Exhibit 99.1
Och-Ziff Capital Management Group LLC Reports
Fourth Quarter and Full Year 2008 Results
Fourth Quarter 2008 Dividend of $0.05 per Class A Share
NEW YORK, February 12, 2009 – Och-Ziff Capital Management Group LLC (NYSE:OZM) (the “Company” or “Och-Ziff”) today reported its results for the fourth quarter and full year ended December 31, 2008, and the declaration of a $0.05 fourth quarter cash dividend on its Class A Shares.
2008 Summary Statistics
| • | Distributable Earnings for the Och-Ziff Funds segment of $33.0 million, or $0.08 per Adjusted Class A Share, for the 2008 fourth quarter and $192.1 million, or $0.48 per Adjusted Class A Share, for the 2008 full year |
| • | Assets under management of $22.1 billion as of January 1, 2009, reflecting $5.7 billion in performance-related depreciation and $5.4 billion in net outflows during 2008 |
| • | Net annualized return of the OZ Master Fund of -15.9%, 2.5% and 5.4% for the 1, 3 and 5 year periods, respectively, ended December 31, 2008 |
For the fourth quarter and full year ended December 31, 2008, Och-Ziff reported a GAAP net loss of $112.2 million, or $1.49 per basic and diluted Class A Share, and $510.6 million, or $6.86 per basic and diluted Class A Share, respectively. The GAAP net loss in both periods resulted primarily from non-cash expenses of $422.2 million and $1.7 billion, respectively, associated with the Company’s reorganization in connection with its initial public offering (“IPO”) in November 2007. These expenses are related to the amortization of Och-Ziff Operating Group A Units (“Group A Units”), which represent equity interests in the Company’s principal operating subsidiaries that were issued to the Company’s pre-IPO owners in exchange for their pre-IPO interests in those subsidiaries. The Group A Units vest annually over five years from the closing of the IPO. Accordingly, amortization of these expenses is expected to result in a GAAP net loss each quarter through 2012. Once vested, the Group A Units may be exchanged on a one-to-one basis for Class A Shares.
Also contributing to the GAAP net loss in the fourth quarter and full year of 2008 were non-cash expenses of $34.3 million and $102.0 million, respectively, for the amortization of equity-based compensation, primarily related to Class A Restricted Share Units (“RSUs”) awarded to all of the Company’s employees in connection with the IPO. These RSUs vest annually over four years from the closing of the IPO. Each RSU represents the right to receive one Class A Share upon vesting.
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Distributable Earnings for the Och-Ziff Funds segment for the fourth quarter and full year ended December 31, 2008 was $33.0 million, or $0.08 per Adjusted Class A Share, and $192.1 million or $0.48 per Adjusted Class A Share, respectively. Distributable Earnings is a supplemental non-GAAP financial measure that management believes provides a meaningful basis for comparison of the after-tax operating performance of the Och-Ziff Funds segment, which includes substantially all of the Company’s business. Additionally, management uses Distributable Earnings, among other financial data, to determine the earnings available to distribute as dividends to holders of the Company’s Class A Shares and to the Company’s partners and Ziff Brothers Investments (the “Ziffs”) with respect to their Group A Units.
Distributable Earnings is equal to the Economic Income of the Och-Ziff Funds segment less adjusted income taxes. These adjusted income taxes are estimated assuming all Group A Units and RSUs were converted on a one-to-one basis into Class A Shares (“Adjusted Class A Shares”). Distributable Earnings per Share is equal to Distributable Earnings divided by the weighted average number of Adjusted Class A Shares. Distributable Earnings should not be considered as an alternative to GAAP net income or cash flow, and is not necessarily indicative of liquidity or the cash available to fund operations. For a reconciliation of the Och-Ziff Funds segment fourth quarter and full year 2008 Economic Income to Distributable Earnings, please see Exhibit 8 of the financial tables that accompany this press release.
Och-Ziff’s assets under management were $27.0 billion as of December 31, 2008, 19% lower than the $33.4 billion in assets under management as of December 31, 2007 and 14% lower than the $31.2 billion in assets under management as of September 30, 2008. The $6.4 billion year-over-year decrease was driven by performance-related depreciation of $5.7 billion and net outflows of $722 million. During the 2008 fourth quarter, the $4.3 billion decrease in assets under management was driven by performance-related depreciation of $3.3 billion and net outflows of $1.0 billion. The net outflows in both periods exclude redemptions for the month of December 2008, as these redemptions are reflected in assets under management as of January 1, 2009.
Assets under management as of January 1, 2009 were $22.1 billion, which reflects redemptions for the month of December 2008 (net of January 1, 2009 capital inflows) of $4.9 billion. All redemptions for a quarter generally are paid on the first day of the month following the quarter in which the redemption notice was submitted, and capital inflows for that month are accepted on the same day. The net outflows experienced in both the quarterly and full-year period ended December 31, 2008 were due primarily to the unprecedented turbulence in the global capital markets during the third and fourth quarters of 2008. This resulted in increased redemptions as institutional investors re-balanced and/or reduced their overall exposure to the equity markets globally and to alternative asset managers, including hedge funds. The Company’s redemptions were also adversely impacted because many hedge funds imposed gates, suspended or froze redemptions or otherwise restricted access to investor capital. The Company provided, and continues to provide, liquidity to its fund investors in accordance with the pre-defined terms of its funds.
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Estimated assets under management as of February 1, 2009 were $22.3 billion, which reflects redemptions for the month of January 2009 (net of February 1, 2009 capital inflows) of $230 million, and performance-related appreciation of $435 million.
Assets under management by fund:
| (dollars in billions) | December 31, 2008 | September 30, 2008 | December 31, 2007 (2) | % Change (1) | ||||||
| Dec. 2008 vs. Sep. 2008 | Dec. 2008 vs. Dec. 2007 | |||||||||
OZ Master Fund | 16.4 | 18.8 | 19.8 | -13% | -17% | |||||
OZ Europe Master Fund | 5.1 | 5.8 | 6.4 | -12% | -21% | |||||
OZ Asia Master Fund | 2.4 | 3.2 | 3.9 | -25% | -37% | |||||
OZ Global Special Investments | 1.9 | 2.0 | 2.1 | -6% | -8% | |||||
Other (1) (3) | 1.2 | 1.4 | 1.2 | NM | NM | |||||
| (1) | Rounding differences may occur. |
| (2) | Includes investment by the Company’s pre-IPO owners of $1.6 billion in after-tax proceeds from the Company’s IPO, principally into the OZ Global Special Investments Master Fund. |
| (3) | Includes Real Estate Funds, managed accounts and other funds not significant to the Company’s results. |
Performance by fund(1):
| 2008 | ||||||||||
| October | November | December | 4Q | YTD | ||||||
OZ Master Fund | -6.71% | -2.35% | -2.02% | -10.74% | -15.92% | |||||
OZ Europe Master Fund | -5.12% | -2.67% | -2.31% | -9.79% | -17.39% | |||||
OZ Asia Master Fund | -11.76% | -1.69% | -4.13% | -16.83% | -30.86% | |||||
OZ Global Special Investments | -2.60% | -1.72% | -1.22% | -5.44% | -8.27% | |||||
| (1) | Please see important disclosures on Exhibit 11 of the financial supplement accompanying this press release. |
For both the fourth quarter and full year 2008, performance-related depreciation in the Company’s master funds was due primarily to unprecedented market volatility and the ensuing flight to quality which began in September and persisted through the remainder of 2008. These factors resulted in substantial declines in the value of almost every asset class globally, a deterioration in the typical fundamental relationships between asset classes, and a lack of liquidity across all the capital markets worldwide. As a result, the investment returns in each of the Company’s master funds were adversely affected, although the Company’s funds significantly outperformed major markets globally during both periods.
“Last year was one of the most difficult periods for the global financial markets and the alternative asset management industry, and our business was not immune to industry-wide trends,” said Daniel Och, Chairman and Chief Executive Officer of Och-Ziff. “That said, we believe current market conditions have increasingly distinguished larger, institutionally-oriented firms such as our own – a point of differentiation that has accelerated over the past 18 months. At the same time, we also are seeing a greater number of compelling investment opportunities globally than we have in years, and we are well positioned to capitalize on them due to a substantial shift in the competitive landscape. Today, there are fewer firms competing for attractive investment opportunities, and we believe firms such as Och-Ziff that have a proven record of generating returns with limited use of leverage will be able to attract capital and grow when the markets begin to stabilize.”
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SUMMARY RESULTS OF THE OCH-ZIFF FUNDS SEGMENT
The Company conducts substantially all of its business through the Och-Ziff Funds segment, which is currently the Company’s only reportable operating segment. This segment provides management and advisory services to the Company’s hedge funds and separately managed accounts.
The Company’s other operations are currently comprised of its real estate business, which manages and provides advisory services to its real estate funds, and investments in new businesses established to expand certain of the Company’s private investment platforms. These other operations, which currently are in early growth stages and are not material to the overall financial performance of the Company as of December 31, 2008, are not included in the Och-Ziff Funds segment and therefore not included in the calculations of Economic Income, Distributable Earnings and Distributable Earnings per Share.
The performance measure for the Och-Ziff Funds segment is Economic Income, which management uses to evaluate the financial performance of and make operating decisions for the segment. Management believes that investors should review the same performance measure that it uses to analyze the Company’s core business performance. Economic Income is a pre-tax measure that does not include income allocations to the pre-IPO interests of the partners and the Ziffs, reorganization expenses related to the Company’s IPO, equity-based compensation expenses, taxes, or partners’ and others’ interests in the Company’s consolidated subsidiaries, among other adjustments. For further information regarding these adjustments, please see Exhibit 7 of the financial tables that accompany this press release.
For reconciliations of Economic Income to total Company GAAP net income (loss) for the periods discussed below, please see Exhibits 3 through 6 of the financial tables that accompany this press release.
Economic Income
Economic Income Revenues
Fourth-quarter 2008 Economic Income Revenues were $140.4 million, an 82% decrease from fourth-quarter 2007 Economic Income Revenues of $763.7 million. Management Fees were $133.2 million, 1% lower than fourth-quarter 2007 Management Fees of $135.1 million. Incentive Income was $6.7 million, as compared to fourth-quarter 2007 Incentive Income of $625.3 million.
Economic Income Revenues for the full year of 2008 were $587.0 million, a 48% decrease from Economic Income Revenues of $1.1 billion in the prior year period. Management Fees were $571.3 million, up 20% from Management Fees of $476.9 million in the prior year period, driven by higher average assets under management during 2008 compared with the prior year. Incentive Income was $12.2 million, 98% lower than Incentive Income of $637.2 million in the prior year period.
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The primary driver of the decline in Economic Income revenues in both the fourth quarter and full year periods was significantly lower Incentive Income in the 2008 fourth quarter due to negative annual investment performance of the Company’s master funds in 2008. The December 2008 redemptions had no impact on fourth-quarter or full-year 2008 results as they impacted assets under management as of January 1, 2009. Therefore, in accordance with the Company’s practices, the effect of these redemptions on Management Fees will be recognized in the Company’s first-quarter 2009 results.
Economic Income Expenses
Compensation and Benefits
Fourth-quarter 2008 Compensation and Benefits expenses totaled $64.3 million, 60% lower than fourth-quarter 2007 Compensation and Benefits expenses of $159.8 million. Fourth-quarter 2008 Compensation and Benefits included $47.3 million of cash bonus expense, which was 67% lower than fourth-quarter 2007 cash bonus expense of $143.8 million.
Compensation and Benefits for the 2008 full year was $141.3 million, 32% lower than Compensation and Benefits of $207.4 million in the prior year period. Compensation and Benefits for this period included $75.1 million of cash bonus expense, which was 53% lower than full-year 2007 cash bonus expense of $160.3 million.
The decrease in Compensation and Benefits in both periods was driven by lower cash bonuses. Cash bonuses are generally variable and are a function of annual Total Economic Income Revenues earned in a given year. Cash bonuses in 2008 declined due to significantly lower Incentive Income in the 2008 fourth quarter than in the prior year fourth quarter, which resulted from negative annual investment performance of the Company’s master funds in 2008.
Non-Compensation Expenses
Fourth-quarter 2008 non-compensation expenses were $35.0 million, a 13% increase from fourth-quarter 2007 non-compensation expenses of $30.9 million. The increase was driven principally by higher professional services fees, insurance costs and occupancy expenses related to the infrastructure associated with becoming a public company. These increases were partially offset by lower interest expense on the Company’s $750 million term loan due to the decline in the loan’s LIBOR-based borrowing rate, and lower business development costs.
Non-compensation expenses for the full year of 2008 were $130.0 million, a 30% increase from non-compensation expenses of $99.7 million in the prior year period. The increase was driven primarily by a full year of interest expense recorded in 2008 on the Company’s $750 million term loan compared to six months of interest expense recorded in 2007, as the loan was entered into during the third quarter of that year. The remainder of the increase was driven principally by higher insurance costs, as well as the impact of annualized expenses related to the infrastructure build-out associated with becoming a public company and growth in the Company’s business in 2007.
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Economic Income
Fourth-quarter 2008 Economic Income totaled $41.1 million, a 93% decrease from fourth-quarter 2007 Economic Income of $573.0 million. Economic Income for the full year of 2008 totaled $315.8 million, a 61% decrease from Economic Income of $818.4 million in the prior year period.
CAPITAL
As of December 31, 2008, Class A Shares outstanding were 76,279,134. For purposes of calculating Distributable Earnings per Share, the Company assumes that all Group A Units and outstanding RSUs have been converted on a one-to-one basis into Class A Shares. For the fourth quarter and full year ended December 31, 2008, the total weighted average Adjusted Class A Shares outstanding were 399,996,898 and 400,002,114, respectively.
DIVIDEND
The Board of Directors of Och-Ziff declared a fourth-quarter 2008 dividend of $0.05 per Class A Share, to be paid on February 19, 2009 to holders of record at the close of business on December 31, 2008.
For U.S. federal income tax purposes, the dividend will be treated as a partnership distribution. Based on the best information currently available, the Company estimates that when calculating withholding taxes, the entire amount of the fourth quarter 2008 dividend will be treated as U.S. source dividend income.
Non-U.S. holders of Class A Shares are generally subject to U.S. federal withholding tax at a rate of 30% (subject to reduction by applicable treaty or other exception) on their share of U.S. source dividends and certain other types of U.S. source income realized by the Company. With respect to interest, however, no withholding is generally required if proper certification (on an IRS Form W-8) of a beneficial owner’s foreign status has been filed with the withholding agent. In addition, non-U.S. holders must generally provide the withholding agent with a properly completed IRS Form W-8 to obtain any reduction in withholding.
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Och-Ziff will host a conference call today, February 12, 2009, at 8:30 a.m. Eastern Time to discuss the Company’s fourth quarter and full year 2008 results. The call will be open to the public and can be accessed by dialing 888-680-0865 (callers inside the U.S.) or 617-213-4853 (callers outside the U.S.). The number should be dialed at least ten minutes prior to the start of the call. The passcode for the call will be 42733770. A simultaneous webcast of the call will be available to the public on a listen-only basis on the For Shareholders page of the Company’s website atwww.ozcap.com.
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For those unable to listen to the live broadcast, a replay will be available by dialing 888-286-8010 (callers inside the U.S.) or 617-801-6888 (callers outside the U.S.), passcode 11439773, beginning approximately two hours after the event for two weeks. A webcast replay of the event will also be available on the For Shareholders page of the Company’s website.
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Forward-Looking Statements
The information contained in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the current views of the Company with respect to, among other things, its future financial or business performance, events, strategies or expectations, including but not limited to its ability to generate returns and preserve capital and its ability to expand its investment platforms. Such forward-looking statements are generally identified by the use of words such as “outlook,” “believe,” “expect,” “potential,” “continue,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “opportunity,” “assume,” “remain,” “sustain,” “achieve” or the negative version of those words or other comparable words.
Any forward-looking statements contained in this press release are based upon historical performance of the Company and its subsidiaries and on current plans, estimates and expectations of the Company and its subsidiaries. The inclusion of this forward-looking information should not be regarded as a representation by the Company or any other person that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties, including but not limited to global and domestic market and business conditions, the Company’s ability to successfully compete for fund investors, talent and investment opportunities, successful formulation and execution of its business and growth strategies, the Company’s ability to appropriately manage conflicts of interest, and tax and other regulatory factors relevant to the Company’s structure and status as a public company, as well as assumptions relating to the Company’s operations, financial results, financial condition, business prospects, growth strategy and liquidity.
If one or more of these or other risks or uncertainties materialize, or if the Company’s assumptions prove to be incorrect, the Company’s actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and risks that are included in the Company’s filings with the Securities and Exchange Commission, including but not limited to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 and its Quarterly Reports on Form 10-Q. Any forward-looking statements contained in this press release are made only as of the date hereof. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
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This press release does not constitute an offer of any Och-Ziff fund.
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About Och-Ziff Capital Management Group LLC
Och-Ziff Capital Management Group LLC is one of the world’s largest institutional alternative asset managers with offices in New York, London, Hong Kong, Tokyo, Bangalore and Beijing. Och-Ziff’s funds seek to deliver consistent, positive, risk-adjusted returns throughout market cycles, with a strong focus on capital preservation. Och-Ziff’s multi-strategy approach combines global investment strategies, including merger arbitrage, convertible and derivative arbitrage, equity restructuring, credit and distressed investments, private investments and real estate. As of February 1, 2009, Och-Ziff had approximately $22.3 billion in estimated assets under management with approximately 700 investor relationships. For more information, please visitwww.ozcap.com.
Investor Relations Contact:
Tina Madon
Managing Director
Head of Investor Relations
Och-Ziff Capital Management Group LLC
212-719-7381
tina.madon@ozcap.com
Media Relations Contact:
Steve Bruce or Chuck Dohrenwend
The Abernathy MacGregor Group, for Och-Ziff Capital Management Group LLC
212-371-5999
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Exhibit 1
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Consolidated and Combined Statements of Operations (Unaudited)
(dollars in thousands, except per share amounts)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
Revenues | ||||||||||||||||
Management fees | $ | 134,495 | $ | 136,419 | $ | 576,265 | $ | 317,756 | ||||||||
Incentive income | 6,718 | 625,275 | 12,201 | 632,690 | ||||||||||||
Other revenues | 930 | 3,341 | 4,109 | 11,637 | ||||||||||||
Income of consolidated Och-Ziff funds | 4,155 | 5,156 | 11,809 | 539,892 | ||||||||||||
Total Revenues | 146,298 | 770,191 | 604,384 | 1,501,975 | ||||||||||||
Expenses | ||||||||||||||||
Compensation and benefits | 106,442 | 176,825 | 261,830 | 238,331 | ||||||||||||
Allocations to non-equity partner interests | (37,463 | ) | 85,060 | (38,328 | ) | 574,326 | ||||||||||
Reorganization expenses | 422,236 | 3,333,396 | 1,698,989 | 3,333,396 | ||||||||||||
Profit sharing | (3,015 | ) | 2,232 | (4,751 | ) | 106,644 | ||||||||||
Interest expense | 9,157 | 11,430 | 33,948 | 24,240 | ||||||||||||
General, administrative and other | 18,451 | 23,718 | 102,222 | 83,241 | ||||||||||||
Expenses of consolidated Och-Ziff funds | 1,594 | 1,201 | 3,994 | 343,135 | ||||||||||||
Total Expenses | 517,402 | 3,633,862 | 2,057,904 | 4,703,313 | ||||||||||||
Other Income (Loss) | ||||||||||||||||
Net earnings (losses) on investments in and deferred income | (128,342 | ) | 67,120 | (153,337 | ) | 118,335 | ||||||||||
Net gains (losses) of consolidated Och-Ziff funds | (18,421 | ) | 16,201 | (17,634 | ) | 2,352,290 | ||||||||||
Total Other Income (Loss) | (146,763 | ) | 83,321 | (170,971 | ) | 2,470,625 | ||||||||||
Loss before Income Taxes and Partners’ and Others’ | (517,867 | ) | (2,780,350 | ) | (1,624,491 | ) | (730,713 | ) | ||||||||
Income taxes | 17,370 | 48,614 | 40,066 | 63,963 | ||||||||||||
Loss before Partners’ and Others’ Interests in | (535,237 | ) | (2,828,964 | ) | (1,664,557 | ) | (794,676 | ) | ||||||||
Partners’ and others’ interests in income of consolidated subsidiaries | 423,004 | 2,054,412 | 1,153,961 | (120,350 | ) | |||||||||||
Net Loss | $ | (112,233 | ) | $ | (774,552 | ) | $ | (510,596 | ) | $ | (915,026 | ) | ||||
| Net Loss per Class A Share | November 14, 2007 through December 31, 2007 | |||||||||||||||
Basic and diluted | $ | (1.49 | ) | $ | (11.15 | ) | $ | (6.86 | ) | |||||||
Weighted Average Class A Shares Outstanding | ||||||||||||||||
Basic and diluted | 75,171,980 | 74,138,572 | 74,398,336 | |||||||||||||
Exhibit 2
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Och-Ziff Funds Economic Income (Unaudited)
(dollars in thousands)
| Three Months Ended December 31, | ||||||||
| 2008 | 2007 | % Change | ||||||
Economic Income Revenues | ||||||||
Management fees | $ | 133,240 | $ | 135,108 | -1% | |||
Incentive income | 6,718 | 625,275 | -99% | |||||
Other revenues | 405 | 3,304 | -88% | |||||
Total Economic Income Revenues | 140,363 | 763,687 | -82% | |||||
Economic Income Expenses | ||||||||
Compensation and benefits (1) | 64,266 | 159,829 | -60% | |||||
Non-compensation expenses | 35,003 | 30,890 | 13% | |||||
Total Economic Income Expenses | 99,269 | 190,719 | -48% | |||||
Och-Ziff Funds Economic Income | $ | 41,094 | $ | 572,968 | -93% | |||
| Year Ended December 31, | ||||||||
| 2008 | 2007 | % Change | ||||||
Economic Income Revenues | ||||||||
Management fees | $ | 571,274 | $ | 476,907 | 20% | |||
Incentive income | 12,201 | 637,243 | -98% | |||||
Other revenues | 3,554 | 11,391 | -69% | |||||
Total Economic Income Revenues | 587,029 | 1,125,541 | -48% | |||||
Economic Income Expenses | ||||||||
Compensation and benefits (1) | 141,255 | 207,379 | -32% | |||||
Non-compensation expenses | 129,970 | 99,723 | 30% | |||||
Total Economic Income Expenses | 271,225 | 307,102 | -12% | |||||
Och-Ziff Funds Economic Income | $ | 315,804 | $ | 818,439 | -61% | |||
(1) Prior to the second quarter of 2008, the grant-date fair value of RSUs awarded to employees, excluding awards made at the time of the Company’s IPO, was recognized as an expense in full on the date of the award. The 2007 fourth-quarter and full-year Compensation and Benefits expenses have been recalculated to conform to the current methodology.
See Exhibits 3 - 6 for reconciliations of Och-Ziff Funds Economic Income to total Company GAAP Net Income (Loss).
Exhibit 3
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Och-Ziff Funds Economic Income to GAAP Net Income (Loss) (Unaudited)
(dollars in thousands)
| Three Months Ended December 31, 2008 | |||||||||||||||||||||
| Reconciling Adjustments (1) | |||||||||||||||||||||
| Och-Ziff Funds Economic Income | Other Operations | Funds Consolidation | Other Adjustments | Total Company | |||||||||||||||||
Revenues | |||||||||||||||||||||
Management fees | $ | 133,240 | $ | 1,311 | $ | (56 | ) | $ | - | $ | 134,495 | ||||||||||
Incentive income | 6,718 | - | - | - | 6,718 | ||||||||||||||||
Other revenues | 405 | 525 | - | - | 930 | ||||||||||||||||
Income of consolidated Och-Ziff funds | - | 4,154 | 1 | - | 4,155 | ||||||||||||||||
Total Revenues | 140,363 | 5,990 | (55 | ) | - | 146,298 | |||||||||||||||
Expenses | |||||||||||||||||||||
Compensation and benefits | 64,266 | 11,006 | - | 31,170 | (a) (b) | 106,442 | |||||||||||||||
Allocations to non-equity partner interests | - | - | - | (37,463 | ) | (c) | (37,463 | ) | |||||||||||||
Reorganization expenses | - | - | - | 422,236 | (d) | 422,236 | |||||||||||||||
Profit sharing | - | - | - | (3,015 | ) | (e) | (3,015 | ) | |||||||||||||
Interest expense | 9,157 | - | - | - | 9,157 | ||||||||||||||||
General, administrative and other | 25,846 | 792 | - | (8,187 | ) | (f) | 18,451 | ||||||||||||||
Expenses of consolidated Och-Ziff funds | - | 1,449 | 145 | - | 1,594 | ||||||||||||||||
Total Expenses | 99,269 | 13,247 | 145 | 404,741 | 517,402 | ||||||||||||||||
Other Loss | |||||||||||||||||||||
Net losses on investments in and | - | (1,500 | ) | - | (126,842 | ) | (g) | (128,342 | ) | ||||||||||||
Net losses of consolidated Och-Ziff funds | - | (16,214 | ) | (2,207 | ) | - | (18,421 | ) | |||||||||||||
Total Other Loss | - | (17,714 | ) | (2,207 | ) | (126,842 | ) | (146,763 | ) | ||||||||||||
Income (Loss) Before Income Taxes and | 41,094 | (24,971 | ) | (2,407 | ) | (531,583 | ) | (517,867 | ) | ||||||||||||
Income taxes | - | 15 | - | 17,355 | (f) | 17,370 | |||||||||||||||
Income (Loss) Before Partners’ and Others’ | 41,094 | (24,986 | ) | (2,407 | ) | (548,938 | ) | (535,237 | ) | ||||||||||||
Partners’ and others’ interests in income of | - | 12,350 | 2,407 | 408,247 | (f) | 423,004 | |||||||||||||||
Net Income (Loss) | $ | 41,094 | $ | (12,636 | ) | $ | - | $ | (140,691 | ) | $ | (112,233 | ) | ||||||||
(1) See Exhibit 7 for a description of the adjustments made to arrive at total Company GAAP Net Income (Loss).
Exhibit 4
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Och-Ziff Funds Economic Income to GAAP Net Income (Loss) (Unaudited)
(dollars in thousands)
| Three Months Ended December 31, 2007 | |||||||||||||||||||||
| Reconciling Adjustments (1) | |||||||||||||||||||||
| Och-Ziff Funds Economic Income | Other Operations | Funds Consolidation | Other Adjustments | Total Company | |||||||||||||||||
Revenues | |||||||||||||||||||||
Management fees | $ | 135,108 | $ | 1,311 | $ | - | $ | - | $ | 136,419 | |||||||||||
Incentive income | 625,275 | - | - | - | 625,275 | ||||||||||||||||
Other revenues | 3,304 | 37 | - | - | 3,341 | ||||||||||||||||
Income of consolidated Och-Ziff funds | - | 5,081 | 75 | - | 5,156 | ||||||||||||||||
Total Revenues | 763,687 | 6,429 | 75 | - | 770,191 | ||||||||||||||||
Expenses | |||||||||||||||||||||
Compensation and benefits | 159,829 | 2,598 | - | 14,398 | (a) (b) | 176,825 | |||||||||||||||
Allocations to non-equity partner interests | - | 69 | - | 84,991 | (c) | 85,060 | |||||||||||||||
Reorganization expenses | - | - | - | 3,333,396 | (d) | 3,333,396 | |||||||||||||||
Profit sharing | - | 23 | - | 2,209 | (e) | 2,232 | |||||||||||||||
Interest expense | 11,430 | - | - | - | 11,430 | ||||||||||||||||
General, administrative and other | 19,460 | 3,191 | - | 1,067 | (f) | 23,718 | |||||||||||||||
Expenses of consolidated Och-Ziff funds | - | 1,138 | 63 | - | 1,201 | ||||||||||||||||
Total Expenses | 190,719 | 7,019 | 63 | 3,436,061 | 3,633,862 | ||||||||||||||||
Other Income | |||||||||||||||||||||
Net gains on investments in and | - | - | 135 | 66,985 | (g) | 67,120 | |||||||||||||||
Net gains (losses) of consolidated Och-Ziff funds | - | 16,218 | (17 | ) | - | 16,201 | |||||||||||||||
Total Other Income | - | 16,218 | 118 | 66,985 | 83,321 | ||||||||||||||||
Income (Loss) Before Income Taxes and | 572,968 | 15,628 | 130 | (3,369,076 | ) | (2,780,350 | ) | ||||||||||||||
Income taxes | - | 8 | - | 48,606 | (f) | 48,614 | |||||||||||||||
Income (Loss) Before Partners’ and Others’ | 572,968 | 15,620 | 130 | (3,417,682 | ) | (2,828,964 | ) | ||||||||||||||
Partners’ and others’ interests in income of | - | (22,933 | ) | (130 | ) | 2,077,475 | (f) | 2,054,412 | |||||||||||||
Net Income (Loss) | $ | 572,968 | $ | (7,313 | ) | $ | - | $ | (1,340,207 | ) | $ | (774,552 | ) | ||||||||
(1) See Exhibit 7 for a description of the adjustments made to arrive at total Company GAAP Net Income (Loss).
Exhibit 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Och-Ziff Funds Economic Income to GAAP Net Income (Loss) (Unaudited)
(dollars in thousands)
| Year Ended December 31, 2008 | |||||||||||||||||||||
| Reconciling Adjustments (1) | |||||||||||||||||||||
| Och-Ziff Funds Economic Income | Other Operations | Funds Consolidation | Other Adjustments | Total Company | |||||||||||||||||
Revenues | |||||||||||||||||||||
Management fees | $ | 571,274 | $ | 5,245 | $ | (254 | ) | $ | - | $ | 576,265 | ||||||||||
Incentive income | 12,201 | - | - | - | 12,201 | ||||||||||||||||
Other revenues | 3,554 | 555 | - | - | 4,109 | ||||||||||||||||
Income of consolidated Och-Ziff funds | - | 11,702 | 107 | - | 11,809 | ||||||||||||||||
Total Revenues | 587,029 | 17,502 | (147 | ) | - | 604,384 | |||||||||||||||
Expenses | |||||||||||||||||||||
Compensation and benefits | 141,255 | 13,975 | - | 106,600 | (a)(b) | 261,830 | |||||||||||||||
Allocations to non-equity partner interests | - | - | - | (38,328 | ) | (c) | (38,328 | ) | |||||||||||||
Reorganization expenses | - | - | - | 1,698,989 | (d) | 1,698,989 | |||||||||||||||
Profit sharing | - | - | - | (4,751 | ) | (e) | (4,751 | ) | |||||||||||||
Interest expense | 33,948 | - | - | - | 33,948 | ||||||||||||||||
General, administrative and other | 96,022 | 1,986 | - | 4,214 | (f) | 102,222 | |||||||||||||||
Expenses of consolidated Och-Ziff funds | - | 3,340 | 654 | - | 3,994 | ||||||||||||||||
Total Expenses | 271,225 | 19,301 | 654 | 1,766,724 | 2,057,904 | ||||||||||||||||
Other Loss | |||||||||||||||||||||
Net losses on investments in and | - | (7,644 | ) | - | (145,693 | ) | (g) | (153,337 | ) | ||||||||||||
Net losses of consolidated Och-Ziff funds | - | (13,453 | ) | (4,181 | ) | - | (17,634 | ) | |||||||||||||
Total Other Loss | - | (21,097 | ) | (4,181 | ) | (145,693 | ) | (170,971 | ) | ||||||||||||
Income (Loss) Before Income Taxes and | 315,804 | (22,896 | ) | (4,982 | ) | (1,912,417 | ) | (1,624,491 | ) | ||||||||||||
Income taxes | - | 241 | - | 39,825 | (f) | 40,066 | |||||||||||||||
Income (Loss) Before Partners’ and Others’ | 315,804 | (23,137 | ) | (4,982 | ) | (1,952,242 | ) | (1,664,557 | ) | ||||||||||||
Partners’ and others’ interests in income of | - | 2,895 | 4,982 | 1,146,084 | (f) | 1,153,961 | |||||||||||||||
Net Income (Loss) | $ | 315,804 | $ | (20,242 | ) | $ | - | $ | (806,158 | ) | $ | (510,596 | ) | ||||||||
(1) See Exhibit 7 for a description of the adjustments made to arrive at total Company GAAP Net Income (Loss).
Exhibit 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Och-Ziff Funds Economic Income to GAAP Net Income (Loss) (Unaudited)
(dollars in thousands)
| Year Ended December 31, 2007 | |||||||||||||||||||||
| Reconciling Adjustments (1) | |||||||||||||||||||||
| Och-Ziff Funds Economic Income | Other Operations | Funds Consolidation | Other Adjustments | Total Company | |||||||||||||||||
Revenues | |||||||||||||||||||||
Management fees | $ | 476,907 | $ | 5,245 | $ | (164,396 | ) | $ | - | $ | 317,756 | ||||||||||
Incentive income | 637,243 | - | (4,553 | ) | - | 632,690 | |||||||||||||||
Other revenues | 11,391 | 246 | - | - | 11,637 | ||||||||||||||||
Income of consolidated Och-Ziff funds | - | 11,436 | 528,456 | - | 539,892 | ||||||||||||||||
Total Revenues | 1,125,541 | 16,927 | 359,507 | - | 1,501,975 | ||||||||||||||||
Expenses | |||||||||||||||||||||
Compensation and benefits | 207,379 | 3,513 | - | 27,439 | (a) (b) | 238,331 | |||||||||||||||
Allocations to non-equity partner interests | - | 734 | - | 573,592 | (c) | 574,326 | |||||||||||||||
Reorganization expenses | - | - | - | 3,333,396 | (d) | 3,333,396 | |||||||||||||||
Profit sharing | - | 227 | - | 106,417 | (e) | 106,644 | |||||||||||||||
Interest expense | 24,240 | - | - | - | 24,240 | ||||||||||||||||
General, administrative and other | 75,483 | 3,678 | - | 4,080 | (f) | 83,241 | |||||||||||||||
Expenses of consolidated Och-Ziff funds | - | 2,664 | 340,471 | - | 343,135 | ||||||||||||||||
Total Expenses | 307,102 | 10,816 | 340,471 | 4,044,924 | 4,703,313 | ||||||||||||||||
Other Income | |||||||||||||||||||||
Net gains (losses) on investments in and | - | - | (186,445 | ) | 304,780 | (g) | 118,335 | ||||||||||||||
Net gains of consolidated Och-Ziff funds | - | 14,929 | 2,337,361 | - | 2,352,290 | ||||||||||||||||
Total Other Income | - | 14,929 | 2,150,916 | 304,780 | 2,470,625 | ||||||||||||||||
Income (Loss) Before Income Taxes and | 818,439 | 21,040 | 2,169,952 | (3,740,144 | ) | (730,713 | ) | ||||||||||||||
Income taxes | - | 111 | - | 63,852 | (f) | 63,963 | |||||||||||||||
Income (Loss) Before Partners’ and Others’ | 818,439 | 20,929 | 2,169,952 | (3,803,996 | ) | (794,676 | ) | ||||||||||||||
Partners’ and others’ interests in income of | - | (27,873 | ) | (2,169,952 | ) | 2,077,475 | (f) | (120,350 | ) | ||||||||||||
Net Income (Loss) | $ | 818,439 | $ | (6,944 | ) | $ | - | $ | (1,726,521 | ) | $ | (915,026 | ) | ||||||||
(1) See Exhibit 7 for a description of the adjustments made to arrive at total Company GAAP Net Income (Loss).
Exhibit 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Description of Adjustments Made to Reconcile Och-Ziff Funds Economic Income to GAAP Net Income (Loss)
Funds Consolidation
Economic Income reflects management fees and incentive income earned from each of the Company’s hedge funds and separately managed accounts, excluding the Company’s real estate funds and investments in new businesses, which are included within the Company’s other operations. The impacts of consolidation and the related eliminations of the Och-Ziff funds are not included in Economic Income. Management fees and incentive income earned by the offshore Och-Ziff funds segment prior to June 30, 2007, were eliminated in consolidation. The Company deconsolidated these funds on June 30, 2007.
Other Adjustments
(a) Economic Income recognizes deferred cash compensation expense in the period in which it is awarded, as management determines the total amount of compensation based on the Company’s performance in the year of the award.
(b) Economic Income excludes equity-based compensation expense, as management does not consider these expenses when evaluating the performance of the Och-Ziff Funds segment.
(c) Economic Income excludes allocations to non-equity partner interests. Management reviewed the performance of the Och-Ziff Funds segment before it made any allocations to the Company’s non-equity founding partners for periods prior to the Reorganization. For these periods, allocations to the founding partners, other than Mr. Och, were treated as expenses for U.S. GAAP purposes. Following the Reorganization, only allocations related to earnings on previously deferred incentive income allocations to non-equity partner interests are incurred and these allocations are excluded from Economic Income.
(d) Economic Income excludes Reorganization expenses, which are non-cash expenses directly attributable to the reclassification of interests held by the founding partners and the Ziffs prior to the Reorganization as Och-Ziff Operating Group A Units.
(e) Economic Income excludes the profit sharing expense related to the Ziffs’ interest in the Company. Management reviewed the performance of the Och-Ziff Funds segment before it made any allocations to the Ziffs for periods prior to the Reorganization. Following the Reorganization, only profit sharing expense related to the allocation of earnings on previously deferred incentive income allocations to the Ziffs are incurred and these allocations are excluded from Economic Income.
(f) Economic Income excludes depreciation, changes in the tax receivable agreement liability, income taxes and partners’ and others’ interests in income of consolidated subsidiaries, as management does not consider these items when evaluating the performance of the Och-Ziff Funds segment.
(g) Economic Income excludes the net earnings (losses) on the deferred income receivable from Och-Ziff funds and net earnings (losses) on investments in Och-Ziff funds and other entities, as these amounts primarily relate to earnings (losses) on amounts due to affiliates for deferred or reinvested incentive income previously allocated to the founding partners and the Ziffs, and earnings (losses) on amounts due to employees under deferred cash compensation arrangements.
Exhibit 8
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Och-Ziff Funds Economic Income to Och-Ziff Funds Distributable Earnings (Unaudited)
(dollars in thousands, except per share amounts)
| Three Months Ended December 31, 2008 | Year Ended December 31, 2008 | |||||||
Och-Ziff Funds Economic Income | $ | 41,094 | $ | 315,804 | ||||
Adjusted income taxes (1) | (8,122 | ) | (123,694 | ) | ||||
Distributable Earnings | $ | 32,972 | $ | 192,110 | ||||
Distributable earnings | $ | 32,972 | $ | 192,110 | ||||
Weighted-Average Adjusted Class A Shares (1) | 399,996,898 | 400,002,114 | ||||||
Distributable Earnings Per Share | $ | 0.08 | $ | 0.48 | ||||
(1) Assumes the conversion of (i) 309,430,571 and 310,680,006 weighted-average Group A Units held by the Company’s partners and the Ziffs for the three months and year ended December 31, 2008, respectively, and (ii) the vesting of 15,394,347 and 14,923,772 weighted-average RSUs for the three months and year ended December 31, 2008, respectively, into Class A Shares on a one-to-one basis.
Exhibit 9
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Financial Supplement (Unaudited)
(dollars in millions)
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||
| 2008 | 2008 | 2007 | 2006 | 2005 | |||||||||||||
Total Assets Under Management (1) | |||||||||||||||||
Beginning of Period Balance | $ | 31,239 | $ | 33,387 | $ | 22,621 | $ | 15,627 | $ | 11,251 | |||||||
Net Flows | (1,027 | ) | (722 | ) | 7,591 | 4,135 | 3,117 | ||||||||||
Appreciation (Depreciation) (2) | (3,257 | ) | (5,710 | ) | 3,175 | 2,859 | 1,259 | ||||||||||
End of Period Balance | $ | 26,955 | $ | 26,955 | $ | 33,387 | $ | 22,621 | $ | 15,627 | |||||||
Total Assets Under Management by Fund | |||||||||||||||||
OZ Master Fund | $ | 16,396 | $ | 19,771 | $ | 15,449 | $ | 12,001 | |||||||||
OZ Europe Master Fund | 5,084 | 6,416 | 3,481 | 1,887 | |||||||||||||
OZ Asia Master Fund | 2,439 | 3,852 | 2,332 | 605 | |||||||||||||
OZ Global Special Investments Master Fund | 1,910 | 2,082 | 195 | 43 | |||||||||||||
Och-Ziff Funds - Net Returns (3) | |||||||||||||||||
OZ Master Fund | -10.7% | -15.9% | 11.5% | 14.8% | 8.8% | ||||||||||||
OZ Europe Master Fund | -9.8% | -17.4% | 14.8% | 22.3% | 15.7% | ||||||||||||
OZ Asia Master Fund | -16.8% | -30.9% | 12.2% | 14.0% | 14.2% | ||||||||||||
OZ Global Special Investments Master Fund | -5.4% | -8.3% | 17.2% | 13.9% | 0.2% | ||||||||||||
(1) Includes deferred incentive income receivable from the offshore funds and amounts invested by the Company, its partners and certain other affiliated parties for which the Company charged no management fees and received no incentive income for the periods presented. Amounts presented in this table are not the amounts used to calculate Management Fees and Incentive Income for the respective periods.
(2) Appreciation (depreciation) reflects the aggregate net capital appreciation (depreciation) for the entire period and is presented on a total return basis, net of all fees and expenses (except incentive income on certain unrealized private investments that could reduce returns on these investments at the time of realization), and includes the reinvestment of all dividends and income. Management Fees and Incentive Income vary by product. Past performance is no guarantee of future results.
(3) Reflects a composite of the monthly return and year-to-date return for the feeder funds comprising each of the Company’s most significant master funds and is presented on a total return basis, net of all fees and expenses of the relevant fund (except incentive income on certain unrealized special investments that could reduce returns at the time of realization), and includes the reinvestment of all dividends and income. Performance includes realized and unrealized gains and losses attributable to certain private and initial public offering investments that are not allocated to all investors in the funds. Investors that do not participate in such investments or that pay different fees may experience materially different returns. Past performance is no guarantee of future results.
Exhibit 10
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
(Unaudited)
Returns of OZ Master Fund During Negative Return Months of S&P 500 Index | Distribution of Net Monthly Returns since April 1, 1994 | |||||||||
Year | Number of Months of Negative Returns of S&P 500 | Total Return of S&P 500 During Negative Return Months | Total Return of OZ Master Fund During Negative Return Months of S&P 500 |  | ||||||
1994 | 3 | -8.5% | 1.7% | |||||||
1995 | 1 | -0.4% | 0.1% | |||||||
1996 | 2 | -6.4% | 3.9% | |||||||
1997 | 3 | -13.1% | 4.0% | |||||||
1998 | 3 | -17.2% | -2.7% | |||||||
1999 | 5 | -11.8% | 6.2% | |||||||
2000 | 8 | -27.1% | 12.0% | |||||||
2001 | 6 | -33.2% | 0.4% | |||||||
2002 | 8 | -41.9% | -5.0% | |||||||
2003 | 3 | -5.2% | 4.6% | |||||||
2004 | 3 | -6.4% | 1.1% | |||||||
2005 | 5 | -8.7% | 0.7% | |||||||
2006 | 1 | -2.9% | 0.5% | |||||||
2007 | 5 | -11.6% | 1.4% | |||||||
1Q08 | 3 | -9.7% | -0.8% | |||||||
2Q08 | 1 | -8.4% | -0.5% | |||||||
3Q08 | 2 | -9.8% | -6.0% | |||||||
4Q08 | 2 | -24.0% | -9.1% | |||||||
Total net return for the OZ Master Fund, Ltd. (the “Fund”) represents a composite of the average return of the feeder funds that comprise the Fund. Returns are presented on a total return basis, net of all fees and expenses (except incentive income on certain unrealized private investments that could reduce returns on these investments at the time of realization), and include the reinvestment of all dividends and income. Performance includes realized and unrealized gains and losses attributable to certain private and initial public offering investments that are not allocated to all investors in the Fund. Investors that do not participate in such investments or that pay different fees may experience materially different returns. Past performance is no guarantee of future results.
For the period from 1994 through 1997, performance represents the performance of Och-Ziff Capital Management, L.P., a Delaware limited partnership that was managed by Daniel Och following an investment strategy that is substantially similar to that of the Fund. In addition, during this period, performance was calculated by deducting Management Fees on a quarterly basis and Incentive Income on a monthly basis. Beginning January 1998, performance has been calculated by deducting both Management Fees and Incentive Income on a monthly basis from the composite returns of the Fund.
Readers should not assume that there is any material overlap between those securities in the portfolio of the Fund and those that comprise the S&P 500 Index. It is not possible to invest directly in the S&P 500 Index. Returns of the S&P 500 Index have not been reduced by fees and expenses associated with investing in securities and include the reinvestment of dividends. The S&P 500 Index is an equity index owned and maintained by Standard & Poor’s, a division of McGraw-Hill, whose value is calculated as the free float-weighted average of the share prices of 500 large-cap corporations listed on the NYSE and Nasdaq. The comparison of S&P 500 Index performance relative to the Fund’s performance during months in which the S&P 500 Index declined is for the limited purpose of illustrating how the Fund has performed during periods of declines in the broad equity market. It should not be considered an indication of how the Fund will perform relative to the S&P 500 Index in the future.
Please note that the Fund’s investment objective is not to beat the S&P 500 Index. Furthermore, the Fund’s performance has frequently trailed that of the S&P 500 Index in periods of positive performance. |
Exhibit 11
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Performance (Unaudited) (1)
| 2007 | ||||||||||||||||||||||||||
| January | February | March | April | May | June | July | August | September | October | November | December | FY2007 | ||||||||||||||
Och-Ziff Funds - Net Returns | ||||||||||||||||||||||||||
OZ Master Fund | 1.97% | 1.31% | 1.38% | 1.81% | 2.40% | 0.19% | -0.49% | -0.96% | 0.95% | 2.07% | -0.32% | 0.67% | 11.48% | |||||||||||||
OZ Europe Master Fund | 1.57% | 1.35% | 1.84% | 2.70% | 2.85% | 0.83% | 0.22% | -0.64% | 1.25% | 1.25% | -0.58% | 1.32% | 14.81% | |||||||||||||
OZ Asia Master Fund | 2.69% | 0.48% | 0.37% | 2.96% | 2.67% | 0.09% | -1.00% | -2.08% | 0.43% | 2.84% | 0.12% | 2.12% | 12.17% | |||||||||||||
OZ Global Special Investments Master Fund | 1.89% | 1.42% | 1.06% | 2.93% | 1.44% | 0.83% | -0.40% | -0.54% | 1.72% | 3.11% | 1.97% | 0.61% | 17.19% | |||||||||||||
S&P 500 Index - Total Return (2) | 1.51% | -1.96% | 1.12% | 4.43% | 3.49% | -1.66% | -3.10% | 1.50% | 3.74% | 1.59% | -4.18% | -0.69% | 5.49% | |||||||||||||
| 2008 | ||||||||||||||||||||||||||
| January | February | March | April | May | June | July | August | September | October | November | December | FY2008 | ||||||||||||||
Och-Ziff Funds - Net Returns | ||||||||||||||||||||||||||
OZ Master Fund | -1.12% | 1.02% | -0.73% | 0.96% | 1.11% | -0.45% | -0.59% | -0.58% | -5.41% | -6.71% | -2.35% | -2.02% | -15.92% | |||||||||||||
OZ Europe Master Fund | -2.00% | 0.81% | -0.54% | 0.31% | 1.69% | 0.20% | -1.35% | -0.38% | -7.22% | -5.12% | -2.67% | -2.31% | -17.39% | |||||||||||||
OZ Asia Master Fund | -1.95% | 1.78% | -2.41% | -0.18% | -0.16% | -2.19% | -1.17% | -4.18% | -7.53% | -11.76% | -1.69% | -4.13% | -30.86% | |||||||||||||
OZ Global Special Investments Master Fund | -0.72% | 0.57% | -0.45% | 0.64% | 0.43% | -0.34% | 0.06% | -0.45% | -2.73% | -2.60% | -1.72% | -1.22% | -8.27% | |||||||||||||
S&P 500 Index - Total Return (2) | -6.00% | -3.25% | -0.43% | 4.87% | 1.30% | -8.43% | -0.84% | 1.45% | -8.91% | -16.80% | -7.18% | 1.06% | -37.00% | |||||||||||||
(1) Fund performance reflects a composite of the return for the feeder funds comprising each of the Company’s most significant master funds and is presented on a total return basis, net of all fees and expenses of the relevant fund (except incentive income on certain unrealized private investments that could reduce returns on these investments at the time of realization), and includes the reinvestment of all dividends and income. Performance includes realized and unrealized gains and losses attributable to certain private and initial public offering investments that are not allocated to all investors in the funds. Investors that do not participate in such investments or that pay different fees may experience materially different returns. Past performance is no guarantee of future results.
(2) Readers should not assume that there is any material overlap between those securities in the portfolios of the funds and those that comprise the S&P 500 Index. It is not possible to invest directly in the S&P 500 Index. Returns of the S&P 500 Index have not been reduced by fees and expenses associated with investing in securities and include the reinvestment of dividends. The S&P 500 Index is an equity index owned and maintained by Standard & Poor’s, a division of McGraw-Hill, whose value is calculated as the free float-weighted average of the share prices of 500 large-cap corporations listed on the NYSE and Nasdaq. The comparison of S&P 500 performance relative to the funds’ performance should not be considered an indication of how the fund will perform relative to the S&P 500 in the future. Please note that the funds’ investment objective is not to beat the S&P 500 Index. Furthermore, the funds’ performance has frequently trailed that of the S&P 500 Index in periods of positive performance.
Exhibit 12
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Summary Performance Statistics (Unaudited)
| As of December 31, 2008 | ||||||||
| Net Annualized Return | 1 Year | 3 Years | 5 Years | Strategy Inception | ||||
OZ Master Fund | -15.9% | 2.5% | 5.4% | 14.0% | ||||
S&P 500 Index | -37.0% | -8.4% | -2.2% | 6.9% | ||||
Correlation of OZ Master Fund to S&P 500 Index | 0.78 | 0.81 | 0.78 | 0.55 | ||||
Volatility | ||||||||
OZ Master Fund Standard Deviation (Annualized) | 8.5 | 6.7 | 5.7 | 5.8 | ||||
S&P 500 Index Standard Deviation (Annualized) | 21.0 | 15.3 | 12.9 | 15.0 | ||||
Sharpe Ratio | ||||||||
OZ Master Fund | (2.18) | (0.30) | 0.30 | 1.66 | ||||
S&P 500 Index | (1.88) | (0.84) | (0.46) | 0.16 | ||||
Total net return for the OZ Master Fund (the “Fund”) represents a composite of the average return of the feeder funds that comprise the Fund. Returns are presented on a total return basis, net of all fees and expenses (except incentive income on certain unrealized private investments that could reduce returns on these investments at the time of realization), and include the reinvestment of all dividends and income. Performance includes realized and unrealized gains and losses attributable to certain private and initial public offering investments that are not allocated to all investors in the Fund. Investors that do not participate in such investments or that pay different fees may experience materially different returns. Past performance is no guarantee of future results.
Readers should not assume that there is any material overlap between those securities in the portfolio of the Fund and those that comprise the S&P 500 Index. It is not possible to invest directly in the S&P 500 Index. Returns of the S&P 500 Index have not been reduced by fees and expenses associated with investing in securities and include the reinvestment of dividends. The S&P 500 Index is an equity index owned and maintained by Standard & Poor’s, a division of McGraw-Hill, whose value is calculated as the free float-weighted average of the share prices of 500 large-cap corporations listed on the NYSE and Nasdaq. The comparison of S&P 500 Index performance relative to the Fund’s performance should not be considered an indication of how the Fund will perform relative to the S&P 500 Index in the future.
Correlation to the returns of the S&P 500 Index represents a statistical measure of the degree to which the return of one portfolio is correlated to the return of another. It is expressed as a factor that ranges from -1.0 (perfectly inversely correlated) to +1.0 (perfectly positively correlated).
Standard deviation is a statistical measure of the degree to which an individual value in a distribution tends to vary from the mean of the distribution.
Sharpe Ratio represents a measure of the investment returns as adjusted for risk. The Sharpe Ratio is calculated by subtracting a “risk-free” rate from the composite returns, and dividing that amount by the standard deviation of the returns. A higher Sharpe Ratio indicates a portfolio that generates a return that is higher than would be expected for the level of risk in the portfolio as compared to the risk-free rate. The risk-free rate is one-month LIBOR.