Exhibit 99.1
KKR & Co. L.P. Reports Fourth Quarter and Full Year 2015 Results
NEW YORK--(BUSINESS WIRE)--February 11, 2016--KKR & Co. L.P. (NYSE:KKR) today reported GAAP net income for the fourth quarter and full year 2015 of $32.3 million and $488.5 million, respectively.
For the full year 2015, After-tax Economic Net Income and After-tax Economic Net Income per adjusted unit were $1.0 billion and $1.21, respectively, compared to $1.5 billion and $1.84 for the full year 2014. After-tax Cash Earnings and After-tax Cash Earnings per adjusted unit eligible for distribution were $1.5 billion and $1.78, respectively, for the full year 2015 compared to $1.9 billion and $2.47 for the full year 2014. Return on equity and cash return on equity were 10% and 14%, respectively, for 2015.
For the quarter ended December 31, 2015, After-tax Economic Net Income and After-tax Economic Net Income per adjusted unit were $70.5 million and $0.08, respectively, compared to $46.0 million and $0.05 for the quarter ended December 31, 2014. After-tax Cash Earnings and After-tax Cash Earnings per adjusted unit eligible for distribution were $168.6 million and $0.21, respectively, for the quarter ended December 31, 2015 compared to $361.2 million and $0.44 for the quarter ended December 31, 2014.
Annual Highlights
___________________________
“KKR delivered strong investment results in 2015 as our private equity portfolio appreciated 14.2%, outperforming the S&P 500 by over 1,200 basis points despite challenging markets,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “We capitalized on attractive opportunities across our segments in the fourth quarter including record deployment within our Credit and Infrastructure businesses. Our ability to take advantage of volatile market environments stems from the long-dated capital entrusted to us by a growing base of limited partners across our diverse set of strategies. With $20 billion of new capital raised in 2015, we ended the year with record dry powder and over $10 billion of cash and investments on our balance sheet to invest as attractive opportunities arise.”
| Note: Certain financial measures, including ENI, After-tax ENI, After-tax cash earnings, book value, cash and short-term investments and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Exhibits C and D for a reconciliation of such measures to financial results prepared in accordance with GAAP. |
| (1) AUM and FPAUM reflect the inclusion of KKR's pro rata portion of AUM or FPAUM, as applicable, managed by other asset managers in which KKR holds a minority stake. In addition, AUM reflects the inclusion of capital commitments for which KKR is eligible to receive fees or carried interest upon deployment of capital. See "Notes to Reportable Segments" for the definitions of AUM and FPAUM. |
GAAP RESULTS
GAAP net income (loss) for the quarter and year ended December 31, 2015, included net income (loss) attributable to KKR & Co. L.P. of $32.3 million and $488.5 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit of $0.07 and $1.01, respectively, on a diluted basis. For the quarter and year ended December 31, 2014, net income (loss) attributable to KKR & Co. L.P. was $(0.6) million and $477.6 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit was $0.00 and $1.16, respectively, on a diluted basis. The increase in both comparable periods was primarily due to an increase in KKR & Co. L.P.'s ownership percentage in the KKR business, and for the quarter ended December 31, 2015, an increase in income before taxes.
TOTAL REPORTABLE SEGMENT RESULTS
| KEY FINANCIAL METRICS (UNAUDITED) | |||||||||||||||||||||||||||
| (Amounts in millions, except per adjusted unit amounts) | |||||||||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||||
December 31, | December 31, | % | December 31, | December 31, | % | ||||||||||||||||||||||
Cash Earnings | |||||||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | $ | 337 | $ | 244 | $ | 1,142 | $ | 1,099 | |||||||||||||||||||
| Realized Performance Income (Loss) | 215 | 210 | 1,047 | 1,242 | |||||||||||||||||||||||
| Realized Investment Income (Loss) | (48 | ) | (1) | 182 | 547 | (1) | 902 | ||||||||||||||||||||
| Total Cash Segment Revenues | 504 | 636 | (21 | )% | 2,736 | 3,243 | (16 | )% | |||||||||||||||||||
| Less: Total Cash Segment Expenses and Other | 297 | 250 | 1,142 | 1,180 | |||||||||||||||||||||||
| Less: Corporate and Local Income Taxes Paid | 38 | 25 | 141 | 131 | |||||||||||||||||||||||
| After-tax Cash Earnings | $ | 169 | (1) | $ | 361 | (53 | )% |
| $ | 1,453 | (1) | $ | 1,932 | (25 | )% | ||||||||||||
After-tax Cash Earnings Per Adjusted Units | $ | 0.21 | $ | 0.44 | (52 | )% | $ | 1.78 | $ | 2.47 | (28 | )% | |||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||||
Economic Net Income (Loss) | December 31, | December 31, | % | December 31, | December 31, | % | |||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | $ | 337 | $ | 244 | $ | 1,142 | $ | 1,099 | |||||||||||||||||||
| Performance Income (Loss) | 327 | 256 | 1,210 | 1,352 | |||||||||||||||||||||||
| Investment Income (Loss) | (176 | ) | (143 | ) | 154 | 505 | |||||||||||||||||||||
| Total Segment Revenues | 488 | 357 | 37 | % | 2,506 | 2,956 | (15 | )% | |||||||||||||||||||
| Less: Total Segment Expenses and Other | 343 | 270 | 1,208 | 1,229 | |||||||||||||||||||||||
| Economic Net Income (Loss) | 145 | 87 | 67 | % | 1,298 | 1,727 | (25 | )% | |||||||||||||||||||
| Less: Equity-based Compensation | 38 | 37 | 186 | 159 | |||||||||||||||||||||||
| Pre-tax Economic Net Income (Loss) | 107 | 50 | 114 | % | 1,112 | 1,568 | (29 | )% | |||||||||||||||||||
| Less: Provision for Income Tax (Benefit) | 36 | 4 | 84 | 94 | |||||||||||||||||||||||
| After-tax Economic Net Income (Loss) | $ | 71 | $ | 46 | 54 | % | $ | 1,028 | $ | 1,474 | (30 | )% | |||||||||||||||
After-tax Economic Net Income (Loss) Per | $ | 0.08 | $ | 0.05 | 60 | % | $ | 1.21 | $ | 1.84 | (34 | )% | |||||||||||||||
Book Value Per Unit | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||||||
| Book Value Per Outstanding Adjusted Unit | $ | 12.18 | $ | 12.48 | (2 | )% | |||||||||||||||||||||
| Book Value Per Adjusted Unit | $ | 11.78 | $ | 12.07 | (2 | )% | |||||||||||||||||||||
| Year Ended | |||||||||||||||||||||||||||
| December 31, 2015 | December 31, 2014 | ||||||||||||||||||||||||||
| Return on Equity | 10% | 16% | |||||||||||||||||||||||||
| Cash Return on Equity | 14% | 21% | |||||||||||||||||||||||||
(1) Amount includes a $100.0 million realized loss on a segment basis relating to the write off of an investment which had previously been marked at zero on an unrealized basis. Accordingly, this write off had no impact on our Economic Net Income during the fourth quarter and full year of 2015. |
TOTAL REPORTABLE SEGMENTS
Total segment revenues were $487.6 million for the quarter ended December 31, 2015, an increase of $130.1 million, compared to total segment revenues of $357.5 million for the quarter ended December 31, 2014. The increase was principally attributable to (i) a non-recurring increase in monitoring fees in our Private Markets segment, which increased segment revenues by $55.5 million net of associated fee credits, (ii) an increase in transaction fees primarily reflecting larger transaction sizes in both our Private Markets segment and Capital Markets segment and (iii) higher performance income from increased carried interest primarily reflecting more favorable performance in our carry earning Private Markets funds. These increases were partially offset by lower total investment income driven primarily by a lower level of net interest and dividends in the current period.
Total segment revenues were $2,505.9 million for the year ended December 31, 2015, a decrease of $449.7 million, compared to total segment revenues of $2,955.6 million for the year ended December 31, 2014. The decrease was principally attributable to (i) lower total investment income driven primarily by a lower level of realized and unrealized investment income which represented a net loss in the current year and (ii) lower performance income during the year reflecting a lower level of net carried interest in our Public Markets segment as well as a decrease in incentive fees.
ENI was $144.7 million for the quarter ended December 31, 2015, an increase of $58.1 million, compared to ENI of $86.6 million for the quarter ended December 31, 2014. The increase was primarily attributable to higher total segment revenues as described above partially offset by an increase in cash compensation and benefits resulting from the higher levels of management, monitoring and transaction fees.
ENI was $1,298.0 million for the year ended December 31, 2015, a decrease of $429.2 million, compared to ENI of $1,727.2 million for the year ended December 31, 2014. The decrease was primarily attributable to lower total segment revenues as described above.
AUM(1) was $119.5 billion as of December 31, 2015, an increase of $7.1 billion, compared to AUM of $112.4 billion as of September 30, 2015. The increase was primarily attributable to (i) an increase in our pro rata portion of AUM managed by other asset managers in which KKR holds a minority stake, primarily reflecting our long-term strategic partnership with Marshall Wace, (ii) an increase in the fair value of our private equity portfolio (our private equity portfolio appreciated by 4.8% and 14.2% for the quarter and year ended December 31, 2015, respectively) and (iii) new capital raised primarily in Special Situations Fund II, our hedge-fund-of-funds platform and our CLOs. These increases were partially offset by distributions to limited partners of our private equity funds arising from realizations and distributions and redemptions in our alternative credit funds and other separately managed accounts in our Public Markets segment.
FPAUM(1) was $91.7 billion as of December 31, 2015, an increase of $5.8 billion, compared to FPAUM of $85.9 billion as of September 30, 2015. The increase was primarily attributable to (i) an increase in our pro rata portion of FPAUM managed by other asset managers in which KKR holds a minority stake, primarily reflecting our long-term strategic partnership with Marshall Wace, (ii) new capital raised primarily in our hedge-fund-of-funds platform and our CLOs and (iii) capital invested across various investment strategies for which KKR was not eligible to receive a fee until deployment of such capital. These increases were partially offset by distributions to limited partners of our private equity funds arising from realizations and distributions and redemptions in our alternative credit funds and other separately managed accounts in our Public Markets segment.
CAPITAL AND LIQUIDITY
As of December 31, 2015, KKR had $1.3 billion of cash and short-term investments and $3.0 billion of outstanding debt and preferred share obligations on a total reportable segment basis. This includes KFN’s debt obligations of $657.3 million and KFN’s 7.375% Series A LLC preferred shares of $373.8 million, which are non-recourse to KKR beyond the assets of KFN. As of December 31, 2015, KKR had a $1.0 billion revolving credit facility, which was undrawn. In addition, KKR has a $500.0 million revolving credit facility for use in its capital markets business, which was undrawn as of December 31, 2015.
As of December 31, 2015, KKR’s portion of total uncalled commitments to its investment funds was $1.4 billion. See Exhibit B for details.
DISTRIBUTION
A distribution of $0.16 per common unit has been declared, which will be paid on March 8, 2016 to unitholders of record as of the close of business on February 22, 2016. Under KKR's distribution policy, KKR intends to make equal quarterly distributions to holders of common units in an amount of $0.16 per common unit per quarter.
The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR, and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all, that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR or that any particular distribution policy will be maintained.
| (1) AUM and FPAUM reflect the inclusion of KKR's pro rata portion of AUM or FPAUM, as applicable, managed by other asset managers in which KKR holds a minority stake. In addition, AUM reflects the inclusion of capital commitments for which KKR is eligible to receive fees or carried interest upon deployment of capital. See "Notes to Reportable Segments" for the definitions of AUM and FPAUM. |
SUPPLEMENTAL INFORMATION
A slide presentation containing supplemental commentary about the Company's financial results for the fiscal quarter and year ended December 31, 2015 may be accessed through the KKR Investor Relations section of the KKR website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. The presentation will be referenced on the conference call discussed below.
CONFERENCE CALL
A conference call to discuss KKR's financial results will be held on Thursday, February 11, 2016 at 10:00 a.m. ET. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Investor Center section of KKR's website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR's website or by dialing (855) 859-2056 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 38906590, beginning approximately two hours after the broadcast.
From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.cfm. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the “Email Alerts” area of the Investor Center on the website.
2015 SCHEDULE K-1 DISTRIBUTION
The 2015 K-1 tax information is expected to be available by the end of March 2016. For the quickest access to your K-1, we encourage you to register for e-mail notification and electronic K-1 delivery at our dedicated website https://www.taxpackagesupport.com/kkr. Unitholders who do not register for electronic delivery will receive a hard copy K-1 with delivery expected in April 2016.
ABOUT KKR
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE: KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements, including the statements with respect to the strategic partnership with Marshall Wace LLP, the declaration and payment of distributions on common units of KKR and the timing, manner and volume of repurchases of common units pursuant to a repurchase program. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to AUM, FPAUM, ENI, ENI after taxes, after-tax cash earnings, equity invested and syndicated capital, uncalled commitments, cash and short-term investments, net realized investment income and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. All forward looking statements speak only as of the date hereof. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on February 27, 2015, quarterly reports on Form 10-Q for subsequent quarters and other filings with the SEC, which are available at www.sec.gov.
| KKR | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED) | ||||||||||||||||||||
| (Amounts in thousands, except common unit and per common unit amounts) | ||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||
| December 31, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||||
| Revenues | ||||||||||||||||||||
| Fees and Other | $ | 307,923 | $ | 212,944 | $ | 1,043,768 | $ | 1,110,008 | ||||||||||||
| Expenses | ||||||||||||||||||||
| Compensation and Benefits | 306,942 | 253,661 | 1,180,591 | 1,263,852 | ||||||||||||||||
| Occupancy and Related Charges | 17,295 | 15,596 | 65,683 | 62,564 | ||||||||||||||||
| General, Administrative and Other | 200,858 | 363,904 | 624,951 | 869,651 | ||||||||||||||||
| Total Expenses | 525,095 | 633,161 | 1,871,225 | 2,196,067 | ||||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||
| Net Gains (Losses) from Investment Activities | 1,197,879 | 535,943 | 4,672,627 | 4,778,232 | ||||||||||||||||
| Dividend Income | 140,397 | 205,875 | 850,527 | 1,174,501 | ||||||||||||||||
| Interest Income | 320,569 | 271,083 | 1,219,197 | 909,207 | ||||||||||||||||
| Interest Expense | (170,282 | ) | (119,846 | ) | (573,226 | ) | (317,192 | ) | ||||||||||||
| Total Investment Income (Loss) | 1,488,563 | 893,055 | 6,169,125 | 6,544,748 | ||||||||||||||||
| Income (Loss) Before Taxes | 1,271,391 | 472,838 | 5,341,668 | 5,458,689 | ||||||||||||||||
| Income Tax (Benefit) | 27,341 | 6,524 | 66,636 | 63,669 | ||||||||||||||||
| Net Income (Loss) | 1,244,050 | 466,314 | 5,275,032 | 5,395,020 | ||||||||||||||||
| Net Income (Loss) Attributable to | ||||||||||||||||||||
| Redeemable Noncontrolling Interests | 7,371 | (4,707 | ) | (4,512 | ) | (3,341 | ) | |||||||||||||
| Net Income (Loss) Attributable to | ||||||||||||||||||||
| Noncontrolling Interests and Appropriated Capital | 1,204,422 | 471,604 | 4,791,062 | 4,920,750 | ||||||||||||||||
| Net Income (Loss) Attributable to KKR & Co. L.P. | $ | 32,257 | $ | (583 | ) | $ | 488,482 | $ | 477,611 | |||||||||||
| Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit | ||||||||||||||||||||
| Basic | $ | 0.07 | $ | 0.00 | $ | 1.09 | $ | 1.25 | ||||||||||||
| Diluted (a) | $ | 0.07 | $ | 0.00 | $ | 1.01 | $ | 1.16 | ||||||||||||
| Weighted Average Common Units Outstanding | ||||||||||||||||||||
| Basic | 461,374,013 | 431,432,521 | 448,884,185 | 381,092,394 | ||||||||||||||||
| Diluted (a) | 489,704,787 | 458,982,859 | 482,699,194 | 412,049,275 | ||||||||||||||||
| (a) KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit since the exchange of these units would not dilute KKR’s respective ownership interests in the KKR Group Partnerships. |
| KKR | |||||||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | |||||||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | |||||||||||||||||||||||||
| (Amounts in thousands, except unit and per unit amounts) | |||||||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||
| Segment Revenues | |||||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | |||||||||||||||||||||||||
| Management Fees | $ | 195,072 | $ | 181,780 | $ | 178,064 | $ | 732,033 | $ | 726,043 | |||||||||||||||
| Monitoring Fees | 94,128 | 24,964 | 38,738 | 264,643 | 135,160 | ||||||||||||||||||||
| Transaction Fees | 107,320 | 61,437 | 53,292 | 364,994 | 459,677 | ||||||||||||||||||||
| Fee Credits | (59,375 | ) | (23,293 | ) | (25,728 | ) | (219,620 | ) | (222,037 | ) | |||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 337,145 | 244,888 | 244,366 | 1,142,050 | 1,098,843 | ||||||||||||||||||||
| Performance Income | |||||||||||||||||||||||||
| Realized Incentive Fees | 7,209 | 880 | 11,301 | 19,647 | 47,807 | ||||||||||||||||||||
| Realized Carried Interest | 207,211 | 265,291 | 198,597 | 1,027,154 | 1,193,661 | ||||||||||||||||||||
| Unrealized Carried Interest | 112,388 | (428,493 | ) | 46,120 | 163,545 | 110,133 | |||||||||||||||||||
| Total Performance Income | 326,808 | (162,322 | ) | 256,018 | 1,210,346 | 1,351,601 | |||||||||||||||||||
| Investment Income (Loss) | |||||||||||||||||||||||||
| Net Realized Gains (Losses) | (81,343 | ) | 61,439 | 62,219 | 337,023 | 628,403 | |||||||||||||||||||
| Net Unrealized Gains (Losses) | (128,765 | ) | (384,460 | ) | (324,416 | ) | (391,962 | ) | (396,425 | ) | |||||||||||||||
| Total Realized and Unrealized | (210,108 | ) | (323,021 | ) | (262,197 | ) | (54,939 | ) | 231,978 | ||||||||||||||||
| Interest Income and Dividends | 85,907 | 101,318 | 165,856 | 411,536 | 408,084 | ||||||||||||||||||||
| Interest Expense | (52,174 | ) | (52,681 | ) | (46,531 | ) | (203,085 | ) | (134,909 | ) | |||||||||||||||
| Net Interest and Dividends | 33,733 | 48,637 | 119,325 | 208,451 | 273,175 | ||||||||||||||||||||
| Total Investment Income (Loss) | (176,375 | ) | (274,384 | ) | (142,872 | ) | 153,512 | 505,153 | |||||||||||||||||
| Total Segment Revenues | 487,578 | (191,818 | ) | 357,512 | 2,505,908 | 2,955,597 | |||||||||||||||||||
| Segment Expenses | |||||||||||||||||||||||||
| Compensation and Benefits | |||||||||||||||||||||||||
| Cash Compensation and Benefits | 121,036 | 87,680 | 86,035 | 409,992 | 380,581 | ||||||||||||||||||||
| Realized Performance Income Compensation | 85,766 | 106,469 | 83,960 | 418,718 | 496,589 | ||||||||||||||||||||
| Unrealized Performance Income Compensation | 45,351 | (170,621 | ) | 21,508 | 66,927 | 49,459 | |||||||||||||||||||
| Total Compensation and Benefits | 252,153 | 23,528 | 191,503 | 895,637 | 926,629 | ||||||||||||||||||||
| Occupancy and Related Charges | 16,666 | 15,720 | 14,383 | 62,657 | 57,787 | ||||||||||||||||||||
| Other Operating Expenses | 68,978 | 52,081 | 61,685 | 233,618 | 229,069 | ||||||||||||||||||||
| Total Segment Expenses | 337,797 | 91,329 | 267,571 | 1,191,912 | 1,213,485 | ||||||||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 5,100 | 2,902 | 3,349 | 16,007 | 14,946 | ||||||||||||||||||||
| Economic Net Income (Loss) (a) | 144,681 | (286,049 | ) | 86,592 | 1,297,989 | 1,727,166 | |||||||||||||||||||
| Equity-based Compensation | 37,376 | 48,252 | 36,607 | 186,346 | 158,927 | ||||||||||||||||||||
| Pre-tax Economic Net Income (Loss) (b) | 107,305 | (334,301 | ) | 49,985 | 1,111,643 | 1,568,239 | |||||||||||||||||||
| Provision for Income Tax (Benefit) | 36,797 | (19,505 | ) | 3,951 | 83,363 | 94,223 | |||||||||||||||||||
| After-tax Economic Net Income (Loss) (c) | $ | 70,508 | $ | (314,796 | ) | $ | 46,034 | $ | 1,028,280 | $ | 1,474,016 | ||||||||||||||
| After-tax Economic Net Income (Loss) Per Adjusted Unit | $ | 0.08 | $ | (0.37 | ) | $ | 0.05 | $ | 1.21 | $ | 1.84 | ||||||||||||||
| Weighted Average Adjusted Units (Fully Diluted Basis) (a) | 852,446,702 | 851,704,303 | 838,067,975 | 851,099,066 | 800,247,988 | ||||||||||||||||||||
| Assets Under Management | $ | 119,544,300 | $ | 112,414,500 | $ | 107,119,300 | $ | 119,544,300 | $ | 107,119,300 | |||||||||||||||
| Fee Paying Assets Under Management | $ | 91,720,500 | $ | 85,861,800 | $ | 85,857,200 | $ | 91,720,500 | $ | 85,857,200 | |||||||||||||||
| Equity Invested and Syndicated Capital | $ | 2,192,100 | $ | 1,462,900 | $ | 2,343,900 | $ | 8,611,500 | $ | 12,818,100 | |||||||||||||||
| Uncalled Commitments | $ | 29,457,100 | $ | 26,892,300 | $ | 21,113,700 | $ | 29,457,100 | $ | 21,113,700 | |||||||||||||||
| Fee Related Earnings (d) | $ | 180,848 | $ | 127,523 | $ | 126,416 | $ | 610,496 | $ | 631,344 | |||||||||||||||
| (a) | See definitions for Economic Net Income (Loss) and adjusted units under "Notes to Reportable Segments." | |
| (b) | Represents Economic Net Income (Loss) after equity-based compensation. | |
| (c) | Represents Economic Net Income (Loss) after equity-based compensation and income taxes. | |
| (d) | See Exhibit A "Other Information" for the definition and calculation of Fee Related Earnings. | |
| KKR | |||||||||||||||||||||||||
| SCHEDULE OF SEGMENT REVENUES AND OTHER SELECTED FINANCIAL INFORMATION (UNAUDITED) | |||||||||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||||||
| PRIVATE MARKETS | |||||||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||
| Segment Revenues | |||||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | |||||||||||||||||||||||||
| Management Fees | $ | 122,703 | $ | 118,250 | $ | 111,186 | $ | 465,575 | $ | 453,210 | |||||||||||||||
| Monitoring Fees | 94,128 | 24,964 | 38,738 | 264,643 | 135,160 | ||||||||||||||||||||
| Transaction Fees | 40,000 | 17,732 | 8,480 | 144,652 | 214,612 | ||||||||||||||||||||
| Fee Credits | (51,567 | ) | (20,266 | ) | (16,054 | ) | (195,025 | ) | (198,680 | ) | |||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 205,264 | 140,680 | 142,350 | 679,845 | 604,302 | ||||||||||||||||||||
| Performance Income | |||||||||||||||||||||||||
| Realized Incentive Fees | — | — | — | — | — | ||||||||||||||||||||
| Realized Carried Interest | 207,211 | 265,291 | 198,597 | 1,018,201 | 1,159,011 | ||||||||||||||||||||
| Unrealized Carried Interest | 137,438 | (394,126 | ) | 34,070 | 182,628 | 70,058 | |||||||||||||||||||
| Total Performance Income | 344,649 | (128,835 | ) | 232,667 | 1,200,829 | 1,229,069 | |||||||||||||||||||
| Investment Income (Loss) | |||||||||||||||||||||||||
| Net Realized Gains (Losses) | — | — | — | — | — | ||||||||||||||||||||
| Net Unrealized Gains (Losses) | — | — | — | — | — | ||||||||||||||||||||
| Total Realized and Unrealized | — | — | — | — | — | ||||||||||||||||||||
| Interest Income and Dividends | — | — | — | — | — | ||||||||||||||||||||
| Interest Expense | — | — | — | — | — | ||||||||||||||||||||
| Net Interest and Dividends | — | — | — | — | — | ||||||||||||||||||||
| Total Investment Income (Loss) | — | — | — | — | — | ||||||||||||||||||||
| Total Segment Revenues | $ | 549,913 | $ | 11,845 | $ | 375,017 | $ | 1,880,674 | $ | 1,833,371 | |||||||||||||||
| Assets Under Management | $ | 66,028,600 | $ | 66,776,600 | $ | 64,611,300 | $ | 66,028,600 | $ | 64,611,300 | |||||||||||||||
| Fee Paying Assets Under Management | $ | 45,307,400 | $ | 46,399,800 | $ | 47,262,500 | $ | 45,307,400 | $ | 47,262,500 | |||||||||||||||
| Equity Invested | $ | 1,355,300 | $ | 867,000 | $ | 828,000 | $ | 5,527,900 | $ | 7,223,400 | |||||||||||||||
| Uncalled Commitments | $ | 22,766,300 | $ | 21,610,400 | $ | 18,272,400 | $ | 22,766,300 | $ | 18,272,400 | |||||||||||||||
| PUBLIC MARKETS | |||||||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||
| Segment Revenues | |||||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | |||||||||||||||||||||||||
| Management Fees | $ | 72,369 | $ | 63,530 | $ | 66,878 | $ | 266,458 | $ | 272,833 | |||||||||||||||
| Monitoring Fees | — | — | — | — | — | ||||||||||||||||||||
| Transaction Fees | 8,183 | 3,386 | 10,511 | 28,872 | 27,145 | ||||||||||||||||||||
| Fee Credits | (7,808 | ) | (3,027 | ) | (9,674 | ) | (24,595 | ) | (23,357 | ) | |||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 72,744 | 63,889 | 67,715 | 270,735 | 276,621 | ||||||||||||||||||||
| Performance Income | |||||||||||||||||||||||||
| Realized Incentive Fees | 7,209 | 880 | 11,301 | 19,647 | 47,807 | ||||||||||||||||||||
| Realized Carried Interest | — | — | — | 8,953 | 34,650 | ||||||||||||||||||||
| Unrealized Carried Interest | (25,050 | ) | (34,367 | ) | 12,050 | (19,083 | ) | 40,075 | |||||||||||||||||
| Total Performance Income | (17,841 | ) | (33,487 | ) | 23,351 | 9,517 | 122,532 | ||||||||||||||||||
| Investment Income (Loss) | |||||||||||||||||||||||||
| Net Realized Gains (Losses) | — | — | — | — | — | ||||||||||||||||||||
| Net Unrealized Gains (Losses) | — | — | — | — | — | ||||||||||||||||||||
| Total Realized and Unrealized | — | — | — | — | — | ||||||||||||||||||||
| Interest Income and Dividends | — | — | — | — | — | ||||||||||||||||||||
| Interest Expense | — | — | — | — | — | ||||||||||||||||||||
| Net Interest and Dividends | — | — | — | — | — | ||||||||||||||||||||
| Total Investment Income (Loss) | — | — | — | — | — | ||||||||||||||||||||
| Total Segment Revenues | $ | 54,903 | $ | 30,402 | $ | 91,066 | $ | 280,252 | $ | 399,153 | |||||||||||||||
| Assets Under Management | $ | 53,515,700 | $ | 45,637,900 | $ | 42,508,000 | $ | 53,515,700 | $ | 42,508,000 | |||||||||||||||
| Fee Paying Assets Under Management | $ | 46,413,100 | $ | 39,462,000 | $ | 38,594,700 | $ | 46,413,100 | $ | 38,594,700 | |||||||||||||||
| Equity Invested | $ | 661,200 | $ | 583,400 | $ | 1,126,700 | $ | 2,214,700 | $ | 3,027,400 | |||||||||||||||
| Uncalled Commitments | $ | 6,690,800 | $ | 5,281,900 | $ | 2,841,300 | $ | 6,690,800 | $ | 2,841,300 | |||||||||||||||
| Gross Dollars Invested | $ | 1,742,600 | $ | 1,181,400 | $ | 1,545,600 | $ | 5,244,900 | $ | 4,425,600 | |||||||||||||||
| KKR | ||||||||||||||||||||||||
| SCHEDULE OF SEGMENT REVENUES AND OTHER SELECTED FINANCIAL INFORMATION (UNAUDITED) | ||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||
| CAPITAL MARKETS | ||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | ||||||||||||||||||||
| Segment Revenues | ||||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||||||
| Management Fees | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
| Monitoring Fees | — | — | — | — | — | |||||||||||||||||||
| Transaction Fees | 59,137 | 40,319 | 34,301 | 191,470 | 217,920 | |||||||||||||||||||
| Fee Credits | — | — | — | — | — | |||||||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 59,137 | 40,319 | 34,301 | 191,470 | 217,920 | |||||||||||||||||||
| Performance Income | ||||||||||||||||||||||||
| Realized Incentive Fees | — | — | — | — | — | |||||||||||||||||||
| Realized Carried Interest | — | — | — | — | — | |||||||||||||||||||
| Unrealized Carried Interest | — | — | — | — | — | |||||||||||||||||||
| Total Performance Income | — | — | — | — | — | |||||||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||||||
| Net Realized Gains (Losses) | — | — | — | — | — | |||||||||||||||||||
| Net Unrealized Gains (Losses) | — | — | — | — | — | |||||||||||||||||||
| Total Realized and Unrealized | — | — | — | — | — | |||||||||||||||||||
| Interest Income and Dividends | — | — | — | — | — | |||||||||||||||||||
| Interest Expense | — | — | — | — | — | |||||||||||||||||||
| Net Interest and Dividends | — | — | — | — | — | |||||||||||||||||||
| Total Investment Income (Loss) | — | — | — | — | — | |||||||||||||||||||
| Total Segment Revenues | $ | 59,137 | $ | 40,319 | $ | 34,301 | $ | 191,470 | $ | 217,920 | ||||||||||||||
| Syndicated Capital | $ | 175,600 | $ | 12,500 | $ | 389,200 | $ | 868,900 | $ | 2,567,300 | ||||||||||||||
| PRINCIPAL ACTIVITIES | |||||||||||||||||||||||||
| Quarter Ended | Year Ended | ||||||||||||||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | |||||||||||||||||||||
| Segment Revenues | |||||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | |||||||||||||||||||||||||
| Management Fees | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||||
| Monitoring Fees | — | — | — | — | — | ||||||||||||||||||||
| Transaction Fees | — | — | — | — | — | ||||||||||||||||||||
| Fee Credits | — | — | — | — | — | ||||||||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | — | — | — | — | — | ||||||||||||||||||||
| Performance Income | |||||||||||||||||||||||||
| Realized Incentive Fees | — | — | — | — | — | ||||||||||||||||||||
| Realized Carried Interest | — | — | — | — | — | ||||||||||||||||||||
| Unrealized Carried Interest | — | — | — | — | — | ||||||||||||||||||||
| Total Performance Income | — | — | — | — | — | ||||||||||||||||||||
| Investment Income (Loss) | |||||||||||||||||||||||||
| Net Realized Gains (Losses) | (81,343 | ) | 61,439 | 62,219 | 337,023 | 628,403 | |||||||||||||||||||
| Net Unrealized Gains (Losses) | (128,765 | ) | (384,460 | ) | (324,416 | ) | (391,962 | ) | (396,425 | ) | |||||||||||||||
| Total Realized and Unrealized | (210,108 | ) | (323,021 | ) | (262,197 | ) | (54,939 | ) | 231,978 | ||||||||||||||||
| Interest Income and Dividends | 85,907 | 101,318 | 165,856 | 411,536 | 408,084 | ||||||||||||||||||||
| Interest Expense | (52,174 | ) | (52,681 | ) | (46,531 | ) | (203,085 | ) | (134,909 | ) | |||||||||||||||
| Net Interest and Dividends | 33,733 | 48,637 | 119,325 | 208,451 | 273,175 | ||||||||||||||||||||
| Total Investment Income (Loss) | (176,375 | ) | (274,384 | ) | (142,872 | ) | 153,512 | 505,153 | |||||||||||||||||
| Total Segment Revenues | $ | (176,375 | ) | $ | (274,384 | ) | $ | (142,872 | ) | $ | 153,512 | $ | 505,153 | ||||||||||||
| KKR | ||||||||||||||
| BALANCE SHEET | ||||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | ||||||||||||||
| (Amounts in thousands, except per unit amounts) | ||||||||||||||
| As of | As of | |||||||||||||
| December 31, 2015 | December 31, 2014 | |||||||||||||
| Cash and Short-term Investments | $ | 1,287,650 | $ | 1,121,385 | ||||||||||
| Investments | 8,958,089 | (a) | 9,807,606 | |||||||||||
| Unrealized Carry | 1,415,478 | (b) | 1,283,022 | (b) | ||||||||||
| Other Assets | 1,613,139 | 999,654 | ||||||||||||
| Corporate Real Estate | 154,942 | — | ||||||||||||
| Total Assets | $ | 13,429,298 | $ | 13,211,667 | ||||||||||
| Debt Obligations - KKR (ex-KFN) | $ | 2,000,000 | $ | 1,527,000 | ||||||||||
| Debt Obligations - KFN | 657,310 | 657,310 | ||||||||||||
| Preferred Shares - KFN | 373,750 | 373,750 | ||||||||||||
| Other Liabilities | 291,537 | 413,808 | ||||||||||||
| Total Liabilities | 3,322,597 | 2,971,868 | ||||||||||||
| Noncontrolling Interests | 127,472 | 121,574 | ||||||||||||
| Book Value | $ | 9,979,229 | $ | 10,118,225 | ||||||||||
| Book Value Per Outstanding Adjusted Unit | $ | 12.18 | $ | 12.48 | ||||||||||
| Book Value Per Adjusted Unit | $ | 11.78 | $ | 12.07 | ||||||||||
| (a) See schedule of investments that follows on the next page. | ||||||||||||||
| As of | As of | |||||||||||||
(b) Unrealized Carry | December 31, 2015 | December 31, 2014 | ||||||||||||
| Private Markets | $ | 1,340,556 | $ | 1,196,633 | ||||||||||
| Public Markets | 74,922 | 86,389 | ||||||||||||
| Total | $ | 1,415,478 | $ | 1,283,022 | ||||||||||
| KKR | ||||||||||||||
| SCHEDULE OF INVESTMENTS* | ||||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | ||||||||||||||
| (Amounts in thousands, except percentage amounts) | ||||||||||||||
| As of December 31, 2015 | ||||||||||||||
| Investments | Cost | Fair Value | Fair Value as a Percentage of Total Investments | |||||||||||
| Private Equity Co-Investments | $ | 2,250,079 | $ | 3,036,805 | 33.9 | % | ||||||||
| Private Equity Funds | 786,043 | 1,020,953 | 11.4 | % | ||||||||||
| Private Equity Total | 3,036,122 | 4,057,758 | 45.3 | % | ||||||||||
| Energy | 977,213 | 580,680 | 6.5 | % | ||||||||||
| Real Estate | 793,068 | 846,266 | 9.4 | % | ||||||||||
| Infrastructure | 183,347 | 191,181 | 2.1 | % | ||||||||||
| Real Assets Total | 1,953,628 | 1,618,127 | 18.0 | % | ||||||||||
| Special Situations | 894,344 | 788,123 | 8.8 | % | ||||||||||
| Direct Lending | 65,802 | 66,827 | 0.8 | % | ||||||||||
| Mezzanine | 63,559 | 64,090 | 0.7 | % | ||||||||||
| Alternative Credit Total | 1,023,705 | 919,040 | 10.3 | % | ||||||||||
| CLOs (a) | 1,330,450 | 921,509 | 10.3 | % | ||||||||||
| Liquid Credit | 189,280 | 184,825 | 2.1 | % | ||||||||||
| Specialty Finance | 297,756 | 234,467 | 2.6 | % | ||||||||||
| Credit Total | 2,841,191 | 2,259,841 | 25.3 | % | ||||||||||
| Other | 1,090,008 | 1,022,363 | 11.4 | % | ||||||||||
| Total Investments | $ | 8,920,949 | $ | 8,958,089 | 100.0 | % | ||||||||
| As of December 31, 2015 | ||||||||||||||
| Significant Investments: (b) | Cost | Fair Value | Fair Value as a Percentage of Total Investments | |||||||||||
First Data Corporation (NYSE: FDC) | $ | 1,061,332 | $ | 1,266,196 | 14.1 | % | ||||||||
Walgreens Boots Alliance (NASDAQ: WBA) | 222,533 | 748,688 | 8.4 | % | ||||||||||
WMI Holdings Corp. (NASDAQ: WMIH) | 221,127 | 311,270 | 3.5 | % | ||||||||||
Oil & Gas Royalties Investment | 118,640 | 173,800 | 1.9 | % | ||||||||||
HCA Holdings, Inc. (NYSE: HCA) | 29,455 | 169,332 | 1.9 | % | ||||||||||
| Total Significant Investments | 1,653,087 | 2,669,286 | 29.8 | % | ||||||||||
| Other Investments | 7,267,862 | 6,288,803 | 70.2 | % | ||||||||||
| Total Investments | $ | 8,920,949 | $ | 8,958,089 | 100.0 | % | ||||||||
| * Investments is a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority investments in subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds. |
| (a) Includes approximately $104.2 million of CLOs that are not held for investment purposes and are held at cost. |
(b) The significant investments include the top five investments (other than investments expected to be syndicated or transferred in connection with new fundraising) based on their fair market value as of December 31, 2015. The fairvalue figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable. |
| KKR | |||||||||||||||
| ASSETS UNDER MANAGEMENT* (UNAUDITED) | |||||||||||||||
| (Amounts in thousands) | |||||||||||||||
| Private Markets Segment | Public Markets Segment | Total Reportable Segments | |||||||||||||
First Quarter 2015 | |||||||||||||||
| December 31, 2014 - As Reported | $ | 61,505,800 | $ | 37,106,700 | $ | 98,612,500 | |||||||||
| Net AUM of Strategic Partnerships (pro-rata based on ownership interest) | — | 2,810,800 | 2,810,800 | ||||||||||||
| Capital Commitments Excluded from AUM ("Shadow AUM") | 3,105,500 | 2,590,500 | 5,696,000 | ||||||||||||
| December 31, 2014 - As Adjusted | $ | 64,611,300 | $ | 42,508,000 | $ | 107,119,300 | |||||||||
| New Capital Raised | 1,570,500 | 2,324,600 | 3,895,100 | ||||||||||||
| Distributions | (2,967,000 | ) | (1,900,800 | ) | (c) | (4,867,800 | ) | ||||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (238,600 | ) | (238,600 | ) | ||||||||||
| Change in Value | 2,009,500 | (292,800 | ) | 1,716,700 | |||||||||||
| March 31, 2015 | $ | 65,224,300 | $ | 42,400,400 | $ | 107,624,700 | |||||||||
Second Quarter 2015 | |||||||||||||||
| March 31, 2015 | $ | 65,224,300 | $ | 42,400,400 | $ | 107,624,700 | |||||||||
| New Capital Raised | 3,468,900 | 4,374,700 | 7,843,600 | ||||||||||||
| Distributions | (3,447,000 | ) | (1,485,400 | ) | (d) | (4,932,400 | ) | ||||||||
| Change in Value | 3,294,100 | 642,700 | 3,936,800 | ||||||||||||
| June 30, 2015 | $ | 68,540,300 | $ | 45,932,400 | $ | 114,472,700 | |||||||||
Third Quarter 2015 | |||||||||||||||
| June 30, 2015 | $ | 68,540,300 | $ | 45,932,400 | $ | 114,472,700 | |||||||||
| New Capital Raised | 1,583,800 | 2,444,700 | 4,028,500 | ||||||||||||
| Distributions | (2,700,300 | ) | (1,861,300 | ) | (e) | (4,561,600 | ) | ||||||||
| Change in Value | (647,200 | ) | (877,900 | ) | (1,525,100 | ) | |||||||||
| September 30, 2015 | $ | 66,776,600 | $ | 45,637,900 | $ | 112,414,500 | |||||||||
Fourth Quarter 2015 | |||||||||||||||
| September 30, 2015 | $ | 66,776,600 | $ | 45,637,900 | $ | 112,414,500 | |||||||||
| New Capital Raised | 327,000 | 3,782,300 | 4,109,300 | ||||||||||||
| Acquisitions | — | 6,010,800 | (b) | 6,010,800 | |||||||||||
| Distributions | (2,718,200 | ) | (1,713,900 | ) | (f) | (4,432,100 | ) | ||||||||
| Change in Value | 1,643,200 | (201,400 | ) | 1,441,800 | |||||||||||
| December 31, 2015 | $ | 66,028,600 | $ | 53,515,700 | $ | 119,544,300 | |||||||||
Full Year 2015 | |||||||||||||||
| December 31, 2014 - As Adjusted | $ | 64,611,300 | $ | 42,508,000 | $ | 107,119,300 | |||||||||
| New Capital Raised | 6,950,200 | 12,926,300 | 19,876,500 | ||||||||||||
| Acquisitions | — | 6,010,800 | (b) | 6,010,800 | |||||||||||
| Distributions | (11,832,500 | ) | (6,961,400 | ) | (g) | (18,793,900 | ) | ||||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (238,600 | ) | (238,600 | ) | ||||||||||
| Change in Value | 6,299,600 | (729,400 | ) | 5,570,200 | |||||||||||
| December 31, 2015 | $ | 66,028,600 | $ | 53,515,700 | $ | 119,544,300 | |||||||||
* For the periods reported, AUM reflects the inclusion of capital commitments for which we are eligible to receive fees or carried interest upon deployment of capital and the inclusion of KKR's pro rata portion of AUM managed by other asset managers in which KKR holds a minority stake. |
|
| (a) Represents the impact of certain funds entering their post-investment period. |
| (b) Represents KKR's pro rata portion of AUM managed by Marshall Wace. |
| (c) Includes $705.4 million of redemptions by fund investors. |
| (d) Includes $563.8 million of redemptions by fund investors. |
| (e) Includes $696.3 million of redemptions by fund investors. |
| (f) Includes $908.0 million of redemptions by fund investors. |
| (g) Includes $2,873.5 million of redemptions by fund investors. |
| KKR | |||||||||||||||
| FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED) | |||||||||||||||
| (Amounts in thousands) | |||||||||||||||
| Private Markets Segment | Public Markets Segment | Total Reportable Segments | |||||||||||||
First Quarter 2015 | |||||||||||||||
| December 31, 2014 - As Reported | $ | 47,262,500 | $ | 35,783,900 | $ | 83,046,400 | |||||||||
| Net FPAUM of Strategic Partnerships (pro-rata based on ownership interest) | — | 2,810,800 | 2,810,800 | ||||||||||||
| December 31, 2014 - As Adjusted | $ | 47,262,500 | $ | 38,594,700 | $ | 85,857,200 | |||||||||
| New Capital Raised | 1,320,500 | 2,277,200 | 3,597,700 | ||||||||||||
| Distributions | (961,100 | ) | (1,638,600 | ) | (c) | (2,599,700 | ) | ||||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (325,200 | ) | (325,200 | ) | ||||||||||
| Change in Value | (460,000 | ) | (357,500 | ) | (817,500 | ) | |||||||||
| March 31, 2015 | $ | 47,161,900 | $ | 38,550,600 | $ | 85,712,500 | |||||||||
Second Quarter 2015 | |||||||||||||||
| March 31, 2015 | $ | 47,161,900 | $ | 38,550,600 | $ | 85,712,500 | |||||||||
| New Capital Raised | 1,310,500 | 2,249,200 | 3,559,700 | ||||||||||||
| Distributions | (1,723,600 | ) | (1,293,900 | ) | (d) | (3,017,500 | ) | ||||||||
| Change in Value | 196,900 | 429,300 | 626,200 | ||||||||||||
| June 30, 2015 | $ | 46,945,700 | $ | 39,935,200 | $ | 86,880,900 | |||||||||
Third Quarter 2015 | |||||||||||||||
| June 30, 2015 | $ | 46,945,700 | $ | 39,935,200 | $ | 86,880,900 | |||||||||
| New Capital Raised | 1,042,700 | 1,944,500 | 2,987,200 | ||||||||||||
| Distributions | (1,648,300 | ) | (1,776,100 | ) | (e) | (3,424,400 | ) | ||||||||
| Change in Value | 59,700 | (641,600 | ) | (581,900 | ) | ||||||||||
| September 30, 2015 | $ | 46,399,800 | $ | 39,462,000 | $ | 85,861,800 | |||||||||
Fourth Quarter 2015 | |||||||||||||||
| September 30, 2015 | $ | 46,399,800 | $ | 39,462,000 | $ | 85,861,800 | |||||||||
| New Capital Raised | 222,400 | 2,741,500 | 2,963,900 | ||||||||||||
| Acquisitions | — | 6,010,800 | (b) | 6,010,800 | |||||||||||
| Distributions | (1,212,200 | ) | (1,620,700 | ) | (f) | (2,832,900 | ) | ||||||||
| Change in Value | (102,600 | ) | (180,500 | ) | (283,100 | ) | |||||||||
| December 31, 2015 | $ | 45,307,400 | $ | 46,413,100 | $ | 91,720,500 | |||||||||
Full Year 2015 | |||||||||||||||
| December 31, 2014 - As Adjusted | $ | 47,262,500 | $ | 38,594,700 | $ | 85,857,200 | |||||||||
| New Capital Raised | 3,896,100 | 9,212,400 | 13,108,500 | ||||||||||||
| Acquisitions | — | 6,010,800 | (b) | 6,010,800 | |||||||||||
| Distributions | (5,545,200 | ) | (6,329,300 | ) | (g) | (11,874,500 | ) | ||||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (325,200 | ) | (325,200 | ) | ||||||||||
| Change in Value | (306,000 | ) | (750,300 | ) | (1,056,300 | ) | |||||||||
| December 31, 2015 | $ | 45,307,400 | $ | 46,413,100 | $ | 91,720,500 | |||||||||
| * For the periods reported, FPAUM reflects the inclusion of KKR's pro rata portion of FPAUM managed by other asset managers in which KKR holds a minority stake. |
| (a) Represents the impact of certain funds entering their post-investment period. |
| (b) Represents KKR's pro rata portion of FPAUM managed by Marshall Wace. |
| (c) Includes $705.4 million of redemptions by fund investors. |
| (d) Includes $563.8 million of redemptions by fund investors. |
| (e) Includes $696.3 million of redemptions by fund investors. |
| (f) Includes $908.0 million of redemptions by fund investors. |
| (g) Includes $2,873.5 million of redemptions by fund investors. |
| KKR | |||||||||||||||||||||||||||||
| INVESTMENT VEHICLE SUMMARY (a) (UNAUDITED) | |||||||||||||||||||||||||||||
| As of December 31, 2015 | |||||||||||||||||||||||||||||
| (Amounts in millions, except percentages) | |||||||||||||||||||||||||||||
| Investment Period | Amount | ||||||||||||||||||||||||||||
| Commencement Date | End Date | Commitment | Uncalled Commitments | Percentage Committed by General Partner | Invested | Realized | Remaining Cost | Remaining Fair Value | |||||||||||||||||||||
Private Markets | |||||||||||||||||||||||||||||
| Private Equity Funds | |||||||||||||||||||||||||||||
| European Fund IV (b) | 12/2014 | 12/2020 | $ | 3,468.0 | $ | 3,307.1 | 5.7% | $ | 160.9 | $ | — | $ | 160.9 | $ | 185.7 | ||||||||||||||
| Asian Fund II (b) | 4/2013 | 4/2019 | 5,825.0 | 3,979.3 | 1.3% | 2,599.7 | 753.9 | 1,845.8 | 3,163.6 | ||||||||||||||||||||
| North America Fund XI (b) | 9/2012 | 9/2018 | 8,718.4 | 3,704.0 | 2.9% | 5,932.1 | 1,733.8 | 4,635.4 | 6,983.8 | ||||||||||||||||||||
| China Growth Fund | 11/2010 | 11/2016 | 1,010.0 | 307.6 | 1.0% | 702.4 | 283.4 | 544.4 | 713.4 | ||||||||||||||||||||
| E2 Investors (Annex Fund) | 8/2009 | 11/2013 | 195.8 | — | 4.9% | 195.8 | 195.7 | 18.1 | 10.3 | ||||||||||||||||||||
| European Fund III | 3/2008 | 3/2014 | 6,121.8 | 812.1 | 4.6% | 5,309.7 | 4,447.2 | 3,224.2 | 4,240.2 | ||||||||||||||||||||
| Asian Fund | 7/2007 | 4/2013 | 3,983.3 | 129.5 | 2.5% | 3,853.8 | 5,397.4 | 1,918.7 | 2,534.0 | ||||||||||||||||||||
| 2006 Fund | 9/2006 | 9/2012 | 17,642.2 | 525.6 | 2.1% | 17,116.6 | 18,411.5 | 7,703.3 | 13,028.5 | ||||||||||||||||||||
| European Fund II | 11/2005 | 10/2008 | 5,750.8 | — | 2.1% | 5,750.8 | 6,611.1 | 825.0 | 2,003.2 | ||||||||||||||||||||
| Millennium Fund | 12/2002 | 12/2008 | 6,000.0 | — | 2.5% | 6,000.0 | 12,517.4 | 714.0 | 1,521.1 | ||||||||||||||||||||
| European Fund | 12/1999 | 12/2005 | 3,085.4 | — | 3.2% | 3,085.4 | 8,748.0 | — | 17.1 | ||||||||||||||||||||
| Total Private Equity Funds | 61,800.7 | 12,765.2 | 50,707.2 | 59,099.4 | 21,589.8 | 34,400.9 | |||||||||||||||||||||||
| Co-Investment Vehicles (b) | Various | Various | 5,774.0 | 2,709.6 | Various | 3,137.4 | 2,511.0 | 2,118.0 | 2,865.8 | ||||||||||||||||||||
| Total Private Equity | 67,574.7 | 15,474.8 | 53,844.6 | 61,610.4 | 23,707.8 | 37,266.7 | |||||||||||||||||||||||
| Real Assets | |||||||||||||||||||||||||||||
| Energy Income and Growth Fund | 9/2013 | 9/2018 | 1,974.2 | 1,142.6 | 12.8% | 831.6 | 143.9 | 757.1 | 544.3 | ||||||||||||||||||||
| Natural Resources Fund | Various | Various | 887.4 | 2.9 | Various | 884.5 | 96.6 | 809.9 | 200.1 | ||||||||||||||||||||
| Global Energy Opportunities (b) | Various | Various | 1,026.4 | 808.7 | Various | 252.7 | 55.0 | 144.8 | 124.7 | ||||||||||||||||||||
| Global Infrastructure Investors (b) | 9/2011 | 10/2014 | 1,039.9 | 100.9 | 4.8% | 967.0 | 216.4 | 847.8 | 972.7 | ||||||||||||||||||||
| Global Infrastructure Investors II (b) | 10/2014 | 10/2020 | 3,028.3 | 2,685.7 | 4.1% | 346.5 | 8.9 | 338.9 | 354.0 | ||||||||||||||||||||
| Infrastructure Co-Investments | Various | Various | 1,125.0 | — | Various | 1,125.0 | 377.9 | 1,124.4 | 1,520.1 | ||||||||||||||||||||
| Real Estate Partners Americas (b) | 5/2013 | 12/2016 | 1,229.1 | 598.2 | 16.3% | 777.5 | 314.5 | 630.5 | 740.7 | ||||||||||||||||||||
| Real Estate Partners Europe (b) | 9/2015 | (d) | 591.3 | 591.3 | 10.9% | — | — | — | — | ||||||||||||||||||||
| Real Assets | 10,901.6 | 5,930.3 | 5,184.8 | 1,213.2 | 4,653.4 | 4,456.6 | |||||||||||||||||||||||
| Unallocated Commitments | 1,361.2 | 1,361.2 | Various | — | — | — | — | ||||||||||||||||||||||
| Private Markets Total | 79,837.5 | 22,766.3 | 59,029.4 | 62,823.6 | 28,361.2 | 41,723.3 | |||||||||||||||||||||||
Public Markets | |||||||||||||||||||||||||||||
| Special Situations Fund | 12/2012 | 1/2016 | 2,257.6 | 128.0 | 11.6% | 2,129.6 | 257.6 | 2,129.6 | 2,205.6 | ||||||||||||||||||||
| Special Situations Fund II | 12/2014 | (c) | 2,675.5 | 2,083.4 | 9.4% | 592.1 | — | 592.1 | 452.4 | ||||||||||||||||||||
| Mezzanine Fund | 3/2010 | 3/2015 | 1,022.8 | 150.6 | 4.4% | 872.2 | 541.0 | 618.5 | 634.3 | ||||||||||||||||||||
| Lending Partners | 12/2011 | 12/2014 | 460.2 | 90.5 | 15.2% | 369.7 | 181.5 | 325.3 | 303.3 | ||||||||||||||||||||
| Lending Partners II | 6/2014 | 6/2017 | 1,335.9 | 889.6 | 3.7% | 446.3 | 26.4 | 446.3 | 475.7 | ||||||||||||||||||||
| Lending Partners Europe | 3/2015 | 3/2018 | 780.1 | 763.6 | 5.2% | 16.5 | — | 16.5 | 24.0 | ||||||||||||||||||||
| Other Alternative Credit Vehicles | Various | Various | 5,157.2 | 2,585.1 | Various | 2,572.1 | 1,496.5 | 1,706.7 | 1,925.9 | ||||||||||||||||||||
| Public Markets Total | 13,689.3 | 6,690.8 | 6,998.5 | 2,503.0 | 5,835.0 | 6,021.2 | |||||||||||||||||||||||
| Grand Total | $ | 93,526.8 | $ | 29,457.1 | $ | 66,027.9 | $ | 65,326.6 | $ | 34,196.2 | $ | 47,744.5 | |||||||||||||||||
_____________________________________________________________________________________________________________________
| (a) | Reflects investment vehicles for which KKR has the ability to earn carried interest. | |
| (b) | The “Invested” and “Realized” columns include the amounts of any realized investments that restored the unused capital commitments of the fund investors. | |
| (c) | Three years from final close. | |
| (d) | Four years from final close. | |
Notes to Reportable Segments (Unaudited)
The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR’s businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.
Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. (including equity awards issued under the Equity Incentive Plan), KKR Holdings and other holders of securities exchangeable into common units of KKR & Co. L.P. and represent the fully diluted unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total equity ownership of KKR as if all outstanding KKR Holdings units, equity awards issued under the Equity Incentive Plan and other exchangeable securities had been exchanged for common units of KKR & Co. L.P.
After-tax cash earnings is used by management as a measure of the cash earnings of KKR. KKR believes this measure, which was formerly referred to as total distributable earnings, is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses). After-tax cash earnings excludes certain realized investment losses to the extent unrealized losses on these investments were recognized prior to the combination with KPE on October 1, 2009.
Assets under management ("AUM") represent the assets managed by KKR or by its strategic partners from which KKR is entitled to receive fees or a carried interest (either currently or upon deployment of capital) and general partner capital. We believe this measure is useful to unitholders as it provides additional insight into KKR's capital raising activities and the overall activity in its investment funds and strategic partnerships. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR's investment funds; (ii) uncalled capital commitments from these funds, including uncalled capital commitments from which KKR is currently not earning management fees or carried interest; (iii) the fair value of investments in KKR's co-investment vehicles; (iv) the par value of outstanding CLOs (excluding CLOs wholly-owned by KKR); (vi) KKR's pro-rata portion of the AUM managed by strategic partnerships in which KKR holds a minority ownership interest and (vi) the fair value of other assets managed by KKR. The pro-rata portion of the AUM managed by strategic partnerships is calculated based on KKR’s percentage ownership interest in such entities multiplied by such entity’s respective AUM. KKR's definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.
Book value is a measure of the net assets of KKR’s reportable segments and is used by management primarily in assessing the unrealized value of KKR’s investment portfolio, including carried interest, as well as KKR’s overall liquidity position. We believe this measure is useful to unitholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders. Book value differs from KKR & Co. L.P. partners’ capital on a GAAP basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings.
Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR’s liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR’s available liquidity. Cash and short-term investments differ from cash and cash equivalents on a GAAP basis as a result of the inclusion of liquid short-term investments in cash and short-term investments.
Cash return on equity measures the amount of cash income generated as a percentage of capital invested in KKR’s business. Cash return on equity is calculated by dividing Cash Earnings on a trailing twelve-month basis by the average book value during the period.
Economic net income (loss) (“ENI”) is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR’s businesses inclusive of carried interest and related carry pool allocations and investment income. ENI is comprised of total segment revenues less total segment expenses and certain economic interests in KKR’s segments held by third parties. ENI differs from net income (loss) on a GAAP basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the Equity Incentive Plan and other securities that are exchangeable for common units of KKR & Co. L.P.; (v) the exclusion of certain non-recurring items; (vi) the exclusion of investment income (loss) relating to noncontrolling interests; and (vii) the exclusion of income taxes.
Equity invested is the aggregate amount of equity capital that has been invested by KKR’s investment funds and carry-yielding co-investment vehicles and is used as a measure of investment activity for KKR and its business segments during a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investments among its investment funds and carry-yielding co-investment vehicles and replaces committed dollars invested. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR’s investment funds, including investments made using investment financing arrangements.
Investments is a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority investments in subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds.
Fee paying AUM ("FPAUM") represents only those assets under management of KKR or its strategic partners from which KKR receives management fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR's fees and differs from AUM in the following respects: (i) assets and commitments from which KKR does not receive a fee are excluded (i.e., assets and commitments with respect to which it receives only carried interest or is otherwise not currently receiving a fee) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Gross dollars invested is the aggregate amount of capital that has been invested by all of KKR’s Public Markets investment vehicles in our private credit non-liquid strategies and is used as a measure of investment activity for a portion of KKR’s Public Markets segment in a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of capital across private credit non-liquid strategies for all the investment vehicles in the Public Markets segment. Such amounts include capital invested by fund investors and co-investors with respect to which KKR’s Public Markets business is entitled to a fee or carried interest.
Return on equity measures the amount of net income generated as a percentage of capital invested in KKR’s business. Return on equity is calculated by dividing After-tax Economic Net Income (Loss) on a trailing twelve-month basis by the average book value during the period.
Syndicated capital is generally the aggregate amount of capital in transactions originated by KKR and its investment funds and carry-yielding co-investment vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment funds and carry-yielding co-investment vehicles, which is instead reported in equity invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds. Syndicated capital is used as a measure of investment activity for KKR and its business segments during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR's Capital Markets segment and across its investment platform.
Uncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to unitholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements.
| KKR | ||||||||||||||||||||||||
EXHIBIT A | ||||||||||||||||||||||||
| OTHER FINANCIAL INFORMATION (UNAUDITED) | ||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||
| Quarter Ended | Year Ended | |||||||||||||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | December 31, 2015 | December 31, 2014 | ||||||||||||||||||||
Fee Related Earnings | ||||||||||||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | $ | 337,145 | $ | 244,888 | $ | 244,366 | $ | 1,142,050 | $ | 1,098,843 | ||||||||||||||
| Less: Cash Compensation and Benefits | 121,036 | 87,680 | 86,035 | 409,992 | 380,581 | |||||||||||||||||||
| Less: Occupancy and Related Charges | 16,666 | 15,720 | 14,383 | 62,657 | 57,787 | |||||||||||||||||||
| Less: Other Operating expenses | 68,978 | 52,081 | 61,685 | 233,618 | 229,069 | |||||||||||||||||||
| Plus: Expenses of Principal Activities Segment | 50,383 | 38,116 | 44,153 | 174,713 | 199,938 | |||||||||||||||||||
| Fee Related Earnings (a) | 180,848 | 127,523 | 126,416 | 610,496 | 631,344 | |||||||||||||||||||
| Plus: Net Interest and Dividends | 33,733 | 48,637 | 119,325 | 208,451 | 273,175 | |||||||||||||||||||
| Plus: Depreciation and Amortization | 3,775 | 3,745 | 3,830 | 15,319 | 15,782 | |||||||||||||||||||
| Plus: Core Interest Expense | 29,516 | 30,429 | 27,050 | 116,027 | 88,002 | |||||||||||||||||||
| Less: Expenses of Principal Activities Segment | 50,383 | 38,116 | 44,153 | 174,713 | 199,938 | |||||||||||||||||||
| Fee and Yield EBITDA (b) | 197,489 | 172,218 | 232,468 | 775,580 | 808,365 | |||||||||||||||||||
| Plus: Realized Performance Income, net | 128,654 | 159,702 | 125,938 | 628,083 | 744,879 | |||||||||||||||||||
| Plus: Net Realized Gains (Losses) | (81,343 | ) | 61,439 | 62,219 | 337,023 | 628,403 | ||||||||||||||||||
| Total EBITDA | $ | 244,800 | $ | 393,359 | $ | 420,625 | $ | 1,740,686 | $ | 2,181,647 | ||||||||||||||
Core Interest Expense | ||||||||||||||||||||||||
| GAAP Interest Expense | $ | 170,282 | $ | 151,554 | $ | 119,846 | $ | 573,226 | $ | 317,192 | ||||||||||||||
Less: Interest expense related to debt obligations from investment financing arrangements | 118,108 | 98,873 | 73,315 | 370,141 | 182,283 | |||||||||||||||||||
| Segment Interest Expense | 52,174 | 52,681 | 46,531 | 203,085 | 134,909 | |||||||||||||||||||
| Less: Interest Expense related to debt obligations from KFN and other | 22,658 | 22,252 | 19,481 | 87,058 | 46,907 | |||||||||||||||||||
| Core Interest Expense (c) | $ | 29,516 | $ | 30,429 | $ | 27,050 | $ | 116,027 | $ | 88,002 | ||||||||||||||
________________________________________________________________________________________________________________________________________________________
| (a) | Fee related earnings (“FRE”) is a measure of the operating earnings of KKR and its business segments before performance income, related performance income compensation and investment income. KKR believes this measure is useful to unitholders as it provides additional insight into the operating profitability of KKR's fee generating management companies and capital markets businesses. | |
| (b) | Fee and Yield EBITDA is used by management as another measure of the cash earnings of KKR and its business segments investment income. We believe this measure is also useful to unitholders as it provides insight into the amount of KKR’s cash earnings before the impact of interest expense, significant portions of which tend to be more recurring than realized carried interest and realized investment income from quarter to quarter. | |
| (c) | Core interest expense is used by management as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s investment funds, investment vehicles and principal investments and also excludes interest expense incurred by KFN. The financing arrangements excluded from core interest expense are not direct obligations of the general partners of KKR’s private equity funds or its management companies, and in the case of debt obligations of KFN are non-recourse to KKR beyond the assets of KFN. KKR believes this measure is useful to unitholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR’s investment funds, other noncontrolling interest holders and KFN. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations other than the debt obligations of KFN. | |
| KKR | |||
EXHIBIT B | |||
| KKR'S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS (UNAUDITED) | |||
| (Amounts in thousands) | |||
| Uncalled Commitments | |||
Private Markets | |||
| European Fund IV | $ | 184,700 | |
| Energy Income and Growth Fund | 147,100 | ||
| Global Infrastructure Investors II | 110,900 | ||
| North America Fund XI | 100,500 | ||
| Real Estate Partners Americas | 97,300 | ||
| European Fund III | 66,300 | ||
| Real Estate Partners Europe | 64,700 | ||
| Asian Fund II | 50,900 | ||
| 2006 Fund | 22,700 | ||
| Co-Investment Vehicles | 69,600 | ||
| Other Private Markets Funds | 10,600 | ||
| Total Private Markets Commitments | 925,300 | ||
Public Markets | |||
| Special Situations Fund | 14,900 | ||
| Special Situations Fund II | 195,100 | ||
| Mezzanine Fund | 6,500 | ||
| Lending Partners | 13,900 | ||
| Lending Partners II | 33,300 | ||
| Lending Partners Europe | 39,600 | ||
| Other Alternative Credit Vehicles | 125,200 | ||
| Total Public Markets Commitments | 428,500 | ||
| Total Uncalled Commitments | $ | 1,353,800 | |
| KKR | ||||||||||||
EXHIBIT C | ||||||||||||
| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT - BASIC (GAAP BASIS) | ||||||||||||
| TO AFTER TAX ENI PER ADJUSTED UNIT (UNAUDITED) | ||||||||||||
| (Amounts in thousands, except common unit and per common unit amounts) | ||||||||||||
| Quarter Ended | ||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | ||||||||||
Net income (loss) attributable to KKR & Co. L.P. per common unit | $ | 0.07 | $ | (0.42 | ) | $ | 0.00 | |||||
| Weighted Average Common Units Outstanding - Basic | 461,374,013 | 452,165,697 | 431,432,521 | |||||||||
| Net income (loss) attributable to KKR & Co. L.P. | 32,257 | (190,588 | ) | (583 | ) | |||||||
| Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. | 35,060 | (166,078 | ) | (3,365 | ) | |||||||
| Plus: Non-cash equity-based charges | 47,730 | 67,821 | 55,968 | |||||||||
| Plus: Amortization of intangibles and other, net | 2,293 | 10,186 | 28,048 | |||||||||
| Plus: Income tax (benefit) | 27,341 | (7,390 | ) | 6,524 | ||||||||
| Economic Net Income (Loss) | 144,681 | (286,049 | ) | 86,592 | ||||||||
Less: Equity-based compensation associated with the KKR & Co. L.P. | 37,376 | 48,252 | 36,607 | |||||||||
| Pre-tax Economic Net Income (Loss) | 107,305 | (334,301 | ) | 49,985 | ||||||||
| Less: Provision for income tax (benefit) | 36,797 | (19,505 | ) | 3,951 | ||||||||
| After-tax Economic Net Income (Loss) | 70,508 | (314,796 | ) | 46,034 | ||||||||
| Weighted Average Adjusted Units | 852,446,702 | 851,704,303 | 838,067,975 | |||||||||
| After-tax Economic Net Income (Loss) Per Adjusted Unit | $ | 0.08 | $ | (0.37 | ) | $ | 0.05 | |||||
| Year Ended | ||||||||||||
| December 31, 2015 | December 31, 2014 | |||||||||||
Net income (loss) attributable to KKR & Co. L.P. per common unit | $ | 1.09 | $ | 1.25 | ||||||||
| Weighted Average Common Units Outstanding - Basic | 448,884,185 | 381,092,394 | ||||||||||
| Net income (loss) attributable to KKR & Co. L.P. | 488,482 | 477,611 | ||||||||||
Plus: Net income (loss) attributable to noncontrolling | 433,693 | 585,135 | ||||||||||
| Plus: Non-cash equity-based charges | 261,579 | 310,403 | ||||||||||
| Plus: Amortization of intangibles and other, net | 47,599 | 290,348 | ||||||||||
| Plus: Income tax (benefit) | 66,636 | 63,669 | ||||||||||
| Economic Net Income (Loss) | 1,297,989 | 1,727,166 | ||||||||||
Less: Equity-based compensation associated with the KKR & Co. L.P. | 186,346 | 158,927 | ||||||||||
| Pre-tax Economic Net Income (Loss) | 1,111,643 | 1,568,239 | ||||||||||
| Less: Provision for income tax (benefit) | 83,363 | 94,223 | ||||||||||
| After-tax Economic Net Income (Loss) | 1,028,280 | 1,474,016 | ||||||||||
| Weighted Average Adjusted Units | 851,099,066 | 800,247,988 | ||||||||||
| After-tax Economic Net Income (Loss) Per Adjusted Unit | $ | 1.21 | $ | 1.84 | ||||||||
| KKR | ||||||||||||
EXHIBIT C (CONTINUED) | ||||||||||||
| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS) | ||||||||||||
TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS, FEE AND YIELD EBITDA, AFTER TAX CASH EARNINGS AND | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| Quarter Ended | ||||||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | ||||||||||
| Net income (loss) attributable to KKR & Co. L.P. | $ | 32,257 | $ | (190,588 | ) | $ | (583 | ) | ||||
| Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. | 35,060 | (166,078 | ) | (3,365 | ) | |||||||
| Plus: Non-cash equity-based charges | 47,730 | 67,821 | 55,968 | |||||||||
| Plus: Amortization of intangibles and other, net | 2,293 | 10,186 | 28,048 | |||||||||
| Plus: Income tax (benefit) | 27,341 | (7,390 | ) | 6,524 | ||||||||
| Economic Net Income (Loss) | 144,681 | (286,049 | ) | 86,592 | ||||||||
| Plus: Income attributable to segment noncontrolling interests | 5,100 | 2,902 | 3,349 | |||||||||
| Less: Total investment income (loss) | (176,375 | ) | (274,384 | ) | (142,872 | ) | ||||||
| Less: Net performance income (loss) | 195,691 | (98,170 | ) | 150,550 | ||||||||
| Plus: Expenses of Principal Activities Segment | 50,383 | 38,116 | 44,153 | |||||||||
| Fee Related Earnings | 180,848 | 127,523 | 126,416 | |||||||||
| Plus: Net interest and dividends | 33,733 | 48,637 | 119,325 | |||||||||
| Plus: Depreciation and amortization | 3,775 | 3,745 | 3,830 | |||||||||
| Plus: Core interest expense | 29,516 | 30,429 | 27,050 | |||||||||
| Less: Expenses of Principal Activities Segment | 50,383 | 38,116 | 44,153 | |||||||||
| Fee and Yield EBITDA | 197,489 | 172,218 | 232,468 | |||||||||
| Less: Depreciation and amortization | 3,775 | 3,745 | 3,830 | |||||||||
| Less: Core interest expense | 29,516 | 30,429 | 27,050 | |||||||||
| Plus: Realized performance income (loss), net | 128,654 | 159,702 | 125,938 | |||||||||
| Plus: Net realized gains (losses) | (81,343 | ) | 61,439 | 62,219 | ||||||||
| Less: Corporate and local income taxes paid | 37,791 | 25,173 | 25,183 | |||||||||
| Less: Income attributable to segment noncontrolling interests | 5,100 | 2,902 | 3,349 | |||||||||
| After-tax Cash Earnings | 168,618 | 331,110 | 361,213 | |||||||||
| Plus: Depreciation and amortization | 3,775 | 3,745 | 3,830 | |||||||||
| Plus: Core interest expense | 29,516 | 30,429 | 27,050 | |||||||||
| Plus: Corporate and local income taxes paid | 37,791 | 25,173 | 25,183 | |||||||||
| Plus: Income attributable to segment noncontrolling interests | 5,100 | 2,902 | 3,349 | |||||||||
| Total EBITDA | $ | 244,800 | $ | 393,359 | $ | 420,625 | ||||||
| Year Ended | ||||||||||||
| December 31, 2015 | December 31, 2014 | |||||||||||
| Net income (loss) attributable to KKR & Co. L.P. | $ | 488,482 | $ | 477,611 | ||||||||
| Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. | 433,693 | 585,135 | ||||||||||
| Plus: Non-cash equity-based charges | 261,579 | 310,403 | ||||||||||
| Plus: Amortization of intangibles and other, net | 47,599 | 290,348 | ||||||||||
| Plus: Income tax (benefit) | 66,636 | 63,669 | ||||||||||
| Economic Net Income (Loss) | 1,297,989 | 1,727,166 | ||||||||||
| Plus: Income attributable to segment noncontrolling interests | 16,007 | 14,946 | ||||||||||
| Less: Total investment income (loss) | 153,512 | 505,153 | ||||||||||
| Less: Net performance income (loss) | 724,701 | 805,553 | ||||||||||
| Plus: Expenses of Principal Activities Segment | 174,713 | 199,938 | ||||||||||
| Fee Related Earnings | 610,496 | 631,344 | ||||||||||
| Plus: Net interest and dividends | 208,451 | 273,175 | ||||||||||
| Plus: Depreciation and amortization | 15,319 | 15,782 | ||||||||||
| Plus: Core interest expense | 116,027 | 88,002 | ||||||||||
| Less: Expenses of Principal Activities Segment | 174,713 | 199,938 | ||||||||||
| Fee and Yield EBITDA | 775,580 | 808,365 | ||||||||||
| Less: Depreciation and amortization | 15,319 | 15,782 | ||||||||||
| Less: Core interest expense | 116,027 | 88,002 | ||||||||||
| Plus: Realized performance income (loss), net | 628,083 | 744,879 | ||||||||||
| Plus: Net realized gains (losses) | 337,023 | 628,403 | ||||||||||
| Less: Corporate and local income taxes paid | 140,677 | 131,081 | ||||||||||
| Less: Income attributable to segment noncontrolling interests | 16,007 | 14,946 | ||||||||||
| After-tax Cash Earnings | 1,452,656 | 1,931,836 | ||||||||||
| Plus: Depreciation and amortization | 15,319 | 15,782 | ||||||||||
| Plus: Core interest expense | 116,027 | 88,002 | ||||||||||
| Plus: Corporate and local income taxes paid | 140,677 | 131,081 | ||||||||||
| Plus: Income attributable to segment noncontrolling interests | 16,007 | 14,946 | ||||||||||
| Total EBITDA | $ | 1,740,686 | $ | 2,181,647 | ||||||||
| KKR | |||||||
EXHIBIT C (CONTINUED) | |||||||
| RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS) | |||||||
| TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT (UNAUDITED) | |||||||
| (Amounts in thousands, except common unit and per common unit amounts) | |||||||
| As of | As of | ||||||
| December 31, 2015 | December 31, 2014 | ||||||
| KKR & Co. L.P. partners’ capital | $ | 5,547,182 | $ | 5,382,691 | |||
| Noncontrolling interests held by KKR Holdings L.P. | 4,347,153 | 4,661,679 | |||||
| Equity impact of KKR Management Holdings Corp. and other | 84,894 | 73,855 | |||||
| Book value | 9,979,229 | 10,118,225 | |||||
| Adjusted units | 847,083,373 | 838,020,974 | |||||
| Book value per adjusted unit | $ | 11.78 | $ | 12.07 | |||
| RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS) | |||||||
| TO CASH AND SHORT-TERM INVESTMENTS (UNAUDITED) | |||||||
| (Amounts in thousands) | |||||||
| As of | As of | ||||||
| December 31, 2015 | December 31, 2014 | ||||||
| Cash and cash equivalents | $ | 1,047,740 | $ | 918,080 | |||
| Liquid short-term investments | 239,910 | 203,305 | |||||
| Cash and short-term investments | $ | 1,287,650 | $ | 1,121,385 | |||
| KKR | ||||||||
EXHIBIT D | ||||||||
| RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING (UNAUDITED) | ||||||||
| The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units: | ||||||||
| Quarter Ended | ||||||||
| December 31, 2015 | September 30, 2015 | December 31, 2014 | ||||||
| Weighted Average GAAP Common Units Outstanding - Basic | 461,374,013 | 452,165,697 | 431,432,521 | |||||
| Adjustments: | ||||||||
| Weighted Average Unvested Common Units and Other Securities (a) | 28,330,774 | — | (c) | 27,550,338 | ||||
| Weighted Average GAAP Common Units Outstanding - Diluted | 489,704,787 | 452,165,697 | 458,982,859 | |||||
| Adjustments: | ||||||||
| Weighted Average KKR Holdings Units (b) | 362,741,915 | 365,717,358 | 379,085,116 | |||||
| Weighted Average Unvested Common Units and Other Securities (a) | — | 33,821,248 | (c) | — | ||||
| Weighted Average Adjusted Units | 852,446,702 | 851,704,303 | 838,067,975 | |||||
| Year Ended | ||||||||
| December 31, 2015 | December 31, 2014 | |||||||
| Weighted Average GAAP Common Units Outstanding - Basic | 448,884,185 | 381,092,394 | ||||||
| Adjustments: | ||||||||
| Weighted Average Unvested Common Units and Other Securities (a) | 33,815,009 | 30,956,881 | ||||||
| Weighted Average GAAP Common Units Outstanding - Diluted | 482,699,194 | 412,049,275 | ||||||
| Adjustments: | ||||||||
| Weighted Average KKR Holdings Units (b) | 368,399,872 | 388,198,713 | ||||||
| Weighted Average Adjusted Units | 851,099,066 | 800,247,988 | ||||||
| RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING (UNAUDITED) | ||||||||
The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units, Adjusted Units Eligible for Distribution and | ||||||||
| As of | As of | |||||||
| December 31, 2015 | December 31, 2014 | |||||||
| GAAP Common Units Outstanding - Basic | 457,834,875 | 433,330,540 | ||||||
| Unvested Common Units and Other Securities (a) | 27,901,910 | 27,493,685 | ||||||
| GAAP Common Units Outstanding - Diluted | 485,736,785 | 460,824,225 | ||||||
| Adjustments: | ||||||||
| KKR Holdings Units (b) | 361,346,588 | 377,196,749 | ||||||
| Adjusted Units | 847,083,373 | 838,020,974 | ||||||
| Adjustments: | ||||||||
| Unvested Common Units and Unvested Other Securities (a) | (24,060,289 | ) | (24,373,441 | ) | ||||
| Adjusted Units Eligible for Distribution | 823,023,084 | 813,647,533 | ||||||
| Adjustments: | ||||||||
| Vested Other Securities | (3,841,621 | ) | (3,120,244 | ) | ||||
| Outstanding Adjusted Units | 819,181,463 | 810,527,289 | ||||||
______________________________________________________________________________________________________________________________________________________
| (a) | Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan and other securities that are exchangeable into KKR & Co. L.P common units. The issuance of common units of KKR & Co. L.P. pursuant to such equity awards or other securities dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business. | |
| (b) | Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units. | |
| (c) | Unvested common units and other securities are excluded from the calculation of diluted earnings per common unit on a GAAP basis because inclusion of such unvested common units and other securities would be anti-dilutive (decrease the loss per common unit). |
CONTACT:
Investor Relations:
Kohlberg Kravis Roberts & Co. L.P.
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+1-212-230-9410
investor-relations@kkr.com
or
Media:
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media@kkr.com
