Exhibit 99.1
The Blackstone Group Reports Third Quarter 2008 Results
| | • | | Economic Net Income for the third quarter 2008 was a loss of $(509.3) million as compared to Economic Net Income of $99.9 million in the second quarter of 2008 and $299.2 million in the third quarter of 2007. |
| | • | | GAAP Loss for the third quarter of 2008 was $(365.5) million, which included net transaction related costs of $855.8 million offset by Non-Controlling Interests of $(999.6) million, as compared with a GAAP Loss of $(185.5) million in the second quarter of 2008. |
| | • | | Fee-earning Assets Under Management of $99.73 billion were 28% higher than the year-ago period and flat with June 30, 2008. Total Assets Under Management were $116.28 billion, an 18% increase from $98.20 billion at September 30, 2007. |
| | • | | Quarterly Management and Advisory Fees rose to a record $462.3 million, a 35% increase from $342.0 million in the third quarter of 2007. |
| | • | | Revenues in Financial Advisory increased to a record $160.7 million, a 91% increase from the third quarter of 2007. |
| | • | | Blackstone declares a quarterly priority distribution of $0.30 per common unit. |
New York, November 6, 2008: The Blackstone Group L.P. (NYSE: BX) today reported its third quarter 2008 results. For the quarter ended September 30, 2008, Total Net Reportable Segment Revenues were a negative $(229.2) million as compared to $376.2 million in this year’s second quarter. Total Reportable Segment Revenues were $545.5 million in the third quarter of 2007. Lower carrying values of portfolio holdings across Corporate Private Equity, Real Estate and Marketable Alternative Asset Management contributed to the negative revenues, partially offset by strong results across advisory businesses and growth in fee paying assets. For the nine months ended September 30, 2008, Total Net Reportable Segment Revenues were $179.3 million as compared to Total Pro Forma Adjusted Reportable Segment Revenues of $2.75 billion for the same period in 2007.
Economic Net Income for the third quarter of 2008 totaled $(509.3) million as compared to $99.9 million in this year’s second quarter and Economic Net Income of $299.2 million for the third quarter of 2007. Economic Net Income for the nine months ended September 30, 2008 was $(502.9) million as compared to Pro Forma Adjusted Economic Net Income of $1.99 billion for the nine months ended September 30, 2007. Adjusted Cash Flow from Operations in the third quarter was a negative $(9.0) million and a positive $148.1 million for the first nine months of the year.
A significant amount of equity interests held by senior managing directors and other employees prior to the initial public offering (“IPO”) are subject to future vesting, minimum retained ownership interests and transfer restrictions. As a result of the future vesting, Blackstone has and will continue to show significant charges associated with these equity interests over their respective service periods. These, as well as certain other transactional charges, associated with the 2007 reorganization, the IPO and subsequent
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The Blackstone Group® L.P. 345 Park Avenue New York, NY 10154 212 583-5000 |
corporate actions including acquisitions, are likely to result in GAAP net losses for the next five years depending upon applicable service periods or useful lives.
Blackstone remains well positioned from a capital and liquidity perspective with $1.13 billion in available cash and an additional $1.29 billion invested in the firm’s liquid funds, against $845.0 million in short term borrowings.
GAAP results for the third quarter of 2008 included negative Revenues of $(160.3) million, Other Loss of $(550.8) million and Loss Before Benefit for Taxes of $(365.5) million. For the third quarter of 2007, Revenues were $526.7 million, Other Income was $9.9 million and Loss Before Provision for Taxes totaled $(107.3) million. GAAP results for the nine months ended September 30, 2008 included Revenues of $261.9 million, Other Loss of $(576.7) million and Loss Before Benefit for Taxes of $(797.7) million. For the nine months ended September 30, 2007, Revenues were $2.71 billion, Other Income was $5.41 billion and Income Before Provision for Taxes totaled $1.81 billion. In connection with the IPO of the common units of The Blackstone Group L.P. (the publicly traded partnership), Blackstone effected a reorganization on June 18, 2007, which affects the comparison of the current year’s periods with those of the prior year’s. Blackstone’s business was historically conducted through a large number of entities as to which there was no single holding entity. Accordingly, operating results for the 2007 periods presented are for the respective consolidated and combined entities. On a GAAP basis, Net Cash Flow Provided by Operating Activities was $475.2 million for the three months ended September 30, 2008 as compared to Net Cash Flow Used in Operating Activities of $(266.9) million for the comparable prior year period.
Global financial markets experienced severe volatility and declines across asset classes in the third quarter of 2008. Credit fears served to substantially stall lending markets, including inter-bank lending. The lack of lending between financial institutions and to corporations left many companies, both healthy and unhealthy, unable to borrow. Global economic growth slowed in both developed and emerging nations and commodity prices have meaningfully declined. Declining market prices also forced many leveraged investors to sell assets to meet liquidity and margin requirements and reduce leverage ratios regardless of market prices.
Stephen A. Schwarzman, Chairman and Chief Executive Officer said: “We are operating in a challenging and volatile environment. As evidenced in the third quarter, global equity and credit markets have declined substantially and we have lowered the carrying value of our fund investments. However, Blackstone has set up its businesses to not only weather such an environment, but to benefit from it. Given Blackstone’s strong balance sheet, scale and breadth of business and continued strong investment performance, we believe that the current market dislocations will alter the competitive landscape, position our firm to enhance our market position and enhance long term unitholder value.”
The table below details Blackstone’s Economic Net Income and Adjusted Cash Flow from Operations for the quarter and nine months ended September 30, 2008 as compared to Blackstone’s Economic Net Income and Pro Forma Adjusted Economic Net Income for the comparable prior year periods. Economic Net Income Before Taxes includes unrealized gains/losses and the direct compensation impact related to those gains/losses but excludes transaction related charges.
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| | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | | 2008 | | | 2007 | | 2008 | | | 2007 |
| | | | | | | | | | | Pro Forma
Adjusted |
| | | (Dollars in Thousands, Except per Unit Amounts) |
| | | | |
Economic Net Income, Total Reportable Segments (a) | | $ | (509,266 | ) | | $ | 299,158 | | $ | (502,908 | ) | | $ | 1,992,548 |
Provision (Benefit) for Income Taxes (b) | | | (6,720 | ) | | | 65,204 | | | (99,491 | ) | | | 265,089 |
| | | | | | | | | | | | | | |
Economic Net Income After Taxes | | $ | (502,546 | ) | | $ | 233,954 | | $ | (403,417 | ) | | $ | 1,727,459 |
| | | | | | | | | | | | | | |
Economic Net Income After Taxes per Adjusted Unit | | $ | (0.44 | ) | | $ | 0.21 | | $ | (0.36 | ) | | $ | 1.54 |
| | | | | | | | | | | | | | |
Adjusted Cash Flow from Operations (a) | | $ | (9,001 | ) | | $ | 311,195 | | $ | 148,122 | | | $ | 1,272,073 |
| | | | | | | | | | | | | | |
| (a) | Reconciliations of Pro Forma Adjusted Economic Net Income, Total Reportable Segments to Economic Net Income, Total Reportable Segments and of Adjusted Cash Flow from Operations to Net Cash Provided by (Used in) Operating Activities are presented in Exhibits 4 and 5, respectively, to this release. |
| (b) | Represents the implied provision (benefit) for income taxes calculated using the same methodology applied in calculating the tax provision (benefit) for The Blackstone Group L.P. |
SEGMENT REVIEW
Corporate Private Equity
For the quarter ended September 30, 2008, Corporate Private Equity had negative third quarter revenues of $(68.3) million, as compared with revenues of $92.4 million for the second quarter of 2008 and $227.3 million for the third quarter of 2007. The principal cause of the change year over year was a reduction in the carrying value of the portfolio holdings in the corporate private equity funds. This decrease in carrying value is reflected in lower Performance Fees and Allocations and Investment Income (Loss) and Other.
Base Management Fees were essentially flat as compared to both the second quarter of 2008 and third quarter of 2007. Transaction and Other Fees increased $6.9 million as compared to the second quarter of 2008 and decreased $22.6 million from the third quarter of 2007.
Compensation and Benefits expense declined to $34.2 million in the third quarter, from $40.3 million in the second quarter of 2008 and $56.3 million in the third quarter of 2007. Other Operating Expenses were $24.0 million, up from $20.9 million in the second quarter of 2008 and down from $22.8 million in the third quarter of 2007.
Weighted-Average Fee-Earning Assets Under Management rose to $25.26 billion from $24.62 billion in the third quarter of 2007.
Limited Partner Capital deployed totaled $1.51 billion for the third quarter of 2008, a decrease from $2.34 billion deployed in the third quarter of 2007.
Real Estate
For the quarter ended September 30, 2008, Real Estate had negative revenues of $(273.7) million, as compared with negative revenues of $(14.4) million for the second quarter of 2008 and positive revenues of $109.1 million for the third quarter of 2007. The principal driver of the decline year over year was a net decrease in the carrying value of the portfolio holdings in the real estate funds. This decrease in carrying value is reflected in Performance Fees and Allocations and Investment Income (Loss) and Other.
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Base Management Fees increased to $80.4 million in the third quarter of 2008 which represents an increase of 18% compared to the second quarter of 2008 and 14% over the third quarter of 2007, reflecting higher Fee-Earning Assets Under Management. Real Estate had closings of $1.68 billion on the segment’s European focused real estate fund, which is included in the current quarter.
Transaction and Other Fees declined as a result of lower transaction volume in the quarter as compared to the third quarter of 2007.
Compensation and Benefits was $21.1 million in the third quarter, down from $32.1 million in the second quarter of 2008 and $39.3 million for the third quarter of 2007. Other Operating Expenses were $14.8 million, up from $12.6 million in the second quarter of 2008 and $12.6 million in the third quarter of 2007.
Weighted-Average Fee-Earning Assets Under Management for the quarter increased 33% or $5.70 billion to $22.79 billion.
Limited Partner Capital Deployed totaled $131.1 million for the quarter ended September 30, 2008, a decrease from the $269.8 million deployed in the third quarter of 2007.
Marketable Alternative Asset Management (MAAM)
For the third quarter of 2008, MAAM had negative revenues of $(48.0) million, compared with $225.2 million for the second quarter of 2008 and $124.9 million for the third quarter of 2007.
Base Management Fees increased $43.3 million, or 49% in the third quarter of 2008 as compared to the third quarter of 2007, and 3% as compared to the second quarter of 2008, reflecting higher Fee-Earning Assets Under Management.
Compensation and Benefits was $60.3 million in the third quarter, down from $84.2 million in the second quarter of 2008 and up from $34.0 million for the third quarter of 2007.
Weighted-Average Fee-Earning Assets Under Management for the quarter ended September 30, 2008 totaled $55.07 billion (including $12.73 billion relating to GSO) compared with $34.83 billion for the prior year period, a 58% increase. MAAM includes funds of hedge funds, debt funds and CLOs, proprietary hedge funds and publicly-traded closed-end mutual funds investing across several asset classes and geographies.
Limited Partner Capital Deployed totaled $657.6 million for the quarter ended September 30, 2008, up from $97.2 million in the same period of 2007, primarily from activity in certain of Blackstone’s newly launched debt funds.
Financial Advisory
Revenues were $160.7 million in the third quarter of 2008, representing an increase of 120% compared to $72.9 million in the second quarter of 2008 and up 91% from $84.3 million in the same period in 2007. Revenues in all business units increased year over year, most notably in Blackstone’s corporate and mergers and acquisitions advisory service and restructuring and reorganization advisory services businesses. An increase in client mandates accounted for the increase in corporate and mergers and acquisitions advisory revenues, while the continued credit market turmoil and low levels of available liquidity led to increased bankruptcies, debt defaults and debt restructurings and drove the increase in revenues in the restructuring and reorganization advisory services business.
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Compensation and Benefits was $82.3 million in the third quarter, up from $48.6 million in the second quarter of 2008 and $50.0 million for the third quarter of 2007.
CAPITAL
For Economic Net Income purposes, the weighted-average fully diluted unit count for the three month and nine month periods ended September 30, 2008 was 1,129.3 million units and 1,129.2 million units (the “Adjusted Units”), respectively. The weighted-average fully diluted unit count for the three months ended September 30, 2007 and for the period June 19, 2007 through September 30, 2007 was 1,121.0 million units.
The total number of units used in calculating cash distributions was 1,101.6 million units for the nine month period ended September 30, 2008 and 1,089.7 million units for the period June 19, 2007 through September 30, 2007.
DISTRIBUTION
The Blackstone Group L.P. has declared a quarterly distribution of $0.30 per common unit to record holders of common units at the close of business on November 28, 2008. This distribution will be paid on December 12, 2008. With this payment, Blackstone will have made $240 million ($0.90 per common unit) in priority distributions for the nine months ended September 30, 2008.
As Blackstone has previously reported, until December 31, 2009 Blackstone personnel and others who hold Blackstone Holdings partnership units (and who own approximately 75% of all outstanding units, with common unitholders holding the remaining 25%) will not receive distributions (other than tax distributions in circumstances specified in Blackstone’s 2007 Annual Report on Form 10-K) for a given calendar year until common unitholders receive aggregate distributions of $1.20 per common unit for such year. The specific amount of this priority allocation of distributions to common unitholders prior to December 31, 2009 is governed by the amount of Blackstone’s Adjusted Cash Flow from Operations available for distributions, as determined in the manner specified in the 2007 10-K Annual Report.
The amount of the distribution to common unitholders payable in respect of the fourth quarter of 2008 will depend on the amount of Blackstone’s Adjusted Cash Flow from Operations for the full 2008 year and other factors. Unless general market conditions improve significantly, the amount of cash flow in the fourth quarter might necessitate a fourth quarter distribution that is significantly lower than $0.30 per common unit and possibly no distribution at all.
Public common unitholders will continue to receive a priority distribution ahead of Blackstone personnel and others through 2009, but the amount of those distributions in respect of 2009 will be based on the amount of Adjusted Cash Flow from Operations in 2009 available for distributions and could fall below $1.20.
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Blackstone will host a conference call on November 6, 2008 at 11:00 a.m. EST to discuss third quarter 2008 results. The conference call can be accessed by dialing (888) 713-4211 (U.S. domestic) and (617) 213-4864 (international) pass code 80404062. Additionally the conference call will be broadcast live.
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over the internet and can be accessed by all interested parties through the Investor Relations section of The Blackstone Group’s website http://ir.blackstone.com. For those unable to listen to the live broadcast, a replay will be available on Blackstone’s website or by dialing (888) 286-8010 (U.S. domestic) or (617) 801-6888 (international) pass code number 77283999, beginning approximately two hours after the event.
About The Blackstone Group
Blackstone is one of the world’s leading investment and advisory firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, the companies we advise and the broader global economy. We do this through the commitment of our extraordinary people and flexible capital. Our alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge funds, funds of funds, debt funds, collateralized loan obligation vehicles (CLOs) and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com.
Investor Relations Contact:
Joan Solotar
The Blackstone Group
Tel: +1 212 583 5068
solotar@blackstone.com
Media Relations Contact:
Peter Rose
The Blackstone Group
Tel: +1 212 583 5871
rose@blackstone.com
Forward-Looking Statements
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect Blackstone’s current views with respect to, among other things, Blackstone’s operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Blackstone believes these factors include but are not limited to those described under the section entitled “Risk Factors” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2007, as such factors may be updated from time to time in its periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the prospectus. Blackstone undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
This release does not constitute an offer of any Blackstone Fund.
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THE BLACKSTONE GROUP L.P.
Exhibit 1a. Consolidated and Combined Statements of Income
(Dollars in Thousands, Except Per Unit Data)
| | | | | | | | | | |
| | | Quarter Ended
September 30, | | | |
| | | 2008 | | | 2007 | | | % Variance |
Revenues | | | | | | | | | | |
Management and Advisory Fees | | $ | 447,373 | | | $ | 329,445 | | | 36% |
Performance Fees and Allocations | | | (416,076 | ) | | | 149,934 | | | N/M |
Investment Income and Other (1) | | | (191,551 | ) | | | 47,307 | | | N/M |
| | | | | | | | | | |
Total Revenues | | | (160,254 | ) | | | 526,686 | | | N/M |
| | | | | | | | | | |
| | | |
Expenses | | | | | | | | | | |
Compensation and Benefits (1) | | | 991,521 | | | | 929,721 | | | 7% |
Interest (1) | | | 5,893 | | | | 2,258 | | | 161% |
General, Administrative and Other (1) | | | 121,842 | | | | 111,814 | | | 9% |
Fund Expenses | | | 13,442 | | | | 7,202 | | | 87% |
| | | | | | | | | | |
Total Expenses | | | 1,132,698 | | | | 1,050,995 | | | 8% |
| | | | | | | | | | |
| | | |
Other Income (Loss) | | | | | | | | | | |
Net Gains (Losses) from Fund Investment Activities | | | (550,755 | ) | | | 9,884 | | | N/M |
| | | | | | | | | | |
Income (Loss) Before Non-Controlling Interests in Loss of Consolidated Entities and Provision (Benefit) for Taxes | | | (1,843,707 | ) | | | (514,425 | ) | | 258% |
Non-Controlling Interests in Loss of Consolidated Entities | | | (1,478,208 | ) | | | (407,076 | ) | | 263% |
| | | | | | | | | | |
Income (Loss) Before Provision (Benefit) for Taxes | | | (365,499 | ) | | | (107,349 | ) | | 240% |
Provision (Benefit) for Taxes | | | (25,168 | ) | | | 5,841 | | | N/M |
| | | | | | | | | | |
Net Income (Loss) (1) | | $ | (340,331 | ) | | $ | (113,190 | ) | | 201% |
| | | | | | | | | | |
Net Loss per Common Unit, Basic and Diluted | | | | | | | | | | |
Common Units Entitled to Priority Distributions | | $ | (1.27 | ) | | $ | (0.44 | ) | | |
| | | | | | | | | | |
Common Units Not Entitled to Priority Distributions | | $ | (1.57 | ) | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
(1) Net transaction-related charges included above were: | | | | | | | | | | |
Investment Income and Other | | $ | (9,539 | ) | | $ | — | | | |
| | | | | | | | | | |
Compensation and Benefits (including equity-based compensation) | | | 793,665 | | | | 747,406 | | | |
Interest | | | 850 | | | | — | | | |
General, Administrative and Other | | | 51,799 | | | | 55,204 | | | |
| | | | | | | | | | |
| | | 846,314 | | | | 802,610 | | | |
| | | | | | | | | | |
| | $ | 855,853 | | | $ | 802,610 | | | |
| | | | | | | | | | |
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THE BLACKSTONE GROUP L.P.
Exhibit 1b. Consolidated and Combined Statements of Income
(Dollars in Thousands, Except Per Unit Data)
| | | | | | | | | | | |
| | | Nine Months Ended
September 30, | | | | |
| | | 2008 | | | 2007 | | | % Variance | |
Revenues | | | | | | | | | | | |
Management and Advisory Fees | | $ | 1,094,941 | | | $ | 1,118,541 | | | (2% | ) |
Performance Fees and Allocations | | | (618,485 | ) | | | 1,266,181 | | | N/M | |
Investment Income and Other (1) | | | (214,535 | ) | | | 320,460 | | | N/M | |
| | | | | | | | | | | |
Total Revenues | | | 261,921 | | | | 2,705,182 | | | (90% | ) |
| | | | | | | | | | | |
| | | |
Expenses | | | | | | | | | | | |
Compensation and Benefits (1) | | | 2,997,476 | | | | 1,354,472 | | | 121% | |
Interest (1) | | | 14,326 | | | | 28,560 | | | (50% | ) |
General, Administrative and Other (1) | | | 324,580 | | | | 190,633 | | | 70% | |
Fund Expenses | | | 58,187 | | | | 126,448 | | | (54% | ) |
| | | | | | | | | | | |
Total Expenses | | | 3,394,569 | | | | 1,700,113 | | | 100% | |
| | | | | | | | | | | |
| | | |
Other Income (Loss) | | | | | | | | | | | |
Net Gains (Losses) from Fund Investment Activities | | | (576,713 | ) | | | 5,406,709 | | | N/M | |
| | | | | | | | | | | |
| | | |
Income (Loss) Before Non-Controlling Interests in Income (Loss) of Consolidated Entities and Provision (Benefit) for Taxes | | | (3,709,361 | ) | | | 6,411,778 | | | N/M | |
| | | |
Non-Controlling Interests in Income (Loss) of Consolidated Entities | | | (2,911,634 | ) | | | 4,601,139 | | | N/M | |
| | | | | | | | | | | |
| | | |
Income (Loss) Before Provision (Benefit) for Taxes | | | (797,727 | ) | | | 1,810,639 | | | N/M | |
| | | |
Provision (Benefit) for Taxes | | | (49,872 | ) | | | 17,402 | | | N/M | |
| | | | | | | | | | | |
Net Income (Loss) (1) | | $ | (747,855 | ) | | $ | 1,793,237 | | | N/M | |
| | | | | | | | | | | |
| | | |
| | | | | | June 19, 2007
through
September 30,
2007 | | | | |
Net Loss per Common Unit, Basic and Diluted | | | | | | | | | | | |
Common Units Entitled to Priority Distributions | | $ | (2.84 | ) | | $ | (0.64 | ) | | | |
| | | | | | | | | | | |
Common Units Not Entitled to Priority Distributions | | $ | (1.57 | ) | | | | | | | |
| | | | | | | | | | | |
| | | |
| | | | | | | | | | | |
(1) Net transaction-related charges included above were: | | | | | | | | | | | |
Investment Income and Other | | $ | (1,509 | ) | | $ | — | | | | |
| | | | | | | | | | | |
Compensation and Benefits (including equity-based compensation) | | | 2,536,341 | | | | 983,634 | | | | |
Interest | | | 3,202 | | | | — | | | | |
General, Administrative and Other | | | 126,011 | | | | 62,404 | | | | |
| | | | | | | | | | | |
| | | 2,665,554 | | | | 1,046,038 | | | | |
| | | | | | | | | | | |
| | $ | 2,667,063 | | | $ | 1,046,038 | | | | |
| | | | | | | | | | | |
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THE BLACKSTONE GROUP L.P.
Exhibit 2. Consolidated Statements of Financial Condition
(Dollars in Thousands)
| | | | | | | |
| | | September 30,
2008 | | | December 31,
2007 |
Assets | | | | | | | |
Cash and Cash Equivalents | | $ | 1,134,954 | | | $ | 868,629 |
Cash Held by Blackstone Funds | | | 143,681 | | | | 163,696 |
Investments | | | 5,468,327 | | | | 7,145,156 |
Accounts Receivable | | | 297,385 | | | | 213,086 |
Due from Brokers | | | 804,301 | | | | 812,250 |
Investment Subscriptions Paid in Advance | | | — | | | | 36,698 |
Due from Affiliates | | | 387,585 | | | | 855,854 |
Intangible Assets, Net | | | 1,117,038 | | | | 604,681 |
Goodwill | | | 1,695,848 | | | | 1,597,474 |
Other Assets | | | 160,596 | | | | 99,366 |
Deferred Tax Assets | | | 739,542 | | | | 777,310 |
| | | | | | | |
Total Assets | | $ | 11,949,257 | | | $ | 13,174,200 |
| | | | | | | |
| | |
Liabilities and Partners’ Capital | | | | | | | |
Loans Payable | | $ | 986,021 | | | $ | 130,389 |
Amounts Due to Non-Controlling Interest Holders | | | 118,734 | | | | 269,901 |
Securities Sold, Not Yet Purchased | | | 590,437 | | | | 1,196,858 |
Due to Affiliates | | | 1,008,896 | | | | 831,609 |
Accrued Compensation and Benefits | | | 424,686 | | | | 188,997 |
Accounts Payable, Accrued Expenses and Other Liabilities | | | 170,498 | | | | 250,445 |
| | | | | | | |
Total Liabilities | | | 3,299,272 | | | | 2,868,199 |
| | | | | | | |
| | |
Commitments and Contingencies | | | | | | | |
Non-Controlling Interests in Consolidated Entities | | | 4,836,128 | | | | 6,079,156 |
| | | | | | | |
| | |
Partners’ Capital | | | | | | | |
Partners’ Capital | | | 3,814,142 | | | | 4,226,500 |
Accumulated Other Comprehensive Income | | | (285 | ) | | | 345 |
| | | | | | | |
Total Partners’ Capital | | | 3,813,857 | | | | 4,226,845 |
| | | | | | | |
Total Liabilities and Partners’ Capital | | $ | 11,949,257 | | | $ | 13,174,200 |
| | | | | | | |
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THE BLACKSTONE GROUP L.P.
Exhibit 3. Condensed Consolidated and Combined Statements of Cash Flows
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | | Quarter Ended | | | Nine Months Ended | |
| | | March 31,
2007 | | | June 30,
2007 | | | September 30,
2007 | | | December 30,
2007 | | | Full Year
2007 | | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | September 30,
2008 | | | September 30,
2007 | |
Operating Activities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) | | $ | 1,132,076 | | | $ | 774,351 | | | $ | (113,190 | ) | | $ | (170,000 | ) | | $ | 1,623,237 | | | $ | (250,993 | ) | | $ | (156,531 | ) | | $ | (340,331 | ) | | $ | (747,855 | ) | | $ | 1,793,237 | |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by (Used in) Operating Activities: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by (Used in) Operating Activities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Blackstone Funds Related: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Non-Controlling Interests in Income (Loss) of Consolidated Entities | | | 744,923 | | | | 1,625,043 | | | | (336,870 | ) | | | (511,793 | ) | | | 1,521,303 | | | | (788,477 | ) | | | (556,261 | ) | | | (1,088,351 | ) | | | (2,433,089 | ) | | | 2,033,096 | |
Net Realized (Gains) Losses on Investments | | | (1,050,641 | ) | | | (2,424,334 | ) | | | (350,629 | ) | | | 25,467 | | | | (3,800,137 | ) | | | 256 | | | | (118,555 | ) | | | 204,373 | | | | 86,074 | | | | (3,825,604 | ) |
Changes in Unrealized (Gains) Losses on Investments Allocable to Blackstone Group | | | (520,424 | ) | | | 507,239 | | | | (30,650 | ) | | | 30,205 | | | | (13,630 | ) | | | 62,823 | | | | (7,770 | ) | | | 182,138 | | | | 237,191 | | | | (43,835 | ) |
Non-Cash Performance Fees and Allocations | | | — | | | | (483,101 | ) | | | 160,808 | | | | 135,223 | | | | (187,070 | ) | | | 76,279 | | | | 37,343 | | | | 393,282 | | | | 506,904 | | | | (322,293 | ) |
Equity-Based Compensation Expense | | | — | | | | 236,228 | | | | 747,406 | | | | 781,554 | | | | 1,765,188 | | | | 914,671 | | | | 805,597 | | | | 774,431 | | | | 2,494,699 | | | | 983,634 | |
Intangible Amortization | | | — | | | | 7,200 | | | | 55,204 | | | | 55,203 | | | | 117,607 | | | | 33,528 | | | | 40,685 | | | | 39,512 | | | | 113,725 | | | | 62,404 | |
Other Non-Cash Amounts Included in Net Income | | | (13,007 | ) | | | 17,782 | | | | 713 | | | | 5,733 | | | | 11,221 | | | | 3,845 | | | | 5,102 | | | | 4,470 | | | | 13,417 | | | | 5,488 | |
Cash Flows Due to Changes in Operating Assets and Liabilities: | | | 289,160 | | | | (342,933 | ) | | | (859,278 | ) | | | 724,469 | | | | (188,582 | ) | | | 311,656 | | | | 55,230 | | | | (46,198 | ) | | | 320,688 | | | | (913,051 | ) |
Blackstone Funds Related Investment Activity | | | (1,926,042 | ) | | | 599,372 | | | | 459,539 | | | | (832,302 | ) | | | (1,699,433 | ) | | | (248,434 | ) | | | (2,697 | ) | | | 351,860 | | | | 100,729 | | | | (867,131 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by (Used in) Operating Activities | | | (1,343,955 | ) | | | 516,847 | | | | (266,947 | ) | | | 243,759 | | | | (850,296 | ) | | | 115,154 | | | | 102,143 | | | | 475,186 | | | | 692,483 | | | | (1,094,055 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Investing Activities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by (Used in) Investing Activities | | | (3,068 | ) | | | (34,742 | ) | | | (2,593 | ) | | | (15,196 | ) | | | (55,599 | ) | | | (388,918 | ) | | | 20,210 | | | | (9,731 | ) | | | (378,439 | ) | | | (40,403 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Financing Activities | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by (Used in) Financing Activities | | | 1,342,302 | | | | 825,897 | | | | (553,630 | ) | | | 29,873 | | | | 1,644,442 | | | | 77,714 | | | | (577,272 | ) | | | 451,839 | | | | (47,719 | ) | | | 1,614,569 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | | | 1,027 | | | | (388 | ) | | | — | | | | — | | | | 639 | | | | 90 | | | | (90 | ) | | | — | | | | — | | | | 639 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Increase (Decrease) in Cash and Cash Equivalents | | | (3,694 | ) | | | 1,307,614 | | | | (823,170 | ) | | | 258,436 | | | | 739,186 | | | | (195,960 | ) | | | (455,009 | ) | | | 917,294 | | | | 266,325 | | | | 480,750 | |
Cash and Cash Equivalents, Beginning of Period | | | 129,443 | | | | 125,749 | | | | 1,433,363 | | | | 610,193 | | | | 129,443 | | | | 868,629 | | | | 672,669 | | | | 217,660 | | | | 868,629 | | | | 129,443 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and Cash Equivalents, End of Period | | $ | 125,749 | | | $ | 1,433,363 | | | $ | 610,193 | | | $ | 868,629 | | | $ | 868,629 | | | $ | 672,669 | | | $ | 217,660 | | | $ | 1,134,954 | | | $ | 1,134,954 | | | $ | 610,193 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
10
THE BLACKSTONE GROUP L.P.
Exhibit 4a. Economic Net Income and Pro Forma Adjusted Economic Net Income
(Dollars in Thousands)
The tables below detail Blackstone’s Economic Net Income, except for the quarters ended March 31, 2007 and June 30, 2007 and the year ended December 31, 2007, for which periods Pro Forma Adjusted Economic Net Income is presented. Exhibit 4b includes the presentation of Economic Net Income for each of the periods for which Pro Forma Adjusted Economic Net Income is presented below.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | | Quarter Ended | | | Nine Months Ended
September 30, | |
| | | March 31,
2007 | | | June 30,
2007 | | | September 30,
2007 | | | December 31,
2007 | | | Full Year
2007 | | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | 2008 | | | 2007 | |
| | | Pro Forma Adjusted | | | | | | | | | Pro Forma
Adjusted | | | | | | | | | | | | | | | Pro Forma
Adjusted | |
Corporate Private Equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 58,861 | | | $ | 62,858 | | | $ | 66,389 | | | $ | 66,735 | | | $ | 254,843 | | | $ | 67,336 | | | $ | 66,967 | | | $ | 67,009 | | | $ | 201,312 | | | $ | 188,108 | |
Transaction and Other Fees * | | | 9,128 | | | | 56,044 | | | | 48,711 | | | | 64,188 | | | | 178,071 | | | | 10,837 | | | | 19,161 | | | | 26,090 | | | | 56,088 | | | | 113,883 | |
Management Fee Offsets ** | | | (8,231 | ) | | | (12,634 | ) | | | (20,892 | ) | | | (23,278 | ) | | | (65,035 | ) | | | (8,410 | ) | | | (15,232 | ) | | | (9,330 | ) | | | (32,972 | ) | | | (41,757 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management Fees | | | 59,758 | | | | 106,268 | | | | 94,208 | | | | 107,645 | | | | 367,879 | | | | 69,763 | | | | 70,896 | | | | 83,769 | | | | 224,428 | | | | 260,234 | |
Performance Fees and Allocations | | | 122,934 | (a) | | | 230,424 | (a) | | | 108,398 | | | | (123,371 | ) | | | 338,385 | (a) | | | (163,430 | ) | | | 21,960 | | | | (104,653 | ) | | | (246,123 | ) | | | 461,756 | |
Investment Income (Loss) and Other | | | 26,212 | (a) | | | 63,782 | (a) | | | 24,685 | | | | 339 | | | | 115,018 | (a) | | | (23,050 | ) | | | (408 | ) | | | (47,454 | ) | | | (70,912 | ) | | | 114,679 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 208,904 | | | | 400,474 | | | | 227,291 | | | | (15,387 | ) | | | 821,282 | | | | (116,717 | ) | | | 92,448 | | | | (68,338 | ) | | | (92,607 | ) | | | 836,669 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 33,383 | (b) | | | 44,782 | (b) | | | 56,319 | | | | (1,798 | ) | | | 132,686 | (b) | | | (80,752 | ) | | | 40,283 | | | | 34,192 | | | | (6,277 | ) | | | 134,484 | |
Other Operating Expenses | | | 8,778 | (c) | | | 14,793 | (c) | | | 22,798 | | | | 23,603 | | | | 69,972 | (c) | | | 22,200 | | | | 20,880 | | | | 23,957 | | | | 67,037 | | | | 46,369 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 42,161 | | | | 59,575 | | | | 79,117 | | | | 21,805 | | | | 202,658 | | | | (58,552 | ) | | | 61,163 | | | | 58,149 | | | | 60,760 | | | | 180,853 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | 166,743 | | | $ | 340,899 | | | $ | 148,174 | | | $ | (37,192 | ) | | $ | 618,624 | | | $ | (58,165 | ) | | $ | 31,285 | | | $ | (126,487 | ) | | $ | (153,367 | ) | | $ | 655,816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Real Estate | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 37,450 | | | $ | 60,183 | | | $ | 70,618 | | | $ | 61,053 | | | $ | 229,304 | | | $ | 66,751 | | | $ | 67,977 | | | $ | 80,361 | | | $ | 215,089 | | | $ | 168,251 | |
Transaction and Other Fees * | | | 209,451 | | | | 19,441 | | | | 14,886 | | | | 108,400 | | | | 352,178 | | | | 11,795 | | | | 6,854 | | | | 7,050 | | | | 25,699 | | | | 243,778 | |
Management Fee Offsets | | | — | | | | (691 | ) | | | (9,281 | ) | | | (1,745 | ) | | | (11,717 | ) | | | (404 | ) | | | (326 | ) | | | (1,435 | ) | | | (2,165 | ) | | | (9,972 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management Fees | | | 246,901 | | | | 78,933 | | | | 76,223 | | | | 167,708 | | | | 569,765 | | | | 78,142 | | | | 74,505 | | | | 85,976 | | | | 238,623 | | | | 402,057 | |
Performance Fees and Allocations | | | 457,360 | (a) | | | 152,681 | (a) | | | 28,479 | | | | (38,310 | ) | | | 600,210 | (a) | | | (30,062 | ) | | | (77,133 | ) | | | (302,448 | ) | | | (409,643 | ) | | | 638,520 | |
Investment Income (Loss) and Other | | | 62,511 | (a) | | | 83,501 | (a) | | | 4,398 | | | | (15,897 | ) | | | 134,513 | (a) | | | (176 | ) | | | (11,788 | ) | | | (57,180 | ) | | | (69,144 | ) | | | 150,410 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 766,772 | | | | 315,115 | | | | 109,100 | | | | 113,501 | | | | 1,304,488 | | | | 47,904 | | | | (14,416 | ) | | | (273,652 | ) | | | (240,164 | ) | | | 1,190,987 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 98,523 | (b) | | | 36,486 | (b) | | | 39,325 | | | | 65,416 | | | | 239,750 | (b) | | | 35,688 | | | | 32,083 | | | | 21,102 | | | | 88,873 | | | | 174,334 | |
Other Operating Expenses | | | 4,735 | (c) | | | 5,541 | (c) | | | 12,639 | | | | 27,575 | | | | 50,490 | (c) | | | 16,160 | | | | 12,581 | | | | 14,807 | | | | 43,548 | | | | 22,915 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 103,258 | | | | 42,027 | | | | 51,964 | | | | 92,991 | | | | 290,240 | | | | 51,848 | | | | 44,664 | | | | 35,909 | | | | 132,421 | | | | 197,249 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | 663,514 | | | $ | 273,088 | | | $ | 57,136 | | | $ | 20,510 | | | $ | 1,014,248 | | | $ | (3,944 | ) | | $ | (59,080 | ) | | $ | (309,561 | ) | | $ | (372,585 | ) | | $ | 993,738 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| * | Transaction and Other Fees are net of amounts, if any, shared with limited partners. |
| ** | Primarily broken deal expenses. |
| (a) | Pro Forma adjustments reflect the elimination of the revenues of the businesses that were not contributed as part of the Reorganization. |
| (b) | Pro Forma adjustments reflect the addition of expenses related to employee compensation and profit arrangements that were not effective prior to the Reorganization. |
| (c) | Pro Forma adjustments reflect the elimination of interest expense based on the assumption that the revolving credit facility was repaid in full from the proceeds of the offering as of January 1, 2007. |
continued…
11
THE BLACKSTONE GROUP L.P.
Exhibit 4a. Economic Net Income and Pro Forma Adjusted Economic Net Income
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | Quarter Ended | | | Nine Months Ended
September 30, |
| | | March 31,
2007 | | | June 30,
2007 | | | September 30,
2007 | | December 31,
2007 | | Full Year
2007 | | | March 31,
2008 | | | June 30,
2008 | | September 30,
2008 | | | 2008 | | | 2007 |
| | | Pro Forma Adjusted | | | | | | | Pro Forma
Adjusted | | | | | | | | | | | | | | Pro Forma
Adjusted |
Marketable Alternative Asset Management | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 61,097 | | | $ | 74,413 | | | $ | 87,999 | | $ | 92,795 | | $ | 316,304 | | | $ | 103,187 | | | $ | 127,449 | | $ | 131,279 | | | $ | 361,915 | | | $ | 223,509 |
Transaction and Other Fees * | | | 1,871 | | | | 1,189 | | | | 1,694 | | | 1,876 | | | 6,630 | | | | 1,128 | | | | 2,884 | | | 4,270 | | | | 8,282 | | | | 4,754 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management Fees | | | 62,968 | | | | 75,602 | | | | 89,693 | | | 94,671 | | | 322,934 | | | | 104,315 | | | | 130,333 | | | 135,549 | | | | 370,197 | | | | 228,263 |
Performance Fees and Allocations | | | 68,061 | (a) | | | 61,906 | (a) | | | 2,522 | | | 24,490 | | | 156,979 | (a) | | | 5,058 | | | | 45,027 | | | (12,488 | ) | | | 37,597 | | | | 132,489 |
Investment Income (Loss) and Other | | | 25,259 | (a) | | | 31,138 | (a) | | | 32,658 | | | 59,027 | | | 148,082 | (a) | | | (79,383 | ) | | | 49,885 | | | (171,033 | ) | | | (200,531 | ) | | | 89,055 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 156,288 | | | | 168,646 | | | | 124,873 | | | 178,188 | | | 627,995 | | | | 29,990 | | | | 225,245 | | | (47,972 | ) | | | 207,263 | | | | 449,807 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 59,374 | (b) | | | 78,268 | (b) | | | 34,006 | | | 45,692 | | | 217,340 | (b) | | | 56,273 | | | | 84,162 | | | 60,268 | | | | 200,703 | | | | 171,648 |
Other Operating Expenses | | | 8,898 | (c) | | | 13,511 | (c) | | | 17,779 | | | 22,205 | | | 62,393 | (c) | | | 18,307 | | | | 25,158 | | | 26,073 | | | | 69,538 | | | | 40,188 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 68,272 | | | | 91,779 | | | | 51,785 | | | 67,897 | | | 279,733 | | | | 74,580 | | | | 109,320 | | | 86,341 | | | | 270,241 | | | | 211,836 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | 88,016 | | | $ | 76,867 | | | $ | 73,088 | | $ | 110,291 | | $ | 348,262 | | | $ | (44,590 | ) | | $ | 115,925 | | $ | (134,313 | ) | | $ | (62,978 | ) | | $ | 237,971 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Financial Advisory | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Advisory Fees | | $ | 92,525 | | | $ | 97,518 | | | $ | 81,911 | | $ | 88,330 | | $ | 360,284 | | | $ | 68,563 | | | $ | 71,080 | | $ | 157,026 | | | $ | 296,669 | | | $ | 271,954 |
Investment Income and Other | | | 1,684 | | | | 1,034 | | | | 2,354 | | | 2,302 | | | 7,374 | | | | 2,597 | | | | 1,826 | | | 3,716 | | | | 8,139 | | | | 5,072 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 94,209 | | | | 98,552 | | | | 84,265 | | | 90,632 | | | 367,658 | | | | 71,160 | | | | 72,906 | | | 160,742 | | | | 304,808 | | | | 277,026 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 49,926 | (b) | | | 45,854 | (b) | | | 50,020 | | | 44,363 | | | 190,163 | (b) | | | 46,967 | | | | 48,574 | | | 82,295 | | | | 177,836 | | | | 145,800 |
Other Operating Expenses | | | 4,777 | (c) | | | 7,941 | (c) | | | 13,485 | | | 11,712 | | | 37,915 | (c) | | | 11,061 | | | | 12,537 | | | 17,352 | | | | 40,950 | | | | 26,203 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 54,703 | | | | 53,795 | | | | 63,505 | | | 56,075 | | | 228,078 | | | | 58,028 | | | | 61,111 | | | 99,647 | | | | 218,786 | | | | 172,003 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Economic Net Income | | $ | 39,506 | | | $ | 44,757 | | | $ | 20,760 | | $ | 34,557 | | $ | 139,580 | | | $ | 13,132 | | | $ | 11,795 | | $ | 61,095 | | | $ | 86,022 | | | $ | 105,023 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| * | Transaction and Other Fees are net of amounts, if any, shared with limited partners. |
| (a) | Pro Forma adjustments reflect the elimination of the revenues of the businesses that were not contributed as part of the Reorganization. |
| (b) | Pro Forma adjustments reflect the addition of expenses related to employee compensation and profit arrangements that were not effective prior to the Reorganization. |
| (c) | Pro Forma adjustments reflect the elimination of interest expense based on the assumption that the revolving credit facility was repaid in full from the proceeds of the offering as of January 1, 2007. |
continued…
12
THE BLACKSTONE GROUP L.P.
Exhibit 4a. Economic Net Income and Pro Forma Adjusted Economic Net Income
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | | Quarter Ended | | | Nine Months Ended
September 30, | |
| | | March 31,
2007 | | | June 30,
2007 | | | September 30,
2007 | | | December 31,
2007 | | | Full Year
2007 | | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | 2008 | | | 2007 | |
| | | Pro Forma Adjusted | | | | | | | | | Pro Forma
Adjusted | | | | | | | | | | | | | | | Pro Forma
Adjusted | |
Economic Net Income Recap, Total Reportable Segments | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 157,408 | | | $ | 197,454 | | | $ | 225,006 | | | $ | 220,583 | | | $ | 800,451 | | | $ | 237,274 | | | $ | 262,393 | | | $ | 278,649 | | | $ | 778,316 | | | $ | 579,868 | |
Advisory Fees | | | 92,525 | | | | 97,518 | | | | 81,911 | | | | 88,330 | | | | 360,284 | | | | 68,563 | | | | 71,080 | | | | 157,026 | | | | 296,669 | | | | 271,954 | |
Transaction and Other Fees * | | | 220,450 | | | | 76,674 | | | | 65,291 | | | | 174,464 | | | | 536,879 | | | | 23,760 | | | | 28,899 | | | | 37,410 | | | | 90,069 | | | | 362,415 | |
Management Fee Offsets ** | | | (8,231 | ) | | | (13,325 | ) | | | (30,173 | ) | | | (25,023 | ) | | | (76,752 | ) | | | (8,814 | ) | | | (15,558 | ) | | | (10,765 | ) | | | (35,137 | ) | | | (51,729 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management and Advisory Fees | | | 462,152 | | | | 358,321 | | | | 342,035 | | | | 458,354 | | | | 1,620,862 | | | | 320,783 | | | | 346,814 | | | | 462,320 | | | | 1,129,917 | | | | 1,162,508 | |
Performance Fees and Allocations | | | 648,355 | (a) | | | 445,011 | (a) | | | 139,399 | | | | (137,191 | ) | | | 1,095,574 | (a) | | | (188,434 | ) | | | (10,146 | ) | | | (419,589 | ) | | | (618,169 | ) | | | 1,232,765 | |
Investment Income (Loss) and Other | | | 115,666 | (a) | | | 179,455 | (a) | | | 64,095 | | | | 45,771 | | | | 404,987 | (a) | | | (100,012 | ) | | | 39,515 | | | | (271,951 | ) | | | (332,448 | ) | | | 359,216 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 1,226,173 | | | | 982,787 | | | | 545,529 | | | | 366,934 | | | | 3,121,423 | | | | 32,337 | | | | 376,183 | | | | (229,220 | ) | | | 179,300 | | | | 2,754,489 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 241,206 | (b) | | | 205,390 | (b) | | | 179,670 | | | | 153,673 | | | | 779,939 | (b) | | | 58,176 | | | | 205,102 | | | | 197,857 | | | | 461,135 | | | | 626,266 | |
Other Operating Expenses | | | 27,188 | (c) | | | 41,786 | (c) | | | 66,701 | | | | 85,095 | | | | 220,770 | (c) | | | 67,728 | | | | 71,156 | | | | 82,189 | | | | 221,073 | | | | 135,675 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 268,394 | | | | 247,176 | | | | 246,371 | | | | 238,768 | | | | 1,000,709 | | | | 125,904 | | | | 276,258 | | | | 280,046 | | | | 682,208 | | | | 761,941 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Economic Net Income (Loss) | | $ | 957,779 | | | $ | 735,611 | | | $ | 299,158 | | | $ | 128,166 | | | $ | 2,120,714 | | | $ | (93,567 | ) | | $ | 99,925 | | | $ | (509,266 | ) | | $ | (502,908 | ) | | $ | 1,992,548 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| * | Transaction and Other Fees are net of amounts, if any, shared with limited partners. |
| ** | Primarily broken deal expenses. |
| (a) | Pro Forma adjustments reflect the elimination of the revenues of the businesses that were not contributed as part of the Reorganization. |
| (b) | Pro Forma adjustments reflect the addition of expenses related to employee compensation and profit arrangements that were not effective prior to the Reorganization. |
| (c) | Pro Forma adjustments reflect the elimination of interest expense based on the assumption that the revolving credit facility was repaid in full from the proceeds of the offering as of January 1, 2007. |
continued…
13
THE BLACKSTONE GROUP L.P.
Exhibit 4b. Economic Net Income
(Dollars in Thousands)
The table below details Blackstone’s Economic Net Income for each reportable segment for the quarters ended March 31, 2007 and June 30, 2007 and the year ended December 31, 2007.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Corporate Private Equity | | | Real Estate | | | Marketable Alternative Asset
Management |
| | | Quarter Ended | | | Year Ended
December 31,
2007 | | | Quarter Ended | | | Year Ended
December 31,
2007 | | | Quarter Ended | | Year Ended
December 31,
2007 |
| | | March 31,
2007 | | | June 30,
2007 | | | | March 31,
2007 | | | June 30,
2007 | | | | March 31,
2007 | | June 30,
2007 | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 58,861 | | | $ | 62,858 | | | $ | 254,843 | | | $ | 37,450 | | | $ | 60,183 | | | $ | 229,304 | | | $ | 61,097 | | $ | 74,413 | | $ | 316,304 |
Transaction and Other Fees | | | 9,128 | | | | 56,044 | | | | 178,071 | | | | 209,451 | | | | 19,441 | | | | 352,178 | | | | 1,871 | | | 1,189 | | | 6,630 |
Management Fee Offsets | | | (8,231 | ) | | | (12,634 | ) | | | (65,035 | ) | | | — | | | | (691 | ) | | | (11,717 | ) | | | — | | | — | | | — |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management Fees | | | 59,758 | | | | 106,268 | | | | 367,879 | | | | 246,901 | | | | 78,933 | | | | 569,765 | | | | 62,968 | | | 75,602 | | | 322,934 |
Performance Fees and Allocations | | | 140,423 | | | | 254,466 | | | | 379,479 | | | | 476,358 | | | | 157,425 | | | | 623,200 | | | | 68,061 | | | 61,906 | | | 156,583 |
Investment Income and Other | | | 27,096 | | | | 65,415 | | | | 117,971 | | | | 63,472 | | | | 83,853 | | | | 136,578 | | | | 25,261 | | | 31,138 | | | 148,479 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 227,277 | | | | 426,149 | | | | 865,329 | | | | 786,731 | | | | 320,211 | | | | 1,329,543 | | | | 156,290 | | | 168,646 | | | 627,996 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 17,278 | | | | 24,603 | | | | 96,402 | | | | 18,328 | | | | 22,077 | | | | 145,146 | | | | 28,631 | | | 42,000 | | | 150,330 |
Other Operating Expenses | | | 12,185 | | | | 19,887 | | | | 78,473 | | | | 6,429 | | | | 8,183 | | | | 54,829 | | | | 14,495 | | | 20,253 | | | 74,728 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 29,463 | | | | 44,490 | | | | 174,875 | | | | 24,757 | | | | 30,260 | | | | 199,975 | | | | 43,126 | | | 62,253 | | | 225,058 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Economic Net Income | | $ | 197,814 | | | $ | 381,659 | | | $ | 690,454 | | | $ | 761,974 | | | $ | 289,951 | | | $ | 1,129,568 | | | $ | 113,164 | | $ | 106,393 | | $ | 402,938 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | |
| | | Financial Advisory | | | Recap, Total Reportable Segments | | | | | | | |
| | | Quarter Ended | | | Year Ended
December 31,
2007 | | | Quarter Ended | | | Year Ended
December 31,
2007 | | | | | | | |
| | | March 31,
2007 | | | June 30,
2007 | | | | March 31,
2007 | | | June 30,
2007 | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | — | | | $ | — | | | $ | — | | | $ | 157,408 | | | $ | 197,454 | | | $ | 800,451 | | | | | | | | | | |
Advisory Fees | | | 92,525 | | | | 97,518 | | | | 360,284 | | | | 92,525 | | | | 97,518 | | | | 360,284 | | | | | | | | | | |
Transaction and Other Fees | | | — | | | | — | | | | — | | | | 220,450 | | | | 76,674 | | | | 536,879 | | | | | | | | | | |
Management Fee Offsets | | | — | | | | — | | | | — | | | | (8,231 | ) | | | (13,325 | ) | | | (76,752 | ) | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Management and Advisory Fees | | | 92,525 | | | | 97,518 | | | | 360,284 | | | | 462,152 | | | | 358,321 | | | | 1,620,862 | | | | | | | | | | |
Performance Fees and Allocations | | | — | | | | — | | | | — | | | | 684,842 | | | | 473,797 | | | | 1,159,262 | | | | | | | | | | |
Investment Income and Other | | | 1,684 | | | | 1,034 | | | | 7,374 | | | | 117,513 | | | | 181,440 | | | | 410,402 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 94,209 | | | | 98,552 | | | | 367,658 | | | | 1,264,507 | | | | 1,013,558 | | | | 3,190,526 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 15,911 | | | | 22,342 | | | | 132,633 | | | | 80,148 | | | | 111,022 | | | | 524,511 | | | | | | | | | | |
Other Operating Expenses | | | 5,204 | | | | 8,638 | | | | 39,037 | | | | 38,313 | | | | 56,961 | | | | 247,067 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 21,115 | | | | 30,980 | | | | 171,670 | | | | 118,461 | | | | 167,983 | | | | 771,578 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Economic Net Income | | $ | 73,094 | | | $ | 67,572 | | | $ | 195,988 | | | $ | 1,146,046 | | | $ | 845,575 | | | $ | 2,418,948 | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
14
THE BLACKSTONE GROUP L.P.
Exhibit 5. Reconciliation of Pro Forma Adjusted Cash Flow from Operations to Net Cash Provided by (Used in) Operating Activities and of Economic Net Income Adjusted Units—Diluted to GAAP Weighted-Average Common Units—Diluted
(Dollars in Thousands, Except Unit Data)
The following table provides a reconciliation of Blackstone’s Adjusted Cash Flow from Operations to Blackstone’s Net Cash Provided by (Used in) Operating Activities. Adjusted Cash Flow from Operations is a supplemental measure of liquidity to assess liquidity and amounts available for distributions to Blackstone unitholders, including Blackstone personnel.
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2008 | | | 2007 | | | 2008 | | | 2007 | |
Net Cash Provided by (Used in) Operating Activities | | $ | 475,186 | | | $ | (266,947 | ) | | $ | 692,483 | | | $ | (1,094,055 | ) |
Changes in Operating Assets and Liabilities | | | 46,198 | | | | 859,278 | | | | (320,685 | ) | | | 913,051 | |
Blackstone Funds Related Investment Activities | | | (351,860 | ) | | | (459,539 | ) | | | (100,729 | ) | | | 867,131 | |
Net Realized Gains on Investments | | | (204,373 | ) | | | 350,629 | | | | (86,074 | ) | | | 3,825,604 | |
Non-Controlling Interests in Income of Consolidated Entities | | | 1,088,351 | | | | 336,870 | | | | 2,433,089 | | | | (2,033,096 | ) |
Realized Gains—Blackstone Funds | | | (31,473 | ) | | | (20,822 | ) | | | (11,241 | ) | | | 77,033 | |
| | | | | | | | | | | | | | | | |
| | | 1,022,029 | | | | 799,469 | | | | 2,606,843 | | | | 2,555,668 | |
| | | | |
| | | | | | | | | | | | Pro Forma | |
Cash Flow from Operations—Adjustments (a) | | | | | | | | | | | | | | | | |
Elimination of Non-Contributed Entities (b) | | | — | | | | — | | | | — | | | | (46,523 | ) |
Increase in Compensation Expense (c) | | | — | | | | — | | | | — | | | | (255,426 | ) |
Interests Held by Blackstone Holdings Limited Partners (d) | | | (999,620 | ) | | | (396,068 | ) | | | (2,372,246 | ) | | | (565,901 | ) |
Eliminate Interest Expense (e) | | | — | | | | — | | | | — | | | | 26,302 | |
Realized Gains—Blackstone Funds | | | — | | | | (44,581 | ) | | | — | | | | (242,341 | ) |
Incremental Cash Tax Effect (f) | | | (31,410 | ) | | | (47,625 | ) | | | (86,475 | ) | | | (199,706 | ) |
| | | | | | | | | | | | | | | | |
Adjusted Cash Flow from Operations | | $ | (9,001 | ) | | $ | 311,195 | | | $ | 148,122 | | | $ | 1,272,073 | |
| | | | | | | | | | | | | | | | |
The following table provides the details of the components of Adjusted Cash Flow from Operations. Adjusted Cash Flow from Operations is the principal factor in determining the amount of distributions to unitholders.
| | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | | 2008 | | | 2007 | | 2008 | | | 2007 |
| | | | |
| | | | | | | | | | | Pro Forma |
Fee Related Earnings | | | | | | | | | | | | | | |
Total Management and Advisory Fees (g) | | $ | 469,199 | | | $ | 346,749 | | $ | 1,149,157 | | | $ | 1,175,853 |
Total Expenses (h) | | | 317,390 | | | | 307,552 | | | 839,343 | | | | 928,968 |
| | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | | 151,809 | | | | 39,197 | | | 309,814 | | | | 246,885 |
| | | | | | | | | | | | | | |
Performance Fees and Allocations Net of Related Compensation (i) | | | 5,237 | | | | 209,355 | | | 28,571 | | | | 793,552 |
| | | | | | | | | | | | | | |
Blackstone Investment Income (j) | | | | | | | | | | | | | | |
Liquid | | | (167,436 | ) | | | 30,056 | | | (204,325 | ) | | | 79,801 |
Illiquid | | | 1,389 | | | | 32,587 | | | 14,062 | | | | 151,835 |
| | | | | | | | | | | | | | |
| | | (166,047 | ) | | | 62,643 | | | (190,263 | ) | | | 231,636 |
| | | | | | | | | | | | | | |
Adjusted Cash Flow from Operations | | $ | (9,001 | ) | | $ | 311,195 | | $ | 148,122 | | | $ | 1,272,073 |
| | | | | | | | | | | | | | |
| (a) | Adjusted Cash Flow from Operations is based upon historical results of operations and gives effect to the pre-initial public offering reorganization and the initial public offering as if they were completed as of January 1, 2007. These pro forma adjustments are consistent with Rule 11-01 of Regulation S–X. |
| (b) | Represent adjustments to eliminate from Adjusted Cash Flow from Operations the cash flows of the businesses that were not contributed as part of the reorganization. |
| (c) | Represent adjustments to reflect in Adjusted Cash Flow from Operations the cash portion of expenses related to employee compensation that were not effective prior to the reorganization as well as vested carried interest for departed partners. |
continued…
15
THE BLACKSTONE GROUP L.P.
Exhibit 5. Reconciliation of Pro Forma Adjusted Cash Flow from Operations to Net Cash Provided
by (Used in) Operating Activities and of Economic Net Income Adjusted Units—Diluted to GAAP
Weighted-Average Common Units—Diluted
(Dollars in Thousands, Except Unit Data)
| (d) | Represents an adjustment to add back net income (loss) allocable to interest holders of Blackstone Holdings Limited Partners after the Reorganization recorded as Non-Controlling Interests. |
| (e) | Represent adjustments to eliminate interest expense in Adjusted Cash Flow from Operations on the assumption that the revolving credit facility was repaid in full from the proceeds of the offering. |
| (f) | Represent the provisions for and/or adjustments to income taxes that were calculated using the same methodology applied in calculating such amounts for the period after the reorganization. |
| (g) | Comprised of total reportable segment Management and Advisory Fees plus Interest Income. |
| (h) | Comprised of total reportable segment compensation expense (excluding compensation expense related to Performance Fees and Allocations pursuant to Blackstone’s profit sharing plans related to carried interest and incentive fees which are included in (i) below), other operating expenses and Blackstone’s estimate of cash taxes currently due. |
| (i) | Represents realized Performance Fees and Allocations net of corresponding actual amounts due under Blackstone’s profit sharing plans related thereto. |
| (j) | Comprised of Blackstone’s investment income (realized and unrealized) on its liquid investments from its Marketable Alternative Asset Management segment as well as its net realized investment income on its illiquid investments, principally from its Corporate Private Equity and Real Estate Segments. |
The following table provides a reconciliation of Blackstone’s Total GAAP Weighted-Average Common Units—Diluted to Weighted-Average Economic Net Income Adjusted Units—Diluted.
| | | | | | | | |
| | | Quarter
Ended
September 30,
2008 | | Quarter
Ended
September 30,
2007 | | Nine Months
Ended
September 30,
2008 | | June 29, 2007
Through
September 30,
2007 |
Total GAAP Weighted-Average Common Units
Outstanding—Diluted | | 268,783,493 | | 260,194,486 | | 263,033,959 | | 260,114,870 |
Adjustments: | | | | | | | | |
Weighted-Average Partnership Units | | 831,014,915 | | 827,365,412 | | 832,994,660 | | 827,382,860 |
Weighted-Average Unvested Deferred Restricted Common Units | | 29,543,142 | | 33,457,425 | | 33,178,865 | | 33,546,583 |
| | | | | | | | |
Weighted-Average Economic Net Income Adjusted Units—Diluted | | 1,129,341,550 | | 1,121,017,323 | | 1,129,207,484 | | 1,121,044,313 |
| | | | | | | | |
16
THE BLACKSTONE GROUP L.P.
Exhibit 6. Supplemental Metrics
(Dollars in Thousands)
| | | | | | | | | |
| | | As of and for the Quarters
Ended September 30, | | | |
| | | 2008 | | 2007 | | % Variance | |
Total Assets Under Management
(End of Period) | | | | | | | | | |
| | | | | | | | | |
Corporate Private Equity | | $ | 28,390,384 | | $ | 32,658,873 | | (13% | ) |
Real Estate | | | 28,738,307 | | | 25,025,741 | | 15% | |
MAAM | | | 59,150,535 | | | 40,515,897 | | 46% | |
| | | | | | | | | |
| | $ | 116,279,226 | | $ | 98,200,511 | | 18% | |
| | | | | | | | | |
Fee-Earning Assets Under Management
(End of Period) (a) | | | | | | | | | |
| | | | | | | | | |
Corporate Private Equity | | $ | 25,349,192 | | $ | 24,705,648 | | 3% | |
Real Estate | | | 22,576,659 | | | 17,152,390 | | 32% | |
MAAM | | | 51,799,414 | | | 35,756,469 | | 45% | |
| | | | | | | | | |
| | $ | 99,725,265 | | $ | 77,614,507 | | 28% | |
| | | | | | | | | |
Weighted-Average Fee-Earning
Assets Under Management
(For the Quarter Ended) (a) | | | | | | | | | |
| | | | | | | | | |
Corporate Private Equity | | $ | 25,258,457 | | $ | 24,615,313 | | 3% | |
Real Estate | | | 22,786,022 | | | 17,089,143 | | 33% | |
MAAM | | | 55,065,692 | | | 34,828,950 | | 58% | |
| | | | | | | | | |
| | $ | 103,110,171 | | $ | 76,533,406 | | 35% | |
| | | | | | | | | |
Limited Partner Capital Deployed
(For the Quarter Ended) | | | | | | | | | |
Corporate Private Equity | | $ | 1,511,065 | | $ | 2,337,466 | | (35% | ) |
Real Estate | | | 131,129 | | | 269,846 | | (51% | ) |
MAAM (b) | | | 657,610 | | | 97,169 | | 577% | |
| | | | | | | | | |
| | $ | 2,299,804 | | $ | 2,704,481 | | (15% | ) |
| | | | | | | | | |
Fund Level Unrealized Value (c)
(End of Period) | | | | | | | | | |
| | | | | | | | | |
Corporate Private Equity | | | | | | | | | |
Cost | | $ | 17,901,156 | | $ | 12,935,576 | | 38% | |
| | | | | | | | | |
Unrealized Value | | $ | 18,023,897 | | $ | 16,540,549 | | 9% | |
| | | | | | | | | |
Real Estate | | | | | | | | | |
Cost | | $ | 11,224,808 | | $ | 6,924,629 | | 62% | |
| | | | | | | | | |
Unrealized Value | | $ | 13,473,939 | | $ | 11,611,947 | | 16% | |
| | | | | | | | | |
MAAM (b) | | | | | | | | | |
Cost | | $ | 2,539,773 | | $ | 715,040 | | 255% | |
| | | | | | | | | |
Unrealized Value | | $ | 2,409,760 | | $ | 727,787 | | 231% | |
| | | | | | | | | |
| (a) | Excludes unrealized values which Blackstone is entitled to receive in carried interest. |
| (b) | Limited Partner Capital Deployed and Fund Level Unrealized Value for the MAAM segment represent activity in Blackstone’s mezzanine and credit liquidity funds. |
| (c) | Cost and unrealized value represents the cost of those fund investments, including co-investments arranged by Blackstone, and related unrealized value on which Blackstone is entitled to receive carried interest when a fund achieves cumulative investment returns in excess of a specified rate. |
17
