |||||||||||||||||||||||||
Total Allocated | 554,442 | 445,437 | |||||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
Total Loans Held for Investment | $ | 6,193,232 | $ | 6,029,059 | |||||||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
| | | | | | | | | | ||||||||||||||||||||
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
Schedule of loans by class modified as troubled debt restructurings | ' | ||||||||||||||||||||||||||||
The following table presents the aggregate balance of loans whose terms have been modified in a TDR during the years ended December 31, 2013, 2012 and 2011 (dollar amounts in thousands): | |||||||||||||||||||||||||||||
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||||
Number | Pre- | Post- | Number | Pre- | Post- | Number | Pre- | Post- | |||||||||||||||||||||
of TDRs | modification | modification | of TDRs | modification | modification | of TDRs | modification | modification | |||||||||||||||||||||
outstanding | outstanding | outstanding | outstanding | outstanding | outstanding | ||||||||||||||||||||||||
recorded | recorded | recorded | recorded | recorded | recorded | ||||||||||||||||||||||||
investment(1) | investment(1)(2) | investment(1) | investment(1) | investment(1) | investment(1)(3) | ||||||||||||||||||||||||
Troubled debt restructurings: | |||||||||||||||||||||||||||||
Loans held for investment | 2 | $ | 68,358 | $ | 39,430 | 1 | $ | 13,807 | $ | 4,679 | — | $ | — | $ | — | ||||||||||||||
Loans held for sale | — | — | — | 1 | 53,875 | 20,886 | — | — | — | ||||||||||||||||||||
Loans at estimated fair value | 1 | 1,670 | 1,229 | — | — | — | 1 | 11,158 | — | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total | 3 | $ | 70,028 | $ | 40,659 | 2 | $ | 67,682 | $ | 25,565 | 1 | $ | 11,158 | $ | — | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||
Recorded investment is defined as amortized cost plus accrued interest. | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Excludes equity securities received from the TDRs with an estimated fair value of $2.1 million. | |||||||||||||||||||||||||||||
-3 | |||||||||||||||||||||||||||||
Excludes equity securities received from the TDRs with an estimated fair value of $9.5 million. | |||||||||||||||||||||||||||||
Schedule of amortized cost of corporate loans pledged as collateral | ' | ||||||||||||||||||||||||||||
The following table summarizes the amortized cost of corporate loans pledged as collateral as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||
2013 | 2012 | ||||||||||||||||||||||||||||
Pledged as collateral for collateralized loan obligation secured debt and junior secured notes to affiliates | $ | 6,231,541 | $ | 5,804,026 | |||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
Total | $ | 6,231,541 | $ | 5,804,026 | |||||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
| | | | | | | | ||||||||||||||||||||||
NATURAL_RESOURCES_ASSETS_Table
NATURAL RESOURCES ASSETS (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
NATURAL RESOURCES ASSETS | ' | |||||||
Summary of the company's oil and gas properties | ' | |||||||
The following table summarizes the Company's oil and gas properties as of December 31, 2013 and 2012 (amounts in thousands): | ||||||||
As of | As of | |||||||
December 31, | December 31, | |||||||
2013 | 2012 | |||||||
Proved oil and natural gas properties (successful efforts method) | $ | 451,909 | $ | 315,446 | ||||
Unproved oil and natural gas properties | 16,913 | 2,596 | ||||||
Less: Accumulated depreciation, depletion and amortization | (68,453 | ) | (28,113 | ) | ||||
| | | | | | | | |
Oil and gas properties, net | $ | 400,369 | $ | 289,929 | ||||
| | | | | | | | |
| | | | | | | | |
Schedule of recognized fair value of the identifiable assets acquired and liabilities assumed in connection with the acquisition | ' | |||||||
The table below reflects updated 2012 information including an increase of $3.8 million to both proved property and accounts payable and accrued liabilities (amounts in thousands): | ||||||||
2013 | 2012 | |||||||
Proved property | $ | — | $ | 164,557 | ||||
Unproved property | — | 2,658 | ||||||
Other assets | — | 16,789 | ||||||
Risk management liabilities | — | (1,037 | ) | |||||
Accounts payable and accrued liabilities | — | (9,030 | ) | |||||
Asset retirement obligation | — | (5,491 | ) | |||||
| | | | | | | | |
Total | $ | — | $ | 168,446 | ||||
| | | | | | | | |
| | | | | | | | |
BORROWINGS_Tables
BORROWINGS (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
BORROWINGS | ' | ||||||||||||||||
Schedule of Company's borrowings | ' | ||||||||||||||||
Certain information with respect to the Company's borrowings as of December 31, 2013 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||||
Outstanding | Weighted | Weighted | Collateral(1) | ||||||||||||||
Borrowings | Average | Average | |||||||||||||||
Borrowing | Remaining | ||||||||||||||||
Rate | Maturity | ||||||||||||||||
(in days) | |||||||||||||||||
CLO 2005-1 senior secured notes | $ | 193,909 | 0.73 | % | 1,212 | $ | 303,104 | ||||||||||
CLO 2005-2 senior secured notes | 335,570 | 0.63 | 1,426 | 496,917 | |||||||||||||
CLO 2006-1 senior secured notes | 384,925 | 0.69 | 1,698 | 649,894 | |||||||||||||
CLO 2007-1 senior secured notes | 2,075,040 | 0.79 | 2,692 | 2,354,938 | |||||||||||||
CLO 2007-1 mezzanine notes | 406,428 | 3.65 | 2,692 | 461,250 | |||||||||||||
CLO 2007-1 subordinated notes(2) | 136,097 | 18.15 | 2,692 | 154,456 | |||||||||||||
CLO 2007-A senior secured notes | 428,152 | 1.57 | 1,384 | 540,677 | |||||||||||||
CLO 2007-A mezzanine notes | 55,327 | 7.44 | 1,384 | 69,867 | |||||||||||||
CLO 2007-A subordinated notes(2) | 15,096 | 42.22 | 1,384 | 19,063 | |||||||||||||
CLO 2011-1 senior debt | 388,703 | 1.25 | 1,688 | 517,597 | |||||||||||||
CLO 2012-1 senior secured notes | 362,727 | 2.34 | 4,002 | 376,603 | |||||||||||||
CLO 2012-1 subordinated notes(2) | 18,000 | 11.67 | 4,002 | 18,689 | |||||||||||||
CLO 2013-1 senior secured notes | 449,409 | 1.98 | 4,214 | 468,915 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total collateralized loan obligation secured debt | 5,249,383 | 6,431,970 | |||||||||||||||
Senior secured credit facility(3) | 75,000 | 1.39 | 699 | — | |||||||||||||
2015 Asset-based borrowing facility | 50,289 | 2.42 | 674 | 213,935 | |||||||||||||
2018 Asset-based borrowing facility(4) | — | — | 1,519 | — | |||||||||||||
| | | | | | | | | | | | | | ||||
Total credit facilities | 125,289 | 213,935 | |||||||||||||||
8.375% Senior notes | 250,800 | 8.38 | 10,181 | — | |||||||||||||
7.500% Senior notes | 111,476 | 7.5 | 10,306 | — | |||||||||||||
Junior subordinated notes | 283,517 | 5.39 | 8,347 | — | |||||||||||||
| | | | | | | | | | | | | | ||||
Total borrowings | $ | 6,020,465 | $ | 6,645,905 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
-1 | |||||||||||||||||
Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities available-for-sale and equity investments at estimated fair value. Also includes the carrying value of oil and gas assets. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the outstanding borrowings for each respective CLO. | |||||||||||||||||
-2 | |||||||||||||||||
Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on year-to-date estimated distributions, if any. | |||||||||||||||||
-3 | |||||||||||||||||
Capital stock of material domestic and foreign subsidiaries, as defined by the senior secured credit facility agreement, are eligible to be pledged as collateral. As of December 31, 2013, the total investments held within these eligible subsidiaries exceeded the amount of the outstanding debt. | |||||||||||||||||
-4 | |||||||||||||||||
Borrowing rates range from 1.75% to 3.25% plus London interbank offered rate ("LIBOR") per annum based on the amount outstanding. | |||||||||||||||||
Certain information with respect to the Company's borrowings as of December 31, 2012 is summarized in the following table (dollar amounts in thousands): | |||||||||||||||||
Outstanding | Weighted | Weighted | Collateral(1) | ||||||||||||||
Borrowings | Average | Average | |||||||||||||||
Borrowing | Remaining | ||||||||||||||||
Rate | Maturity | ||||||||||||||||
(in days) | |||||||||||||||||
CLO 2005-1 senior secured notes | $ | 427,317 | 0.69 | % | 1,577 | $ | 510,187 | ||||||||||
CLO 2005-2 senior secured notes | 470,516 | 0.66 | 1,791 | 618,000 | |||||||||||||
CLO 2006-1 senior secured notes | 601,091 | 0.69 | 2,063 | 846,365 | |||||||||||||
CLO 2007-1 senior secured notes | 2,075,040 | 0.86 | 3,057 | 2,298,373 | |||||||||||||
CLO 2007-1 mezzanine notes | 203,727 | 2.81 | 3,057 | 225,654 | |||||||||||||
CLO 2007-1 subordinated notes(2) | 5,828 | 26.22 | 3,057 | 6,455 | |||||||||||||
CLO 2007-A senior secured notes | 601,375 | 1.5 | 1,749 | 698,569 | |||||||||||||
CLO 2007-A mezzanine notes | 5,580 | 7.02 | 1,749 | 6,482 | |||||||||||||
CLO 2007-A subordinated notes(2) | 4,599 | 60.24 | 1,749 | 5,342 | |||||||||||||
CLO 2011-1 senior debt | 343,485 | 1.67 | 2,053 | 421,584 | |||||||||||||
CLO 2012-1 senior secured notes(3) | 362,280 | 2.58 | 4,367 | 40,180 | |||||||||||||
CLO 2012-1 subordinated notes(2)(3) | 21,500 | — | 4,367 | 2,351 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total collateralized loan obligation secured debt | 5,122,338 | 5,679,542 | |||||||||||||||
CLO 2007-1 mezzanine notes to affiliates | 118,845 | 6.29 | 3,057 | 131,636 | |||||||||||||
CLO 2007-1 subordinated notes to affiliates(2) | 130,270 | 25.89 | 3,057 | 144,291 | |||||||||||||
CLO 2007-A mezzanine notes to affiliates | 36,945 | 7.53 | 1,749 | 42,916 | |||||||||||||
CLO 2007-A subordinated notes to affiliates(2) | 10,497 | 60.24 | 1,749 | 12,194 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total collateralized loan obligation junior secured notes to affiliates | 296,557 | 331,037 | |||||||||||||||
Senior secured credit facility | — | 2.56 | 1,064 | — | |||||||||||||
2015 Asset-based borrowing facility | 107,789 | 2.71 | 1,039 | 227,415 | |||||||||||||
| | | | | | | | | | | | | | ||||
Total credit facilities | 107,789 | 227,415 | |||||||||||||||
7.5% Convertible senior notes | 166,028 | 7.5 | 1,476 | — | |||||||||||||
8.375% Senior notes | 250,735 | 8.38 | 10,546 | — | |||||||||||||
7.500% Senior notes | 111,443 | 7.5 | 10,671 | — | |||||||||||||
Junior subordinated notes | 283,517 | 5.43 | 8,712 | — | |||||||||||||
| | | | | | | | | | | | | | ||||
Total borrowings | $ | 6,338,407 | $ | 6,237,994 | |||||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
-1 | |||||||||||||||||
Collateral for borrowings consists of the estimated fair value of certain corporate loans, securities available-for-sale and equity investments at estimated fair value. Also includes the carrying value of oil and gas assets. For purposes of this table, collateral for CLO senior, mezzanine and subordinated notes are calculated pro rata based on the outstanding borrowing for each respective CLO. | |||||||||||||||||
-2 | |||||||||||||||||
Subordinated notes do not have a contractual coupon rate, but instead receive a pro rata amount of the net distributions from each respective CLO. Accordingly, weighted average borrowing rates for the subordinated notes were calculated based on year-to-date estimated distributions, if any. | |||||||||||||||||
-3 | |||||||||||||||||
In addition to the fair value of collateral, CLO 2012-1 held $357.7 million of principal cash as of December 31, 2012 as it was closed on December 21, 2012. | |||||||||||||||||
Schedule of Company's contractual obligations (excluding interest) under borrowing agreements | ' | ||||||||||||||||
The table below summarizes the Company's contractual obligations (excluding interest) under borrowing agreements as of December 31, 2013 (amounts in thousands): | |||||||||||||||||
Payments Due by Period | |||||||||||||||||
Total | Less than | 1 - 3 | 3 - 5 | More than | |||||||||||||
1 year | years | years | 5 years | ||||||||||||||
CLO 2005-1 notes | $ | 195,897 | $ | — | $ | — | $ | 195,897 | $ | — | |||||||
CLO 2005-2 notes | 338,773 | — | — | 338,773 | — | ||||||||||||
CLO 2006-1 notes | 384,925 | — | — | 384,925 | — | ||||||||||||
CLO 2007-1 notes | 2,641,442 | — | — | — | 2,641,442 | ||||||||||||
CLO 2007-A notes | 498,843 | — | — | 498,843 | — | ||||||||||||
CLO 2011-1 debt | 388,703 | — | — | 388,703 | — | ||||||||||||
CLO 2012-1 notes | 385,500 | — | — | — | 385,500 | ||||||||||||
CLO 2013-1 notes | 458,500 | — | — | — | 458,500 | ||||||||||||
Credit facilities | 125,289 | — | 125,289 | — | — | ||||||||||||
Senior notes | 373,750 | — | — | — | 373,750 | ||||||||||||
Junior subordinated notes | 283,517 | — | — | — | 283,517 | ||||||||||||
| | | | | | | | | | | | | | | | | |
Total | $ | 6,075,139 | $ | — | $ | 125,289 | $ | 1,807,141 | $ | 4,142,709 | |||||||
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
DERIVATIVE_INSTRUMENTS_Tables
DERIVATIVE INSTRUMENTS (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
Derivative Instruments | ' | ||||||||||||||||||||||||||||
Schedule of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ||||||||||||||||||||||||||||
The table below summarizes the aggregate notional amount and estimated net fair value of the derivative instruments as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||
As of | As of | ||||||||||||||||||||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||||||||||||||||||||
Notional | Estimated | Notional | Estimated | ||||||||||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||||||||||||
Cash Flow Hedges: | |||||||||||||||||||||||||||||
Interest rate swaps | $ | 478,333 | $ | (42,078 | ) | $ | 503,833 | $ | (90,618 | ) | |||||||||||||||||||
Free-Standing Derivatives: | |||||||||||||||||||||||||||||
Commodity swaps | — | 1,493 | — | 7,056 | |||||||||||||||||||||||||
Credit default swaps—protection sold | — | — | — | 19 | |||||||||||||||||||||||||
Credit default swaps—protection purchased | (100,000 | ) | (2,019 | ) | (47,321 | ) | (1,140 | ) | |||||||||||||||||||||
Foreign exchange forward contracts | (320,380 | ) | (25,258 | ) | (338,313 | ) | (20,975 | ) | |||||||||||||||||||||
Foreign exchange options | 129,900 | 8,941 | 130,207 | 8,277 | |||||||||||||||||||||||||
Common stock warrants | — | 945 | — | 3,318 | |||||||||||||||||||||||||
Total rate of return swaps | — | (229 | ) | — | — | ||||||||||||||||||||||||
Options | — | 6,794 | — | — | |||||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Total | $ | (51,411 | ) | $ | (94,063 | ) | |||||||||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
| | | | | | | | | | | | | | ||||||||||||||||
Schedule of net gains (losses) recognized in accumulated other comprehensive loss related to derivatives in cash flow hedging relationships | ' | ||||||||||||||||||||||||||||
The following table shows the net gains (losses) recognized in other comprehensive loss related to derivatives in cash flow hedging relationships for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
Year ended | Year ended | Year ended | |||||||||||||||||||||||||||
December 31, | December 31, | December 31, | |||||||||||||||||||||||||||
2013 | 2012 | 2011 | |||||||||||||||||||||||||||
Net gains (losses) recognized in other comprehensive loss on cash flow hedges | $ | 48,479 | $ | 10,169 | $ | (42,324 | ) | ||||||||||||||||||||||
Schedule of open positions of derivative contracts on expected annual production volumes | ' | ||||||||||||||||||||||||||||
The following table summarizes open positions as of December 31, 2013, and represents, as of such date, derivatives in place through December 31, 2016, on expected annual production volumes: | |||||||||||||||||||||||||||||
2014 | 2015 | 2016 | |||||||||||||||||||||||||||
Natural gas positions: | |||||||||||||||||||||||||||||
Fixed price swaps: | |||||||||||||||||||||||||||||
Hedged volume (MMMBtu) | 5,821 | 4,277 | 1,805 | ||||||||||||||||||||||||||
Average price ($/MMBtu) | $ | 4.34 | $ | 4.73 | $ | 4.44 | |||||||||||||||||||||||
Natural gas liquid positions: | |||||||||||||||||||||||||||||
Fixed price swaps: | |||||||||||||||||||||||||||||
Hedged volume (MBbls) | 145 | — | — | ||||||||||||||||||||||||||
Average price ($/Bbl) | $ | 31.21 | $ | — | $ | — | |||||||||||||||||||||||
Oil positions: | |||||||||||||||||||||||||||||
Fixed price swaps: | |||||||||||||||||||||||||||||
Hedged volume (MBbls) | 639 | 500 | — | ||||||||||||||||||||||||||
Average price ($/Bbl) | $ | 92.27 | $ | 88.24 | $ | — | |||||||||||||||||||||||
Schedule of effect on income from free-standing derivatives by derivative instrument type | ' | ||||||||||||||||||||||||||||
The following table presents the amounts recorded in net realized and unrealized loss on derivatives and foreign exchange on the consolidated statements of operations for the years ended December 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||||
Realized | Unrealized | Total | Realized | Unrealized | Total | Realized | Unrealized | Total | |||||||||||||||||||||
gains | gains | gains | gains | gains | gains | ||||||||||||||||||||||||
(losses)(1) | (losses) | (losses)(1) | (losses) | (losses)(1) | (losses) | ||||||||||||||||||||||||
Commodity swaps | $ | 1,296 | $ | (5,562 | ) | $ | (4,266 | ) | $ | 3,554 | $ | 721 | $ | 4,275 | $ | 352 | $ | 7,596 | $ | 7,948 | |||||||||
Credit default swaps | (4,408 | ) | 188 | (4,220 | ) | (6,079 | ) | 942 | (5,137 | ) | 1,033 | (7,063 | ) | (6,030 | ) | ||||||||||||||
Foreign exchange forward contracts and options(2) | 1,104 | (2,096 | ) | (992 | ) | (503 | ) | (2,544 | ) | (3,047 | ) | 11 | (4,806 | ) | (4,795 | ) | |||||||||||||
Common stock warrants | 2,327 | (1,503 | ) | 824 | 691 | 986 | 1,677 | 2,184 | (3,074 | ) | (890 | ) | |||||||||||||||||
Total rate of return swaps | 1,803 | (229 | ) | 1,574 | — | 141 | 141 | — | 49 | 49 | |||||||||||||||||||
Options | (91 | ) | 333 | 242 | — | — | — | (94 | ) | — | (94 | ) | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net realized and | $ | 2,031 | $ | (8,869 | ) | $ | (6,838 | ) | $ | (2,337 | ) | $ | 246 | $ | (2,091 | ) | $ | 3,486 | $ | (7,298 | ) | $ | (3,812 | ) | |||||
unrealized | |||||||||||||||||||||||||||||
gains (losses) | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||
Includes related income and expense on the derivatives. | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Net of foreign exchange remeasurement gain or loss on foreign denominated assets. | |||||||||||||||||||||||||||||
ACCUMULATED_OTHER_COMPREHENSIV1
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
ACCUMULATED OTHER COMPREHENSIVE LOSS | ' | ||||||||||||||||||||||||||||
Schedule of components of changes in accumulated other comprehensive loss | ' | ||||||||||||||||||||||||||||
The components of changes in accumulated other comprehensive loss were as follows (amounts in thousands): | |||||||||||||||||||||||||||||
Year ended December 31, 2013 | Year ended December 31, 2012 | Year ended December 31, 2011 | |||||||||||||||||||||||||||
Net unrealized | Net | Total | Net unrealized | Net | Total | Net unrealized | Net | Total | |||||||||||||||||||||
gains on | unrealized | gains on | unrealized | gains on | unrealized | ||||||||||||||||||||||||
available- | losses on cash | available- | losses on cash | available- | losses on cash | ||||||||||||||||||||||||
for-sale | flow hedges | for-sale | flow hedges | for-sale | flow hedges | ||||||||||||||||||||||||
securities | securities | securities | |||||||||||||||||||||||||||
Beginning balance | $ | 17,472 | $ | (87,698 | ) | $ | (70,226 | ) | $ | 62,248 | $ | (97,867 | ) | $ | (35,619 | ) | $ | 189,139 | $ | (55,543 | ) | $ | 133,596 | ||||||
Other comprehensive (loss) income before reclassifications | (9,668 | ) | 48,479 | 38,811 | 48,358 | 10,169 | 58,527 | (30,799 | ) | (42,324 | ) | (73,123 | ) | ||||||||||||||||
Amounts reclassified from accumulated other comprehensive loss(2) | 15,763 | — | 15,763 | (93,134 | ) | — | (93,134 | ) | (96,092 | ) | — | (96,092 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net current-period other comprehensive income (loss) | 6,095 | 48,479 | 54,574 | (44,776 | ) | 10,169 | (34,607 | ) | (126,891 | ) | (42,324 | ) | (169,215 | ) | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance | $ | 23,567 | $ | (39,219 | ) | $ | (15,652 | ) | $ | 17,472 | $ | (87,698 | ) | $ | (70,226 | ) | $ | 62,248 | $ | (97,867 | ) | $ | (35,619 | ) | |||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||
The Company's gross and net of tax amounts are the same. | |||||||||||||||||||||||||||||
-2 | |||||||||||||||||||||||||||||
Includes impairment charges of $19.5 million, $8.4 million and $3.7 million for investments which were determined to be other-than-temporary for the years ended December 31, 2013, 2012 and 2011, respectively. These reclassified amounts are included in net realized and unrealized gain on investments on the consolidated statements of operations. | |||||||||||||||||||||||||||||
SHAREHOLDERS_EQUITY_Tables
SHAREHOLDERS' EQUITY (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||
Schedule of restricted common share transactions | ' | ||||||||||
Manager | Directors | Total | |||||||||
Unvested shares as of January 1, 2011 | 1,097,000 | 212,604 | 1,309,604 | ||||||||
Issued | 240,845 | 50,566 | 291,411 | ||||||||
Vested | (1,097,000 | ) | (92,903 | ) | (1,189,903 | ) | |||||
Cancelled | — | (24,591 | ) | (24,591 | ) | ||||||
| | | | | | | | | | | |
Unvested shares as of December 31, 2011 | 240,845 | 145,676 | 386,521 | ||||||||
Issued | 258,303 | 43,557 | 301,860 | ||||||||
Vested | (60,211 | ) | (96,980 | ) | (157,191 | ) | |||||
| | | | | | | | | | | |
Unvested shares as of December 31, 2012 | 438,937 | 92,253 | 531,190 | ||||||||
Issued | 292,009 | 39,288 | 331,297 | ||||||||
Vested | (146,312 | ) | (46,347 | ) | (192,659 | ) | |||||
| | | | | | | | | | | |
Unvested shares as of December 31, 2013 | 584,634 | 85,194 | 669,828 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of common share option transactions | ' | ||||||||||
Number of | Weighted | ||||||||||
Options | Average | ||||||||||
Exercise Price | |||||||||||
Outstanding as of January 1, 2011 | 1,932,279 | $ | 20 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
| | | | | | | | ||||
Outstanding as of December 31, 2011 | 1,932,279 | $ | 20 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
| | | | | | | | ||||
Outstanding as of December 31, 2012 | 1,932,279 | $ | 20 | ||||||||
Granted | — | — | |||||||||
Exercised | — | — | |||||||||
Forfeited | — | — | |||||||||
| | | | | | | | ||||
Outstanding as of December 31, 2013 | 1,932,279 | $ | 20 | ||||||||
| | | | | | | | ||||
| | | | | | | | ||||
Schedule of share-based compensation expense | ' | ||||||||||
For the years ended December 31, 2013, 2012 and 2011, the components of share-based compensation expense are as follows (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Restricted shares granted to Manager | $ | 3,524 | $ | 2,270 | $ | 2,448 | |||||
Restricted shares granted to certain directors | 1,035 | 932 | 830 | ||||||||
| | | | | | | | | | | |
Total share-based compensation expense | $ | 4,559 | $ | 3,202 | $ | 3,278 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
MANAGEMENT_AGREEMENT_AND_RELAT1
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
Management Agreement and Related Party Transactions | ' | ||||||||||
Summary of components of related party management compensation | ' | ||||||||||
The following table summarizes the components of related party management compensation on the Company's consolidated statements of operations, which are described in further detail below, for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Base management fees, net | $ | 25,029 | $ | 28,244 | $ | 26,294 | |||||
CLO management fees | 17,282 | 4,237 | 5,289 | ||||||||
Incentive fees | 22,741 | 37,588 | 34,154 | ||||||||
Manager share-based compensation | 3,524 | 2,270 | 2,448 | ||||||||
| | | | | | | | | | | |
Total related party management compensation | $ | 68,576 | $ | 72,339 | $ | 68,185 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Base Management Fees | ' | ||||||||||
Management Agreement and Related Party Transactions | ' | ||||||||||
Summary of components of related party management compensation | ' | ||||||||||
The table below summarizes the aggregate base management fees for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Base management fees, gross | $ | 39,065 | $ | 28,244 | $ | 26,294 | |||||
CLO management fees credit(1) | (10,042 | ) | — | — | |||||||
Other related party fees credit | (3,994 | ) | — | — | |||||||
| | | | | | | | | | | |
Total base management fees, net | $ | 25,029 | $ | 28,244 | $ | 26,294 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | |||||||||||
See "CLO Management Fees" for further discussion. | |||||||||||
CLO Management Fees | ' | ||||||||||
Management Agreement and Related Party Transactions | ' | ||||||||||
Summary of components of related party management compensation | ' | ||||||||||
The table below summarizes the aggregate CLO management fees, including the Fee Credits, for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Charged and retained CLO management fees(1) | $ | 7,240 | $ | 4,237 | $ | 5,289 | |||||
CLO management fees credit | 10,042 | — | — | ||||||||
| | | | | | | | | | | |
Total CLO management fees | $ | 17,282 | $ | 4,237 | $ | 5,289 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
-1 | |||||||||||
Represents management fees incurred by the senior and subordinated note holders of a CLO, excluding the Fee Credits received by the Company based on its ownership percentage in the CLO. | |||||||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
Schedule of components of income tax provision | ' | ||||||||||
The income tax expense (benefit) for the years ended December 31, 2013, 2012 and 2011 consisted of the following components (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, | December 31, | December 31, | |||||||||
2013 | 2012 | 2011 | |||||||||
Current: | |||||||||||
Federal income tax | $ | 2,988 | $ | 3,514 | $ | 1,267 | |||||
State income tax | 480 | 759 | 629 | ||||||||
| | | | | | | | | | | |
Total | 3,468 | 4,273 | 1,896 | ||||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
Federal income tax | (3,001 | ) | (6,221 | ) | 4,709 | ||||||
State income tax | — | (1,519 | ) | 1,406 | |||||||
| | | | | | | | | | | |
Total | (3,001 | ) | (7,740 | ) | 6,115 | ||||||
| | | | | | | | | | | |
Total income tax expense (benefit) | $ | 467 | $ | (3,467 | ) | $ | 8,011 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of reconciliation of income before taxes at the statutory rate to the effective tax expense (benefit) | ' | ||||||||||
The following table presents a reconciliation of income before taxes at the statutory rate to the effective tax expense (benefit) for each of the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||
Year ended | Year ended | Year ended | |||||||||
December 31, 2013 | December 31, 2012 | December 31, 2011 | |||||||||
Income before taxes at statutory rate | $ | 102,794 | $ | 120,667 | $ | 114,129 | |||||
Income passed through to shareholders | (93,260 | ) | (118,983 | ) | (104,137 | ) | |||||
REIT income not subject to tax | (9,141 | ) | (4,681 | ) | (2,867 | ) | |||||
State and local income taxes, net of federal benefit | (464 | ) | (414 | ) | 705 | ||||||
Withholding taxes | 172 | 72 | 138 | ||||||||
Other | 366 | (128 | ) | 43 | |||||||
| | | | | | | | | | | |
Effective tax expense (benefit) | $ | 467 | $ | (3,467 | ) | $ | 8,011 | ||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of components of deferred tax assets and liabilities | ' | ||||||||||
The significant components of deferred tax assets and liabilities are reflected in the following table as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||
As of | As of | ||||||||||
December 31, 2013 | December 31, 2012 | ||||||||||
Deferred tax assets: | |||||||||||
Unrealized losses from investments in domestic corporate subsidiaries | $ | 4,329 | $ | 1,328 | |||||||
| | | | | | | | ||||
Total deferred tax assets | 4,329 | 1,328 | |||||||||
Deferred tax liabilities: | |||||||||||
Total deferred tax liabilities | — | — | |||||||||
| | | | | | | | ||||
Net deferred tax assets | $ | 4,329 | $ | 1,328 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
FAIR_VALUE_OF_FINANCIAL_INSTRU1
FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | |||||||||||||||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | |||||||||||||||||||||||||||||||
Schedule of carrying value and estimated fair value, as well as the respective hierarchy classifications, of the financial assets and liabilities that are not carried at estimated fair value | ' | |||||||||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company's financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Fair Value Hierarchy | ||||||||||||||||||||||||||||||||
As of December 31, 2013 | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||||||||||||||||||
Active Markets | Unobservable | |||||||||||||||||||||||||||||||
for Identical | Inputs | |||||||||||||||||||||||||||||||
Carrying | Estimated | Assets (Level 1) | Significant Other | (Level 3) | ||||||||||||||||||||||||||||
Amount | Fair Value | Observable | ||||||||||||||||||||||||||||||
Inputs (Level 2) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 507,552 | $ | 507,552 | $ | 507,552 | $ | — | $ | — | ||||||||||||||||||||||
Corporate loans, net of allowance for loan losses of $224,999 as of December 31, 2013(1) | 5,949,492 | 6,051,641 | — | 5,691,988 | 359,653 | |||||||||||||||||||||||||||
Corporate loans held for sale(1) | 279,748 | 281,278 | — | 267,169 | 14,109 | |||||||||||||||||||||||||||
Private equity investments, at cost(2) | 405 | 4,496 | — | — | 4,496 | |||||||||||||||||||||||||||
Other assets | 5,763 | 5,513 | — | 5,513 | — | |||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Collateralized loan obligation secured debt | $ | 5,249,383 | $ | 5,179,207 | $ | — | $ | — | $ | 5,179,207 | ||||||||||||||||||||||
Credit facilities | 125,289 | 125,289 | — | — | 125,289 | |||||||||||||||||||||||||||
Senior notes | 362,276 | 393,772 | 393,772 | — | — | |||||||||||||||||||||||||||
Junior subordinated notes | 283,517 | 247,416 | — | — | 247,416 | |||||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
Corporate loans held for investment are carried at amortized cost net of allowance for loan losses, while corporate loans held for sale are carried at the lower of cost or estimated fair value. Refer to "Fair Value Measurements" for a table presenting the corporate loans which are measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
Included within other assets on the consolidated balance sheets. | ||||||||||||||||||||||||||||||||
The following table presents the carrying value and estimated fair value, as well as the respective hierarchy classifications, of the Company's financial assets and liabilities that are not carried at estimated fair value on a recurring basis as of December 31, 2012 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Fair Value Hierarchy | ||||||||||||||||||||||||||||||||
As of December 31, 2012 | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | |||||||||||||||||||||||||||||||
Active Markets | Unobservable | |||||||||||||||||||||||||||||||
for Identical | Inputs | |||||||||||||||||||||||||||||||
Carrying | Estimated | Assets (Level 1) | Significant Other | (Level 3) | ||||||||||||||||||||||||||||
Amount | Fair Value | Observable | ||||||||||||||||||||||||||||||
Inputs (Level 2) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Cash, restricted cash, and cash equivalents | $ | 1,134,002 | $ | 1,134,002 | $ | 1,134,002 | $ | — | $ | — | ||||||||||||||||||||||
Corporate loans, net of allowance for loan losses of $223,472 as of December 31, 2012(1) | 5,783,689 | 5,831,218 | — | 5,203,763 | 627,455 | |||||||||||||||||||||||||||
Corporate loans held for sale(1) | 128,289 | 195,078 | — | 151,327 | 43,751 | |||||||||||||||||||||||||||
Private equity investments, at cost(2) | 405 | 1,635 | — | — | 1,635 | |||||||||||||||||||||||||||
Other assets | 17,148 | 16,777 | — | 16,439 | 338 | |||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Collateralized loan obligation secured debt | $ | 5,122,338 | $ | 5,020,115 | $ | — | $ | — | $ | 5,020,115 | ||||||||||||||||||||||
Collateralized loan obligation junior secured notes to affiliates | 296,557 | 290,948 | — | — | 290,948 | |||||||||||||||||||||||||||
Credit facilities | 107,789 | 107,789 | — | — | 107,789 | |||||||||||||||||||||||||||
Convertible senior notes | 166,028 | 268,238 | — | 268,238 | — | |||||||||||||||||||||||||||
Senior notes | 362,178 | 412,126 | 412,126 | — | — | |||||||||||||||||||||||||||
Junior subordinated notes | 283,517 | 134,351 | — | — | 134,351 | |||||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
Corporate loans held for investment are carried at amortized cost net of allowance for loan losses, while corporate loans held for sale are carried at the lower of cost or estimated fair value. Refer to "Fair Value Measurements" for a table presenting the corporate loans which are measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
Included within other assets on the consolidated balance sheets. | ||||||||||||||||||||||||||||||||
Schedule of fair value of financial assets and liabilities measured on a recurring basis | ' | |||||||||||||||||||||||||||||||
The following table presents information about the Company's assets and liabilities measured at fair value on a recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | December 31, | |||||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2013 | |||||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | |||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||
Securities available-for-sale | $ | — | $ | 326,940 | $ | 23,401 | $ | 350,341 | ||||||||||||||||||||||||
Other securities, at estimated fair value | — | 39,437 | 107,530 | 146,967 | ||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 76,004 | 76,004 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total securities | — | 366,377 | 206,935 | 573,312 | ||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | — | 84,680 | 152,800 | 237,480 | ||||||||||||||||||||||||||||
Equity investments, at estimated fair value | 39,515 | 3,638 | 138,059 | 181,212 | ||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | 14,836 | — | 415,247 | 430,083 | ||||||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Interest rate swaps | — | 3,290 | — | 3,290 | ||||||||||||||||||||||||||||
Commodity swaps | — | 5,408 | — | 5,408 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 4,846 | — | 4,846 | ||||||||||||||||||||||||||||
Foreign exchange options | — | — | 8,941 | 8,941 | ||||||||||||||||||||||||||||
Common stock warrants | — | 945 | — | 945 | ||||||||||||||||||||||||||||
Options | — | — | 6,794 | 6,794 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | — | 14,489 | 15,735 | 30,224 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | 54,351 | $ | 469,184 | $ | 928,776 | $ | 1,452,311 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Interest rate swaps | — | 45,368 | — | 45,368 | ||||||||||||||||||||||||||||
Commodity swaps | — | 3,915 | — | 3,915 | ||||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 2,019 | — | 2,019 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 30,104 | — | 30,104 | ||||||||||||||||||||||||||||
Total rate of return swaps | — | 229 | — | 229 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | — | 81,635 | — | 81,635 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | — | $ | 81,635 | $ | — | $ | 81,635 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
The following table presents information about the Company's financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2012 and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands): | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Other | Unobservable Inputs | December 31, | |||||||||||||||||||||||||||||
for Identical | Observable | (Level 3) | 2012 | |||||||||||||||||||||||||||||
Assets (Level 1) | Inputs (Level 2) | |||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||
Corporate debt securities | $ | — | $ | 370,072 | $ | 42,221 | $ | 412,293 | ||||||||||||||||||||||||
Other securities, at estimated fair value | — | 34,476 | 2,909 | 37,385 | ||||||||||||||||||||||||||||
Residential mortgage-backed securities | — | — | 83,842 | 83,842 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total securities | — | 404,548 | 128,972 | 533,520 | ||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | — | 19,738 | 16,141 | 35,879 | ||||||||||||||||||||||||||||
Equity investments, at estimated fair value | 23,790 | 40,085 | 97,746 | 161,621 | ||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | — | — | 142,477 | 142,477 | ||||||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Commodity swaps | — | 8,557 | — | 8,557 | ||||||||||||||||||||||||||||
Credit default swaps—protection sold | — | 19 | — | 19 | ||||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 136 | — | 136 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 2,615 | — | 2,615 | ||||||||||||||||||||||||||||
Foreign exchange options | — | — | 8,562 | 8,562 | ||||||||||||||||||||||||||||
Common stock warrants | 1,744 | — | 1,574 | 3,318 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | 1,744 | 11,327 | 10,136 | 23,207 | ||||||||||||||||||||||||||||
Other assets | — | 319 | — | 319 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | 25,534 | $ | 476,017 | $ | 395,472 | $ | 897,023 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Securities sold, not yet purchased | $ | 1,158 | $ | — | $ | — | $ | 1,158 | ||||||||||||||||||||||||
Derivatives: | ||||||||||||||||||||||||||||||||
Interest rate swaps | — | 90,618 | — | 90,618 | ||||||||||||||||||||||||||||
Commodity swaps | — | 1,501 | — | 1,501 | ||||||||||||||||||||||||||||
Credit default swaps—protection purchased | — | 1,276 | — | 1,276 | ||||||||||||||||||||||||||||
Foreign exchange forward contracts | — | 23,590 | — | 23,590 | ||||||||||||||||||||||||||||
Foreign exchange options | — | — | 285 | 285 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total derivatives | — | 116,985 | 285 | 117,270 | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | 1,158 | $ | 116,985 | $ | 285 | $ | 118,428 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Schedule of fair value of assets measured on a non-recurring basis | ' | |||||||||||||||||||||||||||||||
The following table presents information about the Company's assets measured at fair value on a non-recurring basis as of December 31, 2013, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands). There were no liabilities measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Observable | Unobservable | December 31, | |||||||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs (Level 3) | 2013 | |||||||||||||||||||||||||||||
Assets (Level 1) | ||||||||||||||||||||||||||||||||
Corporate loans held for sale(1) | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | — | $ | 90,485 | $ | 5,568 | $ | 96,053 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
As of December 31, 2013, total loans held for sale had a carrying value of $279.7 million of which $96.1 million was carried at estimated fair value and the remaining $183.6 million carried at amortized cost. | ||||||||||||||||||||||||||||||||
The following table presents information about the Company's assets measured at fair value on a non-recurring basis as of December 31, 2012, and indicates the fair value hierarchy of the valuation techniques utilized by the Company to determine such fair value (amounts in thousands). There were no liabilities measured at fair value on a non-recurring basis. | ||||||||||||||||||||||||||||||||
Quoted Prices in | Significant Other | Significant | Balance as of | |||||||||||||||||||||||||||||
Active Markets | Observable | Unobservable | December 31, 2012 | |||||||||||||||||||||||||||||
for Identical | Inputs (Level 2) | Inputs (Level 3) | ||||||||||||||||||||||||||||||
Assets (Level 1) | ||||||||||||||||||||||||||||||||
Corporate loans held for sale(1) | $ | — | $ | 49,521 | $ | 24,347 | $ | 73,868 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
Total | $ | — | $ | 49,521 | $ | 24,347 | $ | 73,868 | ||||||||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
As of December 31, 2012, total loans held for sale had a carrying value of $128.3 million of which $73.9 million was carried at estimated fair value and the remaining $54.4 million carried at amortized cost. | ||||||||||||||||||||||||||||||||
Schedule of additional information of assets measured on level 3 basis | ' | |||||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the year ended December 31, 2013 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate Loans, at | Equity | Interests in | Foreign | Common | Options | ||||||||||||||||||||||||
Available- | Securities, | Mortgage- | Estimated | Investments, | Joint | Exchange | Stock | |||||||||||||||||||||||||
For-Sale: | at Estimated | Backed | Fair | at | Ventures and | Options, | Warrants | |||||||||||||||||||||||||
Corporate | Fair Value | Securities | Value | Estimated | Partnerships | Net | ||||||||||||||||||||||||||
Debt | Fair Value | |||||||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||||||
Beginning balance as of January 1, 2013 | $ | 42,221 | $ | 2,909 | $ | 83,842 | $ | 16,141 | $ | 97,746 | $ | 142,477 | $ | 8,277 | $ | 1,574 | $ | — | ||||||||||||||
Total gains or losses (for the period): | ||||||||||||||||||||||||||||||||
Included in earnings(1) | 1,729 | 3,485 | 7,711 | 8,996 | 10,555 | 21,926 | 664 | 167 | 211 | |||||||||||||||||||||||
Included in other comprehensive loss | (1,808 | ) | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Transfers out of Level 3(2) | — | — | — | — | — | — | — | (945 | ) | — | ||||||||||||||||||||||
Purchases | 4,613 | 103,616 | — | 123,409 | 30,113 | 299,039 | — | — | 8,787 | |||||||||||||||||||||||
Sales | — | — | — | — | (198 | ) | — | — | — | — | ||||||||||||||||||||||
Settlements | (23,354 | ) | (2,480 | ) | (15,549 | ) | 4,254 | (157 | ) | (48,195 | ) | — | (796 | ) | (2,204 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Ending balance as of December 31, 2013 | $ | 23,401 | $ | 107,530 | $ | 76,004 | $ | 152,800 | $ | 138,059 | $ | 415,247 | $ | 8,941 | $ | — | $ | 6,794 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 74 | $ | 3,485 | $ | 21,796 | $ | 8,700 | $ | 10,854 | $ | 21,926 | $ | 954 | $ | — | $ | 211 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
-1 | ||||||||||||||||||||||||||||||||
Amounts are included in net realized and unrealized gain on investments or net realized and unrealized loss on derivatives and foreign exchange in the consolidated statements of operations. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
There were no transfers into Level 3. Common stock warrants were transferred out of Level 3 to Level 2 because observable market data became available. The Company's policy is to recognize transfers into and out of Level 3 at the end of the reporting period. | ||||||||||||||||||||||||||||||||
The following table presents additional information about assets, including derivatives that are measured at fair value on a recurring basis for which the Company has utilized Level 3 inputs to determine fair value, for the year ended December 31, 2012 (amounts in thousands): | ||||||||||||||||||||||||||||||||
Securities | Other | Residential | Corporate | Equity | Interest in | Foreign | Common | Total | Other | |||||||||||||||||||||||
Available- | Securities, | Mortgage- | Loans, | Investments, | Joint | Exchange | Stock | Rate | Assets | |||||||||||||||||||||||
For-Sale: | at Estimated | Backed | at Estimated | at Estimated | Ventures and | Options, | Warrants | of | ||||||||||||||||||||||||
Corporate | Fair Value | Securities | Fair Value | Fair Value | Partnerships | Net | Return | |||||||||||||||||||||||||
Debt | Swaps | |||||||||||||||||||||||||||||||
Securities | ||||||||||||||||||||||||||||||||
Beginning balance as of January 1, 2012 | $ | 67,233 | $ | 2,778 | $ | 86,479 | $ | — | $ | 150,962 | $ | — | $ | 13,394 | $ | 1,266 | $ | 152 | $ | 567 | ||||||||||||
Total gains or losses (for the period): | ||||||||||||||||||||||||||||||||
Included in earnings(1) | 1,171 | 131 | 6,306 | 429 | 1,708 | 4,391 | (5,117 | ) | 308 | 141 | 342 | |||||||||||||||||||||
Included in other comprehensive loss | 12,202 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||
Transfers into Level 3(2) | — | — | — | — | — | 34,230 | — | — | — | — | ||||||||||||||||||||||
Transfers out of Level 3(2) | (2,721 | ) | — | — | — | (34,230 | ) | — | — | — | — | — | ||||||||||||||||||||
Purchases | — | — | — | 15,056 | 18,060 | 104,728 | — | — | — | — | ||||||||||||||||||||||
Sales | (24,660 | ) | — | — | — | (4,365 | ) | — | — | — | — | (706 | ) | |||||||||||||||||||
Settlements | (11,004 | ) | — | (8,943 | ) | 656 | (34,389 | ) | (872 | ) | — | — | (293 | ) | (203 | ) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Ending balance as of December 31, 2012 | $ | 42,221 | $ | 2,909 | $ | 83,842 | $ | 16,141 | $ | 97,746 | $ | 142,477 | $ | 8,277 | $ | 1,574 | $ | — | $ | — | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period(1) | $ | 506 | $ | 131 | $ | 28,543 | $ | 429 | $ | 14,579 | $ | 4,391 | $ | (5,117 | ) | $ | 308 | $ | — | $ | — | |||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | ||||||||||||||||||||||||||||||||
Amounts are included in net realized and unrealized gain on investments or net realized and unrealized loss on derivatives and foreign exchange in the consolidated statements of operations. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
Securities available-for-sale: corporate debt securities were transferred out of Level 3 to Level 2 because observable market data became available. The remaining transfers into and out of Level 3 represented the reclassification of certain assets from equity investments, at estimated fair value to interests in joint ventures and partnerships. The Company's policy is to recognize transfers into and out of Level 3 at the end of the reporting period. | ||||||||||||||||||||||||||||||||
Summary of valuation techniques used for assets and liabilities, measured at fair value and categorized within level 3 | ' | |||||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets and liabilities, including derivatives, that are measured at fair value and categorized within Level 3 as of December 31, 2013 (dollar amounts in thousands): | ||||||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, 2013 | Techniques(1) | Inputs(2) | Average(3) | Valuation | ||||||||||||||||||||||||||||
from an | ||||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities available-for-sale: | $ | 23,401 | Yield Analysis | Yield | 10% | 6% - 12% | Decrease | |||||||||||||||||||||||||
Corporate debt securities | Net leverage | 12x | 11x - 12x | Decrease | ||||||||||||||||||||||||||||
EBITDA multiple | 8x | 8x - 9x | Increase | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 105 | 104 - 105 | Increase | ||||||||||||||||||||||||||||
Other securities, at estimated fair value | $ | 107,530 | Yield Analysis | Yield | 12% | 7% - 17% | Decrease | |||||||||||||||||||||||||
EBITDA multiple | 8x | 7x - 8x | Increase | |||||||||||||||||||||||||||||
Illiquidity discount | 3% | 3% | Decrease | |||||||||||||||||||||||||||||
Net leverage | 1x | 1x - 2x | Decrease | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 102 | 101 - 102 | Increase | ||||||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 76,004 | Discounted cash flows | Probability of default | 7% | 0% - 21% | Decrease | |||||||||||||||||||||||||
Loss severity | 28% | 16% - 77% | Decrease | |||||||||||||||||||||||||||||
Constant prepayment rate | 15% | 3% - 35% | -5 | |||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | $ | 152,800 | Yield Analysis | Yield | 16% | 14% - 23% | Decrease | |||||||||||||||||||||||||
Net leverage | 7x | 4x - 12x | Decrease | |||||||||||||||||||||||||||||
EBITDA multiple | 8x | 6x - 11x | Increase | |||||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 138,059 | Inputs to both | Weight ascribed to market | 50% | 33% - 100% | -7 | |||||||||||||||||||||||||
market | comparables | |||||||||||||||||||||||||||||||
comparables and | Weight ascribed to | 59% | 50% - 100% | -8 | ||||||||||||||||||||||||||||
discounted cash | discounted cash flows | |||||||||||||||||||||||||||||||
flow | ||||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 12x | 6x - 16x | Increase | ||||||||||||||||||||||||||||
Forward EBITDA multiple | 12x | 10x - 14x | Increase | |||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 11% | 8% - 14% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 4x - 11x | Increase | |||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | $ | 415,247 | Inputs to both | Weight ascribed to market | 50% | 50% - 100% | -7 | |||||||||||||||||||||||||
market | comparables | |||||||||||||||||||||||||||||||
comparables and | Weight ascribed to | 50% | 50% - 100% | -8 | ||||||||||||||||||||||||||||
discounted cash | discounted cash flows | |||||||||||||||||||||||||||||||
flow | ||||||||||||||||||||||||||||||||
Market | Current capitalization rate | 7% | 6% - 9% | Decrease | ||||||||||||||||||||||||||||
comparables | LTM EBITDA | 9x | 9x | Increase | ||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 8% - 24% | Decrease | ||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, 2013 | Techniques(1) | Inputs(2) | Average(3) | Valuation | ||||||||||||||||||||||||||||
from an | ||||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Foreign exchange options | $ | 8,941 | Option pricing model | Forward and spot rates | 1 | 0 - 1 | -9 | |||||||||||||||||||||||||
Options | $ | 6,794 | Inputs to both | Weight ascribed to market | 50% | 50% | -7 | |||||||||||||||||||||||||
market | comparables | |||||||||||||||||||||||||||||||
comparables and | Weight ascribed to | 50% | 50% | -8 | ||||||||||||||||||||||||||||
discounted cash | discounted cash flows | |||||||||||||||||||||||||||||||
flow | ||||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA | 9x | 9x | Increase | ||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 12% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 10x | 9x - 10x | Increase | |||||||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
The significant unobservable inputs used in the fair value measurement of the Company's assets and liabilities may include the last twelve months ("LTM") EBITDA multiple, weighted average cost of capital, net leverage, probability of default, loss severity and constant prepayment rate. In determining certain of these inputs, management evaluates a variety of factors including economic, industry and market trends and developments; market valuations of comparable companies; and company specific developments including potential exit strategies and realization opportunities. Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement. | ||||||||||||||||||||||||||||||||
-3 | ||||||||||||||||||||||||||||||||
Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||||||
-4 | ||||||||||||||||||||||||||||||||
Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||||||
-5 | ||||||||||||||||||||||||||||||||
The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||
When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company takes a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||||||
-7 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||||||
-8 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||||||
-9 | ||||||||||||||||||||||||||||||||
The directional change from an increase in forward and spot rates varies and is dependent on the specific option. | ||||||||||||||||||||||||||||||||
The following table presents additional information about valuation techniques and inputs used for assets and liabilities, including derivatives, that are measured at fair value and categorized within Level 3 as of December 31, 2012 (dollar amounts in thousands): | ||||||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable Inputs(2) | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, | Techniques(1) | Average(3) | Valuation | |||||||||||||||||||||||||||||
2012 | from an | |||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Securities available-for-sale: | $ | 42,221 | Yield Analysis | Yield | 16% | 11% - 46% | Decrease | |||||||||||||||||||||||||
Corporate debt securities | Discount margin | 1450bps | 1100bps - 4550bps | Decrease | ||||||||||||||||||||||||||||
Net leverage | 6x | 3x - 13x | Decrease | |||||||||||||||||||||||||||||
Illiquidity discount | 3% | 3% | Decrease | |||||||||||||||||||||||||||||
EBITDA multiple | 7x | 6x - 8x | Increase | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 88 | 69 - 105 | Increase | ||||||||||||||||||||||||||||
Other securities, at estimated fair value | $ | 2,909 | Yield Analysis | Yield | 10% | 10% | Decrease | |||||||||||||||||||||||||
Residential mortgage-backed securities | $ | 83,842 | Discounted cash flows | Probability of default | 6% | 0% - 21% | Decrease | |||||||||||||||||||||||||
Loss severity | 30% | 18% - 80% | Decrease | |||||||||||||||||||||||||||||
Constant prepayment rate | 13% | 1% - 35% | -5 | |||||||||||||||||||||||||||||
Corporate loans, at estimated fair value | $ | 16,141 | Yield Analysis | Illiquidity discount | 15% | 15% | Decrease | |||||||||||||||||||||||||
Net leverage | 9x | 8x - 9x | Decrease | |||||||||||||||||||||||||||||
EBITDA multiple | 10x | 9x - 10x | Increase | |||||||||||||||||||||||||||||
Broker quotes | Offered quotes | 39 | 8 - 40 | Increase | ||||||||||||||||||||||||||||
Equity investments, at estimated fair value(6) | $ | 97,746 | Inputs to both | Weight ascribed to market | 43% | 25% - 50% | -7 | |||||||||||||||||||||||||
market comparables | comparables | |||||||||||||||||||||||||||||||
and discounted | Weight ascribed to | 57% | 50% - 75% | -8 | ||||||||||||||||||||||||||||
cash flows | discounted cash flows | |||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 10x | 7x - 12x | Increase | ||||||||||||||||||||||||||||
Forward EBITDA multiple | 10x | 6x - 12x | Increase | |||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 10% | 6% - 16% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 9x | 7x - 12x | Increase | |||||||||||||||||||||||||||||
Interests in joint ventures and partnerships | $ | 142,477 | Discounted cash flows | Illiquidity discount | 10% | 10% - 15% | Decrease | |||||||||||||||||||||||||
Weighted average cost of capital | 18% | 13% - 30% | Decrease | |||||||||||||||||||||||||||||
Foreign exchange options | $ | 8,562 | Option pricing model | Forward and spot rates | 1 | 0 - 2 | -9 | |||||||||||||||||||||||||
Common stock warrants | $ | 1,574 | Inputs to both | Weight ascribed to market | 50% | 50% | -7 | |||||||||||||||||||||||||
market comparables | comparables | |||||||||||||||||||||||||||||||
and discounted | Weight ascribed to | 50% | 50% | -8 | ||||||||||||||||||||||||||||
cash flows | discounted cash flows | |||||||||||||||||||||||||||||||
Market comparables | LTM EBITDA multiple | 7x | 7x | Increase | ||||||||||||||||||||||||||||
Forward EBITDA multiple | 7x | 7x | Increase | |||||||||||||||||||||||||||||
Illiquidity discount | 15% | 15% | Decrease | |||||||||||||||||||||||||||||
Balance as of | Valuation | Unobservable Inputs(2) | Weighted | Range | Impact to | |||||||||||||||||||||||||||
December 31, | Techniques(1) | Average(3) | Valuation | |||||||||||||||||||||||||||||
2012 | from an | |||||||||||||||||||||||||||||||
Increase in | ||||||||||||||||||||||||||||||||
Input(4) | ||||||||||||||||||||||||||||||||
Discounted cash flows | Weighted average cost of capital | 12% | 12% | Decrease | ||||||||||||||||||||||||||||
LTM EBITDA exit multiple | 7x | 7x | Increase | |||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||
Foreign exchange options | $ | 285 | Option pricing model | Forward and spot rates | 0.02 | 0.02 | -9 | |||||||||||||||||||||||||
-1 | ||||||||||||||||||||||||||||||||
For the assets that have more than one valuation technique, the Company may rely on the techniques individually or in aggregate based on a weight ascribed to each one ranging from 0-100%. When determining the weighting ascribed to each valuation methodology, the Company considers, among other factors, the availability of direct market comparables, the applicability of a discounted cash flow analysis and the expected hold period and manner of realization for the investment. These factors can result in different weightings among the investments and in certain instances, may result in up to a 100% weighting to a single methodology. Broker quotes obtained for valuation purposes are reviewed by the Company through other valuation techniques. | ||||||||||||||||||||||||||||||||
-2 | ||||||||||||||||||||||||||||||||
The significant unobservable inputs used in the fair value measurement of the Company's assets and liabilities may include the last twelve months ("LTM") EBITDA multiple, weighted average cost of capital, discount margin, probability of default, loss severity and constant prepayment rate. In determining certain of these inputs, management evaluates a variety of factors including economic, industry and market trends and developments; market valuations of comparable companies; and company specific developments including potential exit strategies and realization opportunities. Significant increases or decreases in any of these inputs in isolation could result in significantly lower or higher fair value measurement. | ||||||||||||||||||||||||||||||||
-3 | ||||||||||||||||||||||||||||||||
Weighted average amounts are based on the estimated fair values. | ||||||||||||||||||||||||||||||||
-4 | ||||||||||||||||||||||||||||||||
Unless otherwise noted, this column represents the directional change in the fair value of the Level 3 investments that would result from an increase to the corresponding unobservable input. A decrease to the unobservable input would have the opposite effect. Significant changes in these inputs in isolation could result in significantly higher or lower fair value measurements. | ||||||||||||||||||||||||||||||||
-5 | ||||||||||||||||||||||||||||||||
The impact of changes in prepayment speeds may have differing impacts depending on the seniority of the instrument. Generally, an increase in the constant prepayment speed will positively impact the overall valuation of traditional mortgage assets. In contrast, an increase in the constant prepayment rate will negatively impact the overall valuation of interest-only strips. | ||||||||||||||||||||||||||||||||
-6 | ||||||||||||||||||||||||||||||||
When determining the illiquidity discount to be applied to equity investments, at estimated fair value, the Company takes a uniform approach across its portfolio and generally applies a minimum 5% discount to all private equity investments carried at estimated fair value. The Company then evaluates such investments to determine if factors exist that could make it more challenging to monetize the investment and, therefore, justify applying a higher illiquidity discount. These factors generally include the salability of the investment, whether the issuer is undergoing significant restructuring activity or similar factors, as well as characteristics about the issuer including its size and/or whether it is experiencing, or expected to experience, a significant decline in earnings. Depending on the applicability of these factors, the Company determines the amount of any incremental illiquidity discount to be applied above the 5% minimum, and during the time the Company holds the investment, the illiquidity discount may be increased or decreased, from time to time, based on changes to these factors. The amount of illiquidity discount applied at any time requires considerable judgment about what a market participant would consider and is based on the facts and circumstances of each individual investment. Accordingly, the illiquidity discount ultimately considered by a market participant upon the realization of any investment may be higher or lower than that estimated by the Company in its valuations. | ||||||||||||||||||||||||||||||||
-7 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the market comparables approach would increase the fair value of the Level III investments if the market comparables approach results in a higher valuation than the discounted cash flow approach. The opposite would be true if the market comparables approach results in a lower valuation than the discounted cash flow approach. | ||||||||||||||||||||||||||||||||
-8 | ||||||||||||||||||||||||||||||||
The directional change from an increase in the weight ascribed to the discounted cash flow approach would increase the fair value of the Level III investments if the discounted cash flow approach results in a higher valuation than the market comparables approach. The opposite would be true if the discounted cash flow approach results in a lower valuation than the market comparables approach. | ||||||||||||||||||||||||||||||||
-9 | ||||||||||||||||||||||||||||||||
The directional change from an increase in forward and spot rates varies and is dependent on the specific option. | ||||||||||||||||||||||||||||||||
SEGMENT_REPORTING_Tables
SEGMENT REPORTING (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT REPORTING | ' | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule showing net income (loss) components and total assets of reportable segments reconciled to amounts reflected in the consolidated financial statements | ' | ||||||||||||||||||||||||||||||||||||||||||||||
The following table presents the net income (loss) components of our reportable segments reconciled to amounts reflected in the consolidated financial statements for the years ended December 31, 2013, 2012 and 2011 (amounts in thousands): | |||||||||||||||||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling Items(1) | Total Consolidated | |||||||||||||||||||||||||||||||||||||||||||
For the years ended | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||||||||||||||||||||||||||
December 31 | |||||||||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 425,209 | $ | 490,861 | $ | 511,392 | $ | 119,178 | $ | 64,535 | $ | 30,629 | $ | 1,519 | $ | 77 | $ | — | $ | — | $ | — | $ | — | $ | 545,906 | $ | 555,473 | $ | 542,021 | |||||||||||||||||
Total investment costs and expenses | 218,600 | 257,269 | 196,415 | 86,174 | 60,668 | 18,747 | 931 | 438 | — | — | — | — | 305,705 | 318,375 | 215,162 | ||||||||||||||||||||||||||||||||
Total other income (loss) | 171,006 | 199,723 | 87,235 | (13,642 | ) | 1,881 | 7,948 | 13,576 | 4,663 | — | (20,015 | ) | (445 | ) | (1,736 | ) | 150,925 | 205,822 | 93,447 | ||||||||||||||||||||||||||||
Total other expenses | 60,870 | 48,640 | 46,371 | 4,835 | 5,111 | 3,823 | 606 | 217 | — | 31,118 | 44,189 | 44,029 | 97,429 | 98,157 | 94,223 | ||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 450 | (3,468 | ) | 7,941 | — | — | 70 | 17 | 1 | — | — | — | — | 467 | (3,467 | ) | 8,011 | ||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net income (loss) | $ | 316,295 | $ | 388,143 | $ | 347,900 | $ | 14,527 | $ | 637 | $ | 15,937 | $ | 13,541 | $ | 4,084 | $ | — | $ | (51,133 | ) | $ | (44,634 | ) | $ | (45,765 | ) | $ | 293,230 | $ | 348,230 | $ | 318,072 | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-1 | |||||||||||||||||||||||||||||||||||||||||||||||
Consists of certain expenses not allocated to individual segments including (i) other income (loss) comprised of losses on restructuring and extinguishment of debt of $20.0 million, $0.4 million and $1.7 million for the years ended December 31, 2013, 2012 and 2011, respectively and (ii) other expenses comprised of incentive fees of $22.7 million, $37.6 million and $34.2 million for the years ended December 31, 2013, 2012 and 2011, respectively. The remaining reconciling items include insurance expenses, directors' expenses and share-based compensation expense. | |||||||||||||||||||||||||||||||||||||||||||||||
The following table shows total assets of reportable segments reconciled to amounts reflected in the consolidated financial statements as of December 31, 2013 and 2012 (amounts in thousands): | |||||||||||||||||||||||||||||||||||||||||||||||
Credit | Natural Resources | Other | Reconciling | Total Consolidated | |||||||||||||||||||||||||||||||||||||||||||
Items | |||||||||||||||||||||||||||||||||||||||||||||||
As of December 31 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||||||||||
Total assets | $ | 8,020,353 | $ | 7,904,116 | $ | 505,029 | $ | 399,225 | $ | 190,946 | $ | 53,742 | $ | 870 | $ | 1,796 | $ | 8,717,198 | $ | 8,358,879 | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
SUMMARY_OF_QUARTERLY_INFORMATI1
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) | ' | |||||||||||||
Schedule of quarterly results of operations | ' | |||||||||||||
2013 | ||||||||||||||
(amounts in thousands, except per share information) | Fourth | Third | Second | First | ||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Total revenues | $ | 139,510 | $ | 128,702 | $ | 137,244 | $ | 140,450 | ||||||
Total investment costs and expenses | 81,586 | 77,877 | 65,193 | 81,049 | ||||||||||
Total other income | 33,244 | 6,226 | 37,235 | 74,220 | ||||||||||
Total other expenses | 22,259 | 17,147 | 23,196 | 34,827 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 68,909 | 39,904 | 86,090 | 98,794 | ||||||||||
Income tax expense (benefit) | 33 | 18 | (42 | ) | 458 | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 68,876 | $ | 39,886 | $ | 86,132 | $ | 98,336 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Preferred share distributions | 6,891 | 6,891 | 6,891 | 6,738 | ||||||||||
| | | | | | | | | | | | | | |
Net income available to common shareholders | $ | 61,985 | $ | 32,995 | $ | 79,241 | $ | 91,598 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share: | ||||||||||||||
Basic(1) | $ | 0.3 | $ | 0.16 | $ | 0.39 | $ | 0.46 | ||||||
Diluted(1) | $ | 0.3 | $ | 0.16 | $ | 0.39 | $ | 0.46 | ||||||
Weighted average number of common shares outstanding: | ||||||||||||||
Basic | 204,154 | 204,134 | 204,108 | 197,153 | ||||||||||
Diluted | 204,154 | 204,134 | 204,108 | 197,153 | ||||||||||
-1 | ||||||||||||||
Summation of the quarters' earnings per share may not equal the annual amounts due to the averaging effect of the number of shares and share equivalents throughout the year. | ||||||||||||||
2012 | ||||||||||||||
(amounts in thousands, except per share information) | Fourth | Third | Second | First | ||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||
Total revenues | $ | 133,655 | $ | 143,334 | $ | 140,550 | $ | 137,934 | ||||||
Total investment costs and expenses | 72,568 | 70,900 | 67,115 | 107,792 | ||||||||||
Total other income | 37,398 | 73,043 | 16,543 | 78,838 | ||||||||||
Total other expenses | 21,391 | 33,196 | 18,570 | 25,000 | ||||||||||
| | | | | | | | | | | | | | |
Income before income taxes | 77,094 | 112,281 | 71,408 | 83,980 | ||||||||||
Income tax expense (benefit) | 81 | 317 | 203 | (4,068 | ) | |||||||||
| | | | | | | | | | | | | | |
Net income | $ | 77,013 | $ | 111,964 | $ | 71,205 | $ | 88,048 | ||||||
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
Net income per common share: | ||||||||||||||
Basic(1) | $ | 0.43 | $ | 0.63 | $ | 0.4 | $ | 0.49 | ||||||
Diluted(1)(2) | $ | 0.4 | $ | 0.61 | $ | 0.39 | $ | 0.48 | ||||||
Weighted average number of common shares outstanding: | ||||||||||||||
Basic | 177,906 | 177,862 | 177,809 | 177,775 | ||||||||||
Diluted | 202,371 | 183,431 | 181,642 | 182,247 | ||||||||||
-1 | ||||||||||||||
Summation of the quarters' earnings per share may not equal the annual amounts due to the averaging effect of the number of shares and share equivalents throughout the year. | ||||||||||||||
-2 | ||||||||||||||
The fourth quarter of 2012 diluted EPS includes the impact of the convertible senior notes settled in common shares using the if-converted method (refer to Notes 3 and 7 to these consolidated financial statements). | ||||||||||||||
ORGANIZATION_Details
ORGANIZATION (Details) (USD $) | 0 Months Ended | 12 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 16, 2013 | Jan. 17, 2013 | Dec. 31, 2013 |
Maximum | ' | ' | ' |
Definitive merger agreement | ' | ' | ' |
Maximum per share amount of quarterly distributions allowed per restriction (in dollars per share) | 0.22 | ' | ' |
Series A LLC Preferred Shares | ' | ' | ' |
Definitive merger agreement | ' | ' | ' |
Preferred shares, dividend rate (as a percent) | 7.38% | 7.38% | 7.38% |
KKR & Co. | ' | ' | ' |
Definitive merger agreement | ' | ' | ' |
Stock exchange ratio to be applied in the merger transaction | 0.51 | ' | ' |
Termination fee | 26.25 | ' | ' |
KKR & Co. | Restricted common shares | ' | ' | ' |
Definitive merger agreement | ' | ' | ' |
Exchange ratio of share based awards under merger transaction | 0.51 | ' | ' |
KKR & Co. | Phantom share | Non-Employee Director's | ' | ' | ' |
Definitive merger agreement | ' | ' | ' |
Exchange ratio of share based awards under merger transaction | 0.51 | ' | ' |
KKR & Co. | Maximum | ' | ' | ' |
Definitive merger agreement | ' | ' | ' |
Reimbursement of expenses on termination of the merger agreement | 7.5 | ' | ' |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Nonaffiliates | ' | ' |
Collateralized Debt Obligation disclosures | ' | ' |
Aggregate secured outstanding debt related to CLOs, held by third parties | $5,249,383,000 | $5,122,338,000 |
Collateralized Debt Obligation (CLOs) VIEs | ' | ' |
Collateralized Debt Obligation disclosures | ' | ' |
Number of Collateralized Loan Obligation (CLOs) VIEs (in loans) | 8 | 7 |
Corporate debt investment, par amount | 6,700,000,000 | 6,300,000,000 |
Estimated fair value of corporate debt instruments | 6,400,000,000 | 6,000,000,000 |
Collateralized Debt Obligation (CLOs) VIEs | Nonaffiliates | ' | ' |
Collateralized Debt Obligation disclosures | ' | ' |
Aggregate secured outstanding debt related to CLOs, held by third parties | 5,200,000,000 | 5,100,000,000 |
Collateralized Debt Obligation (CLOs) VIEs | Affiliates | ' | ' |
Collateralized Debt Obligation disclosures | ' | ' |
Aggregate secured outstanding debt related to CLOs, held by third parties | ' | $296,600,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) | 0 Months Ended | 12 Months Ended | |
Dec. 16, 2013 | Jan. 17, 2013 | Dec. 31, 2013 | |
Consolidation | ' | ' | ' |
Minimum percentage of voting interest required to consolidate non-VIEs | ' | ' | 50.00% |
Fair Value of Financial Instruments | ' | ' | ' |
Number of approaches used to determine fair value of investments (in approaches) | ' | ' | 2 |
Corporate Loans | ' | ' | ' |
Period for determination of non-accrual status | ' | ' | '90 days |
Number of methods interest income recognized | ' | ' | 2 |
Sustained period of repayment performance | ' | ' | '6 months |
Allowance for Loan Losses | ' | ' | ' |
Number of components in the loans receivable allowance for loan losses (in components) | ' | ' | 2 |
Number of internally assigned risk grades | ' | ' | 3 |
Series A LLC Preferred Shares | ' | ' | ' |
Preferred Shares | ' | ' | ' |
Preferred shares, dividend rate (as a percent) | 7.38% | 7.38% | 7.38% |
EARNINGS_PER_COMMON_SHARE_Deta
EARNINGS PER COMMON SHARE (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Reconciliation of basic and diluted net income and distributions per common share | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net income | $68,876 | $39,886 | $86,132 | $98,336 | $77,013 | $111,964 | $71,205 | $88,048 | $293,230 | $348,230 | $318,072 |
Less: Preferred share distributions | 6,891 | 6,891 | 6,891 | 6,738 | ' | ' | ' | ' | 27,411 | ' | ' |
Net income available to common shareholders | 61,985 | 32,995 | 79,241 | 91,598 | ' | ' | ' | ' | 265,819 | 348,230 | 318,072 |
Less: Dividends and undistributed earnings allocated to participating securities | ' | ' | ' | ' | ' | ' | ' | ' | 904 | 1,116 | 1,082 |
Net income allocated to common shareholders | ' | ' | ' | ' | ' | ' | ' | ' | 264,915 | 347,114 | 316,990 |
Effect of dilutive securities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest on convertible senior notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,234 | ' |
Net income allocated to common shareholders for diluted earnings per share | ' | ' | ' | ' | ' | ' | ' | ' | 264,915 | 350,348 | 316,990 |
Basic: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic weighted average common shares outstanding (in shares) | 204,154,000 | 204,134,000 | 204,108,000 | 197,153,000 | 177,906,000 | 177,862,000 | 177,809,000 | 177,775,000 | 202,411,000 | 177,838,000 | 177,560,000 |
Net income per common share (in dollars per share) | $0.30 | $0.16 | $0.39 | $0.46 | $0.43 | $0.63 | $0.40 | $0.49 | $1.31 | $1.95 | $1.79 |
Diluted: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic weighted average common shares outstanding (in shares) | 204,154,000 | 204,134,000 | 204,108,000 | 197,153,000 | 177,906,000 | 177,862,000 | 177,809,000 | 177,775,000 | 202,411,000 | 177,838,000 | 177,560,000 |
Dilutive effect of convertible senior notes (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,585,000 | 3,337,000 |
Diluted weighted average common shares outstanding (in shares) | 204,154,000 | 204,134,000 | 204,108,000 | 197,153,000 | 202,371,000 | 183,431,000 | 181,642,000 | 182,247,000 | 202,411,000 | 187,423,000 | 180,897,000 |
Net income per common share (in dollars per share) | $0.30 | $0.16 | $0.39 | $0.46 | $0.40 | $0.61 | $0.39 | $0.48 | $1.31 | $1.87 | $1.75 |
Amount of debt that had been tendered for conversion | ' | ' | ' | $172,500 | ' | ' | ' | ' | $186,254 | ' | ' |
Number of common shares of the entity issued in exchange of convertible notes (in shares) | ' | ' | ' | 26,100,000 | ' | ' | ' | ' | ' | ' | ' |
Anti-dilutive securities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Anti-dilutive securities excluded from diluted earnings per share calculations (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 1,932,279 | 1,932,279 | 1,932,279 |
SECURITIES_Details
SECURITIES (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Securities Available-for-Sale | ' | ' |
Amortized Cost | $326,775 | $394,821 |
Gross Unrealized Gains | 24,791 | 27,281 |
Gross Unrealized Losses | -1,225 | -9,809 |
Estimated Fair Value | 350,341 | 412,293 |
Total Securities | ' | ' |
Amortized Cost | 601,027 | 594,197 |
Gross Unrealized Gains | 40,036 | 40,811 |
Gross Unrealized Losses | -67,751 | -101,488 |
Total securities | 573,312 | 533,520 |
Other securities, at estimated fair value | ' | ' |
Total Securities | ' | ' |
Amortized Cost | 135,968 | 27,991 |
Gross Unrealized Gains | 12,436 | 9,768 |
Gross Unrealized Losses | -1,437 | -374 |
Securities, at estimated fair value | 146,967 | 37,385 |
Residential mortgage-backed securities, at estimated fair value | ' | ' |
Total Securities | ' | ' |
Amortized Cost | 138,284 | 171,385 |
Gross Unrealized Gains | 2,809 | 3,762 |
Gross Unrealized Losses | -65,089 | -91,305 |
Securities, at estimated fair value | $76,004 | $83,842 |
SECURITIES_Details_2
SECURITIES (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Corporate debt securities | ' | ' | ' |
Unrealized losses on available for sale securities in a gross continuous unrealized loss position by the length of time | ' | ' | ' |
Number of issuers with corporate debt securities in default | 1 | ' | ' |
Number of corporate debt securities in default | 1 | 0 | ' |
Estimated fair value of corporate debt security in default | $25,400,000 | ' | ' |
Common and preferred stock | ' | ' | ' |
Unrealized losses on available for sale securities in a gross continuous unrealized loss position by the length of time | ' | ' | ' |
Other-than-temporarily impaired loss | ' | 200,000 | 2,200,000 |
Amount of investment in common and preferred stock classified as available-for-sale | 0 | ' | ' |
Securities available-for-sale | ' | ' | ' |
Fair value on available for sale securities in a gross continuous unrealized loss position by the length of time | ' | ' | ' |
Less Than 12 months | 25,543,000 | 45,900,000 | ' |
12 Months or More | 30,034,000 | 37,500,000 | ' |
Total Estimated Fair Value | 55,577,000 | 83,400,000 | ' |
Unrealized losses on available for sale securities in a gross continuous unrealized loss position by the length of time | ' | ' | ' |
Less Than 12 months | -658,000 | -4,398,000 | ' |
12 months or More | -567,000 | -5,411,000 | ' |
Total Unrealized Losses | -1,225,000 | -9,809,000 | ' |
Other-than-temporarily impaired loss | $19,500,000 | $8,200,000 | $1,500,000 |
SECURITIES_Details_3
SECURITIES (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Net realized gains and losses recognized on the sale of securities available for sale | ' | ' | ' |
Gross realized gains | $2,829 | $85,982 | $100,565 |
Gross realized losses | -42 | -12 | -559 |
Net realized gains | $2,787 | $85,970 | $100,006 |
SECURITIES_Details_4
SECURITIES (Details 4) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Amortized Cost of corporate debt securities by remaining contractual maturity | ' |
Due within one year | $23,702,000 |
One to five years | 207,987,000 |
Five to ten years | 92,329,000 |
Greater than ten years | 2,757,000 |
Total | 326,775,000 |
Estimated fair value of corporate debt securities by remaining contractual maturity | ' |
Due within one year | 24,517,000 |
One to five years | 221,393,000 |
Five to ten years | 101,341,000 |
Greater than ten years | 3,090,000 |
Total | 350,341,000 |
Weighted average coupon based on par values | ' |
Due within one year (as a percent) | 7.90% |
One to five years (as a percent) | 8.20% |
Five to ten years (as a percent) | 8.50% |
Greater than ten years (as a percent) | 1.10% |
Prepayments of available-for-sale securities | $0 |
SECURITIES_Details_5
SECURITIES (Details 5) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Concentrated risks | ' | ' |
Number of issuers with whom a specified percentage of estimated fair value of corporate debt securities is concentrated (in issuers) | 10 | 10 |
Number of largest issuers out of ten issuers with whom a specified percentage of estimated fair value of debt securities is concentrated (in issuers) | 3 | 3 |
Securities | $350,341 | $412,293 |
Estimated fair value of securities pledged as collateral | ' | ' |
Pledged as collateral for collateralized loan obligation secured debt and junior secured notes to affiliates | 324,830 | 354,088 |
Total | 324,830 | 354,088 |
Corporate debt securities | Credit concentration | Top three largest | ' | ' |
Concentrated risks | ' | ' |
Investment in affiliates as a percentage of total investment (in percentage) | 21.00% | 19.00% |
Securities | $104,500 | $87,000 |
Corporate debt securities | Credit concentration | Ten issuers | ' | ' |
Concentrated risks | ' | ' |
Investment in affiliates as a percentage of total investment (in percentage) | 55.00% | 51.00% |
CORPORATE_LOANS_AND_ALLOWANCE_2
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
Summary of corporate loans | ' | ' | ' | ' |
Principal | $6,873,666,000 | $6,431,761,000 | ' | ' |
Net unamortized discount | -181,046,000 | -248,610,000 | ' | ' |
Total amortized cost | 6,692,620,000 | 6,183,151,000 | ' | ' |
Lower of cost or fair value adjustment | -15,920,000 | -14,047,000 | ' | ' |
Allowance for loan losses | -224,999,000 | -223,472,000 | ' | ' |
Net unrealized gains | 15,019,000 | 2,225,000 | ' | ' |
Net carrying value | 6,466,720,000 | 5,947,857,000 | ' | ' |
Corporate Loan Held for Investment | ' | ' | ' | ' |
Summary of corporate loans | ' | ' | ' | ' |
Principal | 6,280,470,000 | 6,143,599,000 | ' | ' |
Net unamortized discount | -105,979,000 | -136,438,000 | ' | ' |
Total amortized cost | 6,174,491,000 | 6,007,161,000 | ' | ' |
Allowance for loan losses | -224,999,000 | -223,472,000 | -191,407,000 | -209,030,000 |
Net carrying value | 5,949,492,000 | 5,783,689,000 | ' | ' |
Corporate Loans Held for Sale | ' | ' | ' | ' |
Summary of corporate loans | ' | ' | ' | ' |
Principal | 315,738,000 | 231,231,000 | ' | ' |
Net unamortized discount | -20,070,000 | -88,895,000 | ' | ' |
Total amortized cost | 295,668,000 | 142,336,000 | ' | ' |
Lower of cost or fair value adjustment | -15,920,000 | -14,047,000 | ' | ' |
Net carrying value | 279,748,000 | 128,289,000 | ' | ' |
Corporate Loans, at Estimated Fair Value | ' | ' | ' | ' |
Summary of corporate loans | ' | ' | ' | ' |
Principal | 277,458,000 | 56,931,000 | ' | ' |
Net unamortized discount | -54,997,000 | -23,277,000 | ' | ' |
Total amortized cost | 222,461,000 | 33,654,000 | ' | ' |
Net unrealized gains | 15,019,000 | 2,225,000 | ' | ' |
Net carrying value | 237,480,000 | 35,879,000 | ' | ' |
Corporate loans and corporate loans held for sale | ' | ' | ' | ' |
Summary of corporate loans | ' | ' | ' | ' |
Cumulative charge-offs and other adjustments | $18,100,000 | $51,600,000 | ' | ' |
CORPORATE_LOANS_AND_ALLOWANCE_3
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
component | |||
Summary of corporate loans | ' | ' | ' |
Number of components in the loans receivable allowance for loan losses (in components) | 2 | ' | ' |
Allowance for loan losses: | ' | ' | ' |
Beginning balance | $223,472 | ' | ' |
Provision for loan losses | 32,812 | 46,498 | 14,194 |
Charge-offs | -31,300 | -14,400 | -31,800 |
Ending balance | 224,999 | 223,472 | ' |
Corporate Loans | ' | ' | ' |
Allowance for loan losses: | ' | ' | ' |
Beginning balance | 223,472 | 191,407 | 209,030 |
Provision for loan losses | 32,812 | 46,498 | 14,194 |
Charge-offs | -31,285 | -14,433 | -31,817 |
Ending balance | $224,999 | $223,472 | $191,407 |
CORPORATE_LOANS_AND_ALLOWANCE_4
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 |
In Thousands, unless otherwise specified | ||||
Allowance for loan losses by basis of impairment method: | ' | ' | ' | ' |
Ending balance: individually evaluated for impairment | $142,682 | $94,863 | ' | ' |
Ending balance: collectively evaluated for impairment | 82,317 | 128,609 | ' | ' |
Allowance for loan losses | 224,999 | 223,472 | ' | ' |
Corporate loans (recorded investment) by basis of impairment method: | ' | ' | ' | ' |
Recorded Investment | 6,193,232 | 6,029,059 | ' | ' |
Corporate Loans | ' | ' | ' | ' |
Allowance for loan losses by basis of impairment method: | ' | ' | ' | ' |
Allowance for loan losses | 224,999 | 223,472 | 191,407 | 209,030 |
Corporate loans (recorded investment) by basis of impairment method: | ' | ' | ' | ' |
Ending balance: individually evaluated for impairment | 554,442 | 445,437 | ' | ' |
Ending balance: collectively evaluated for impairment | 5,638,790 | 5,583,622 | ' | ' |
Recorded Investment | $6,193,232 | $6,029,059 | ' | ' |
CORPORATE_LOANS_AND_ALLOWANCE_5
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 4) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | issuer | issuer |
Recorded investment in impaired loans and related allowances for credit losses | ' | ' |
Number of issuers of loans related to the aggregate allowance on impaired loans (in issuers) | 4 | 6 |
Impaired Financing Receivable, Recorded Investment | ' | ' |
Recorded Investment, with no related allowance recorded | ' | $6,490 |
Recorded Investment, with an allowance recorded | 554,442 | 438,947 |
Recorded Investment | 554,442 | 445,437 |
Unpaid Principal Balance, with no related allowance recorded | ' | 19,931 |
Unpaid Principal Balance, with an allowance recorded | 594,416 | 464,214 |
Unpaid Principal Balance | 594,416 | 484,145 |
Related Allowance | 142,682 | 94,863 |
Impaired Financing Receivable, Amortized Cost | ' | ' |
Allocated component of allowance for loan losses to the account for impairment | 142,682 | 94,863 |
Texas Competitive Electric Holdings Company LLC | ' | ' |
Impaired Financing Receivable, Amortized Cost | ' | ' |
Impaired loans | 311,600 | 310,900 |
Allocated component of allowance for loan losses to the account for impairment | $66,900 | $49,100 |
CORPORATE_LOANS_AND_ALLOWANCE_6
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 5) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES | ' | ' | ' |
Average Recorded Investment, with no related allowance recorded | $1,298 | $3,540 | $3,244 |
Average Recorded Investment, with an allowance recorded | 524,924 | 199,083 | 76,933 |
Average Recorded Investment | 526,222 | 202,623 | 80,177 |
Interest Income Recognized, with no related allowance recorded | ' | 208 | ' |
Interest Income Recognized, with an allowance recorded | 18,194 | 9,310 | 2,645 |
Interest Income Recognized | $18,194 | $9,518 | $2,645 |
CORPORATE_LOANS_AND_ALLOWANCE_7
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 6) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Recorded investment in impaired loans and related allowances for credit losses | ' | ' |
Recorded investment with nonaccrual status | $624,148,000 | $536,277,000 |
Interest income recognized using cash basis method | 25,100,000 | 19,600,000 |
Loans carried at estimated fair value on non-accrual | 237,480,000 | 35,879,000 |
Corporate Loan Held for Investment | ' | ' |
Recorded investment in impaired loans and related allowances for credit losses | ' | ' |
Recorded investment with nonaccrual status | 554,442,000 | 445,437,000 |
Interest income recognized using cash basis method | 18,200,000 | 9,500,000 |
Recorded investment of non-accrual and past due loans | 237,200,000 | 50,400,000 |
Number of issuers past due (in issuers) | 3 | 1 |
Past due interest payments of amortized cost of non-accrual and past due loans | ' | ' |
Total past due interest payment | 5,600,000 | 1,100,000 |
Less than 30 days past due | 900,000 | 1,100,000 |
60-89 days past due | 2,300,000 | ' |
90 or more days past due | 2,400,000 | ' |
Corporate Loans Held for Sale | ' | ' |
Recorded investment in impaired loans and related allowances for credit losses | ' | ' |
Recorded investment with nonaccrual status | 44,823,000 | 90,840,000 |
Interest income recognized using cash basis method | 6,900,000 | 10,100,000 |
Corporate Loans, at Estimated Fair Value | ' | ' |
Recorded investment in impaired loans and related allowances for credit losses | ' | ' |
Recorded investment with nonaccrual status | 24,883,000 | ' |
Par amount of non-accrual and past due loans | 15,500,000 | ' |
Loans carried at estimated fair value on non-accrual | 12,200,000 | ' |
Number of issuers past due (in issuers) | 1 | ' |
Past due interest payments of amortized cost of non-accrual and past due loans | ' | ' |
90 or more days past due | $200,000 | ' |
CORPORATE_LOANS_AND_ALLOWANCE_8
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 7) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | $6,193,232 | $6,029,059 |
Allowances for loan losses | 82,317 | 128,609 |
Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 5,638,790 | 5,583,622 |
Allowances for loan losses | 82,300 | 128,600 |
Allocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 554,442 | 445,437 |
High | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 325,525 | 824,075 |
High | Senior Secured Loan | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 26,886 | 525,562 |
High | Second Lien Loan | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 286,996 | 287,892 |
High | Subordinated | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 11,643 | 10,621 |
Moderate | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 1,099,898 | 892,066 |
Moderate | Senior Secured Loan | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 1,033,065 | 826,107 |
Moderate | Second Lien Loan | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 27,504 | 27,585 |
Moderate | Subordinated | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 39,329 | 38,374 |
Low | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 4,213,367 | 3,867,481 |
Low | Senior Secured Loan | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 4,148,913 | 3,716,831 |
Low | Second Lien Loan | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | 25,864 | 68,917 |
Low | Subordinated | Unallocated | ' | ' |
Corporate Loans and Allowance for Loan Losses | ' | ' |
Recorded Investment | $38,590 | $81,733 |
CORPORATE_LOANS_AND_ALLOWANCE_9
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 8) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
loan | issuer | ||
issuer | loan | ||
Summary of corporate loans | ' | ' | ' |
Charge-offs recorded | $31,300,000 | $14,400,000 | $31,800,000 |
Corporate loans, held for sale (in dollars) | 279,748,000 | 128,289,000 | ' |
Corporate loans transferred from held for investment to held for sale | 323,416,000 | 114,995,000 | 862,244,000 |
Corporate loans transferred from held for sale to held for investment | ' | 114,871,000 | 448,329,000 |
Net charge for lower of cost or estimated fair value adjustment | 5,899,000 | 2,656,000 | 65,163,000 |
Number of issuers in default | 2 | 1 | ' |
Number of loans in default | 6 | 2 | ' |
Amortized cost of corporate loans in default | 215,700,000 | 50,400,000 | ' |
Corporate Loan Held for Investment | ' | ' | ' |
Summary of corporate loans | ' | ' | ' |
Charge-offs recorded | 31,285,000 | 14,433,000 | 31,817,000 |
Corporate loans transferred from held for investment to held for sale | 323,400,000 | 115,000,000 | ' |
Allocated component of allowance for loan losses | 203,700,000 | ' | ' |
Corporate Loans Held for Sale | ' | ' | ' |
Summary of corporate loans | ' | ' | ' |
Corporate loans, held for sale (in dollars) | 279,700,000 | 128,300,000 | ' |
Corporate loans transferred from held for sale to held for investment | 0 | 114,900,000 | ' |
Net charge for lower of cost or estimated fair value adjustment | 5,900,000 | 2,700,000 | 65,200,000 |
Corporate Loans Held for Sale | Carrying reported amount | ' | ' | ' |
Summary of corporate loans | ' | ' | ' |
Corporate loans, held for sale (in dollars) | 279,748,000 | 128,289,000 | 317,300,000 |
Corporate Loans, at Estimated Fair Value | ' | ' | ' |
Summary of corporate loans | ' | ' | ' |
Amortized cost of corporate loans in default | $12,000,000 | ' | ' |
Recovered_Sheet1
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 9) (USD $) | 12 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2011 | |
issuer | issuer | issuer | Loans held for investment | Loans held for investment | Loans held for investment | Loans held for sale | Loans at estimated fair value | Loans at estimated fair value | |
loan | loan | loan | issuer | issuer | issuer | issuer | issuer | issuer | |
Troubled debt restructurings: | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Troubled debt restructurings on a recorded investment basis | $55,400,000 | $25,500,000 | ' | ' | ' | ' | ' | ' | ' |
Number of TDRs related to recorded investment balance (in issuers) | 3 | 1 | ' | ' | ' | ' | ' | ' | ' |
Sustained period of repayment performance for determining the reclassification of restructured loans from non-accrual to accrual status | '6 months | ' | ' | ' | ' | ' | ' | ' | ' |
Troubled debt restructurings, included in non-accrual loans | 55,400,000 | 25,500,000 | ' | ' | ' | ' | ' | ' | ' |
Specific reserves allocated to the issuer | 22,100,000 | 500,000 | ' | ' | ' | ' | ' | ' | ' |
Financing Receivable Modifications Extension Period of Maturity Date | '4 years | ' | ' | ' | ' | ' | ' | ' | ' |
Higher coupon rate for extended period (as a percent) | 6.80% | ' | ' | ' | ' | ' | ' | ' | ' |
Number of TDRs (in issuers) | 3 | 2 | 1 | 2 | 1 | ' | 1 | 1 | 1 |
Pre-modification outstanding recorded investment | 70,028,000 | 67,682,000 | 11,158,000 | 68,358,000 | 13,807,000 | ' | 53,875,000 | 1,670,000 | 11,158,000 |
Number of issuers troubled debt restructurings | 3 | 1 | 1 | ' | ' | ' | ' | ' | ' |
Post-modification outstanding recorded investment | 40,659,000 | 25,565,000 | ' | 39,430,000 | 4,679,000 | ' | 20,886,000 | 1,229,000 | ' |
Estimated fair value of equity received from the TDRs excluded from post-modification outstanding recorded investment | 2,100,000 | ' | 9,500,000 | ' | ' | ' | ' | ' | ' |
Number of TDRs identified as impaired (in issuers) | ' | ' | ' | ' | ' | 2 | ' | ' | ' |
Charge-offs recorded related to TDR's | 26,800,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Charge-offs related to TDR's as a percentage of charge-offs related to loans and losses (in percentage) | 86.00% | ' | ' | ' | ' | ' | ' | ' | ' |
Exchanged aggregate recorded investment | ' | 67,700,000 | ' | ' | ' | ' | ' | ' | ' |
Estimated fair value of new loans issued in TDR exchange | ' | 25,600,000 | ' | ' | ' | ' | ' | ' | ' |
Modified amortized cost of corporate loan | ' | ' | 11,200,000 | ' | ' | ' | ' | ' | ' |
Loss on modified corporate loan | ' | ' | 800,000 | ' | ' | ' | ' | ' | ' |
Charge-offs recorded | 31,300,000 | 14,400,000 | 31,800,000 | ' | ' | ' | ' | ' | ' |
Number of loans modified as TDRs in default | 0 | 0 | 0 | ' | ' | ' | ' | ' | ' |
Modified amortized cost of corporate loans that did not qualify as TDRs | ' | ' | ' | 2,400,000,000 | 1,700,000,000 | ' | ' | ' | ' |
Lending commitment to borrower whose loans had been modified in the troubled debt restructuring | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' |
Recovered_Sheet2
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 10) (Corporate Loans, USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Concentrated risks | ' | ' |
Number of issuers with whom a specified percentage of amortized cost of corporate loans is concentrated | 20 | 20 |
Number of issuers with the largest concentration of corporate loans | 3 | 3 |
Percent to Total Corporate Loans | ' | ' |
Concentrated risks | ' | ' |
Concentration risk of total amortized cost basis (as a percent) | 46.00% | 46.00% |
Percent to Total Corporate Loans | Texas Competitive Electric Holdings Company LLC, Modular Space Corporation, and U.S. Foods Inc. | ' | ' |
Concentrated risks | ' | ' |
Concentration risk of total amortized cost basis (as a percent) | 14.00% | 16.00% |
Amortized cost of corporate loans concentrated in major issuers (in dollars) | 935.2 | 1,000 |
Recovered_Sheet3
CORPORATE LOANS AND ALLOWANCE FOR LOAN LOSSES (Details 11) (Corporate Loan Held for Investment, USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Corporate Loan Held for Investment | ' | ' |
Amortized cost of corporate loans held for investment and corporate loans held for sale pledged as collateral | ' | ' |
Pledged as collateral for collateralized loan obligation secured debt and junior secured notes to affiliates | $6,231,541 | $5,804,026 |
Total loans pledged as collateral | $6,231,541 | $5,804,026 |
NATURAL_RESOURCES_ASSETS_Detai
NATURAL RESOURCES ASSETS (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Oil and natural gas properties | ' | ' |
Proved oil and natural gas properties (successful efforts method) | $451,909,000 | $315,446,000 |
Unproved oil and natural gas properties | 16,913,000 | 2,596,000 |
Less: Accumulated depreciation, depletion and amortization | -68,453,000 | -28,113,000 |
Oil and gas properties, net | 400,369,000 | 289,929,000 |
Impairment charges | $10,400,000 | $3,300,000 |
NATURAL_RESOURCES_ASSETS_Detai1
NATURAL RESOURCES ASSETS (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Recognized fair value of the identifiable assets acquired and liabilities assumed in connection with acquisitions | ' | ' |
Amount borrowed to finance the acquisition | $154,500,000 | ' |
Oil and natural gas properties located in Louisiana, Mississippi, and Texas | ' | ' |
Acquisitions | ' | ' |
Cost of acquired properties | ' | 178,300,000 |
Increase in proved property | 3,800,000 | ' |
Increase in accounts payable and accrued liabilities | 3,800,000 | ' |
Recognized fair value of the identifiable assets acquired and liabilities assumed in connection with acquisitions | ' | ' |
Proved property | ' | 164,557,000 |
Unproved property | ' | 2,658,000 |
Other assets | ' | 16,789,000 |
Risk management liabilities | ' | -1,037,000 |
Accounts payable and accrued liabilities | ' | -9,030,000 |
Asset retirement obligation | ' | -5,491,000 |
Total | ' | 168,446,000 |
Oil and natural gas properties located in Texas | ' | ' |
Recognized fair value of the identifiable assets acquired and liabilities assumed in connection with acquisitions | ' | ' |
Amount borrowed to finance the acquisition | ' | $1,400,000 |
BORROWINGS_Details
BORROWINGS (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 21, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Nov. 14, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Jan. 18, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Jun. 25, 2013 |
Affiliates | Nonaffiliates | Nonaffiliates | CLO 2005-1 senior secured notes | CLO 2005-1 senior secured notes | CLO 2005-2 senior secured notes | CLO 2005-2 senior secured notes | CLO 2006-1 senior secured notes | CLO 2006-1 senior secured notes | CLO 2007-1 senior secured notes | CLO 2007-1 senior secured notes | CLO 2007-1 mezzanine notes | CLO 2007-1 mezzanine notes | CLO 2007-1 subordinated notes | CLO 2007-1 subordinated notes | CLO 2007-A senior secured notes | CLO 2007-A senior secured notes | CLO 2007-A mezzanine notes | CLO 2007-A mezzanine notes | CLO 2007-A subordinated notes | CLO 2007-A subordinated notes | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2012-1 senior secured notes | CLO 2012-1 senior secured notes | CLO 2012-1 senior secured notes | CLO 2012-1 subordinated notes | CLO 2012-1 subordinated notes | CLO 2007-1 mezzanine notes to affiliates | CLO 2007-1 subordinated notes to affiliates | CLO 2007-A mezzanine notes to affiliates | CLO 2007-A subordinated notes to affiliates | 2015 Facility | 2015 Facility | 2015 Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | Total credit facilities | Total credit facilities | 7.5% Convertible Senior Notes | 7.5% Convertible Senior Notes | 8.375% Senior Notes | 8.375% Senior Notes | 7.500% Senior notes due March 20, 2042 | 7.500% Senior notes due March 20, 2042 | Junior subordinated notes | Junior subordinated notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | |||
Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | Affiliates | Affiliates | Affiliates | Affiliates | LIBOR | LIBOR | Minimum | Maximum | Nonaffiliates | |||||||||||||||||||||||||||||||||||||||||
LIBOR | LIBOR | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Details of Company's borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured debt | ' | ' | ' | $5,249,383,000 | $5,122,338,000 | $193,909,000 | $427,317,000 | $335,570,000 | $470,516,000 | $384,925,000 | $601,091,000 | $2,075,040,000 | $2,075,040,000 | $406,428,000 | $203,727,000 | $136,097,000 | $5,828,000 | $428,152,000 | $601,375,000 | $55,327,000 | $5,580,000 | $15,096,000 | $4,599,000 | ' | $388,703,000 | $343,485,000 | $362,727,000 | $362,280,000 | ' | $18,000,000 | $21,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $449,409,000 | ' |
Collateralized loan obligation junior secured notes to affiliates | ' | ' | 296,557,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 118,845,000 | 130,270,000 | 36,945,000 | 10,497,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Senior notes | 362,276,000 | 362,178,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,800,000 | 250,735,000 | 111,476,000 | 111,443,000 | ' | ' | ' | ' |
Credit facilities | 125,289,000 | 107,789,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000,000 | ' | ' | ' | 50,289,000 | 107,789,000 | ' | ' | ' | ' | ' | 125,289,000 | 107,789,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible senior notes | ' | 166,028,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 166,028,000 | 172,500,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Junior subordinated notes | 283,517,000 | 283,517,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 283,517,000 | 283,517,000 | ' | ' |
Total borrowings | 6,020,465,000 | 6,338,407,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 166,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Borrowing Rate (as a percent) | ' | ' | ' | ' | ' | 0.73% | 0.69% | 0.63% | 0.66% | 0.69% | 0.69% | 0.79% | 0.86% | 3.65% | 2.81% | 18.15% | 26.22% | 1.57% | 1.50% | 7.44% | 7.02% | 42.22% | 60.24% | ' | 1.25% | 1.67% | 2.34% | 2.58% | ' | 11.67% | ' | 6.29% | 25.89% | 7.53% | 60.24% | 1.39% | 2.56% | ' | ' | 2.42% | 2.71% | ' | ' | ' | 1.75% | 3.25% | ' | ' | 7.50% | ' | 8.38% | 8.38% | 7.50% | 7.50% | 5.39% | 5.43% | 1.98% | ' |
Weighted Average Remaining Maturity | ' | ' | ' | ' | ' | '1212 days | '1577 days | '1426 days | '1791 days | '1698 days | '2063 days | '2692 days | '3057 days | '2692 days | '3057 days | '2692 days | '3057 days | '1384 days | '1749 days | '1384 days | '1749 days | '1384 days | '1749 days | ' | '1688 days | '2053 days | '4002 days | '4367 days | ' | '4002 days | '4367 days | '3057 days | '3057 days | '1749 days | '1749 days | '699 days | '1064 days | ' | ' | '674 days | '1039 days | ' | '1519 days | ' | ' | ' | ' | ' | '1476 days | ' | '10181 days | '10546 days | '10306 days | '10671 days | '8347 days | '8712 days | '4214 days | ' |
Total borrowings, fair value of collateral | 6,645,905,000 | 6,237,994,000 | 331,037,000 | 6,431,970,000 | 5,679,542,000 | 303,104,000 | 510,187,000 | 496,917,000 | 618,000,000 | 649,894,000 | 846,365,000 | 2,354,938,000 | 2,298,373,000 | 461,250,000 | 225,654,000 | 154,456,000 | 6,455,000 | 540,677,000 | 698,569,000 | 69,867,000 | 6,482,000 | 19,063,000 | 5,342,000 | ' | 517,597,000 | 421,584,000 | 376,603,000 | 40,180,000 | ' | 18,689,000 | 2,351,000 | 131,636,000 | 144,291,000 | 42,916,000 | 12,194,000 | ' | ' | ' | ' | 213,935,000 | 227,415,000 | ' | ' | ' | ' | ' | 213,935,000 | 227,415,000 | ' | ' | ' | ' | ' | ' | ' | ' | 468,915,000 | ' |
Principal cash held | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $357,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt, variable interest rate basis | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | 'LIBOR | 'LIBOR | 'LIBOR | ' | 'LIBOR | ' | 'LIBOR | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 'three-month LIBOR |
BORROWINGS_Details_2
BORROWINGS (Details 2) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Sep. 27, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 21, 2012 | Dec. 21, 2012 | Dec. 31, 2013 | Dec. 21, 2012 | Dec. 31, 2012 | Jun. 25, 2013 | Jun. 25, 2013 | Dec. 31, 2013 | |
Nonaffiliates | Nonaffiliates | Nonaffiliates | CLO 2007-A, CLO 2005-1, CLO 2005-2 and CLO 2006-1 senior notes | CLO 2007-A, CLO 2005-1, CLO 2005-2 and CLO 2006-1 senior notes | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2011-1 senior debt | CLO 2007-1 Class D secured notes | CLO 2007-1 Class D secured notes | CLO 2012-1 senior secured notes | CLO 2012-1 senior secured notes | CLO 2012-1 senior secured notes | CLO 2012-1 junior secured notes | CLO 2007-A Class C secured notes | CLO 2013-1 senior secured notes | CLO 2013-1 senior secured notes | CLO 2007-A Class F secured notes | |
Maximum | Nonaffiliates | Nonaffiliates | Nonaffiliates | Nonaffiliates | |||||||||||||||
Details of Company's borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured debt repaid | $839,625,000 | $979,667,000 | $531,060,000 | $759,200,000 | $886,600,000 | ' | $77,200,000 | $93,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Increase in the maximum borrowing capacity | ' | ' | ' | ' | ' | 300,000,000 | ' | ' | ' | ' | ' | ' | ' | 3,500,000 | ' | ' | ' | ' | ' |
Increase in current borrowing capacity | ' | ' | ' | ' | ' | ' | ' | ' | 225,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Par amount of notes issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 412,400,000 | 367,500,000 | 18,000,000 | 21,500,000 | 11,300,000 | 519,400,000 | 458,500,000 | 12,400,000 |
Gain on extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 300,000 | ' | ' | ' | ' | ' |
Par amount of notes issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | 84,800,000 | 119,700,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Floating rate senior secured note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 342,500,000 | ' | ' | ' | ' | 442,000,000 | ' |
Debt, variable interest rate basis | ' | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | ' | ' | 'three-month LIBOR | ' | ' | ' | ' | 'three-month LIBOR | ' |
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | ' | ' | ' | ' | ' | 1.35% | ' | ' | ' | ' | ' | ' | 2.09% | ' | ' | ' | ' | 1.67% | ' |
Fixed rate senior secured note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 25,000,000 | ' | ' | ' | ' | 16,500,000 | ' |
Fixed rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2.39% | ' | ' | ' | ' | 3.73% | ' |
Proceeds from senior notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | $81,100,000 | $95,100,000 | ' | ' | ' | ' | $10,600,000 | ' | ' | $12,700,000 |
BORROWINGS_Details_3
BORROWINGS (Details 3) (USD $) | 0 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | ||||||||||
In Millions, unless otherwise specified | Nov. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 30, 2012 | Nov. 30, 2012 | Nov. 14, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Nov. 14, 2013 | Nov. 14, 2013 | Feb. 27, 2013 | Dec. 31, 2013 | Dec. 20, 2013 | Dec. 31, 2013 | Feb. 27, 2013 | Feb. 27, 2013 |
2015 Facility | 2015 Facility | 2015 Facility | 2015 Facility | 2015 Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2015 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | 2018 Natural Resources Facility | |
LIBOR | Alternate base rate | Minimum | Maximum | LIBOR | Minimum | Maximum | ||||||||||
LIBOR | LIBOR | LIBOR | LIBOR | |||||||||||||
Details of Company's borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Credit facility term | '3 years | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | '5 years | ' | ' | ' | ' | ' |
Current borrowing capacity under line of credit facility | $150 | ' | ' | ' | ' | $94.60 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maximum borrowing capacity | 350 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6 | ' | 42 | ' | ' | ' |
Amount outstanding | ' | $75 | $0 | ' | ' | ' | $50.30 | $107.80 | ' | ' | ' | $0 | ' | ' | ' | ' |
Debt, variable interest rate basis | ' | ' | ' | 'LIBOR | 'alternate base rate | 'LIBOR | 'LIBOR | ' | ' | ' | 'LIBOR | ' | ' | 'LIBOR | ' | ' |
Percentage of margin added to reference rate to determine interest rate on debt (in percentage) | ' | ' | ' | 2.25% | 1.25% | ' | ' | ' | 1.75% | 2.75% | ' | ' | ' | ' | 1.75% | 3.25% |
BORROWINGS_Details_4
BORROWINGS (Details 4) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Share data in Millions, unless otherwise specified | Mar. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jan. 18, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Jul. 13, 2012 | Mar. 31, 2012 | Dec. 31, 2011 |
7.5% Convertible Senior Notes | 7.5% Convertible Senior Notes | 7.5% Convertible Senior Notes | 7.5% Convertible Senior Notes | 7.0% convertible senior notes | 7.0% convertible senior notes | 7.0% convertible senior notes | |||||
Details of Company's borrowings | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest rate (as a percent) | ' | ' | ' | ' | 7.50% | ' | ' | ' | 7.00% | ' | ' |
Convertible senior notes issued, principal amount | ' | ' | $166,028,000 | ' | $172,500,000 | ' | $166,028,000 | ' | ' | ' | ' |
Conversion rate of common stock shares per $1,000 principal amount (in shares per USD) | ' | ' | ' | ' | 0.1418256 | ' | ' | ' | ' | ' | ' |
Principal amount used for debt instrument conversion ratio | ' | ' | ' | ' | 1,000 | ' | ' | ' | ' | ' | ' |
Conversion rate of additional common shares issued upon conversion per $1,000 principal amount to account for the make-whole premium (in shares per USD) | ' | ' | ' | ' | 0.0092324 | ' | ' | ' | ' | ' | ' |
Amount of debt that had been tendered for conversion | 172,500,000 | 186,254,000 | ' | ' | 172,500,000 | ' | ' | ' | ' | ' | ' |
Number of common shares of the entity issued in exchange of convertible notes (in shares) | 26.1 | ' | ' | ' | 26.1 | ' | ' | ' | ' | ' | ' |
Carrying amount of equity component included in paid-in-capital | ' | ' | ' | ' | ' | ' | 10,000,000 | ' | ' | ' | ' |
Total borrowings | ' | 6,020,465,000 | 6,338,407,000 | ' | ' | ' | 166,000,000 | ' | ' | ' | ' |
Convertible debt principal amount | ' | ' | ' | ' | ' | ' | 172,500,000 | ' | ' | ' | ' |
Debt discount, unamortized | ' | ' | ' | ' | ' | ' | 6,500,000 | ' | ' | ' | ' |
Debt discount, amortized | ' | ' | ' | ' | ' | 0 | 1,300,000 | 1,200,000 | ' | ' | ' |
Effective interest rate to amortize debt discount (as a percent) | ' | ' | ' | ' | ' | 8.60% | ' | ' | ' | ' | ' |
Interest expense, recognized | ' | ' | ' | ' | ' | 500,000 | 12,900,000 | 12,900,000 | ' | ' | ' |
Principal amount of debt extinguishment | ' | ' | ' | ' | ' | ' | ' | ' | 112,000,000 | 23,100,000 | 45,500,000 |
Loss on repurchase of convertible notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000 | 1,700,000 |
Write-off of unamortized debt issuance costs | ' | $6,674,000 | $4,224,000 | $2,194,000 | ' | ' | ' | ' | ' | $200,000 | $100,000 |
BORROWINGS_Details_5
BORROWINGS (Details 5) (USD $) | 12 Months Ended | 0 Months Ended | |
Dec. 31, 2012 | Dec. 31, 2011 | Mar. 20, 2012 | |
7.500% Senior notes due March 20, 2042 | |||
Details of Company's borrowings | ' | ' | ' |
Aggregate principal amount of the notes | ' | ' | $115,000,000 |
Interest rate (as a percent) | ' | ' | 7.50% |
Total net proceeds from senior notes | $111,418,000 | $250,669,000 | $111,418,000 |
BORROWINGS_Details_6
BORROWINGS (Details 6) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
1 - 3 years | $125,289,000 |
3 - 5 years | 1,807,141,000 |
More than 5 years | 4,142,709,000 |
Total borrowings | 6,075,139,000 |
Prepayments of long-term debt | 0 |
CLO 2005-1 notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
3 - 5 years | 195,897,000 |
Total borrowings | 195,897,000 |
CLO 2005-2 notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
3 - 5 years | 338,773,000 |
Total borrowings | 338,773,000 |
CLO 2006-1 notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
3 - 5 years | 384,925,000 |
Total borrowings | 384,925,000 |
CLO 2007-1 senior secured notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
More than 5 years | 2,641,442,000 |
Total borrowings | 2,641,442,000 |
CLO 2007-A senior secured notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
3 - 5 years | 498,843,000 |
Total borrowings | 498,843,000 |
CLO 2011-1 debt | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
3 - 5 years | 388,703,000 |
Total borrowings | 388,703,000 |
CLO 2012-1 notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
More than 5 years | 385,500,000 |
Total borrowings | 385,500,000 |
CLO 2013-1 notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
More than 5 years | 458,500,000 |
Total borrowings | 458,500,000 |
Total credit facilities | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
1 - 3 years | 125,289,000 |
Total borrowings | 125,289,000 |
Senior notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
More than 5 years | 373,750,000 |
Total borrowings | 373,750,000 |
Junior subordinated notes | ' |
Entity's contractual obligations (excluding interest) under borrowing agreements, payments due by period | ' |
More than 5 years | 283,517,000 |
Total borrowings | $283,517,000 |
DERIVATIVE_INSTRUMENTS_Details
DERIVATIVE INSTRUMENTS (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Estimated Fair Value | ($51,411) | ($94,063) |
Cash Flow Hedges: | Interest rate swaps | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Notional amount | 478,333 | 503,833 |
Estimated Fair Value | -42,078 | -90,618 |
Free-Standing Derivatives: | Commodity swaps | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Estimated Fair Value | 1,493 | 7,056 |
Free-Standing Derivatives: | Credit default swaps-protection sold | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Estimated Fair Value | ' | 19 |
Free-Standing Derivatives: | Credit default swaps-protection purchased | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Notional amount | -100,000 | -47,321 |
Estimated Fair Value | -2,019 | -1,140 |
Free-Standing Derivatives: | Foreign exchange forward contracts | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Notional amount | -320,380 | -338,313 |
Estimated Fair Value | -25,258 | -20,975 |
Free-Standing Derivatives: | Foreign exchange options | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Notional amount | 129,900 | 130,207 |
Estimated Fair Value | 8,941 | 8,277 |
Free-Standing Derivatives: | Common stock warrants | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Estimated Fair Value | 945 | 3,318 |
Free-Standing Derivatives: | Total Rate of Return Swaps | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Estimated Fair Value | -229 | ' |
Free-Standing Derivatives: | Options | ' | ' |
Summary of aggregate notional amount and estimated net fair value of the derivative instruments | ' | ' |
Estimated Fair Value | $6,794 | ' |
DERIVATIVE_INSTRUMENTS_Details1
DERIVATIVE INSTRUMENTS (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Net gains (losses) recognized in other comprehensive loss on cash flow hedges | ' | ' | ' |
Net gains (losses) recognized in other comprehensive loss on cash flow hedges | $48,479 | $10,169 | ($42,324) |
DERIVATIVE_INSTRUMENTS_Details2
DERIVATIVE INSTRUMENTS (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | Foreign exchange options and forward contracts | Foreign exchange options and forward contracts | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: | Free-Standing Derivatives: |
Natural gas positions | Natural gas positions | Natural gas positions | Natural gas liquid positions | Oil positions | Oil positions | Credit default swaps-protection purchased | Credit default swaps-protection purchased | |||
2014 | 2015 | 2016 | 2014 | 2014 | 2015 | |||||
MMBTU | MMBTU | MMBTU | MBbls | MBbls | MBbls | |||||
Fixed price swaps | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Hedged volume (MBbls) | ' | ' | ' | ' | ' | 145 | 639 | 500 | ' | ' |
Hedged volume (MMBtu) | ' | ' | 5,821 | 4,277 | 1,805 | ' | ' | ' | ' | ' |
Average price ($/Bbl) | ' | ' | ' | ' | ' | 31.21 | 92.27 | 88.24 | ' | ' |
Average price ($/MMBtu) | ' | ' | 4.34 | 4.73 | 4.44 | ' | ' | ' | ' | ' |
Notional amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional amount | $190,500 | $208,100 | ' | ' | ' | ' | ' | ' | ($100,000) | ($47,321) |
DERIVATIVE_INSTRUMENTS_Details3
DERIVATIVE INSTRUMENTS (Details 4) (Free-Standing Derivatives:, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Effect on income from free-standing derivatives | ' | ' | ' |
Realized gains (losses) | $2,031 | ($2,337) | $3,486 |
Unrealized gains (losses) | -8,869 | 246 | -7,298 |
Total | -6,838 | -2,091 | -3,812 |
Commodity swaps | ' | ' | ' |
Effect on income from free-standing derivatives | ' | ' | ' |
Realized gains (losses) | 1,296 | 3,554 | 352 |
Unrealized gains (losses) | -5,562 | 721 | 7,596 |
Total | -4,266 | 4,275 | 7,948 |
Credit Default Swaps | ' | ' | ' |
Effect on income from free-standing derivatives | ' | ' | ' |
Realized gains (losses) | -4,408 | -6,079 | 1,033 |
Unrealized gains (losses) | 188 | 942 | -7,063 |
Total | -4,220 | -5,137 | -6,030 |
Foreign exchange forward contracts and options | ' | ' | ' |
Effect on income from free-standing derivatives | ' | ' | ' |
Realized gains (losses) | 1,104 | -503 | 11 |
Unrealized gains (losses) | -2,096 | -2,544 | -4,806 |
Total | -992 | -3,047 | -4,795 |
Common stock warrants | ' | ' | ' |
Effect on income from free-standing derivatives | ' | ' | ' |
Realized gains (losses) | 2,327 | 691 | 2,184 |
Unrealized gains (losses) | -1,503 | 986 | -3,074 |
Total | 824 | 1,677 | -890 |
Total Rate of Return Swaps | ' | ' | ' |
Effect on income from free-standing derivatives | ' | ' | ' |
Realized gains (losses) | 1,803 | ' | ' |
Unrealized gains (losses) | -229 | 141 | 49 |
Total | 1,574 | 141 | 49 |
Options | ' | ' | ' |
Effect on income from free-standing derivatives | ' | ' | ' |
Realized gains (losses) | -91 | ' | -94 |
Unrealized gains (losses) | 333 | ' | ' |
Total | $242 | ' | ($94) |
ACCUMULATED_OTHER_COMPREHENSIV2
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ' | ' | ' |
Impairment charge for investments which were determined to be other-than-temporary | $19,500,000 | $8,400,000 | $3,700,000 |
Components of changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Beginning balance | -70,226,000 | -35,619,000 | 133,596,000 |
Other comprehensive (loss) income before reclassifications | 38,811,000 | 58,527,000 | -73,123,000 |
Amounts reclassified from accumulated other comprehensive loss | 15,763,000 | -93,134,000 | -96,092,000 |
Net current-period other comprehensive income (loss) | 54,574,000 | -34,607,000 | -169,215,000 |
Ending balance | -15,652,000 | -70,226,000 | -35,619,000 |
Net unrealized gains on available-for-sale securities | ' | ' | ' |
Components of changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Beginning balance | 17,472,000 | 62,248,000 | 189,139,000 |
Other comprehensive (loss) income before reclassifications | -9,668,000 | 48,358,000 | -30,799,000 |
Amounts reclassified from accumulated other comprehensive loss | 15,763,000 | -93,134,000 | -96,092,000 |
Net current-period other comprehensive income (loss) | 6,095,000 | -44,776,000 | -126,891,000 |
Ending balance | 23,567,000 | 17,472,000 | 62,248,000 |
Net unrealized losses on cash flow hedges | ' | ' | ' |
Components of changes in accumulated other comprehensive income (loss) | ' | ' | ' |
Beginning balance | -87,698,000 | -97,867,000 | -55,543,000 |
Other comprehensive (loss) income before reclassifications | 48,479,000 | 10,169,000 | -42,324,000 |
Net current-period other comprehensive income (loss) | 48,479,000 | 10,169,000 | -42,324,000 |
Ending balance | ($39,219,000) | ($87,698,000) | ($97,867,000) |
COMMITMENTS_CONTINGENCIES_Deta
COMMITMENTS & CONTINGENCIES (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Millions, unless otherwise specified | ||
Guarantees | ' | ' |
Non-recourse debt | $231.70 | ' |
Financial guarantees related to natural resources investments | 17.9 | 17.9 |
Debt Instrument | ' | ' |
Estimated future contributions for interests in joint ventures and partnerships | 325.5 | 203 |
Corporate Loans | ' | ' |
Debt Instrument | ' | ' |
Aggregate par amounts to purchase corporate loans | 62.7 | 254.2 |
Unfunded financing commitments for corporate loans | $17.40 | $9.80 |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (USD $) | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 16, 2013 | Jan. 17, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Feb. 14, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2013 | |
Series A LLC Preferred Shares | Series A LLC Preferred Shares | Series A LLC Preferred Shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Restricted common shares | Common share options | Common share options | |||
Manager | Manager | Manager | Manager | Directors | Directors | Directors | Maximum | ||||||||||
Stock-based compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares, shares issued | 14,950,000 | 0 | ' | 14,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross proceeds from issue of preferred shares (in dollars) | ' | ' | ' | $373,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from issuance of preferred stock (in dollars) | 361,622,000 | ' | ' | 362,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred shares, dividend rate (as a percent) | ' | ' | 7.38% | 7.38% | 7.38% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of share options granted, minimum (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% | ' |
Termination period from date of grant | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '10 years |
Authorized shares available to satisfy awards as of the balance sheet date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8,839,625 | ' |
Vesting period | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | ' | ' | ' |
Restricted common share transactions | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unvested shares at the beginning of the period | ' | ' | ' | ' | ' | 531,190 | 386,521 | 1,309,604 | ' | 438,937 | 240,845 | 1,097,000 | 92,253 | 145,676 | 212,604 | ' | ' |
Issued (in shares) | ' | ' | ' | ' | ' | 331,297 | 301,860 | 291,411 | ' | 292,009 | 258,303 | 240,845 | 39,288 | 43,557 | 50,566 | ' | ' |
Vested (in shares) | ' | ' | ' | ' | ' | -192,659 | -157,191 | -1,189,903 | ' | -146,312 | -60,211 | -1,097,000 | -46,347 | -96,980 | -92,903 | ' | ' |
Cancelled (in shares) | ' | ' | ' | ' | ' | ' | ' | -24,591 | ' | ' | ' | ' | ' | ' | -24,591 | ' | ' |
Unvested shares at the end of the period | ' | ' | ' | ' | ' | 669,828 | 531,190 | 386,521 | ' | 584,634 | 438,937 | 240,845 | 85,194 | 92,253 | 145,676 | ' | ' |
Value of unvested restricted common shares granted (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | $12.19 | $10.56 | $8.73 | $10.69 | $9.26 | $7.91 | ' | ' |
Unrecognized compensation cost (in dollars) | ' | ' | ' | ' | ' | $3,400,000 | $2,900,000 | $2,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SHAREHOLDERS_EQUITY_Details_2
SHAREHOLDERS' EQUITY (Details 2) (Common share options, USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Common share options | ' | ' | ' |
Number of Options | ' | ' | ' |
Outstanding at the beginning of the period (in shares) | 1,932,279 | 1,932,279 | 1,932,279 |
Granted (in shares) | 0 | 0 | 0 |
Exercised (in shares) | 0 | 0 | 0 |
Forfeited (in shares) | 0 | 0 | 0 |
Outstanding at the end of the period (in shares) | 1,932,279 | 1,932,279 | 1,932,279 |
Exercisable at the end of the period (in shares) | 1,932,279 | 1,932,279 | 1,932,279 |
Weighted Average Exercise Price | ' | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | $20 | $20 | $20 |
Granted (in dollars per share) | $0 | $0 | $0 |
Exercised (in dollars per share) | $0 | $0 | $0 |
Forfeited (in dollars per share) | $0 | $0 | $0 |
Outstanding at the end of the period (in dollars per share) | $20 | $20 | $20 |
SHAREHOLDERS_EQUITY_Details_3
SHAREHOLDERS' EQUITY (Details 3) (Restricted common shares, USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Stock-based compensation | ' | ' | ' |
Share-based compensation expense (in dollars) | $4,559 | $3,202 | $3,278 |
Manager | ' | ' | ' |
Stock-based compensation | ' | ' | ' |
Share-based compensation expense (in dollars) | 3,524 | 2,270 | 2,448 |
Directors | ' | ' | ' |
Stock-based compensation | ' | ' | ' |
Share-based compensation expense (in dollars) | $1,035 | $932 | $830 |
MANAGEMENT_AGREEMENT_AND_RELAT2
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2007 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Related party transaction expense | ' | $22,741,000 | $37,588,000 | $34,154,000 |
Total related party management compensation | ' | 68,576,000 | 72,339,000 | 68,185,000 |
Payable to manager | ' | 5,574,000 | 10,998,000 | ' |
Restricted common shares | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Share-based compensation | ' | 4,559,000 | 3,202,000 | 3,278,000 |
CLO Management Fees | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Number of CLOs the Company owns less than 100% of subordinated notes | ' | 3 | ' | ' |
CLO Management Fees | Maximum | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Entity's percentage in subordinated notes (as a percent) | ' | 100.00% | ' | ' |
Manager | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Renewal period | ' | '1 year | ' | ' |
Votes for termination, minimum (as a percent) | ' | 66.70% | ' | ' |
Notice period for termination | ' | '180 days | ' | ' |
Multiplier used to determine termination fee (as a multiplier) | ' | 4 | ' | ' |
Number of 12 month periods considered for calculation of termination fee (in periods) | ' | 2 | ' | ' |
Specified period for which average annual incentive fee to be considered | ' | '12 months | ' | ' |
Manager | Base Management Fees | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Related party transaction expense | ' | 25,029,000 | 28,244,000 | 26,294,000 |
Common shares offering | 230,400,000 | ' | ' | ' |
Common share right offering | 270,000,000 | ' | ' | ' |
Common share closing price, minimum (in dollars per share) | ' | $20 | ' | ' |
Number of consecutive trading days | ' | '5 days | ' | ' |
Fees, waived | ' | 8,800,000 | 8,800,000 | 8,800,000 |
Manager | Incentive Fees | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Related party transaction expense | ' | 22,741,000 | 37,588,000 | 34,154,000 |
Payable to manager | ' | 0 | ' | ' |
Manager | Reimbursable General and Administrative Expenses | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Related party transaction expense | ' | 9,800,000 | 10,200,000 | 8,200,000 |
Manager | Manager Share-Based Compensation | Restricted common shares | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Share-based compensation | ' | 3,524,000 | 2,270,000 | 2,448,000 |
Collateral manager | CLO Management Fees | ' | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' | ' |
Related party transaction expense | ' | 17,282,000 | 4,237,000 | 5,289,000 |
Fees, waived | ' | $19,700,000 | $32,200,000 | $34,000,000 |
MANAGEMENT_AGREEMENT_AND_RELAT3
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 2) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Management Agreement and Related Party Transactions | ' | ' | ' |
Total related party transaction expense | $22,741 | $37,588 | $34,154 |
Manager | Base Management Fees | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' |
Base management fees, gross | 39,065 | 28,244 | 26,294 |
CLO management fees credit | -10,042 | ' | ' |
Other related party fees credit | -3,994 | ' | ' |
Total related party transaction expense | $25,029 | $28,244 | $26,294 |
MANAGEMENT_AGREEMENT_AND_RELAT4
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 3) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Management Agreement and Related Party Transactions | ' | ' | ' |
Total related party transaction expense | $22,741 | $37,588 | $34,154 |
Collateral manager | CLO Management Fees | ' | ' | ' |
Management Agreement and Related Party Transactions | ' | ' | ' |
Charged and retained CLO management fees | 7,240 | 4,237 | 5,289 |
CLO management fees credit | 10,042 | ' | ' |
Total related party transaction expense | $17,282 | $4,237 | $5,289 |
MANAGEMENT_AGREEMENT_AND_RELAT5
MANAGEMENT AGREEMENT AND RELATED PARTY TRANSACTIONS (Details 4) (Affiliates, USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Investments in affiliates | ' | ' |
Investment in affiliates, number of issuers | 28 | 32 |
Par | 2,100 | 2,100 |
Corporate loans | ' | ' |
Investments in affiliates | ' | ' |
Par | 1,900 | 2,000 |
Corporate debt securities | ' | ' |
Investments in affiliates | ' | ' |
Par | 52.8 | 39.3 |
Equity investments, at estimated fair value | ' | ' |
Investments in affiliates | ' | ' |
Par | 84.5 | 73.8 |
Joint ventures and partnerships | ' | ' |
Investments in affiliates | ' | ' |
Aggregate cost amount | 400.3 | 137.6 |
Affiliated investments | Percent to total investment in corporate loans, debt securities and other investments | ' | ' |
Investments in affiliates | ' | ' |
Investment in affiliates as a percentage of total investment (in percentage) | 27.00% | 29.00% |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Federal income tax | ' | ' | ' | ' | ' | ' | ' | ' | $2,988 | $3,514 | $1,267 |
State income tax | ' | ' | ' | ' | ' | ' | ' | ' | 480 | 759 | 629 |
Total | ' | ' | ' | ' | ' | ' | ' | ' | 3,468 | 4,273 | 1,896 |
Deferred: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Federal income tax | ' | ' | ' | ' | ' | ' | ' | ' | -3,001 | -6,221 | 4,709 |
State income tax | ' | ' | ' | ' | ' | ' | ' | ' | ' | -1,519 | 1,406 |
Total | ' | ' | ' | ' | ' | ' | ' | ' | -3,001 | -7,740 | 6,115 |
Total income tax (benefit) expense | $33 | $18 | ($42) | $458 | $81 | $317 | $203 | ($4,068) | $467 | ($3,467) | $8,011 |
Combined federal and state income tax rate (as a percent) | ' | ' | ' | ' | ' | ' | ' | ' | 41.50% | 39.55% | 41.02% |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Reconciliation of the applicable statutory United States income tax rate to the effective tax rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Income before taxes at statutory rate | ' | ' | ' | ' | ' | ' | ' | ' | $102,794 | $120,667 | $114,129 |
Income passed through to shareholders | ' | ' | ' | ' | ' | ' | ' | ' | -93,260 | -118,983 | -104,137 |
REIT income not subject to tax | ' | ' | ' | ' | ' | ' | ' | ' | -9,141 | -4,681 | -2,867 |
State and local income taxes, net of federal benefit | ' | ' | ' | ' | ' | ' | ' | ' | -464 | -414 | 705 |
Withholding taxes | ' | ' | ' | ' | ' | ' | ' | ' | 172 | 72 | 138 |
Other | ' | ' | ' | ' | ' | ' | ' | ' | 366 | -128 | 43 |
Total income tax (benefit) expense | $33 | $18 | ($42) | $458 | $81 | $317 | $203 | ($4,068) | $467 | ($3,467) | $8,011 |
INCOME_TAXES_Details_3
INCOME TAXES (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Deferred tax assets: | ' | ' |
Unrealized losses from investments in domestic corporate subsidiaries | $4,329 | $1,328 |
Total deferred tax assets | 4,329 | 1,328 |
Net deferred tax assets | $4,329 | $1,328 |
FAIR_VALUE_OF_FINANCIAL_INSTRU2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2010 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | |
Proved oil and natural gas properties | Corporate loans | Corporate loans | Corporate loans | Corporate loans | Corporate loans held for sale | Corporate loans held for sale | Nonaffiliates | Nonaffiliates | Affiliates | Quoted Prices in Active Markets for Identical Assets (Level 1) | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Significant Unobservable Inputs (Level 3) | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Carrying Amount | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | Estimated Fair Value | |||
Corporate loans | Corporate loans | Corporate loans held for sale | Corporate loans held for sale | Corporate loans | Corporate loans | Corporate loans held for sale | Corporate loans held for sale | Nonaffiliates | Nonaffiliates | Affiliates | Proved oil and natural gas properties | Corporate loans | Corporate loans | Corporate loans held for sale | Corporate loans held for sale | Corporate loans held for sale | Nonaffiliates | Nonaffiliates | Affiliates | Proved oil and natural gas properties | Corporate loans | Corporate loans | Corporate loans held for sale | Corporate loans held for sale | Nonaffiliates | Nonaffiliates | Affiliates | |||||||||||||||||||||||
Assets: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash, restricted cash, and cash equivalents | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $507,552,000 | $1,134,002,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $507,552,000 | $1,134,002,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | $507,552,000 | $1,134,002,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Corporate loans, net of allowance for loan losses of $224,999 and $223,472 as of December 31, 2013 and 2012, respectively | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,691,988,000 | 5,203,763,000 | ' | ' | ' | ' | 359,653,000 | 627,455,000 | ' | ' | ' | ' | ' | ' | ' | ' | 5,949,492,000 | 5,783,689,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 6,051,641,000 | 5,831,218,000 | ' | ' | ' | ' | ' |
Allowances for loan losses | 224,999,000 | 223,472,000 | ' | 224,999,000 | 223,472,000 | 191,407,000 | 209,030,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 224,999,000 | 223,472,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0 | 223,472,000 | ' | ' | ' | ' | ' |
Corporate loans held for sale | 279,748,000 | 128,289,000 | ' | ' | ' | ' | ' | 279,700,000 | 128,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 267,169,000 | 151,327,000 | ' | ' | ' | ' | 14,109,000 | 43,751,000 | ' | ' | ' | ' | ' | ' | ' | ' | 279,748,000 | 128,289,000 | 317,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | 281,278,000 | 195,078,000 | ' | ' | ' |
Private equity investments, at cost | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,496,000 | 1,635,000 | ' | ' | ' | ' | ' | ' | ' | 405,000 | 405,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4,496,000 | 1,635,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Other assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,513,000 | 16,439,000 | ' | ' | ' | ' | ' | 338,000 | ' | ' | ' | ' | ' | ' | ' | 5,763,000 | 17,148,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,513,000 | 16,777,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Liabilities: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Collateralized loan obligation secured debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,249,383,000 | 5,122,338,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,179,207,000 | 5,020,115,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,249,383,000 | 5,122,338,000 | ' | ' | ' | ' | ' | ' | ' | ' | 5,179,207,000 | 5,020,115,000 | ' |
Collateralized loan obligation junior secured notes to affiliates | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 296,557,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 290,948,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 296,557,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 290,948,000 |
Credit facilities | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 125,289,000 | 107,789,000 | ' | ' | ' | ' | ' | ' | ' | 125,289,000 | 107,789,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 125,289,000 | 107,789,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Convertible senior notes | ' | 166,028,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 268,238,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 166,028,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 268,238,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Senior notes | 362,276,000 | 362,178,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 393,772,000 | 412,126,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 362,276,000 | 362,178,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 393,772,000 | 412,126,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Junior subordinated notes | 283,517,000 | 283,517,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 247,416,000 | 134,351,000 | ' | ' | ' | ' | ' | ' | ' | 283,517,000 | 283,517,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 247,416,000 | 134,351,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Oil and natural gas properties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Impairment charges of oil and natural gas properties | 10,400,000 | 3,300,000 | 10,400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Oil and natural gas properties | $400,369,000 | $289,929,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $16,100,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $5,700,000 | ' | ' | ' | ' | ' | ' | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU3
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets: | ' | ' |
Securities available-for-sale | $350,341 | $412,293 |
Total securities | 573,312 | 533,520 |
Corporate loans, estimated fair value | 237,480 | 35,879 |
Equity investments, at estimated fair value | 181,212 | 161,621 |
Derivatives: | ' | ' |
Total derivatives | 30,224 | 23,207 |
Derivatives: | ' | ' |
Total derivatives | 81,635 | 117,270 |
Residential mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Trading securities | 76,004 | 83,842 |
Significant Other Observable Inputs (Level 2) | ' | ' |
Derivatives: | ' | ' |
Other assets | 5,513 | 16,439 |
Significant Unobservable Inputs (Level 3) | ' | ' |
Derivatives: | ' | ' |
Other assets | ' | 338 |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | ' | ' |
Assets: | ' | ' |
Equity investments, at estimated fair value | 39,515 | 23,790 |
Interests in joint ventures and partnerships | 14,836 | ' |
Derivatives: | ' | ' |
Total derivatives | ' | 1,744 |
Total | 54,351 | 25,534 |
Liabilities: | ' | ' |
Securities sold, not yet purchased | ' | 1,158 |
Derivatives: | ' | ' |
Total | ' | 1,158 |
Recurring basis | Quoted Prices in Active Markets for Identical Assets (Level 1) | Common stock warrants | ' | ' |
Derivatives: | ' | ' |
Derivative assets | ' | 1,744 |
Recurring basis | Significant Other Observable Inputs (Level 2) | ' | ' |
Assets: | ' | ' |
Securities available-for-sale | 326,940 | 370,072 |
Total securities | 366,377 | 404,548 |
Equity investments, at estimated fair value | 3,638 | 40,085 |
Derivatives: | ' | ' |
Total derivatives | 14,489 | 11,327 |
Other assets | ' | 319 |
Total | 469,184 | 476,017 |
Derivatives: | ' | ' |
Total derivatives | 81,635 | 116,985 |
Total | 81,635 | 116,985 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Other securities, at estimated fair value | ' | ' |
Assets: | ' | ' |
Trading securities | 39,437 | 34,476 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Interest rate swaps | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 3,290 | ' |
Derivatives: | ' | ' |
Derivative liabilities | 45,368 | 90,618 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Commodity swaps | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 5,408 | 8,557 |
Derivatives: | ' | ' |
Derivative liabilities | 3,915 | 1,501 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Credit default swaps-protection sold | ' | ' |
Derivatives: | ' | ' |
Derivative assets | ' | 19 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Credit default swaps-protection purchased | ' | ' |
Derivatives: | ' | ' |
Derivative assets | ' | 136 |
Derivatives: | ' | ' |
Derivative liabilities | 2,019 | 1,276 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Foreign exchange forward contracts | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 4,846 | 2,615 |
Derivatives: | ' | ' |
Derivative liabilities | 30,104 | 23,590 |
Recurring basis | Significant Other Observable Inputs (Level 2) | Common stock warrants | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 945 | ' |
Recurring basis | Significant Other Observable Inputs (Level 2) | Total Rate of Return Swaps | ' | ' |
Derivatives: | ' | ' |
Derivative liabilities | 229 | ' |
Recurring basis | Significant Other Observable Inputs (Level 2) | Portion at estimated fair value | ' | ' |
Assets: | ' | ' |
Corporate loans, estimated fair value | 84,680 | 19,738 |
Recurring basis | Significant Unobservable Inputs (Level 3) | ' | ' |
Assets: | ' | ' |
Securities available-for-sale | 23,401 | 42,221 |
Total securities | 206,935 | 128,972 |
Equity investments, at estimated fair value | 138,059 | 97,746 |
Interests in joint ventures and partnerships | 415,247 | 142,477 |
Derivatives: | ' | ' |
Total derivatives | 15,735 | 10,136 |
Total | 928,776 | 395,472 |
Derivatives: | ' | ' |
Total derivatives | ' | 285 |
Total | ' | 285 |
Recurring basis | Significant Unobservable Inputs (Level 3) | Other securities, at estimated fair value | ' | ' |
Assets: | ' | ' |
Trading securities | 107,530 | 2,909 |
Recurring basis | Significant Unobservable Inputs (Level 3) | Residential mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Trading securities | 76,004 | 83,842 |
Recurring basis | Significant Unobservable Inputs (Level 3) | Foreign exchange options | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 8,941 | 8,562 |
Derivatives: | ' | ' |
Derivative liabilities | ' | 285 |
Recurring basis | Significant Unobservable Inputs (Level 3) | Common stock warrants | ' | ' |
Derivatives: | ' | ' |
Derivative assets | ' | 1,574 |
Recurring basis | Significant Unobservable Inputs (Level 3) | Options | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 6,794 | ' |
Recurring basis | Significant Unobservable Inputs (Level 3) | Portion at estimated fair value | ' | ' |
Assets: | ' | ' |
Corporate loans, estimated fair value | 152,800 | 16,141 |
Recurring basis | Estimated Fair Value | ' | ' |
Assets: | ' | ' |
Securities available-for-sale | 350,341 | 412,293 |
Total securities | 573,312 | 533,520 |
Corporate loans, estimated fair value | 237,480 | 35,879 |
Equity investments, at estimated fair value | 181,212 | 161,621 |
Interests in joint ventures and partnerships | 430,083 | 142,477 |
Derivatives: | ' | ' |
Total derivatives | 30,224 | 23,207 |
Other assets | ' | 319 |
Total | 1,452,311 | 897,023 |
Liabilities: | ' | ' |
Securities sold, not yet purchased | ' | 1,158 |
Derivatives: | ' | ' |
Total derivatives | 81,635 | 117,270 |
Total | 81,635 | 118,428 |
Recurring basis | Estimated Fair Value | Other securities, at estimated fair value | ' | ' |
Assets: | ' | ' |
Trading securities | 146,967 | 37,385 |
Recurring basis | Estimated Fair Value | Residential mortgage-backed securities | ' | ' |
Assets: | ' | ' |
Trading securities | 76,004 | 83,842 |
Recurring basis | Estimated Fair Value | Interest rate swaps | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 3,290 | ' |
Derivatives: | ' | ' |
Derivative liabilities | 45,368 | 90,618 |
Recurring basis | Estimated Fair Value | Commodity swaps | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 5,408 | 8,557 |
Derivatives: | ' | ' |
Derivative liabilities | 3,915 | 1,501 |
Recurring basis | Estimated Fair Value | Credit default swaps-protection sold | ' | ' |
Derivatives: | ' | ' |
Derivative assets | ' | 19 |
Recurring basis | Estimated Fair Value | Credit default swaps-protection purchased | ' | ' |
Derivatives: | ' | ' |
Derivative assets | ' | 136 |
Derivatives: | ' | ' |
Derivative liabilities | 2,019 | 1,276 |
Recurring basis | Estimated Fair Value | Foreign exchange forward contracts | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 4,846 | 2,615 |
Derivatives: | ' | ' |
Derivative liabilities | 30,104 | 23,590 |
Recurring basis | Estimated Fair Value | Foreign exchange options | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 8,941 | 8,562 |
Derivatives: | ' | ' |
Derivative liabilities | ' | 285 |
Recurring basis | Estimated Fair Value | Common stock warrants | ' | ' |
Derivatives: | ' | ' |
Derivative assets | 945 | 3,318 |
Recurring basis | Estimated Fair Value | Total Rate of Return Swaps | ' | ' |
Derivatives: | ' | ' |
Derivative liabilities | 229 | ' |
Recurring basis | Estimated Fair Value | Options | ' | ' |
Derivatives: | ' | ' |
Derivative assets | $6,794 | ' |
FAIR_VALUE_OF_FINANCIAL_INSTRU4
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 3) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' | ' |
Net carrying value | $6,466,720 | $5,947,857 |
Transfers from Level 1 into Level 2 | 0 | 0 |
Transfers from Level 2 into Level 1 | 0 | 0 |
Corporate loans held for sale | ' | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' | ' |
Net carrying value | 279,748 | 128,289 |
Corporate loans held for investment | ' | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' | ' |
Net carrying value | 5,949,492 | 5,783,689 |
Amortized Cost | Corporate loans held for sale | ' | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' | ' |
Loans held for sale | 183,600 | 54,400 |
Non-recurring basis | Significant Other Observable Inputs (Level 2) | ' | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' | ' |
Loans held for sale | 90,485 | 49,521 |
Asset, fair value | 90,485 | 49,521 |
Non-recurring basis | Significant Unobservable Inputs (Level 3) | ' | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' | ' |
Loans held for sale | 5,568 | 24,347 |
Asset, fair value | 5,568 | 24,347 |
Non-recurring basis | Estimated Fair Value | ' | ' |
Assets and liabilities measured at fair value on a recurring and non- recurring basis | ' | ' |
Liabilities measured at fair value on a non-recurring basis | 0 | 0 |
Loans held for sale | 96,053 | 73,868 |
Asset, fair value | $96,053 | $73,868 |
FAIR_VALUE_OF_FINANCIAL_INSTRU5
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 4) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Total gain or losses (for the period) | ' | ' |
Transfers into Level 3 | $0 | ' |
Securities Available-For-Sale: Corporate Debt Securities | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 42,221 | 67,233 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 1,729 | 1,171 |
Included in other comprehensive loss | -1,808 | 12,202 |
Transfers out of Level 3 | ' | -2,721 |
Purchases | 4,613 | ' |
Sales | ' | -24,660 |
Settlements | -23,354 | -11,004 |
Balance at the end of the period | 23,401 | 42,221 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 74 | 506 |
Other Securities, at Estimated Fair Value | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 2,909 | 2,778 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 3,485 | 131 |
Purchases | 103,616 | ' |
Settlements | -2,480 | ' |
Balance at the end of the period | 107,530 | 2,909 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 3,485 | 131 |
Residential Mortgage-Backed Securities | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 83,842 | 86,479 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 7,711 | 6,306 |
Settlements | -15,549 | -8,943 |
Balance at the end of the period | 76,004 | 83,842 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 21,796 | 28,543 |
Corporate Loans, at Estimated Fair Value | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 16,141 | ' |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 8,996 | 429 |
Purchases | 123,409 | 15,056 |
Settlements | 4,254 | 656 |
Balance at the end of the period | 152,800 | 16,141 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 8,700 | 429 |
Equity investments, at estimated fair value | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 97,746 | 150,962 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 10,555 | 1,708 |
Transfers out of Level 3 | ' | -34,230 |
Purchases | 30,113 | 18,060 |
Sales | -198 | -4,365 |
Settlements | -157 | -34,389 |
Balance at the end of the period | 138,059 | 97,746 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 10,854 | 14,579 |
Interests in Joint Ventures and Partnerships | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 142,477 | ' |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 21,926 | 4,391 |
Transfers into Level 3 | ' | 34,230 |
Purchases | 299,039 | 104,728 |
Settlements | -48,195 | -872 |
Balance at the end of the period | 415,247 | 142,477 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 21,926 | 4,391 |
Foreign Exchange Options, Net | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 8,277 | 13,394 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 664 | -5,117 |
Balance at the end of the period | 8,941 | 8,277 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 954 | -5,117 |
Common Stock Warrants | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | 1,574 | 1,266 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 167 | 308 |
Transfers out of Level 3 | -945 | ' |
Settlements | -796 | ' |
Balance at the end of the period | ' | 1,574 |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | ' | 308 |
Options | ' | ' |
Total gain or losses (for the period) | ' | ' |
Included in earnings | 211 | ' |
Purchases | 8,787 | ' |
Settlements | -2,204 | ' |
Balance at the end of the period | 6,794 | ' |
Change in unrealized gains or losses for the period included in earnings for assets held at the end of the reporting period | 211 | ' |
Total Rate of Return Swaps | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | ' | 152 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | ' | 141 |
Settlements | ' | -293 |
Other Assets | ' | ' |
Reconciliation of assets measured on Level 3 basis | ' | ' |
Balance at the beginning of the period | ' | 567 |
Total gain or losses (for the period) | ' | ' |
Included in earnings | ' | 342 |
Sales | ' | -706 |
Settlements | ' | ($203) |
FAIR_VALUE_OF_FINANCIAL_INSTRU6
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 5) (USD $) | 12 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to each valuation technique | 0.00% | 0.00% |
Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to each valuation technique | 100.00% | 100.00% |
Unobservable Inputs | Common stock warrants | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | ' | 1,574 |
Unobservable Inputs | Foreign exchange options | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 8,941 | 8,562 |
Unobservable Inputs | Securities available-for-sale | Corporate debt securities | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 23,401 | 42,221 |
Unobservable Inputs | Other securities, at estimated fair value | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 107,530 | 2,909 |
Unobservable Inputs | Residential mortgage-backed securities | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 76,004 | 83,842 |
Unobservable Inputs | Corporate loans, at estimated fair value | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 152,800 | 16,141 |
Unobservable Inputs | Equity investments, at estimated fair value | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 138,059 | 97,746 |
Unobservable Inputs | Equity investments, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Illiquidity discount | 5.00% | 5.00% |
Unobservable Inputs | Interests in joint ventures and partnerships | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 415,247 | 142,477 |
Unobservable Inputs | Options | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Assets, fair value (in dollars) | 6,794 | ' |
Unobservable Inputs | Yield Analysis | Securities available-for-sale | Corporate debt securities | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 10.00% | 16.00% |
Discount margin | ' | 14.50% |
Net leverage | 12 | 6 |
Illiquidity discount | ' | 3.00% |
EBITDA multiple | 8 | 7 |
Unobservable Inputs | Yield Analysis | Securities available-for-sale | Corporate debt securities | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 6.00% | 11.00% |
Discount margin | ' | 11.00% |
Net leverage | 11 | 3 |
EBITDA multiple | 8 | 6 |
Unobservable Inputs | Yield Analysis | Securities available-for-sale | Corporate debt securities | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 12.00% | 46.00% |
Discount margin | ' | 45.50% |
Net leverage | 12 | 13 |
EBITDA multiple | 9 | 8 |
Unobservable Inputs | Yield Analysis | Other securities, at estimated fair value | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 12.00% | 10.00% |
Net leverage | 1 | ' |
Illiquidity discount | 3.00% | ' |
EBITDA multiple | 8 | ' |
Unobservable Inputs | Yield Analysis | Other securities, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 7.00% | ' |
Net leverage | 1 | ' |
EBITDA multiple | 7 | ' |
Unobservable Inputs | Yield Analysis | Other securities, at estimated fair value | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 17.00% | ' |
Net leverage | 2 | ' |
EBITDA multiple | 8 | ' |
Unobservable Inputs | Yield Analysis | Corporate loans, at estimated fair value | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Illiquidity discount | ' | 15.00% |
Unobservable Inputs | Yield Analysis | Corporate loans, at estimated fair value | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 16.00% | ' |
Net leverage | 7 | 9 |
Illiquidity discount | ' | 15.00% |
EBITDA multiple | 8 | 10 |
Unobservable Inputs | Yield Analysis | Corporate loans, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 14.00% | ' |
Net leverage | 4 | 8 |
EBITDA multiple | 6 | 9 |
Unobservable Inputs | Yield Analysis | Corporate loans, at estimated fair value | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Yield | 23.00% | ' |
Net leverage | 12 | 9 |
EBITDA multiple | 11 | 10 |
Unobservable Inputs | Broker quotes | Securities available-for-sale | Corporate debt securities | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | 105 | 88 |
Unobservable Inputs | Broker quotes | Securities available-for-sale | Corporate debt securities | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | 104 | 69 |
Unobservable Inputs | Broker quotes | Securities available-for-sale | Corporate debt securities | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | 105 | 105 |
Unobservable Inputs | Broker quotes | Other securities, at estimated fair value | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | 102 | ' |
Unobservable Inputs | Broker quotes | Other securities, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | 101 | ' |
Unobservable Inputs | Broker quotes | Other securities, at estimated fair value | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | 102 | ' |
Unobservable Inputs | Broker quotes | Corporate loans, at estimated fair value | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | ' | 39 |
Unobservable Inputs | Broker quotes | Corporate loans, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | ' | 8 |
Unobservable Inputs | Broker quotes | Corporate loans, at estimated fair value | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Offered quotes (in dollars per share) | ' | 40 |
Unobservable Inputs | Discounted cash flow | Common stock warrants | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weighted average cost of capital | ' | 12.00% |
LTM EBITDA exit multiple | ' | 7 |
Unobservable Inputs | Discounted cash flow | Common stock warrants | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weighted average cost of capital | ' | 12.00% |
LTM EBITDA exit multiple | ' | 7 |
Unobservable Inputs | Discounted cash flow | Residential mortgage-backed securities | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Probability of default | 7.00% | 6.00% |
Loss severity | 28.00% | 30.00% |
Constant prepayment rate | 15.00% | 13.00% |
Unobservable Inputs | Discounted cash flow | Residential mortgage-backed securities | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Probability of default | 0.00% | 0.00% |
Loss severity | 16.00% | 18.00% |
Constant prepayment rate | 3.00% | 1.00% |
Unobservable Inputs | Discounted cash flow | Residential mortgage-backed securities | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Probability of default | 21.00% | 21.00% |
Loss severity | 77.00% | 80.00% |
Constant prepayment rate | 35.00% | 35.00% |
Unobservable Inputs | Discounted cash flow | Equity investments, at estimated fair value | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weighted average cost of capital | 11.00% | 10.00% |
LTM EBITDA exit multiple | 10 | 9 |
Unobservable Inputs | Discounted cash flow | Equity investments, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weighted average cost of capital | 8.00% | 6.00% |
LTM EBITDA exit multiple | 4 | 7 |
Unobservable Inputs | Discounted cash flow | Equity investments, at estimated fair value | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weighted average cost of capital | 14.00% | 16.00% |
LTM EBITDA exit multiple | 11 | 12 |
Unobservable Inputs | Discounted cash flow | Interests in joint ventures and partnerships | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Illiquidity discount | ' | 10.00% |
Weighted average cost of capital | 12.00% | 18.00% |
Current capitalization rate | 7.00% | ' |
Unobservable Inputs | Discounted cash flow | Interests in joint ventures and partnerships | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Illiquidity discount | ' | 10.00% |
Weighted average cost of capital | 8.00% | 13.00% |
Current capitalization rate | 6.00% | ' |
Unobservable Inputs | Discounted cash flow | Interests in joint ventures and partnerships | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Illiquidity discount | ' | 15.00% |
Weighted average cost of capital | 24.00% | 30.00% |
Current capitalization rate | 9.00% | ' |
Unobservable Inputs | Discounted cash flow | Options | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weighted average cost of capital | 12.00% | ' |
Unobservable Inputs | Discounted cash flow | Options | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weighted average cost of capital | 12.00% | ' |
LTM EBITDA exit multiple | 10 | ' |
Unobservable Inputs | Discounted cash flow | Options | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA exit multiple | 9 | ' |
Unobservable Inputs | Discounted cash flow | Options | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA exit multiple | 10 | ' |
Unobservable Inputs | Market comparables | Common stock warrants | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Illiquidity discount | ' | 15.00% |
LTM EBITDA multiple | ' | 7 |
Forward EBITDA multiple | ' | 7 |
Unobservable Inputs | Market comparables | Common stock warrants | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Illiquidity discount | ' | 15.00% |
LTM EBITDA multiple | ' | 7 |
Forward EBITDA multiple | ' | 7 |
Unobservable Inputs | Market comparables | Equity investments, at estimated fair value | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA multiple | 12 | 10 |
Forward EBITDA multiple | 12 | 10 |
Unobservable Inputs | Market comparables | Equity investments, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA multiple | 6 | 7 |
Forward EBITDA multiple | 10 | 6 |
Unobservable Inputs | Market comparables | Equity investments, at estimated fair value | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA multiple | 16 | 12 |
Forward EBITDA multiple | 14 | 12 |
Unobservable Inputs | Market comparables | Interests in joint ventures and partnerships | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA multiple | 9 | ' |
Unobservable Inputs | Market comparables | Interests in joint ventures and partnerships | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA multiple | 9 | ' |
Unobservable Inputs | Market comparables | Options | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA multiple | 9 | ' |
Unobservable Inputs | Market comparables | Options | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
LTM EBITDA multiple | 9 | ' |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Common stock warrants | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | ' | 50.00% |
Weight ascribed to discounted cash flows | ' | 50.00% |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Common stock warrants | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | ' | 50.00% |
Weight ascribed to discounted cash flows | ' | 50.00% |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Equity investments, at estimated fair value | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 50.00% | 43.00% |
Weight ascribed to discounted cash flows | 59.00% | 57.00% |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Equity investments, at estimated fair value | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 33.00% | 25.00% |
Weight ascribed to discounted cash flows | 50.00% | 50.00% |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Equity investments, at estimated fair value | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 100.00% | 50.00% |
Weight ascribed to discounted cash flows | 100.00% | 75.00% |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Interests in joint ventures and partnerships | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 50.00% | ' |
Weight ascribed to discounted cash flows | 50.00% | ' |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Interests in joint ventures and partnerships | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 50.00% | ' |
Weight ascribed to discounted cash flows | 50.00% | ' |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Interests in joint ventures and partnerships | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 100.00% | ' |
Weight ascribed to discounted cash flows | 100.00% | ' |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Options | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 50.00% | ' |
Weight ascribed to discounted cash flows | 50.00% | ' |
Unobservable Inputs | Inputs to both market comparables and discounted cash flow | Options | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Weight ascribed to market comparables | 50.00% | ' |
Weight ascribed to discounted cash flows | 50.00% | ' |
Unobservable Inputs | Option pricing model | Foreign exchange options | Weighted Average | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Forward and spot rates, Assets | 1 | 1 |
Unobservable Inputs | Option pricing model | Foreign exchange options | Minimum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Forward and spot rates, Assets | 0 | 0 |
Unobservable Inputs | Option pricing model | Foreign exchange options | Maximum | ' | ' |
Valuation techniques used for assets, measured at fair value | ' | ' |
Forward and spot rates, Assets | 1 | 2 |
FAIR_VALUE_OF_FINANCIAL_INSTRU7
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 6) (Unobservable Inputs, Foreign exchange options, Option pricing model, USD $) | 12 Months Ended |
In Thousands, unless otherwise specified | Dec. 31, 2012 |
Valuation techniques used for liabilities, measured at fair value and categorized within level 3 | ' |
Liabilities, fair value | $285 |
Forward and spot rates, Liabilities | 0.02 |
Weighted Average | ' |
Valuation techniques used for liabilities, measured at fair value and categorized within level 3 | ' |
Forward and spot rates, Liabilities | 0.02 |
SEGMENT_REPORTING_Details
SEGMENT REPORTING (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Reconciliation of operating profit loss from segment to consolidated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | $139,510 | $128,702 | $137,244 | $140,450 | $133,655 | $143,334 | $140,550 | $137,934 | $545,906 | $555,473 | $542,021 |
Total investment costs and expenses | 81,586 | 77,877 | 65,193 | 81,049 | 72,568 | 70,900 | 67,115 | 107,792 | 305,705 | 318,375 | 215,162 |
Total other income (loss) | 33,244 | 6,226 | 37,235 | 74,220 | 37,398 | 73,043 | 16,543 | 78,838 | 150,925 | 205,822 | 93,447 |
Total other expenses | 22,259 | 17,147 | 23,196 | 34,827 | 21,391 | 33,196 | 18,570 | 25,000 | 97,429 | 98,157 | 94,223 |
Income tax expense (benefit) | 33 | 18 | -42 | 458 | 81 | 317 | 203 | -4,068 | 467 | -3,467 | 8,011 |
Net income | 68,876 | 39,886 | 86,132 | 98,336 | 77,013 | 111,964 | 71,205 | 88,048 | 293,230 | 348,230 | 318,072 |
Incentive fees | ' | ' | ' | ' | ' | ' | ' | ' | 22,741 | 37,588 | 34,154 |
Net loss on restructuring and extinguishment of debt | ' | ' | ' | ' | ' | ' | ' | ' | 20,015 | 445 | 1,736 |
Total assets | 8,717,198 | ' | ' | ' | 8,358,879 | ' | ' | ' | 8,717,198 | 8,358,879 | ' |
Reportable segments | Credit | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reconciliation of operating profit loss from segment to consolidated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | ' | ' | ' | ' | ' | ' | ' | ' | 425,209 | 490,861 | 511,392 |
Total investment costs and expenses | ' | ' | ' | ' | ' | ' | ' | ' | 218,600 | 257,269 | 196,415 |
Total other income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 171,006 | 199,723 | 87,235 |
Total other expenses | ' | ' | ' | ' | ' | ' | ' | ' | 60,870 | 48,640 | 46,371 |
Income tax expense (benefit) | ' | ' | ' | ' | ' | ' | ' | ' | 450 | -3,468 | 7,941 |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | 316,295 | 388,143 | 347,900 |
Total assets | 8,020,353 | ' | ' | ' | 7,904,116 | ' | ' | ' | 8,020,353 | 7,904,116 | ' |
Reportable segments | Natural Resources | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reconciliation of operating profit loss from segment to consolidated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | ' | ' | ' | ' | ' | ' | ' | ' | 119,178 | 64,535 | 30,629 |
Total investment costs and expenses | ' | ' | ' | ' | ' | ' | ' | ' | 86,174 | 60,668 | 18,747 |
Total other income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | -13,642 | 1,881 | 7,948 |
Total other expenses | ' | ' | ' | ' | ' | ' | ' | ' | 4,835 | 5,111 | 3,823 |
Income tax expense (benefit) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 70 |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | 14,527 | 637 | 15,937 |
Total assets | 505,029 | ' | ' | ' | 399,225 | ' | ' | ' | 505,029 | 399,225 | ' |
Reportable segments | Other | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reconciliation of operating profit loss from segment to consolidated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | ' | ' | ' | ' | ' | ' | ' | ' | 1,519 | 77 | ' |
Total investment costs and expenses | ' | ' | ' | ' | ' | ' | ' | ' | 931 | 438 | ' |
Total other income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | 13,576 | 4,663 | ' |
Total other expenses | ' | ' | ' | ' | ' | ' | ' | ' | 606 | 217 | ' |
Income tax expense (benefit) | ' | ' | ' | ' | ' | ' | ' | ' | 17 | 1 | ' |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | 13,541 | 4,084 | ' |
Total assets | 190,946 | ' | ' | ' | 53,742 | ' | ' | ' | 190,946 | 53,742 | ' |
Reconciling Items | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Reconciliation of operating profit loss from segment to consolidated | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total other income (loss) | ' | ' | ' | ' | ' | ' | ' | ' | -20,015 | -445 | -1,736 |
Total other expenses | ' | ' | ' | ' | ' | ' | ' | ' | 31,118 | 44,189 | 44,029 |
Net income | ' | ' | ' | ' | ' | ' | ' | ' | -51,133 | -44,634 | -45,765 |
Total assets | $870 | ' | ' | ' | $1,796 | ' | ' | ' | $870 | $1,796 | ' |
SUMMARY_OF_QUARTERLY_INFORMATI2
SUMMARY OF QUARTERLY INFORMATION (UNAUDITED) (Details) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2012 | Sep. 30, 2012 | Jun. 30, 2012 | Mar. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Net investment income: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues | $139,510 | $128,702 | $137,244 | $140,450 | $133,655 | $143,334 | $140,550 | $137,934 | $545,906 | $555,473 | $542,021 |
Total investment costs and expenses | 81,586 | 77,877 | 65,193 | 81,049 | 72,568 | 70,900 | 67,115 | 107,792 | 305,705 | 318,375 | 215,162 |
Total other income | 33,244 | 6,226 | 37,235 | 74,220 | 37,398 | 73,043 | 16,543 | 78,838 | 150,925 | 205,822 | 93,447 |
Total other expenses | 22,259 | 17,147 | 23,196 | 34,827 | 21,391 | 33,196 | 18,570 | 25,000 | 97,429 | 98,157 | 94,223 |
Income before income taxes | 68,909 | 39,904 | 86,090 | 98,794 | 77,094 | 112,281 | 71,408 | 83,980 | 293,697 | 344,763 | 326,083 |
Income tax expense (benefit) | 33 | 18 | -42 | 458 | 81 | 317 | 203 | -4,068 | 467 | -3,467 | 8,011 |
Net income | 68,876 | 39,886 | 86,132 | 98,336 | 77,013 | 111,964 | 71,205 | 88,048 | 293,230 | 348,230 | 318,072 |
Preferred share distributions | 6,891 | 6,891 | 6,891 | 6,738 | ' | ' | ' | ' | 27,411 | ' | ' |
Net income available to common shareholders | $61,985 | $32,995 | $79,241 | $91,598 | ' | ' | ' | ' | $265,819 | $348,230 | $318,072 |
Net income per common share: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic (in dollars per share) | $0.30 | $0.16 | $0.39 | $0.46 | $0.43 | $0.63 | $0.40 | $0.49 | $1.31 | $1.95 | $1.79 |
Diluted (in dollars per share) | $0.30 | $0.16 | $0.39 | $0.46 | $0.40 | $0.61 | $0.39 | $0.48 | $1.31 | $1.87 | $1.75 |
Weighted-average number of common shares outstanding: | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Basic (in shares) | 204,154 | 204,134 | 204,108 | 197,153 | 177,906 | 177,862 | 177,809 | 177,775 | 202,411 | 177,838 | 177,560 |
Diluted (in shares) | 204,154 | 204,134 | 204,108 | 197,153 | 202,371 | 183,431 | 181,642 | 182,247 | 202,411 | 187,423 | 180,897 |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (USD $) | Dec. 24, 2013 | Dec. 31, 2013 | Jan. 30, 2014 | Feb. 25, 2014 |
In Millions, except Per Share data, unless otherwise specified | Series A LLC Preferred Shares | Modular Space Corporation | Subsequent Event | Subsequent Event |
Modular Space Corporation | ||||
Subsequent events | ' | ' | ' | ' |
Total amortized cost of loan portfolio | ' | $313.80 | ' | $26.80 |
Cash distribution declared (in dollars per share) | $0.46 | ' | $0.22 | ' |