Exhibit 99.1
The Blackstone Group Reports First Quarter 2009 Results
Economic Net Income was a loss of $(93) million for the first quarter of 2009, significantly better than the loss of $(827) million in the fourth quarter of 2008 and about flat from a loss of $(94) million in the first quarter of 2008.
Net Fee Related Earnings from Operations were $90 million for the first quarter of 2009, up 32% from the first quarter of 2008.
Adjusted Cash Flows From Operations were $75 million during the first quarter of 2009, up from negative $(4) million for the first quarter of 2008.
GAAP Net Loss Attributable to The Blackstone Group L.P. was $(232) million in the first quarter of 2009, including transaction-related charges of $192 million, as compared to a GAAP Net Loss of $(251) million in the first quarter of 2008, which included transaction-related charges of $226 million.
Blackstone was awarded a Single-A rating with Stable Outlook by Standard & Poor’s.
Blackstone declares a quarterly priority distribution of $0.30 per common unit.
First Quarter 2009 Highlights
| | • | | Management and Advisory Fees were $344.6 million, up from $320.8 million in the first quarter of 2008 and down from $389.2 million in the fourth quarter of 2008. Fee earning assets under management were approximately flat at $92.2 billion versus $92.9 billion at March 31, 2008 and up from $91.0 billion at December 31, 2008. |
| | • | | Fee-Earning Assets Under Management were higher in Private Equity and Real Estate year-over-year and lower in Marketable Alternative Asset Management, mostly as a result of our decision to eliminate two of our single-manager hedge funds, but also due to market declines in 2008. Both Blackstone’s credit-oriented and funds of hedge funds businesses experienced net inflows and positive performance in the first quarter of 2009. |
| | • | | Performance Fees and Allocations of negative $(213.8) million were an improvement from negative $(629.1) million for the fourth quarter of 2008, but down from negative $(188.4) million for the first quarter of 2008. Performance Fees and Allocations were positive for Corporate Private Equity and Marketable Alternative Asset Management. |
| | • | | Blackstone remains well positioned from a capital and liquidity perspective, with $776.3 million in available cash as of March 31, 2009, $400.1 million invested in liquid Blackstone Funds and $81.9 million in outstanding borrowings. |
| | |
| | |
| | The Blackstone Group® L.P. |
| | 345 Park Avenue |
| | New York, NY 10154 |
| | 212 583-5000 |
New York, May 6, 2009: The Blackstone Group L.P. (NYSE: BX) today reported its first quarter 2009 results.
For the first quarter of 2009, Total Segment Revenues were $48.0 million as compared to negative $(621.4) million for the fourth quarter of 2008 and $32.3 million for the first quarter of 2008. The year-over-year change was driven by lower net depreciation of the underlying portfolio investments in the Corporate Private Equity and Marketable Alternative Asset Management segments and increased Management and Advisory Fees in the Real Estate, Financial Advisory and Corporate Private Equity segments. These increases were partially offset by increased net depreciation of the underlying portfolio investments in the Real Estate segment.
GAAP results for the first quarter of 2009 included Revenues of $47.1 million, Other Loss of $(34.8) million and Net Loss Attributable to The Blackstone Group L.P. of $(231.6) million. For the first quarter of 2008, Revenues were $68.5 million, Other Loss was $(215.6) million and Net Loss Attributable to The Blackstone Group L.P. totaled $(251.0) million. On a GAAP basis, Net Cash Flows Provided by Operating Activities was $555.9 million for the first quarter of 2009 as compared to $115.2 million for the first quarter of 2008.
Global economies weakened further in the first quarter of 2009, while global markets were more variable. In the United States and Europe, equities markets declined in the double-digit range, while Asian markets rebounded approximately 15%-35% off of their lows. Loan pricing moderately improved in the first quarter of 2009 and modest debt issuance was visible. However, commercial mortgage backed securities markets remained mostly closed. Credit trends worsened across most consumer and commercial asset classes. Commodities prices, which dropped sharply in the second half of 2008, rose in the first quarter of 2009. Most currencies weakened against the U.S. dollar in the first quarter, with the U.S. dollar 5.5% higher against the Euro, 2.1% higher against the Pound Sterling and 9.1% higher against the Japanese Yen. Macro-economic weakness continues to negatively affect real estate fundamentals globally.
Several government initiatives to potentially stimulate lending, consumer spending and the functioning of debt capital markets were announced during the first quarter. The dollar amount of stimulus spending announced by governments worldwide is unprecedented. Lenders continue to severely restrict commitments to new debt, limiting industry-wide leveraged acquisition activity levels in both corporate and real estate markets. General acquisition activity has continued to decline, which has had a significant impact on several of our investment businesses.
Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “Blackstone continues to focus on its core investment and advisory businesses amidst a dynamic and challenging economic and market back-drop. We are a beneficiary of an altered competitive landscape, as Blackstone remains a trusted and stable partner to its institutional investors, advisory clients and employees. We will continue to channel the firm’s intellectual capital across business units to navigate market dislocations and find attractive investments with a favorable risk-reward balance.”
The table below details Blackstone’s Economic Net Income (Loss), Net Fee Related Earnings from Operations, Adjusted Cash Flows from Operations and Fee-Earning Assets Under Management as of, and for the quarters ended March 31, 2009 and 2008. Economic Net Income, Total Segments includes unrealized gains/losses and the direct compensation impact related to those gains/losses but excludes transaction-related charges.
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| | | | | | | | | | | | | | | |
| | | As of and for the Quarter Ended March 31, | | | Variance | |
| | | 2009 | | | 2008 | | | $ | | | % | |
| | | (Dollars in Thousands, Except per Unit Amounts) | |
Economic Net Income (Loss), Total Segments | | $ | (93,202 | ) | | $ | (93,567 | ) | | $ | 365 | | | — | |
| | | | |
Benefit for Income Taxes (a) | | | (10,772 | ) | | | (27,053 | ) | | | 16,281 | | | 60 | % |
| | | | | | | | | | | | | | | |
Economic Net Income (Loss) After Taxes | | $ | (82,430 | ) | | $ | (66,514 | ) | | $ | (15,916 | ) | | -24 | % |
| | | | | | | | | | | | | | | |
| | | | |
Economic Net Income (Loss) After Taxes per Adjusted Unit (b) | | $ | (0.07 | ) | | $ | (0.06 | ) | | $ | (0.01 | ) | | -23 | % |
| | | | |
Net Fee Related Earnings from Operations | | $ | 89,518 | | | $ | 67,561 | | | $ | 21,957 | | | 32 | % |
| | | | |
Adjusted Cash Flows from Operations | | $ | 74,784 | | | $ | (4,402 | ) | | $ | 79,186 | | | N/M | |
Fee-Earning Assets Under Management: | | | | | | | | | | | | | | | |
| | | | |
Corporate Private Equity | | $ | 25,461,139 | | | $ | 25,061,921 | | | $ | 399,218 | | | 2 | % |
Real Estate | | | 22,867,992 | | | | 18,795,343 | | | | 4,072,649 | | | 22 | % |
Marketable Alternative Asset Management (c) | | | 43,898,435 | | | | 49,090,455 | | | | (5,192,020 | ) | | -11 | % |
| | | | | | | | | | | | | | | |
Total Fee-Earning Assets Under Management | | $ | 92,227,566 | | | $ | 92,947,719 | | | $ | (720,153 | ) | | -1 | % |
| | | | | | | | | | | | | | | |
SEGMENT REVIEW
Corporate Private Equity
Corporate Private Equity had revenues of $68.4 million in the first quarter of 2009, as compared with negative revenues of $(193.6) million for the fourth quarter of 2008 and negative $(116.7) million for the first quarter of 2008. The increase was driven by positive performance fees earned in one of Blackstone’s funds, partially offset by lower net depreciation in the total fair value of the segment’s underlying portfolio investments.
Net Fee Related Earnings from Operations were $19.9 million for the first quarter of 2009, an increase of $1.6 million as compared to the first quarter of 2008, down from $31.6 million for the fourth quarter of 2008, primarily due to lower transaction fees. Economic Net Income was $53.1 million for the first quarter of 2009 as compared to negative $(58.2) million for the first quarter of 2008.
Compensation and Benefits expense decreased to $(5.1) million from $22.5 million in the fourth quarter of 2008 and increased from $(80.8) million in the first quarter of 2008. The first quarter of 2008 included a $109.5 million reversal of prior period carried interest allocations to certain personnel, resulting from the net depreciation in fair value of certain portfolio investments, compared with a reversal of $40.7 million in the first quarter of 2009, which also reflected a change in our carry compensation plan. Other Operating Expenses were $20.5 million, down from $23.1 million in the fourth quarter of 2008 and $22.2 million in the first quarter of 2008.
Weighted-Average Fee-Earning Assets Under Management rose to $25.5 billion from $25.1 billion in the first quarter of 2008, driven principally by the deployment of capital.
Limited Partner Capital Deployed totaled $196.1 million for the first quarter of 2009, a decrease from $340.1 million deployed in the first quarter of 2008 and $1.1 billion in the fourth quarter of 2008.
| (a) | Represents the implied benefit for income taxes calculated using the same methodology applied in calculating the tax provision for The Blackstone Group L.P. |
| (b) | Adjusted Units represents the weighted-average fully diluted unit count for Economic Net Income purposes. A reconciliation of each of these items to the equivalent GAAP measure is presented in Exhibit 5 to this release. |
| (c) | The variance of $5.2 billion is primarily attributed to a $3.3 billion decrease in Fee-Earning Assets Under Management related to Blackstone's decision to restructure its Marketable Alternative Asset Management segment and liquidate two of its single manager proprietary hedge funds as well as market decreases in 2008. |
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Real Estate
Real Estate had revenues of negative $(211.9) million for the first quarter of 2009, as compared with revenues of negative $(477.8) million for the fourth quarter of 2008 and positive revenues of $47.9 million for the first quarter of 2008. The principal driver of the decline from the first quarter of 2008 was a net depreciation in the fair value of certain portfolio investments, which reflects revised operating projections of the portfolio companies. This decrease in fair value is reflected in Performance Fees and Allocations and Investment Income (Loss) and Other.
Net Fee Related Earnings from Operations were $30.5 million for the first quarter of 2009, an increase of $10.2 million as compared to the first quarter of 2008. The principal driver of the change from the first quarter of 2008 was an increase in Base Management Fees, partially offset by a decrease in transaction fees. Economic Net Income was negative $(187.9) million for the first quarter of 2009 as compared to negative $(3.9) million for the first quarter of 2008.
Compensation and Benefits were $(37.3) million, reflecting the reversal of prior period carried interest allocations to certain personnel, down from $(12.1) million in the fourth quarter of 2008 and $35.7 million for the first quarter of 2008. Other Operating Expenses were $13.3 million, up $1.0 million and down $2.9 million from the fourth quarter of 2008 and the first quarter of 2008, respectively.
Weighted-Average Fee-Earning Assets Under Management increased 21%, or $3.9 billion, from the first quarter of 2008 to $22.7 billion.
Limited Partner Capital Deployed totaled $215.1 million for the first quarter of 2009, a decrease from the $369.2 million and $258.6 million deployed in the first and fourth quarters of 2008, respectively.
Marketable Alternative Asset Management (MAAM)
MAAM had revenues of $99.5 million, compared with negative revenues of $(55.7) million for the fourth quarter of 2008 and positive revenues of $30.0 million for the first quarter of 2008. MAAM had positive performance fees, net of investment losses, of $6.7 million in the first quarter of 2009. The change from the first quarter of 2008 was driven by an increase in performance fees and decreases in investment losses.
Net Fee Related Earnings from Operations were $14.4 million for the first quarter of 2009, a decrease from $26.3 million for the first quarter of 2008 and $21.7 million for the fourth quarter of 2008. The main driver of the change from the first quarter of 2008 was a decrease in management fees. Economic Net Income was $14.4 million for the first quarter of 2009 as compared to negative $(44.6) million for the first quarter of 2008.
Compensation and Benefits were $61.1 million, up from $40.3 million in the fourth quarter of 2008 and $56.3 million for the first quarter of 2008. The increase from the fourth quarter of 2008 was principally driven by performance related compensation and the increase from the first quarter of 2008 stemmed from the acquisition of GSO in March 2008.
Weighted-Average Fee-Earning Assets Under Management for the first quarter of 2009 totaled $43.2 billion compared with $48.8 billion for the first quarter of 2008, an 11% decrease due to net depreciation in the fair value of investments, redemptions and Blackstone’s decision to eliminate two of its single-manager hedge funds.
Limited Partner Capital Deployed totaled $208.4 million for the first quarter of 2009, up from $19.4 million for the first quarter of 2008, primarily from activity in certain of Blackstone’s credit-oriented funds. Limited Partner Capital Deployed decreased 38% from the fourth quarter of 2008.
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Financial Advisory
Revenues were $92.0 million for the first quarter of 2009, up 29% compared to the first quarter of 2008 and down 13% from the fourth quarter of 2008. An increase in Blackstone’s restructuring and reorganization advisory services business revenues was the primary driver for the increase from the first quarter of 2008.
Net Fee Related Earnings from Operations were $24.7 million for the first quarter of 2009, an increase of $22.1 million as compared to the first quarter of 2008 and $3.9 million from the fourth quarter of 2008. The primary catalyst for the increase from the first quarter of 2008 was higher restructuring and reorganization advisory services business revenues, partially offset by higher compensation. Economic Net Income was $27.1 million for the first quarter of 2009 as compared to $13.1 million for the first quarter of 2008.
Compensation and Benefits were $51.0 million, down from $56.9 million in the fourth quarter of 2008 and up from $47.0 million for the first quarter of 2008.
CAPITAL AND LIQUIDITY
For Economic Net Income purposes, the weighted-average fully diluted unit count (the “Adjusted Units”) for the first quarters of 2009 and 2008 was 1,132.2 million units and 1,127.2 million units, respectively.
The total number of units used in calculating cash distributions was 1,093.4 million units for the first quarter of 2009 and 1,082.2 million units for the first quarter of 2008.
As of March 31, 2009, Blackstone had $776.3 million in cash, $400.1 million invested in liquid Blackstone Funds and $81.9 million in outstanding borrowings. Blackstone has a new committed revolving credit facility for $850 million, which will be effective May 11, 2009 when the current facility expires.
Standard & Poor’s recently issued Blackstone an investment grade Single A rating, noting a stable outlook.(a)
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 May 29, 2009. This distribution will be paid on June 12, 2009.
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 Flows from Operations generated in 2009 available for distributions and could fall below $1.20.
No distributions will be paid in respect of the first quarter of 2009 to Blackstone personnel and others with respect to their Blackstone Holdings partnership units.
# # #
Blackstone will host a conference call on May 6, 2009 at 10:00 a.m. ET to discuss first quarter 2009 results. The conference call can be accessed by dialing (888) 713-4211 (U.S. domestic) or +1 (617) 213-4864 (international) pass code 38820314. Additionally, the conference call will be broadcast live 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
(a) | Rating agency ratings are not a recommendation to buy, sell or hold any security and they may be revised or withdrawn at any time by the rating agency. |
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to the live broadcast, a replay will be available on Blackstone’s website or by dialing (888) 286-8010 (U.S. domestic) or +1 (617) 801-6888 (international) conference ID number 94584511, 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, funds of hedge funds, credit-oriented 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, 2008, 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 1. Condensed Consolidated Statements of Operations
(Dollars in Thousands, Except Per Unit Data)
| | | | | | | | |
| | | Quarter Ended March 31, | |
| | | 2009 | | | 2008 | |
Revenues | | | | | | | | |
Management and Advisory Fees | | $ | 341,172 | | | $ | 309,409 | |
Performance Fees and Allocations | | | (214,248 | ) | | | (188,687 | ) |
Investment Income (Loss) and Other (a) | | | (79,793 | ) | | | (52,199 | ) |
| | | | | | | | |
Total Revenues | | | 47,131 | | | | 68,523 | |
| | | | | | | | |
| | |
Expenses | | | | | | | | |
Compensation and Benefits (b) | | | 812,347 | | | | 977,147 | |
Interest (c) | | | 1,399 | | | | 2,743 | |
General, Administrative and Other (d) | | | 107,817 | | | | 95,221 | |
Fund Expenses | | | 3,012 | | | | 22,952 | |
| | | | | | | | |
Total Expenses | | | 924,575 | | | | 1,098,063 | |
| | | | | | | | |
| | |
Other Income (Loss) | | | | | | | | |
Net Gains (Losses) from Fund Investment Activities | | | (34,763 | ) | | | (215,636 | ) |
| | | | | | | | |
| | |
Income (Loss) Before Provision for Taxes (e) | | | (912,207 | ) | | | (1,245,176 | ) |
| | |
Provision for Taxes | | | 17,731 | | | | 8,981 | |
| | | | | | | | |
Net Income (Loss) | | | (929,938 | ) | | | (1,254,157 | ) |
| | |
Net Income (Loss) Attributable to Redeemable Non-Controlling Interests in Consolidated Entities | | | 2,596 | | | | (184,194 | ) |
| | |
Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities | | | (41,031 | ) | | | (14,916 | ) |
| | |
Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings | | | (659,929 | ) | | | (804,054 | ) |
| | | | | | | | |
| | |
Net Income (Loss) Attributable to The Blackstone Group L.P. (f) | | $ | (231,574 | ) | | $ | (250,993 | ) |
| | | | | | | | |
| | |
Net Loss per Common Unit, Basic and Diluted | | | | | | | | |
Common Units Entitled to Priority Distributions | | $ | (0.84 | ) | | $ | (0.95 | ) |
| | | | | | | | |
Common Units Not Entitled to Priority Distributions | | $ | (1.14 | ) | | | | |
| | | | | | | | |
| | |
| | | | | | | | |
Net transaction-related charges included above were: | | | | | | | | |
(a) Investment Income (Loss) and Other | | $ | 2,358 | | | $ | — | |
(b) Total Compensation and Benefits | | $ | 812,347 | | | $ | 977,147 | |
Less: Compensation and Benefits – transaction-related | | $ | 742,704 | | | $ | 918,971 | |
| | | | | | | | |
Compensation – non-transactional (*) | | $ | 69,643 | | | $ | 58,176 | |
| | | | | | | | �� |
(c) Interest | | $ | 713 | | | $ | — | |
(d) General, Administrative and Other | | $ | 39,513 | | | $ | 33,528 | |
(e) Total transaction-related charges | | $ | 780,572 | | | $ | 952,499 | |
(f) Total transaction-related charges attributable to The Blackstone Group L.P., net of tax | | $ | 191,807 | | | $ | 225,549 | |
| (*) | Principally comprised of base pay, bonus, net carried interest allocations, benefits and non-IPO related equity-based compensation. |
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THE BLACKSTONE GROUP L.P.
Exhibit 2a. Condensed Consolidated Statements of Financial Condition
(Dollars in Thousands)
| | | | | | | | |
| | | March 31,
2009 | | | December 31,
2008 | |
Assets | | | | | | | | |
Cash and Cash Equivalents | | $ | 776,303 | | | $ | 503,737 | |
Cash Held by Blackstone Funds and Other | | | 67,505 | | | | 907,324 | |
Investments | | | 2,397,134 | | | | 2,830,942 | |
Accounts Receivable | | | 248,689 | | | | 312,067 | |
Due from Brokers | | | 970 | | | | 48,506 | |
Investment Subscriptions Paid in Advance | | | — | | | | 1,916 | |
Due from Affiliates | | | 429,869 | | | | 861,434 | |
Intangible Assets, Net | | | 1,038,013 | | | | 1,077,526 | |
Goodwill | | | 1,703,602 | | | | 1,703,602 | |
Other Assets | | | 167,098 | | | | 169,555 | |
Deferred Tax Assets | | | 845,326 | | | | 845,578 | |
| | | | | | | | |
Total Assets | | $ | 7,674,509 | | | $ | 9,262,187 | |
| | | | | | | | |
| | |
Liabilities and Partners’ Capital | | | | | | | | |
Loans Payable | | $ | 81,874 | | | $ | 387,000 | |
Amounts Due to Non-Controlling Interest Holders | | | 247,879 | | | | 1,103,423 | |
Securities Sold, Not Yet Purchased | | | 690 | | | | 894 | |
Due to Affiliates | | | 1,273,422 | | | | 1,285,577 | |
Accrued Compensation and Benefits | | | 265,419 | | | | 413,459 | |
Accounts Payable, Accrued Expenses and Other Liabilities | | | 208,681 | | | | 180,259 | |
| | | | | | | | |
Total Liabilities | | | 2,077,965 | | | | 3,370,612 | |
| | | | | | | | |
| | |
Commitments and Contingencies | | | | | | | | |
| | |
Redeemable Non-Controlling Interests in Consolidated Entities | | | 432,585 | | | | 362,462 | |
| | | | | | | | |
| | |
Partners’ Capital | | | | | | | | |
Partners’ Capital | | | 3,433,752 | | | | 3,509,448 | |
Accumulated Other Comprehensive Income (Loss) | | | (2,906 | ) | | | (291 | ) |
Non-Controlling Interests in Consolidated Entities | | | 84,683 | | | | 198,197 | |
Non-Controlling Interests in Blackstone Holdings | | | 1,648,430 | | | | 1,821,759 | |
| | | | | | | | |
Total Partners’ Capital | | | 5,163,959 | | | | 5,529,113 | |
| | | | | | | | |
Total Liabilities and Partners’ Capital | | $ | 7,674,509 | | | $ | 9,262,187 | |
| | | | | | | | |
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THE BLACKSTONE GROUP L.P.
Exhibit 2b. Condensed Consolidating Statements of Financial Condition
(Dollars in Thousands)
| | | | | | | | | | | | | | | |
| | | March 31, 2009 | |
| | | Consolidated
Operating
Partnerships | | | Consolidated
Blackstone Funds | | Reclasses
and
Eliminations | | | Consolidated | |
Assets | | | | | | | | | | | | | | | |
Cash and Cash Equivalents | | $ | 776,303 | | | $ | — | | $ | — | | | $ | 776,303 | |
Cash Held by Blackstone Funds and Other | | | 52,866 | | | | 14,824 | | | (185 | ) | | | 67,505 | |
Investments | | | 1,527,652 | | | | 1,063,093 | | | (193,611 | ) | | | 2,397,134 | |
Accounts Receivable | | | 245,151 | | | | 3,538 | | | — | | | | 248,689 | |
Due from Brokers | | | — | | | | 970 | | | — | | | | 970 | |
Investment Subscriptions Paid in Advance | | | — | | | | — | | | — | | | | — | |
Due from Affiliates | | | 409,761 | | | | 20,111 | | | (3 | ) | | | 429,869 | |
Intangible Assets, Net | | | 1,038,013 | | | | — | | | — | | | | 1,038,013 | |
Goodwill | | | 1,703,602 | | | | — | | | — | | | | 1,703,602 | |
Other Assets | | | 166,875 | | | | 223 | | | — | | | | 167,098 | |
Deferred Tax Assets | | | 845,326 | | | | — | | | — | | | | 845,326 | |
| | | | | | | | | | | | | | | |
Total Assets | | $ | 6,765,549 | | | $ | 1,102,759 | | $ | (193,799 | ) | | $ | 7,674,509 | |
| | | | | | | | | | | | | | | |
| | | | |
Liabilities and Partners’ Capital | | | | | | | | | | | | | | | |
Loans Payable | | $ | 81,874 | | | $ | — | | $ | — | | | $ | 81,874 | |
Amounts Due to Non-Controlling Interest Holders | | | 91,628 | | | | 156,251 | | | — | | | | 247,879 | |
Securities Sold, Not Yet Purchased | | | — | | | | 690 | | | — | | | | 690 | |
Due to Affiliates | | | 1,231,159 | | | | 77,811 | | | (35,548 | ) | | | 1,273,422 | |
Accrued Compensation and Benefits | | | 254,255 | | | | 11,164 | | | — | | | | 265,419 | |
Accounts Payable, Accrued Expenses and Other Liabilities | | | 202,911 | | | | 5,954 | | | (184 | ) | | | 208,681 | |
| | | | | | | | | | | | | | | |
Total Liabilities | | | 1,861,827 | | | | 251,870 | | | (35,732 | ) | | | 2,077,965 | |
| | | | | | | | | | | | | | | |
Redeemable Non-Controlling Interests in Consolidated Entities | | | — | | | | — | | | 432,585 | | | | 432,585 | |
| | | | | | | | | | | | | | | |
| | | | |
Partners’ Capital | | | | | | | | | | | | | | | |
Partners’ Capital | | | 3,433,752 | | | | 590,652 | | | (590,652 | ) | | | 3,433,752 | |
Accumulated Other Comprehensive Income (Loss) | | | (2,906 | ) | | | — | | | — | | | | (2,906 | ) |
Non-Controlling Interests in Consolidated Entities | | | (175,554 | ) | | | 260,237 | | | — | | | | 84,683 | |
Non-Controlling Interests in Blackstone Holdings | | | 1,648,430 | | | | — | | | — | | | | 1,648,430 | |
| | | | | | | | | | | | | | | |
Total Partners’ Capital | | | 4,903,722 | | | | 850,889 | | | (590,652 | ) | | | 5,163,959 | |
| | | | | | | | | | | | | | | |
Total Liabilities and Partners’ Capital | | $ | 6,765,549 | | | $ | 1,102,759 | | $ | (193,799 | ) | | $ | 7,674,509 | |
| | | | | | | | | | | | | | | |
…continued
9
THE BLACKSTONE GROUP L.P.
Exhibit 2b. Condensed Consolidating Statements of Financial Condition - Continued
(Dollars in Thousands)
| | | | | | | | | | | | | | | |
| | | December 31, 2008 | |
| | | Consolidated
Operating
Partnerships | | | Consolidated
Blackstone Funds | | Reclasses
and
Eliminations | | | Consolidated | |
Assets | | | | | | | | | | | | | | | |
Cash and Cash Equivalents | | $ | 503,737 | | | $ | — | | $ | — | | | $ | 503,737 | |
Cash Held by Blackstone Funds and Other | | | 57,536 | | | | 849,788 | | | — | | | | 907,324 | |
Investments | | | 1,650,071 | | | | 1,385,132 | | | (204,261 | ) | | | 2,830,942 | |
Accounts Receivable | | | 309,201 | | | | 2,866 | | | — | | | | 312,067 | |
Due from Brokers | | | — | | | | 48,506 | | | — | | | | 48,506 | |
Investment Subscriptions Paid in Advance | | | 6,697 | | | | — | | | (4,781 | ) | | | 1,916 | |
Due from Affiliates | | | 1,057,362 | | | | 216 | | | (196,144 | ) | | | 861,434 | |
Intangible Assets, Net | | | 1,077,526 | | | | — | | | — | | | | 1,077,526 | |
Goodwill | | | 1,703,602 | | | | — | | | — | | | | 1,703,602 | |
Other Assets | | | 169,333 | | | | 222 | | | — | | | | 169,555 | |
Deferred Tax Assets | | | 845,578 | | | | — | | | — | | | | 845,578 | |
| | | | | | | | | | | | | | | |
Total Assets | | $ | 7,380,643 | | | $ | 2,286,730 | | $ | (405,186 | ) | | $ | 9,262,187 | |
| | | | | | | | | | | | | | | |
| | | | |
Liabilities and Partners’ Capital | | | | | | | | | | | | | | | |
Loans Payable | | $ | 387,000 | | | $ | — | | $ | — | | | $ | 387,000 | |
Amounts Due to Non-Controlling Interest Holders | | | 105,942 | | | | 1,009,780 | | | (12,299 | ) | | | 1,103,423 | |
Securities Sold, Not Yet Purchased | | | — | | | | 894 | | | — | | | | 894 | |
Due to Affiliates | | | 1,064,980 | | | | 362,526 | | | (141,929 | ) | | | 1,285,577 | |
Accrued Compensation and Benefits | | | 410,593 | | | | 2,866 | | | — | | | | 413,459 | |
Accounts Payable, Accrued Expenses and Other Liabilities | | | 176,418 | | | | 112,699 | | | (108,858 | ) | | | 180,259 | |
| | | | | | | | | | | | | | | |
Total Liabilities | | | 2,144,933 | | | | 1,488,765 | | | (263,086 | ) | | | 3,370,612 | |
| | | | | | | | | | | | | | | |
| | | | |
Redeemable Non-Controlling Interests in Consolidated Entities | | | — | | | | — | | | 362,462 | | | | 362,462 | |
| | | | | | | | | | | | | | | |
| | | | |
Partners’ Capital | | | | | | | | | | | | | | | |
Partners’ Capital | | | 3,509,448 | | | | 504,562 | | | (504,562 | ) | | | 3,509,448 | |
Accumulated Other Comprehensive Income | | | (291 | ) | | | — | | | — | | | | (291 | ) |
Non-Controlling Interests in Consolidated Entities | | | (95,206 | ) | | | 293,403 | | | — | | | | 198,197 | |
Non-Controlling Interests in Blackstone Holdings | | | 1,821,759 | | | | — | | | — | | | | 1,821,759 | |
| | | | | | | | | | | | | | | |
Total Partners’ Capital | | | 5,235,710 | | | | 797,965 | | | (504,562 | ) | | | 5,529,113 | |
| | | | | | | | | | | | | | | |
Total Liabilities and Partners’ Capital | | $ | 7,380,643 | | | $ | 2,286,730 | | $ | (405,186 | ) | | $ | 9,262,187 | |
| | | | | | | | | | | | | | | |
10
THE BLACKSTONE GROUP L.P.
Exhibit 3. Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | | | | | | Quarter Ended | |
| | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | December 31,
2008 | | | Full Year
2008 | | | March 31,
2009 | |
Operating Activities | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) | | $ | (1,254,157 | ) | | $ | (594,627 | ) | | $ | (1,822,345 | ) | | $ | (1,923,025 | ) | | $ | (5,594,154 | ) | | $ | (929,938 | ) |
Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities: | | | | | | | | | | | | | | | | | | | | | | | | |
Blackstone Funds Related: | | | | | | | | | | | | | | | | | | | | | | | | |
Non-Controlling Interests in Income (Loss) of Consolidated Entities | | | 209,980 | | | | (121,292 | ) | | | 389,856 | | | | 202,011 | | | | 680,555 | | | | 13,235 | |
Net Realized (Gains) Losses on Investments | | | 256 | | | | (118,555 | ) | | | 204,373 | | | | 78,652 | | | | 164,726 | | | | 53,190 | |
Changes in Unrealized (Gains) Losses on Investments Allocable to Blackstone Group | | | 62,823 | | | | (7,770 | ) | | | 182,138 | | | | 386,870 | | | | 624,061 | | | | 78,218 | |
Non-Cash Performance Fees and Allocations | | | 76,279 | | | | 37,343 | | | | 393,282 | | | | 579,154 | | | | 1,086,058 | | | | 101,770 | |
Equity-Based Compensation Expense | | | 914,671 | | | | 805,597 | | | | 774,431 | | | | 807,918 | | | | 3,302,617 | | | | 738,045 | |
Intangible Amortization | | | 33,528 | | | | 40,685 | | | | 39,512 | | | | 39,512 | | | | 153,237 | | | | 39,513 | |
Other Non-Cash Amounts Included in Net Income | | | 3,845 | | | | 5,102 | | | | 4,470 | | | | 6,271 | | | | 19,688 | | | | 6,006 | |
Cash Flows Due to Changes in Operating Assets and Liabilities | | | 316,363 | | | | 58,357 | | | | (42,392 | ) | | | 651,626 | | | | 983,954 | | | | 182,718 | |
Blackstone Funds Related Investment Activity | | | (248,434 | ) | | | (2,697 | ) | | | 351,860 | | | | 368,964 | | | | 469,693 | | | | 273,125 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by Operating Activities | | | 115,154 | | | | 102,143 | | | | 475,185 | | | | 1,197,953 | | | | 1,890,435 | | | | 555,882 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Investing Activities | | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by (Used in) Investing Activities | | | (388,918 | ) | | | 20,210 | | | | (9,731 | ) | | | (3,241 | ) | | | (381,680 | ) | | | (2,044 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Financing Activities | | | | | | | | | | | | | | | | | | | | | | | | |
Net Cash Provided by (Used in) Financing Activities | | | 77,714 | | | | (577,272 | ) | | | 451,839 | | | | (1,825,928 | ) | | | (1,873,647 | ) | | | (281,272 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Effect of Exchange Rate Changes on Cash and Cash Equivalents | | | 90 | | | | (90 | ) | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Increase (Decrease) in Cash and Cash Equivalents | | | (195,960 | ) | | | (455,009 | ) | | | 917,293 | | | | (631,216 | ) | | | (364,892 | ) | | | 272,566 | |
Cash and Cash Equivalents, Beginning of Period | | | 868,629 | | | | 672,669 | | | | 217,660 | | | | 1,134,953 | | | | 868,629 | | | | 503,737 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Cash and Cash Equivalents, End of Period | | $ | 672,669 | | | $ | 217,660 | | | $ | 1,134,953 | | | $ | 503,737 | | | $ | 503,737 | | | $ | 776,303 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
11
THE BLACKSTONE GROUP L.P.
Exhibit 4a. Economic Net Income and Net Fee Related Earnings from Operations
(Dollars in Thousands)
The tables below detail Blackstone’s Economic Net Income and Net Fee Related Earnings from Operations. Net Fee Related Earnings from Operations is a supplemental measure of after tax performance used to highlight earnings from operations excluding the income from and related profit sharing expenses of Blackstone’s performance fees and investment income except for interest income. The reconciliation of Economic Net Income to Net Fee Related Earnings from Operations is presented in Exhibit 4b to this release.
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | December 31,
2008 | | | March 31,
2009 | |
Corporate Private Equity | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 67,336 | | | $ | 66,967 | | | $ | 67,009 | | | $ | 67,649 | | | $ | 68,431 | |
Transaction and Other Fees * | | | 10,837 | | | | 19,161 | | | | 26,090 | | | | 24,862 | | | | 13,982 | |
Management Fee Offsets ** | | | (8,410 | ) | | | (15,232 | ) | | | (9,330 | ) | | | (1,044 | ) | | | (3,654 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Management Fees | | | 69,763 | | | | 70,896 | | | | 83,769 | | | | 91,467 | | | | 78,759 | |
Performance Fees and Allocations | | | (163,430 | ) | | | 21,960 | | | | (104,653 | ) | | | (184,362 | ) | | | 4,818 | |
Investment Income (Loss) and Other | | | (23,050 | ) | | | (408 | ) | | | (47,454 | ) | | | (100,668 | ) | | | (15,136 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | (116,717 | ) | | | 92,448 | | | | (68,338 | ) | | | (193,563 | ) | | | 68,441 | |
| | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | (80,752 | ) | | | 40,283 | | | | 34,192 | | | | 22,483 | | | | (5,124 | ) |
Other Operating Expenses | | | 22,200 | | | | 20,880 | | | | 23,957 | | | | 23,093 | | | | 20,453 | |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | (58,552 | ) | | | 61,163 | | | | 58,149 | | | | 45,576 | | | | 15,329 | |
| | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | (58,165 | ) | | $ | 31,285 | | | $ | (126,487 | ) | | $ | (239,139 | ) | | $ | 53,112 | |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 18,297 | | | $ | 15,871 | | | $ | 16,194 | | | $ | 31,566 | | | $ | 19,883 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Real Estate | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 66,751 | | | $ | 67,977 | | | $ | 80,361 | | | $ | 80,832 | | | $ | 80,198 | |
Transaction and Other Fees * | | | 11,795 | | | | 6,854 | | | | 7,050 | | | | 10,347 | | | | 3,140 | |
Management Fee Offsets ** | | | (404 | ) | | | (326 | ) | | | (1,435 | ) | | | (2,804 | ) | | | (1,193 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Management Fees | | | 78,142 | | | | 74,505 | | | | 85,976 | | | | 88,375 | | | | 82,145 | |
Performance Fees and Allocations | | | (30,062 | ) | | | (77,133 | ) | | | (302,448 | ) | | | (409,380 | ) | | | (228,573 | ) |
Investment Income (Loss) and Other | | | (176 | ) | | | (11,788 | ) | | | (57,180 | ) | | | (156,840 | ) | | | (65,462 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 47,904 | | | | (14,416 | ) | | | (273,652 | ) | | | (477,845 | ) | | | (211,890 | ) |
| | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 35,688 | | | | 32,083 | | | | 21,102 | | | | (12,080 | ) | | | (37,319 | ) |
Other Operating Expenses | | | 16,160 | | | | 12,581 | | | | 14,807 | | | | 12,234 | | | | 13,280 | |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 51,848 | | | | 44,664 | | | | 35,909 | | | | 154 | | | | (24,039 | ) |
| | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | (3,944 | ) | | $ | (59,080 | ) | | $ | (309,561 | ) | | $ | (477,999 | ) | | $ | (187,851 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 20,317 | | | $ | 22,787 | | | $ | 32,739 | | | $ | 43,778 | | | $ | 30,513 | |
| | | | | | | | | | | | | | | | | | | | |
| * | Transaction and Other Fees are net of amounts, if any, shared with limited partners. |
| ** | Primarily placement fees and, for Corporate Private Equity, broken deal expenses. |
continued…
12
THE BLACKSTONE GROUP L.P.
Exhibit 4a. Economic Net Income and Net Fee Related Earnings from Operations - Continued
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | December 31,
2008 | | | March 31,
2009 | |
Marketable Alternative Asset Management | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 103,187 | | | $ | 127,465 | | | $ | 131,908 | | | $ | 114,276 | | | $ | 96,503 | |
Transaction and Other Fees * | | | 1,128 | | | | 2,884 | | | | 3,806 | | | | 698 | | | | 443 | |
Management Fee Offsets ** | | | — | | | | (16 | ) | | | (165 | ) | | | (6,425 | ) | | | (4,213 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Management Fees | | | 104,315 | | | | 130,333 | | | | 135,549 | | | | 108,549 | | | | 92,733 | |
Performance Fees and Allocations | | | 5,058 | | | | 45,027 | | | | (12,488 | ) | | | (35,338 | ) | | | 9,922 | |
Investment Income (Loss) and Other | | | (79,383 | ) | | | 49,885 | | | | (171,033 | ) | | | (128,954 | ) | | | (3,190 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 29,990 | | | | 225,245 | | | | (47,972 | ) | | | (55,743 | ) | | | 99,465 | |
| | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 56,273 | | | | 84,162 | | | | 60,268 | | | | 40,252 | | | | 61,134 | |
Other Operating Expenses | | | 18,307 | | | | 25,158 | | | | 26,073 | | | | 36,489 | | | | 23,907 | |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 74,580 | | | | 109,320 | | | | 86,341 | | | | 76,741 | | | | 85,041 | |
| | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | (44,590 | ) | | $ | 115,925 | | | $ | (134,313 | ) | | $ | (132,484 | ) | | $ | 14,424 | |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 26,322 | | | $ | 40,490 | | | $ | 42,417 | | | $ | 21,712 | | | $ | 14,428 | |
| | | | | | | | | | | | | | | | | | | | |
Financial Advisory | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | |
Advisory Fees | | $ | 68,563 | | | $ | 71,080 | | | $ | 157,026 | | | $ | 100,850 | | | $ | 90,940 | |
Investment Income and Other | | | 2,597 | | | | 1,826 | | | | 3,716 | | | | 4,908 | | | | 1,045 | |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 71,160 | | | | 72,906 | | | | 160,742 | | | | 105,758 | | | | 91,985 | |
| | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 46,967 | | | | 48,574 | | | | 82,295 | | | | 56,919 | | | | 50,952 | |
Other Operating Expenses | | | 11,061 | | | | 12,537 | | | | 17,352 | | | | 26,327 | | | | 13,920 | |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 58,028 | | | | 61,111 | | | | 99,647 | | | | 83,246 | | | | 64,872 | |
| | | | | | | | | | | | | | | | | | | | |
Economic Net Income | | $ | 13,132 | | | $ | 11,795 | | | $ | 61,095 | | | $ | 22,512 | | | $ | 27,113 | |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 2,625 | | | $ | 11,295 | | | $ | 60,460 | | | $ | 20,798 | | | $ | 24,694 | |
| | | | | | | | | | | | | | | | | | | | |
| * | Transaction and Other Fees are net of amounts, if any, shared with limited partners. |
| ** | Primarily placement fees and, for Corporate Private Equity, broken deal expenses. |
continued…
13
THE BLACKSTONE GROUP L.P.
Exhibit 4a. Economic Net Income and Net Fee Related Earnings from Operations - Continued
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | December 31,
2008 | | | March 31,
2009 | |
Economic Net Income Recap, Total Segments | | | | | | | | | | | | | | | | | | | | |
Revenues | | | | | | | | | | | | | | | | | | | | |
Management Fees | | | | | | | | | | | | | | | | | | | | |
Base Management Fees | | $ | 237,274 | | | $ | 262,409 | | | $ | 279,278 | | | $ | 262,757 | | | $ | 245,132 | |
Advisory Fees | | | 68,563 | | | | 71,080 | | | | 157,026 | | | | 100,850 | | | | 90,940 | |
Transaction and Other Fees * | | | 23,760 | | | | 28,899 | | | | 36,946 | | | | 35,907 | | | | 17,565 | |
Management Fee Offsets ** | | | (8,814 | ) | | | (15,574 | ) | | | (10,930 | ) | | | (10,273 | ) | | | (9,060 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Management and Advisory Fees | | | 320,783 | | | | 346,814 | | | | 462,320 | | | | 389,241 | | | | 344,577 | |
Performance Fees and Allocations | | | (188,434 | ) | | | (10,146 | ) | | | (419,589 | ) | | | (629,080 | ) | | | (213,833 | ) |
Investment Income (Loss) and Other | | | (100,012 | ) | | | 39,515 | | | | (271,951 | ) | | | (381,554 | ) | | | (82,743 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Revenues | | | 32,337 | | | | 376,183 | | | | (229,220 | ) | | | (621,393 | ) | | | 48,001 | |
| | | | | | | | | | | | | | | | | | | | |
Expenses | | | | | | | | | | | | | | | | | | | | |
Compensation and Benefits | | | 58,176 | | | | 205,102 | | | | 197,857 | | | | 107,574 | | | | 69,643 | |
Other Operating Expenses | | | 67,728 | | | | 71,156 | | | | 82,189 | | | | 98,143 | | | | 71,560 | |
| | | | | | | | | | | | | | | | | | | | |
Total Segment Expenses | | | 125,904 | | | | 276,258 | | | | 280,046 | | | | 205,717 | | | | 141,203 | |
| | | | | | | | | | | | | | | | | | | | |
Total Economic Net Income (Loss) | | $ | (93,567 | ) | | $ | 99,925 | | | $ | (509,266 | ) | | $ | (827,110 | ) | | $ | (93,202 | ) |
| | | | | | | | | | | | | | | | | | | | |
Total Net Fee Related Earnings from Operations | | $ | 67,561 | | | $ | 90,443 | | | $ | 151,810 | | | $ | 117,854 | | | $ | 89,518 | |
| | | | | | | | | | | | | | | | | | | | |
| * | Transaction and Other Fees are net of amounts, if any, shared with limited partners. |
| ** | Primarily placement fees and, for Corporate Private Equity, broken deal expenses. |
14
THE BLACKSTONE GROUP L.P.
Exhibit 4b. Reconciliation of Economic Net Income
to Net Fee Related Earnings from Operations - Continued
(Dollars in Thousands)
The tables below reconcile Economic Net Income to Net Fee Related Earnings from Operations.
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | December 31,
2008 | | | March 31,
2009 | |
Corporate Private Equity | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | (58,165 | ) | | $ | 31,285 | | | $ | (126,487 | ) | | $ | (239,139 | ) | | $ | 53,112 | |
Performance Fees and Allocations Adjustment (a) | | | 163,430 | | | | (21,960 | ) | | | 104,653 | | | | 184,362 | | | | (4,818 | ) |
Investment Income (Loss) and Other Adjustment (b) | | | 23,050 | | | | 408 | | | | 47,454 | | | | 100,668 | | | | 15,136 | |
Interest Income (c) | | | 874 | | | | 326 | | | | 436 | | | | 9,296 | | | | 373 | |
Performance Related Compensation and Benefits Adjustment (d) | | | (109,934 | ) | | | 7,678 | | | | (6,181 | ) | | | (21,908 | ) | | | (41,972 | ) |
Taxes Payable (e) | | | (958 | ) | | | (1,866 | ) | | | (3,681 | ) | | | (1,713 | ) | | | (1,948 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 18,297 | | | $ | 15,871 | | | $ | 16,194 | | | $ | 31,566 | | | $ | 19,883 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Real Estate | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | (3,944 | ) | | $ | (59,080 | ) | | $ | (309,561 | ) | | $ | (477,999 | ) | | $ | (187,851 | ) |
Performance Fees and Allocations Adjustment (a) | | | 30,062 | | | | 77,133 | | | | 302,448 | | | | 409,380 | | | | 228,573 | |
Investment Income (Loss) and Other Adjustment (b) | | | 176 | | | | 11,788 | | | | 57,180 | | | | 156,840 | | | | 65,462 | |
Interest Income (c) | | | 2,445 | | | | (429 | ) | | | 1,511 | | | | 5,361 | | | | 380 | |
Performance Related Compensation and Benefits Adjustment (d) | | | (1,921 | ) | | | (4,759 | ) | | | (19,121 | ) | | | (48,090 | ) | | | (73,321 | ) |
Taxes Payable (e) | | | (6,501 | ) | | | (1,866 | ) | | | 282 | | | | (1,714 | ) | | | (2,730 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 20,317 | | | $ | 22,787 | | | $ | 32,739 | | | $ | 43,778 | | | $ | 30,513 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Marketable Alternative Asset Management | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | (44,590 | ) | | $ | 115,925 | | | $ | (134,313 | ) | | $ | (132,484 | ) | | $ | 14,424 | |
Performance Fees and Allocations Adjustment (a) | | | (5,058 | ) | | | (45,027 | ) | | | 12,488 | | | | 35,338 | | | | (9,922 | ) |
Investment Income (Loss) and Other Adjustment (b) | | | 79,383 | | | | (49,885 | ) | | | 171,033 | | | | 128,954 | | | | 3,190 | |
Interest Income (c) | | | 2,889 | | | | 1,835 | | | | 1,215 | | | | 3,805 | | | | 718 | |
Performance Related Compensation and Benefits Adjustment (d) | | | 1,360 | | | | 18,141 | | | | (5,798 | ) | | | (12,188 | ) | | | 7,427 | |
Taxes Payable (e) | | | (7,662 | ) | | | (499 | ) | | | (2,208 | ) | | | (1,713 | ) | | | (1,409 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 26,322 | | | $ | 40,490 | | | $ | 42,417 | | | $ | 21,712 | | | $ | 14,428 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Financial Advisory | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | 13,132 | | | $ | 11,795 | | | $ | 61,095 | | | $ | 22,512 | | | $ | 27,113 | |
Investment Income (Loss) and Other Adjustment (b) | | | (2,597 | ) | | | (1,826 | ) | | | (3,716 | ) | | | (4,908 | ) | | | (1,045 | ) |
Interest Income (c) | | | 2,596 | �� | | | 1,826 | | | | 3,717 | | | | 4,908 | | | | 1,045 | |
Taxes Payable (e) | | | (10,506 | ) | | | (500 | ) | | | (636 | ) | | | (1,714 | ) | | | (2,419 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 2,625 | | | $ | 11,295 | | | $ | 60,460 | | | $ | 20,798 | | | $ | 24,694 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | This adjustment removes from ENI the segment amount of Performance Fees and Allocations. |
| (b) | This adjustment removes from ENI the segment amount of Investment Income (Loss) Other. |
| (c) | Represents the Interest Income portion of Investment Income (Loss) and Other. |
| (d) | This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees and Allocations. |
| (e) | Represents an implied payable for income taxes calculated using the same methodology applied in calculating the provision for The Blackstone Group L.P. |
continued…
15
THE BLACKSTONE GROUP L.P.
Exhibit 4b. Reconciliation of Economic Net Income
to Net Fee Related Earnings from Operations - Continued
(Dollars in Thousands)
| | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended | |
| | | March 31,
2008 | | | June 30,
2008 | | | September 30,
2008 | | | December 31,
2008 | | | March 31,
2009 | |
Total Segments | | | | | | | | | | | | | | | | | | | | |
Economic Net Income (Loss) | | $ | (93,567 | ) | | $ | 99,925 | | | $ | (509,266 | ) | | $ | (827,110 | ) | | $ | (93,202 | ) |
Performance Fees and Allocations Adjustment (a) | | | 188,434 | | | | 10,146 | | | | 419,589 | | | | 629,080 | | | | 213,833 | |
Investment Income (Loss) and Other Adjustment (b) | | | 100,012 | | | | (39,515 | ) | | | 271,951 | | | | 381,554 | | | | 82,743 | |
Interest Income (c) | | | 8,804 | | | | 3,558 | | | | 6,879 | | | | 23,370 | | | | 2,516 | |
Performance Related Compensation and Benefits Adjustment (d) | | | (110,495 | ) | | | 21,060 | | | | (31,100 | ) | | | (82,186 | ) | | | (107,866 | ) |
Taxes Payable (e) | | | (25,627 | ) | | | (4,731 | ) | | | (6,243 | ) | | | (6,854 | ) | | | (8,506 | ) |
| | | | | | | | | | | | | | | | | | | | |
Net Fee Related Earnings from Operations | | $ | 67,561 | | | $ | 90,443 | | | $ | 151,810 | | | $ | 117,854 | | | $ | 89,518 | |
| | | | | | | | | | | | | | | | | | | | |
| (a) | This adjustment removes from ENI the segment amount of Performance Fees and Allocations. |
| (b) | This adjustment removes from ENI the segment amount of Investment Income (Loss) Other. |
| (c) | Represents the Interest Income portion of Investment Income (Loss) and Other. |
| (d) | This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees and Allocations. |
| (e) | Represents an implied payable for income taxes calculated using the same methodology applied in calculating the provision for The Blackstone Group L.P. |
16
THE BLACKSTONE GROUP L.P.
Exhibit 5. Reconciliation of Adjusted Cash Flows from Operations to Net Cash Provided by Operating
Activities and of Weighted-Average Economic Net Income Adjusted Units—Diluted
to Total GAAP Weighted-Average Common Units Outstanding—Diluted
(Dollars in Thousands, Except Unit Data)
The following table provides a reconciliation of Blackstone’s Adjusted Cash Flows from Operations to Blackstone’s Net Cash Provided by Operating Activities. Adjusted Cash Flows from Operations is a supplemental measure of liquidity to assess liquidity and amounts available for distributions to Blackstone unitholders, including Blackstone personnel.
| | | | | | | | |
| | | Quarter Ended March 31, | |
| | | 2009 | | | 2008 | |
Net Cash Provided by Operating Activities | | $ | 555,882 | | | $ | 115,154 | |
Changes in Operating Assets and Liabilities | | | (182,718 | ) | | | (316,363 | ) |
Blackstone Funds Related Investment Activities | | | (273,125 | ) | | | 248,434 | |
Net Realized Gains (Losses) on Investments | | | (53,190 | ) | | | (256 | ) |
Non-Controlling Interests in Income of Consolidated Entities | | | 685,129 | | | | 793,184 | |
Realized Gains (Losses) - Blackstone Funds | | | (6,488 | ) | | | (23,854 | ) |
| | |
Cash Flows from Operations - Adjustments | | | | | | | | |
Interests Held by Blackstone Holdings Limited Partners (a) | | | (659,929 | ) | | | (804,054 | ) |
Incremental Cash Tax Effect (b) | | | 9,223 | | | | (16,647 | ) |
| | | | | | | | |
Adjusted Cash Flows from Operations | | $ | 74,784 | | | $ | (4,402 | ) |
| | | | | | | | |
The following table provides the details of the components of Adjusted Cash Flows from Operations. Adjusted Cash Flows from Operations is the principal factor in determining the amount of distributions to unitholders.
| | | | | | | | |
| | | Quarter Ended March 31, | |
| | | 2009 | | | 2008 | |
Fee Related Earnings | | | | | | | | |
Total Management and Advisory Fees (c) | | $ | 347,093 | | | $ | 329,587 | |
Total Expenses (d) | | | 257,575 | | | | 262,026 | |
| | | | | | | | |
Net Fee Related Earnings from Operations | | | 89,518 | | | | 67,561 | |
| | | | | | | | |
Performance Fees and Allocations Net of Related Compensation (e) | | | — | | | | 8,286 | |
| | | | | | | | |
Blackstone Investment Income (f) | | | | | | | | |
Liquid | | | (1,702 | ) | | | (82,911 | ) |
Illiquid | | | (13,032 | ) | | | 2,662 | |
| | | | | | | | |
| | | (14,734 | ) | | | (80,249 | ) |
| | | | | | | | |
Adjusted Cash Flows from Operations | | $ | 74,784 | | | $ | (4,402 | ) |
| | | | | | | | |
| (a) | 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. |
| (b) | Represents 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. |
| (c) | Comprised of total segment Management and Advisory Fees plus interest income. |
| (d) | Comprised of total 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 (e) below), other operating expenses and Blackstone’s estimate of taxes payable. |
| (e) | Represents realized Performance Fees and Allocations net of corresponding actual amounts due under Blackstone’s profit sharing plans related thereto. |
| (f) | 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 and permanent impairment charges on certain illiquid investments. |
continued…
17
THE BLACKSTONE GROUP L.P.
Exhibit 5. Reconciliation of Adjusted Cash Flows from Operations to Net Cash Provided by (Used in) Operating
Activities and of Weighted-Average Economic Net Income Adjusted Units—Diluted
to Total GAAP Weighted-Average Common Units Outstanding—Diluted—Continued
(Dollars in Thousands, Except Unit Data)
The following table provides a reconciliation of Blackstone’s Total GAAP Weighted-Average Common Units Outstanding—Diluted to Weighted-Average Economic Net Income Adjusted Units—Diluted.
| | | | |
| | | Quarter Ended March 31, |
| | | 2009 | | 2008 |
Total GAAP Weighted-Average Common Units Outstanding - Diluted | | 275,252,037 | | 263,147,120 |
Adjustments: | | | | |
Weighted-Average Partnership Units | | 830,772,697 | | 831,980,264 |
Weighted-Average Unvested Deferred Restricted Common Units | | 26,206,018 | | 32,060,929 |
| | | | |
Weighted-Average Economic Net Income Adjusted Units - Diluted | | 1,132,230,752 | | 1,127,188,313 |
| | | | |
18
THE BLACKSTONE GROUP L.P.
Exhibit 6. Supplemental Metrics
(Dollars in Thousands)
| | | | | | |
| | | As of and for the Quarters Ended
March 31, |
| | | 2009 | | 2008 |
Total Assets Under Management (End of Period) | | | | |
Corporate Private Equity | | $ | 23,202,949 | | $ | 30,651,023 |
Real Estate | | | 21,454,095 | | | 26,278,298 |
MAAM (a) | | | 47,888,124 | | | 56,601,250 |
| | | | | | |
| | $ | 92,545,168 | | $ | 113,530,571 |
| | | | | | |
Fee-Earning Assets Under Management (End of Period) (b) | | | | |
Corporate Private Equity | | $ | 25,461,139 | | $ | 25,061,921 |
Real Estate | | | 22,867,992 | | | 18,795,343 |
MAAM (c) | | | 43,898,435 | | | 49,090,455 |
| | | | | | |
| | $ | 92,227,566 | | $ | 92,947,719 |
| | | | | | |
Weighted-Average Fee-Earning Assets Under Management (For the Quarter Ended) (b) | | | | |
Corporate Private Equity | | $ | 25,455,066 | | $ | 25,054,322 |
Real Estate | | | 22,746,282 | | | 18,868,242 |
MAAM (d) | | | 43,230,872 | | | 48,820,675 |
| | | | | | |
| | $ | 91,432,220 | | $ | 92,743,239 |
| | | | | | |
Limited Partner Capital Deployed (For the Quarter Ended) | | | | |
Corporate Private Equity | | $ | 196,140 | | $ | 340,119 |
Real Estate | | | 215,123 | | | 369,202 |
MAAM (e) | | | 208,359 | | | 19,389 |
| | | | | | |
| | $ | 619,622 | | $ | 728,710 |
| | | | | | |
Fund Level Unrealized Value (f) (End of Period) | | | | |
Corporate Private Equity | | | | | | |
Cost | | $ | 19,229,828 | | $ | 14,921,136 |
| | | | | | |
Unrealized Value | | $ | 14,874,562 | | $ | 17,690,435 |
| | | | | | |
Real Estate | | | | | | |
Cost | | $ | 11,798,292 | | $ | 11,008,855 |
| | | | | | |
Unrealized Value | | $ | 8,169,473 | | $ | 15,498,537 |
| | | | | | |
MAAM (e) | | | | | | |
Cost | | $ | 2,903,539 | | $ | 1,205,365 |
| | | | | | |
Unrealized Value | | $ | 1,947,368 | | $ | 1,228,877 |
| | | | | | |
| (a) | Includes $412.8 million and $4.0 billion as of March 31, 2009 and 2008, respectively, resulting in a decrease of $3.6 billion, related to two single manager proprietary hedge funds which have been or are in the process of being liquidated in an orderly fashion following Blackstone’s 2008 decision to restructure the businesses. |
| (b) | Excludes unrealized values which Blackstone is entitled to receive in carried interest. |
| (c) | Includes $378.2 million and $3.7 billion as of March 31, 2009 and 2008, respectively, resulting in a decrease of $3.3 billion, related to the matters discussed in (a). |
| (d) | Includes $483.8 million and $4.0 billion for the quarters ended March 31, 2009 and 2008, respectively, resulting in a decrease of $3.5 billion, related to the matters discussed in (a). |
| (e) | Limited Partner Capital Deployed and Fund Level Unrealized Value for the MAAM segment represent activity in Blackstone’s mezzanine and credit liquidity funds. |
| (f) | Cost and unrealized value represents the limited partners’ share, including co-investments arranged by Blackstone, of those fund level investments before carried interest allocations to Blackstone when a fund achieves cumulative investment returns in excess of a specified rate. |
19
